[Congressional Record Volume 144, Number 99 (Wednesday, July 22, 1998)]
[Extensions of Remarks]
[Page E1383]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


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          SECURITIES LITIGATION UNIFORM STANDARDS ACT OF 1998

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                               speech of

                            HON. ZOE LOFGREN

                             of california

                    in the house of representatives

                         Tuesday, July 21, 1998

  Ms. LOFGREN. Mr. Speaker, I am very proud to vigorously support the 
Securities Litigation Reform Act of 1998. This bill is the culmination 
of a long, hard effort to enact securities reform.
  During the last Congress, we struggled with and finally crafted a law 
that ensures that those who have genuinely been defrauded have access 
to courts and to justice, while preventing the misuse of our justice 
system.
  This landmark legislation, the Private Securities Litigation Reform 
Act, ultimately passed with widespread bipartisan support. I strongly 
supported this legislation.
  We passed this bill in response to the increasingly troubling 
practice of ``strike suits,'' in which a small group of attorneys 
frequently took advantage of the legal system to backmail high tech 
companies for huge settlements, with little or no evidence of wrong 
doing.
  These frivolous strike suits particularly damaged the companies in 
Silicon Valley. According to one study, 53% of Silicon Valley's top 100 
technology companies have been subject to securities fraud claims.
  Despite our best efforts last Congress, opponents have sought to 
sidestep the new federal securities laws. To avoid the new heightened 
federal standards, a number of securities fraud suits have moved from 
the Federal to the State courts.
  According to a study by Stanford Professors Joseph Grundfest and 
Michael Perino, 26% of securities litigation activity has shifted to 
state courts.
  Because of this development, executives now advise me they are 
reluctant to rely on the 1995 Act's safe harbor provisions when making 
public statements about their companies' prospects. This hurts 
investors who lose access to valuable information, and it undermines 
the efficiency of the market.
  It is time to close the loopholes. The Securities Litigation Uniform 
Standards Act of 1998 will finally slam the door on strike suits by 
establishing Federal court as the exclusive venue for securities class 
actions.
  I urge my colleagues to support this important bill. I would also 
like to commend my colleagues Anna Eshoo and Rick White for their hard 
work in pushing this issue forward.
  I pledge to work with my colleagues to move this bill speedily 
through Conference and into law.

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