How is scienter, or intent, established in securities fraud cases?

In a securities fraud case in Utah, intent (known as scienter) is established when a court determines that the defendant acted knowingly and willfully. This means that they had knowledge of the evidence or facts which proves that the act of fraud had occurred and that they understood the consequences of the act. In a prosecution, evidence of intent can be established by circumstantial evidence, such as emails or text messages referring to the fraudulent activity, or by direct evidence like confessions or admissions by the defendant. The prosecution must also show that the defendant had a "state of mind" to act fraudulently. Another way to establish scienter is when the defendant had a duty to disclose the information to a third party, such as when creating a company filing with the Securities and Exchange Commission (SEC). In this situation, the defendant can be charged with fraud if they knowingly failed to disclose the truth when they were obligated to do so. Finally, case law in Utah—and across the country—allows a court to infer scienter, or intent, from certain “badges of fraud.” These can include concealment of facts, a pattern of deceptive behavior, or an intent to deceive or defraud. In such cases, the relevant facts must be taken into consideration in order to determine if scienter can be established.

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How is scienter, or intent, established in securities fraud cases?

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