[Congressional Record Volume 144, Number 144 (Monday, October 12, 1998)]
[Extensions of Remarks]
[Pages E2096-E2097]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      INTERNATIONAL ANTI-BRIBERY AND FAIR COMPETITION ACT OF 1998

                                 ______
                                 

                               speech of

                            HON. ZOE LOFGREN

                             of california

                    in the house of representatives

                        Friday, October 9, 1998

  Ms. LOFGREN. Mr. Speaker, I am proud to cast my vote in favor of the 
conference report on the Securities Litigation Reform Act of 1998. This 
legislation is the culmination of a long, hard effort to enact reform 
of securities litigation.
  When Congress passed the Private Securities Litigation Reform Act in 
1995, we thought we had stopped the increasingly troubling practice of 
``strike suits.'' In these suits, a small group of attorneys took 
advantage of the legal system to coerce huge settlements out of growing 
high-tech companies, often with little or no evidence of wrong doing.
  Unfortunately, loopholes in the new law were found. To avoid the new 
heightened pleading standards, cases were moved from Federal Courts 
into State courts. According to a recent study by Stanford Professors 
Joseph Grundfest and Michael Perino, 26% of securities litigation 
activity has shifted to state courts.
  Because the threat of ``strike suits'' still exists, many executives 
in Silicon Valley are reluctant take full advantage of key provisions 
of

[[Page E2097]]

the 1995 law. For example, the 1995 Act created a ``safe harbor'' 
provision to encourage companies to disclose valuable information about 
their prospects to investors. However, this provision is not being 
implemented because executives still are concerned about their exposure 
to strike suits in State courts. This hurts investors who lose access 
to valuable information, and it undermines the efficiency of securities 
markets.
  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. This legislation targets abuses in our court system, but it 
also protects the rights of consumers who actually suffer from fraud.
  I urge my colleagues to support this important bill.

                          ____________________