PSLRA, Public Pension Plaintiffs, and Agency Costs

Michael Perino (St. John's) recently circulated an interesting paper (here) assessing whether the Private Securities Litigation Reform Act's lead plaintiff provision achieves its goal of incenting lead plaintiffs to monitor agency costs incident to class actions.  To do so he analyzes a random sample of 627 pre- and post-PSLRA settlements with a specific eye towards public pension lead plaintiff cases.  He finds that: "Cases with public pension lead plaintiffs have larger settlements, recover a greater percentage of the stakes at issue in the case, have greater attorney effort, and have lower fee requests and awards than cases with other types of lead plaintiffs.  These findings suggest that public pensions do in fact act as effective monitors of class counsel."