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Do Institutional Investors Value the 10b-5 Private Right of Action? Evidence from Investor Trading Behavior Following Morrison v. National Australia Bank Ltd. (2010)


Robert P. Bartlett III


University of California, Berkeley - School of Law; University of California, Berkeley - Berkeley Center for Law, Business and the Economy

December 5, 2014

Journal of Legal Studies, Forthcoming
UC Berkeley Public Law Research Paper No. 2171006

Abstract:     
In Morrison v. National Australia Bank (2010), the U.S. Supreme Court limited investors’ ability to bring private 10b-5 securities fraud actions to cases where the securities at issue were purchased on a United States stock exchange or were otherwise purchased in the U.S. Because many foreign firms’ securities trade simultaneously on non-U.S. venues and on U.S. exchanges, institutional investors claimed after Morrison that they would look to such firms’ U.S-traded securities to preserve their rights under 10b-5. This article tests this prediction using proprietary trading data from 378 institutional investors. The analysis reveals no evidence that investors reallocated trades in cross-listed issuers to the U.S., nor did they reallocate foreign trading to cross-listed issuers that are now clearly subject to 10b-5 securities suits. This persistence in trading appears across both money managers and pension plan sponsors, notwithstanding sponsors’ more vocal criticism of Morrison and their prominence in 10b-5 litigation.

The appendices for this paper are available at the following URL: http://ssrn.com/abstract=2537125

Number of Pages in PDF File: 39

Keywords: 10b-5, securities fraud, class actions, institutional investors

JEL Classification: G15, G18, G23, G38

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Date posted: November 4, 2012 ; Last revised: December 14, 2014

Suggested Citation

Bartlett, Robert P., Do Institutional Investors Value the 10b-5 Private Right of Action? Evidence from Investor Trading Behavior Following Morrison v. National Australia Bank Ltd. (2010) (December 5, 2014). Journal of Legal Studies, Forthcoming; UC Berkeley Public Law Research Paper No. 2171006. Available at SSRN: http://ssrn.com/abstract=2171006 or http://dx.doi.org/10.2139/ssrn.2171006

Contact Information

Robert P. Bartlett III (Contact Author)
University of California, Berkeley - School of Law ( email )
215 Boalt Hall
Berkeley, CA 94720-7200
United States
510-642-6646 (Phone)
University of California, Berkeley - Berkeley Center for Law, Business and the Economy
UC Berkeley School of Law
Berkeley, CA 94720
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