[Congressional Record Volume 144, Number 150 (Tuesday, October 20, 1998)]
[Senate]
[Pages S12738-S12739]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          SECURITIES LITIGATION UNIFORM STANDARDS ACT OF 1998

  Mr. D'AMATO. Mr. President, I strongly supported Senate 
passage of the conference report on S. 1260, the Securities Litigation 
Uniform Standards Act of 1998. This bill extends the efforts which we 
undertook in 1995 to curb abusive securities class action

[[Page S12739]]

litigation when we passed the Private Securities Litigation Reform Act 
of 1995 (PSLRA).
  This bill makes the standard we adopted in the Reform Act the 
national standard for securities fraud lawsuits. In particular, the 
Reform Act adopted a heightened pleading requirement. That heightened 
uniform pleading standard is the standard applied by the Second Circuit 
Court of Appeals. At the time we adopted the Reform Act, the Second 
Circuit pleading standard was the highest standard in the country. 
Neither the Managers of Reform Act nor the Managers of this bill (and I 
was a Manager of both) intended to raise the pleading standard above 
the Second Circuit standard, as some have suggested. The Statement of 
Managers for this bill makes this clear when it states: ``It was the 
intent of Congress, as was expressly stated during the legislative 
debate on the PSLRA, and particularly during the debate on overriding 
the President's veto, that the PSLRA establish a heightened uniform 
federal standard based upon the pleading standard applied by the Second 
Circuit Court of Appeals.'' This language is substantially identical to 
language contained in the Report on S. 1260 by the Senate Banking 
Committee, which I chair.
  The references in the Statement of Managers to the ``legislative 
debate on the PSLRA, and particularly . . . the debate on overriding 
the President's veto,'' are statements clarifying Congress's intent to 
adopt the Second Circuit pleading standard. The President vetoed the 
Reform Act because he feared that the Reform Act adopted a pleading 
standard higher than the Second Circuit's. We overrode that veto 
because, as the post-veto legislative debate makes clear, the President 
was wrong. The Reform Act did not adopt a standard higher than the 
Second Circuit standard; it adopted the Second Circuit standard. And 
that is the standard that we have adopted for this bill as well.
  The Statement of Managers also makes explicit that nothing in the 
Reform Act or this bill alters the liability standards in securities 
fraud lawsuits. Prior to adoption of the Reform Act, every Federal 
court of appeals in the Nation to have considered the issue--ten in 
number--concluded that the scienter requirement could be met by proof 
of recklessness. It is clear then that under the national standard we 
create by this bill, investors can continue to recover for losses 
created by reckless misconduct.

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