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. Chamber Responds to Indictment of Milberg Weiss Law Firm

    May 18, 2006 | Press Release

    WASHINGTON, D.C. - The president of the U.S. Chamber's Institute for Legal Reform (ILR), Lisa Rickard, issued the following statement in response to today's indictment of the law firm Milberg Weiss and a number of its partners by the U.S. Attorney.s office: "The Chamber has long been concerned about the questionable practices of Milberg Weiss and has repeatedly sought an investigation into their activities by the Federal Government," said Ms. Rickard. ... Read More

  2. Securities Class Action System In Need of Repair

    February 15, 2006 | Press Release

    WASHINGTON, D.C. - The securities class action litigation system is not working the way Congress intended it to work when it passed the Private Securities Litigation Reform Act (PSLRA) of 1995, according to a paper released today by the U.S. Chamber Institute for Legal Reform (ILR). "The PSLRA, which was designed to protect the average American investor, has been subverted by entrepreneurial plaintiffs' lawyers," said Thomas J. Donohue, President and CEO of the U.S. Chamber of Commerce. "The system needs to be repaired." ... Read More

  3. The Economic Realities of Securities Class Action Litigation

    October 26, 2005 | Research

    Unlike conventional fraud claims, which seek to disgorge wrongful gains from the perpetrator of the fraud, securities class action claims usually entail situations in which the supposed illicit gains are received by innocent investors, who sold securities at allegedly inflated prices, rather than by the company officials who allegedly committed the fraud.... Read More

  4. Chamber Report: Securities Class Action System Out of Kilter

    October 25, 2005 | Press Release

    WASHINGTON, D.C. - A U.S. Chamber Institute for Legal Reform (ILR) study of the securities class action litigation system shows that there is a substantial disconnect between what the system is supposed to do in terms of compensating investors and what it actually does. The report was released today as part of ILR's 6th Annual Legal Reform Summit. ... Read More

  5. Institute for Legal Reform Calls for SEC Review of Law Firm

    March 09, 2004 | Press Release

    WASHINGTON, D.C. - The United States Chamber of Commerce's Institute for Legal Reform asked the Securities and Exchange Commission to investigate certain short sellers and the Milberg Weiss law firm, following a recent California ruling that the firm's clients appeared to have participated in a fraud on shareholders. The court ruling removed these short sellers as lead plaintiffs in a class action. ... Read More