> Have you heard anything about the constitutionality of the proposed
> law? A lot of these extreme measures get passed by a vote, only to
> be knocked down in the courts.
Prop 211 would probably be found to violate the interstate commerce clause of the US constitution which says that Congress, not the states, regulates interstate commerce. This would NOT necessarily mean the end of Prop 211 however. Back in the '80s several states tried to regulate hostile takeovers. The supreme court found that these laws violated the interstate commerce clause only to the extent that a state would attempt to apply its antitakeover laws to any corporation not incorporated in that state. If this analysis is followed, Prop 211, even if found unconstitutional, could still be applied to corporations incorporated in California. Other states might then pass similar laws that apply to their own corporations.
The only way I can think of to make Prop 211 go away forever is for Congress to require that federal courts, not state courts, resolve all claims of fraud related to publicly traded securities. I think that the current Congress would be amenable to such a law if Prop 211 passes but I also think that Pres. Clinton will again repay his most generous contributors the trial lawyers with another veto. If Gephardt and/or Daschle take over, forget it.
> While I think that the anti-frivilous shareholder rights legislation
> that was in front of Congress earlier this year was horrible for the
> individual investor, this proposition sounds like nothing but a
> lawyer's dream.
I am curious why you think that the 1995 securities litigation reform law was "horrible" for the individual investor. The 1995 law should greatly reduce the number of frivolous lawsuits against corporations who have done nothing wrong except have a decline in their stock price. This will result in enormous savings of time and money benefitting the corporations, consumers, employees and shareholders.
I admit that the new law can make some legitimate cases somewhat harder to prove, but this is the price we must pay to get rid of the far greater number of illegitimate cases under the old laws. BTW Prop 211 is not "a lawyer's dream"; it's a trial lawyer's (a euphemism for "ambulance chaser's") dream. You can see from another post that virtually all of its major financial backers are "trial lawyers".
> For those who aren't all that crazy discussing the issue here,
> they've got to realize that passage of such a measure would huge
> ramifications throughout the entire stock market, not just for
> California-based co.'s. All would be effected to an extent.
Agreed. If you're not interested, skip to the next message.
Regards,
John |
