Securities Law Updates | New Proposed Legislation

July 15, 2011

House Judiciary Committee Approves Bill to Thwart Frivolous Lawsuits

The Lawsuit Abuse Reduction Act of 2011
H.R. 966, 7/7/2011

House Judiciary Committee Approves Bill to Thwart Frivolous Lawsuits

The House Judiciary Committee has approved legislation to reduce frivolous lawsuits by restoring sanctions against attorneys who file meritless suits in federal court.

The Committee favorably reported H.R. 966, the Lawsuit Abuse Reduction Act (LARA), by a vote of 20-13.

Federal rules mandating sanctions for frivolous suits were watered down in 1993, resulting in the current crisis of widespread lawsuit abuse, according to Committee Chairman Lamar Smith.

“LARA restores accountability for attorneys by reinstating monetary sanctions against lawyers who file frivolous suits,” he added.

LARA provides the following steps to help thwart frivolous lawsuits:

· Reinstates the requirement that if there is a violation of Rule 11, there are sanctions (Rule 11 of the Federal Rules of Civil Procedure was originally intended to deter frivolous lawsuits by sanctioning the offending party).

· Requires that judges impose monetary sanctions against lawyers who file frivolous lawsuits.  Those monetary sanctions will include the attorney’s fees and costs incurred by the victim of the frivolous lawsuit.

· Reverses the 1993 amendments to Rule 11 that allow parties and their attorneys to avoid sanctions for making frivolous claims by withdrawing them within 21 days after a motion for sanctions has been served.

View a PDF of the proposed legislation

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Companies Mentioned

Securities Law

The following companies are mentioned in Securities Law Updates:

Securities and Exchange Commission

Harris Associates, L.P.

Banc of America Securities LLC

Citicorp USA, Inc.

CIBC World Markets Corp.

Citigroup Inc.

Barclays Capital Inc.

Citigroup Global Markets, Inc.

The Public Employees’ Retirement System of Mississippi

Morgan Stanley & Co., Inc.

Jan Charles Finance S.A.

Park East, Inc.

Lydia Capital, LLC

Suntrust Capital Markets, Inc.

Makor Issues & Rights, Ltd.

ABN AMRO Inc.

Tribune Company

Fleet Securities, Inc. n.k.a. Bank of America, N.A.

City of Philadelphia Board of Pensions and Retirement

Staples, Inc.

The Bank of New York Company, Inc.

CIBC, Inc.

Citibank, N.A.

Metal Management, Inc.

European Metal Recycling, Ltd.

Salomon Smith Barney Inc. n.k.a. Citigroup Global Markets, Inc.

Calyon Securities (USA), Inc. f.k.a. Credit Lyonnais Securities (USA) Inc.

Salomon Smith Barney, Inc.

Calyon New York Branch (successor by operation of law to Credit Lyonnais New York Branch)

Dynex Capital Inc.

Citigroup, Inc.

JPMorgan Chase & Co.

Merit Securities Corp.

JPMorgan Securities Inc.

Teamsters Local 445 Freight Division Pension Fund

Aetna, Inc.

Scotia Capital (USA), Inc.,

Cowen & Co., LLC f.k.a. SG Cowen Securities Corp.

Societe Generale

SunTrust Bank

TD Securities (USA), Inc.

BMO Nesbitt Burns Corp. n.k.a. Harris Nesbitt Burns Corp.

Consolidated Leasing Hugoton Joint Venture #2

Buchanan Ingersoll & Rooney Professional Corporation

Consolidated Leasing Anadarko Joint Venture

W. R. Huff Asset Management Co., LLC

Guardian Capital Management

ABN AMRO Bank N.V.

Vesta Insurance Group, Inc.

Free Enterprise Fund

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