Congress Overrides Securities Bill Veto

The Senate joined the House Friday in overriding President Clinton’s veto of legislation aimed at protecting corporations from so-called frivolous lawsuits by investors. It was the first time that Congress has won a veto fight with Clinton.

Voting 68 to 30, the Senate easily mustered the required two-thirds majority needed to make the bill a law despite objections from the president. The House voted to override Wednesday, 319 to 100.

The bill, which passed both houses by lopsided margins earlier this year, would make it harder for dissatisfied stockholders to file and win class action lawsuits when they believe they have been misled by company officials. Most provisions of the law take effect immediately.

While proponents contended the bill would deter unwarranted litigation, opponents said it would erode investors’ rights and “close the courthouse door on investors who have legitimate claims,” as Clinton put it in a letter to Congress explaining his veto on Tuesday.

The bill limits attorneys’ fees, gives judges power to punish attorneys who file frivolous claims, restricts the ability of plaintiffs to collect damages from accountants and others for “aiding and abetting” fraud, and makes defendants pay damages according to their share of the guilt.

Nearly half the Senate’s Democrats joined all but four Republicans in voting to override.

Washington state and Idaho senators split along party lines in Friday’s vote.

Clinton has vetoed 10 bills, all of them since June, and has threatened vetoes of several more, including major welfare and defense policy legislation. Until the securities bill, neither house attempted to override any veto.

The securities bill forced Clinton to choose between two constituencies that supported him in 1992: trial lawyers, who oppose litigation curbs, and high-tech entrepreneurs, who complain that they are particularly vulnerable to meritless lawsuits.

His veto satisfied one side, and “the other side went away happy because they got the bill,” observed Sen. John B. Breaux, D-La.