[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1260 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                S. 1260

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 SENATE OF THE UNITED STATES

                            October 7, 1997

    Mr. Gramm (for himself, Mr. Dodd, Mr. Domenici, Mrs. Boxer, Mr. 
Faircloth, Mrs. Feinstein, Mr. Hagel, Mr. Reid, Mr. Wyden, Mr. Allard, 
   Ms. Moseley-Braun, Mrs. Murray, and Mr. Lieberman) introduced the 
 following bill; which was read twice and referred to the Committee on 
                  Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 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 the following 
definitions shall apply:
            ``(1) Class action.--The term `class action' means 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 it satisfies the standard for a covered security specified 
        in paragraph (1) or (2) of section 18(b) at the 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 the 
        following definitions shall apply:
                    ``(A) Class action.--The term `class action' means 
                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 it satisfies the standard for a covered 
                security specified in paragraph (1) or (2) of section 
                18(b) of the Securities Act of 1933, at the 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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