News & Events

News & Events

1.3.2017

Three Key Securities Litigation Developments of 2016

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Doug Greene authored an article in Law360, published December 23, titled “3 Key Securities Litigation Developments of 2016.” In the article, Greene outlines what he sees as the key developments that have the greatest potential to significantly increase or decrease the frequency or severity of claims against public companies and their directors and officers.

The Private Securities Litigation Reform Act’s lead plaintiff process incentivized plaintiffs’ firms to recruit institutional investors to serve as plaintiffs. For the most part, institutional investors, whether smaller unions or large funds, have retained the more prominent plaintiffs firms, and smaller plaintiffs firms have been left with individual investor clients who usually can’t beat out institutions for the lead-plaintiff role. At the same time, securities class action economics tightened in all but the largest cases. Dismissal rates under the Reform Act are pretty high, and defeating a motion to dismiss often requires significant investigative costs and intensive legal work. And the median settlement amount of cases that survive dismissal motions is fairly low. These dynamics placed a premium on experience, efficiency, and scale. Larger firms filed the lion’s share of the cases, and smaller plaintiffs firms were unable to compete effectively for the lead plaintiff role, or make much money on their litigation investments.