The New Republic Online has a column strongly criticizing Democratic presidential contender Senator John Kerry for his vote in favor of the Private Securities Litigation Reform Act of 1995. Noting that Senator Kerry frequently talks about corporate accountability and has expressed shock over the Enron scandal, the author states: “But Kerry shouldn’t be shocked at all. Back in 1995, he backed a controversial measure that severely limited the ability of investors to sue companies engaged in fraudulent accounting practices–a legal change widely believed to have contributed to the accounting scandals of the last few years.”
The charge that the PSLRA has made it more difficult to bring securities class actions, and therefore has contributed to recent corporate scandals, is controversial. The New Republic Online column has led to a blog debate on the topic between Mickey Kaus (first item on Jan. 25) and Professor Stephen Bainbridge. What does The 10b-5 Daily think about all of this? As previously posted, the statistics appear to speak for themselves.