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. 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

  2. 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

  3. In the News Today - January 30, 2020

    January 30, 2020 | News

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

  4. 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

  5. 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

  6. 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

  7. 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

  8. "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

  9. 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

  10. "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