I 
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 Serv-
ices, and in addition to the Committee on the Judiciary, for a period to 
be subsequently determined by the Speaker, in each case for consider-
ation 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 Representa-
tives 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. 
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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 ex-
penses to the defendant is substantially 
burdensome or unjust. 
‘‘(B) AWARD.—If the court makes the de-
terminations described in clauses (i), (ii), and 
(iii) of subparagraph (A), the court shall award 
the defendant reasonable fees and other ex-
penses incurred by the defendant and impose 
such fees and expenses on the plaintiff’s attor-
ney. 
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‘‘(C) BASIS OF DETERMINATION REGARD-
ING 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 de-
fendant.’’. 
(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 
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‘‘(iii) the cost of such fees and ex-
penses to the defendant is substantially 
burdensome or unjust. 
‘‘(B) AWARD.—If the court makes the de-
terminations described in clauses (i), (ii), and 
(iii) of subparagraph (A), the court shall award 
the defendant reasonable fees and other ex-
penses incurred by the defendant and impose 
such fees and expenses on the plaintiff’s attor-
ney. 
‘‘(C) BASIS OF DETERMINATION REGARD-
ING 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 de-
fendant.’’. 
SEC. 3. DISCLOSURES OF CONFLICTS OF INTEREST BE-
TWEEN 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: 
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‘‘(10) DISCLOSURES REGARDING CONFLICTS OF 
INTEREST.—In any private action arising under this 
title, each plaintiff and any attorney for such plain-
tiff shall provide sworn certifications, which shall be 
personally signed by such plaintiff and such attor-
ney, respectively, and filed with the complaint, that 
identifies any conflict of interest, including any di-
rect or indirect payment, between such attorney and 
such plaintiff and between such attorney and any af-
filiated person of such plaintiff. The court shall 
make a determination of whether such conflict is 
sufficient to disqualify the attorney from rep-
resenting 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 plain-
tiff shall provide sworn certifications, which shall be 
personally signed by such plaintiff and such attor-
ney, respectively, and filed with the complaint, that 
identifies any conflict of interest, including any di-
rect or indirect payment, between such attorney and 
such plaintiff and between such attorney and any af-
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filiated 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 rep-
resenting 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 em-
ploy alternative means in the selection and retention of 
counsel for the most adequate plaintiff, including a com-
petitive 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 alter-
native means in the selection and retention of counsel for 
the most adequate plaintiff, including a competitive bid-
ding process.’’. 
Æ 
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