[Congressional Record Volume 159, Number 43 (Friday, March 22, 2013)]
[Senate]
[Pages S2334-S2335]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. CORNYN:
S. 652. A bill to protect investors by fostering transparency and
accountability of attorneys in private securities litigation; to the
Committee on Banking, Housing, and Urban Affairs.
Mr. CORNYN. Mr. President, I ask unanimous consent that the text of
the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 652
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. 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:
``(10) Disclosures regarding payments.--
``(A) Sworn certifications required.--
``(i) In general.--In any private action arising under this
title, each plaintiff and any attorney for such plaintiff
shall provide sworn certifications, which shall--
``(I) be personally signed by such plaintiff and each such
attorney, respectively;
``(II) be filed with the complaint; and
``(III) 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 pro rata share of
any recovery received by the plaintiff, except as ordered or
approved by the court in accordance with paragraph (4).
``(ii) Court actions.--Upon disclosure of any payment or
promise of payment described in clause (i), the court shall
disqualify the attorney from representing the plaintiff.
``(B) Definition.--For purposes of this paragraph, the term
`payment' includes 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.--
``(A) In general.--In any private action arising under this
title, each plaintiff and any attorney for such plaintiff
shall provide sworn certifications, which shall--
``(i) be personally signed by such plaintiff and each such
attorney, respectively;
``(ii) be filed with the complaint; and
``(iii) identify 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.
``(B) Court actions.--The court--
``(i) may allow certifications under subparagraph (A) to be
made under seal;
``(ii) shall review such certifications to determine
whether cause exists to believe that the nature or terms of
the fee arrangement for any other matter influenced the
selection and retention of counsel in the private action
arising under this title;
``(iii) may conduct a factual inquiry or refer the question
to a magistrate, if the court makes a finding described in
clause (ii); and
``(iv) shall disqualify the attorney from representing the
plaintiff in any action arising under this title, if the
court finds, after such inquiry, that the nature or terms of
the fee arrangement for any other matter influenced the
selection and retention of counsel 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--
``(A) be personally signed by such plaintiff and each such
attorney, respectively;
``(B) be filed with the complaint; and
``(C) identify any contribution made during the 5-year
period preceding the date of filing
[[Page S2335]]
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 real or
apparent 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.''.
(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:
``(9) Disclosures regarding payments.--
``(A) Sworn certifications required.--
``(i) In general.--In any private action arising under this
title, each plaintiff and any attorney for such plaintiff
shall provide sworn certifications, which shall--
``(I) be personally signed by such plaintiff and each such
attorney, respectively;
``(II) be filed with the complaint; and
``(III) 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 pro rata share of
any recovery received by the plaintiff, except as ordered or
approved by the court in accordance with paragraph (4).
``(ii) Court actions.--Upon disclosure of any payment or
promise of payment described in clause (i), 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.
``(10) Disclosures regarding legal representations.--
``(A) In general.--In any private action arising under this
title, each plaintiff and any attorney for such plaintiff
shall provide sworn certifications, which shall--
``(i) be personally signed by such plaintiff and each such
attorney, respectively;
``(ii) be filed with the complaint; and
``(iii) identify 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.
``(B) Court actions.--The court--
``(i) may allow certifications under subparagraph (A) to be
made under seal;
``(ii) shall review such certifications to determine
whether cause exists to believe that the nature or terms of
the fee arrangement for any other matter influenced the
selection and retention of counsel in the private action
arising under this title;
``(iii) may conduct a factual inquiry or refer the question
to a magistrate, if the court makes a finding described in
clause (ii); and
``(iv) shall disqualify the attorney from representing the
plaintiff in any action arising under this title, if the
court finds, after such inquiry, that the nature or terms of
the fee arrangement for any other matter influenced the
selection and retention of counsel in the private action
arising under this title.
``(11) 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--
``(A) be personally signed by such plaintiff and each such
attorney, respectively;
``(B) be filed with the complaint; and
``(C) identify any contribution made during the 5-year
period preceding the date of 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 real or apparent 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.''.
SEC. 3. 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. 4. STUDY OF AVERAGE HOURLY FEES IN SECURITIES CLASS
ACTIONS.
(a) Study and Review Required.--The Comptroller General of
the United States (in this section referred to as the
``Comptroller General'') shall conduct a study and review of
fee awards to lead counsel in securities class actions during
the 7-year period preceding the date of enactment of this
Act, to determine the effective average hourly rate for lead
counsel in such actions. Such study and review shall also
consider lead counsel perquisites, including travel and
accommodation.
(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 report every 3
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.
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