Plaintiffs in securities fraud class action cases often file a complaint after a company’s disclosure of an SEC, DOJ or other governmental investigation, and then use and cite that investigation in their complaint. Plaintiffs also have an additional —and potentially more valuable—resource available to them when Congress conducts its own investigation regarding those same issues and either makes public internal company documents or holds public hearings at which company officials testify. Congressional investigations thus may give plaintiffs internal company information that they might not otherwise have because of the stay of discovery in securities fraud cases during the pendency of a motion to dismiss. As described below, plaintiffs may reference this material in a complaint or attempt to use it to bolster their opposition to a motion to dismiss. At the same time, however, such public information might be useful to defendants on a motion to dismiss.
This article originally appeared on InsideCounsel.