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 COVID-19 Series: Federal Liability Problems and Solutions

    ILR Briefly COVID-19 Series: Federal Liability Problems and Solutions

    May 07, 2020

    As the public health and economic consequences of COVID-19 continue to mount, plaintiffs' lawyers are looking for ways to expand upon their legal theories and bring opportunistic litigation. This edition of ILR Briefly explores four projected hot spots of COVID-19 litigation: exposure liability, product liability, medical malpractice, and securities litigation. The paper goes on to recommend targeted federal legislative and administrative solutions to combat abusive lawsuits in these areas and protect the economic recovery. Read More

  • ILR Briefly COVID-19 Series: Liability Overview

    ILR Briefly COVID-19 Series: Liability Overview

    April 23, 2020

    As Americans and businesses of all sizes are working together to get through the COVID-19 health crisis, plaintiffs' lawyers have already begun filing COVID-19-related lawsuits. Limiting litigation abuse is essential to making available the tools and resources needed to combat the virus, and ultimately to spurring economic recovery once the immediate health crisis has been resolved. This edition of ILR Briefly explores the current and anticipated types of litigation coming out of the COVID-19 pandemic. Read More

All Results for Securities Litigation Reform

  1. ILR Research Review Volume 7 Issue 1

    June 29, 2020 | Research

    This edition of the ILR Research Review contains research examining the myriad liability challenges flowing from COVID-19 and describing potential administrative and legislative solutions, as well as papers dedicated to the ongoing crisis in securities litigation, the growth of and problems with the third party litigation funding industry, and insights into the strategy behind trial lawyer advertising.... Read More

  2. ILR Briefly Live Event: COVID-19 State Liability Issues and Solutions

    May 13, 2020 | Video | Watch

  3. ILR Briefly COVID-19 Series: Federal Liability Problems and Solutions

    May 07, 2020 | Research

    As the public health and economic consequences of COVID-19 continue to mount, plaintiffs' lawyers are looking for ways to expand upon their legal theories and bring opportunistic litigation. This edition of ILR Briefly explores four projected hot spots of COVID-19 litigation: exposure liability, product liability, medical malpractice, and securities litigation. The paper goes on to recommend targeted federal legislative and administrative solutions to combat abusive lawsuits in these areas and protect the economic recovery.... Read More

  4. ILR Briefly COVID-19 Series: Liability Overview

    April 23, 2020 | Research

    As Americans and businesses of all sizes are working together to get through the COVID-19 health crisis, plaintiffs' lawyers have already begun filing COVID-19-related lawsuits. Limiting litigation abuse is essential to making available the tools and resources needed to combat the virus, and ultimately to spurring economic recovery once the immediate health crisis has been resolved. This edition of ILR Briefly explores the current and anticipated types of litigation coming out of the COVID-19 pandemic.... Read More

  5. In the News today - April 6, 2020

    April 06, 2020 | News

    As the number of securities class action lawsuit filings remains at historically high levels, there have been renewed calls for reform, according to a report in D&O Diary.... Read More

  6. From the President's Desk: New ILR Briefly Paper Shows Securities Class Actions on the Rise

    April 03, 2020 | Blogs

    A new Institute for Legal Reform report highlights a disturbing trend: securities class actions are on the rise.... Read More

  7. ILR Briefly: Securities Litigation Live Event

    April 01, 2020 | Video | Watch

  8. 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

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

    March 20, 2020 | News

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

  10. 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