California Proposition 211, Rules Governing Retirement Savings Fraud (1996)
If Proposition 211 had been approved, it would have made various changes to the laws governing fraud with respect to retirement savings and would also have made it more difficult to change state laws concerning attorney-client fee agreements in all types of cases. Specifically, Proposition 211 would have:
- Broadened California's laws governing securities fraud to apply them to any person involved in the buying or selling of securities, including accountants and lawyers.
- Made it easier for individuals to sue for securities fraud, rather than having to rely on a retirement plan or group to initiate such lawsuits.
- If a retirement savings-related fraud lawsuit was successful, and punitive damages were awarded, the punitive damaged would not have gone to the damaged parties, but rather would go to the state's General Fund.
- Changed the burden of proof in retirement savings-related fraud to the person accused of fraud.
- Required that any individuals found guilty of retirement savings-related fraud would have to pay any costs imposed as a result of a successful lawsuit, rather than allowing the business that employed those individuals to bear those costs.
Text of measure
The official ballot summary that appeared on the ballot said:
- Prohibits restrictions on attorney-client fee arrangements, except as allowed by laws existing on January 1, 1995.
- Prohibits deceptive conduct by any person in securities transactions resulting in loss to pension, retirement funds, savings. Imposes civil liability, including punitive damages, for losses.
- Authorizes class actions, derivative suits; adds presumption fraudulent acts affected market value of security.
- Prohibits indemnification of officers found liable for fraudulent acts by business entities, but may purchase insurance to cover liability.
- Declares measure conflicts with other ballot measures that restrict attorney fees or securities fraud actions.
The California Legislative Analyst's Office provided an estimate of net state and local government fiscal impact for Proposition 211. That estimate was:
- Potential increase in court-related costs to state and local governments of an unknown, but probably not significant, amount.
- Potential increase in revenue to the state of an unknown, but probably not significant, amount.
- Official Voter Guide to Proposition 211
- Full text of Proposition 211
- November 5, 1996 California election results (dead link) (PDF)
- PDF of the paper version of the November 5, 1996 Ballot Propositions Voter Guide
- League of Women Voters analysis