With President Clinton's endorsement in its back pocket, the Senate Banking Committee today cleared legislation to ward off a swell in shareholder lawsuits against companies with volatile stock prices.
Supported by the Securities and Exchange Commission and pushed by a consortium out of Silicon Valley, the legislation would impose "uniform standards" regarding shareholder lawsuits filed in state courts against nationally traded public companies.
If passed, class-action shareholder suits brought against companies for failed earnings would have to be filed in federal court. The legislation would change a 1995 securities law that made it more difficult for plaintiffs to file in federal court.
Proponents say the statute will protect the slew of public high-tech start-ups from being sued in every state, arguing that such suits have the potential to stifle the growing computer industry.
The Senate committee approved the legislation today by a 14 to 4 vote.