"Sexual harassment is securities fraud" is an idea that will buy a big
yacht for the lawyer who came up with it. It's so much better--for the
lawyer--than suing directly for sexual harassment. If you sue for
sexual harassment you have to recruit individual plaintiffs who were
harassed, and you have to prove their cases, and they're all probably
different so it's harder to make it a lucrative class action, and they
are actual individual humans who have been harmed and you have to be
sensitive to their trauma.
If you sue for sexual-harassment-as-securities-fraud, the plaintiffs
are easy to find (big shareholders), you don't really have to prove
harassment (just refer to news accounts), your clients are only in it
for the money, everything is clean and simple and easy. Also the
dollar amounts are larger: In some subjective moral sense, sure,
employees are more harmed by a toxic work environment than
shareholders are, but if the toxic work environment is at a large
public company, and the stock drops, then it's really easy to argue
that the shareholders lost a huge amount of money and should get it
back.
[...]
It's a very generic enforcer of good behavior: If you do anything
shady, people who specialize in extracting money from public companies
will extract some money from you. And a lot of technical defenses that
you could use if you were sued by your employees or customers or
regulators--technical defenses like "the shady thing we did wasn't
actually illegal"!--will not work here, because the lawyers' basic
argument will be "you did this thing and the stock went down."