John Sarbanes: “The Senator is correct. Currently, what happened is we set a Federal standard in the 1995 act in the Federal courts.…”

“The Senator is correct. Currently, what happened is we set a Federal standard in the 1995 act in the Federal courts. That still left to an investor the option of going into a State court to seek remedy. Now the proponents of this bill said, ``Well, everyone who is going into Federal court bringing the so-called frivolous suits are now going to migrate into the State courts.'' The numbers show that has not happened. You have a little increase in 1996. The numbers came back down in 1997. The projected numbers are down. So you do not have that flood of litigation into the State courts, and yet investors had available to them State court remedies. Well, now what they are going to do is they are going to preempt the ability to bring the action in the State courts. Well, then, the proponents will say, ``Well, we are just preempting it for these class actions. If you are an individual investor and you want to hire your lawyer, you will still be able to go into State court.'' But they define a class action in this bill in such a way, so broadly that it will sweep up individual investors who are really not part of a class-action suit. Those individual investors will then discover--I mean, what is going to happen here, my prediction on this is that what is going to come before the Congress down the road, if this legislation passes, is small investors showing up in the Congress and saying, ``This happened to me.”