Page:United States Statutes at Large Volume 112 Part 5.djvu/472

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112 STAT. 3230 PUBLIC LAW 105-353 —NOV. 3, 1998 only if the entity is not established for the purpose of participating in the action. "(D) RULE OF CONSTRUCTION.— Nothing in this paragraph shall be construed to affect the discretion of a State court in determining whether actions filed in such court should be joined, consolidated, or otherwise allowed to proceed as a single action. "(3) COVERED SECURITY.— The term 'covered security means a security that satisfies the standards for a covered security specified in paragraph (1) or (2) of section 18(b) at the time during which it is alleged that the misrepresentation, omission, or manipulative or deceptive conduct occurred, except that such term shall not include any debt security that is exempt from registration under this title pursuant to rules issued by the Commission under section 4(2).". (2) CIRCUMVENTION OF STAY OF DISCOVERY.—Section 27(b) of the Securities Act of 1933 (15 U.S.C. 77z-l(b)) is amended by inserting after paragraph (3) the following new paragraph: "(4) CIRCUMVENTION OF STAY OF DISCOVERY.—Upon a proper showing, a court may stay discovery proceedings in any private action in a State court as necessary in aid of its jurisdiction, or to protect or effectuate its judgments, in an action subject to a stay of discovery pursuant to this subsection.". (3) CONFORMING AMENDMENTS.—Section 22(a) of the Securities Act of 1933 (15 U.S.C. 77v(a)) is amended— (A) by inserting "except as provided in section 16 with respect to covered class actions," after "Territorial courts,"; and (B) by striking "No case" and inserting "Except as provided in section 16(c), no case". (b) AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.— (1) AMENDMENT.— Section 28 of the Securities Exchange Act of 1934 (15 U.S.C. 78bb) is amended— (A) in subsection (a), by striking "The rights and remedies" and inserting "Except as provided in subsection (f), the rights and remedies"; and (B) by adding at the end the following new subsection: " (f) LIMITATIONS ON REMEDIES.— "(1) CLASS ACTION LIMITATIONS. —N O covered class action based upon the statutory or common law of any State or subdivision thereof may be maintained in any State or Federal court by any private party alleging— "(A) a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security; or "(B) that the defendant used or employed any manipulative or deceptive device or contrivance in connection with the purchase or sale of a covered security. "(2) REMOVAL OF COVERED CLASS ACTIONS.— Any covered class action brought in any State court involving a covered security, as set forth in paragraph (1), shall be removable to the Federal district court for the district in which the action is pending, and shall be subject to paragraph (1). " (3) PRESERVATION OF CERTAIN ACTIONS.— "(A) ACTIONS UNDER STATE LAW OF STATE OF INCORPO- RATION. — .,, .: