I've added it as an update to the Reeder Feedback on the ILR Report post here, but another comment from a reader now has me pondering. The premise of the IRL report seems to be that individual investors get the "short end of the stick" because, unlike institutions, they are unlikely to be sufficiently diversified  to get enough of the "'winning' transactions (i.e., from selling a security at what is alleged to be an artificially inflated price)" to offset their losses from "losing" transactions caused by securities fraud.  Conversely, institutional investors are typically diversified, and therefore do better than individuals in this regard.

But...as one reader points out, "'institutions', i.e. pension funds, mutual funds, are simply aggregations of individual investor interests." 

Isn't that right?  Doesn't this benefit of diversification to institutions that supposedly causes individuals to get the "short end of the stick" simply get distributed in the end to individuals anyway?