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Vanderbilt Law Review

First Page

1817

Abstract

This Article argues that the time has come to modernize the distribution of settlement funds in securities class actions. There are two possible ways to modernize this process. The first approach relies on market innovation, proposing an automated system that collects the relevant transaction data from individual banks and brokers. Claims administrators could then use this data to calculate every class member’s pro rata share of the settlement and send them their money. The second approach relies on regulatory innovation using the SEC’s Consolidated Audit Trail, which, once it is up and running, will contain a complete record of nearly all securities transactions in the financial markets. The Consolidated Audit Trail will contain exactly the type of data needed to automate the distribution of settlement funds in securities class actions. Neither of these solutions is turnkey, and both would require the cooperation of courts and lawmakers, but they have the potential to revolutionize how investors recover money lost to corporate fraud.

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