II 

110TH CONGRESS 

2D SESSION S. 3033 

To protect investors by fostering transparency and accountability of attorneys 

in private securities litigation. 

IN THE SENATE OF THE UNITED STATES 

MAY 19, 2008 

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 new paragraphs: 

9 ‘‘(10) DISCLOSURES REGARDING PAYMENTS.— 

10 ‘‘(A) SWORN CERTIFICATIONS RE11 QUIRED.—In any private action arising under 

12 this title, each plaintiff and any attorney for 

13 such plaintiff shall provide sworn certifications, 

14 which shall be personally signed by such plain15 tiff and such attorney, respectively, and filed 

16 with the complaint, that identify any direct or 

17 indirect payment, or promise of any payment, 

18 by such attorney, or any person affiliated with 

19 such attorney, to such plaintiff, or any person 

20 affiliated with such plaintiff, beyond the plain21 tiff’s pro rata share of any recovery, except as 

22 ordered or approved by the court in accordance 

23 with paragraph (4). Upon disclosure of any 

24 such payment or promise of payment, the court 

25 shall disqualify the attorney from representing 

26 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 ‘‘(11) DISCLOSURES REGARDING LEGAL REP8 RESENTATIONS.—In any private action arising 

9 under this title, each plaintiff and any attorney for 

10 such plaintiff shall provide sworn certifications, 

11 which shall be personally signed by such plaintiff 

12 and such attorney, respectively, and filed with the 

13 complaint, that identifies the nature and terms of 

14 any legal representation provided by such attorney, 

15 or any person affiliated with such attorney, to such 

16 plaintiff, or any person affiliated with such plaintiff 

17 other than the representation of the plaintiff in the 

18 private action arising under this title. The court may 

19 allow such certifications to be made under seal. The 

20 court shall make a determination whether the nature 

21 or terms of the fee arrangement for any other mat22 ter influenced the selection and retention of counsel 

23 in any private action arising under this title and, if 

24 the court so finds, shall disqualify the attorney from 

25 representing the plaintiff in any such action. 


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1 ‘‘(12) DISCLOSURES REGARDING CONTRIBU2 TIONS.—In any private action arising under this 

3 title, each plaintiff and any attorney for such plain4 tiff shall provide sworn certifications, which shall be 

5 personally signed by such plaintiff and such attor6 ney, respectively, and filed with the complaint, that 

7 identifies any contribution made within five years 

8 prior to the filing of the complaint by such attorney, 

9 any person affiliated with such attorney, or any po10 litical action committee controlled by such attorney, 

11 to any elected official with authority to retain coun12 sel for such plaintiff or to select or appoint, influ13 ence the selection or appointment of, or oversee any 

14 individual or group of individuals with that author15 ity. 

16 ‘‘(13) DISCLOSURE REGARDING OTHER CON17 FLICTS OF INTEREST.—In any private action arising 

18 under this title, each plaintiff and any attorney for 

19 such plaintiff shall provide sworn certifications, 

20 which shall be personally signed by such plaintiff 

21 and such attorney, respectively, and filed with the 

22 complaint, that identifies any other conflict of inter23 est (other than one specified in paragraphs (10) 

24 through (12)) between such attorney and such plain25 tiff. The court shall make a determination of whethVerDate Aug 31 2005 01:54 May 20, 2008 Jkt 069200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3033.IS S3033

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1 er such conflict is sufficient to disqualify the attor2 ney from representing the plaintiff.’’. 

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

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

5 by adding at the end the following new paragraph: 

6 ‘‘(9) DISCLOSURES REGARDING PAYMENTS.— 

7 ‘‘(A) SWORN CERTIFICATIONS RE8 QUIRED.—In any private action arising under 

9 this title, each plaintiff and any attorney for 

10 such plaintiff shall provide sworn certifications, 

11 which shall be personally signed by such plain12 tiff and such attorney, respectively, and filed 

13 with the complaint, that identify any direct or 

14 indirect payment, or promise of any payment, 

15 by such attorney, or any person affiliated with 

16 such attorney, to such plaintiff, or any person 

17 affiliated with such plaintiff, beyond the plain18 tiff’s pro rata share of any recovery, except as 

19 ordered or approved by the court in accordance 

20 with paragraph (4). Upon disclosure of any 

21 such payment or promise of payment, the court 

22 shall disqualify the attorney from representing 

23 the plaintiff. 

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

25 paragraph, the term ‘payment’ shall include the 


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1 transfer of money and any other thing of value, 

2 including the provision of services, other than 

3 representation of the plaintiff in the private ac4 tion arising under this title. 

5 ‘‘(10) DISCLOSURES REGARDING LEGAL REP6 RESENTATIONS.—In any private action arising 

7 under this title, each plaintiff and any attorney for 

8 such plaintiff shall provide sworn certifications, 

9 which shall be personally signed by such plaintiff 

10 and such attorney, respectively, and filed with the 

11 complaint, that identifies the nature and terms of 

12 any legal representation provided by such attorney, 

13 or any person affiliated with such attorney, to such 

14 plaintiff, or any person affiliated with such plaintiff 

15 other than the representation of the plaintiff in the 

16 private action arising under this title. The court may 

17 allow such certifications to be made under seal. The 

18 court shall make a determination whether the nature 

19 or terms of the fee arrangement for any other mat20 ter influenced the selection and retention of counsel 

21 in any private action arising under this title and, if 

22 the court so finds, shall disqualify the attorney from 

23 representing the plaintiff in any such action. 

24 ‘‘(11) DISCLOSURES REGARDING CONTRIBU25 TIONS.—In any private action arising under this 


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1 title, each plaintiff and any attorney for such plain2 tiff shall provide sworn certifications, which shall be 

3 personally signed by such plaintiff and such attor4 ney, respectively, and filed with the complaint, that 

5 identifies any contribution made within five years 

6 prior to the filing of the complaint by such attorney, 

7 any person affiliated with such attorney, or any po8 litical action committee controlled by such attorney, 

9 to any elected official with authority to retain coun10 sel for such plaintiff or to select or appoint, influ11 ence the selection or appointment of, or oversee any 

12 individual or group of individuals with that author13 ity. 

14 ‘‘(12) DISCLOSURE REGARDING OTHER CON15 FLICTS OF INTEREST.—In any private action arising 

16 under this title, each plaintiff and any attorney for 

17 such plaintiff shall provide sworn certifications, 

18 which shall be personally signed by such plaintiff 

19 and such attorney, respectively, and filed with the 

20 complaint, that identifies any other conflict of inter21 est (other than one specified in paragraphs (9) 

22 through (11)) between such attorney and such plain23 tiff. The court shall make a determination of wheth24 er such conflict is sufficient to disqualify the attor25 ney from representing the plaintiff.’’. 


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1 SEC. 3. SELECTION OF LEAD COUNSEL. 

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

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

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

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

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

7 employ a competitive bidding process as one of the criteria 

8 in the selection and retention of counsel for the most ade9 quate plaintiff, unless the court determines on the record 

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

11 (b) SECURITIES ACT OF 1933.—Section 

12 27(a)(3)(B)(v) of the Securities Act of 1933 (15 U.S.C. 

13 77z–1(a)(3)(B)(v)) is amended by adding at the end the 

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

15 the approval of lead counsel, the court shall employ a com16 petitive bidding process as one of the criteria in the selec17 tion and retention of counsel for the most adequate plain18 tiff, unless the court determines on the record that such 

19 a process is not feasible.’’. 

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

21 CLASS ACTIONS. 

22 (a) STUDY AND REVIEW REQUIRED.—The Comp23 troller General of the United States shall conduct a study 

24 and review of fee awards to lead counsel in securities class 

25 actions over the 5-year period preceding the date of enactVerDate Aug 31 2005 01:54 May 20, 2008 Jkt 069200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3033.IS S3033

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1 ment of this Act to determine the effective average hourly 

2 rate for lead counsel in such actions. 

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

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

5 shall submit a report to the Committee on Banking, Hous6 ing, and Urban Affairs of the Senate and the Committee 

7 on Financial Services of the House of Representatives on 

8 the results of the study and review required by this sec9 tion. The Comptroller General shall submit an updated 

10 study every 3 years thereafter. 

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

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

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

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

15 78 et seq.) that is brought as a plaintiff class action pur16 suant to the Federal Rules of Civil Procedure. 

Æ 


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