[Congressional Record Volume 141, Number 10 (Wednesday, January 18, 1995)]
[Extensions of Remarks]
[Pages E124-E125]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                   THE COMMON SENSE LEGAL REFORM ACT

                                 ______


                         HON. BRIAN P. BILBRAY

                             of california

                    in the house of representatives

                       Wednesday, January 18, 1995
  Mr. BILBRAY. Mr. Speaker, this week the Commerce Committee begins 
hearings on extremely important legal reform.
  The Common Sense Legal Reform Act (H.R. 10) will restore commonsense 
to Federal securities laws by limiting strike lawsuits--suits filed by 
class action attorneys on behalf of shareholders whose stock 
investments have failed to live up to their expectations. Currently, a 
sharp drop or increase in a company's stock price can trigger a 
lawsuit, even if movement was caused by normal market events.
  Mr. Speaker, high-tech, bio-tech and other growth companies are the 
job creators in our economy. American businesses like these, struggling 
to remain competitive in a global marketplace, fear these abusive 
strike lawsuits for good reason: Because these companies stock prices 
are the most volatile, and they can least afford the endless litigation 
resulting in huge legal fees, they are the targets of these frivolous 
lawsuits.
  These lawsuits effect businesses' competitiveness on several levels. 
To settle these speculative suits, companies may be forced to layoff 
employees or simply never hire them at all. Worst of all, U.S. 
competitiveness on an international scale is shackled with a tax on 
innovation. Why? Because strike suits hit the most innovative, 
entrepreneurial firms in America.
  Finally, Mr. Speaker, the small independent investor is the one who 
stand to gain the most 
[[Page E125]] from this commonsense legal reform. The small investor is 
the one deprived of timely information by gun-shy managers, who see 
capital allocated to R&D diverted to pay legal bills and settlements, 
and who are robbed of the time and talent of managers distracted by 
lawsuits.
  Commonsense legal reform, that we promised in the Contract With 
America, and we are delivering with H.R. 10, is desperately needed to 
unshackle companies and investors from these abusive lawsuits.


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