Friday, June 11, 2021

Kirkland & Ellis partners examine courts’ continued skepticism over confidential witnesses

By Matthew Solum, Kirkland & Ellis, LLP

The use of confidential witnesses in securities fraud complaints is a questionable technique that has drawn intense scrutiny from the courts, according to Matthew Solum of Kirkland & Ellis. When confidential witnesses are used, he notes, plaintiffs insist that the complaint must be taken as true, even if there is no way of determining if the alleged informants could plausibly be in possession of the information they claim to possess. If confidential witnesses’ statements are simply taken at face value, the potential for abuse is high, he adds. Solum examines the trend toward greater skepticism by the courts, by looking at several recent cases involving confidential witnesses including one where the witness’s supposed testimony was exaggerated or made up entirely.

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