Page:United States Statutes at Large Volume 112 Part 5.djvu/474

 112 STAT. 3232 PUBLIC LAW 105-353—NOV. 3, 1998 of any State shall retain jurisdiction under the laws of such State to investigate and bring enforcement actions. Applicability. "(5) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply: "(A) AFFILIATE OF THE ISSUER. — The term 'affiliate of the issuer' means a person that directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with, the issuer. "(B) COVERED CLASS ACTION.—The term 'covered class action' means— "(i) any single lawsuit in which— "(I) damages are sought on behalf of more than 50 persons or prospective class members, and questions of law or fact common to those persons or members of the prospective class, without ref- erence to issues of individualized reliance on an alleged misstatement or omission, predominate over any questions affecting only individual persons or members; or "(II) one or more named parties seek to recover damages on a representative basis on behalf of themselves and other unnamed parties similarly situated, and questions of law or fact common to those persons or members of the prospective class predominate over any questions affecting only individual persons or members; or "(ii) any group of lawsuits filed in or pending in the same court and involving common questions of law or fact, in which— "(I) damages are sought on behalf of more than 50 persons; and "(II) the lawsuits are joined, consolidated, or otherwise proceed as a single action for any purpose. " (C) EXCEPTION FOR DERIVATIVE ACTIONS.— Notwithstanding subparagraph (B), the term 'covered class action' does not include an exclusively derivative action brought by one or more shareholders on behalf of a corporation. "(D) COUNTING OF CERTAIN CLASS MEMBERS.— For purposes of this paragraph, a corporation, investment company, pension plan, partnership, or other entity, shall be treated as one person or prospective class member, but only if the entity is not established for the purpose of participating in the action. "(E) 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) of the Securities Act of 1933, 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 the Securities Act of 1933 pursuant to rules issued by the Commission under section 4(2) of that Act. "(F) 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

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