Back on June 28th our own Ted Frank testified in hearings before the Capital Markets, Insurance, and Government Sponsored Enterprises Subcommittee of the House Financial Services Committee on H.R. 5491. At the time, he noted that the bill had received little media attention.
That seems to be changing, as popular pundit Robert Novak noted over the weeked the partisan fireworks that erupted at that hearing when the Democratic members (Barney Frank and Paul Kanjorski) tried to move the hearing into executive session in order to keep the debate out of the public spotlight.
H.R. 5491 would change the law governing securities class action litigation by (a) creating a quasi-loser-pays rule in which a prevailing defendant's attorneys' fees could be shifted to the plaintiffs' counsel if the plaintiff's position was not "substantially justified", (b) requiring plaintiffs and their attorneys to sign conflicts-of-interest disclosures that could lead to the disqualification of some plaintiffs' counsel and (c) authorizing courts to impose a competitive bidding process for the selection of lead plaintiffs' counsel.
One can only guess why Frank and Kanjorski would want to stifle a public debate on this subject. As Novak noted, in recent years, Milberg Weiss donated $2.78 million to Democratic candidates and $22,000 to Republicans.
Perhaps Ted's persuasive testimony was the kindling that sparked the firestorm.
California Judge Vaughn Walker's also spoke in support of the bill, but Duke Law professor James Cox voiced a contrary opinion.