Academic journal article Journal of Accountancy

California Votes Down Proposition 211

Academic journal article Journal of Accountancy

California Votes Down Proposition 211

Article excerpt

Voters in California rejected an initiative on the November 1996 election ballot that would have increased the rewards for class-action securities lawsuits. The Retirement Savings and Consumer Protection Act, or proposition 211, was turned down by 74% of California voters. The proposition had threatened to nullify the reforms achieved by the passage of the Private Securities Litigation Reform Act of 1995 and would have had far-reaching effects on all U.S. publicly traded companies and their CPA firms.

Proposition 211 would have allowed plaintiffs' lawyers to put together class-action claims similar to Securities and Exchange Commission 10b-5 class actions with no statute of limitations and no limits on lawyer's fees. Abusive securities class-action suits, principally under the Federal Rules of Civil Procedure, were sharply curbed under the 1995 reform act. The initiative would have affected all U.S. companies with shareholders in California.

"This was an important victory for the profession," said Andrea R. …

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