With President Clinton's
endorsement in its back pocket, the ="" href="http://www.senate.gov/committee/banking.html" rel="nofollow" class="c-regularLink" target="_blank">Senate
Banking Committee today cleared legislation to ward off a swell in shareholder lawsuits against companies with volatile stock prices
The House Commerce Committee is now
expected to pass the Securities
Litigation Uniform Standards Act, which means both houses of Congress likely will vote on the bill by
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.