[Congressional Record Volume 144, Number 101 (Friday, July 24, 1998)]
[Extensions of Remarks]
[Page E1424]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          SECURITIES LITIGATION UNIFORM STANDARDS ACT OF 1998

                                 ______
                                 

                               speech of

                            HON. JANE HARMAN

                             of california

                    in the house of representatives

                        Thursday, July 23, 1998

  Ms. HARMAN. Mr. Speaker, as an original cosponsor of H.R. 1689, this 
day has been a long time coming.
  I first want to commend the chairmen and ranking members of the 
relevant committees, as well as my friend and colleague, Anna Eshoo, 
for their leadership.
  Mr. Speaker, in 1995, Congress enacted, over the President's veto, 
the Securities Litigation Reform Act. This act limits the opportunities 
to bring abusive and frivolous class action suits--suits which divert 
precious financial resources from leading-edge high technology 
companies. The act continues protections for investors against genuine 
fraud, as it should, but protects forward-looking statements made by 
companies issuing nationally-traded securities from strike suits.
  With ``strike'' suits in Federal courts less likely to succeed, a new 
venue has been increasingly used--State courts. Such suits potentially 
have the same chilling effect as those previously brought in Federal 
court--until today.
  The measure before us, the Securities Litigation Uniform Standards 
Act, sets forth clear and uniform standards for bringing securities 
class actions under State law and would generally proscribe bringing a 
private class action suit involving 50 or more parties except in 
Federal court.
  Mr. Speaker, enactment of this measure should complete an important 
reform initiated in 1995. Securities litigation needed reform. The 
future of our Nation's competitive advantage in the world lies in our 
ability to develop products and services that are on the leading edge 
of technology and research. The business ventures which undertake such 
activities are among the fastest growing sectors of our economy. 
Indeed, in many places in our country, including California's 36th 
District, they are the pride of our economy.
  But if these business ventures are saddled by the costs and 
distractions of unwarranted lawsuits, filed when stock prices fluctuate 
for reasons often beyond the control of business management, the 
consequences are to chill economic growth. Despite the absence of 
wrongdoing by managers, corporations are essentially forced to pay 
large sums to avoid even larger expenses associated with their legal 
defense. The ultimate loser, of course, is the individual long-term 
investor whose share value was diminished as a result of these suits.
  Mr. Speaker, let me assure my colleagues that the reform measure 
before us continues to protect investors. It recognizes the important 
role the private litigation system has played in maintaining the 
integrity of our capital markets. Yet, at the same time, the bill 
recognizes that forum shopping cannot be a new pathway for enterprising 
parties to gain new profits. The rights of the aggrieved investor to 
seek justice and restitution is maintained, while the opportunity to 
manipulate procedures to the detriment of the company and legitimate 
investors is hopefully ended.
  The Securities Litigation Uniform Standards Act is supported by the 
Securities and Exchange Commission and the administration and I urge 
its support.

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