[Congressional Record Volume 141, Number 205 (Wednesday, December 20, 1995)]
[House]
[Pages H15214-H15224]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995--VETO MESSAGE FROM THE 
          PRESIDENT OF THE UNITED STATES (H. DOC. NO. 104-150)

  The SPEAKER pro tempore laid before the House the following veto 
message from the President of the United States:

To the House of Representatives:
  I am returning herewith without my approval H.R. 1058, the ``Private 
Securities Litigation Reform Act of 1995.'' This legislation is 
designed to reform portions of the Federal securities laws to end 
frivolous lawsuits and to ensure that investors receive the best 
possible information by reducing the litigation risk to companies that 
make forward-looking statements.
  I support those goals. Indeed, I made clear my willingness to support 
the bill passed by the Senate with appropriate ``safe harbor'' 
language, even though it did not include certain provisions that I 
favor--such as enhanced provisions with respect to joint and several 
liability, aider and abettor liability, and statute of limitations.
  I am not, however, willing to sign legislation that will have the 
effect of closing the courthouse door on investors who have legitimate 
claims. Those who are the victims of fraud should have recourse in our 
courts. Unfortunately, changes made in this bill during conference 
could well prevent that.
  This country is blessed by strong and vibrant markets and I believe 
that they function best when corporations can raise capital by 
providing investors with their best good-faith assessment of future 
prospects, without fear of costly, unwarranted litigation. But I 

[[Page H15215]]
also know that our markets are as strong and effective as they are 
because they operate--and are seen to operate--with integrity. I 
believe that this bill, as modified in conference, could erode this 
crucial basis of our markets' strength.
  Specifically, I object to the following elements of this bill. First, 
I believe that the pleading requirements of the Conference Report with 
regard to a defendant's state of mind impose an unacceptable procedural 
hurdle to meritorious claims being heard in Federal courts. I am 
prepared to support the high pleading standard of the U.S. Court of 
Appeals for the Second Circuit--the highest pleading standard of any 
Federal circuit court. But the conferees make crystal clear in the 
Statement of Managers their intent to raise the standard even beyond 
that level. I am not prepared to accept that.

  The conferees deleted an amendment offered by Senator Specter and 
adopted by the Senate that specifically incorporated Second Circuit 
case law with respect to pleading a claim of fraud. Then they 
specifically indicated that they were not adopting Second Circuit case 
law but instead intended to ``strengthen'' the existing pleading 
requirements of the Second Circuit. All this shows that the conferees 
meant to erect a higher barrier to bringing suit than any now 
existing--one so high that even the most aggrieved investors with the 
most painful losses may get tossed out of court before they have a 
chance to prove their case.
  Second, while I support the language of the Conference Report 
providing a ``safe harbor'' for companies that include meaningful 
cautionary statements in their projections of earnings, the Statement 
of Managers--which will be used by courts as a guide to the intent of 
the Congress with regard to the meaning of the bill--attempts to weaken 
the cautionary language that the bill itself requires. Once again, the 
end result may be that investors find their legitimate claims unfairly 
dismissed.
  Third, the Conference Report's Rule 11 provision lacks balance, 
treating plaintiffs more harshly than defendants in a manner that comes 
too close to the ``loser pays'' standard I oppose.
  I want to sign a good bill and I am prepared to do exactly that if 
the Congress will make the following changes to this legislation: 
first, adopt the Second Circuit pleading standards and reinsert the 
Specter amendment into the bill. I will support a bill that submits all 
plaintiffs to the tough pleading standards of the Second Circuit, but I 
am not prepared to go beyond that. Second, remove the language in the 
Statement of Managers that waters down the nature of the cautionary 
language that must be included to make the safe harbor safe. Third, 
restore the Rule 11 language to that of the Senate bill.

  While it is true that innocent companies are hurt by frivolous 
lawsuits and that valuable information may be withheld from investors 
when companies fear the risk of such suits, it is also true that there 
are innocent investors who are defrauded and who are able to recover 
their losses only because they can go to court. It is appropriate to 
change the law to ensure that companies can make reasonable statements 
and future projections without getting sued every time earnings turn 
out to be lower than expected or stock prices drop. But it is not 
appropriate to erect procedural barriers that will keep wrongly injured 
persons from having their day in court.
  I ask the Congress to send me a bill promptly that will put an end to 
litigation abuses while still protecting the legitimate rights of 
ordinary investors. I will sign such a bill as soon as it reaches my 
desk.
                                                  William J. Clinton.  
  The White House, December 19, 1995.

                              {time}  1045

  The SPEAKER pro tempore (Mr. Wicker). The objections of the president 
will be spread at large upon the Journal, and the veto message and the 
bill will be printed as a House document.
  The question is, Will the House, on reconsideration, pass the bill, 
the objections of the President to the contrary notwithstanding?
  The gentleman from Virginia [Mr. Bliley] is recognized for 1 hour.
  Mr. BLILEY. Mr. Speaker, for purposes of debate only, I yield 30 
minutes to the gentleman from Massachusetts [Mr. Markey], pending 
which, I yield myself such time as I may consume.
  (Mr. BLILEY asked and was given permission to revise and extend his 
remarks.)
  Mr. BLILEY. Mr. Speaker, the conference report on securities 
litigation reform passed this House on December 6 by a vote of 320 to 
102. It had previously cleared the Senate by a vote of 65 to 30. Strong 
bipartisan majorities have embraced this legislation as a way to end 
the scandalous state of securities strike suits. Testimony has revealed 
that these suits amount to legalized extortion by the plaintiffs bar.
  The plaintiffs bar is not more important than the investors who lose 
their savings to these extortion artists.
  In the floor debate we learned that every single one of the top 10 
companies in Silicon Valley--world class multinational competitors like 
Hewlett-Packard, Intel, Sun Microsystems and Apple Computer--have been 
accused of violating the antifraud provisions of the securities laws. 
Not all of these companies are guilty of fraud, they are at least as 
worthy of protection as is the plaintiff bar.
  We do know that the safe harbor in Securities Litigation Reform has 
been endorsed by the President's own SEC Chairman, Arthur Levitt. We do 
know that Chris Dodd, the general chairman of the Democratic Party 
supports securities litigation reform I rise today to urge an override 
of this veto which flies in the face of common sense and the hard work 
of bipartisan majorities in both Houses of Congress.
  This is extremely important legislation for investors and for our 
economy. It is designed to curb frivolous and abusive securities 
litigation. This kind of litigation exacts a tax on this country's most 
productive and competitive companies and their shareholders.
  Job creating, wealth producing companies that have done nothing 
wrong, too often find themselves subject to class action lawsuits 
whenever their stock price drops. They are forced to pay extortionate 
settlements, because the costs of defending these lawsuits are 
prohibitive. And, when companies are forced to settle, their 
shareholders, ultimately, pay the costs.
  We have tolerated this scandalous situation long enough. Let's end 
these strike suits. Stand with investors, professionals, and jobs. Vote 
to override the veto.
  Mr. Speaker, I reserve the balance of my time.
  Mr. MARKEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the President has determined that a veto is appropriate 
for this particular piece of legislation, and has sent back to this 
Congress a number of concerns which I think he has legitimately raised 
about the legislation in its present form.
  I think that it is ill-advised for us to be debating a veto and its 
override at this particular time. I think that the more appropriate 
course for this House would have been for there to now have been 
conducted a conversation, a negotiation between the White House and the 
Members of Congress who have an interest in this bill to determine 
whether or not changes could have been made which would have dealt with 
the very legitimate concerns which were raised in the President's veto 
message.
  That has not been the case. Instead, what we see is a rush here to 
the floor to override the President's veto without any real 
deliberation as to the substantive issues which were raised in his 
message. I think that is a big mistake, Mr. Speaker. I think that this 
House should have, in fact, engaged today at least in a discussion of 
the very important issues that have been raised.
  Mr. Speaker, let us begin with a number of these concerns and try our 
best to lay out why the President did take the time to pour over this 
particular bill and to dissect it, as the good law professor which he 
used to be, in an attempt to come to some common sense resolution of a 
very troublesome set of issues.
  Clearly, the President agrees with just about every Member out here 
that frivolous lawsuits have to be cut off. We cannot allow the courts 
to be used in a way that have frivolous lawsuits being brought by 
unscrupulous lawyers in an attempt to hold up legitimate businesspeople 
across this country.
  But at the same time, the President does not want the law changed in 
a way 

[[Page H15216]]
that prohibits meritorious lawsuits from being brought. He makes quite 
clear his concern that, in fact, that would be the necessary result of 
passage and ultimate implementation of the bill as it had originally 
been passed through the House and the Senate.
  The pleading requirement, as it has been included in the legislation 
originally, must be modified so that it is tough, but that it is also 
reasonable.
  The Second Circuit's existing standard for pleading, which passed the 
Senate, by the way, in June, should be included in the bill, in my 
opinion. This is the second highest priority, I think, overall in this 
legislation, along with a number of other concerns which I will raise a 
little bit later.

  My colleagues should note that the ninth circuit, which includes 
California, rejected the second circuit standard in favor of a much 
more relaxed approach. So, the codification of the second circuit's 
standard is something which in my opinion is something that we should 
be debating out here on the floor.
  The issue has been raised by Senator Specter who has taken the time 
to write to the White House and he strenuously objects to the bill in 
its present form. Leading legal scholars, including the dean of the NYU 
Law School, believes that this is one of the most harmful issues in the 
bill.
  In addition, and something that is quite important in the overall 
deliberations, is the safe-harbor provision for forward-looking 
statements, which would give blanket immunity to those who would commit 
intentional fraud. A scienter requirement should be added to the safe-
harbor so that intentional wrongdoers cannot cloak them in immunity 
that was intended only for those who make good-faith projections in 
estimates. That is, in fact, a contention which has to be debated 
throughout this entire proceeding.
  Mr. Speaker, it is important to note that the statement of managers 
accompanying the conference report instructs courts to look only at the 
adequacy of the meaningful cautionary language to determine if the 
safe-harbor should apply. The state of mind of the company's 
executives, meaning whether not they intended to deceive or to mislead 
investors, is supposed to be irrelevant, even if the executive of the 
company, of the financial firm, intentionally lies to the investing 
public.
  Now, that is wrong; simply wrong, and it must be addressed in this 
debate that we are having on such an important piece of legislation.
  I also want to note that this revision would be consistent with a 
statement previously attributed to the President, which I think is now 
quite clear in his veto message, that he could not sign a bill that 
allowed someone to lie intentionally and to get away with it. That is 
the core of his message, and it is something that I think we are going 
to have to deal with today, and in the subsequent days ahead, as we 
with what the ramifications of passage of this bill without inclusion 
of the very wise recommendations that have been made by the President 
to the Congress in his veto message.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BLILEY. Mr. Speaker, I yield 3 minutes to the gentleman from 
Texas [Mr. Fields], the chairman of the Subcommittee on 
Telecommunications and Finance.
  (Mr. FIELDS of Texas asked and was given permission to revise and 
extend his remarks.)
  Mr. FIELDS of Texas. Mr. Speaker, it is with a heavy heart that I 
rise today. The Congress crafted strong bipartisan legislation designed 
to curb securities litigation abuse. The legislation was approved by 
veto-proof majorities in both houses. The President obviously does not 
see the wisdom of the approach and vetoed the legislation.
  Mr. Speaker, I call on all Members to override this veto on this very 
important piece of legislation. As was pointed out in the floor debate, 
American companies, paticularly high-technology companies in 
California, have become the target of speculative, abusive securities 
litigation which enriches lawyers at the expense of shareholders and 
the economy.
  These abusive securities lawsuits are brought by a relatively small 
number of lawyers specializing in initiating this type of litigation. 
In many cases, the plaintiffs are investors who own only a few shares 
of the defendant corporation and the corporations are frequently high-
technology companies whose share price volatility precipitates that 
lawsuit.
  The plaintiffs do not need to allege any specific fraud. Many of 
these suits are brought only because the market price on the securities 
has dropped. The plaintiff's attorneys name, as individual defendants, 
the officers and directors of the corporation and proceed to engulf 
management in a time-consuming and a costly fishing expedition for the 
alleged fraud.

  Mr. Speaker, it has been pointed out that one of the most compelling 
statistics for reform, I believe, comes from Silicon Valley where one 
out of every two companies has been the subject of a 10(b)(5) 
securities class action.
  Mr. Speaker, the current securities litigation system is seriously 
affecting the competitiveness and the productivity of America's high-
technology companies, and it is also affecting our ability to create 
jobs.
  In summary, Mr. Speaker, I believe we have demonstrated that the 
current securities litigation system promotes meritless litigation, 
shortchanges investors and it costs jobs. It is a showcase example of 
the legal system gone awry.
  Mr. Speaker, I urge Members to override this veto to support wise and 
prudent litigation reform.
  Mr. MARKEY. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Michigan [Mr. Dingell].
  Mr. DINGELL. Mr. Speaker, a bad bill, conceived with bad process, 
badly handled, leading to serious abuses in the marketplace, putting 
innocent and helpful investors at mercy of scoundrels and rogues, has 
been vetoed by the President.

                              {time}  1100

  The President said that he is prepared to sign a good bill, that he 
is prepared to work with the Congress to end the litigation abuses 
while at the same time protecting the legitimate rights of ordinary 
investors. He says that in his message.
  I urge my colleagues to listen to the President of the United States 
and to read the veto message, to see why it is this iniquitous piece of 
legislation was vetoed. It is a poor piece of legislation. It favors 
rascals and rogues over the innocent and the honest. It creates a 
situation where a law-abiding citizen cannot get decent redress in the 
courts. It raises questions as to the integrity of the American process 
for offering securities, and it will raise questions about the 
integrity of our markets. It will ultimately hurt the process of 
developing capital in this country because it will threaten the thing 
which is absolutely essential to the workings of the capital markets of 
the United States, and that is public confidence.
  A lot of people think that the public securities offerings and the 
industry in this country run on money. That is not true. The market 
runs on public confidence, and if it produces the public confidence 
it has been doing since the 1934 act was passed, the market produces a 
lot of money for everybody involved.

  What is wrong with this bill? First, the process was unfair, and no 
careful attention was given to responsible amendments or to intelligent 
discussion of the abuses that were going to be unleashed upon the 
investing public.
  But beyond that, the President points out why he has vetoed it. The 
pleading requirements require not a genius but a psychiatrist, and the 
discovery process is closed until such time as it is impossible to deal 
with the claims that an honest claimant would make who had been 
improperly treated and had been hurt by improper behavior of scoundrels 
in the securities industry.
  Second, it has a most curious safe harbor provision, a safe harbor 
provision which permits active fraud, active fraud, deceit, deceit and 
serious misbehavior.
  I would urge my colleagues to not permit a safe harbor provision 
which allows such scandalous behavior to be inflicted upon the trusting 
and the innocent investor by slippery managers of corporations 
interested in maximizing stock prices or their particular earnings.
  Last of all, it treats the plaintiffs in suits of this kind in a way 
which makes the loser pay, a situation which 

[[Page H15217]]
will deny honest citizens who might not prevail in a lawsuit an 
opportunity to expect fair treatment from the courts of their country.
  I would urge my colleagues to support the President. The veto is a 
good one. If the veto is sustained, we can come back and write a decent 
bill. We can write a bill which addresses the real problems which exist 
with regard to litigation abuses, and at the same time we can protect 
American investors and protect the confidence of the American people in 
their securities industry and their securities markets. That is the 
step which would be in the best interests of not only the country, the 
securities market, the securities industry, public confidence in the 
securities that are offered in this country, but also something which 
is best and fairest to those who do not have the means to protect 
themselves against malefactors of great wealth.
  I urge my colleagues to vote to sustain the veto. I urge my 
colleagues on the committee who have the ability to do these things to 
then work with us to achieve a decent bill which protects the interests 
of all.
  Mr. BLILEY. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
California [Ms. Eshoo], a member of the committee.
  (Ms. ESHOO asked and was given permission to revise and extend her 
remarks.)
  Ms. ESHOO. Mr. Speaker, I rise in strong support this morning of this 
measure to override the President's veto of the securities litigation 
conference report. I think that it is highly regrettable that the 
President chose to send up a veto message to us. With all due respect 
to that veto message, I think that it is an excuse slip.
  On every point that is mentioned in the veto, in a bipartisan effort 
all of this year we have worked to satisfy the concerns of the 
Securities and Exchange Commission, the administration, and the Senate 
in the key areas, certainly on pleadings and second circuit language, 
certainly on safe harbor, and that is also mentioned in the veto 
message, and certainly on statute of limitations. This bill is a strong 
bipartisan bill. It is good for investors, and it is good for our 
economy.
  In my view, the price of not passing this conference report this year 
is simply too high. As the Representative from Silicon Valley, I know 
that businesses in my region cannot wait for an answer. The legislation 
provides companies with relief, but not a blank check. The right of 
investors to sue in cases of actual fraud is protected by this bill. In 
fact, the bill's safe harbor provision meets the demands set down by 
CALPERS, the Nation's largest pension fund, representing nearly 1 
million shareholders.
  Members who supported the conference report are now being asked to 
change their vote to satisfy its concerns about report language. I do 
not remember when report language was reason for a veto, and that is 
why I call it an excuse slip and not a true veto message.
  Mr. Speaker, I urge my colleagues to override the President's veto. I 
think it is regrettable, but I think that this bill needs to become 
law.
  Mr. BLILEY. Mr. Speaker, I yield 3 minutes to the gentleman from 
Louisiana [Mr. Tauzin].
  Mr. TAUZIN. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, Members of the House, I, too, rise in support of this 
bill and for the motion to override the veto.
  Let me point out what the President did not do. He did not say this 
was a bad bill. In fact, he complimented it. He said he supported goals 
of this bill. He did not say that he objected to the safe harbor 
provisions of this bill. In fact, he said he supported the language of 
the safe harbor provisions of this bill.
  In fact, all he has said he objected to was the pleading requirements 
of this bill. Now, the pleading requirements are what the plaintiff 
lawyer does when he files a lawsuit, and what we have done is to make 
sure that the lawyer alleges a case, that you just do not go on a 
fishing expedition. Is that terrible?
  I suggest if we are trying to deal with frivolous lawsuits, that is 
the very least we ought to do is require the plaintiff lawyer to plead 
a case, to have a decent and not a frivolous lawsuit before the court.
  Second, he objected to the managers' language, not the language of 
the bill. I would remind the House that when a bill is sent to the 
President, the managers' language, the legislative history is not sent 
to the President. He does not veto the legislative history. He vetoes 
the language of the bill. He does not veto the language in the bill. He 
only objected to the language of the managers' report in that area. He 
suports, in fact, the safe harbor provisions that a previous speaker 
objected to this in this bill.
  Finally, he objected to what is called the rule 11 section, where 
frivolous lawsuits are punished; that is, the plaintiff is required to 
put up the cost of the lawsuit. I want point out to you that he said in 
his veto message that we did something wrong here; we did not have a 
balance between plaintiffs and defendants.
  First of all, it is plaintiffs who file frivolous lawsuits, not 
defendants. That is the problem. And rule 11 seeks to make sure when 
plaintiff lawyers file frivolous lawsuits that they have the obligation 
of paying the costs of the parties who are necessarily brought to court 
and required to hire attorneys.
  Let me point out our language was very fair. It said that existing 
rules would apply to each party, plaintiffs and defendants, and that a 
violation by a party, plaintiff or defendant, would require mandatory 
sanctions by the court.

  We have a balanced provision in here. What I concluded when I read 
this veto message is, one, the President likes the bill; two, he does 
not really want to sign it. He would rather we overrode his veto and we 
made it law. And, three, that we have huge bipartisan support for this 
bill, and we ought to, in fact, override the veto. Nearly 100 members 
of the Democratic side joined the Republican Party in this bill. It is 
a bill that has been in the works for well over 6, perhaps 8, years 
now. It is a bill in which a veto-proof majority in the House and 
Senate adopted the bill. It is a bill, in fact, that ought to become 
law. If the President will not sign it, then he is telling us to do it, 
and I suggest we do like Mikey, we just do it, override this veto.
  Mr. MARKEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, at this point, the Members are presented with a very 
narrow issue: Will the House block meritorious suits, or will it allow 
meritorious suits to go forward in the courts of this country as they 
have throughout our history?
  The President has asked for a very narrow set of changes. This is not 
about frivolous lawsuits any longer. The President agrees that 
frivolous lawsuits must be discontinued.
  This is now a battle over whether or not we will support the 
President's veto, sustain him and, in fact, then begin the discussion 
over the narrow set of issues which he has raised to ensure that this 
bill does not go too far in cutting off the meritorious cases which 
citizens of our country have been allowed to bring throughout our 
history.
  The President has said that he will sign just about anything in the 
bill except those provisions which block meritorious suits. The veto 
message makes very clear what changes he is seeking, and that those 
changes are meant to protect investors who have been defrauded.
  Let me emphasize again that the President is not seeking to allow 
frivolous suits. The only issue raised by his veto message is whether 
or not, in fact, we will deal with the points in the legislation which 
have gone too far, which have raised pleadings standards too far, which 
have changed the safe harbor provisions to the point where actual lying 
is permitted, which put an unfair burden upon plaintiffs in terms of 
the risks which they must assume in terms of loser-pays. That is what 
we are talking about now. The rest of it the President says is 
acceptable to him.
  Now, he is in good company. Let me read to you some of the people who 
side with the President. We begin with the Fraternal Order of Police, 
the Fraternal Order of Police, ``I urge you to reject the 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.'' That is the national president of the Fraternal 
Order of Police. 

[[Page H15218]]


                              {time}  1115

  The International Association of Firefighters: ``Firefighters put 
their lives at risk to save others. Should they also have to put their 
hard-earning savings at risk too?'' That is the general president of 
the International Association of Firefighters.
  The Consumer Federation of America: ``The bill would immunize knowing 
and reckless violations of the securities laws, reduce compensation to 
victims of fraud, and undermine public confidence in the market. It 
represents special interest politics at its worst.'' That is the 
Consumer Federation of America.
  Here are the Attorneys General of the United States, 11 attorneys 
general writing to the Congress: ``We cannot countenance such a 
weakening of critical enforcement against white collar fraud. The bill 
goes too far beyond what is necessary. It would likely result in a 
dramatic increase in securities fraud.''
  Here is the U.S. Conference of Mayors and the National League of 
Cities commenting on this bill: ``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 this bill would imperil the ability of public officials to protect 
billions of dollars of taxpayers monies in short-term investments and 
pension funds.''
  The changes which the President recommends in his veto message will 
still guarantee that the frivolous lawsuits will be straight-armed out 
of court. But what it also does is ensure that we do not raise the bar 
so high that the meritorious cases, in instances where individuals 
across this country have been defrauded, are also knocked out of court.
  If we ask people to put at risk their money in a loser-pay provision, 
after they have already lost half of their life savings to some 
financial scam, who in this Chamber expects that person to now take the 
double or nothing risk of knowing that under loser-pays they would be 
held responsible for the additional cost of trying to defend themselves 
against the fraud which had been perpetrated against them under these 
extremely high barriers that are being constructed in this bill?
  Mr. CONYERS. Mr. Chairman, will the gentleman yield?
  Mr. MARKEY. I yield to the gentleman from Michigan.
  Mr. CONYERS. That is, if they have any money left.
  Mr. MARKEY. Exactly. I am saying they would have to put at risk the 
money they do have left after they have been defrauded.
  Who in the world as an ordinary citizen would do that to their 
family, to take on a major financial or corporate entity, with the sure 
uncertain knowledge, not that they could lose, but that there is the 
risk? The risk itself it could happen, no matter how small, would serve 
as an absolute bar to an ordinary citizen participating in these 
lawsuits. That is what this debate is about; not immunizing ordinary 
lawsuits, just the opposite.
  Let us join together to ban frivolous lawsuits with the President, 
but let us not wall out the capacity to have the meritorious lawsuits 
which we all know, we all know in our souls, should be continued to be 
brought in court.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BLILEY. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from 
Virginia [Mr. Moran].
  Mr. MORAN. Mr. Speaker, I think the gentleman from Massachusetts 
knows how much I respect and like him, and I would hope that the 
President would know as well, how much I respect him, even though I 
must urge my colleagues to vote to override this veto. I am surprised, 
frankly, that the President vetoed this, because I know that one of his 
favorite books is ``The Death of Common Sense'' by Phillip Howard. This 
is commonsense legislation. It is necessary legislation. If in faith it 
does get vetoed, we may not get another shot at it.
  Frankly, when you read this message, much of his objection is of a 
nitpicking nature. It is legalistic. We know we are going to have the 
Second Circuit standard applied, and that in fact when legislation is 
at variance with legislative history or report language, that it is the 
bill itself that prevails.
  But I do not want to speak as a lawyer, I want to speak as a 
stockbroker, which I was for 10 years. The fact is the most frustrating 
thing we encounter is the need for accurate, informative, relevant 
information. But I have to say, if I were the CEO of a high growth 
company, I would not provide that information, because of the number of 
people out there that will game the system. These people who exploit 
the deficiency of our legal system do not put any money into capital, 
they do not do anything for our economy. They find ways to make 
themselves wealthy by abusing the system. What this is is an antifraud 
and abuse bill that ought to be passed.
  Mr. MARKEY. Mr. Speaker, I yield 5 minutes to the gentleman from 
Michigan [Mr. Conyers].
  (Mr. CONYERS asked and was given permission to revise and extend his 
remarks.)
  Mr. CONYERS. Mr. Speaker, well, it is nice to find out stockbrokers 
would advise us to vote on this special interest legislation. Some 
believe the President perhaps overreacted last night with the veto. But 
could I suggest another route? What about making some common sense 
revisions he is recommending and then coming back and unanimously 
passing this bill?
  Besides, I think there is another body that has something to say 
about the override. So let us not get too carried away on the vote 
here. Let us all settle down here for just a minute.
  Now, the bill simply goes too far. We are not talking about simply 
limiting frivolous cases with this bill. So could all the rest of the 
speakers comport all of the passion that they have about frivolous 
cases just a little bit? We want to stop frivolous cases. What we do 
not want to do is stop meritorious cases. And, there are a few 
meritorious cases around.
  This House was mistaken in trying to gauge the President's 
determination about these matters. The gentleman from Massachusetts 
told you repeatedly the President was going to veto the bill because 
you overreached, and now he did it today. So now we are faced with an 
extreme measure that requires a two-house override.
  Why do we not do something more reasonable? Let us go back and look 
at what we can do to repair what provoked the veto, and then come back 
with a bill that we can all agree on. Is there something wrong with 
that? I do not think so.
  Even the conservative Money Magazine told you the bill went too far, 
once, twice, three times, four times, and the local officials, 15 
Attorneys General, told you the same. Thank you, Mr. President, for 
having the courage to do the right thing.
  So, Mr. Speaker, I rise in strong opposition to this matter. The 
gentleman from Michigan [Mr. Dingell] pointed out that this is classic 
special interest lobbying legislation.
  So now we are at a point of where the American people are not going 
to get robbed. The Nation's seniors, whose life savings are tied up in 
investments, depend on honesty in investment transactions. They are 
being robbed with this bill.
  Now, American investors know they may be robbed by swindlers, but 
they do not expect to be robbed from the House of Representatives. So 
let us get a little bit of reason in here. I think a few of our leaders 
on this measure, Mr. Markey for instance, have some suggestions that 
would make for a decent agreement, and that would meet White House 
objections, and we could go home feeling that we have not involved 
ourselves in this rather large rip-off that is occurring.
  Now, does somebody not have something to explain about Money Magazine 
and the 15 Attorneys General and the thousands of local officials, the 
150 outspoken editorials all who believe this bill is to extreme? Are 
we all nuts and you are all right?
  Mr. Speaker, I thank the gentleman for allowing me to make a few 
comments on the floor.
  Mr. BLILEY. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from 
Washington [Mr. White], a member of the committee.
  Mr. WHITE. Mr. Speaker, I thank the gentleman very much for yielding 
me this time.
  Mr. Speaker, I would like to respond to a couple of things we heard 
this morning. As I told members of the 

[[Page H15219]]
committee many times, it is only 11 months ago that I was a practicing 
lawyer, and I can tell you that anybody who is out there in the real 
world practicing law knows that this system is broken and badly needs 
to be fixed. It is just not something that most people who are 
objective about it can disagree about.
  Mr. Speaker, I would have to express a little bit of concern at some 
of the arguments we have heard from the other side. We are hearing 
maybe if we just made a few changes, just took a little more time, we 
can come up with a better bill. The fact is we have been working on 
this bill for 6 or 7 years. For some people the time is just never 
right to make this fundamental change. The time is now; it is time to 
make sure we enact this.
  We have also heard a lot of pious remarks about how we have to 
protect the investors, protect our grandmothers, all the people 
investing money in these companies. But the fact is, we have not really 
heard from the investors. It is not the investors who are concerned 
about this bill; it is their lawyers. It is the trial lawyers who are 
concerned about this bill, not the people who are supposed to be.
  The great tragedy of the system we have right now is that it makes a 
mockery of our legal system. It sets up a system where you win not if 
you are right, but you win because you are able to game the system, and 
it is a system where even if you do win, you do not get the money. You 
may get a little bit of money, but most of the money goes to trial 
lawyers. Our system right now is a jackpot for trial lawyers. It needs 
to be fixed, and we need to override this veto.
  Mr. BLILEY. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from 
California [Mr. Fazio].
  Mr. FAZIO of California. Mr. Speaker, I supported the conference 
agreement that passed the House because I believe it was a balanced 
bill and I believe it sought to solve a significant problem in the 
securities market while, I believe, protecting legitimately defrauded 
investors.
  I and over 60 of my colleagues wrote to the President not long ago, 
since the conference committee completed its work, urging him to 
support the securities legislation compromise, which I think was the 
appropriate product of that deliberation, which did smooth some of the 
rough edges off the bill that passed the House.
  Our letter outlined many of the changes that had been made to provide 
added protection to those with legitimate claims. No one wants to keep 
those people out of court. These improvements met all the goals that 
would benefit investors and companies alike. The compromise I believe 
would stimulate the economy, curb abuses, increase the flow of 
information to investors, reduce fraud, and strengthen our capital 
markets.
  The man in charge of the Securities and Exchange Commission has 
written a letter that reassures many of us to that extent. The most 
important element of the conference agreement is the fact that it 
reduces the need for lawsuits. The extreme litigious environment that 
currently exists certainly suggests that the ability to sue is readily 
protected.
  Under present circumstances, a plaintiff can sue first and collect 
evidence of fraud later through discovery motions; as a result, a 
number of class action attorneys actively seek to put together lawsuits 
out of unforeseeable investor losses. High-tech companies in my State 
of California, are particularly susceptible to this kind of predatory 
action. It has helped dry up capital in our markets, and I believe made 
it harder to create jobs for Americans.
  All we want to do is restore common sense to this process. We do not 
want to prevent legitimate actions from going forward. I understand the 
President has questions about the potential impact of this measure.

                              {time}  1130

  What he should not question is the impact the lack of protection is 
having on American businesses. Efforts to prevent frivolous actions 
should be supported. We need to restore the faith of the American 
public and the business community that when we see evidence of abuse we 
do something about it.
  I urge the President to reconsider his position and accept this very 
well-crafted, well-thought-out, carefully negotiated compromise. The 
confidence in our markets, in our system of funding startup ventures 
requires it.
  Mr. BLILEY. Mr. Speaker, I yield 1 minute to the gentleman from New 
York [Mr. Paxon], a member of the committee.
  Mr. PAXON. Mr. Speaker, the President's decision to veto this 
legislation, I believe, is a serious blow to economic opportunity, job 
creation and entrepreneurship in our Nation. The goal of this 
bipartisan legislation is to provide some protection from frivolous 
securities lawsuits filed against businesses, often small cutting-edge 
technology companies.
  More and more these companies are truly the engine of growth in our 
economy, creating new high-paying jobs, developing new and innovative 
technologies, and increasing America's exports. Unfortunately, this 
pro-growth reform legislation fell victim to some of the Nation's most 
powerful special interests. A win for these special interests is 
unfortunately a loss for the American economy.
  The good news is we can turn this around today. I urge my colleagues 
to override the President's ill-advised veto of this vitally important 
securities lawsuit reform legislation.
  Mr. BLILEY. Mr. Speaker, I yield 1 minute and 10 seconds to the 
gentlewoman from California [Ms. Lofgren].
  Ms. LOFGREN. Mr. Speaker, I have been reading through the veto 
message of the President. I think there is some good news and some 
misplaced rhetoric here on the floor today.
  The President supports the securities bill, I believe, that is before 
us. And what remains are sort of nerd-like lawyers issues on the 
technical details of the language.
  The President says he supports the second circuit standard for 
pleading. So do I. That is what is included in this bill. The President 
says he supports the safe harbor language in the bill, but he is 
concerned about the legislative history.
  I am mindful that years ago the President of the United States taught 
law school, and years ago so did I, and this is an issue that lawyers 
can argue about, but I think the sounder course is to override this 
veto and get this bill done.
  I am not meaning to say that the President does not disagree on these 
technical issues, but in his veto message he does support it overall. I 
would like to say the overheated rhetoric about fraud is entirely 
misplaced. These are very technical issues, and I think the sounder 
course is to override this veto.
  Mr. BLILEY. Mr. Speaker, I yield 1-\1/2\ minutes to the gentleman 
from California [Mr. Dreier], a member of the Committee on Rules.
  (Mr. DREIER asked and was given permission to revise and extend his 
remarks.)
  Mr. DREIER. Mr. Speaker, clearly, the vanguard of economic 
revitalization in this country has been the high-technology industry 
and the cutting edge biotechnology industry. Unfortunately, if we look 
at the State of California, where we have gained tremendous jobs from 
exports, this legislation is designed to expand that rather than 
jeopardize it.
  We have seen very, very strong statements made by those industries 
from the Silicon Valley that have been victimized by this; Hewlett 
Packard, Sun Microsystems, Intel, Apple Computer. A wide range of 
companies have been impacted, and we need to realize that job creation 
is very important, but there is also the compassionate side to this.
  I wonder how much research is not being done in the area of AIDS and 
cancer because of the threat of these kinds of lawsuits. When Speaker 
Gingrich established his task force on California, passage of the 
legislation authored by the gentleman from California, [Mr. Cox] was 
among our very top priorities, and we hope very much that in a 
bipartisan way, in a bipartisan way, we will be able to come together 
and successfully override this veto so that we, as a Congress, can send 
the very important signal to the largest State in the Union that we are 
committed to job creation, economic growth and the very important 
research to meet some of our most important societal needs.
  Mr. BLILEY. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Illinois [Mr. Hastert].

[[Page H15220]]

  (Mr. HASTERT asked and was given permission to revise and extend his 
remarks.)
  Mr. HASTERT. Mr. Speaker, I rise in favor of the legislation.
  Mr. Speaker, I rise in support of the motion to override the 
President's veto.
  Clearly, securities litigation reform is needed. It is good for 
investors and good for America's economy.
  SEC rules were designed to protect investors. Investors need accurate 
and timely information from companies in which they invest their money. 
However, spectators are misusing the law to virtually extort money from 
honest companies when no fraud has taken place.
  Frivolous class action suits are being filed--sometimes multiple 
suits with the same typing errors--often forcing innocent companies to 
settle out of court rather than face massive court fees--again, after 
no fraud has taken place.
  Investors still have solid protection against fraud under this bill. 
However, this unwarranted litigation is harming U.S. companies and the 
economy. Business capital that could be used for technical innovation, 
capital investment, job creation, and investor dividends are diverted 
to lawsuits. In a sense, these suits represent a tax on capital.
  Lest we forget that frivolous lawsuits really exist, it is 
interesting to note that during the last 3 years, one out of every 12 
companies listed on the New York Stock Exchange was sued for securities 
fraud. As the author of this survey remarked, ``Either you have to 
believe there's rampant fraud on the New York Stock Exchange, or there 
are a lot of people getting sued who shouldn't be.''
  Some may claim to be in support of getting rid of these meritless 
suits, but unless they are in support of this legislation, they are 
doing nothing to change the current problem. Suits with merit should be 
brought before the proper authorities and will continue to be brought 
and won under this legislation.
  Mr. Speaker, investors need better information. The changes to 
prospectuses contained in this bill encourage companies to give more 
and better information to investors. That is why numerous citizen 
investor groups have been running advertisements in favor of this bill.
  They know their dividends are going to be higher if the companies 
they invest in are not fighting off frivolous lawsuits.
  I urge my colleagues to support this bill, which serves investors, 
small business and the American economy well.
  Mr. BLILEY. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Iowa [Mr. Ganske].
  (Mr. GANSKE asked and was given permission to revise and extend his 
remarks.)
  Mr. GANSKE. Mr. Speaker, I rise in favor of this legislation.
  Mr. Speaker, last night the President vetoed the securities 
litigation reform measure placed on his desk. This legislation is 
needed for two main reasons. First, so proper plaintiffs will have a 
place to redress valid grievances in a system ensuring fraud victims 
recover their losses and not merely the estimated pennies on the 
dollar. Second, the securities industry must be allowed to get back to 
its intended functions. A veto-proof majority in both Houses of 
Congress supported this legislation.
  The President gave three major reasons for vetoing the legislation. 
First, he objects to the mandatory sanctions imposed if the court finds 
a rule 11 violation. Sanctions are mandatory against any party 
violating the rule. He claims that the provision is unreasonably harsh 
on plaintiffs' lawyers found in violation of the rule and that this 
will have a chilling effect on a plaintiff's right to sue.
  The only thing chilled by this provision is meritless lawsuits that 
shouldn't have been brought in the first place. Plaintiffs should be 
forced to more carefully weigh the merits of their case before filing 
suit. With less meritless suits clogging up the court system, valid 
plaintiffs will more quickly be able to redress their grievances.
  Second, the President claims the safe harbor provision will allow 
wrongdoers to get off scot-free. This could not be further from the 
truth. The provision protects companies and executives when they have 
done their job from meritless suits being brought against them. 
Companies are protected only if they have adequately informed the 
investor of risks associated with the investment, and if they have not 
made a knowing misinformation. It does not prevent plaintiffs from 
bringing meritless suits.
  Third, tougher pleading standards ensure that the plaintiff's lawyer 
actually has a case before bringing a frivolous suit. Frivolous suits 
serve no purpose. They waste everyone's time and money. Nobody 
benefits--not plaintiffs and defendants involved in litigation that 
will go nowhere despite countless amounts of time and money expended, 
not the court system which gets clogged, and future plaintiffs who 
can't get in the courthouse door because it is so jammed.
  This bill has broad bipartisan support and is endorsed by the SEC 
Chairman, Arthur Levitt. So why did the President veto this bill?
  Does he want to put the Silicon Valley out of business as it 
continues to spend time defending frivolous suits rather than advancing 
the technological future of our country?
  Does he want to keep valid plaintiffs out of court?
  According to some newspaper reports, the President's decision may 
have been influenced by a leading member of the trial bar. We must ask 
whether the President's veto was designed to protect the American 
people or a special interest that has funneled millions of dollars to 
the Democratic Party.
  Mr. BLILEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
Florida [Mr. Deutsch], a member of the committee.
  Mr. DEUTSCH. Mr. Speaker, I rise today in support of an override of 
the veto on this legislation, and I do that as a member of the 
Democratic Caucus and a member of the committee.
  I would, once again, point out to my colleagues that this is a 
bipartisan bill. A majority of Democrats in this Chamber voted for this 
bill, both as it originally passed the House as well as the conference 
report. The President's veto message highlights several specific 
things, and I want to discuss those in the short time that I have.
  The first is the issue of pleadings. Let me be very clear about that. 
That particular issue was in the bill at the request of the judicial 
conference, not at the request of any particular industry group, but by 
a group of judges that deal with pleading requirements. That is why 
that particular issue was in the bill.
  The other issue that the President raises is the issue of report 
language. And let me focus on that for my colleagues. What courts in 
this country have determined in terms of our legislative intent is that 
report language is not considered. It is the language that we pass in 
the bill. So the President's focus actually might have been accurate 
when he was a professor of law several decades ago in Arkansas, but by 
the latest court decisions that is just not accurate. Report language 
has no effect on the bill.
  But let me talk about what the President did agree with. He agreed 
with the safe-harbor provisions. He had no objections to the aiding-
and-abetting provisions or for the issue of fraud, because the facts of 
this bill are that this bill is an antifraud bill. It creates an 
affirmative duty by accountants to report fraud, which does not exist 
under existing law. So, if anything, this bill truly is an antifraud 
bill.
  Finally, I would close just on the substance of the bill itself. This 
bill is really at the heart of what we are as Democrats as well. This 
is a jobs bill. Because the reality is the existing law stops access to 
capital, stops job creation in this country today. I urge support of 
the override of the President's veto.
  Mr. BLILEY. Mr. Speaker, I yield 1 minute to the gentleman from Ohio 
[Mr. Oxley], vice chairman of the subcommittee.
  Mr. OXLEY. Mr. Speaker, I rise in support of securities litigation 
reform and the veto override attempt.
  As Members know, and the White House must know, legislation to curb 
abusive securities-fraud lawsuits was approved by veto-proof margins by 
both Houses of Congress earlier in the year.
  I think this is a case where the Congress needs to act to save the 
President from himself.
  The legislation before us takes a moderate approach to the problem of 
frivolous securities class-action lawsuits.
  There is a collection of class-action lawyers out there who are 
filing meritless fraud suits against publicly traded companies, 
especially high-technology firms, whenever their stock prices fall. 
They have used the securities laws to win billions from corporations 
and their accountants.

  Meanwhile, defrauded mom-and-pop investors recover only 7 cents for 
every dollar lost in the market.
  This legislation will return the focus of securities laws to their 
original purpose--protecting investors and helping actual victims of 
fraud.
  This legislation has been described as a boon for securities firms, 
accounting firms, and public companies. I might add that it is a boon 
for employees of those companies, as well as 

[[Page H15221]]
anyone who invests in them in the hope that their stock will go up, not 
down.
  These reforms are long overdue, the President's veto message 
notwithstanding. They're good for American business, they're good for 
American competitiveness, and they're good for American investors.
  Mr. MARKEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
Pennsylvania [Mr. Klink].
  Mr. KLINK. Mr. Speaker, I thank the gentleman for yielding me this 
time. First of all, I want to make a few points and that is that there 
really is not a difference of opinion between the two sides that are 
arguing this case about what to do concerning frivolous assembly-line 
lawsuits. We all agree. There are some suits where we have anecdotal 
evidence that this occurs, but when we look at the numbers, when we 
look at statistics on those studies that have been done when stock 
prices fluctuate, the evidence is not there that there is this 
avalanche of frivolous suits. It exists, it does inhibit capital, and 
we should take some action, but indeed the President is correct when he 
says this legislation goes too far.
  Now, there are two ways we can deal with this problem. No. 1, we can 
expand the bureaucracy, which I do not think that there is anyone on 
the other side of the aisle and very few on our side of the aisle who 
would like to see that happen. We can expand the bureaucracy and allow 
some bureaucrats to be able to police whether or not securities are 
being misrepresented to the plaintiffs; or we can do what SEC Chairman 
Levitt said in front of the committee, and that is identify ways to 
make the system more efficient while preserving the essential role that 
many private actions play in supporting the integrity of our markets. 
That is where we have gone too far.
  We can have self-policing of the markets by allowing a private right 
of action when an individual has been hurt, and this legislation simply 
goes too far.
  The conference report's rule XI, the President states, this provision 
lacks balance. It treats the plaintiffs more harshly than the 
defendants in a manner that comes so close to loser pay. Now, I ask my 
colleagues, when we start getting close to loser pay, how many people, 
and the gentleman from Michigan [Mr. Conyers] brought this up a few 
moments ago, how many people are going to take the action after they 
have lost so much of their resources to lose more of it by bringing a 
meritorious case? We must allow room for meritorious lawsuits.
  Mr. BLILEY. Mr. Speaker, I yield 1 minute to the gentleman from Ohio 
[Mr. Brown], a member of the committee.
  Mr. BROWN of Ohio. Mr. Speaker, I thank the gentleman for yielding 
time to me.
  Mr. Speaker, I rise in support of H.R. 1058. Many of us on this side 
of the aisle have opposed extreme tort reform because we want consumers 
and workers protected through sensible regulation and through the 
specter of potential lawsuits. H.R. 1058, however, does provide that 
investor protection.
  H.R. 1058 is a jobs protection bill. I represent an area in northeast 
Ohio which is a hotbed of innovation and entrepreneurial spirit. 
Exporting is important, small business is important, high-tech 
companies are important. H.R. 1058 is a mechanism, as a bipartisan 
effort, to create jobs in my district and throughout this country. I 
urge a ``yes'' vote.
  Mr. MARKEY. Mr. Speaker, I yield such time as she may consume to the 
gentlewoman from Illinois [Mrs. Collins].
  (Mrs. COLLINS of Illinois asked and was given permission to revise 
and extend her remarks.)
  Mrs. COLLINS of Illinois. Mr. Speaker, I am in opposition to the 
motion to override the President's veto.
  Mr. Speaker, I rise in opposition to the motion to override the 
President's veto of the conference report to accompany H.R. 1058, the 
Securities Litigation Reform Act. This so-called agreement would slam 
the doors of justice on hard-working Americans who unwittingly fall 
victim to corporate misconduct and fraud. It is shamelessly 
anticonsumer, anti-small investor, and antitaxpayer.
  Every Member of this body recognizes that there continue to be some 
cases in which meritless securities class action lawsuits are brought 
and we must take steps to deter such behavior. But the GOP's approach 
on this issue, as with many other issues throughout this Congress, has 
been to blow a minor problem way out of proportion for short-term 
political gain. This is simply irresponsible Mr. Speaker.
  The facts are these: Of the 225,000 suits filed in Federal courts 
annually, only about 300 or so are securities fraud class action suits, 
and the courts currently have the full authority to dismiss those suits 
they deem to be without just cause.
  Private securities lawsuits have provided a very powerful deterrent 
to fraud and have been invaluable in supplementing and enhancing 
Securities and Exchange Commission [SEC] enforcement of Federal 
securities laws. The Lincoln S&L/Charles Keating debacle and the Drexel 
Burnham/Michael Milken disaster were just two high-profile cases that 
were initiated as a result of private investor action.
  In these two cases alone, $262 million in hard-earned taxpayer 
dollars, mostly the dollars of senior citizens, was recovered. Under 
the conference report for H.R. 1058, a mere $16 million of this money 
would have been retrievable.
  It is not justifiable to throw the baby out with the bath water in 
the name of so-called reform. However, that is what the conference 
report does.
  It offers a great number of incentives for corporate misconduct. Most 
distressing to me is the fact that the bill imposes ``loser pays'' 
requirements forcing a losing small investor in a securities fraud suit 
to shoulder the legal fees of the investment banking houses, accounting 
firms, megacorporations, etc. I don't want to tell my constituents who 
lose their life savings that they had invested in mutual funds, IRAs, 
or pension plans because of a fraudulent action that they must then 
risk their homes and whatever else they may have left to have even a 
chance of recovering a small portion of what they lost. Do you think 
these investors will pursue any suit, regardless of its merits?
  In addition, the measure's ``safe harbor'' liability exemption for 
``forward-looking'' statements excuses unethical corporate wolves from 
prosecution. With these provisions, any statements made by a defendant 
in a securities fraud case would be exempt from liability--even if the 
statement is deliberately false--as long as it is accompanied by 
vaguely defined ``cautionary'' language.
  I urge my colleagues to vote no on this motion, support the 
President, and help prevent a grave injustice to our Nation's consumers 
and small investors from occurring.
  Mr. MARKEY. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from 
New Jersey [Mr. Torricelli].
  Mr. TORRICELLI. Mr. Speaker, I thank the gentleman for yielding time 
to me.
  Mr. Speaker, when securities litigation reform legislation came to 
this House earlier this year, I voted for it. The Clinton 
administration supported it. Democrats and Republicans in this body 
overwhelmingly gave their assent.

                              {time}  1145

  This is not that bill.
  Mr. Speaker, this is a good example of what happens when this 
institution does not function according to its own rules and 
procedures.
  The bill the President vetoed is not the result of a conference 
committee. The conference committee did not meet. It is not the result 
of a bipartisan effort. Democrats were never consulted. We started with 
Democrats, Republicans, both bodies of the Congress, and the 
administration toward a common language, largely with common language, 
with a good purpose, and because we could not work together in good 
faith, we came up with a product that forced the President to issue a 
veto and many of us to oppose the legislation.
  Mr. Speaker, that is why 15 attorneys general have stated their 
concerns, and leaders of the business community themselves. Look how 
far we went wrong, and be careful that you want to be identified with 
this legislation if you do not vote to sustain the veto.
  The conference report drops language exempting from the safe-harbor 
provisions ``statements knowingly made with the purpose and actual 
intent of misleading investors.'' That was dropped.
  Mr. Speaker, I know we all want to do right by the business 
community. How about your retirees? Small business people? Pension fund 
managers? Ultimately, the strength of this economy rests on the 
confidence of our people to invest. This is not a small Latin American 
nation where a few large families carry the raising of capital. Our 
people must feel confident. We cannot pass this bill and have people 

[[Page H15222]]
believe that they can go and make an investment and have recourse. The 
President will sign a bill with modest changes. It is the bill many of 
you voted for originally.
  Mr. Speaker, I urge the Members of this body, sustain this veto. Let 
us get a bill worth voting for.
  Mr. BLILEY. Mr. Speaker, I yield 1 minute to the gentleman from 
California from [Mr. Bilbray].
  Mr. BILBRAY. Mr. Speaker, I rise in support of H.R. 1058, and I rise 
in support for many reasons, but one of them being the fact that I 
think the American people have a chance today to see a bipartisan 
effort to protect the most critical resource of our country; that is, 
the ability of people to venture into agreements to invest their 
capital.
  Mr. Speaker, I think that one of the things we see again and again, 
contrary to what some speakers would like to say, is that this is a 
bipartisan effort. You see the Representatives from California 
especially, from both sides of the aisle, do what we do not do enough, 
cross the aisle and work together for the benefit of the public.
  Mr. Speaker, I wish to point out this is not just an issue of jobs. 
This is not just an issue of investing money. This is an issue of life 
and death because the companies that are being attacked are not those 
that are big companies, but these are the small dynamic companies that 
are working on issues that are absolutely essential for our citizens, 
such as cures for cancer, looking for a cure for AIDS, looking for 
those items that will save lives.
  So, Mr. Speaker, I ask Members to support the override not just for 
the jobs, not just for the bipartisan effort, but for the citizens' 
lives too.
  Mr. BLILEY. Mr. Speaker, I yield 1 minute to the gentlewoman from 
California [Ms. Harman].
  (Ms. HARMAN asked and was given permission to revise and extend her 
remarks.)
  Ms. HARMAN. Mr. Speaker, I represent a district in California that I 
consider the aerospace center of the universe, and its future depends 
on two things. One is a right-sized defense, but the second is 
diversification, so that the industrial base can prosper in industries 
like medical research, communications, biotechnology, green 
technologies, and so forth.
  Mr. Speaker, that diversification will be hampered if we do not have 
securities law reform. I am very sorry that the White House has chosen 
to veto this bill, as it chose or will choose to veto our Defense 
authorization bill. I think in both cases the growth of California, its 
export potential, and its cutting-edge technology in the twenty-first 
century depend on policies opposite those the White House has chosen to 
take.
  Mr. Speaker, I would make this point in closing. As a corporate 
lawyer, I know that there are investors on both sides of securities 
litigation and victims on both sides. These reforms will protect those 
who invest and are subsequently defrauded as well as those who invest 
in companies that are unfairly targeted by strike suits.
  These reforms are critical to all investors, to our Nation's future 
economic growth, and to the leading-edge advances that high-technology 
companies make to improve the quality of our lives.
  Mr. BLILEY. Mr. Speaker, I yield 1 minute to the gentleman from Ohio 
[Mr. Boehner].
  Mr. BOEHNER. Mr. Speaker, there is nothing wrong with this bill. It 
went through the House and the Senate in a bipartisan way. And during 
the whole process, we worked with the SEC, we worked with the 
administration, and we had an agreed-upon bill.
  All the sudden, at the eleventh hour, the President decides to veto 
it. Everybody in this Chamber knows what this is. This is nothing more 
than raw politics. The President, having a few of his friends over for 
dinner and deciding, ``Well, I really do not want to tell those trial 
lawyers, no. I really do not want to stand up and do the right thing 
for the American people.''
  Mr. Speaker, it is very simple. It is time to send the President a 
message that we are not going to negotiate this way. This is the same 
thing we have been going through with the budget for the last several 
months. All we get is idle talk, idle talk, but we never get serious 
negotiations.
  Mr. Speaker, we had serious negotiations on this bill. We came to an 
agreement, and the fact is we ought to override it and we ought to do 
it today.
  Mr. BLILEY. Mr. Speaker, I yield 30 seconds to the gentleman from 
California [Mr. Farr].
  Mr. FARR. Mr. Speaker, I voted for this bill because it addressed 
things that were broken and needed fixing. We had a bipartisan effort 
to fix those things, and we did. We need to keep America competitive. 
Technology development depends on risk-taking. This bill allows risks 
to be taken and rights to be protected.
  Mr. Speaker, I was shocked by this veto. It is the first time I have 
ever not agreed with the President on a veto, and I am going to vote to 
override it. I urge my colleagues who supported it in the first 
instance to do so in the latter.
  Mr. MARKEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
California [Mr. Berman].
  (Mr. BERMAN asked and was given permission to revise and extend his 
remarks.)
  Mr. BERMAN. Mr. Speaker, I hear a lot of talk, general talk, about 
climate for investors and climate for new ventures, and trial lawyers, 
and bipartisan efforts. No one seems to want to address the specific 
points of the veto, I suggest, because there is no good answers to 
those specific points.
  Mr. Speaker, if I heard it once, I heard it ten times from the 
gentleman from California when this bill passed: We want a pleading 
standard that matches the Second Circuit, not the lose pleading 
requirement of the Ninth Circuit.
  Why do they come back? The Second Circuit standard is not enough. We 
want to make it even tougher to file a suit based on fraud and 
defrauding investors.
  The question of sanctions; I think there should be tough sanctions on 
frivolous lawsuits. I think there should be tough sanctions on 
frivolous defenses. Here we presume a frivolous plaintiff pays all the 
legal costs and we specifically prohibit a presumption of all the costs 
of the plaintiff by frivolous defenses by the defendant.
  Finally, on the safe-harbor provisions, they allow an individual to 
lie to potential investors, make some cautionary statements, and state 
specifically they cannot make any general allegation with respect to 
the state of mind of the person who is lying, and then allows omission 
of major, major kinds of cautionary statement.
  Mr. Speaker, a new drug company could represent future earnings, make 
forward-looking statements, talk about the problem of floods and talk 
about the problem of earthquakes and the problem of labor disputes, and 
never mention that the company that their drug is based on has not yet 
had FDA approval.
  All we are asking is to clean this bill up so that my colleagues can 
achieve the purposes they say they want, without undermining the 
ability of fraudulent actors to pay the penalties they should be paying 
to the investors they have defrauded.
  Mr. BLILEY. Mr. Speaker, I yield 30 seconds to the gentleman from New 
York [Mr. Frisa], a member of the committee.
  Mr. FRISA. Mr. Speaker, the President, as is his right, chose to use 
his pen to veto legislation that I feel is very important for our high-
tech companies to encourage growth, to encourage innovation, to 
encourage the creation of more jobs, to protect our accounting 
profession and other professions that deal with especially new, 
emerging companies that create growth.
  So, Mr. Speaker, I would urge all of the Members of the House to 
exercise their right to override the ill-advised veto of the President 
so that we can accomplish these objectives.
  Mr. BLILEY. Mr. Speaker, I yield 30 seconds to the gentleman from 
Wisconsin [Mr. Roth], a member of the Committee on Banking and 
Financial Services.
  Mr. ROTH. Mr. Speaker, as chairman of the Subcommittee on Economic 
Policy and Trade, I, along with the gentleman from Connecticut [Mr. 
Gejdenson], have looked at this issue of jobs. The reason this bill is 
so important, this securities legislation, is because it really 
revolving around jobs.
  Many of our companies are moving overseas. Why? Because of frivolous 
lawsuits. Many of our companies are 

[[Page H15223]]
not bringing in the innovation that we need today. Why? Because they 
are afraid of frivolous lawsuits.
  Mr. Speaker, in his opening remarks, the gentleman from Virginia [Mr. 
Bliley] pointed to a ``T'' to the central nub of the problem, and that 
is what we want to focus on. I know if the President had a chance to 
reconsider, he would sign this legislation.
  Mr. BLILEY. Mr. Speaker, I yield 30 seconds to the gentleman from 
California [Mr. Hunter].
  Mr. HUNTER. Mr. Speaker, just to follow my colleague's remarks, 53 
percent of our high-technology companies in Silicon Valley have been 
hit with the type of fraudulent lawsuits that this legislation would 
prohibit. If my colleagues want to bring back the California economy--
and it is still struggling--and if the President wants to bring back 
the California economy and get a little credit for it, let us get this 
legislation passed. Please support this override.
  The SPEAKER pro tempore. The gentleman from Virginia [Mr. Bliley] has 
2\1/2\ minutes remaining, and the gentleman from Massachusetts [Mr. 
Markey] has 2 minutes remaining.
  Mr. BLILEY. Mr. Speaker, we have one speaker left to close, and I 
reserve the balance of my time.
  Mr. MARKEY. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, when a hurricane or a tornado causes a billion dollars' 
worth of damage to homes and families, the Nation races to their aid. 
But when investors are defrauded of $1 billion, such as the Prudential 
Securities case, it is a silent hurricane that ravages the life savings 
of families across this country.
  The President wants to protect growing companies and growing 
families. We must help him to fix this bill. We must have a ``no'' vote 
on this override. It is absolutely critical for us to block all 
frivolous cases. The President, and those of us who are supporting the 
President's position, want to block all frivolous lawsuits, and we will 
do so. But we do not want to block meritorious cases.
  Mr. Speaker, what a sad state of affairs in this country if, in the 
name of job creation, we block meritorious cases brought by defrauded 
investors against financial scam artists who have lied and deceived 
investors in this country.
  Mr. Speaker, a ``no'' vote is the only correct vote here to defend 
against the defrauding of investors in this country; to ensure that 
meritorious cases can be brought; to ensure that the pleadings are not 
too high; to ensure that, in fact, loser-pays does not become an 
absolute block to ordinary individuals in bringing cases; to ensure 
that companies and financial experts cannot lie, deliberately lie, 
deliberately defraud individuals across this country.
  Support the President. Vote ``no''. Vote ``no'' here to protect 
average investors in this country. Mr. Speaker, I tell my colleagues, 
we will come back and we will give them a bill which will block all 
frivolous lawsuits that will be brought in this country. Vote ``no.''

                              {time}  1200

  Mr. BLILEY. Mr. Speaker, I yield the remainder of our time to the 
gentleman from California [Mr. Cox], a member of the committee who has 
done more work on this bill perhaps than almost anyone else on our 
side.
  Mr. COX of California. Mr. Speaker, I thank the gentleman for 
yielding me this time.
  Christmas Day is approaching. We are still hard at work because we 
are in the midst of a historic effort to pass the first balanced budget 
in 30 years. It is a difficult time. There is some partisan rhetoric on 
the floor.
  But in the midst of this we have managed to produce one of the most 
bipartisan, carefully crafted pieces of legislation in congressional 
history. It is no accident that this bill passed the House of 
Representatives and the Senate by overwhelming, more than two-thirds, 
more than veto-proof margins.
  Fraudulent litigation, everyone has accepted, is a serious problem in 
America. The manipulation and abuse of our securities laws by unethical 
multimillionaire bandits is a serious problem in need of a remedy. This 
bill comes after long and hard work, not just between the House and the 
Senate, not just Democrats, a majority of whom have voted to support 
this legislation, and Republicans, but with the administration and with 
the Securities and Exchange Commission.
  We wanted to craft a careful balance because this is such a serious 
issue that affects all of us. In California, it affects us at least as 
much as anywhere else. That is why the Governor of California has asked 
for your support. That is why you have seen so many California 
Democrats and Republicans on the floor today asking for an override of 
this ill-considered veto.
  The President made three points. First, he believes that people who 
bring cases in violation of existing Federal rule 11 should not be 
subject to sanctions. Let me read you what rule 11 says: Only those 
cases that are brought for the purpose of harassment are subject to 
these sanctions; cases brought for an improper purpose, to 
intentionally delay; frivolous cases. That is what rule 11 says. Those 
cases have no place in our system.
  And, yes, at the end of a lawsuit after the judge has heard all of 
the evidence, he should, or she should, be able to impose sanctions in 
those cases.
  Second, the President said the pleadings standards, which are changed 
in our bill to prevent fishing expeditions, should be weakened. But we 
do not wish to see fishing expedition lawsuits. That is why the 
President's own Securities and Exchange Commission did not level this 
objection to this part of the bill. * * * complaint about the safe 
harbor. The SEC chairman approved it. The Administration's own SEC 
approved this part of the bill.
  It took 12 months to craft this legislation. It took 12 seconds for 
the President to set these efforts back. Let us put ourselves back on 
track and vote now to override the President's veto and support this 
most bipartisan and most important legislation.
  The SPEAKER pro tempore (Mr. Wicker). Without objection, the previous 
question is ordered.
  There was no objection.
  The SPEAKER pro tempore. The question is, Will the House, on 
reconsideration, pass the bill, the objections of the President to the 
contrary notwithstanding?
  Under the Constitution, this vote must be by the yeas and nays.
  The vote was taken by electronic device, and there were--yeas 319, 
nays 100, answered ``present'' 1, not voting 14, as follows:

                             [Roll No. 870]

                               YEAS--319

     Ackerman
     Allard
     Andrews
     Archer
     Armey
     Bachus
     Baesler
     Baker (CA)
     Baker (LA)
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Barrett (WI)
     Bartlett
     Barton
     Bass
     Bateman
     Bentsen
     Bereuter
     Bevill
     Bilbray
     Bilirakis
     Bishop
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bono
     Boucher
     Brewster
     Browder
     Brown (OH)
     Brownback
     Bryant (TN)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Campbell
     Canady
     Cardin
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Clement
     Clinger
     Coble
     Coburn
     Collins (GA)
     Combest
     Condit
     Cooley
     Cox
     Cramer
     Crapo
     Cremeans
     Cubin
     Cunningham
     Danner
     Davis
     Deal
     DeLauro
     DeLay
     Deutsch
     Diaz-Balart
     Dickey
     Doolittle
     Doyle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     English
     Ensign
     Eshoo
     Everett
     Ewing
     Farr
     Fawell
     Fazio
     Fields (LA)
     Fields (TX)
     Flake
     Flanagan
     Foley
     Forbes
     Fowler
     Fox
     Frank (MA)
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Frost
     Funderburk
     Furse
     Gallegly
     Ganske
     Gejdenson
     Gekas
     Geren
     Gilchrest
     Gillmor
     Gilman
     Gingrich
     Goodlatte
     Goodling
     Gordon
     Goss
     Graham
     Green
     Greenwood
     Gunderson
     Gutknecht
     Hall (TX)
     Hamilton
     Hancock
     Hansen
     Harman
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Heineman
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Holden
     Horn
     Hostettler
     Houghton
     Hoyer
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kim
     King
     Kingston
     Kleczka
     Klug
     Knollenberg
     Kolbe
     LaFalce
     LaHood
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Lincoln
     Linder
     Lipinski
     Livingston
     LoBiondo
     Lofgren
     Longley
     Lucas
     Luther
     Maloney
     Manton
     Manzullo
     Martini
     McCarthy
     McCollum
     McCrery
     McDade
     McHale
     McHugh
     McInnis
     McIntosh
     McKeon
     McNulty
     Meehan
     
[[Page H15224]]

     Metcalf
     Meyers
     Mica
     Miller (FL)
     Minge
     Molinari
     Montgomery
     Moorhead
     Moran
     Morella
     Murtha
     Myers
     Myrick
     Neal
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Ortiz
     Orton
     Oxley
     Packard
     Pallone
     Parker
     Paxon
     Payne (VA)
     Pelosi
     Peterson (FL)
     Petri
     Pickett
     Pombo
     Porter
     Portman
     Quillen
     Quinn
     Radanovich
     Ramstad
     Reed
     Regula
     Riggs
     Roberts
     Roemer
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Rose
     Roth
     Roukema
     Royce
     Rush
     Sabo
     Salmon
     Sanford
     Sawyer
     Saxton
     Scarborough
     Schaefer
     Schiff
     Schumer
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Sisisky
     Skeen
     Skelton
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Spratt
     Stearns
     Stenholm
     Stockman
     Stump
     Talent
     Tanner
     Tate
     Tauzin
     Taylor (NC)
     Tejeda
     Thomas
     Thornberry
     Thornton
     Tiahrt
     Torkildsen
     Towns
     Traficant
     Upton
     Vento
     Visclosky
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Ward
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wolf
     Wyden
     Wynn
     Young (FL)
     Zeliff
     Zimmer

                               NAYS--100

     Baldacci
     Becerra
     Beilenson
     Berman
     Bonior
     Borski
     Brown (CA)
     Brown (FL)
     Bryant (TX)
     Clay
     Clayton
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Conyers
     Costello
     Coyne
     DeFazio
     Dellums
     Dicks
     Dingell
     Dixon
     Doggett
     Durbin
     Engel
     Evans
     Fattah
     Foglietta
     Ford
     Gephardt
     Gibbons
     Gonzalez
     Gutierrez
     Hall (OH)
     Hastings (FL)
     Hefner
     Hilliard
     Hinchey
     Jacobs
     Johnson (SD)
     Johnson, E. B.
     Johnston
     Kanjorski
     Kaptur
     Kildee
     Klink
     Levin
     Lewis (GA)
     Markey
     Martinez
     Mascara
     Matsui
     McDermott
     McKinney
     Meek
     Menendez
     Mfume
     Miller (CA)
     Mink
     Moakley
     Mollohan
     Nadler
     Oberstar
     Obey
     Olver
     Owens
     Pastor
     Payne (NJ)
     Pomeroy
     Poshard
     Rahall
     Rangel
     Richardson
     Rivers
     Roybal-Allard
     Sanders
     Schroeder
     Scott
     Serrano
     Skaggs
     Stark
     Stokes
     Studds
     Stupak
     Taylor (MS)
     Thompson
     Thurman
     Torres
     Torricelli
     Velazquez
     Volkmer
     Waters
     Watt (NC)
     Waxman
     Williams
     Wilson
     Wise
     Woolsey
     Yates

                        ANSWERED ``PRESENT''--1

       
     Lowey
       

                             NOT VOTING--14

     Abercrombie
     Chapman
     Crane
     de la Garza
     Dooley
     Dornan
     Edwards
     Emerson
     Filner
     Lantos
     Peterson (MN)
     Pryce
     Watts (OK)
     Young (AK)

                              {time}  1220

  The Clerk announced the following pair:
  On this vote:

       Mr. Edwards for, with Mr. Filner against.

  Mr. ROSE changed his vote from ``nay'' to ``yea.''
  So, two-thirds having voted in favor thereof, the bill was passed, 
the objections of the President to the contrary notwithstanding.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore. The clerk will notify the Senate of the 
action of the House.

                          ____________________