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SILICON VALLEY CHIEF EXECUTIVE SPEAKS OUT ON SECURITIES LITIGATION REFORM

 WASHINGTON, June 17 /PRNewswire/ -- Frivolous class-action securities litigation adversely affects American competitiveness, and the fact that "we allow this sort of activity to continue is, in my opinion, a national concern," said John G. Adler, chairman and CEO of Milpitas, Calif.-based Adaptec, Inc., a market leader in computer input/output technology.
 Adler, testifying today on behalf of the American Business Conference (ABC), a coalition of fast-growing, midsized firms, and 53 high-technology companies, urged the Securities Subcommittee of the Senate Banking Committee to take action to legislate change.
 The companies Adler represented accounted for approximately $65 billion in revenues last year, and collectively employ more than 600,000 people.
 "American businesses are not looking for special treatment," Adler said. "We ask only that we not be burdened with defending against predatory, frivolous suits that make it even more difficult to be competitive in an already tough economic environment.
 "What we are requesting, therefore, is not a legislative wall to block class-action securities suits," Adler continued. "Instead, we need a filter that cleanses the civil justice system of frivolous claims so that meritorious cases may proceed more expeditiously."
 Adler's testimony outlined the impact abusive and frivolous class- action securities suits have on American businesses. One impact of such suits is the cost to business.
 "The cost of defending against these types of lawsuits directly impedes corporations' ability to create jobs and develop new products," Adler told the committee.
 Another backlash of abusive lawsuits is that they make it almost impossible for businesses to attract board members. For example, 71 percent of the chief executives surveyed for an upcoming ABC report on the litigation crisis said that they have found it more difficult to attract directors because of potential liability from litigation. Furthermore, 60 percent of ABC members indicate that the litigation issue has forced them to weigh more carefully their decision to join a corporate board. Another 24 percent refuse service on corporate boards of start-up firms or other companies vulnerable to securities litigation. Finally, 7 percent refuse to join corporate boards of any sort.
 Frivolous suits also have what Adler calls a "chilling" effect on corporate communications to the financial community.
 "Open and frequent communications are essential if the financial markets are to operate efficiently," Adler said. "Many firms in Silicon Valley and elsewhere have adopted a `no communication' policy and say nothing beyond what they must disclose by law. This strategy limits the ability of investors to make informed choices."
 Adler noted that bills sponsored by Sen. Pete Domenici (R-N.M.) and Rep. Billy Tauzin (D-La.) attempt to "create the sort of filter we think we need to purify the system of frivolous suits." He endorsed language in both bills that would introduce modified fee shifting in suits found not to be substantially justified, establish proportionate liability, and eliminate abusive litigation practices. Significantly, he also endorsed together with those reforms an extension on the statute of limitations on securities suits as a way of improving access to the courts for people with meritorious suits.
 In addition, Adler offered two other proposals: legislative language requiring plaintiffs to show some basis for claims of fraud before initiating a suit and reasonable time and cost limits on pretrial discovery. "What we are advocating are fair and balanced measures designed to cull out cases that are clearly without merit and are filed merely to use complicated and protracted procedures to extort money from companies and their associated accounting, insurance, and underwriting firms," Adler said.
 In conclusion, Adler observed that the legislative changes he and his colleagues seek are "in full alignment with the stated objectives of the current administration. That is to create more jobs, make American business more competitive, improve the efficiency and fairness of the civil justice system, and revitalize corporate governance by enhancing the role and function of boards of directors.
 Founded in 1981, the American Business Conference (ABC) is the only business organization that focuses its attention on midsized, high- growth companies -- the companies that create jobs and raise America's standard of living. ABC's CEO-entrepreneurs support public policies designed to promote economic growth and a higher standard for all Americans.
 -0- 6/17/93
 /CONTACT: Lois Long, 408-957-4893, or Jerry Steach, 408-945-6761, both of Adaptec, Inc.; or Mary Lou Galvin of the American Business Conference, 202-822-9300/


CO: Adaptec, Inc.; American Business Conference ST: District of Columbia, California IN: CPR SU: LEG

KD-DS -- DC005 -- 2957 06/17/93 09:36 EDT
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Date:Jun 17, 1993
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