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. NERA Predicts Nine Percent Increase in Total Securities Lawsuit Filings This Year

    April 23, 2019 | News

    A new report from the NERA Economic Consulting group on the securities class action filings from the year's first quarter predicts a nine percent increase in total filings for all of 2019.... Read More

  2. In the News Today - April 18, 2019

    April 18, 2019 | News

    Accounting-Related Securities Lawsuits On The Rise... Read More

  3. Securities Lawsuits Are Increasing D&O Insurance Premiums

    April 16, 2019 | News

    According to the Wall Street Journal, the record number of securities class action lawsuit filings is increasing the cost of D&O insurance for foreign businesses in the U.S. market.... Read More

  4. In the News Today - April 15, 2019

    April 15, 2019 | News

    Growing Number of Securities Lawsuits Boosting Prices For D&O Insurance; New Tennessee Law A "Win for Consumers And For Companies"... Read More

  5. Oral Arguments Begin in Key Securities Case Before SCOTUS

    April 15, 2019 | News

    The U.S. Supreme Court heard oral arguments today in a securities case that could determine the future of the private right of action in merger and acquisitions cases, Law360 reports.... Read More

  6. In the News Today - March 27, 2019

    March 27, 2019 | News

    Research Finds Securities Settlement Sizes Are Increasing... Read More

  7. ILR Research Review - Spring 2019

    March 21, 2019 | Research

    The rising pace of private securities class actions could present a threat to the health of U.S. capital markets, while the ongoing wave of municipality lawsuits stands in the way of global settlements and undermines the authority of lawmakers and state attorneys general. White papers covered in this edition of the ILR Research Review detail the causes and current state of these litigation trends, along with a full suite of solutions to address them.... Read More

  8. In the News Today - March 20, 2019

    March 20, 2019 | News

    Businesses Call for Oversight of Proxy Firms; "The Post-Cyan Spike In State Securities Act Filings"... Read More

  9. Securities Class Actions Are on The Rise; Here's How to Contain Them

    March 07, 2019 | Blogs

    Securities class action filings skyrocketed in 2018 to 420 cases-doubling the average of the prior 20 years. A new report from the U.S. Chamber Institute for Legal Reform (ILR) shows how the trial bar fuels this trend, recruiting "professional plaintiffs" to bring cases, earning excessive fees, and submitting repeat "frequent filer" claims that are commonly dismissed, imposing huge costs on companies. ... Read More

  10. In the News Today - March 7 , 2019

    March 07, 2019 | News

    2nd Circuit Tosses "Creative" Securities Suit Against Cigna; Pa. Supreme Court Warns Against Questionable Evidence in Asbestos Cases... Read More