What is Scienter? Scienter is the mental state where someone knows their statements or actions are wrong, deceptive, or illegal. Scienter is often presented to a jury as: So the defendant wasnt an expert and didnt 100% know what he was doing was illegal, but he has some info and knowledge to know it wasnt exactly legal, and he did it anyway. Thats enough to suggest he knew it was wrong but chose to do it anyway. In Smith v. First Marblehead Corp., Plaintiffs claim Marblehead defrauded them and had scienter to know their transactions of bundling defaulted student loans into asset-backed securities but did not let the buyers know what the tax consequences were. U.S. District Court Judge Patti Saris dismissed the Plaintiffs claim because they did not bring forth enough evidence or allegations in their complaint to suggest Marblehead had Scienter, meaning it knew its In Securities Fraud and Tax Fraud cases, Scienter is what the United States or Securities and Exchange Commission (SEC) has to prove to convict someone. Scienter means that the person is not innocent meaning they actually didnt know what they were doing was wrong, but they also were doing illegal acts intentionally. Smith, et al. v. The First Marblehead Corp., et al. (20 pages) (Saris, J.) (USDC Mass.) (Civil Action No. 13-12121-PBS) masslawyersweekly/2014/10/30/securities-fraud-tax-consequences/
Posted on: Thu, 30 Oct 2014 15:33:42 +0000