Motions for Lead Plaintiff in Securities Class Actions

61 Pages Posted: 3 Nov 2008 Last revised: 17 Jun 2009

See all articles by Stephen J. Choi

Stephen J. Choi

New York University School of Law

Date Written: December 1, 2008


Using a dataset of securities class actions filed from 2003 to 2005, this paper assesses the effect of the lead plaintiff presumption enacted as part of the Private Securities Litigation Reform Act of 1995 (PSLRA) on agency costs between lead counsel for the class and class members. Examining the pre-trial motions for lead plaintiff for each class action, the paper reports evidence that plaintiffs' attorneys retain significant control over the selection of lead plaintiff, cutting side deals to determine the selection of lead plaintiff and thereby lead counsel. Using proxies for where plaintiffs' attorneys have relatively greater influence over the selected lead plaintiff, the paper reports that plaintiffs' attorneys with greater power are able to negotiate higher attorneys' fees as a percentage of the recovery and work fewer hours.

Keywords: Securities litigation, lead plaintiffs, class actions

Suggested Citation

Choi, Stephen J., Motions for Lead Plaintiff in Securities Class Actions (December 1, 2008). NYU Law and Economics Research Paper No. 08-53, Available at SSRN: or

Stephen J. Choi (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States


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