Securities Litigation Reform Passes House : Legislation: GOP-sponsored bill would make it easier for companies and their agents to fend off shareholder lawsuits.

The House on Wednesday overwhelmingly approved a drastic revision of the nation’s securities laws, making it easier for corporations, and their outside accountants, lawyers and investment bankers, to defend themselves against shareholder lawsuits.

The Republican-sponsored bill, a key provision in the GOP “contract with America,” would make losers pay the legal costs of the winners in many cases, and would provide a far higher standard of proof for bringing successful suits.

The bill’s backers say it would free high-technology and fast-growing innovative firms from the constant fear of being slapped with costly lawsuits whenever their stock drops sharply in price.

No more will the business world be a “hunting preserve for strike suit lawyers,” said Rep. Christopher Cox (R-Newport Beach), the prime author of the securities litigation reform act.

Citizens with legitimate legal complaints to file at the federal courthouse in Los Angeles find themselves “waiting in line behind mammoth class-action suits that take years,” Cox said.

But opponents--including trial lawyers, consumer groups and state securities administrators--said the GOP plan would virtually destroy the ability of citizens of modest means to sue when they are victims of fraud. They hope to derail the bill in the Senate.

“We have to give the public protection to be sure they can bring class-action suits,” said Rep. Edward J. Markey (D-Mass.), whose amendments to weaken the bill were brushed aside by the determined and united Republican majority.

The bill passed by a final vote of 325 to 99--a margin large enough to override a presidential veto. The Clinton Administration opposes the bill, and officials have indicated a veto is being considered.

It was the second in a complex and far-reaching package of measures that would restrict the ability to file class-action lawsuits dealing with civil complaints ranging from securities fraud to personal-injury cases.

On Tuesday, the House approved a bill with a “losers pay” provision for federal suits in which the contending parties are from different states. And today the House is expected to adopt a bill placing limits on damages in suits involving damages from defective products, or from other corporate actions.

The bill dealing with securities litigation would:

* Allow a judge to require the loser in a securities fraud case to pay the legal expenses of the winner if the judge decides the investor’s complaint did not have substantial merit. This change from current procedure, in which there is no general provision for “loser pays,” could deter many suits.

* Require that the investor provide details showing that the company or its officials acted knowingly and recklessly in committing the fraud. Currently, there is a far easier standard in which the failure to disclose vital information about the company provides grounds for a winning fraud case.

Both sides made repeated references during the debate to the Orange County bankruptcy. Republicans insisted nothing in the bill would interfere with the rights of aggrieved parties who lost money in the county’s ill-fated investment pool.

But Rep. John D. Dingell (D-Mich.), arguing in vain for an amendment to keep the current law intact for cases involving high-risk derivative instruments, said, “Orange County is not alone.” Many local governments “are just beginning to discover their exposure to high-risk derivatives,” he argued.

Opponents of the legislation hope they can get it modified in the Senate, where there is a Republican majority, but with some key members less enthusiastic about the bill.