A. In any private action arising under section 44-1991 or 44-1992 in which the plaintiff alleges that the defendant made an untrue statement of a material fact or omitted a statement of a material fact necessary in order to make the statements made, in the light of the circumstances in which they were made, not misleading, the complaint shall specify each alleged untrue statement or material omission and the reason or reasons why the statement or omission is misleading or the omission is material and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.

B. In any private action arising under section 44-1991 or 44-1992 in which the plaintiff may recover money damages only on proof that the defendant acted with a particular state of mind, for each act or omission that allegedly violates section 44-1991 or 44-1992, the complaint shall state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.

C. In any private action arising under section 44-1991 or 44-1992:

1. On any defendant’s motion, the court shall dismiss the complaint if the requirements of subsections A and B of this section are not met.

2. All discovery and other proceedings shall be stayed during the pendency of any motion to dismiss pursuant to rule 12 of the Arizona rules of civil procedure, unless the court finds on the motion of any party that particularized discovery is necessary to preserve evidence or to prevent undue prejudice to that party.

D. During the pendency of any stay of discovery pursuant to subsection C of this section, unless ordered by the court, any party to the action with actual notice of the allegations contained in the complaint shall treat all documents, data compilations, including electronically recorded or stored data, and tangible objects that are in the custody or control of that person and that are relevant to the allegations as if they were the subject of a continuing request for production of documents from an opposing party under the Arizona rules of civil procedure or any applicable federal or other jurisdictional counterpart to the rules. A party aggrieved by the wilful failure of an opposing party to comply with this subsection may apply to the court for an order awarding appropriate sanctions.

E. Except as provided in section 44-1991, subsection B, including actions based on allegations of activities constituting dishonest or unethical practices in the securities industry, in any private action arising under this chapter, the plaintiff has the burden of proving that the act or omission of the defendant alleged to violate the section under which the private action is brought caused the loss for which the plaintiff seeks to recover damages.