John Hope Bryant: “one of the most, I think, difficult to understand portions of the bill before us today is the portion that has…”

“one of the most, I think, difficult to understand portions of the bill before us today is the portion that has heretofore not been focused upon, regarding the requirements for pleading the case when a person might file if he has been defrauded by someone in the business of issuing securities. The requirements of H.R. 1058 will, in simple statement, be impossible for real-life plaintiffs to meet because they require that investors who bring securities fraud cases must make specific allegations which, if true, would be sufficient to ``establish,'' which word comes from the bill, to establish that the defendant had acted knowingly or recklessly. That means prior to discovery when it is virtually impossible for plaintiff to establish the facts that would be necessary to meet this new requirement that would have to be known and filed with the case in the beginning or you could not even proceed. I want to quote now: Plaintiffs would be required ``to make specific allegations, which, if true, would be sufficient to establish Scienter as to each defendant at the time the alleged violation occurred.'' That is to establish a knowing element on the part of the actor, the defendant, at the time the defendant committed the alleged violation. Obviously, no defrauded investor could pursue a claim for fraud unless that plaintiff is lucky enough to have the clearest proof of each defendant's state of mind before filing suit.…”