ORANGE COUNTY IN BANKRUPTCY : Boxer Says GOP ‘Contract’ to Impede Litigation by Investors : Legislation: Senator fears strategy of easing securities law will make it harder to sue successfully to recover fund losses.

Sen. Barbara Boxer called on Republican House leaders Tuesday to drop the securities law section of their “contract with America,” asserting that the plan would make it more difficult for investors in the Orange County fund to sue successfully if they believe they were victims of fraud.

By proposing major easing of securities law, the “contract” would “do great injustice to the investing public,” Boxer said in letters to Rep. Newt Gingrich (R-Ga.), the next House Speaker, and Sen Robert Dole (R-Kan.), who will become Senate Majority Leader.

The suggested change in the law would require an investor to prove that the defendant had “actual knowledge” of a fraud, creating barriers “far more difficult than any in current law,” wrote Boxer (D-Calif.), who is holding a fact-finding hearing on the failure of the Orange County fund in Anaheim on Thursday.

Rep. Christopher Cox (R-Newport Beach), who wrote the securities section in the Republican plan, insisted that it would separate legitimate suits from frivolous complaints.

The Republican plan “is good for Orange County because it is targeted at frivolous lawsuits designed to extort settlements from taxpayers,” Cox said.

Boxer and Cox disagree strongly on the Republican plan, as they do on many issues.

“If Chris Cox wrote this, then it is the height of political irony that he wrote this section that could win up injuring his constituents,” Boxer said in an interview.

Cox responded by saying, “either Barbara Boxer hasn’t read it or she doesn’t understand securities law.”

Both legislators pledged an active role in dealing with the aftermath of the Orange County bankruptcy.

Boxer said Thursday’s hearing in Anaheim will include testimony from finance experts, public officials, and investors who suffered financially because of Orange County’s filing. The hearing is set for 10 a.m. to 1 p.m. in the council chambers at Anaheim City Hall.

Boxer is a member of the Senate Banking Committee, and its chairman, Sen. Alphonse D’Amato (R-N.Y.), has agreed at her request to hold hearings on the Orange County situation Jan. 4.

Cox, a member of the House Energy and Commerce Committee, will push for legislation requiring municipalities to provide the same disclosure to potential investors as corporations provide when they issue shares. Orange County disclosed far less than a business would, Cox said.