Throughout the week over at Securities Docket, I highlight the most interesting columns and blog posts from around the web (on the subjects, predictably, of SEC enforcement and securities litigation). Here is a digest of my picks for the week ending January 22:

The Downside to Opting Out (Adam Savett, Securities Litigation Watch)Securities Litigation Watch | January 22, 2010Much ink is spilled (particularly by self-laudatory securities litigators) on the potential upside of the process of opting out of securities class actions and filing individual or group actions over the same alleged misstatements or omissions. Someone in the plaintiffs bar (perhaps with a PR background) even created a new term to describe these cases - direct actions.

It seems that virtually all of what has been written on the issue has focused on the allegedly larger recoveries that opt-out plaintiffs have received in their own cases as compared to what they would have received if they had remained in the class action and filed a claim for their pro-rata share of the settlement fund. Well most upsides also have a downside, and a recent state court trial of an opt-out case provides a nice case study for us.

Going Undercover for a White-Collar Sting (Peter Henning, DealBook)DealBook | January 21, 2010Using these new tactics in white-collar crime cases is not without controversy. Don't be surprised to hear the defendants in the foreign bribery case argue that the government manufactured the crimes they are accused of committing by trapping unwary innocents. In the Galleon case, the billionaire hedge fund operator Raj Rajaratnam plans to challenge the use of the wiretaps, arguing that there was no need for them.

What is clear is that the Justice Department is willing to use investigative tools that were once largely ignored in white-collar crime cases as part of a shift away from being simply reactive to reported wrongdoing. We may be witnessing the dawn of a new era in white-collar investigations.

A Stronger Sheriff For Wall Street As SEC Enforcement Is Overhauled (Gary Weiss, Portfolio.com)Portfolio.com | January 19, 2010The SEC's enforcement division announced a reorganization the other day, its first in nearly four decades. It is, overall, a good thing. But it could be made a lot better.

The SEC gets an A for effort for doing this, but I was disappointed by the units that the SEC did not create. Yes, those five areas are important. Heck, it’s hard to find five areas in the SEC’s orbit that would not be important. But the SEC erred by failing to include two units: one focusing on misconduct by public companies and another focusing on small companies and entrepreneurs.

So, you want to be a big-firm deal lawyer? (Houston's Clear Thinkers)Houston's Clear Thinkers | January 18, 2010Continuing to fly well beneath the radar screen – probably because lawyers don’t want to talk about it except in hushed tones – is the seven-year prison sentence that former Mayer Brown partner Joseph P. Collins was handed late last week. Collins was the former outside deal lawyer for Refco, Inc., which unraveled back in 2005 under the weight of public disclosure of a series of insider transactions that were apparently designed to hide millions in liabilities from customers and investors.

As his Memorandum of Law in support of a new trial explains, whether Collins even knew about the allegedly fraudulent nature of the transactions is highly questionable and whether he hid those transactions from anyone is even more dubious.

Galleon Insider-Trading Case's Inside Man (Susan Pulliam, WSJ)The Wall Street Journal | January 16, 2010In the movie "Wall Street," Bud Fox wears a body wire and gets his partner arrested for insider trading. David Slaine has done that in real life.

For more than a year, Mr. Slaine, a senior Wall Street trader, was a government mole who wore a wire strapped to his torso, helping prosecutors to build the biggest insider-trading case in two decades.

Using extensive contacts developed over a 27-year Wall Street career, Mr. Slaine has provided leads on possible insider trading by others not yet implicated in a sprawling case involving hedge fund Galleon Group, people familiar with the matter say.