Business, Management and Accounting
4 years ago

Lead plaintiff provision increases investor control over securities fraud class actions.

Washington University law review
Do Institutions Matter? The Impact of the Lead Plaintiff Provision of the Private Securities Litigation Reform Act
Stephen J. Choi, Adam C. Pritchard, Jill E. Fisch

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The lead plaintiff provision of the Private Securities Litigation Reform Act aimed to give institutional investors more control over securities fraud class actions. The provision was meant to encourage institutions to lead lawsuits, negotiate with class counsel, and oversee the legal process. A study compared cases before and after the provision to see if it achieved these goals. The findings show that the lead plaintiff provision did increase institutional involvement in securities fraud cases and led to more active oversight of class counsel.