Proposition 211: Securities Litigation Referendum (B) Harvard Case Solution & Analysis

Proposition 211: Securities Litigation Referendum (B) Case Solution

The lawsuits, which werealleged securities fraud caused by earnings projections that were inflated by the companies, were generally filed after a sudden drop in the share price of an organization. High technology companies, which often have share prices that are explosive, were the main goal of the lawsuits. Several law firms, headed by Bill Lerach, specialized in these lawsuits, and some were considered to have roomsof investors who'd file a lawsuit as soon as an organization's share price dropped substantially.
Despite the fact that the defendant firms were assured that the lawsuits were frivolous and that no fraud was perpetrated, the defendants felt compelled to settle to avoid a drawn-out and expensive court fight. In 1995, bookkeeping, high technology, and other companies succeeded in having Congress enact national laws restricting the conditions under which such lawsuits would achieve success. The plaintiff's bar qualified a referendum, proposal 211, for the November 1996 California vote to reinforce their standing under state law. If passed by the voters, not only would securities fraud lawsuits be easier to win but almost all publicly traded firms in America could be subject to lawsuits.

This is just an excerpt. This case is about  GLOBAL BUSINESS

PUBLICATION DATE: October 01, 1997

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