The American Lawyer looks at the future of securities class actions (from the plaintiffs’ perspective) in its Fall 2003 special edition on litigation. [Unfortunately, the website currently does not have the article posted.] The article focuses on the lead plaintiff provisions of the Private Securities Litigation Reform Act of 1995 (“PSLRA”) and discusses, in depth, the growing role of public pension funds in assuming the leadership of large suits. A number of issues are touched upon, including the effectiveness of the PSLRA, how plaintiffs’ firms attract public pension fund clients, and the statistical trends in this area of the law. Simply put, it’s a must-read article.
Quote of note: “Some thought that major mutual funds would consistently serve as lead plaintiff. The haven’t. And some thought that the number of class actions would steadily decline. Wrong again. But eight years after [the PSLRA’s] passage, the act is making good on its promise to involve institutions. Instead of professional institutional investors, however, its primarily public pension funds that are serving as lead plaintiffs in megaclass actions.”
Quote of note II: “What will be the effect of the Sarbanes-Oxley Act of 2002 and the myriad regulatory corporate governance changes? Will they stifle corporate fraud or will the new causes of action spawn more suits? The early indicators don’t suggest much change in any direction. A recent study by NERA Consulting shows little uptick since the blow-up of Enron and the passage of Sarbanes-Oxley. No increase. No decrease. Just a steady stream of suits.”