Limiting Damages and Suing The Government

(1) The National Law Journal (Sept. 22 edition) has an interesting column on the issue of securities class action damages. Professor Adam Pritchard (U. Mich.) argues that the fundamental flaw in the system is the failure to measure damages by the defendant’s gain, rather than the plaintiff’s loss.

Quote of note: “Measuring damages by the defendant’s gain would accomplish two things. First, it would scale back the stakes in securities class actions. . . . Second, measuring damages by the defendant’s benefit would focus deterrence on the executives who actually lied.”

(2) The New York Law Journal (Sept. 22 edition) has an article discussing whether the government’s role in the credit crisis will limit the scope of private litigation.

Quote of note: “AIG, for instance, was already facing a number of shareholder suits before the government stepped in. The government’s acquisition of an 80 percent interest in the insurer through its $85 billion loan then squeezed shareholders further. How a government-controlled AIG will deal with securities class actions remains uncertain.”

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