On May 13, by a vote of 79 to 2, the Senate passed legislation mandating that securities fraud lawsuits against nationally traded companies be litigated in Federal courts. The bill strengthens the enforcement of the Private Securities Reform Act of 1995, for which the profession and business coalitions fought diligently.
Many trial attorneys were circumventing the intent of the 1995 legislation to limit frivolous lawsuits by filing class action suits in states with less restrictive laws on abusive practices. S 1260 will allow for removal to Federal courts those class action securities suits involving 50 or more parties. The bill has the support of the SEC and the White House.
At press time, the House Commerce Committee had held what was expected to be its last hearing on uniform standards legislation and, according to congressional sources, hopes to approve the bill this summer. The House bill, HR 1689, The Securities Litigation Uniform Standards Act of 1997, has 228 co-sponsors.
Securities class actions were brought almost exclusively in Federal court under Federal law before the 1995 reform act. …