
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, August 2, 1995                   TAG: 9508020026
SECTION: EDITORIAL                    PAGE: A-8   EDITION: METRO 
SOURCE: JAMES D. GRISSO
DATELINE:                                 LENGTH: Medium

PUBLIC INVESTMENTS ARE AT RISK

AS DIRECTOR of finance for Roanoke city, I am required to use extreme caution when investing public funds. My office relies on safeguards that shield taxpayer dollars from undo risk and allow for recovery when the investment system is abused.

In a direct threat to our financial markets, the U.S. Congress is being extremely reckless by proposing drastic changes to federal laws that protect us from financial scams. The Private Securities Litigation Reform Act is a troubling bill that would reduce the ability of public and private investors to recover losses in an investment fraud.

Some federal action may be needed to deter frivolous shareholder lawsuits, but this legislation fails to strike an appropriate balance that ensures the rights of investors and corrects flaws in the litigation process. Instead, it would immunize known financial fraud and protect from liability many wrongdoers - including investment advisers who make false forecasts of stock performance and accountants, lawyers and others who aid and abet such reckless deception.

Also, if this legislation is enacted, class-action lawsuits must be filed within a short statute of limitations. And fraud victims could be threatened with a ``loser pays'' scheme forcing them to cover the legal costs of a high investment firm if they are unsuccessful in court.

All this serves to undermine the confidence of public and private investors, which would likely be reflected in higher borrowing costs for municipal bonds - a serious blow to all taxpayers.

Given recent losses suffered by local governments, it's especially important that state and local officials maintain our right to seek redress in court.

Look back at Orange County, Calif., and the 45 other communities nationwide that have seen risky derivatives trading cause a $3 billion drop in the value of their investments. Recall the savings-and-loan scandal, and the billions of taxpayer dollars spent on bailing out failed institutions such as Charles Keating's Lincoln Savings and Loan.

Despite pleas from my office and other local officials across Virginia, the U.S. Senate recently voted for this flawed legislation, which will be sent to a House-Senate conference committee and merged with a similar version passed in the House.

Unless our lawmakers are turned around before a final vote on the conference committee bill, it will be up to President Clinton to use his veto power to protect the integrity of our financial markets. Otherwise, our investments and those of many senior citizens and working families will be placed at greater risk without due recourse.

James D. Grisso is director of finance for the city of Roanoke.

by CNB