In an Order dated Friday, Judge Castel denied the motion of an investor, Cartica, to lift the automatic PSLRA discovery stay in Cartica’s suit challenging the proposed merger between a Chilean bank (Itau) and a Brazlian bank (CorpBanca). Cartica claims that the disclosures to investors were incomplete and misleading, and sought limited discovery in advance of a potential motion to preliminarily enjoin the shareholder vote. Judge Castel found that Cartica’s position would undermine the purposes of the PSLRA discovery stay:
Cartica seeks a lift of the stay in order for it to prepare a motion for preliminary injunction — which would require this Court to examine the sufficiency of Cartica’s claims. The PSLRA stay is meant to prevent discovery until this Court has evaluated Cartica’s claims under the standards for a motion to dismiss. Cartica’s desire for discovery to enable it to engage in motion practice does not create undue prejudice when the very purpose of the PSLRA is to prevent discovery in support of such motion practice until after an examination of the motion to dismiss.