Securities class actions are interesting for many reasons. They involve large stakes, and so they also attract outsized personalities. They are also more strictly regulated than other class actions. And, as a result, they often lead to unusual tactics for class action litigation. For example, as Professor Mark Gideon points out in his article
Confidential Witness Confidential – City of Livonia Employees’ Retirement Sys v Boeing
The confidential witness is the bane of the securities defendant’s existence. While there may be some legitimate reasons to keep a witness confidential, the words "Confidential Witness #1" can also hide problems with the plaintiffs’ case, like sloppy research or outright misrepresentation.
How do we know this is the case? Well, many defendants
In re Netbank – Confidential Witness Interrogatories
Plaintiffs in securities class actions often use "confidential witnesses" in their complaints to substantiate various allegations. The practice makes some sense at the complaint stage: it allows the plaintiff to plead fraud and loss causation with the specificity required by the PSLRA, without exposing potential witnesses to backlash from their employer should