The Morrison Case as a Window to Institutional Investors’ Motives in Securities Class Actions

41 Pages Posted: 14 Sep 2012  

Adi Osovsky

Harvard University, Law School, Students

Date Written: April 20, 2012

Abstract

A growing body of legal literature suggests that securities litigation in the United States has little economic benefit, both from the perspective of compensation and with respect to deterrence. In light of the costs entailed with securities class actions and the transfer of losses to innocent group of shareholders, one would expect that financial institutions would seek to limit the scope of these suits. However, a recent study conducted by the Securities and Exchange Commission (the “SEC”) with respect to the Morrison case reveals that the inclination of institutional investors is quite the opposite. The paper analyzes the puzzling comments of institutional investors to the SEC’s study and suggests possible explanations to their support of broader class action regime.

Keywords: class actions, securities class actions, securities litigation, financial institutions, Morrison, compensation, deterrence, conduct and effect test, transactional test, Dodd Frank Act, fiduciary duties, fairness, behavioral economics

Suggested Citation

Osovsky, Adi, The Morrison Case as a Window to Institutional Investors’ Motives in Securities Class Actions (April 20, 2012). Available at SSRN: https://ssrn.com/abstract=2146741 or http://dx.doi.org/10.2139/ssrn.2146741

Adi Osovsky (Contact Author)

Harvard University, Law School, Students ( email )

1563 Massachusetts Avenue
Cambridge, MA 02138
United States

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