Musto’s "Fraud on the Market" bill (Senate Bill 1347) is part of a package of reforms offered by state Senate Democrats in the wake of the accounting scandals last spring.

In testimony before the House Special Joint Finance and Judiciary Advisory Committee on Securities, a Pennsylvania Securities Commission official recommended adopting Musto’s proposal as part of a series of changes to the state Securities Act of 1972.

"I’m glad to see that we’re finally moving toward protecting Pennsylvania investors," Musto said. "Months after retirees and pension funds were left holding the bag, we still have important work to do."

Musto’s "Fraud on the Market" proposal, already accepted theory in federal courts, would make it easier for Pennsylvania investors to sue companies that make false or inflated claims about their performance to boost their stock price. The bill would remove one important hurdle in a plaintiff’s burden of proof.

"Federal judges have already decided that this is the right thing to do," Musto said. "It’s important that we bring this same notion to our state courts."

The Pennsylvania Securities Commission, in a recently released report, also supported another proposal of Senate Democrats: increasing jail time for corporate wrongdoers.

"Our citizens expect all criminals treated the same way," Musto said. "We need to send the message that there will be no more slaps on the wrist."

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