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WASHINGTON, Dec 19 (Reuters) - Two lawmakers called on the chairman of the U.S. Securities and Exchange Commission to hold a public meeting to look at the effect of class-action litigation on the competitiveness of U.S. capital markets.
Rep. Vito Fossella, a Republican from New York, and Rep. Gregory Meeks, a Democrat from New York, wrote in a letter released on Wednesday that "the unpredictable and litigious legal environment has emerged as a leading factor in driving companies to overseas markets to raise capital."
SEC Chairman Christopher Cox pledged earlier this year to hold a public round-table discussion of securities litigation. An agency spokesman declined comment on the lawmakers' letter, saying a public event on the issue will be announced early in 2008 but no date has yet been set.
A report released earlier this month by the private-sector Committee on Capital Markets Regulation pushed for the reduction of burdensome regulation and fewer lawsuits against companies. It noted that all of the 20 largest global initial public offerings in the first three quarters of 2007 occurred outside the United States.
The U.S. Supreme Court is expected to issue a decision in 2008 on whether investors should be allowed to sue third parties such as banks and accountants in cases of stock fraud. The SEC recommended that the Justice Department's U.S. solicitor general support the investor plaintiffs in the case, but he did not take the SEC's position.
The new letter from the lawmakers said the growth and costs of securities class-action litigation require "an urgent and comprehensive review of the impact upon the competitiveness of our capital markets." (Reporting by Karey Wutkowski; Editing by Steve Orlofsky)