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.

01/01/2019

Suggested Resources

Research
  • ILR Briefly: An Update on Securities Litigation

    ILR Briefly: An Update on Securities Litigation

    March 25, 2020

    The first issue of ILR Briefly focuses on the securities litigation crisis: how record-high filings have become the new normal, how the Supreme Court's Cyan decision is creating real-world consequences for investors, how Coronavirus claims will likely be the new major front in event-driven litigation, and why not all lawyers can be trusted to protect class interests when millions of dollars in fees are at stake. Read More

  • 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

All Results for Securities Litigation Reform

  1. ILR Briefly: An Update on Securities Litigation

    March 25, 2020 | Research

    The first issue of ILR Briefly focuses on the securities litigation crisis: how record-high filings have become the new normal, how the Supreme Court's Cyan decision is creating real-world consequences for investors, how Coronavirus claims will likely be the new major front in event-driven litigation, and why not all lawyers can be trusted to protect class interests when millions of dollars in fees are at stake.... Read More

  2. The Possible Impact of COVID-19 on D&O Claims

    March 20, 2020 | News

    While prior outbreaks such as the SARS, MERS and Ebola outbreakscaused no D&O claims, COVID-19 continues to be different according to a report in D&O Diary. ... Read More

  3. From the President's Desk: State Street Case Reveals Ugly Truth Behind Massive Litigation

    March 13, 2020 | Blogs

    Last week, we talked about how legal fees are threatening the progress made in the major opioid multidistrict litigation proceedings. Today, let's look at another egregious example of legal fee excess that derailed litigation: the State Street case.... Read More

  4. From the President's Desk: State Street Case Reveals Ugly Truth Behind Massive Litigation

    March 06, 2020 | News

    Last week, we talked about how legal fees are threatening the progress made in the major opioid multidistrict litigation proceedings. Today, let's look at another egregious example of legal fee excess that derailed litigation: the State Street case.... Read More

  5. Directors and Officers Insurance Costs Continue to Increase

    March 05, 2020 | News

    The impact of losses and increasing concern about litigation have led to price increases for many D&O insurance buyers.... Read More

  6. In the News Today - January 30, 2020

    January 30, 2020 | News

    Report Finds State Securities Litigation Is Increasing... Read More

  7. 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

  8. 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

  9. 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

  10. 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