Legislation pushed by the high-tech industry to curb frivolous shareholder lawsuits against companies with volatile stock prices is expected to pass Congress by tomorrow.
The Securities Litigation Uniform Standards Act has already passed both houses, but now the conference report that reconciled the bills is set for final passage. The bill will then be sent to President Clinton, who has promised to sign it.
Endorsed by the Securities and Exchange Commission and pushed by Silicon Valley's TechNet, the legislation would impose "uniform standards" regarding shareholder lawsuits filed in state courts against nationally traded public companies.
There is a chance Congress will take tomorrow off and finish up on Tuesday. Congress was scheduled to adjourn today but did not.
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. "We are confident it will be passed and they will get it before they adjourn," Mike Engelhardt, TechNet's vice president of policy and communications, said today.
"High-tech companies have very volatile stock prices by nature," he added. "This bill establishes safe harbors for companies' good-faith performance predictions."