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Investors brought a securities fraud class action against a corp. and its CEO, who published info that their flagship product was still selling strong when not, did channel stuffing, other bad acts.  Ct dismissed - failed to establish CEO's scienter (had to say w/particularity some facts that give rise to a strong inference of scienter.)  Shareholders amended to add 27 statements of others to CEO's state of mind, ct dismissed again.  Appeal granted, reasonable person standard.  Certiorari granted.

H - Ginsburg: reasonable person not appropriate, b/c fails to take into account competing inferences.  Must plead facts to show scienter is at least as likely as not.
Scalia's concurrence is that inference of scienter should be more plausible than the inference of innocence.
Stevens's dissent says we don't need to look at competing inference, just is this probable?

Notes:

In alleging fraud or mistake, must be specific about circumstances constituting fraud or mistake, but can infer scienter.  Must be a "strong inference."  This is to prevent allegations of fraud by hindsight - i.e., every time your stock drops.

Private Securities Litigation Reform Act was enacted in 1995 to put a higher standard on the specificity required in the pleadings under the SEC Act, to protect companies from the costs of discovery etc, when they are Ds.