Vanderbilt Law Review

First Page



In 1995, my colleague John Beckerman and I had an experience shared by very few legal academics. We mailed the galley proofs of an article that we had written to the staff of a Senate Committee and then saw the Committee, the Senate, and the full Congress enact into law a bill that included all of the recommendations in our article. The article was Let the Money Do the Monitoring: How Institutional Investors Can Reduce Agency Costs in Securities Class Actions; the law was the Private Securities Litigation Reform Act of 1995 ("PSLRA"). The relevant provisions of the PSLRA, now generally known as "the lead plaintiff provisions," prescribe procedures for the selection of lead plaintiffs and lead counsel in securities class actions.

For years, I have thought about writing something that sets forth the unique history of the lead plaintiff provisions, describes how closely developments pursuant to those provisions have met our expectations and what surprises have occurred, and assesses how well those provisions have worked in a "real world" setting. The invitation to participate in this Symposium, held little more than a decade after the lead plaintiff provisions went into effect, provides me with the opportunity to do just that.

This Essay has six parts. Part I describes the questions that led Professor Beckerman and me to undertake research concerning the dynamics of securities class actions and summarizes our findings and recommendations. Part II sets forth the story of how our recommendations came to be enacted into law. Part III describes post- enactment developments that have been consistent with our expectations, while Part IV describes post-enactment developments that we did not anticipate. Part V contains some thoughts about whether, had Congress followed a more deliberative process before enacting our recommendations into law, it could have come up with a better approach for organizing the process by which lead plaintiffs and lead counsel are appointed in securities class actions. Part VI sets forth a few recommendations for change.