SEC Investigations and Securities Class Actions: An Empirical Comparison

23 Pages Posted: 9 Feb 2016

See all articles by Stephen J. Choi

Stephen J. Choi

New York University School of Law

Adam C. Pritchard

University of Michigan Law School

Multiple version iconThere are 2 versions of this paper

Date Written: March 2016

Abstract

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 as (if not more so than) SEC enforcement.

Suggested Citation

Choi, Stephen J. and Pritchard, Adam C., SEC Investigations and Securities Class Actions: An Empirical Comparison (March 2016). Journal of Empirical Legal Studies, Vol. 13, Issue 1, pp. 27-49, 2016, Available at SSRN: https://ssrn.com/abstract=2729554 or http://dx.doi.org/10.1111/jels.12096

Stephen J. Choi

New York University School of Law ( email )

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

Adam C. Pritchard (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4048 (Phone)
734-647-7349 (Fax)

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