[Congressional Record Volume 141, Number 199 (Thursday, December 14, 1995)]
[Extensions of Remarks]
[Pages E2357-E2358]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      SECURITIES LITIGATION REFORM

                                 ______


                          HON. JOHN D. DINGELL

                              of michigan

                    in the house of representatives

                      Wednesday, December 13, 1995

  Mr. DINGELL. Mr. Speaker, on December 6, 1995, the House passed the 
conference report on H.R. 1058, the Private Securities Litigation 
Reform Act of 1995. I am disappointed that the House approved this 
legislation. Many experts predict that it will only marginally deter 
frivolous lawsuits while causing significant harm to investors with 
meritorious claims.
  By this time next week, President Clinton will have had to veto the 
bill or sign it. At this point, I would like to submit for the Record 
two articles that point out the serious flaws in this bill and why it 
should be vetoed.

                  [From the Bond Buyer, Dec. 5, 1995]

        California Counties Ask Clinton To Veto Securities Bill

                           (By Joe Bel Bruno)

       Los Angeles.--The California State Association of Counties 
     on Friday elected a new president--San Mateo County 
     supervisor Mike Nevin--whose first action was sending a 
     letter to President Clinton opposing the Securities 
     Litigation Reform Act.
       CSAC, a nonprofit corporation that promotes the interests 
     of California's 58 counties before the state legislature and 
     Congress, contends the reform act will severely hinder local 
     governments' ability to recover losses related to securities 
     fraud.
       ``We need to have the ability to recover losses in the case 
     of securities fraud,'' Nevin said yesterday. ``We just wanted 
     to let the President know that this bill, if he signs it, 
     would make things tough on local governments and the 
     taxpayers. It would be sending the wrong message.''
       The letter to Clinton was signed by 106 county and other 
     local government officials.
       In addition to CSAC, signers of the letter include the 
     California Association of County Treasurer/Tax Collectors, 
     the city and county of San Francisco and the counties of 
     Sacramento, San Diego, San Mateo, Riverside, Alameda, Kern, 
     and Fresno. The letter was also signed by administrators of 
     several county retirement systems.
       A House-Senate conference committee has cleared the way for 
     final congressional action on the bill. The Senate and House 
     are slated to vote on it on Dec. 5 and Dec. 6. As currently 
     worded, the bill would limit the type of securities-related 
     lawsuit that could be filed, as well as the dollar amount of 
     damages requested.
       Steve Szalay, executive director of CSAC, said the 
     legislation would have a dramatic impact on local 
     governments. The legislation was a much-discussed topic at 
     the association's 101st annual meeting in San Jose last week, 
     he said.
       ``Local governments are victims of securities fraud; they 
     need access to the courts to recover their losses,'' he said 
     in a press statement. ``Orange County, on behalf of 187 
     independent California governments, is suing to recover about 
     $1.5 billion on the grounds that the investments made on its 
     behalf were unsuitable and violated the California 
     constitution and statutes.''
       ``This bill makes it very difficult for local governments 
     and taxpayers to recover their losses in securities fraud 
     cases, and it will give wrongdoers a green light to commit 
     more fraud,'' Szalay said.
       The letter was drafted and signed by the association's new 
     board on Friday. Also elected to the association's board was 
     Yolo County supervisor Helen Thomson, first vice president; 
     and El Dorado County supervisor John Upton, second vice 
     president.
       Nevin represents urban counties, while Thomson and Upton 
     represent suburban and rural counties, respectively. One of 
     the association's goals is educating the public about the 
     value and need for county programs and services. Founded in 
     1895, CSAC is headquartered in Sacramento and has a research 
     office in the District of Columbia.
                                                                    ____

                                  
[[Page E2358]]


                     [From USA Today, Dec. 8, 1995]

               Securities Lawsuit Bill May Hurt Investors

                          (By Christine Dugas)

       A securities law aimed at reducing frivolous lawsuits also 
     may make it harder for investors with legitimate claims.
       The bill, approved by Congress this week and awaiting 
     President Clinton's signature, means ``investors are going to 
     have to take a lot more responsibility for their own 
     welfare,'' says Philip Feigin, Colorado Securities 
     commissioner. ``It will be harder to get a case started and 
     more difficult to prevail.''
       Among the bill's provisions:
       Companies would be able to say anything about future 
     performance if they include some cautionary statements.
       The amount of damages reckless wrongdoers would pay 
     generally would depend on their share of liability. So a 
     victim may not fully recover his or her damages if the main 
     lawbreaker has claimed bankruptcy. In the case of Charles 
     Keating's savings-and-loan fraud, Keating claimed bankruptcy, 
     so damages to victims were paid mainly by accountants and 
     lawyers who might not pay so much under this bill.
       A judge would require investors or their lawyers to pay 
     defendant's legal fees if a lawsuit were considered 
     frivolous.
       Investors would have to have specific evidence of fraud 
     before they could go to court.
       Investors still would have only one year after fraud was 
     discovered, or three years after it occurred, to file suit.
       ``Now more than ever, investors must go beyond what 
     companies tell them, and do some independent checking,'' says 
     Maureen Thompson, legislative adviser for the North American 
     Securities Administrators Association.
       Because efforts to stretch the statute of limitations 
     failed, investors still would have to check their investment 
     account statements promptly for irregularities. They also 
     would have to carefully document problems and consult a 
     lawyer quickly, says Gerri Detweiler, policy director of the 
     National Council of Individual Investors.
       But it might be hard to find a lawyer to take investor 
     fraud cases. ``The law tells us we can't just have a good 
     case, we must have a great case,'' says Matthew Kelly, a 
     lawyer who represents investors at Roemer, Wallens & Mineaux 
     in Albany, N.Y.
       The Securities and Exchange Commission, mean-while, is 
     unlikely to pursue investors' cases. ``It doesn't have the 
     resources,'' says Kim Schweitzer, counsel for the National 
     Association of Securities and Commercial Lawyers. ``Its 
     mandate is enforcement, not recovery for victims.''
       The measure would benefit investors because companies would 
     have to disclose more information, says Louis Thompson Jr., 
     president of the National Investor Relations Institute.
       And some investors support the bill because they are fed up 
     with lawsuits that mainly enrich lawyers. The bill is aimed 
     at a small number of ``professional investors'' and lawyers 
     who file class-action lawsuits and take most of the proceeds.
       ``The money spent by corporations on frivolous lawsuits 
     would better serve all share-owners if it remained in the 
     company, resulting in higher net profits and earnings per 
     share,'' says Kenneth Janke, president of the National 
     Association of Investors.
       But the legislation doesn't only stop frivolous lawsuits. 
     ``It's a balancing act,'' Feigin says. ``Even good cases 
     might not make it.''

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