What 1995 US law limited securities class-action lawsuits?

The 1995 U.S. law that limited securities class-action lawsuits is the Private Securities Litigation Reform Act.

Congress enacted the Private Securities Litigation Reform Act of 1995, commonly called the PSLRA, as Public Law 104-67. President Bill Clinton vetoed the bill, but Congress overrode the veto, and it became law on December 22, 1995. The statute targeted practices Congress viewed as abusive in private securities-fraud litigation.

The PSLRA introduced stricter pleading requirements, including a requirement that fraud allegations identify misleading statements and explain why they were misleading. It also imposed an automatic discovery stay during many motions to dismiss, created a lead-plaintiff process favoring investors with the largest financial interest, and addressed limits on damages and attorney-fee arrangements.

The act did not eliminate securities class actions. Instead, it made many cases harder to file and survive at the early stage. The Dodd-Frank Act, Sarbanes-Oxley Act, and JOBS Act are important financial laws, but they were enacted for different purposes and at different times.