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
  • 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. 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

  2. New Report: Securities Plaintiffs' Attorneys May Be Inflating Hours

    July 19, 2019 | News

    A new report released by three law professors found that plaintiffs' attorneys in securities class actions may be incentivized to inflate their billable hours to justify large fee awards, Law360 reports.... Read More

  3. In the News Today - July 16, 2019

    July 16, 2019 | News

    "Collective Investor Actions" On The Rise... Read More

  4. In The News Today - July 3, 2019

    July 03, 2019 | News

    "The M&A Class Action Racket: An End in Sight?"... Read More

  5. The M&A Class Action Racket: An End in Sight?

    July 02, 2019 | Blogs

    In late June, a federal judge in Illinois delivered an extraordinary opinion. U.S. District Judge Thomas Durkin threw out a merger and acquisition (M&A) objection lawsuit settlement and ordered the plaintiffs' lawyers to return hundreds of thousands of dollars in fees. He also said that the case should have been dismissed before it ever got off the ground, and that it was time to end the "racket" of "worthless" M&A lawsuits.... Read More

  6. In the News Today - July 1, 2019

    July 02, 2019 | News

    New Zealand Law Commission to Review TPLF; Securities Lawsuit Filings Continue to Rise... Read More

  7. Is The "Beginning Of The End" Coming For M&A Litigation "Racket?"

    June 28, 2019 | News

    Kevin LaCroix of the D&O Diary writes that the "abusive litigation racket" spotlighted by a recent Illinois decision on a merger objection lawsuit might be coming to an end.... Read More

  8. Attorney Says "Stupid Mistake" Led To State Street Overbilling

    June 27, 2019 | News

    The managing partner at Boston-based Thornton Law Firm said he made a "stupid mistake" by signing a false declaration of hours worked in the now-infamous State Street securities case, Law360 reports. ... Read More

  9. Time To End "Racket" of "Worthless" M&A Securities Lawsuits, Judge Says

    June 26, 2019 | News

    U.S. District Judge Thomas Durkin ordered plaintiffs' attorneys to return over $322,000 in fees to the company they sued because their complaints should have been tossed from court, Reuters reports.... Read More

  10. In the News Today - June 20, 2019

    June 20, 2019 | News

    "Amid a Flood of Securities Class-Actions, the Supreme Court Must Act"... Read More