Senate moves on shareholder suits

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.

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 August.

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.