Does the outcome of a securities class action hinge on which shareholder firm is handling the case? Not most of the time, according to the latest draft of an article for the NYU Law & Economics Research Paper Series. In Paying for Performance? Attorneys Fees in Securities Fraud Class Actions, law professors Adam Pritchard of the University of Michigan, Stephen…
… Specifically, do illegally informed traders rationally internalize legal risks? If so, is this process reflected in their trades and prices? While addressing these issues is vital to assess insider trading regulations’ effectiveness, one faces a formidable empirical challenge: neither private information nor legal risks are readily observable. To enhance our understanding, we contribute in three ways: We manually collect…
The United States Congress requires the Securities and Exchange Commission (SEC) to deter market manipulation, such as insider trading, which it achieves through calibrated remedies for harmful behavior. As the SEC stated in its 2015 annual report regarding insider trading, rigorous enforcement actions send “a strong message of deterrence to would-be violators.” Despite the SEC’s commitment to fair markets and…
To try to derive the kinds of information that would allow lead plaintiffs and courts to fulfill their intended roles, the authors reviewed case records of thousands of cases, as a way to identify important indica of law firm performance as well as to extract detailed information about the fee awards. With the benefit of this information, the authors —…
We show that exchange traded funds (ETFs) are used in a new form of insider trading known as “shadow trading.” Our evidence suggests that some traders in possession of material non-public information about upcoming M&A announcements trade in ETFs that contain the target stock, rather than trading the underlying company shares, thereby concealing their insider trading. Using bootstrap techniques to…
Mr. Dyck is a professor of finance at the University of Toronto, who just published a provocative new study on the pervasiveness of corporate fraud. The study has been passed around in the world of academia in recent weeks, and has become a fascination among general counsels, corporate leaders and investors. It suggests that only about a third of frauds…
More securities class action lawsuits were filed in 2017 than in any year since 2001, in significant part because of the substantial number of federal court merger objection lawsuit filings during the year. But even disregarding the merger suits and looking only at the traditional securities lawsuits, the number of lawsuit filings was at the highest level since at least…
More securities class action lawsuits were filed in 2017 than in any year since 2001, in significant part because of the substantial number of federal court merger objection lawsuit filings during the year. But even disregarding the merger suits and looking only at the traditional securities lawsuits, the number of lawsuit filings was at the highest level since at least…
In an interesting post on his D&O Discourse blog earlier this fall (here), Doug Greene of the Lane Powell law firm raised the question whether there is a securities litigation storm brewing. Citing a number of different factors ranging from the SEC whistleblower program to changes in the plaintiffs’ bar, Greene suggested that we could be headed toward a significantly…
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