While prior securities fraud class actions studies under the PSLRA have found that class counsel’s fee requests and awards are lower in cases in which the lead plaintiff is a public institutional investor, prior work has not explained the mechanism that underlies this reduction in agency costs. Specifically, do public funds negotiate better terms with their chosen counsel ex ante than do other lead plaintiffs? Or are judges responsible for the reductions in agency costs, suggesting that the PSLRA...
Securities class action lawsuits have a better chance of going the distance with judges when they are led by institutional investors, a study has found.
Between 1996 and 2010, judges dismissed 35% of cases led or co-led by an institutional investor, and 42% that weren't. Stanford University's law school and New York-based Cornerstone Research collaborated on the data as part of their Securities Class Action Clearinghouse project.
Having institutional investors on the dockets also bodes well...
