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

  • 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. "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

  2. 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

  3. "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

  4. 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

  5. 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

  6. 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

  7. Securities Class Action Filings At "Near-Record Pace"

    August 01, 2019 | News

    A new report from Cornerstone Research shows that securities class action lawsuit filings were at a "near-record pace," D&O Diary reports.... Read More

  8. New Securities Litigation Report Exposes the Plaintiffs' Bar's Game of Padding its Pocketbook with Investors' Money

    July 26, 2019 | Blogs

    A securities plaintiffs' lawyer could hit it big by buying a lottery ticket, but the odds of a win are long. A new study suggests they're better off filing as many suits as they can and creating unnecessary work to defend massive fee requests. It turns out the odds of a windfall there are as sure-fire as Derek Jeter making the Hall of Fame. ... Read More

  9. In the News Today - July 25, 2019

    July 25, 2019 | News

    Plaintiffs' Firms Fight For Top Spot In Boeing Securities Case... Read More

  10. UK Becoming a "Preferred Jurisdiction" For Securities Litigation

    July 24, 2019 | News

    Two Dechert law firm partners wrote in The Times of London that the United Kingdom is quickly becoming a "preferred jurisdiction" for third party funding-fueled securities litigation.... Read More