[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5491 Introduced in House (IH)]
109th CONGRESS
2d Session
H. R. 5491
To protect investors by fostering transparency and accountability of
attorneys in private securities litigation.
_______________________________________________________________________
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.
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. 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.''.
SEC. 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.''.
SEC. 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.''.
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