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Securities Law Commons

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Full-Text Articles in Securities Law

Why Governance Might Work In Mutual Funds, Michael C. Schouten May 2011

Why Governance Might Work In Mutual Funds, Michael C. Schouten

Michigan Law Review First Impressions

The Supreme Court's recent decision in Jones v. Harris Associates L.P. has highlighted the potential for agency conflicts in mutual funds, whose advisors have the de facto power to award themselves high fees. While the surrounding debate has focused on the extent to which market competition replaces the need for fee litigation, there appears to be a growing consensus that fund governance, through the use of voice, is unlikely to be effective. The use of voice is commonly said to be hampered by collective action problems. More recently, scholars have argued that it is further weakened by the easy availability …


The Price Of Pay To Play In Securities Class Actions, Adam C. Pritchard, Stephen J. Choi, Drew T. Johnson-Skinner Jan 2011

The Price Of Pay To Play In Securities Class Actions, Adam C. Pritchard, Stephen J. Choi, Drew T. Johnson-Skinner

Articles

We study the effect of campaign contributions to lead plaintiffs—“pay to play”—on the level of attorney fees in securities class actions. We find that state pension funds generally pay lower attorney fees when they serve as lead plaintiffs in securities class actions than do individual investors serving in that capacity, and larger funds negotiate for lower fees. This differential disappears, however, when we control for campaign contributions made to offcials with infuence over state pension funds. This effect is most pronounced when we focus on state pension funds that receive the largest campaign contributions and that associate repeatedly as lead …