Securities Litigation Attorney Accountability and Transparency Act - Amends the Securities Exchange Act of 1934 and the Securities Act of 1933 to state that, in any private action in which the court enters a final judgment against plaintiff on the basis of a motion to dismiss, motion for summary judgment, or a trial on the merits, the court shall, upon defendant's motion, determine whether: (1) the position of the plaintiff was not substantially justified; (2) imposition of fees and expenses on the plaintiff's attorney would be just; and (3) the cost of such fees and expenses to the defendant is substantially burdensome or unjust.
Requires the court to award the defendant reasonable fees and other expenses, and impose such fees and expenses on the plaintiff's attorney, if the court makes positive determinations in such a case.
Places the burden of persuasion upon the defendant as to whether or not the position of the plaintiff was substantially justified.
Requires plaintiff and plaintiff's attorney to provide sworn, signed certifications that identify any actual or promised payment by the attorney to the plaintiff, beyond the plaintiff's pro rata share of any recovery.
Requires similar plaintiff and plaintiff's attorney certifications regarding: (1) legal representations; (2) contributions; and (3) conflicts of interest.
Requires the court, in exercising discretion over the approval of lead counsel, to employ a competitive bidding process as one of the criteria (unless the court determines that such a process is not feasible).
Instructs the Comptroller General to study and report to certain congressional committees on average hourly fees in securities class actions.
[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3931 Introduced in House (IH)]
110th CONGRESS
1st Session
H. R. 3931
To protect investors by fostering transparency and accountability of
attorneys in private securities litigation.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 23, 2007
Mr. Baker (for himself, Mr. Hensarling, and Mr. Royce) introduced the
following bill; which was referred to the Committee on Financial
Services, and in addition to the Committee on the Judiciary, for a
period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To protect investors by fostering transparency and accountability of
attorneys in private securities litigation.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Securities Litigation Attorney
Accountability and Transparency Act''.
SEC. 2. LOSING PLAINTIFF'S ATTORNEY PAYS.
(a) Securities Exchange Act of 1934.--Section 21D(c) of the
Securities Exchange Act of 1934 (15 U.S.C. 78u-4(c)) is amended by
adding at the end the following new paragraph:
``(4) Assessment of fees and expenses.--
``(A) Determination required.--If the court in any
private action arising under this title enters a final
judgment against a plaintiff on the basis of a motion
to dismiss, motion for summary judgment, or a trial on
the merits, the court shall, upon motion by the
defendant, determine whether--
``(i) the position of the plaintiff was not
substantially justified;
``(ii) imposing fees and expenses on the
plaintiff's attorney would be just; and
``(iii) the cost of such fees and expenses
to the defendant is substantially burdensome or
unjust.
``(B) Award.--If the court makes the determinations
described in clauses (i), (ii), and (iii) of
subparagraph (A), the court shall award the defendant
reasonable fees and other expenses incurred by the
defendant and impose such fees and expenses on the
plaintiff's attorney.
``(C) Basis of determination regarding position;
burden of persuasion.--The determination of whether the
position of the plaintiff was substantially justified
shall be made on the basis of the record in the action
for which fees and other expenses are sought, but the
burden of persuasion shall be on the defendant.''.
(b) Securities Act of 1933.--Section 27(c) of the Securities Act of
1933 (15 U.S.C. 77z-1(c)) is amended by adding at the end the following
new paragraph:
``(4) Assessment of fees and expenses.--
``(A) Determination required.--If the court in any
private action arising under this title enters a final
judgment against a plaintiff on the basis of a motion
to dismiss, motion for summary judgment, or a trial on
the merits, the court shall, upon motion by the
defendant, determine whether--
``(i) the position of the plaintiff was not
substantially justified;
``(ii) imposing fees and expenses on the
plaintiff's attorney would be just; and
``(iii) the cost of such fees and expenses
to the defendant is substantially burdensome or
unjust.
``(B) Award.--If the court makes the determinations
described in clauses (i), (ii), and (iii) of
subparagraph (A), the court shall award the defendant
reasonable fees and other expenses incurred by the
defendant and impose such fees and expenses on the
plaintiff's attorney.
``(C) Basis of determination regarding position;
burden of persuasion.--The determination of whether the
position of the plaintiff was substantially justified
shall be made on the basis of the record in the action
for which fees and other expenses are sought, but the
burden of persuasion shall be on the defendant.''.
SEC. 3. DISCLOSURES OF PAYMENTS, FEE ARRANGEMENTS, CONTRIBUTIONS, AND
OTHER POTENTIAL CONFLICTS OF INTEREST BETWEEN PLAINTIFF
AND ATTORNEYS.
(a) Securities Exchange Act of 1934.--Section 21D(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78u-4(a)) is amended by
adding at the end the following new paragraphs:
``(10) Disclosures regarding payments.--
``(A) Sworn certifications required.--In any
private action arising under this title, each plaintiff
and any attorney for such plaintiff shall provide sworn
certifications, which shall be personally signed by
such plaintiff and such attorney, respectively, and
filed with the complaint, that identify any direct or
indirect payment, or promise of any payment, by such
attorney, or any person affiliated with such attorney,
to such plaintiff, or any person affiliated with such
plaintiff, beyond the plaintiff's pro rata share of any
recovery, except as ordered or approved by the court in
accordance with paragraph (4). Upon disclosure of any
such payment or promise of payment, the court shall
disqualify the attorney from representing the
plaintiff.
``(B) Definition.--For purposes of this paragraph,
the term `payment' shall include the transfer of money
and any other thing of value, including the provision
of services, other than representation of the plaintiff
in the private action arising under this title.
``(11) Disclosures regarding legal representations.--In any
private action arising under this title, each plaintiff and any
attorney for such plaintiff shall provide sworn certifications,
which shall be personally signed by such plaintiff and such
attorney, respectively, and filed with the complaint, that
identifies the nature and terms of any legal representation
provided by such attorney, or any person affiliated with such
attorney, to such plaintiff, or any person affiliated with such
plaintiff other than the representation of the plaintiff in the
private action arising under this title. The court may allow
such certifications to be made under seal. The court shall make
a determination whether the nature or terms of the fee
arrangement for any other matter influenced the selection and
retention of counsel in any private action arising under this
title and, if the court so finds, shall disqualify the attorney
from representing the plaintiff in any such action.
``(12) Disclosures regarding contributions.--In any private
action arising under this title, each plaintiff and any
attorney for such plaintiff shall provide sworn certifications,
which shall be personally signed by such plaintiff and such
attorney, respectively, and filed with the complaint, that
identifies any contribution made within five years prior to the
filing of the complaint by such attorney, any person affiliated
with such attorney, or any political action committee
controlled by such attorney, to any elected official with
authority to retain counsel for such plaintiff or to select or
appoint, influence the selection or appointment of, or oversee
any individual or group of individuals with that authority.
``(13) Disclosure regarding other conflicts of interest.--
In any private action arising under this title, each plaintiff
and any attorney for such plaintiff shall provide sworn
certifications, which shall be personally signed by such
plaintiff and such attorney, respectively, and filed with the
complaint, that identifies any other conflict of interest
(other that one specified in paragraphs (10) through (12))
between such attorney and such plaintiff. The court shall make
a determination of whether such conflict is sufficient to
disqualify the attorney from representing the plaintiff.''.
(b) Securities Act of 1933.--Section 27(a) of the Securities Act of
1933 (15 U.S.C. 77z-1(a)) is amended by adding at the end the following
new paragraph:
``(10) Disclosures regarding payments.--
``(A) Sworn certifications required.--In any
private action arising under this title, each plaintiff
and any attorney for such plaintiff shall provide sworn
certifications, which shall be personally signed by
such plaintiff and such attorney, respectively, and
filed with the complaint, that identify any direct or
indirect payment, or promise of any payment, by such
attorney, or any person affiliated with such attorney,
to such plaintiff, or any person affiliated with such
plaintiff, beyond the plaintiff's pro rata share of any
recovery, except as ordered or approved by the court in
accordance with paragraph (4). Upon disclosure of any
such payment or promise of payment, the court shall
disqualify the attorney from representing the
plaintiff.
``(B) Definition.--For purposes of this paragraph,
the term `payment' shall include the transfer of money
and any other thing of value, including the provision
of services, other than representation of the plaintiff
in the private action arising under this title.
``(11) Disclosures regarding legal representations.--In any
private action arising under this title, each plaintiff and any
attorney for such plaintiff shall provide sworn certifications,
which shall be personally signed by such plaintiff and such
attorney, respectively, and filed with the complaint, that
identifies the nature and terms of any legal representation
provided by such attorney, or any person affiliated with such
attorney, to such plaintiff, or any person affiliated with such
plaintiff other than the representation of the plaintiff in the
private action arising under this title. The court may allow
such certifications to be made under seal. The court shall make
a determination whether the nature or terms of the fee
arrangement for any other matter influenced the selection and
retention of counsel in any private action arising under this
title and, if the court so finds, shall disqualify the attorney
from representing the plaintiff in any such action.
``(12) Disclosures regarding contributions.--In any private
action arising under this title, each plaintiff and any
attorney for such plaintiff shall provide sworn certifications,
which shall be personally signed by such plaintiff and such
attorney, respectively, and filed with the complaint, that
identifies any contribution made within five years prior to the
filing of the complaint by such attorney, any person affiliated
with such attorney, or any political action committee
controlled by such attorney, to any elected official with
authority to retain counsel for such plaintiff or to select or
appoint, influence the selection or appointment of, or oversee
any individual or group of individuals with that authority.
``(13) Disclosure regarding other conflicts of interest.--
In any private action arising under this title, each plaintiff
and any attorney for such plaintiff shall provide sworn
certifications, which shall be personally signed by such
plaintiff and such attorney, respectively, and filed with the
complaint, that identifies any other conflict of interest
(other that one specified in paragraphs (10) through (12))
between such attorney and such plaintiff. The court shall make
a determination of whether such conflict is sufficient to
disqualify the attorney from representing the plaintiff.''.
SEC. 4. SELECTION OF LEAD COUNSEL.
(a) Securities Exchange Act of 1934.--Section 21D(a)(3)(B)(v) of
the Securities Exchange Act of 1934 (15 U.S.C. 78u-4(a)(3)(B)(v)) is
amended by adding at the end the following: ``In exercising the
discretion of the court over the approval of lead counsel, the court
shall employ a competitive bidding process as one of the criteria in
the selection and retention of counsel for the most adequate plaintiff,
unless the court determines on the record that such a process is not
feasible.''.
(b) Securities Act of 1933.--Section 27(a)(3)(B)(v) of the
Securities Act of 1933 (15 U.S.C. 77z-1(a)(3)(B)(v)) is amended by
adding at the end the following: ``In exercising the discretion of the
court over the approval of lead counsel, the court shall employ a
competitive bidding process as one of the criteria in the selection and
retention of counsel for the most adequate plaintiff, unless the court
determines on the record that such a process is not feasible.''.
SEC. 5. STUDY OF AVERAGE HOURLY FEES IN SECURITIES CLASS ACTIONS.
(a) Study and Review Required.--The Comptroller General of the
United States shall conduct a study and review of fee awards to lead
counsel in securities class actions over the five years preceding the
date of enactment of this Act to determine the effective average hourly
rate for lead counsel in such actions.
(b) Report Required.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General shall submit a report to
the Committee on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of Representatives on
the results of the study and review required by this section. The
Comptroller General shall submit an updated study every three years
thereafter.
(c) Definition.--For purposes of this section, the term
``securities class action'' means a private class action arising under
the Securities Act of 1933 (15 U.S.C. 77 et seq.) or the Securities
Exchange Act of 1934 (15 U.S.C. 78 et seq.) that is brought as a
plaintiff class action pursuant to the Federal Rules of Civil
Procedure.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Financial Services, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Subcommittee on Courts, the Internet, and Intellectual Property.
Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
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