Managing Partner Jonathan Gardner and Associate Emily N. Gault are the authors of the Investor Alert, “The PSLRA Turns 30.”  This alert examines the profound impact of the Private Securities Litigation Reform Act (PSLRA) over its 30-year history, detailing how it has shaped the initiation, investigation, and litigation of securities class actions.

Enacted in 1995, the PSLRA was intended to address perceived abuses in securities fraud cases while allowing for meritorious actions to be brought forward and further sought to encourage institutional investors to exercise primary control over securities fraud litigation.  The Act implemented heightened pleading standards, a process for selecting an adequate lead plaintiff, an automatic discovery stay, safe harbor provisions, a 90-day look back period limitation on damages, and sanctions for frivolous claims.

With securities fraud class actions still being filed at high rates today, Jonathan and Emily contend that—while once feared to be detrimental to securities litigation—the PSLRA has been instrumental in ensuring a path for institutional investors to pursue securities fraud cases, protecting the integrity of the capital markets, and preventing unmeritorious claims.