The Private Securities Litigation Reform Act of 1995 .
A) enables private investors to sue public corporations for securities violations
B) enables the Securities and Exchange Commission to sue private corporations for securities violations
C) provides a safe harbor from liability for companies that make statements to the public about future risk factors
D) provides payment of punitive damages and attorney fees to successful plaintiffs in cases of securities litigation

Question

Quizplus · Accepted Answer

The Private Securities Litigation Reform Act of 1995 provides a safe harbor from liability for companies that make statements to the public about future risk factors. This means that if a company makes a statement about a potential risk, and that risk materializes, the company may be protected from lawsuits as long as they made a good faith effort to provide accurate information to the public. The other choices are incorrect. A enables private investors to sue public corporations for securities violations, but this was already possible prior to the Act. B is incorrect because the Securities and Exchange Commission already had the power to sue private corporations for securities violations. D is incorrect because the Act limits the amount of punitive damages and attorney fees that can be awarded in securities litigation.