Cutting Class Action Agency Costs: Lessons from the Public Company

Class action reform could take a lesson from U.S. public company governance, I argue in a new working paper, available here.

Class actions and public companies have a lot in common.  Class action scholars routinely explain problems in class action litigation, such as excessive attorneys’ fees and settlements that shortchange the class, as “agency costs.”[1]  Corporate law scholars frame the problems that beset the governance of U.S. public companies in the same terms.  It is also the case that the agency relationship between class counsel and class members looks similar to that between executives and shareholders in U.S. … Read more

Calculating SEC Whistleblower Awards: A Theoretical Approach

On October 23, the Securities and Exchange Commission is scheduled to vote on whether to adopt proposed amendments to the rules governing its whistleblower bounty program.  The most controversial proposed amendments are to Rule 21F-6, which governs the way the SEC calculates the amount of an award. In a recent paper, available here, I analyze the wisdom of the proposed amendments to Rule 21F-6.  My take: They are wise, but incomplete.

Under the Dodd-Frank Act, SEC whistleblowers are entitled to between 10 and 30 percent of the money collected by the SEC in an enforcement action that the whistleblower’s … Read more

The Shifting Purpose of the Rule 10b-5 Private Right of Action

Private Rule 10b-5 lawsuits have inspired volumes of academic literature, much of it focused on the suits’ social benefits (or lack thereof, depending on the author’s perspective). In a chapter for the forthcoming Research Handbook on Representative Shareholder Litigation, I introduce readers to this aspect of the Rule 10b-5 literature, which is best understood in light of the historical and doctrinal evolution of Rule 10b-5.

In its early years, the implied right of action under Rule 10b-5 operated as essentially a federalized version of the common law fraud cause of action focused on securities transactions. The service of process provisions … Read more

How the SEC’s New Whistleblower Program Changes the Securities Fraud Class Action Debate

The SEC’s new whistleblower bounty program promises financial rewards to eligible individuals who voluntarily provide the agency with original information about securities law violations, if that information leads to an enforcement action resulting in $1 million or more in sanctions.  The program has spawned considerable debate, but the controversy thus far has been focused on the program’s insular design—with many criticizing, for example, the SEC’s choice to allow whistleblowers who bypass their internal compliance departments to recover bounties.

In a new article, Better Bounty Hunting: How the SEC’s New Whistleblower Program Changes the Securities Fraud Class Action DebateI … Read more

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Editor's Tweet: Prof. Amanda Rose of Vanderbilt Law on How the SEC's New Whistleblower Program Changes the Securities Fraud Class Action Debate