Abstract

http://ssrn.com/abstract=2109739
 


 



SEC Investigations and Securities Class Actions: An Empirical Comparison


Stephen J. Choi


New York University School of Law

Adam C. Pritchard


University of Michigan Law School

June 3, 2015

U of Michigan Law & Econ Research Paper No. 12-022
NYU Law and Economics Research Paper No. 12-38

Abstract:     
Using actions with both an SEC investigation and a class action as our baseline, we compare the targeting of SEC-only investigations with class action-only lawsuits. Looking at measures of information asymmetry, we find that investors in the market perceive greater information asymmetry following the public announcement of the underlying violation for class action-only lawsuits compared with SEC-only investigations. Turning to sanctions, we find that the incidence of top officer resignation is greater for class action-only lawsuits relative to SEC-only investigations. Our findings are consistent with the private enforcement targeting disclosure violations at least as precisely (if not more) than SEC enforcement.

Number of Pages in PDF File: 37

Keywords: fraud, SEC Enforcement, securities class actions

JEL Classification: K22, K42


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Date posted: July 16, 2012 ; Last revised: June 10, 2015

Suggested Citation

Choi, Stephen J. and Pritchard, Adam C., SEC Investigations and Securities Class Actions: An Empirical Comparison (June 3, 2015). U of Michigan Law & Econ Research Paper No. 12-022; NYU Law and Economics Research Paper No. 12-38. Available at SSRN: http://ssrn.com/abstract=2109739 or http://dx.doi.org/10.2139/ssrn.2109739

Contact Information

Stephen J. Choi
New York University School of Law ( email )
40 Washington Square South
New York, NY 10012-1099
United States
Adam C. Pritchard (Contact Author)
University of Michigan Law School ( email )
625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4048 (Phone)
734-647-7349 (Fax)

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