37 Pages Posted: 16 Jul 2012 Last revised: 10 Jun 2015
Date Written: June 3, 2015
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.
Keywords: fraud, SEC Enforcement, securities class actions
JEL Classification: K22, K42
Suggested Citation: 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: https://ssrn.com/abstract=2109739 or http://dx.doi.org/10.2139/ssrn.2109739