Why did the United States Congress pass the Private Securities Litigation Reform Act of 1995?

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Shareholders who purchased stock in corporations with high earnings forecasts often sued the corporations' directors if actual corporate earnings fell short of forecasted earnings,alleging that the directors violated Rule 10b-5 of the Securities Exchange Act of 1934 by disclosing misleading financial information.The United States Congress attempted to remedy this situation by passing the Private Securities Litigation Reform Act of 1995 (PSLRA).Among other things,the act provides a "safe harbor" from liability for publicly held issuers who make financial forecasts as long as the forecasts are "accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement."

Why Did the United States Congress Pass the Private Securities