[Congressional Record Volume 141, Number 193 (Wednesday, December 6, 1995)]
[House]
[Pages H14030-H14034]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




WAIVING POINTS OF ORDER AGAINST CONFERENCE REPORT ON H.R. 1058, PRIVATE 
                SECURITIES LITIGATION REFORM ACT OF 1995

  Mr. DREIER. Mr. Speaker, by direction of the Committee on Rules, I 
called up House Resolution 290 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 290

       Resolved, That upon adoption of this resolution it shall be 
     in order to consider the conference report to accompany the 
     bill (H.R. 1058) to reform Federal securities litigation, and 
     for other purposes. All points of order against the 
     conference report and against its consideration are waived.

  The SPEAKER pro tempore. The gentleman from California [Mr. Dreier] 
is recognized for 1 hour.
  Mr. DREIER. Mr. Speaker, I yield the customary 30 minutes to my good 
friend, the gentleman from Dayton, OH [Mr. Hall], pending which I yield 
myself such time as I may consume. All time yielded is for purposes of 
debate only.
  (Mr. DREIER asked and was given permission to revise and extend his 
remarks and include extraneous material.)
  Mr. DREIER. Mr. Speaker, this rule provides for consideration of the 
conference report to accompany H.R. 1058, the Securities Litigation 
Reform Act. All points of order against the conference report and 
against its consideration are waived.
  Securities litigation reform is not some abstract proposal that will 
prove meaningless to everyone but a few overlitigious lawyers and 
assorted legal professors around the country. This bill is about jobs. 
This is a critical step in our effort to help create more high-quality 
private-sector jobs here at home.
  Private securities litigation is undertaken today in a system that 
encourages meritless cases, destroys thousands of jobs, undercuts 
economic growth, and raises the prices that American families pay for 
goods and services.
  This legislation targets a particularly abusive class of securities 
lawsuits often filed with the sole intention of extorting pretrial 
settlement from companies whose stock has fallen in value. Because of 
the innovative nature of the work of high-technology companies, their 
stock values are inherently volatile, making them frequent targets of 
strike-suit lawyers. For example, nearly every company in California's 
Silicon Valley has faced this type of litigation, and this problem also 
plagues the cutting-edge biotechnology industry.
  In States like California, where high-technology companies are a 
critical component of economic recovery and revitalization, strike 
suits aimed at crippling legitimate high technology firms are crippling 
prospects for growth and job creation.
  The conference report on H.R. 1058 represents a bipartisan, bicameral 
agreement on securities litigation reform that will promote good 
business practices, protect investors' rights, and free innocent 
parties from wasteful and baseless litigation designed to enrich 
litigators alone. While Chairman Bliley and Chairman Fields have done 
tremendous work to bring this conference agreement to the floor, I must 
note the efforts of my colleague from Newport Beach, CA, Chris Cox.
  Chris, a former securities lawyer, has been involved in securities 
litigation reform since his days at Harvard Law School. He has pushed 
this important reform effort throughout his 6 years in the House, and 
was ready to move forward at the beginning of this year when success 
became a possibility. His hard work and leadership has been critical to 
this effort.
  Mr. Speaker, I urge my colleagues to support this fair rule and move 
to debate of the conference agreement on H.R. 1058.
  Mr. Speaker, I include for the Record the following material from the 
Committee on Rules:

  THE AMENDMENT PROCESS UNDER SPECIAL RULES REPORTED BY THE RULES COMMITTEE,\1\ 103D CONGRESS V. 104TH CONGRESS 
                                            [As of December 1, 1995]                                            
----------------------------------------------------------------------------------------------------------------
                                                  103d Congress                        104th Congress           
              Rule type              ---------------------------------------------------------------------------
                                       Number of rules    Percent of total   Number of rules    Percent of total
----------------------------------------------------------------------------------------------------------------
Open/Modified-open \2\..............                 46                 44                 56                 66
Modified Closed \3\.................                 49                 47                 20                 24
Closed \4\..........................                  9                  9                  9                 10
                                     ---------------------------------------------------------------------------
      Total.........................                104                100                 85                100
----------------------------------------------------------------------------------------------------------------
\1\ This table applies only to rules which provide for the original consideration of bills, joint resolutions or
  budget resolutions and which provide for an amendment process. It does not apply to special rules which only  
  waive points of order against appropriations bills which are already privileged and are considered under an   
  open amendment process under House rules.                                                                     
\2\ An open rule is one under which any Member may offer a germane amendment under the five-minute rule. A      
  modified open rule is one under which any Member may offer a germane amendment under the five-minute rule     
  subject only to an overall time limit on the amendment process and/or a requirement that the amendment be     
  preprinted in the Congressional Record.                                                                       
\3\ A modified closed rule is one under which the Rules Committee limits the amendments that may be offered only
  to those amendments designated in the special rule or the Rules Committee report to accompany it, or which    
  preclude amendments to a particular portion of a bill, even though the rest of the bill may be completely open
  to amendment.                                                                                                 
\4\ A closed rule is one under which no amendments may be offered (other than amendments recommended by the     
  committee in reporting the bill).                                                                             


                          SPECIAL RULES REPORTED BY THE RULES COMMITTEE, 104TH CONGRESS                         
                                            [As of December 1, 1995]                                            
----------------------------------------------------------------------------------------------------------------
                                                                                                 Disposition of 
    H. Res. No. (Date rept.)         Rule type           Bill No.              Subject                rule      
----------------------------------------------------------------------------------------------------------------
H. Res. 38 (1/18/95)...........  O................  H.R. 5...........  Unfunded Mandate        A: 350-71 (1/19/ 
                                                                        Reform.                 95).            

[[Page H 14031]]
                                                                                                                
H. Res. 44 (1/24/95)...........  MC...............  H. Con. Res. 17..  Social Security.......  A: 255-172 (1/25/
                                                    H.J. Res. 1......  Balanced Budget Amdt..   95).            
H. Res. 51 (1/31/95)...........  O................  H.R. 101.........  Land Transfer, Taos     A: voice vote (2/
                                                                        Pueblo Indians.         1/95).          
H. Res. 52 (1/31/95)...........  O................  H.R. 400.........  Land Exchange, Arctic   A: voice vote (2/
                                                                        Nat'l. Park and         1/95).          
                                                                        Preserve.                               
H. Res. 53 (1/31/95)...........  O................  H.R. 440.........  Land Conveyance, Butte  A: voice vote (2/
                                                                        County, Calif.          1/95).          
H. Res. 55 (2/1/95)............  O................  H.R. 2...........  Line Item Veto........  A: voice vote (2/
                                                                                                2/95).          
H. Res. 60 (2/6/95)............  O................  H.R. 665.........  Victim Restitution....  A: voice vote (2/
                                                                                                7/95).          
H. Res. 61 (2/6/95)............  O................  H.R. 666.........  Exclusionary Rule       A: voice vote (2/
                                                                        Reform.                 7/95).          
H. Res. 63 (2/8/95)............  MO...............  H.R. 667.........  Violent Criminal        A: voice vote (2/
                                                                        Incarceration.          9/95).          
H. Res. 69 (2/9/95)............  O................  H.R. 668.........  Criminal Alien          A: voice vote (2/
                                                                        Deportation.            10/95).         
H. Res. 79 (2/10/95)...........  MO...............  H.R. 728.........  Law Enforcement Block   A: voice vote (2/
                                                                        Grants.                 13/95).         
H. Res. 83 (2/13/95)...........  MO...............  H.R. 7...........  National Security       PQ: 229-100; A:  
                                                                        Revitalization.         227-127 (2/15/  
                                                                                                95).            
H. Res. 88 (2/16/95)...........  MC...............  H.R. 831.........  Health Insurance        PQ: 230-191; A:  
                                                                        Deductibility.          229-188 (2/21/  
                                                                                                95).            
H. Res. 91 (2/21/95)...........  O................  H.R. 830.........  Paperwork Reduction     A: voice vote (2/
                                                                        Act.                    22/95).         
H. Res. 92 (2/21/95)...........  MC...............  H.R. 889.........  Defense Supplemental..  A: 282-144 (2/22/
                                                                                                95).            
H. Res. 93 (2/22/95)...........  MO...............  H.R. 450.........  Regulatory Transition   A: 252-175 (2/23/
                                                                        Act.                    95).            
H. Res. 96 (2/24/95)...........  MO...............  H.R. 1022........  Risk Assessment.......  A: 253-165 (2/27/
                                                                                                95).            
H. Res. 100 (2/27/95)..........  O................  H.R. 926.........  Regulatory Reform and   A: voice vote (2/
                                                                        Relief Act.             28/95).         
H. Res. 101 (2/28/95)..........  MO...............  H.R. 925.........  Private Property        A: 271-151 (3/2/ 
                                                                        Protection Act.         95).            
H. Res. 103 (3/3/95)...........  MO...............  H.R. 1058........  Securities Litigation   .................
                                                                        Reform.                                 
H. Res. 104 (3/3/95)...........  MO...............  H.R. 988.........  Attorney                A: voice vote (3/
                                                                        Accountability Act.     6/95).          
H. Res. 105 (3/6/95)...........  MO...............  .................  ......................  A: 257-155 (3/7/ 
                                                                                                95).            
H. Res. 108 (3/7/95)...........  Debate...........  H.R. 956.........  Product Liability       A: voice vote (3/
                                                                        Reform.                 8/95).          
H. Res. 109 (3/8/95)...........  MC...............  .................  ......................  PQ: 234-191 A:   
                                                                                                247-181 (3/9/   
                                                                                                95).            
H. Res. 115 (3/14/95)..........  MO...............  H.R. 1159........  Making Emergency Supp.  A: 242-190 (3/15/
                                                                        Approps.                95).            
H. Res. 116 (3/15/95)..........  MC...............  H.J. Res. 73.....  Term Limits Const.      A: voice vote (3/
                                                                        Amdt.                   28/95).         
H. Res. 117 (3/16/95)..........  Debate...........  H.R. 4...........  Personal                A: voice vote (3/
                                                                        Responsibility Act of   21/95).         
                                                                        1995.                                   
H. Res. 119 (3/21/95)..........  MC...............  .................  ......................  A: 217-211 (3/22/
                                                                                                95).            
H. Res. 125 (4/3/95)...........  O................  H.R. 1271........  Family Privacy          A: 423-1 (4/4/   
                                                                        Protection Act.         95).            
H. Res. 126 (4/3/95)...........  O................  H.R. 660.........  Older Persons Housing   A: voice vote (4/
                                                                        Act.                    6/95).          
H. Res. 128 (4/4/95)...........  MC...............  H.R. 1215........  Contract With America   A: 228-204 (4/5/ 
                                                                        Tax Relief Act of       95).            
                                                                        1995.                                   
H. Res. 130 (4/5/95)...........  MC...............  H.R. 483.........  Medicare Select          A: 253-172 (4/6/
                                                                        Expansion.              95).            
H. Res. 136 (5/1/95)...........  O................  H.R. 655.........  Hydrogen Future Act of  A: voice vote (5/
                                                                        1995.                   2/95).          
H. Res. 139 (5/3/95)...........  O................  H.R. 1361........  Coast Guard Auth. FY    A: voice vote (5/
                                                                        1996.                   9/95).          
H. Res. 140 (5/9/95)...........  O................  H.R. 961.........  Clean Water Amendments  A: 414-4 (5/10/  
                                                                                                95).            
H. Res. 144 (5/11/95)..........  O................  H.R. 535.........  Fish Hatchery--         A: voice vote (5/
                                                                        Arkansas.               15/95).         
H. Res. 145 (5/11/95)..........  O................  H.R. 584.........  Fish Hatchery--Iowa...  A: voice vote (5/
                                                                                                15/95).         
H. Res. 146 (5/11/95)..........  O................  H.R. 614.........  Fish Hatchery--         A: voice vote (5/
                                                                        Minnesota.              15/95).         
H. Res. 149 (5/16/95)..........  MC...............  H. Con. Res. 67..  Budget Resolution FY    PQ: 252-170 A:   
                                                                        1996.                   255-168 (5/17/  
                                                                                                95).            
H. Res. 155 (5/22/95)..........  MO...............  H.R. 1561........  American Overseas       A: 233-176 (5/23/
                                                                        Interests Act.          95).            
H. Res. 164 (6/8/95)...........  MC...............  H.R. 1530........  Nat. Defense Auth. FY   PQ: 225-191 A:   
                                                                        1996.                   233-183 (6/13/  
                                                                                                95).            
H. Res. 167 (6/15/95)..........  O................  H.R. 1817........  MilCon Appropriations   PQ: 223-180 A:   
                                                                        FY 1996.                245-155 (6/16/  
                                                                                                95).            
H. Res. 169 (6/19/95)..........  MC...............  H.R. 1854........  Leg. Branch Approps.    PQ: 232-196 A:   
                                                                        FY 1996.                236-191 (6/20/  
                                                                                                95).            
H. Res. 170 (6/20/95)..........  O................  H.R. 1868........  For. Ops. Approps. FY   PQ: 221-178 A:   
                                                                        1996.                   217-175 (6/22/  
                                                                                                95).            
H. Res. 171 (6/22/95)..........  O................  H.R. 1905........  Energy & Water          A: voice vote (7/
                                                                        Approps. FY 1996.       12/95).         
H. Res. 173 (6/27/95)..........  C................  H.J. Res. 79.....  Flag Constitutional     PQ: 258-170 A:   
                                                                        Amendment.              271-152 (6/28/  
                                                                                                95).            
H. Res. 176 (6/28/95)..........  MC...............  H.R. 1944........  Emer. Supp. Approps...  PQ: 236-194 A:   
                                                                                                234-192 (6/29/  
                                                                                                95).            
H. Res. 185 (7/11/95)..........  O................  H.R. 1977........  Interior Approps. FY    PQ: 235-193 D:   
                                                                        1996.                   192-238 (7/12/  
                                                                                                95).            
H. Res. 187 (7/12/95)..........  O................  H.R. 1977........  Interior Approps. FY    PQ: 230-194 A:   
                                                                        1996 #2.                229-195 (7/13/  
                                                                                                95).            
H. Res. 188 (7/12/95)..........  O................  H.R. 1976........  Agriculture Approps.    PQ: 242-185 A:   
                                                                        FY 1996.                voice vote (7/18/
                                                                                                95).            
H. Res. 190 (7/17/95)..........  O................  H.R. 2020........  Treasury/Postal         PQ: 232-192 A:   
                                                                        Approps. FY 1996.       voice vote (7/18/
                                                                                                95).            
H. Res. 193 (7/19/95)..........  C................  H.J. Res. 96.....  Disapproval of MFN to   A: voice vote (7/
                                                                        China.                  20/95).         
H. Res. 194 (7/19/95)..........  O................  H.R. 2002........  Transportation          PQ: 217-202 (7/21/
                                                                        Approps. FY 1996.       95).            
H. Res. 197 (7/21/95)..........  O................  H.R. 70..........  Exports of Alaskan      A: voice vote (7/
                                                                        Crude Oil.              24/95).         
H. Res. 198 (7/21/95)..........  O................  H.R. 2076........  Commerce, State         A: voice vote (7/
                                                                        Approps. FY 1996.       25/95).         
H. Res. 201 (7/25/95)..........  O................  H.R. 2099........  VA/HUD Approps. FY      A: 230-189 (7/25/
                                                                        1996.                   95).            
H. Res. 204 (7/28/95)..........  MC...............  S. 21............  Terminating U.S. Arms   A: voice vote (8/
                                                                        Embargo on Bosnia.      1/95).          
H. Res. 205 (7/28/95)..........  O................  H.R. 2126........  Defense Approps. FY     A: 409-1 (7/31/  
                                                                        1996.                   95).            
H. Res. 207 (8/1/95)...........  MC...............  H.R. 1555........  Communications Act of   A: 255-156 (8/2/ 
                                                                        1995.                   95).            
H. Res. 208 (8/1/95)...........  O................  H.R. 2127........  Labor, HHS Approps. FY  A: 323-104 (8/2/ 
                                                                        1996.                   95).            
H. Res. 215 (9/7/95)...........  O................  H.R. 1594........  Economically Targeted   A: voice vote (9/
                                                                        Investments.            12/95).         
H. Res. 216 (9/7/95)...........  MO...............  H.R. 1655........  Intelligence            A: voice vote (9/
                                                                        Authorization FY 1996.  12/95).         
H. Res. 218 (9/12/95)..........  O................  H.R. 1162........  Deficit Reduction       A: voice vote (9/
                                                                        Lockbox.                13/95).         
H. Res. 219 (9/12/95)..........  O................  H.R. 1670........  Federal Acquisition     A: 414-0 (9/13/  
                                                                        Reform Act.             95).            
H. Res. 222 (9/18/95)..........  O................  H.R. 1617........  CAREERS Act...........  A: 388-2 (9/19/  
                                                                                                95).            
H. Res. 224 (9/19/95)..........  O................  H.R. 2274........  Natl. Highway System..  PQ: 241-173 A:   
                                                                                                375-39-1 (9/20/ 
                                                                                                95).            
H. Res. 225 (9/19/95)..........  MC...............  H.R. 927.........  Cuban Liberty & Dem.    A: 304-118 (9/20/
                                                                        Solidarity.             95).            
H. Res. 226 (9/21/95)..........  O................  H.R. 743.........  Team Act..............  A: 344-66-1 (9/27/
                                                                                                95).            
H. Res. 227 (9/21/95)..........  O................  H.R. 1170........  3-Judge Court.........  A: voice vote (9/
                                                                                                28/95).         
H. Res. 228 (9/21/95)..........  O................  H.R. 1601........  Internatl. Space        A: voice vote (9/
                                                                        Station.                27/95).         
H. Res. 230 (9/27/95)..........  C................  H.J. Res. 108....  Continuing Resolution   A: voice vote (9/
                                                                        FY 1996.                28/95).         
H. Res. 234 (9/29/95)..........  O................  H.R. 2405........  Omnibus Science Auth..  A: voice vote (10/
                                                                                                11/95).         
H. Res. 237 (10/17/95).........  MC...............  H.R. 2259........  Disapprove Sentencing   A: voice vote (10/
                                                                        Guidelines.             18/95).         
H. Res. 238 (10/18/95).........  MC...............  H.R. 2425........  Medicare Preservation   PQ: 231-194 A:   
                                                                        Act.                    227-192 (10/19/ 
                                                                                                95).            
H. Res. 239 (10/19/95).........  C................  H.R. 2492........  Leg. Branch Approps...  PQ: 235-184 A:   
                                                                                                voice vote (10/ 
                                                                                                31/95).         
H. Res. 245 (10/25/95).........  MC...............  H. Con. Res. 109.  Social Security         PQ: 228-191 A:   
                                                    H.R. 2491........   Earnings Reform.        235-185 (10/26/ 
                                                                       Seven-Year Balanced      95).            
                                                                        Budget.                                 
H. Res. 251 (10/31/95).........  C................  H.R. 1833........  Partial Birth Abortion  A: 237-190 (11/1/
                                                                        Ban.                    95).            
H. Res. 252 (10/31/95).........  MO...............  H.R. 2546........  D.C. Approps..........  A: 241-181 (11/1/
                                                                                                95).            
H. Res. 257 (11/7/95)..........  C................  H.J. Res. 115....  Cont. Res. FY 1996....  A: 216-210 (11/8/
                                                                                                95).            
H. Res. 258 (11/8/95)..........  MC...............  H.R. 2586........  Debt Limit............  A: 220-200 (11/10/
                                                                                                95).            
H. Res. 259 (11/9/95)..........  O................  H.R. 2539........  ICC Termination Act...  A: voice vote (11/
                                                                                                14/95).         
H. Res. 261 (11/9/95)..........  C................  H.J. Res. 115....  Cont. Resolution......  A: 223-182 (11/10/
                                                                                                95).            
H. Res. 262 (11/9/95)..........  C................  H.R. 2586........  Increase Debt Limit...  A: 220-185 (11/10/
                                                                                                95).            
H. Res. 269 (11/15/95).........  O................  H.R. 2564........  Lobbying Reform.......  A: voice vote (11/
                                                                                                16/95).         
H. Res. 270 (11/15/95).........  C................  H.J. Res. 122....  Further Cont.           A: 229-176 (11/15/
                                                                        Resolution.             95).            
H. Res. 273 (11/16/95).........  MC...............  H.R. 2606........  Prohibition on Funds    A: 239-181 (11/17/
                                                                        for Bosnia.             95).            
H. Res. 284 (11/29/95).........  O................  H.R. 1788........  Amtrak Reform.........  A: voice vote (11/
                                                                                                30/95).         
H. Res. 287 (11/30/95).........  O................  H.R. 1350........  Maritime Security Act.  .................
----------------------------------------------------------------------------------------------------------------
Codes: O-open rule; MO-modified open rule; MC-modified closed rule; C-closed rule; A-adoption vote; D-defeated; 
  PQ-previous question vote. Source: Notices of Action Taken, Committee on Rules, 104th Congress.               


  Mr. DREIER. Mr. Speaker, I reserve the balance of my time.
  Mr. HALL of Ohio. Mr. Speaker, I yield myself such time as I may 
consume.
  (Mr. HALL of Ohio asked and was given permission to revise and extend 
his remarks.)
  Mr. HALL of Ohio. Mr. Speaker, House Resolution 290 is a rule which 
will allow consideration of H.R. 1058, the conference report to 
accompany the Private Securities Litigation Reform Act of 1995. As my 
colleague from California, Mr. Dreier, described, this rule waives all 
points of order against the conference report.
  I have concerns about the bill for both procedural and substantial 
reasons. The rights of the minority were repeatedly violated in the 
conference process. The conference agreement was worked out privately 
by the bill's supporters without taking into consideration opposing 
views that could have improved the bill. During Rules Committee 
consideration of the measure, Mr. Markey testified that Democratic 
members of the conference committee were excluded from every aspect of 
the conference, and that this represented an outrageous breech of due 
process.
  I also have concerns on substantial grounds. There is agreement on 
both 

[[Page H 14032]]
sides of the aisle that frivolous securities lawsuits need to be 
stopped and that the existing law needs to be changed. There is much in 
this bill that will help. But critics of this bill believe it goes too 
far and too fast.
  It is unfortunate that Democrats were shut out of the conference 
process. Permitting full participation by conference members on all 
sides would have made this a much better bill.
  The conference report makes numerous changes from the House-passed 
bill. Many of the provisions in the conference report will result in 
changes in securities practices in ways that we cannot predict and that 
could come back to haunt us. I need only remind my colleagues that the 
banking deregulation of the early 1980's was a case where we thought we 
were doing the right thing, but reducing Government control had a 
catastrophic effect a decade later.
  During Rules Committee consideration, Mr. Beilenson offered an 
amendment to the rule to provide 2 hours of debate. This was because 
Democrats were not given an opportunity to participate in the 
conference process and there were so many critical changes in the 
conference agreement. The amendment was defeated along party lines. It 
is unfortunate that the House will not have more time to consider the 
sweeping effects of this bill.
  Mr. Speaker, this bill does accomplish needed reform. However, the 
long-term implications of this bill should give us all cause for 
concern. Regrettably, the House is not giving these issues the full 
airing that they require.
  Mr. Speaker, I reserve the balance of my time.
  Mr. DREIER. Mr. Speaker, in my remarks I intentionally failed to 
mention my friend, the gentleman from Thibodaux, LA [Mr. Tauzin] 
because I knew I would have the opportunity to introduce him. He has, 8 
years ago, introduced the first legislation on securities reform, and 
we are very pleased that we in the new majority have been able to 
finally move his legislation forward.
  Mr. Speaker, I yield 3 minutes to the gentleman from Louisiana [Mr. 
Tauzin].
  Mr. TAUZIN. Mr. Speaker, I rise in support of the rule. What we are 
dealing with is a part of litigation reform in America that deals with 
a specific kind of class action lawsuit brought against companies in 
America whenever their stock prices dramatically change.
  The problem with this section of the law is that it does not do what 
the law ought to do. The law ought to say that a wrongdoer pays for the 
wrong he committed and that a lawsuit makes sure that the wrongdoer 
compensates those he injured.

                              {time}  1045

  In this particular section of the law, it does not matter whether you 
did anything right or wrong. In fact, over 90 percent of the lawsuits 
filed, these big class-action lawsuits, over 90 percent of them are 
settled for 10 cents on the dollar. In effect, they are shotgun 
lawsuits, strike lawsuits filed, designed to make all the parties 
contribute into a settlement fund at 10 cents on the dollar.
  What does that mean? It means that the law does not really punish the 
wrongdoer. It says whether you are wrong or not, whether you are guilty 
of any wrong, you are going to contribute to a 10-cents-on-the-dollar 
fund to settle this lawsuit. Why? Because the lawsuits are so huge, 
they are like aircraft carriers moving through our legal system that 
the expense of defending the suit is much higher than the cost of 
putting into that 10-cents-on-the-dollar fund.
  So everybody connected with the company puts into the fund to settle 
the lawsuit, make the lawyers go away, and the wrongdoers are never 
really punished. It is a system of law out of connection with the 
purpose of the law.
  So we need to change it. This bill we are bringing up on this rule is 
signed on a conference report by both Democrats and Republicans. It is 
a bill that, as was pointed out, introduced about 8 years ago, that got 
very little attention from the former chairman of the committee. It 
ended up getting only two hearings in all those years. It was finally 
made part of the Contract With America. It passed this House with 325 
votes, nearly 100 Democrats joining the Republican majority in support 
of this bill.
  The Senate has now cleared it with an over two-thirds majority in the 
Senate. It is ready for us to act upon today. I urge adoption of this 
rule so that we can get on the conference report and hopefully pass 
this good bill to make this one important litigation reform.
  What does it do? It sets up the proportionate liability so that 
nobody is deep pocketed, sued in such a way that you better come up 
with a settlement or you are going to get hit for everything. It ends 
the deep pockets theory. It requires specific pleading. It sets up a 
system of dealing with frivolous lawsuits by making the party who 
brings a frivolous lawsuit responsible for the cost of that lawsuit.
  It sets up a new system to allow companies to legitimately advise 
people in advance of what they expect their company to do so that 
investors are being properly advised in terms of making investments. It 
does not eliminate the obligation of wrongdoers to pay for their wrong. 
In fact, it sets up a system of law to make sure real wrongdoers pay 
the tab. I urge adoption of the rule.
  Mr. HALL of Ohio. Mr. Speaker, I yield 6 minutes to the gentleman 
from Massachusetts [Mr. Markey].
  Mr. MARKEY. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, let me begin by saying that this bill is not 
controversial because there is a disagreement as to whether or not we 
have to crack down on frivolous lawsuits in this country. We agree upon 
that subject. The issue is whether or not we want to pass legislation 
that will become the law of this land, that will also prevent 
meritorious suits from being brought against those that deliberately 
mislead investors into expending their hard-earned money on financial 
investments which were, in fact, fraudulent in their nature.
  That is what this whole debate is about. We who oppose the bill which 
is being brought out on the floor today want to shut down the frivolous 
suits as much as anyone who is a proponent of the legislation. However, 
what has happened is that over the course of the year, the interest in 
frivolous lawsuits has been replaced by, for all intents and purposes, 
an interest in all lawsuits. This bill could, in fact, have been made a 
good bill, but it was not.
  Moreover, the gentleman from Michigan, Mr. Dingell, the gentleman 
from Texas, Mr. Bryant, the gentleman from Michigan, Mr. Conyers, along 
with the gentleman from Maryland, Mr. Sarbanes and the gentleman from 
Nevada, Mr. Bryan on the Senate side, were all excluded from 
participating in a meaningful way in the crafting of this legislation 
so that it could, in fact, be made acceptable to all Members while 
addressing the core issues which each and every one of us wants to see 
dealt with.
  The House bill that passed this body was 36 pages long. The bill 
which we are considering here today is 75 pages long. We were not 
allowed to see the final draft until we walked into the conference room 
to have the vote on this momentous piece of legislation. That is not a 
proper way to run the legislative process.
  All Members should have been included. All Members should have been 
given notice. All Members should have had the opportunity to make 
suggestions which would have been appropriate to perfect this 
legislation. Moreover, I think it is important for all Members to know 
that, as the year began, the debate surrounded the issue of the 1934 
Securities Act. As we are presented with a piece of legislation on the 
floor today, all of the fundamental changes that have been included to 
address the 1934 act have now been extended to cover the 1933 
Securities Act as well, even though there is no testimony, not one 
shred of evidence that there has been any abuse by use of the 1933 
Securities Act in securities litigation cases.
  Let me make one final point at this juncture. We are dealing here 
with one-tenth of 1 percent of all cases brought in Federal district 
court, on average, about 125 cases a year. If this crisis of frivolous 
lawsuits is such a great concern to the Members on the other side, we 
should be dealing with the issue of companies suing other companies as 
well, because that is the bulk of cases in Federal district court. This 
only 

[[Page H 14033]]
deals with the ability of individuals to sue companies.
  The reason that we are dealing with only this one area is that 
companies want to preserve their ability to sue other companies. Disney 
wants to be able to sue the Motion Picture Association for misuse of 
the image of Snow White. Burger King wants to be able to sue 
McDonald's. On and on and on and on. They use the courts in many 
instances as places for negotiation. But if individuals want to ban 
together and sue companies, well, we are going to put down a strict new 
set of guidelines dealing not only with those cases that are obviously 
frivolous but also where individuals have been deliberately misled, 
where material information has been withheld from investors with regard 
to the financial well-being of an institution.
  That is wrong. I think everyone should know what is going on during 
this debate. But most importantly, because I think it strikes at the 
integrity of the institution, they should understand that those who 
oppose the bill were completely excluded. And no rule should pass on 
the floor of the Congress which has in fact treated its own Members in 
that way.
  Mr. DREIER. Mr. Speaker, I reserve the balance of my time.
  Mr. HALL of Ohio. Mr. Speaker, I yield 4 minutes to the gentleman 
from Michigan [Mr. Dingell].
  (Mr. DINGELL asked and was given permission to revise and extend his 
remarks.)
  Mr. DINGELL. Mr. Speaker, I have a simple comment to make about this 
legislation and about the way in which it was conceived. It was 
conceived in sin. I have this to say to my colleagues who have done it. 
Shame. Shame on them.
  This is a raid on the small investor. It is an attack upon the public 
confidence in our securities system. I hear from my Republican 
colleagues comments about white collar crime and about criminals and 
violent crime.
  Let me tell Members what the Fraternal Order of Police had to say 
about this bill, in a letter which was sent by their national 
president. ``I urge you,'' this is the national president of the 
Fraternal Order of Police:

       I urge you to reject a bill which would make it less risky 
     for white collar criminals to steal from police pension funds 
     while the police are risking their lives against violent 
     criminals.

  The International Association of Firefighters had a similar thing to 
say. Money magazine had these things to say about it, speaking on 
behalf of small investors:

       Congress aims at lawyers and ends up shooting small 
     investors in the back. Let us stop this Congress from helping 
     crooks cheat investors like you. Your 1,000 letters of 
     protest may stop this Congress from jeopardizing investors. 
     Now only Clinton can stop Congress from hurting small 
     investors like you.

Four successive editorials in Money magazine.
  The attorneys general of 11 States had this to say in a joint letter:

       We cannot countenance such a weakening of critical 
     enforcement against white collar fraud. The bill goes so far 
     beyond what is necessary, it would likely result in a 
     dramatic increase in securities fraud.

  The U.S. Conference of Mayors says:

       Over 1,000 letters from State and local officials from all 
     regions of the country have been sent to Washington, 
     representing an extraordinary bipartisan national consensus 
     that H.R. 1058 would imperil the ability of public officials 
     to protect billions of dollars of taxpayer monies in short-
     term investments and pension funds.

  Here is what the Association of the Bar of the City of New York had 
to say:

       The safe harbor could immunize artfully packaged and 
     intentional misstatements and omissions of known facts. 
     Protecting knowingly false statements is not consistent with 
     the purposes of the Federal securities laws and encourages 
     exactly the kind of conduct those laws were designed to 
     eliminate.

  Our Republican colleagues did this in a dark back room, unattended by 
anyone who was opposed to their viewpoint, except a coterie of faithful 
lobbyists who participated in the process. Our Republican colleagues 
brought us a conference report on which no voice of dissent was heard 
in the discussions. The bill was presented to the conference just 
shortly before the conference convened.
  What is in this bill? Virtual repealer of much of the protection of 
American investors, an open attack on the public confidence that we 
have in the securities market, and, in the safe harbor provisions, an 
active protection for fraud. It permits the law firm, for example, of 
Sly, Sneak and, Crook to put forward wonderful words of caveat like 
``you really should not believe this particular footnote because it is 
not true, but.'' We are going to see more investor fraud and more loss 
of confidence in the securities industry than we have seen for years.
  People tell us that the securities industry functions on the basis of 
money. It does not. It functions on the basis of public confidence. And 
if the public confidence is there, billions of dollars are made by 
everybody and we have, in consequence of this, the most liquid, open, 
and fair system of raising capital in the history of mankind. It is a 
miracle of the age. People come from all over the world as investors, 
as sellers of securities to participate in this market.

  This legislation will go light years toward jeopardizing the public 
confidence in that market. I urge Members to reject this rule.
  Mr. DREIER. Mr. Speaker, I yield 6 minutes to the gentleman from 
Newport Beach, CA [Mr. Cox], the prime author of this legislation.
  Mr. COX of California. Mr. Speaker, I thank the gentleman for 
yielding time to me.
  I appreciate the fiery rhetoric of the former chairman of the 
Committee on Commerce who led 99 of our colleagues to vote against this 
bill when it was overwhelmingly approved, over half the Democrats 
voting in favor of it and virtually all the Republicans earlier this 
year.

                              {time}  1100

  But I have to take issue with what the gentleman said, because it 
simply is not true. What the gentleman said is there is an 
extraordinary bipartisan national consensus against this bill. The 
truth is, there is an extraordinary bipartisan national consensus in 
favor of this bill, which originally was, after all, the Dodd-Domenici 
bill. Chris Dodd, presently the cochairman of the Democratic National 
Committee, is obviously not a Republican. Pete Domenici, the very 
respected chairman of the Committee on the Budget in the Senate, worked 
together with Chris Dodd on this, well in advance of this bill becoming 
part of the Contract with America.
  Because it was not conceived in sin by Republicans, but initiated in 
this bipartisan way by Chris Dodd and Pete Domenici, we found that the 
bill yesterday passed the Senate once again with more than two-thirds 
voting in support. At last check, Ted Kennedy, who is not a flaming 
Republican, but Ted Kennedy, who represents so many high-technology 
companies in Massachusetts who are being victimized by fraudulent 
lawsuits by crooks and lawyers, working in tandem in many cases, these 
people need protection from our securities laws too. That is why Phil 
Gramm, Ted Kennedy, Pete Domenici, and Chris Dodd, people on both sides 
of the aisle, have all come to agreement on this very important 
investor protection.
  The safe harbor, which my colleague implied was some sort of 
Republican attack on small investors, was in fact an investor 
protection offered on the floor of this Chamber, not by a Republican, 
but by my good and wise colleague from California, Norm Mineta. The 
safe harbor provision of this bill was carefully drafted in concert 
with the Securities and Exchange Commission, and no less than the 
chairman of the Securities and Exchange Commission, appointed by 
President Clinton, Arthur Levitt, has said yes, this is a sound, safe 
harbor. The reason that we have it, of course, is so that investors and 
the market can get the very best information possible, so that they can 
protect themselves. That is what this bill is all about.
  But, more than anything, we are not just protecting investors with 
this bill, we are protecting everyone in America. Yes, those who might 
have invested through their pension plan, or those who might have 
invested through a mutual fund, but everyone in America ultimately who 
uses the products manufactured by high-technology companies, who are 
the special victims of this kind of securities fraud, fraud through the 
device of a lawsuit.
  I just want to mention one example of the kind of fraud we are going 
to 

[[Page H 14034]]
crack down on with this legislation. A company in San Diego, Alliance 
Pharmaceuticals, a very, very fine company, manufactures innovative 
drugs to treat critically ill patients with acute lung injury. Their 
drug, now in development, a highly oxygenated liquid which allows the 
lungs to breathe liquid, reportedly could help as many as 80,000 
premature babies with insufficiently developed lungs to have the gift 
of life.
  This bill is for Adriana Mancini, who was born weighing 1 pound 10 
ounces, with a 1 in 10 chance of living. The drug, manufactured by 
Alliance Pharmaceuticals of San Diego, saved her life. Her mother, in a 
television report about this story, said, ``I prayed, please God, save 
our baby, and God did.'' The agent of God's miracle was Alliance 
Pharmaceuticals. The company came through with the medication that, as 
I said, can be used on 80,000 premature babies every year.
  What Adriana's mother said, and it is important for everyone in this 
Chamber to hear this, is:

       I just wish that everyone could have been in that room to 
     see the joy and excitement on everybody's faces. A baby who 
     was about to die made an exciting 180-degree turnaround.

  Alliance Pharmaceuticals for its role in helping baby Adriana found 
itself on the wrong end of a fraudulent lawsuit, that is the only way 
to describe it, a fraudulent lawsuit, that was brought within 24 hours 
of the public announcement of nothing more than a delay in a new 
product development.
  The president of this company wrote to the President of our country, 
and I would like to quote from his letter:

       Reform of the private securities litigation laws is needed 
     to protect the companies that are victims of frivolous suits.

  I should add that Alliance won its lawsuit, but they have received no 
compensation for all the lost time of their workers who were developing 
drugs. They received no compensation for all of the legal fees that 
they had to spend. There was nothing that could be done about the fact 
that all of the management were taken away from their critical job. 
These suits, which are brought to extort settlements, do nothing more 
than injure all of us. Let me continue reading from his letter.

       Reform of the private securities litigation laws is needed 
     to protect the victims of frivolous suits, while preserving 
     the ability for shareholders to recover in instances of 
     fraud. It is unconscionable that greedy lawyers are allowed 
     the virtual unrestricted ability to promote their own self-
     interests. Companies like Alliance are developing truly 
     innovative and potentially life-saving products. Every dollar 
     we spend defending these meritorious suits is one less dollar 
     available for meaningful research and one less dollar 
     available for shareholders. 
  Mr. Speaker, let us move forward with this critically important 
legislation, which is so bipartisan and has overwhelming support.

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