Prop. 211 Battle Sets Spending Record

The high-stakes fight over Proposition 211--the securities fraud initiative--has set a California spending record for a single ballot measure.

So far, at least $40.6 million has been spent by the two sides--surpassing the old record of $37.8 million--and with the election more than a week away, more spending is certain.

The amount was disclosed in campaign reports filed this week with the secretary of state’s office. The old record was set in 1988 when the insurance industry sponsored Proposition 104, a no-fault car insurance plan. It was defeated.

Supported by plaintiffs’ attorneys, Proposition 211 would allow the filing in California courts of certain class-action securities fraud lawsuits against corporations, their officers, stockbrokers, accountants and others. Such suits are prohibited in federal courts.

The measure’s potentially far-reaching financial consequences are reflected in the money spent to pass and defeat it.

Taxpayers Against Frivolous Lawsuits, the chief campaign committee against Proposition 211, reported it has raised $36.7 million so far this year to defeat the proposal. It has spent at least $31.8 million, much of it on television commercials.

The leading supporters, Citizens for Retirement Protection and Security, reported raising $9.2 million so far in 1996 and spending at least $8.8 million.

Lawyers from throughout the country accounted for most of the contributions to the pro-Proposition 211 campaign, which the latest Los Angeles Times poll showed to be trailing among likely voters, with 52% against the measure, 24% in favor and 24% undecided.

The campaign against the initiative has received major contributions from Silicon Valley companies, the securities industry, accountants and national corporations such as Neiman Marcus, Colgate-Palmolive and Chrysler.

“The stakes are very high,” said Robert M. Stern, co-director of the Center for Governmental Studies, a private research organization in Los Angeles.

He said the contributions represented merely an “investment” by Proposition 211’s opponents. “It is a pittance compared to how much they would lose if the other side wins,” Stern said.

Among the Wall Street players fighting the initiative is the Deutsche Morgan Grenfell Technology Group of New York, an investment banking company that has donated $400,000.

The company’s president, Frank Quattrone, said Silicon Valley companies are convinced that Proposition 211 could severely hurt them financially.

“It is so repugnant and so potentially damaging,” Quattrone said. “It has galvanized industry to come together and get rid of it. It’s not just companies in California [that would be affected]. It could go beyond California.”

Spending has also soared in other initiative contests, including the battle over Proposition 209, which would abolish affirmative action programs in state and local government.

Supporters of the measure reported pulling in more than $3.4 million so far during 1996, led by the California Republican Party, which contributed more than $900,000, according to the reports. The party intends to spend about $2 million late in the campaign.

Another big contributor was industrialist Larry Smead of Cerritos, who gave $50,000.

Opponents reported $2.4 million in contributions, much of it from labor unions, including the California Teachers Assn., which gave $258,000.

Times staff writer Max Vanzi contributed to this story.