In combating securities fraud, the historic role of the Securities and Exchange Commission has been to deter wrongdoers, while private litigation sought to compensate injured investors. One of the innovations in the Sarbanes-Oxley Act of 2002, however, was to put the SEC in the business of compensating investors . . . somewhat.
The result has been a hybrid system that encourages both the SEC and private plaintiffs’ attorneys to chase after the same limited pool of corporate funds available to compensate investors, with the ultimate losers being the injured investors.
