NVIDIA Corp. v. E. Ohman J:or Fonder AB

The Ninth Circuit had accepted plaintiffs' confidential witness accounts and expert analysis of NVIDIA's data as sufficient to establish a strong inference of scienter without independently assessing the witnesses' reliability or the factual basis underlying the expert's conclusions. The Supreme Court rejected this deferential approach, requiring courts to scrutinize whether the confidential witnesses' allegations were sufficiently corroborated and whether the expert's analysis rested on facts actually pleaded in the complaint with particularity. Because NVIDIA's investors had not independently pleaded particularized facts establishing fraudulent intent but instead relied on the expert's independent analysis of internal company data, the heightened PSLRA standard was not satisfied. The Court thus vacated the Ninth Circuit's decision, making clear that pleading-stage gatekeeping demands rigorous examination of the evidence's reliability, not deference to the plaintiff's characterization of what it proves.