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Does The Plaintiff Matter? An Empirical Analysis Of Lead Plaintiffs In Securities Class Actions, Randall Thomas, James D. Cox
Does The Plaintiff Matter? An Empirical Analysis Of Lead Plaintiffs In Securities Class Actions, Randall Thomas, James D. Cox
Vanderbilt Law School Faculty Publications
The PSLRA's lead plaintiff provision was adopted in order to encourage large shareholders with claims in a securities fraud class action to step forward to become the class' representative. Congress' expectation was that these investors would actively monitor the conduct of a securities fraud class action so as to reduce the litigation agency costs that may arise when class counsel's interests diverge from those of the shareholder class. Proponents of the provision claimed that there would be substantial benefits from having institutional investors serve as lead plaintiffs. Now, ten years later, the claim that the lead plaintiff is a more …
The Allocation Problem In Multiple-Claimant Representations, Paul H. Edelman, Richard A. Nagareda, Charles Silver
The Allocation Problem In Multiple-Claimant Representations, Paul H. Edelman, Richard A. Nagareda, Charles Silver
Vanderbilt Law School Faculty Publications
Multiple-claimant representations-classa ctions and other group lawsuits-pose two principal-agent problems: Shirking (failure to maximize the aggregate recovery) and misallocation (distribution of the aggregate recovery other than according to the relative value of claims). Clients have dealt with these problems separately, using contingent percentage fees to motivate lawyers to maximize the aggregate recovery and monitoring devices (disclosure requirements, client control rights, and third-party review) to encourage appropriate allocations. The scholarly literature has proceeded on the premise that monitoring devices are needed to police misallocations, because the fee calculus cannot do the entire job. This paper shows that this premise is mistaken …