A national law was passed in 1995 to protect companies from a skyrocketing number of frivolous class action lawsuits brought by shareholders when the value of their stock holdings declines precipitously.
Due to loopholes in the legislation, however, these lawsuits have now flooded into state courts-particularly in California-where high tech companies are the primary target.
These lawsuits force high-tech companies to expend valuable human and monetary resources on costly litigation, rather than on technological development and innovation.
Uniform National Standards (UNS) legislation-H.R. 1689 and S. 1260-is making its way through Congress. It would close the loopholes and transfer these class action suits from state to federal courts, where standards exist to determine the validity of the claim.
UNS legislation is a fair deal that shields high-tech companies from frivolous lawsuits while providing recourse to investors who are confronted with securities fraud. It is broadly supported by Democrats and Republicans.
"For too long, the plaintiff lawyers have held industry hostage. It's time to spend dollars on innovation, not fighting frivolous lawsuits."
Vice President, Legal and Government Affairs
Uniform National Standards
Securities Litigation Reform