Endorsed by President Clinton and the Securities and Exchange Commission, the Securities Litigation Uniform Standards Act would impose "uniform standards" regarding shareholder lawsuits brought by 50 or more people and filed in state courts against nationally traded public companies.
If passed by the full House, 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.
The bill is backed a> by Technology Network and Silicon Valley lawmakers. Proponents say the revised law is necessary to protect the growing number of publicly traded high-tech companies from being sued in every state, which they argue could stifle the industry.
"This bill will help to cut down on abuse of our court system, while still protecting consumer rights," James Barksdale, president and CEO of Netscape Communications and co-chair of TechNet, said in a statement.