The PSLRA Cap on Securities Fraud Damages: An Empirical Evaluation of the 90-Day 'Bounce-Back'

摘要

The process of damages calculation in securities class actions brought under § 10(b) of the Securities Exchange Act of 1934 (1934 Act)1 is a complicated one, highly dependent on the battling financial models of experts. In 1995, the Private Securities Litigation Reform Act (PSLRA) added Section 21D(e) to the 1934 Act, which instituted a cap on damages in such cases. The PSLRA cap limits damages to the difference between the price paid for the security by the investor and the average price of the stock during the 90 days after the date of the corrective disclosure.