Securities Litigation Reform

Private securities class actions are lawsuits filed on behalf of shareholders against publicly traded companies alleged to have defrauded their investors. Supporters of these cases claim they are necessary to compensate shareholders and stop corporate transgressions. However, plaintiffs’ lawyers are the real beneficiaries of securities class actions, not investors. Read More...

There is enormous pressure on companies to settle these cases because of the cost of going to trial, the burden they inflict on management, and the risk of a runaway verdict. This typically results in settlements even in cases where the merit of the claim is questionable. The individuals responsible for wrongdoing rarely make a significant contribution, and those whom the securities class action system is supposed to protect—small, individual retail investors—are the ones who, in fact, benefit the least.

These cases threaten the health of the U.S. economy by imposing huge costs on American businesses, investors, and employees, while hurting the global competiveness of the U.S. securities markets. Companies actively question whether they want to access the U.S. securities markets and expose themselves to the problematic liability our current system imposes. The number of publicly registered American companies is now roughly half of what it was approximately 20 years ago and the fact that nearly one-in-ten public companies will be hit with a securities class action this year, could certainly dissuade companies from going public.

To curb securities litigation abuses, and improve the health of the U.S. economy, Congress, the courts and the Securities and Exchange Commission should consider commonsense reforms that would expose relationships between securities class action attorneys and plaintiffs, limit the lottery aspect of securities litigation and drive out meritless cases from the courts.


Suggested Resources

  • Containing the Contagion: Proposals to Reform the Broken Securities Class Action System

    Containing the Contagion: Proposals to Reform the Broken Securities Class Action System

    February 25, 2019

    Record-high numbers of securities class action filings are swamping the protections that Congress created in 1995. In fact, the likelihood that a public company will be sued has never been greater, and the bulk of these lawsuits show the classic signs of litigation abuse. However, solutions are at hand. This research proposes regulatory and legislative action to contain the securities litigation contagion. Read More

  • Risk and Reward: The Securities Fraud Class Action Lottery

    Risk and Reward: The Securities Fraud Class Action Lottery

    February 25, 2019

    Securities fraud class action lawyers are playing the "litigation lottery," filing often meritless cases against big companies on the off-chance of a big settlement. This research looks at all securities fraud class actions filed between 2005 and 2016 to reveal the true incentives that motivate plaintiffs' lawyers to roll the dice on these lawsuits, despite their high dismissal rate. Read More

All Results for Securities Litigation Reform

  1. In the News Today - January 14, 2020

    January 14, 2020 | News

    Skadden Attorneys Predict Continued "Record Pace" Of Securities Lawsuit Filings; Public May Be Interested In TPLF, Judge Says... Read More

  2. Total Securities Lawsuit Filings in 2019 Nearly Double Twenty-Year Average

    January 02, 2020 | News

    The surge of securities class action lawsuit filings continued in 2019 with a total number of fillings that was 99 percent higher than the annual average between 1997 and 2017, D&O Diary's Kevin LaCroix reports.... Read More

  3. In the News Today - December 5, 2019

    December 05, 2019 | News

    Plaintiffs' Lawyers Lobbying Congress As PFAS Debate Heats Up; Judge Says "Pay To Play" Must Stay Out of Securities Litigation ... Read More

  4. Federal Judges Take on Securities Lawyers' Mootness Fees Racket

    November 08, 2019 | Blogs

    The Trial Lawyers Chafe at the Challenge to Their "Cozy Game"... Read More

  5. "End Attorney Fee Trophy Hunting In Securities Litigation"

    November 05, 2019 | News

    A former commissioner with the U.S. Securities and Exchange Commission (SEC) said in an op-ed that policymakers must end the "big-game hunt approach by plaintiffs lawyers" who aim for big mootness fees in securities litigation. ... Read More

  6. Securities Plaintiffs' Lawyers Try To Defend "Racket"

    October 22, 2019 | News

    A group of plaintiffs' lawyers filed a brief before the Seventh Circuit to defend a practice that some judges have called a "racket," Alison Frankel reports in Reuters.... Read More

  7. "Blackmail"-Style Securities Lawsuits Continue Unabated, Author Says

    October 08, 2019 | News

    Kevin LaCroix, author of the D&O Diary, said the "extraction of blackmail payment" by plaintiffs' lawyers via mootness fees in securities lawsuits "continues unabated."... Read More

  8. In the News Today - September 19, 2019

    September 19, 2019 | News

    ILR COO Harold Kim on WGN Radio To Talk About Illinois' Lawsuit Climate Ranking; Average Number of Lawsuits Per Merger Rose In 2018... Read More

  9. Another Judge Rejects Merger Objection Securities Lawsuit

    September 06, 2019 | News

    A Delaware federal judge rejected a merger objection lawsuit because it wouldn't have created a "substantial benefit" to the shareholders, D&O Diary reports.... Read More

  10. Securities Class Action Filings Remain at High Tide

    September 03, 2019 | News

    The first half of 2019 continued the heightened pace of federal court securities class actions with 199 cases filed, signaling a year-end total of around 400 such lawsuits... Read More