[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1689 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 1689

To amend the Securities Act of 1933 and the Securities Exchange Act of 
1934 to limit the conduct of securities class actions under State law, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 21, 1997

 Mr. White (for himself, Ms. Eshoo, Mr. Barton of Texas, Mr. Brown of 
Ohio, Mr. Bilbray, Mr. Dooley of California, Mr. Campbell, Mr. Fazio of 
California, Mr. Coburn, Mr. Farr of California, Mr. Cox of California, 
Mr. Frank of Massachusetts, Ms. Dunn, Ms. Harman, Mr. Klug, Mr. Kennedy 
 of Massachusetts, Mr. Nethercutt, Ms. Lofgren, Mr. Paxon, Mr. Roemer, 
   Ms. Pryce of Ohio, Mrs. Tauscher, Mr. Tauzin, Mr. Towns, and Mr. 
   Deutsch) introduced the following bill; which was referred to the 
                         Committee on Commerce

_______________________________________________________________________

                                 A BILL


 
To amend the Securities Act of 1933 and the Securities Exchange Act of 
1934 to limit the conduct of securities class actions under State law, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Securities Litigation Uniform 
Standards Act of 1997''.

SEC. 2. LIMITATION ON REMEDIES.

    (a) Amendments to the Securities Act of 1933.--
            (1) Amendment.--Section 16 of the Securities Act of 1933 
        (15 U.S.C. 77p) is amended to read as follows:

``SEC. 16. ADDITIONAL REMEDIES; LIMITATION ON REMEDIES.

    ``(a) Remedies Additional.--Except as provided in subsection (b), 
the rights and remedies provided by this title shall be in addition to 
any and all other rights and remedies that may exist at law or in 
equity.
    ``(b) Class Action Limitations.--No class action based upon the 
statutory or common law of any State or subdivision thereof may be 
maintained in any State or Federal court by any private party 
alleging--
            ``(1) an untrue statement or omission of a material fact in 
        connection with the purchase or sale of a covered security; or
            ``(2) that the defendant used or employed any manipulative 
        or deceptive device or contrivance in connection with the 
        purchase or sale of a covered security.
    ``(c) Removal of Class Actions.--Any class action brought in any 
State court involving a covered security as set forth in subsection (b) 
shall be removable to the Federal district court for the district in 
which the action is pending and shall be subject to subsection (b).
    ``(d) Definitions.--For purposes of this section:
            ``(1) Class action.--A `class action' is any single 
        lawsuit, or any group of lawsuits filed in or pending in the 
        same court involving common questions of law or fact, in 
        which--
                    ``(A) damages are sought on behalf of more than 25 
                persons;
                    ``(B) one or more named parties seek to recover 
                damages on a representative basis on behalf of 
                themselves and other unnamed parties similarly 
                situated; or
                    ``(C) one or more of the parties seeking to recover 
                damages did not personally authorize the filing of the 
                lawsuit.
            ``(2) Covered security.--A security is a `covered security' 
        if the issuer of the security had outstanding any security that 
        satisfied the standard for a covered security specified in 
        section 18(b)(1) of this title at any time during which it is 
        alleged that the misrepresentation, omission, or manipulative 
        or deceptive conduct occurred.''.
            (2) Conforming amendments.--Section 22(a) of the Securities 
        Act of 1933 (15 U.S.C. 77v(a)) is amended--
                    (A) by striking ``and, concurrent with State and 
                Territorial courts,'' and inserting ``and, concurrent 
                with State and Territorial courts except as provided in 
                section 16 with respect to class actions,''; and
                    (B) by striking ``No case arising under this title 
                and brought in any State court of competent 
                jurisdiction shall be removed'' and inserting ``Except 
                as provided in section 16(c), no case arising under 
                this title and brought in any State court of competent 
                jurisdiction shall be removed''.
    (b) Amendments to the Securities Exchange Act of 1934.--Section 28 
of the Securities Exchange Act of 1934 (15 U.S.C. 78bb) is amended--
            (1) in subsection (a), by striking ``The rights and 
        remedies'' and inserting ``Except as provided in subsection 
        (f), the rights and remedies''; and
            (2) by adding at the end the following new subsection:
    ``(f) Limitations on Remedies.--
            ``(1) Class action limitations.--No class action based upon 
        the statutory or common law of any State or subdivision thereof 
        may be maintained in any State or Federal court by any private 
        party alleging--
                    ``(A) a misrepresentation or omission of a material 
                fact in connection with the purchase or sale of a 
                covered security; or
                    ``(B) that the defendant used or employed any 
                manipulative or deceptive device or contrivance in 
                connection with the purchase or sale of a covered 
                security.
            ``(2) Removal of class actions.--Any class action brought 
        in any State court involving a covered security as set forth in 
        paragraph (1) shall be removable to the Federal district court 
        for the district in which the action is pending and shall be 
        subject to paragraph (1).
            ``(3) Definitions.--For purposes of this subsection:
                    ``(A) Class action.--A `class action' is any single 
                lawsuit, or any group of lawsuits filed in or pending 
                in the same court involving common questions of law or 
                fact, in which--
                            ``(i) damages are sought on behalf of more 
                        than 25 persons;
                            ``(ii) one or more named parties seek to 
                        recover damages on a representative basis on 
                        behalf of themselves and other unnamed parties 
                        similarly situated; or
                            ``(iii) one or more of the parties seeking 
                        to recover damages did not personally authorize 
                        the filing of the lawsuit.
                    ``(B) Covered security.--A security is a `covered 
                security' if the issuer of the security had outstanding 
                any security that satisfied the standard for a covered 
                security specified in section 18(b)(1) of the 
                Securities Act of 1993 at any time during which it is 
                alleged that the misrepresentation, omission, or 
                manipulative or deceptive conduct occurred.''.
    (c) Applicability.--The amendments made by this section shall not 
affect or apply to any action commenced before and pending on the date 
of enactment of this Act.
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