Mountain View, CA--May 21, 1997--Semiconductor Equipment and Materials International (SEMI; Mountain View, CA), a worldwide trade association representing manufacturers of semiconductor capital equipment and materials, announced its strong support of new federal legislation introduced in Congress by Representatives Anna Eshoo (D-CA) and Richard White (R-WA) to enact uniform national standards governing securities lawsuits.
The legislation would eliminate the growing use of state courts as a forum to file frivolous securities class action lawsuits or "strike suits." Publicly owned, high-technology firms such as those comprising SEMI's membership are often the target of abusive suits, due to the volatility of their stocks and the difficulty of predicting future performance. SEMI believes this legislation would allow states to retain the right to protect their citizens against securities fraud while ensuring that, for class action lawsuits involving nationally traded securities, the remedies would not vary from state to state.
SEMI strongly supported the Private Securities Litigation Reform Act in 1995, which reformed securities class actions brought in federal courts under federal law. Since its passage, this act has discouraged the use of federal courts to file frivolous securities class action suits by requiring that plaintiffs provide clear evidence of wrongdoing when they file suit, and by providing a "safe harbor" to assist in the disclosure of forward-looking information to investors.
However, a recent study by Stanford Law School professors Joseph A. Grundfest and Michael A. Perino found that there has been an increase in the number of strike suits filed under the state judiciary system since the passage of the federal reform law. Often firms have been forced to settle such suits out of court to avoid the financial costs and risks of trial, regardless of the merits of the case.
Return to Headlines