II 

113TH CONGRESS 

1ST SESSION S. 652 

To protect investors by fostering transparency and accountability of attorneys 

in private securities litigation. 

IN THE SENATE OF THE UNITED STATES 

MARCH 22, 2013 

Mr. CORNYN introduced the following bill; which was read twice and referred 

to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To protect investors by fostering transparency and 

accountability of attorneys in private securities litigation. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Securities Litigation 

5 Attorney Accountability and Transparency Act’’. 


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1 SEC. 2. DISCLOSURES OF PAYMENTS, FEE ARRANGEMENTS, 

2 CONTRIBUTIONS, AND OTHER POTENTIAL 

3 CONFLICTS OF INTEREST BETWEEN PLAIN4 TIFF AND ATTORNEYS. 

5 (a) SECURITIES EXCHANGE ACT OF 1934.—Section 

6 21D(a) of the Securities Exchange Act of 1934 (15 U.S.C. 

7 78u–4(a)) is amended by adding at the end the following: 

8 ‘‘(10) DISCLOSURES REGARDING PAYMENTS.— 

9 ‘‘(A) SWORN CERTIFICATIONS RE10 QUIRED.— 

11 ‘‘(i) IN GENERAL.—In any private ac12 tion arising under this title, each plaintiff 

13 and any attorney for such plaintiff shall 

14 provide sworn certifications, which shall— 

15 ‘‘(I) be personally signed by such 

16 plaintiff and each such attorney, re17 spectively; 

18 ‘‘(II) be filed with the complaint; 

19 and 

20 ‘‘(III) identify any direct or indi21 rect payment, or promise of any pay22 ment, by such attorney, or any person 

23 affiliated with such attorney, to such 

24 plaintiff, or any person affiliated with 

25 such plaintiff, beyond the pro rata 

26 share of any recovery received by the 


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1 plaintiff, except as ordered or ap2 proved by the court in accordance 

3 with paragraph (4). 

4 ‘‘(ii) COURT ACTIONS.—Upon disclo5 sure of any payment or promise of pay6 ment described in clause (i), the court shall 

7 disqualify the attorney from representing 

8 the plaintiff. 

9 ‘‘(B) DEFINITION.—For purposes of this 

10 paragraph, the term ‘payment’ includes the 

11 transfer of money and any other thing of value, 

12 including the provision of services, other than 

13 representation of the plaintiff in the private ac14 tion arising under this title. 

15 ‘‘(11) DISCLOSURES REGARDING LEGAL REP16 RESENTATIONS.— 

17 ‘‘(A) IN GENERAL.—In any private action 

18 arising under this title, each plaintiff and any 

19 attorney for such plaintiff shall provide sworn 

20 certifications, which shall— 

21 ‘‘(i) be personally signed by such 

22 plaintiff and each such attorney, respec23 tively; 

24 ‘‘(ii) be filed with the complaint; and 


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1 ‘‘(iii) identify the nature and terms of 

2 any legal representation provided by such 

3 attorney, or any person affiliated with such 

4 attorney, to such plaintiff, or any person 

5 affiliated with such plaintiff, other than 

6 the representation of the plaintiff in the 

7 private action arising under this title. 

8 ‘‘(B) COURT ACTIONS.—The court— 

9 ‘‘(i) may allow certifications under 

10 subparagraph (A) to be made under seal; 

11 ‘‘(ii) shall review such certifications to 

12 determine whether cause exists to believe 

13 that the nature or terms of the fee ar14 rangement for any other matter influenced 

15 the selection and retention of counsel in 

16 the private action arising under this title; 

17 ‘‘(iii) may conduct a factual inquiry or 

18 refer the question to a magistrate, if the 

19 court makes a finding described in clause 

20 (ii); and 

21 ‘‘(iv) shall disqualify the attorney 

22 from representing the plaintiff in any ac23 tion arising under this title, if the court 

24 finds, after such inquiry, that the nature 

25 or terms of the fee arrangement for any 


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1 other matter influenced the selection and 

2 retention of counsel in any such action. 

3 ‘‘(12) DISCLOSURES REGARDING CONTRIBU4 TIONS.—In any private action arising under this 

5 title, each plaintiff and any attorney for such plain6 tiff shall provide sworn certifications, which shall— 

7 ‘‘(A) be personally signed by such plaintiff 

8 and each such attorney, respectively; 

9 ‘‘(B) be filed with the complaint; and 

10 ‘‘(C) identify any contribution made during 

11 the 5-year period preceding the date of filing of 

12 the complaint by such attorney, any person af13 filiated with such attorney, or any political ac14 tion committee controlled by such attorney, to 

15 any elected official with real or apparent au16 thority to retain counsel for such plaintiff or to 

17 select or appoint, influence the selection or ap18 pointment of, or oversee any individual or group 

19 of individuals with that authority.’’. 

20 (b) SECURITIES ACT OF 1933.—Section 27(a) of the 

21 Securities Act of 1933 (15 U.S.C. 77z–1(a)) is amended 

22 by adding at the end the following: 

23 ‘‘(9) DISCLOSURES REGARDING PAYMENTS.— 

24 ‘‘(A) SWORN CERTIFICATIONS RE25 QUIRED.— 


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1 ‘‘(i) IN GENERAL.—In any private ac2 tion arising under this title, each plaintiff 

3 and any attorney for such plaintiff shall 

4 provide sworn certifications, which shall— 

5 ‘‘(I) be personally signed by such 

6 plaintiff and each such attorney, re7 spectively; 

8 ‘‘(II) be filed with the complaint; 

9 and 

10 ‘‘(III) identify any direct or indi11 rect payment, or promise of any pay12 ment, by such attorney, or any person 

13 affiliated with such attorney, to such 

14 plaintiff, or any person affiliated with 

15 such plaintiff, beyond the pro rata 

16 share of any recovery received by the 

17 plaintiff, except as ordered or ap18 proved by the court in accordance 

19 with paragraph (4). 

20 ‘‘(ii) COURT ACTIONS.—Upon disclo21 sure of any payment or promise of pay22 ment described in clause (i), the court shall 

23 disqualify the attorney from representing 

24 the plaintiff. 


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1 ‘‘(B) DEFINITION.—For purposes of this 

2 paragraph, the term ‘payment’ shall include the 

3 transfer of money and any other thing of value, 

4 including the provision of services, other than 

5 representation of the plaintiff in the private ac6 tion arising under this title. 

7 ‘‘(10) DISCLOSURES REGARDING LEGAL REP8 RESENTATIONS.— 

9 ‘‘(A) IN GENERAL.—In any private action 

10 arising under this title, each plaintiff and any 

11 attorney for such plaintiff shall provide sworn 

12 certifications, which shall— 

13 ‘‘(i) be personally signed by such 

14 plaintiff and each such attorney, respec15 tively; 

16 ‘‘(ii) be filed with the complaint; and 

17 ‘‘(iii) identify the nature and terms of 

18 any legal representation provided by such 

19 attorney, or any person affiliated with such 

20 attorney, to such plaintiff, or any person 

21 affiliated with such plaintiff, other than 

22 the representation of the plaintiff in the 

23 private action arising under this title. 

24 ‘‘(B) COURT ACTIONS.—The court— 


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1 ‘‘(i) may allow certifications under 

2 subparagraph (A) to be made under seal; 

3 ‘‘(ii) shall review such certifications to 

4 determine whether cause exists to believe 

5 that the nature or terms of the fee ar6 rangement for any other matter influenced 

7 the selection and retention of counsel in 

8 the private action arising under this title; 

9 ‘‘(iii) may conduct a factual inquiry or 

10 refer the question to a magistrate, if the 

11 court makes a finding described in clause 

12 (ii); and 

13 ‘‘(iv) shall disqualify the attorney 

14 from representing the plaintiff in any ac15 tion arising under this title, if the court 

16 finds, after such inquiry, that the nature 

17 or terms of the fee arrangement for any 

18 other matter influenced the selection and 

19 retention of counsel in the private action 

20 arising under this title. 

21 ‘‘(11) DISCLOSURES REGARDING CONTRIBU22 TIONS.—In any private action arising under this 

23 title, each plaintiff and any attorney for such plain24 tiff shall provide sworn certifications, which shall— 


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1 ‘‘(A) be personally signed by such plaintiff 

2 and each such attorney, respectively; 

3 ‘‘(B) be filed with the complaint; and 

4 ‘‘(C) identify any contribution made during 

5 the 5-year period preceding the date of filing of 

6 the complaint by such attorney, any person af7 filiated with such attorney, or any political ac8 tion committee controlled by such attorney, to 

9 any elected official with real or apparent au10 thority to retain counsel for such plaintiff or to 

11 select or appoint, influence the selection or ap12 pointment of, or oversee any individual or group 

13 of individuals with that authority.’’. 

14 SEC. 3. SELECTION OF LEAD COUNSEL. 

15 (a) SECURITIES EXCHANGE ACT OF 1934.—Section 

16 21D(a)(3)(B)(v) of the Securities Exchange Act of 1934 

17 (15 U.S.C. 78u–4(a)(3)(B)(v)) is amended by adding at 

18 the end the following: ‘‘In exercising the discretion of the 

19 court over the approval of lead counsel, the court shall 

20 employ a competitive bidding process as one of the criteria 

21 in the selection and retention of counsel for the most ade22 quate plaintiff, unless the court determines on the record 

23 that such a process is not feasible.’’. 

24 (b) SECURITIES ACT OF 1933.—Section 

25 27(a)(3)(B)(v) of the Securities Act of 1933 (15 U.S.C. 


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1 77z–1(a)(3)(B)(v)) is amended by adding at the end the 

2 following: ‘‘In exercising the discretion of the court over 

3 the approval of lead counsel, the court shall employ a com4 petitive bidding process as one of the criteria in the selec5 tion and retention of counsel for the most adequate plain6 tiff, unless the court determines on the record that such 

7 a process is not feasible.’’. 

8 SEC. 4. STUDY OF AVERAGE HOURLY FEES IN SECURITIES 

9 CLASS ACTIONS. 

10 (a) STUDY AND REVIEW REQUIRED.—The Comp11 troller General of the United States (in this section re12 ferred to as the ‘‘Comptroller General’’) shall conduct a 

13 study and review of fee awards to lead counsel in securities 

14 class actions during the 7-year period preceding the date 

15 of enactment of this Act, to determine the effective aver16 age hourly rate for lead counsel in such actions. Such 

17 study and review shall also consider lead counsel per18 quisites, including travel and accommodation. 

19 (b) REPORT REQUIRED.—Not later than 1 year after 

20 the date of enactment of this Act, the Comptroller General 

21 shall submit a report to the Committee on Banking, Hous22 ing, and Urban Affairs of the Senate and the Committee 

23 on Financial Services of the House of Representatives on 

24 the results of the study and review required by this secVerDate Mar 15 2010 15:57 Mar 29, 2013 Jkt 029200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S652.IS S652

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1 tion. The Comptroller General shall submit an updated re2 port every 3 years thereafter. 

3 (c) DEFINITION.—For purposes of this section, the 

4 term ‘‘securities class action’’ means a private class action 

5 arising under the Securities Act of 1933 (15 U.S.C. 77 

6 et seq.) or the Securities Exchange Act of 1934 (15 U.S.C. 

7 78 et seq.) that is brought as a plaintiff class action pur8 suant to the Federal Rules of Civil Procedure. 

Æ 


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