Westlaw Publishes Reed and Lloyd Article on Limiting “Meritless” Securities Class Actions

Westlaw Securities Enforcement & Litigation Daily Briefing has published the article “Stemming the tide of meritless securities class actions,” which was written by Akin Gump litigation partner Michelle Reed and counsel Matthew Lloyd and discusses the recent rise in event-driven securities class actions.

Reed and Lloyd begin by noting that the increase in the number of federal securities class actions could be explained, in part, on the “apparent shift of merger and acquisitions suits from Delaware state court to federal court.” There is also another explanation, which they attribute to claims “filed in response to adverse company events such as a data security breach, sexual harassment allegations, a catastrophic explosion, allegations that a drug or product has side effects or caused injury, or a regulatory investigation or enforcement action.”

The article then provides some examples of event-driven securities claims as well as the problems associated with them. It also outlines some potential solutions, such as adopting a rule “requiring a plaintiff who loses at the dismissal stage to pay the winning party’s attorney fees” or imposing a higher bar on settlement approvals.

To read the full article, please click here.