Recent Judicial and Legislative Developments Affecting the Private Securities Fraud Class Action

This Article provides a brief overview of four developments in the last seven
years–two judicial and two legislative–that each either have had or could have
a profound effect on the conduct of private securities fraud class actions. The
Article has three parts. Part I briefly discusses the role of private enforcement
under the federal securities laws and the creation of the securities fraud class
action. Part II then discusses two important Supreme Court decisions from the
1990s–Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson and Central
Bank of Denver v. First Interstate Bank of Denver–and the continuing efforts of
the lower federal courts to apply these two decisions. Part M discusses Congress’s
two recent forays into securities litigation reform–the 1995 Private Securities
Litigation Reform Act (“Reform Act”) and the current efforts to preempt state
securities fraud class actions. In addition to describing these pieces of legislation,
Part III surveys some of the current and anticipated issues the courts will have to
address to implement Congress’s work.