President Clinton generated joy unconfined for exploitative lawyers and ensured a very unhappy Christmas for the entire US high-tech industry on Tuesday night by vetoing the the Private Securities Litigation Reform Act of 1995, which was designed to make it harder to bring the kinds of frivolous lawsuits that have hit almost every company of standing in the computer and electronics industry from Hewlett-Packard Co through Apple Computer Inc, Sun Microsystems Inc, Intel Corp to Silicon Graphics Inc. The President supports the goals of this legislation, but he is unwilling to close the courthouse doors on investors who have legitimate claims, a White House statement said. Opponents had argued that the law overreached its goals and weakened the protection currently available to average investors, ultimately undermining confidence in US markets, supporters believed few changes could have made the situation much worse than it is already. An outraged American Electronics Association characterised the Presidential veto as rewarding the trial lawyers and astounding the high-tech community. It believes that the act as drafted would have provided investors with more timely and relevant information about their investments; given shareholders a real say in the litigation process; provided companies with the tools to avoid years of senseless discovery; and returned a semblance of balance to a legal system run awry. The bill had passed both the House of Representatives and the Senate, the former by 320 to 102, the latter by 65 to 30. By vetoing this bill the President has turned on the nation’s most respected high-tech companies and left them to face meritless securities lawsuits, 93% of which settle for an average $8.6m a piece. That makes this a $2,400m industry with a third of this amount, plus expenses, going to the lawyers, the Association declared. Its records show that nearly 53% of Silicon Valley’s high technology companies, including every one of the top 10, have been sued for allegedly violating the anti-fraud provisions of the securities laws. It is insulting for anyone to believe that these companies have committed fraud, it asserted, pointing out that the bill had been intensely negotiated and compromises had been forged so that the President would have a bill he could sign, and that the Securities & Exchange Commission had supported the final version. We are going to take this battle back to Congress and work to overturn the President’s veto, the San Jose Association concluded.
