Public pension funds have played a prominent role in securities class actions, comprising nearly half of all institutional investor lead plaintiffs. Overall, prior research has shown that the funds perform admirably in the lead plaintiff role, increasing recoveries for the class of defrauded shareholders, improving corporate governance, enhancing the independence of the board, and lowering attorneys’ fees. Recently, several articles in the business press and a concerted lobbying effort have argued that the funds’ participation in these class actions is driven by “pay-to-play”. In this context, “pay-to-play” means that politicians on pension fund boards direct the funds to obtain lead plaintiff appointments in exchange for campaign contributions from plaintiffs’ law firms. In my paper recently posted on SSRN, Is ‘Pay-to-Play’ Driving Public Pension Fund Activism in Securities Class Actions? An Empirical Study, I conclude that “pay-to-play” is, at most, a marginal factor in the funds’ participation in securities class actions.

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