Private Litigation Under the Federal Securities Laws: Hearings Before the Subcommittee on Securities of the Committee on Banking, Housing, and Urban Affairs, United States Senate, One Hundred Third Co

Excerpt from Private Litigation Under the Federal Securities Laws: Hearings Before the Subcommittee on Securities of the Committee on Banking, Housing, and Urban Affairs, United States Senate, One Hundred Third Congress, First Session; June 17 and July 21, 1993

These private lawsuits are critical to the overall scheme of law enforcement because, like the sec enforcement actions, they help to deter future violations.

When the system is working well, it helps to keep corporate offi cers honest and helps ensure that auditors, directors, lawyers and others do their jobs, and therefore promotes investor confidence and capital formation, the two critical issues I mentioned at the outset of these remarks.

But many of our witnesses this morning are going to tell us something else, that securities litigation has gotten out Of hand and is destroying the very capital formation policy it seeks to promote. They say cases are brought without. Any investigation. Complaints are literally run off word processors within days or even hours of a drop in a company's stock and are brought for the purpose of ex tracting settlements.

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