S.1976 - Private Securities Litigation Reform Act of 1994103rd Congress (1993-1994)
|Sponsor:||Sen. Dodd, Christopher J. [D-CT] (Introduced 03/24/1994)|
|Committees:||Senate - Banking, Housing, and Urban Affairs|
|Latest Action:||Senate - 03/24/1994 Read twice and referred to the Committee on Banking. (All Actions)|
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Summary: S.1976 — 103rd Congress (1993-1994)All Information (Except Text)
Introduced in Senate (03/24/1994)
TABLE OF CONTENTS:
Title I: Private Securities Litigation
Title II: Financial Disclosure
Private Securities Litigation Reform Act of 1994 - Title I: Private Securities 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 any implied private action.
Prohibits the use of disgorgement funds resulting from actions brought by the Securities Exchange Commission (the Commission) to pay legal expenses incurred by private parties seeking distribution of such funds.
Modifies the guidelines for class action litigation, including: (1) recovery by named plaintiffs in the same manner as all other members of the class; (2) court determination of conflicts of interest on the part of counsel with a beneficial interest in the securities that are the subject of the litigation; (3) restrictions on settlements under seal; (4) restrictions on payment of attorney's fees from settlement funds; (5) disclosure of settlement terms to class members; (6) special verdicts; and (7) the threshold enabling a plaintiff to obtain certification as representative for the class.
Prescribes procedural guidelines for alternative dispute resolution. Establishes a limitations period for implied private rights of action. Provides for a court-appointed guardian ad litem or class action steering committee to oversee counsel and settlement offers for the plaintiff class.
Delineates the requirements for securities fraud actions.
Amends the Racketeer Influenced and Corrupt Organizations statute to exclude from its purview an action involving fraud in the sale of securities.
Title II: Financial Disclosure - Directs the Commission to re-examine the regulatory and judicial framework with respect to predictive statements ("forward-looking statements") concerning the future economic performance of an issuer of securities.
Amends the Securities Exchange Act of 1934 to prescribe litigation procedures governing safe harbors for forward-looking statements.
Modifies requirements for audits conducted by an independent public accountant of an issuer's financial statements to include procedures to: (1) detect illegal acts; (2) identify related party transactions material to financial statements; and (3) evaluate an issuer's ability to continue as a going concern. Sets forth notification and reporting guidelines for a public accountant who detects illegal activities during the course of an audit. Limits such auditor's liability for complying with such guidelines. Establishes civil penalties for an auditor's noncompliance with this Act.
Modifies the allocation of damages scheme to distinguish between primary degrees of responsibility and the application of proportionate liability.
Directs the Commission to establish a Public Auditing Self-Disciplinary Board (the Board). Prohibits a public accounting firm from furnishing an accountant's report on any document required to be filed with the Commission unless it has registered with the Board.
Requires the Board to establish guidelines for: (1) investigations and disciplinary proceedings against public accounting firms; and (2) criteria for certification of public accountant peer review organizations. Grants the Commission responsibility for oversight of the Board. Includes within Board jurisdiction a foreign public accounting firm that furnishes accountant's reports on any document required to be filed with the Commission.