Legislative and judicial developments over the last 15 years have established that institutional funds, the major stakeholders in U.S. public companies, have an affirmative duty to recoup losses resulting from corporate misconduct and securities fraud.
The 1995 passage of the Private Securities Litigation Reform Act (the "PSLRA") focused the burden of securities litigation oversight on the large institutional investor plaintiff. In 2006, a Government Finance Officers Association's published recommended practice concluded that "public pension governing bodies (the Board) and chief administrative officers (CAO) have a fiduciary obligation to recover funds lost through investments in public securities as the result of corporate mismanagement and/or fraud." In addition, the U.S. Department of Labor has repeatedly affirmed that it would be "a breach of fiduciary duty not to pursue a valid [securities fraud] claim." Most recently, in Larson v. J.P. Morgan Chase & Co., the Seventh Circuit Court of Appeals sent a strong message to institutional investors that they are expected to have procedures and policies in place to monitor securities class actions in which they have a financial interest and viable claims.
Bernstein Litowitz Berger & Grossmann is widely recognized as the leading law firm representing institutional investors in corporate governance, shareholder rights and securities litigation matters. In order to help institutional funds properly track potential securities frauds and recoup losses, BLB&G employs a state-of-the-art proprietary portfolio monitoring and case evaluation system. Click here to learn more.
In addition, we publish a quarterly newsletter - the Advocate for Institutional Investors - and host an annual educational conference - the Forum for Institutional Investors - for the benefit of the institutional investor community.
