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Choi, Johnson-Skinner, & Pritchard on Campaign Contributions & Securities Class Action Fees

By Lawrence Solum

Stephen J. Choi, Drew T. Johnson-Skinner and Adam C. Pritchard (New York University - School of Law , New York University School of Law and University of Michigan Law School) have posted The Price of Pay to Play in Securities Class Actions on SSRN. Here is the abstract:

This paper studies the effect of campaign contributions to lead plaintiffs ? ?pay to play?? ? on the level of attorneys? fees in securities class actions. We find that state pension funds generally pay lower attorneys? fees when they serve as lead plaintiffs in securities class actions than do individual investors serving in that capacity. This differential disappears, however, when we control for campaign contributions made to officials with influence over state pension funds. Thus, pay to play appears to increase agency costs borne by shareholders in securities class actions.

Very interesting result.

Full post as published by Legal Theory Blog on December 29, 2009 (boomark / email).