In the 1990s, most securities class action litigation took the form of so-called “stock-drop” suits. Alleging little more than an unexpected drop in company stock, plaintiffs’ lawyers were racking up serial settlements from companies who wanted to avoid expensive litigation. Congress attempted to put a stop to this with the Private Securities Litigation Reform Act of 1995—but the plaintiffs’ bar found a workaround.
The Institute for Legal Reform conducts regular research on securities class actions to better understand emerging trends on the legal reform front. According to the most current research, securities class actions are experiencing explosive growth and will continue to inflate. For more on the topic, delve into the recently released Joint Business Statement on the Proposal on Representative Actions (Collective Redress).