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"Securities regulation: end the dual approach"



Lyle Roberts, of 10b-5 Daily blog fame, has published an opinion piece in the National Law Journal on the SEC's relatively new role in arranging compensation for investors. An excerpt:

In the heady legislative rush surrounding the passage of Sarbanes-Oxley, the prospect of having both the SEC and private plaintiffs' attorneys work to compensate injured investors probably seemed like a great idea. Multiple investigations and lawsuits over the same conduct, however, waste scarce resources that otherwise could go to investor compensation.

Two areas are particularly problematic: corporate defense costs and plaintiffs' attorney fees. The SEC has no power to stop a private lawsuit from proceeding while it conducts its own civil action. Accordingly, a corporation must battle on two fronts, with all of the attendant defense costs. Meanwhile, the private plaintiffs' attorneys may be able to free-ride on the SEC's efforts and still get paid high contingency fees.

 

 


Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.