damages on behalf of a class, the court shall, at the earli-
est practicable time, appoint a committee of class members
to direct counsel for the class (hereafter in this section
referred to as the ‘plaintiff steering committee’) and to
perform such other functions as the court may specify.
Court appointment of a plaintiff steering committee shall
not be subject to interlocutory review.
‘‘(b) MEMBERSHIP OF PLAINTIFF STEERING COM-
MITTEE.—
‘‘(1) QUALIFICATIONS.—
‘‘(A) NUMBER.—A plaintiff steering com-
mittee shall consist of not fewer than 5 class
members, willing to serve, who the court be-
lieves will fairly represent the class.
‘‘(B) OWNERSHIP
INTERESTS.—Members
of the plaintiff steering committee shall have
cumulatively held during the class period not
less than—
‘‘(i) the lesser of 5 percent of the se-
curities which are the subject matter of the
litigation or $10,000,000 in market value
of the securities which are the subject mat-
ter of the litigation; or
‘‘(ii) such smaller percentage or dollar
amount as the court finds appropriate
under the circumstances.
‘‘(2) 
NAMED
PLAINTIFFS.—Class 
plaintiffs
serving as the representative parties in the litigation
may serve on the plaintiff steering committee, but
shall not comprise a majority of the committee.
‘‘(3) NONCOMPENSATION OF MEMBERS.—Mem-
bers of the plaintiff steering committee shall serve
without compensation, except that any member may
apply to the court for reimbursement of reasonable
out-of-pocket expenses from any common fund es-
tablished for the class.
‘‘(4) MEETINGS.—The plaintiff steering com-
mittee shall conduct its business at one or more pre-
viously scheduled meetings of the committee, of
which prior notice shall have been given and at
which a majority of its members are present in per-
son or by electronic communication. The plaintiff
steering committee shall decide all matters within its
authority by a majority vote of all members, except
that the committee may determine that decisions
other than to accept or reject a settlement offer or
to employ or dismiss counsel for the class may be
delegated to one or more members of the committee,
or may be voted upon by committee members seria-
tim, without a meeting.
‘‘(5) RIGHT OF NONMEMBERS TO BE HEARD.—
A class member who is not a member of the plaintiff
steering committee may appear and be heard by the
court on any issue relating to the organization or ac-
tions of the plaintiff steering committee.
‘‘(c) FUNCTIONS OF PLAINTIFF STEERING COMMIT-
TEE.—The authority of the plaintiff steering committee
to direct counsel for the class shall include all powers nor-
mally permitted to an attorney’s client in litigation, includ-
ing the authority to retain or dismiss counsel and to reject
offers of settlement, and the authority to accept an offer
of settlement subject to final approval by the court. Dis-
missal of counsel other than for cause shall not limit the
ability of counsel to enforce any contractual fee agreement
or to apply to the court for a fee award from any common
fund established for the class.
‘‘(d) IMMUNITY FROM CIVIL LIABILITY; REMOVAL.—
Any person serving as a member of a plaintiff steering
committee shall be immune from any civil liability for any
negligence in performing such service, but shall not be im-
mune from liability for intentional misconduct or from the
assessment of costs pursuant to section 20B(c). The court
may remove a member of a plaintiff steering committee
for good cause shown.
‘‘(e) EFFECT ON OTHER LAW.—This section does not
affect any other provision of law concerning class actions
or the authority of the court to give final approval to any
offer of settlement.’’.
(b) PROHIBITION ON ATTORNEYS’ FEES PAID FROM
COMMISSION DISGORGEMENT FUNDS.—Section 21(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78u(d))
is amended by adding at the end the following new para-
graph:
‘‘(4) PROHIBITION
ON ATTORNEYS’ FEES PAID
FROM COMMISSION DISGORGEMENT FUNDS.—Except as
otherwise ordered by the court, funds disgorged as the re-
sult of an action brought by the Commission, or of any
Commission proceeding, shall not be distributed as pay-
ment for attorneys’ fees or expenses incurred by private
parties seeking distribution of the disgorged funds.’’.
SEC. 3. PREVENTION OF ABUSIVE PRACTICES THAT FO-
MENT LITIGATION.
(a) ADDITIONAL PROVISIONS APPLICABLE TO PRI-
VATE ACTIONS.—The Securities Exchange Act of 1934 is
amended by inserting after section 20A (15 U.S.C. 78t–
1) the following new section:
‘‘PROCEDURES APPLICABLE TO PRIVATE ACTIONS
‘‘SEC. 20B. (a) ELIMINATION OF BONUS PAYMENTS
TO NAMED PLAINTIFFS IN CLASS ACTIONS.—In any pri-
vate action under this title that is certified as a class ac-
tion pursuant to the Federal Rules of Civil Procedure, the
portion of any final judgment or of any settlement that
is awarded to class plaintiffs serving as the representative
parties shall be equal, on a per share basis, to the portion
of the final judgment or settlement awarded to all other
members of the class. Nothing in this subsection shall be
construed to limit the award to any representative parties
of actual expenses (including lost wages) relating to the
representation of the class.
‘‘(b) RESTRICTIONS
ON
PROFESSIONAL
PLAIN-
TIFFS.—Except as the court may otherwise permit for
good cause, a person may be a named plaintiff, or an offi-
cer, director, or fiduciary of a named plaintiff, in no more
than 5 class actions filed during any 3-year period.
‘‘(c) AWARDS OF FEES AND EXPENSES.—
‘‘(1) AUTHORITY
TO
AWARD
FEES
AND
EX-
PENSES.—If the court in any private action arising
under this title enters a final judgment against a
party litigant 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 prevail-
ing party, determine whether (A) the position of the
losing party was not substantially justified, (B) im-
posing fees and expenses on the losing party or the
losing party’s attorney would be just, and (C) the
cost of such fees and expenses to the prevailing
party is substantially burdensome or unjust. If the
court makes the determinations described in clauses
(A), (B), and (C), the court shall award the prevail-
ing party reasonable fees and other expenses in-
curred by that party. The determination of whether
the position of the losing party 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
prevailing party.
‘‘(2) SECURITY
FOR
PAYMENT
OF
COSTS
IN
CLASS
ACTIONS.—In any private action arising
under this title that is certified as a class action pur-
suant to the Federal Rules of Civil Procedure, the
court shall require an undertaking from the attor-
neys for the plaintiff class, the plaintiff class, or
both, in such proportions and at such times as the
court determines are just and equitable, for the pay-
ment of the fees and expenses that may be awarded
under paragraph (1).