Securities Litigation Reform - At Last A Real Possibility

It is the nightmare of many CEOs and general counsel. Often due to events beyond a company's control, the company's share price drops. Within days, if not hours, a class action lawsuit is filed alleging violations of the federal securities laws and seeking huge monetary damages. The complaint's allegations are tissue-paper thin and unfounded, and the company promptly moves to dismiss the lawsuit. While the motion is being decided, however, the company is forced to spend substantial amounts of time and money responding to an avalanche of discovery demands. The company soon learns that the supposed "class representative," who owns only a handful of shares, has been the plaintiff in several other class action suits, working with the same law firm and sometimes receiving special bounties for serving as the class representative. The company is also advised that most of these suits have settled for a fraction of the damages originally sought. Thus, the company is confronted with the