A recent decision of the U.S. Court of Appeals for the Fourth Circuit considered whether the plaintiffs in a securities fraud class action may rely on the defendants' conduct and statements after the period when the alleged harm occurred to establish the strong inference of intent, known as "scienter," needed to satisfy the heightened standard required by the Private Securities Litigation Reform Act of 1995 ("PSLRA") to plead a securities fraud claim. The court's unanimous decision identified several factors relevant to its determination that the facts alleged in the complaint did not establish an inference of intent sufficient to survive a motion to dismiss.

Background on In re: Triangle Capital Corporation Securities Litigation

Plaintiff Triangle Capital was a Raleigh, North Carolina-based lender that provided financing to companies with annual revenues between $10 million and $250 million (referred to as the "lower middle market"). Its investments typically would be considered below investment grade, i.e., "high yield" or "junk," a fact it disclosed to its shareholders in annual securities filings.