Mapping the American Shareholder Litigation Experience: A Survey of Empirical Studies of the Enforcement of the U.S. Securities Law

In this paper, we provide an overview of the most significant empirical research that has been conducted in recent years on the public and private enforcement of the federal securities laws. The existing studies of the U.S. enforcement system provide a rich tapestry for assessing the value of enforcement, both private and public, as well as market penalties for fraudulent financial reporting practices. The relevance of the U.S. experience is made broader by the introduction through the PSLRA in late 1995 of new procedures for the conduct of private suits and the numerous efforts to evaluate the effects of those provisions. We believe that the evidence reviewed here shows that the PSLRA\u27s provisions have largely achieved their intended purposes. For example, many more private suits are headed by an institutional lead plaintiff, such plaintiffs appear to fulfill the desired role of monitoring the suit\u27s prosecution and their presence is associated with suits yielding better settlements and lower attorneys\u27 fees awards. SEC enforcement efforts, while significant, have tended to focus on weaker targets, suggesting that the big fish get away. Equally importantly, markets impose their own discipline on companies whose managers release false financial reports and, in turn, firms discipline the managers who are responsible for false misleading reporting, perhaps because of the presence of, or potential for, private enforcement actions

Public and Private Enforcement of the Securities Laws: Have Things Changed Since Enron?

In this paper, we examine how those corporations that have been the targets of SEC enforcement efforts compare in terms of their size and financial health vis-a-vis firms that are targeted only by the private securities class action. We also ask whether the SEC or the private bar systematically proceeds against violators that cause the greatest loss to investors. In this regard, we are intrigued by the most basic question posed by private suits, whether settlements bear any relationship to the losses suffered by the class and whether those losses bear any relationship to the size of either the firm itself or the duration of the class action. Our data set consists of 389 securities class action settlements that occurred between 1990 and 2003. Using multivariate regression analysis to examine the determinants of government litigation, we find a sharp change in the pattern of SEC enforcement actions after the end of 2001. We find that the SEC seems to have shifted its enforcement focus away from targeting frauds at firms in financial distress to seeking out frauds at companies where investors may have suffered larger losses, especially if they are smaller firms. Again applying multivariate regression analysis, we look at settlement sizes in private class actions. We find that provable losses, total assets, class period and the presence of an SEC enforcement action, are all positively and significantly related to the dollar amount of the settlement obtained in a private action. These effects do not change over the time period of our sample. The fact that provable losses are such an important determinant of the size of actual recoveries supports the view that the merits do matter

Mapping the American Shareholder Litigation Experience: A Survey of Empirical Studies of the Enforcement of the U.S. Securities Law

In this paper, we provide an overview of the most significant empirical research that has been conducted in recent years on the public and private enforcement of the federal securities laws. The existing studies of the U.S. enforcement system provide a rich tapestry for assessing the value of enforcement, both private and public, as well as market penalties for fraudulent financial reporting practices. The relevance of the U.S. experience is made broader by the introduction through the PSLRA in late 1995 of new procedures for the conduct of private suits and the numerous efforts to evaluate the effects of those provisions. We believe that the evidence reviewed here shows that the PSLRA\u27s provisions have largely achieved their intended purposes. For example, many more private suits are headed by an institutional lead plaintiff, such plaintiffs appear to fulfill the desired role of monitoring the suit\u27s prosecution and their presence is associated with suits yielding better settlements and lower attorneys\u27 fees awards. SEC enforcement efforts, while significant, have tended to focus on weaker targets, suggesting that the big fish get away. Equally importantly, markets impose their own discipline on companies whose managers release false financial reports and, in turn, firms discipline the managers who are responsible for false misleading reporting, perhaps because of the presence of, or potential for, private enforcement actions

Foreword

A toast to the Model Business Corporation Act (MBCA), and especially its forefathers, on its 60th Birthday! Now at age 60, the MBCA is still vibrant, meaningful, and it forms the bedrock for the health of the United States corporate economy

New Measurements of the Ionizing Ultraviolet Background over 2 < z < 5 and Implications for Hydrogen Reionization

We present new measurements of the intensity of the ionizing ultraviolet background and the global emissivity of ionizing photons over 2 < z < 5. Our results are based on a suite of updated measurements of physical properties of the high-redshift intergalactic medium (IGM), including gas temperatures and the opacity of the IGM to Ly-alpha and ionizing photons. Consistent with previous works, we find a relatively flat hydrogen photoionization rate over 2 < z < 5, although our measurements are roughly a factor of two higher than the 2008 values of Faucher-Giguere et al., due primarily to our lower gas temperatures. The ionizing emissivity we derive is also generally higher than other recent estimates due to a combination of lower gas temperatures, higher ionizing opacity, and an accounting of cosmological radiative transfer effects. We find evidence that the emissivity increases from z~3 to 5, reaching ~5 ionizing photons per atom per gigayear at z=4.75 for realistic galaxy spectra. We further find that galaxies must dominate the emissivity near 1 Ryd at z > 4, and possibly at all redshifts z > 2.4. Our results suggest that the globally-averaged ionizing "efficiency" of star-forming galaxies increases substantially with redshift over 3.2 < z < 4.75. This trend is consistent with the conclusion often drawn from reionization models that the ionizing efficiency of galaxies must be higher during reionization in order for galaxies to reionize the IGM by z=6. Our emissivity values at z~5 suggest that ionizing photons may have been a factor of two more abundant during the final stages of reionization than previously indicated. The evolution of the ionizing emissivity over 2 < z < 5 suggests, moreover, that the steep decline in the photoionization rate from z~5 to 6 may indicate a rapid evolution in the mean free path at z > 5.Comment: 19 pages, 14 figures, MNRAS, in pres

The Digital Anatomist Foundational Model Server

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Therapeutic antibodies: current state and future trends--is a paradigm change coming soon?

Antibody-based therapeutics currently enjoy unprecedented success, growth in research and revenues, and recognition of their potential. It appears that the promise of the "magic bullet" has largely been realized. There are currently 22 monoclonal antibodies (mAbs) approved by the United States Food and Drug Administration (FDA) for clinical use and hundreds are in clinical trials for treatment of various diseases including cancers, immune disorders, and infections. The revenues from the top five therapeutic antibodies (Rituxan, Remicade, Herceptin, Humira, and Avastin) nearly doubled from $6.4 billion in 2004 to$11.7 billion in 2006. During the last several years major pharmaceutical companies raced to acquire antibody companies, with a recent example of MedImmune being purchased for $15.6 billion by AstraZeneca. These therapeutic and business successes reflect the major advances in antibody engineering which have resulted in the generation of safe, specific, high-affinity, and non-immunogenic antibodies during the last three decades. Currently, second and third generations of antibodies are under development, mostly to improve already existing antibody specificities. However, although the refinement of already known methodologies is certainly of great importance for potential clinical use, there are no conceptually new developments in the last decade comparable, for example, to the development of antibody libraries, phage display, domain antibodies (dAbs), and antibody humanization to name a few. A fundamental question is then whether there will be another change in the paradigm of research as happened 1-2 decades ago or the current trend of gradual improvement of already developed methodologies and therapeutic antibodies will continue. Although any prediction could prove incorrect, it appears that conceptually new methodologies are needed to overcome the fundamental problems of drug (antibody) resistance due to genetic or/and epigenetic alterations in cancer and chronic infections, as well as problems related to access to targets and complexity of biological systems. If new methodologies are not developed, it is likely that gradual saturation will occur in the pipeline of conceptually new antibody therapeutics. In this scenario we will witness an increase in combination of targets and antibodies, and further attempts to personalize targeted treatments by using appropriate biomarkers as well as to develop novel scaffolds with properties that are superior to those of the antibodies now in clinical use

Addressing Agency Costs through Private Litigation in the U.S: Tensions, Disappointments, and Substitutes

Many scholars argue that over the past seventy years, shareholder representative litigation has acted as an important policing mechanism of managerial abuses at U.S. public companies. Different types of representative litigation have had their moment in the sun – derivative suits early on, followed by federal securities class actions, and most recently merger litigation – often producing benefits for shareholders, but posing difficult challenges as well. In particular, the benefits are qualified by another concern, the litigation agency costs that surround shareholder suits. This form of agency costs arises since the suits are invariably representative with no requirement that the named plaintiffs have a substantial ownership interest in the corporation, so that their prosecution could be easily seen as lawyer-driven. And that perception is further underscored in the U.S. where the “American Rule,” in contrast to the “Loser Pays Rule,” provides no governor on the suit’s initiation and prosecution. In this article, we assess the interactions of shareholder suits and governance mechanisms. Our thesis is straightforward: we claim that the recent rise of some important governance developments is a natural consequence of both the ineffectiveness and inefficiency of private suits to address certain genre of managerial agency costs. That is, just as one part of a balloon expands when another part contracts, we find that governance responses evolve to fill voids caused by the decompression of shareholder monitoring once supplied by private suits. In other words, as representative shareholder litigation comes under increasing attack, greater attention needs to be devoted to governance and market mechanisms as alternative means to address managerial agency costs