May 19, 2026
This past March, the Institute for Law and Economic Policy (ILEP), together with the Business Law Journal, hosted its annual symposium. Marking a significant milestone, this year’s convening focused on The 30th Anniversary of the Private Securities Litigation Reform Act (PSLRA). Over two days, the Symposium brought together esteemed jurists, academics, practitioners, and former Securities and Exchange Commission officials for wide‑ranging and thought‑provoking discussions on investor protection, securities litigation, and the evolving civil justice landscape.
Looking back, speakers examined how the PSLRA and caselaw interpreting the statute since have reshaped class certification, Section 11 claims and the traceability of shares, attorneys’ fees, and pleading standards. Looking ahead, discussions turned to forced arbitration, precatory shareholder proposals, and the growing attempt to privatize securities law. The program also featured insights from Northern District of California Federal Judge Jon S. Tigar on class certification, and Delaware Supreme Court Justices Collins J. Seitz, Jr. and Abigail M. LeGrow and Vice Chancellor Paul A. Fioravanti, Jr. on Delaware’s most recent corporate law reforms and landmark cases. The Symposium concluded with two fireside conversations—one with Delaware Supreme Court Chief Justice Seitz, and the other with former SEC Commissioner Caroline A. Crenshaw.
The Private Securities Litigation Reform Act, commonly known as the PSLRA, was enacted in December 1995, over the veto of President Clinton, and represents the most sweeping overhaul of the federal securities laws since the passage of the Securities Act of 1933 and Securities Exchange Act of 1934. At its core, the legislation was premised on the belief that the securities litigation system was broken. Critics argued that non‑meritorious cases were filed too frequently, that nearly all cases survived early motion practice only to settle without regard to the merits, and that class actions were driven more by lawyers than by investors themselves.
To address these perceived problems, Congress enacted reforms that were widely viewed at the time as a boon to public companies, their executives, investment banks, and accounting firms. The PSLRA imposed new restrictions and procedural hurdles, including reforms to the selection and compensation of lead plaintiffs; limits on recoverable damages and attorneys’ fees; an automatic stay of discovery while motions to dismiss are pending; a safe harbor for certain forward‑looking statements; a mandate requiring courts to sanction attorneys who violate Rule 11(b), with penalties potentially reaching 100 percent of defendants’ fees; and, most significantly, heightened pleading requirements for falsity and scienter that exceeded even Rule 9(b) of the Federal Rules of Civil Procedure. Taken together, the PSLRA codified a set of tools designed to delay and defeat securities fraud claims and to discourage plaintiffs’ counsel from filing suit.
There is little dispute that the statute succeeded in achieving at least one of its primary objectives. While the number of securities class actions filed has remained relatively stable since 1995, the PSLRA dramatically increased dismissal rates. As Symposium panelist Susan Saltzstein recently observed in her New York Law Journal article, “Reflections on the PSLRA at 30,” heightened pleading standards fundamentally reshaped early motion practice. Data from the Securities Class Action Clearinghouse, operated by Stanford Law School in partnership with Cornerstone Research, confirms this shift: since the PSLRA’s enactment, 3,306 cases have been dismissed and 3,004 have settled—a dismissal rate of 52%.
Dismissal rates have climbed even higher over time, particularly as the Supreme Court has interpreted and strengthened the PSLRA’s requirements in decisions such as Tellabs, Halliburton, Janus, Omnicare, and Slack. NERA’s 2025 year‑end report found that between 2016 and 2025, motions to dismiss were granted in full in 62% of cases, partially granted in another 21%, and denied entirely in only 17%. As Professor and former SEC Commissioner Joseph Grundfest—himself involved in the PSLRA’s drafting and another one of the Symposium’s speakers—recently remarked, the statute was “a major success” that brought long‑needed discipline and order to securities litigation.
Importantly, however, the PSLRA did not extinguish private enforcement of the federal securities laws. Instead, by ensuring that only non‑frivolous claims survived to discovery, the statute contributed to significantly larger recoveries in cases that cleared its thresholds. According to the Stanford Clearinghouse, since 1995, nearly $120 billion has been recovered for investors—an average of $4 billion per year. All 100 of the largest securities class action settlements in history occurred after the PSLRA’s passage, and both average and median settlement amounts have increased substantially.
Private class actions also continue to play a vital role in policing markets and deterring fraud. According to a 2025 ISS report, only 27 of the top 100 securities class action settlements had related SEC enforcement actions. In those cases, private litigation recovered more than $34 billion for investors, compared to just $4.6 billion recovered by the SEC—meaning private actions yielded, on average, more than seven times what SEC-related actions covered. Overall, the top 50 private securities settlements recovered over $58 billion, while the top 50 SEC actions recovered less than $14 billion, much of which was never returned to investors.
Against this backdrop, investors now face a renewed challenge. SEC Chair Paul Atkins has argued that declining numbers of public companies and IPOs are attributable to regulatory burdens and fears of frivolous litigation. Yet empirical research does not support his claim. A recent Journal of Financial Economics study found that regulatory compliance costs explain just 7.3 percent of the decline in IPOs. Instead, the primary drivers are the expanding availability of private capital or M&A activity. Further, if litigation costs were the culprit of the IPO decline, IPO activity should have increased as the PSLRA increased dismissal rates—but data shows precisely the opposite trend.
Despite this evidence, efforts continue to weaken private enforcement through forced arbitration, expanded safe harbors, and pressure on states to adopt investor‑hostile laws. As the Symposium made clear, 30 years on, the PSLRA’s legacy is complex. But private securities litigation remains indispensable to market integrity and investor protection.