House Bill Would Make Securities
Litigation More Transparent

A bill fostering transparency and accountability of attorneys in private securities litigation has been introduced in the House. The Securities Litigation Attorney Accountability and Transparency Act (HR 5463) would provide that, in any private securities action in which the court enters a final judgment against plaintiff, the court must determine whether the position of the plaintiff was not substantially justified; whether the imposition of fees and expenses on the plaintiff's attorney would be just; and whether the cost of such fees and expenses to the defendant is substantially burdensome or unjust. Further, the court must award the defendant reasonable fees and other expenses if the court makes positive determinations in such a case. The bill places the burden of persuasion upon the defendant as to whether or not the position of the plaintiff was substantially justified.

Under the Act, plaintiffs and their attorney must provide sworn, signed certifications identifying any actual or promised payment by the attorney to the plaintiff, beyond the plaintiff's pro rata share of any recovery. Similarly, similar certifications are required regarding legal representations; contributions; and conflicts of interest. Moreover, in exercising discretion over the approval of lead counsel, courts would be directed to employ, if feasible, a competitive bidding process as one of the criteria.

Finally, the bill instructs the Comptroller General to study and report to Congress on average hourly fees in securities class actions.