Using actions with both an SEC investigation and a class action as our baseline, we compare the targeting of SEC-only investigations with class-action-only lawsuits. Looking at measures of information asymmetry, we find that investors in the market perceive greater information asymmetry following the public announcement of the underlying violation for class-action-only lawsuits compared with SEC-only investigations. Turning to sanctions, we find that the incidence of top officer resignation is greater for class-action-only lawsuits relative to SEC-only investigations. Our findings are consistent with the private enforcement targeting disclosure violations at least as precisely as (if not more so than) SEC enforcement.
Pritchard, Adam C., co-author. "SEC Investigations and Securities Class Actions: An Empirical Comparison." S. J. Choi, co-author. J. Empirical Legal Stud. 13, no. 1 (2016): 27-49.
Also available in the Wiley Online Library at http://onlinelibrary.wiley.com/doi/10.1111/jels.12096/full.