Negative levels represent memory loss somewhat well from the scientific view psionics approaches from.
Hard to say on the CR, though it should be higher, since it only has a speed of 20 and any party could flee from it. If something nails you with 8 negative levels from a distance, you run. What i will say is most CRs now assume the PC have most splat books available to them. It is why so much of the new monsters have "WTF!" abilities and lowish CRs. Wotc knows what players are capable of and is accounting for that.
Wow Ms. Frezied Beserker, that is a lot of damage you are going to do with that leap attack charge! BTW now that you are 55' from the monster ,Will save or say bye bye to 2d4 levels, and your Persistant Death Ward can go #### off!
Laghathti CR 10
Always CE Large outsider (aquatic, chaotic, evil, extraplanar, obyrith)
Init +5; Senses all-around vision, darkvision 60 ft., true seeing; Listen +2, Spot +21
Aura form of madness (60-ft. radius, DC 17)
Language Abyssal
AC 24, touch 10, flat-footed 23
(-1 size, +1 Dex, +14 natural)
hp 126 (12 HD); fast healing 5; DR 10/cold iron or lawful
Immune mind-affecting spells and effects, poison
Resist acid 10, cold 10, electricity 10, fire 10; SR 21
Fort +16, Ref +11, Will +10
Speed 20 ft. (4 squares), swim 50 ft.
Melee 5 tentacles +16 (1d6+5 plus mindwipe) and
2 bites +14 (1d8+2 plus mindwipe)
Space 10 ft.; Reach 5 ft.
Base Atk +12; Grp +21
Atk Options constrict 1d6+5, improved grab
Special Actions pounce
Spell-Like Abilities (CL 12th)
At will -- modify memory (DC 15)
Abilities Str 20, Dex 13, Con 22, Int 5, Wis 15, Cha 12
SQ all-around vision, amphibious, obyrith traits
Feats Ability Focus (mindwipe), Great Fortitude, Improved Initiative, Lightning Reflexes, Multiattack
Skills Climb +20, Escape Artist +16, Move Silently +16, Search +1, Spot +21, Swim +28
Advancement 13-18 HD (Large); 19-24 HD (Huge); 25-32 HD (Gargantuan)
All-Around Vision (Ex) Laghathti see through their skin and gain a +4 racial bonus on Search and Spot checks. They can't be flanked.
Amphibious (Ex) Although laghathti are aquatic, they can survive indefinitely on land.
Constrict (Ex) A laghathti deals 1d6+5 points of damage with a successful grapple check, in addition to damage from its tentacle attack.
Form of Madness (Su) A creature within 60 feet that observes a laghathti must make a DC 17 Will save. Failure indicates the creature suffers partial amnesia. The victim immediately gains 2d4 negative levels. These negative levels do not result from negative energy and never result in actual level loss, although they persist until cured by restoration or greater restoration. A creature that makes the save is immune to that particular laghathti's form of madness for 24 hours. This is a mind-affecting ability that does not affect chaotic evil outsiders. The save DC is Charisma-based.
Improved Grab (Ex) To use this ability, a laghathti must hit an opponent of any size with a tentacle attack. It can then attempt to start a grapple as a free action without provoking an attack of opportunity. If it wins the grapple check, it establishes a hold and can constrict.
Mindwipe (Su) Anyone that takes damage from a laghathti's tentacle or bite attack must make a DC 19 Will save or gain one negative level as the hundreds of tiny mouths that cover their writhing bodies siphon away memories. Negative levels gained from a laghathti's mindwipe do not result from negative energy, and although they persist until cured by restoration or greater restoration, never result in actual level loss. This is a mind-affecting ability. The save DC is Charisma-based and includes the +2 bonus from the laghathti's Ability Focus feat.
Pounce (Ex) If a laghathti charges a foe, it can make a full attack.