The Impact Of The PSLRA

Stephen Choi, a law professor at Berkeley, has published an article entitled “Do the Merits Matter Less After the Private Securities Litigation Reform Act?” Choi finds that the PSLRA has reduced nuisance litigation, but may discourage some meritorious suits.

Notably, Choi’s research suggests that two classes of cases are less likely to be brought post-PSLRA: (1) cases against “companies engaged in smaller offerings or with a lower secondary market volume (and therefore reduced potential damage awards);” and (2) cases against “companies engaged in fraud where no hard evidence of the fraud is announced pre-filing of a suit.” Choi concludes that the PSLRA “has operated less like a selective deterrence against fraud and more as a simple tax on all litigation (including meritorious suits).”

Leave a comment

Filed under All The News That's Fit To Blog

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s