A couple of interesting items from around the web.
Pay To Play - In the context of securities litigation, "pay to play" is when lawyers compete to be selected as class counsel for public entities serving as lead plaintiffs in securities class actions by making political contributions to politicians that exercise control over the entities (typically public pension funds). It is a perennial subject of proposed reform, although it has proven difficult to regulate.
The Wall Street Journal had an editorial (subscrip. req'd) on "pay to play" this past weekend. The paper noted that the practice appears to be widespread and state attorneys general, who receive donations from the same plaintiffs law firms, may be reluctant to investigate. Senator Bob Bennett, however, is one politician who is interested in the topic. According to the New York Daily News, Bennett says that Congress may need to launch an investigation. On the other hand, not everyone is convinced that there is a lot of merit to the allegations of "pay to play." Securities Litigation Watch has two recent posts discussing the empirical counterarguments (here and here)
Extraterritorial Application - One of the government's stated reasons for urging the U.S. Supreme Court not to hear the National Australia Bank case was that Congress may soon address the issue of the extraterritorial application of the securities laws. The legislation that the government was referring to - the Investor Protection Act of 2009 - has been voted out of committee. The full House may take up the bill in December. The provisions on extraterritorial application (Section 215) grant jurisdiction in U.S. courts when (a) there is "conduct within the United States that constitutes significant steps in furtherance of the violation" or (b) there is "conduct occurring outside the United States that has a foreseeable substantial effect within the United States." Thanks to John Letteri for the tip.Posted by Lyle Roberts at November 6, 2009 11:32 PM | TrackBack