S. 240 (104th): Private Securities Litigation Reform Act of 1995

Jan 18, 1995 (104th Congress, 1995–1996)
Died (Reported by Committee)
See Instead:

H.R. 1058 (same title)
Veto Overridden — Dec 22, 1995

Pete Domenici
Senator from New Mexico
Read Text »
Last Updated
Jun 19, 1995
144 pages
Related Bills
H.R. 1058 (Supersedes)
Private Securities Litigation Reform Act of 1995

Veto Overridden
Dec 22, 1995


This bill was introduced on May 25, 1995, in a previous session of Congress, but was not enacted.

Introduced Jan 18, 1995
Referred to Committee Jan 18, 1995
Reported by Committee May 25, 1995
Full Title

A bill to amend the Securities Exchange Act of 1934 to establish a filing deadline and to provide certain safeguards to ensure that the interests of investors are well protected under the implied private action provisions of the Act.


No summaries available.

Jun 22, 1995 8:31 p.m.
Motion to Table Motion to Reconsider Agreed to 69/19

51 cosponsors (38R, 13D) (show)

Senate Banking, Housing, and Urban Affairs

Securities, Insurance, and Investment

The committee chair determines whether a bill will move past the committee stage.

Primary Source

THOMAS.gov (The Library of Congress)

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S. stands for Senate bill.

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The bill’s title was written by its sponsor.

GovTrack’s Bill Summary

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Library of Congress Summary

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.

6/19/1995--Reported to Senate amended.
Title I - Reduction of Abusive Litigation Title II: Reduction of Coercive Settlements Title III: Auditor Disclosure of Corporate Fraud Private Securities Litigation Reform Act of 1995
Title I - Reduction of Abusive Litigation
Amends the Securities Exchange Act of 1934 (the Act) to prohibit brokers or dealers from soliciting or accepting referral fees from an attorney for obtaining the representation of a customer in unapproved action.
Section 101 -
Amends the Securities Act of 1933 and the Securities Exchange Act of 1934 (the Acts) with respect to class action suits to:
(1) require the court to determine whether an interest on the part of plaintiff's counsel in the securities that are the subject of the litigation constitutes a conflict of interest sufficient to disqualify the attorney from representing the party;
(2) prohibit the use of disgorgement funds resulting from actions brought by the Securities Exchange Commission (SEC) to pay legal expenses incurred by private parties seeking distribution of such funds;
(3) mandate recovery by the representative party in a class action suit in the same manner as all other members of the class;
(4) restrict settlements under seal;
(5) restrict payment of attorney's fees from settlement funds;
(6) mandate disclosure of settlement terms to class members; and
(7) prescribe procedures governing the appointment of the lead plaintiff.
Section 103 -
Amends the Acts to prescribe procedural guidelines to: (1) impose sanctions upon the party in violation of the Federal Rules of Civil Procedure with respect to abusive litigation; and (2) stay discovery during the pendency of any motion to dismiss (unless particularized discovery is necessary to preserve evidence).
Section 104 -
Amends the Securities Exchange Act of 1934 to require: (1) particularity in securities fraud actions alleging misleading statements and omissions; (2) specific allegations of facts giving rise to a strong inference that the defendant acted with the required state of mind in a private action in which the plaintiff may recover money damages; and (3) place the burden of proving loss causation upon the plaintiff.
Section 105 -
Amends the Acts to provide an issuer of securities, except in specified circumstances, with safe harbor from liability for forward-looking statements regarding a security's projected performance or operations. Amends the Investment Company Act of 1940 to prescribe guidelines under which the Securities and Exchange Commission shall promulgate regulations governing forward-looking statements.
Section 106 -
Amends the Acts to grant the defendant, in a private action for money damages based only on the defendant's particular state of mind, the right to have the court submit to the jury a written state-of-mind interrogatory for each alleged violation.
Section 107 -
Amends the Racketeer Influenced and Corrupt Organizations (RICO) statute to exclude as a basis for a civil action for treble damages for certain prohibited activities any conduct that would have been actionable as securities fraud.
Section 108 -
Amends the Securities Exchange Act of 1934 to authorize the SEC to seek injunctive relief or money penalties against aiders and abettors of securities laws violations.
Section 109 -
Amends the Securities Act of 1933 to allow a defendant to avoid rescissionary damages in an action based upon misstatements or omissions contained in a prospectus if the defendant proves that the depreciation in the value of a security resulted from factors unrelated to the alleged misstatement or omission.
Title II - Reduction of Coercive Settlements
Amends the Securities Exchange Act of 1934 to prescribe a limitation-on-damages formula (difference between price and value) in an action based upon a misstatement or omission.
Section 202 -
Modifies the allocation of damages scheme to distinguish between primary degrees of responsibility and the application of proportionate liability.
Title III - Auditor Disclosure of Corporate Fraud
Modifies requirements for audits conducted by an independent public accountant of an issuer's financial statements to include procedures to: (1) detect illegal acts that would have a direct and material effect on the determination of financial statement amounts; (2) identify related party transactions material to financial statements; and (3) evaluate an issuer's ability to continue as a going concern.
Section 301 -
Sets forth notification and reporting guidelines for a public accountant who detects illegal activities during the course of an audit. Declares that an auditor shall not be liable in a private action for complying with such guidelines. Establishes civil penalties for an auditor's noncompliance with this Act.

House Republican Conference Summary

The summary below was written by the House Republican Conference, which is the caucus of Republicans in the House of Representatives.

No summary available.

House Democratic Caucus Summary

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