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D. The legislation is unlikely to be effective.
If Congress were to pass S. 1260, it would create a strong incentive for institutional investors to bring their cases individually in state court when that is the more favorable venue. (19) Thus, companies still will face the threat of state court litigation for forward-looking statements. Furthermore, plaintiffs' attorneys may still be able to avoid the federal discovery stay by bringing a parallel individual case in state court. Investors, meanwhile, will have paid an enormous price for legislation that fails even to solve the "problems" Congress set out to address. Thus, when this new law also proves ineffective, will its proponents return to Congress with a request to preempt all private rights of action under state laws for exchange-traded securities? How big a sledgehammer is Congress willing to wield to kill this gnat?
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