Securities Litigation Uniform Standards Act
Congress enacted the Securities Litigation Uniform Standards Act (“SLUSA”) in 1998 to prevent evasion of the PSLRA. As discussed above, Congress enacted the PSLRA to stem abusive litigation initiated to extract settlements. At the time of the PSLRA’s enactment, essentially all securities class actions were brought under federal law in federal court. After the PSLRA’s enactment, trial lawyers brought an increasing number of securities class actions in state court. Trial lawyers wanted to be able to continue bringing frivolous lawsuits and extracting settlements, and moved their tactics to state court. Congress enacted SLUSA to plug that loophole. SLUSA provides that large securities class actions must proceed in federal court, where they will be governed by the PSLRA.