House Commerce Committee Approves Securities Litigation Bill

(June 25, 1998)  The House Commerce Committee approved by voice vote the Securities Litigation Uniform Standards Act on Wednesday.  A similar version of the bill, S. 1620, has already passed the Senate.  Clinton assistant Bruce Lindsey has written that the President supports the legislation.

The bill, H.R. 1689,  would preempt state laws by establishing uniform national standards for class action lawsuits.  It is designed to decrease the number of harassment suits brought in state courts that threaten the ability of companies -- particularly high-tech Silicon Valley companies -- to raise capital and disseminate information.  It would remedy what what its promoters see as an oversight or deficiency of the recently enacted Private Securities Litigation Reform Act of 1995 (PSLRA), which was intended to reduce the number of frivolous class action 10(b) suits in federal courts.

Rep. Rick White (R-WA), a sponsor of the bill, and a member of the House Commerce Committee, stated that "This bill is incredibly important for the fast growing companies that are driving the information economy"  He added that "Frivolous lawsuits that target high tech firms with volatile stock prices do nothing but slow down innovation. I hope the full House will pass this bill in July and send it to the President to be signed into law."

Rep. White served on the conference committee for the PSLRA (which passed over President Clinton's veto), and introduced H.R. 1689 to ensure that the reforms Congress passed were implemented. The Senate passed companion legislation (S. 1260) by a vote of 79-21 on May 13, 1998.

The sponsors of H.R. 1689 include Rep. White, Rep. Anna Eshoo (D-CA), and over 200 other Members of Congress.

Rep. Eshoo stated that "This bill prevents those specializing in frivolous, opportunistic class actions from using state courts to get around federal reforms enacted in 1995.  It will give consumers the protection they need to bring legitimate cases of fraud to court and companies the relief they need from harassing, meritless lawsuits."

The bill may also be referred to the House Judiciary Committee, before being considered by the full House.