{"title":"Money for Nothing…: A Case Study of Financial Class Action Litigation","authors":"J. Jackwerth","doi":"10.2139/SSRN.2179544","DOIUrl":"https://doi.org/10.2139/SSRN.2179544","url":null,"abstract":"The class action law suit Annie Adams et al - Southern New York, 12-cv-07461, claims that banks increased 6-months USD LIBOR rates on first business days of a month in order to take advantage of mortgage holders due to inflated reset rates on the mortgages. The claims do not seem to be supported by the data. While some point estimates are correct as claimed in the law suit, the claimants do not account for random fluctuation in the LIBOR rates. Standard statistical analysis suggests that the observed differences in means are well within typical fluctuations in the data. Moreover, as some people argue that banks were artificially lowering LIBOR rates in order to make them look financially stronger in the crisis of 2007/2008, that effect would actually help the claimants as it would lower their reset mortgage rates.","PeriodicalId":273295,"journal":{"name":"CGN: Class Actions in Corporate & Securities Laws (Sub-Topic)","volume":"32 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116211181","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Have Institutional Fiduciaries Improved Securities Class Actions? A Review of the Empirical Literature on the PSLRA's Lead Plaintiff Provision","authors":"Michael Perino","doi":"10.1017/CBO9781139565516.015","DOIUrl":"https://doi.org/10.1017/CBO9781139565516.015","url":null,"abstract":"In 1995, Congress substantially revamped the governance of securities class actions when it created the lead plaintiff provision as part of the Private Securities Litigation Reform Act. This paper reviews the empirical literature evaluating that provision. The story that emerges from these studies is of a largely successful statutory innovation that has markedly improved the conduct of these cases. There is little doubt that passage of the PSLRA spurred institutions to become more active in securities class actions. Overall, the results of that participation are positive. Existing studies demonstrate that cases with institutional lead plaintiffs settle for more and are subject to a lower rate of dismissal than cases with other kinds of lead plaintiffs, although some questions remain regarding whether these results are driven by institutional self-selection of higher quality cases. One study has shown that institutional participation is correlated with at least some improvements in corporate governance. Institutional lead plaintiffs have had their largest impact on attorneys’ fees. Not only is institutional participation correlated with lower fees and greater attorney effort, but there is evidence to suggest that institutions have created an economically significant positive externality - a reduction in fee awards even in cases without institutional plaintiffs. Institutional participation, however, has not been an unalloyed good. Other studies suggest that institutional investors are subject to their own agency costs, particularly in the form of pay-to-play arrangements with plaintiffs’ law firms. Those arrangements appear to eliminate some of the beneficial effects associated with institutional service as lead plaintiffs.","PeriodicalId":273295,"journal":{"name":"CGN: Class Actions in Corporate & Securities Laws (Sub-Topic)","volume":"8 1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-11-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116758084","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}