Congress Must Resolve PSLRA Issue For Section 11 Litigants

Uncertainty in Section 11 securities litigation has grown following the Supreme Court’s Slack v. Pirani decision and ambiguities in the Private Securities Litigation Reform Act (PSLRA). The PSLRA grants judgment reduction credits when outside directors settle, but its silence on other Section 11 defendants has created confusion that discourages fair and efficient settlements. Although courts often extend judgment reduction credits more broadly, inconsistent interpretations leave litigants uncertain. Amending the PSLRA to provide uniform rules would promote quicker, fairer resolutions and better serve its goal of curbing abusive securities litigation.