Despite the recent downturn in securities class action filings, securities litigation reform is a hot topic. On the heels of the Committee on Capital Markets Regulation’s interim report, Mayor Bloomberg and Senator Schumer have issued “Sustaining New York’s and the US’ Global Financial Services Leadership.” The two reports cover much of the same ground, but there are differences in their securities litigation reform recommendations. After noting that “if economic conditions were to decline in the future, than a strong resurgence in [securities class actions] would likely follow,” the Bloomberg/Schumer report recommends (pp. 102-104):
(1) Limit the liability of foreign companies with U.S. listings to damages that are proportional to their degree of exposure to the U.S. markets. (SEC)
(2) Impose a cap on auditors’ liability. (SEC)
(3) Encourage arbitration as an alternative dispute resolution system for securities grievances. (SEC)
(4) Allow parties in federal securities actions to appeal interlocutory judgments (e.g., the denial of a motion to dismiss) immediately to the circuit courts. (Congress)
Coverage of the report can be found in the Financial Times (subscrip. req’d), Wall Street Journal (subscrip. req’d), and the New York Times. D&O Diary has a comprehensive summary.
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