Letter from Bruce Lindsey and Gene Sperling.
On S 1620, Securities Litigation Uniform Standards Act of 1997.
April 28, 1998.
Source: Office of Rep. Anna Eshoo.  This document was created by scanning a fax of the letter, and converting it into HTML.

THE WHITE HOUSE
WASHINGTON

April 28, 1998

The Honorable Alfonse M. D'Amato
Chairman
Committee on Banking, Housing & Urban Affairs
United States Senate
Senate Hart Office Building 520
Washington, DC 20510

The Honorable Phil Gramm
Chairman
Subcommittee on Securities
United States Senate
Senate Russell Office Building 370
Washington, DC 20510

The Honorable Christopher J. Dodd
Ranking Member
Subcommittee on Securities
United States Senate
Senate Russell Office Building 444
Washington, DC 20510

Dear Chairman D'Amato, Chairman Gramm and Senator Dodd:

We understand that you have had productive discussions with the Securities and Exchange Commission (SEC) about S. 1260, the Securities Litigation Uniform Standards Act of 1997. The Administration applauds the constructive approach that you have taken to resolve the SEC's concerns.

We support the amendments to clarify that the bill will not preempt certain corporate governance claims and to narrow the definition of class action. More importantly, we am pleased to see your commitment, by letter dated March 24,1998, to Chairman Levitt and members of the Commission, to restate in S. 1260's legislative history, and in the expected debate on the Senate floor, that the Private Securities Litigation Reform Act of 1995 did not, and was not intended to, alter the scienter standard for securities fraud actions.

As you know, uncertainty about the impact of the Reform Act on the scienter standard was one of the President' s greatest concerns. The legislative history and floor statements that you have promised the SEC and will accompany S. 1260 should reduce confusion in the courts about the proper interpretation of the Reform Act. Since the uniform standards provided by S. 1260 will provide that class actions generally can be brought only in federal court, where they will be governed by federal law, it is particularly important to the President that you be clear that the federal law to be applied includes recklessness as a basis for pleading and liability in securities fraud class actions.

So long as the amendments designed to address the SEC's concerns are added to the legislation and the appropriate legislative history and floor statements on the subject of legislative intent are included in the legislative record, the Administration would support enactment of S. 1260.

Sincerely,