Pleading

Abstract: In 1995 Congress passed the Private Securities Litigation Reform Act to address abuses in securities fraud class actions. In the wake of Enron, WorldCom, Adelphia, and other high profile securities frauds, critics suggest that the law made it too easy to escape liability for securities fraud and thus created a climate in which frauds are more likely to occur. Others claim that the Act has largely failed because it did little to deter plaintiff's lawyers from filing non-meritorious cases. This article employs a database of the 1,449 class actions filed from 1996 through 2001 to explore whether the Act achieved several of its primary goals - discouraging the filing of non-meritorious suits, reducing litigation risk for high technology issuers, and reducing the "race to the courthouse," whereby class actions were filed soon after significant stock price declines, apparently with very little pre-filing investigation. The picture that emerges from studying these data is that the PSLRA did not work as intended. This article demonstrates that as many or more class actions are filed after the Act as before. High technology issuers remain at significantly greater risk than issuers in other industries. There is statistically significant evidence, however, that suggests that the Act improved overall case quality at least in the circuit that most strictly interprets one of the Act's key provisions, a heightened pleading standard. The data in the article also demonstrate that Congress did not achieve its goal of increasing the filing delay in class actions. Actions are filed as quickly now as they were before passage of the Act. Nonetheless, that too may provide indirect evidence that plaintiff's attorneys are selecting more apparent cases of fraud that require less pre-filing investigation.

Abstract: Coming shortly after the Enron and WordCom scams, the Parmalat scandal offers a good opportunity to compare failures on both sides of the Atlantic. In this paper, we start by tracing Parmalat's history and describe the frauds and the criminal proceedings and civil actions that followed the company's collapse both in Italy and the US. We then focus on Parmalat's governance and gatekeepers, and argue that gatekeepers are substantially undeterred in Italy because of poor enforcement rather than legislative black holes. In fact, law on books, in particular the civil law concerning auditors, is even more severe than common law. We subsequently analyse the causes of under-enforcement and the reasons why Parmalat generated litigation in the US rather than Italy. Drawing from economic analysis, we explain the role of private enforcement and consider the benefits of class actions. In this respect, we emphasize the importance of discovery and pleading rules. We also find that the interplay between public and private enforcement is missing in Italy and argue, by way of conclusion, that US securities regulation was transplanted into Continental Europe without sufficient modernisation as to civil procedure in the area of mass claims and complex litigation.

Abstract: The legal ramifications of pleading guilty and findings of an interdependence between pleading guilty and sentence severity suggest that the guilty plea decision is a significent turning point in case processing. The present research examines the variables affecting the probability of pleading guilty. The first analysis involves estimating a single probit equation of main effects of variables previously found to be related to pleading guilty. A second analysis is conducted estimating the same equation separately for black defendants and white defendants. Findings from the first part of the analysis indicate that physical evidence, number of charges, and confessing to the crime during police/prosecutor interrogation increase the probability of pleading guilty, whereas the number of witnesses, use of a weapon, and offenses carrying a minimum penalty of 5 years in custody with no maximum prison term decrease the probability of pleading guilty. Findings from the second analysis indicate that the effect of marital status, prior record of felony convictions, type of counsel, number of charges, and use of a weapon on the probability of pleading guilty varies by defendant's race. The research concludes by offering several competing explanations of these findings in hope of stimulating further research on the variables affecting the route of case disposition in felony processing.