A proposed federal law governing fraud in securities investments is being opposed by the City Council, which agrees with the League of California Cities that the law would not do enough to protect victims of securities fraud.
At a meeting last week, the council voted unanimously to oppose the Securities Litigation Reform Act. Council members acted after being urged by the League of California Cities to join in efforts to derail the legislation.
In a letter to the City Council, the league said the legislation "would penalize victims of securities fraud and reward the wrongdoers who perpetrate this fraud on an unsuspecting public."
The legislation is a compromise between separate bills recently passed by the House and Senate. Both bills were aimed at tightening controls on securities investments, and proponents have said the compromise keeps the essentials of the two bills.
But opponents said the House-Senate conference committee ended up with a securities bill that is too weak on fraud protection.
"It would limit many wrongdoers from providing full compensation to innocent fraud victims," according to the League, which added: "In recent years, local California governments, including Orange, Placer and San Diego counties, have lost more than $2 billion in the securities markets, mostly due to derivative investments.
"Now is not the time to weaken defrauded investors' rights to pursue civil actions, as would occur should [the compromise bill] become law."