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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.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.