109 HR 5491 IH: Securities Litigation Attorney U.S. House of Representatives 2006-05-25 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 2d Session H. R. 5491 IN THE HOUSE OF REPRESENTATIVES May 25, 2006 Mr. Baker (for himself, Mr. McHenry, and Mr. Hensarling) 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.

1.

Short title

This Act may be cited as the Securities Litigation Attorney Accountability and Transparency Act.

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. .

3.

Disclosures of 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 paragraph: (10)

Disclosures regarding 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 conflict of interest, including any direct or indirect payment, between such attorney and such plaintiff and between such attorney and any affiliated person of 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 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 conflict of interest, including any direct or indirect payment, between such attorney and such plaintiff and between such attorney and any affiliated person (as such term is defined in section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(a)(3))) of such plaintiff. The court shall make a determination of whether such conflict is sufficient to disqualify the attorney from representing the plaintiff. .

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 may employ alternative means in the selection and retention of counsel for the most adequate plaintiff, including a competitive bidding process.. (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 may employ alternative means in the selection and retention of counsel for the most adequate plaintiff, including a competitive bidding process..