House Rejects Clinton Veto of Bill Restricting Fraud Lawsuits : Securities: Chamber overrides president in 319-100 vote. His move angers and disappoints business community.

Nearly half the Democrats in the House deserted President Clinton on Wednesday and voted to override his veto of a bill restricting lawsuits for securities fraud.

The bipartisan vote of 319 to 100 marks the first time the House has overturned a Clinton veto. The Senate is expected to act on the measure soon and the vote is expected to be close. The Senate approved the bill earlier this month by a vote of 65 to 30, and backers believe they can hold the two-thirds majority needed to override Clinton on the 10th veto of his presidency.

“We don’t know yet how hard the White House will work to turn around some of those Democrats who voted with us,” said a lobbyist for the high-tech industry, which favored the reform measure.

Clinton explained Wednesday that while he supported many objectives of the legislation, he vetoed it Tuesday “because I just didn’t want innocent people to be shafted . . . “

In an interview with The Times’ Washington bureau, Clinton said he would sign the bill “in a heartbeat” if he gets a new version with changes that he believes would protect the ability of investors to file lawsuits if they feel they have been victimized by fraud on the part of publicly traded companies.

He issued the veto late Tuesday, just before a midnight deadline for him to act. Until then, opponents and supporters of the bill alike thought Clinton would probably sign it. Pushing hard for the legislation all year were accountants and trade groups representing the computer, high-tech and biotechnology industries. Fighting against it were trial lawyer, consumer and liberal groups and state securities regulators.

Many corporate chief executives from California companies lobbied for the bill, and it was identified as an issue of special importance in California.

The legislation would establish tougher standards for investors to file, and win, lawsuits alleging securities fraud by corporations, their accountants and lawyers. Those who brought the suits would have to provide more detailed accusations about the misdeeds of those who allegedly committed the fraud. And corporate executives would be given a new “safe harbor” to make statements about future performance and profit without fear of being sued.

Business representatives reacted to the veto with anger and disappointment. The president “is the kind of guy who kicks you in the groin and says, ‘I feel your pain,’ ” said John Endean, vice president of the American Business Conference, a group of 100 high-growth companies. “People are angry about the way he vetoed this bill--at the last minute, they brought up topics they had never focused on before.”

The bill’s leading Senate sponsor, Christopher Dodd (D--Conn.), who is general chairman of the Democratic party, told colleagues Wednesday that he was shocked and surprised by the veto, sources said. Dodd is likely to lead the effort in the Senate to override the veto.

The president’s veto message “was written up as an excuse slip,” said Rep. Anna Eshoo (D-Atherton), one of the 89 Democrats who defied Clinton and voted to override his veto. “I think there is today deep, deep disappointment in the hi-tech community,” she said. “I share that.

“The president led us to believe the White House had concerns and we had met those concerns,” Eshoo said.

Eighty-nine Democrats joined 230 Republicans in voting to override the veto. The president was backed by 99 Democrats and the lone independent in the House, Bernard Sanders of Vermont.

Another Democratic dissident, Zoe Lofgren of San Jose, said she supported the bill because “high technology is the economic engine of Santa Clara County. The highest number of employees involved in [computer] chips in the country reside in my district.”

Clinton insisted during The Times interview that he agreed with Silicon Valley that dubious lawsuits are harming the high-tech business. But he said the bill would go too far in limiting the right to sue.

“There have been examples of frivolous lawsuits filed which really have been unfair to people in California and elsewhere,” Clinton said. However, he said, “I would ask the American people to remember there have been a lot of examples in the last 15 years of people who have been ripped off to a fare-thee-well, who didn’t get all their money back but at least got some of their money back because they could go to court.”

If the government does “anything that inadvertently keeps them out of the courthouse in the first place, that would be a big mistake,” he said.

Rep. Christopher Cox (R-Newport Beach), principal author of the bill in the House, denounced the veto, saying, “President Clinton has turned his back on everyone who owns a mutual fund, participates in a pension plan or has a job at a public company.”