A former commissioner with the U.S. Securities and Exchange Commission (SEC) said in an op-ed that policymakers must end the “big-game hunt approach by plaintiffs lawyers” who aim for big mootness fees in securities litigation.
Paul Atkins specifically pointed to Delaware courts, which he says have “for years been the plaintiffs bar’s happy hunting ground” for these fees, which lawyers get from companies in exchange for dismissing lawsuits over disclosures about mergers and acquisitions (though he notes that state courts there have “cracked down on the abuse”). However, a recent ruling from one Delaware-based federal judge took what Atkins calls a “no benefit-no lawyer fees” approach—since the disclosures wouldn’t benefit the class, the lawyers shouldn’t get paid.
Atkins says this ruling should be applied across the country as securities litigation continues to rise. He called on the SEC and Congress for better oversight and new standards “to eliminate abusive practices used by plaintiffs lawyers who have used Delaware as their private litigation reserve.”