University of Michigan Law School, Working Paper No. 99-006
98 Pages Posted: 23 Feb 1999
This Article proposes the replacement of securities fraud class actions for "fraud on the market" with an enforcement regime administered by the securities exchanges. It discusses the social costs of fraud in secondary trading markets and the respective roles of compensation and deterrence in controlling those costs. The expense and ineffectiveness of securities class actions in achieving deterrence are explained. An alternative regime enforced by the exchanges is outlined, and the incentives of exchanges to enforce anti-fraud prohibitions are analyzed.
Suggested Citation: Suggested Citation
Pritchard, Adam C., Markets as Monitors: A Proposal to Replace Class Actions with Exchanges as Securities Fraud Enforcers. University of Michigan Law School, Working Paper No. 99-006. Available at SSRN: https://ssrn.com/abstract=150182 or http://dx.doi.org/10.2139/ssrn.150182
By Frank Yu
By Stephen Choi