I
105TH CONGRESS
1ST SESSION
H. R. 1689
To amend the Securities Act of 1933 and the Securities Exchange Act
of 1934 to limit the conduct of securities class actions under State
law, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 21, 1997
Mr. WHITE (for himself, Ms. ESHOO, Mr. BARTON of Texas, Mr. BROWN of
Ohio, Mr. BILBRAY, Mr. DOOLEY of California, Mr. CAMPBELL, Mr.
FAZIO of California, Mr. COBURN, Mr. FARR of California, Mr. COX of
California, Mr. FRANK of Massachusetts, Ms. DUNN, Ms. HARMAN, Mr.
KLUG, Mr. KENNEDY
of Massachusetts, Mr. NETHERCUTT, Ms.
LOFGREN, Mr. PAXON, Mr. ROEMER, Ms. PRYCE
of Ohio, Mrs.
TAUSCHER, Mr. TAUZIN, Mr. TOWNS, and Mr. DEUTSCH) introduced the
following bill; which was referred to the Committee on Commerce
A BILL
To amend the Securities Act of 1933 and the Securities
Exchange Act of 1934 to limit the conduct of securities
class actions under State law, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Securities Litigation
Uniform Standards Act of 1997’’.
Federal district court for the district in which the action
is pending and shall be subject to subsection (b).
‘‘(d) DEFINITIONS.—For purposes of this section:
‘‘(1) CLASS ACTION.—A ‘class action’ is any
single lawsuit, or any group of lawsuits filed in or
pending in the same court involving common ques-
tions of law or fact, in which—
‘‘(A) damages are sought on behalf of
more than 25 persons;
‘‘(B) one or more named parties seek to
recover damages on a representative basis on
behalf of themselves and other unnamed parties
similarly situated; or
‘‘(C) one or more of the parties seeking to
recover damages did not personally authorize
the filing of the lawsuit.
‘‘(2) COVERED SECURITY.—A security is a ‘cov-
ered security’ if the issuer of the security had out-
standing any security that satisfied the standard for
a covered security specified in section 18(b)(1) of
this title at any time during which it is alleged that
the misrepresentation, omission, or manipulative or
deceptive conduct occurred.’’.
(2) 
CONFORMING
AMENDMENTS.—Section
22(a) of the Securities Act of 1933 (15 U.S.C.
77v(a)) is amended—
(A) by striking ‘‘and, concurrent with
State and Territorial courts,’’ and inserting
‘‘and, concurrent with State and Territorial
courts except as provided in section 16 with re-
spect to class actions,’’; and
(B) by striking ‘‘No case arising under this
title and brought in any State court of com-
petent jurisdiction shall be removed’’ and in-
serting ‘‘Except as provided in section 16(c), no
case arising under this title and brought in any
State court of competent jurisdiction shall be
removed’’.
(b) AMENDMENTS TO THE SECURITIES EXCHANGE
ACT OF 1934.—Section 28 of the Securities Exchange Act
of 1934 (15 U.S.C. 78bb) is amended—
(1) in subsection (a), by striking ‘‘The rights
and remedies’’ and inserting ‘‘Except as provided in
subsection (f), the rights and remedies’’; and
(2) by adding at the end the following new sub-
section:
‘‘(f) LIMITATIONS ON REMEDIES.—
‘‘(1) CLASS ACTION LIMITATIONS.—No class ac-
tion based upon the statutory or common law of any
State or subdivision thereof may be maintained in
any State or Federal court by any private party al-
leging—
‘‘(A) a misrepresentation or omission of a
material fact in connection with the purchase or
sale of a covered security; or
‘‘(B) that the defendant used or employed
any manipulative or deceptive device or contriv-
ance in connection with the purchase or sale of
a covered security.
‘‘(2) REMOVAL OF CLASS ACTIONS.—Any class
action brought in any State court involving a cov-
ered security as set forth in paragraph (1) shall be
removable to the Federal district court for the dis-
trict in which the action is pending and shall be sub-
ject to paragraph (1).
‘‘(3) DEFINITIONS.—For purposes of this sub-
section:
‘‘(A) CLASS ACTION.—A ‘class action’ is
any single lawsuit, or any group of lawsuits
filed in or pending in the same court involving
common questions of law or fact, in which—
‘‘(i) damages are sought on behalf of
more than 25 persons;
‘‘(ii) one or more named parties seek
to recover damages on a representative
basis on behalf of themselves and other
unnamed parties similarly situated; or
‘‘(iii) one or more of the parties seek-
ing to recover damages did not personally
authorize the filing of the lawsuit.
‘‘(B) COVERED SECURITY.—A security is a
‘covered security’ if the issuer of the security
had outstanding any security that satisfied the
standard for a covered security specified in sec-
tion 18(b)(1) of the Securities Act of 1993 at
any time during which it is alleged that the
misrepresentation, omission, or manipulative or
deceptive conduct occurred.’’.
(c) APPLICABILITY.—The amendments made by this
section shall not affect or apply to any action commenced
before and pending on the date of enactment of this Act.
Æ