Business, Management and Accounting
4 years ago

Private Securities Reform Act Screens Out Weak Fraud Claims

Journal of Empirical Legal Studies
The Screening Effect of the Private Securities Litigation Reform Act
Stephen J. Choi, Karen K. Nelson, Adam C. Pritchard

Paper Summary

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The Private Securities Litigation Reform Act (PSLRA) changed how securities fraud cases are handled. It either reduced weak lawsuits or made it harder to file strong ones. Claims without solid proof of fraud were less likely to be filed under the PSLRA. This screening effect was more noticeable for cases lacking clear evidence of wrongdoing.