Private Securities Enforcement Improvements Act of 1995

Summary

TABLE OF CONTENTS: Title I: Private Securities Litigation Title II: Financial Fraud Detection and Disclosure Private Securities Enforcement Improvements Act of 1995 - Title I: Private Securities Litigation - Amends the Securities Exchange Act of 1934 to prohibit brokers, dealers, or associated persons from soliciting or accepting referral fees from an attorney for obtaining the representation of a customer in any implied private action. (Sec. 101) Prohibits, unless otherwise ordered by the court, the use of funds disgorged solely as the result of any administrative or court action brought by the Securities and Exchange Commission (SEC) to pay legal expenses incurred by private parties seeking distribution of such funds. Modifies the guidelines for class action litigation, including: (1) recovery by named plaintiffs in the same manner as all other members of the class; (2) court determination of conflicts of interest on the part of counsel with a beneficial interest in the securities that are the subject of the litigation; (3) restrictions on settlements under seal; (4) restrictions on protective orders and sealing of cases; (5) payment of attorney's fees from settlement funds; and (6) disclosure of settlement terms to class members. (Sec. 102) Sets forth special requirements for class action complaints with respect to certification, multiple securities class actions, and an early evaluation procedure employing the services of a mediator. (Sec. 103) States that in any private action under the Act that is based on a fraudulent statement or omission, liability may be established only upon proof that such statement was made knowingly or recklessly by the defendant. (Defines "recklessly" as an extreme departure from standards of ordinary care, presenting a danger of misleading purchasers or sellers that was either known or so obvious that the defendant must have been aware of it.) (Sec. 104) Prescribes guidelines for proportionate liability and contribution among securities fraud defendants, including third-party defendants. (Sec. 105) Amends the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act of 1940 to set forth guidelines for prosecution of persons who aid or abet violations of such Acts. (Sec. 106) Establishes a statute of limitations period for implied private rights of action. (Sec. 107) Directs the SEC to: (1) adopt certain rules to provide one or more safe harbors for forward-looking statements concerning the future economic performance of an issuer of securities; and (2) report to certain congressional committees on such rules. Amends the Securities Exchange Act of 1934 to prescribe litigation procedures with respect to safe harbors for forward-looking statements. Title II: Financial Fraud Detection and Disclosure - Modifies requirements for audits conducted by an independent public accountant of an issuer's financial statements to include procedures to: (1) detect illegal acts that would have a direct and material effect on the determination of financial statement amounts; (2) identify related party transactions material to financial statements; and (3) evaluate an issuer's ability to continue as a going concern. Sets forth notification and reporting guidelines for a public accountant who detects illegal activities during the course of an audit. Limits such auditor's liability for complying with such guidelines. Establishes civil penalties for an auditor's noncompliance with this Act.

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• Introduced in Senate (text)

  Introduced in Senate · EN · 4 April 1995

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• Introduced in Senate (PDF)

  Introduced in Senate · EN · 4 April 1995

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• Introduced in Senate

  summary · EN · 4 April 1995

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