Clinton Signs Securities Fraud Bill

President Clinton signed legislation Tuesday to stem the migration of some securities fraud class-action lawsuits to state courts from federal courts, but he did so with an objection to a pay-related provision.

The bill was backed by Silicon Valley’s high-tech industry, which had complained that securities lawsuits were flooding state courts--particularly in California--and forcing companies to direct resources to costly litigation rather than developing new technology.

Clinton said he objected to an eleventh-hour addition dealing with a separate authority for job classification and greater salary flexibility for Securities and Exchange Commission economists. “This provision was added to the bill at the last minute without any time for review or comment,” Clinton said in a statement. “There is no justification to treat SEC economists differently from other federal employees.” The SEC had no comment on the president’s objection, agency spokesman Christopher Ullman said. The bill, the Securities Litigation Uniform Standards Act, applies only to securities traded on national exchanges and Nasdaq, the electronic stock market.

The legislation, which had the backing of the White House and the SEC, aims to protect widely traded companies from reckless lawsuits having nothing to do with shareholder protection.