Thank you for your kind invitation to testify today about abuses in securities class action litigation and on H.R. 5491, the proposed Securities Litigation Attorney Accountability and Transparency Act.
The problem of abuses by plaintiffs’ attorneys in securities class action litigation have come to the forefront because of the recent indictment of the Milberg Weiss law firm. But I am reminded of what Michael Kinsley once said: "The scandal isn't what's illegal; the scandal is what's legal." I, along with many academics, believe that the same is true with much securities class action litigation.
But while there are areas of securities class action reform that are unavoidably divisive, this bill should not be one of them. The small steps taken by this bill are uncontroversial means to reduce corruption in the securities litigation process, benefiting shareholders and plaintiffs’ law firms that play by the rules. I would like to see Congress to take more decisive action to protect investors and the American public from problems created by earlier Congressional action and judicial interpretations of these statutes, but this bill is a step in the right direction.
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