Senate Panel Shows Support for Securities Litigation Reform
WASHINGTON (AP) _ With few exceptions, members of the U.S. Senate Banking Committee expressed broad support Thursday for a far-reaching bill that would make it tougher for investors to file securities fraud lawsuits against businesses.
The panel's leading conservative, Sen. Phil Gramm, R-Texas, and one of its more liberal members, Sen. John Kerry, D-Mass., both expressed support for the newly revised securities litigation reform bill. They spoke as the committee began debating the complex bill and some 35 amendments.
The bill, a major overhaul of securities law, is aimed at curbing frivolous lawsuits that charge executives have engaged in frauds such as insider trading. Businesses contend such lawsuits cost them millions of dollars and waste resources that could be used for job-creating ventures.
Consumer groups and plaintiffs' lawyers fiercely oppose the bill, saying it grants businesses too much immunity against lawsuits and would amount to a major erosion of investors' rights.
In March, the House passed a separate securities reform bill, part of the GOP's "Contract with America," that could force consumers who lose fraud lawsuits to pay the other side's legal bills.
Securities and Exchange Commission Chairman Arthur Levitt Jr. said he continues "to have serious concerns about the safe harbor fraud exclusion" in the Senate bill.
Levitt referred to an element in the bill aimed at protecting executives' forecasts against lawsuits in case their predictions don't pan out. The breadth of the so-called "safe harbor" against forward-looking information emerged as the key battle in Senate staff negotiations over the bill.
Predictions and forecasts by corporations play a critical role in the securities markets and are relied upon heavily by analysts to price companies' stock.
Early Wednesday evening, Senate staff members reached agreement to strip out language that would have made it much tougher for investors to file a fraud lawsuit based on an incorrect forecast. …