II 113th CONGRESS 1st Session S. 652 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. Short title This Act may be cited as the Securities Litigation Attorney Accountability and Transparency Act . 2. Disclosures of payments, fee arrangements, contributions, and other potential 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: (10) Disclosures regarding payments (A) Sworn certifications required (i) In general In any private action arising under this title, each plaintiff and any attorney for such plaintiff shall provide sworn certifications, which shall— (I) be personally signed by such plaintiff and each such attorney, respectively; (II) be filed with the complaint; and (III) identify any direct or indirect payment, or promise of any payment, by such attorney, or any person affiliated with such attorney, to such plaintiff, or any person affiliated with such plaintiff, beyond the pro rata share of any recovery received by the plaintiff, except as ordered or approved by the court in accordance with paragraph (4). (ii) Court actions Upon disclosure of any payment or promise of payment described in clause (i), the court shall disqualify the attorney from representing the plaintiff. (B) Definition For purposes of this paragraph, the term payment includes the transfer of money and any other thing of value, including the provision of services, other than representation of the plaintiff in the private action arising under this title. (11) Disclosures regarding legal representations (A) In general In any private action arising under this title, each plaintiff and any attorney for such plaintiff shall provide sworn certifications, which shall— (i) be personally signed by such plaintiff and each such attorney, respectively; (ii) be filed with the complaint; and (iii) identify the nature and terms of any legal representation provided by such attorney, or any person affiliated with such attorney, to such plaintiff, or any person affiliated with such plaintiff, other than the representation of the plaintiff in the private action arising under this title. (B) Court actions The court— (i) may allow certifications under subparagraph (A) to be made under seal; (ii) shall review such certifications to determine whether cause exists to believe that the nature or terms of the fee arrangement for any other matter influenced the selection and retention of counsel in the private action arising under this title; (iii) may conduct a factual inquiry or refer the question to a magistrate, if the court makes a finding described in clause (ii); and (iv) shall disqualify the attorney from representing the plaintiff in any action arising under this title, if the court finds, after such inquiry, that the nature or terms of the fee arrangement for any other matter influenced the selection and retention of counsel in any such action. (12) Disclosures regarding contributions In any private action arising under this title, each plaintiff and any attorney for such plaintiff shall provide sworn certifications, which shall— (A) be personally signed by such plaintiff and each such attorney, respectively; (B) be filed with the complaint; and (C) identify any contribution made during the 5-year period preceding the date of filing of the complaint by such attorney, any person affiliated with such attorney, or any political action committee controlled by such attorney, to any elected official with real or apparent authority to retain counsel for such plaintiff or to select or appoint, influence the selection or appointment of, or oversee any individual or group of individuals with that authority. . (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: (9) Disclosures regarding payments (A) Sworn certifications required (i) In general In any private action arising under this title, each plaintiff and any attorney for such plaintiff shall provide sworn certifications, which shall— (I) be personally signed by such plaintiff and each such attorney, respectively; (II) be filed with the complaint; and (III) identify any direct or indirect payment, or promise of any payment, by such attorney, or any person affiliated with such attorney, to such plaintiff, or any person affiliated with such plaintiff, beyond the pro rata share of any recovery received by the plaintiff, except as ordered or approved by the court in accordance with paragraph (4). (ii) Court actions Upon disclosure of any payment or promise of payment described in clause (i), the court shall disqualify the attorney from representing the plaintiff. (B) Definition For purposes of this paragraph, the term payment shall include the transfer of money and any other thing of value, including the provision of services, other than representation of the plaintiff in the private action arising under this title. (10) Disclosures regarding legal representations (A) In general In any private action arising under this title, each plaintiff and any attorney for such plaintiff shall provide sworn certifications, which shall— (i) be personally signed by such plaintiff and each such attorney, respectively; (ii) be filed with the complaint; and (iii) identify the nature and terms of any legal representation provided by such attorney, or any person affiliated with such attorney, to such plaintiff, or any person affiliated with such plaintiff, other than the representation of the plaintiff in the private action arising under this title. (B) Court actions The court— (i) may allow certifications under subparagraph (A) to be made under seal; (ii) shall review such certifications to determine whether cause exists to believe that the nature or terms of the fee arrangement for any other matter influenced the selection and retention of counsel in the private action arising under this title; (iii) may conduct a factual inquiry or refer the question to a magistrate, if the court makes a finding described in clause (ii); and (iv) shall disqualify the attorney from representing the plaintiff in any action arising under this title, if the court finds, after such inquiry, that the nature or terms of the fee arrangement for any other matter influenced the selection and retention of counsel in the private action arising under this title. (11) Disclosures regarding contributions In any private action arising under this title, each plaintiff and any attorney for such plaintiff shall provide sworn certifications, which shall— (A) be personally signed by such plaintiff and each such attorney, respectively; (B) be filed with the complaint; and (C) identify any contribution made during the 5-year period preceding the date of filing of the complaint by such attorney, any person affiliated with such attorney, or any political action committee controlled by such attorney, to any elected official with real or apparent authority to retain counsel for such plaintiff or to select or appoint, influence the selection or appointment of, or oversee any individual or group of individuals with that authority. . 3. 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 shall employ a competitive bidding process as one of the criteria in the selection and retention of counsel for the most adequate plaintiff, unless the court determines on the record that such a process is not feasible. . (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 shall employ a competitive bidding process as one of the criteria in the selection and retention of counsel for the most adequate plaintiff, unless the court determines on the record that such a process is not feasible. . 4. Study of average hourly fees in securities class actions (a) Study and review required The Comptroller General of the United States (in this section referred to as the Comptroller General ) shall conduct a study and review of fee awards to lead counsel in securities class actions during the 7-year period preceding the date of enactment of this Act, to determine the effective average hourly rate for lead counsel in such actions. Such study and review shall also consider lead counsel perquisites, including travel and accommodation. (b) Report required Not later than 1 year after the date of enactment of this Act, the Comptroller General shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results of the study and review required by this section. The Comptroller General shall submit an updated report every 3 years thereafter. (c) Definition For purposes of this section, the term securities class action means a private class action arising under the Securities Act of 1933 (15 U.S.C. 77 et seq.) or the Securities Exchange Act of 1934 ( 15 U.S.C. 78 et seq. ) that is brought as a plaintiff class action pursuant to the Federal Rules of Civil Procedure.