A Legislative Overview

Includes:

1. Bills that have passed a floor vote
2. Bills that have passed a committee vote
3. Bills that were offered as amendments on the House floor and defeated
4. Good reforms that have not passed out of committee

1. Bills that have passed a floor vote:

H.R. 3762, “Pension Security Act of 2002” Introduced by John Boehner (R-OH). Actually makes the situation worse by removing a provision that requires employers to treat all workers the same in pension plans. The bill does not do anything to ensure that employees are notified of insider stock trades in a timely manner; it does not ensure that employee representatives could serve as pension plan trustees; it does nothing to ensure that employees diversify their portfolios or even receive independent advice telling them to diversify. Approved by House Vote 255-165 on April 15, 2002.

H.R. 3763, "Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002" Introduced by Michael Oxley (R-OH). A gift to the accounting industry, punts reform to the SEC for further study. The Washington Post reports that Oxley’s own staff doesn’t even think the bill will restore investor confidence and that Republicans are backtracking, now calling the Oxley bill a good first step (“Business Reform Gains Support in Senate, SEC”, 6-27-02) Approved by House Vote 334-90 on April 25, 2002.

S. 2673, "Public Company Accounting Reform and Investor Protection Act of 2002" Introduced by Paul Sarbanes (D-MD). "To improve quality and transparency in financial reporting and independent audits and accounting services for public companies, to create a Public Company Accounting Oversight Board, to enhance the standard setting process for accounting practices, to strengthen the independence of firms that audit public companies, to increase corporate responsibility and the usefulness of corporate financial disclosure, to protect the objectivity and independence of securities analysts, to improve Securities and Exchange Commission resources and oversight, and for other purposes." Approved by Senate Vote 97-0 on July 15, 2002. (read an analysis of this bill)

H.R. 5118, “Corporate Fraud Accountability Act of 2002” Introduced by F. James Sensenbrenner (R-WI). ”To provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and for other purposes, as amended.” 1. Increases penalties for mail and wire fraud from 5 to 20 years and creates a new securities fraud penalty with a maximum penalty of 25 years. 2. Limits bankruptcy protection for securities fraud liabilities. 3. Requires top excecutives to ertify their financial statements or face a fine of $5 million and 20 years in jail. 4. Bans CEOs and other officers who clearly abuse their power from serving in any corporate leadership position. Approved by House Vote 391-28 on July 16, 2002.

2. Bills that have passed a committee vote:

S. 2119, “Reversing the Expatriation of Profits Offshore Act” Introduced by Sens. Charles Grassley (R-IA) and Max Baucus (D-MT) Taxes corporations that reincorporate offshore as domestic companies if the ownership and the activities of the “inverted” corporation still remain primarily onshore in the United States. Approved by the Senate Finance Committee, unanimous voice vote, on 6/18/02. 6 co-sponsors

S. 2498, “Tax Shelter Transparency Act” Introduced by Sen. Max Baucus (D-MT). Strengthens penalties for failing to disclose tax avoidance transactions. Approved the Senate Finance Committee, unanimous voice vote, on 6/18/02. 2 co-sponsors

S. 2010, “Corporate and Criminal Fraud Accountability Act of 2002” Introduced by Sen. Patrick Leahy (D-VT). Create new criminal felony charges to punish corporate executives for perpetuating fraud and vastly improves protections for corporate whistleblowers. Should come to the Senate floor following July 4 recess. 12 co-sponsors. Approved by the Senate Judiciary Committee, unanimous vote, May 6, 2002.

S. 1992, “Protecting America's Pensions Act of 2002” Introduced by Sen. Edward Kennedy (D-MA). Would give employees a right to fully diversify after no more than three years, would hold company officials accountable for their unlawful actions, and require worker representation on 401(k) plan boards of trustees. Also gives employers an option: either offer company stock as a matching grant for 401(k) plans or as an investment option in the plan, but not both. Senate Finance Committee has claimed jurisdiction over pensions as well and has not acted but is keeping the Kennedy bill off the floor. A Coalition of more than 20 groups, including The Pensions Rights Center, the AFL-CIO, AARP, and Citizen Works, sent a letter to Finance Committee members asking for them to pass something akin to the Kennedy Bill. Senate Democrats say pensions is one of their big five issues for the fall elections. 13 co-sponsors Approved by Senate Health, Education, Labor and Pension Committee vote on March 21, 2002.

3. Bills that were offered as amendments on the House floor and defeated:

H.R. 3795, “Investor, Shareholder, and Employee Protection Act of 2002”, introduced by Rep. Dennis Kucinich (D-OH). Would have created a Federal Bureau of Audits, a government agency to perform audits on all large U.S. public companies. Offered as an amendment to H.R. 3763 (Oxley/Republican accounting bill), defeated by a 381-39 vote.

H.R. 3818, “Comprehensive Investment Protection Act of 2002,” introduced by Rep. John LaFalce (D-NY). Would have established a strong Public Regulatory Organization (PRO) to police the accounting industry, prohibited auditors from performing non-audit services, held executives responsible for their financial statements, allowed the SEC to seek disgorgement of bonuses and profits on options, eliminated investment banking/analyst conflicts of interest on Wall Street, among other things. Offered as an amendment to H.R. 3763 (Oxley/Republican accounting bill), defeated by a mostly partisan 219-202 vote.

4. Good reforms that have not passed out of committee:

S. 1940, “Ending the Double Standard for Stock Options Act”, introduced by Sens. Carl Levin (D-MI) and John McCain (R-AZ). Would eliminate a loophole that allows companies to receive a tax deduction for stock options without reporting them as expenditures on financial statements.

S. 1838, “Pensions Protection and Diversification Act of 2001,” introduced by Sens. Barbara Boxer (D-CA) and Jon Corzine (D-NJ). Would have capped percentage of company stock in an employee’s 401(k) plan at 20 percent

H.R. 4084, “Corporate Asset Protection Act of 2002,” introduced by Rep. Lynn Rivers (D-MI). Would prohibit companies from providing loans to “insiders” and prohibit company executives from accepting loans unless the employer is a financial institution.

H.R. 3634, “Enron Employee Pension Recovery Act of 2002,” introduced by Rep. Maxine Waters (D-CA). Would create a “disgorgement” fund composed of Enron and Andersen proceeds to compensate Enron employees.

H.R. 3644, “Securities Fraud Prevention Act of 2002,” introduced by Rep. John Conyers (D-MI). Would eliminate the securities fraud exemption from the civil remedy for racketeering violations.

H.R. 3769, “Insider Trading Disclosure Act of 2002” introduced by Rep. Ken Bensten (D-TX). Would require day-of insider trading disclosure to the SEC and next-day disclosure to the public and company employees.

Note: The following three bills deal with the increasing number of corporations that are reincorporating in offshore tax havens and cheating the U.S. government out of billions of dollars in tax revenue. Though they are gaining momentum and co-sponsors, none have gotten out of committee yet.

H.R. 3884 “Corporate Patriot Enforcement Act of 2002”, Introduced by Richard Neal (D-MA). Taxes corporations that reincorporate offshore as domestic companies if the ownership and the activities of the “inverted” corporation still remain primarily onshore in the United States. 106 co-sponsors

H.R. 4993, “No Tax Breaks for Corporations Renouncing America Act” Introduced by Lloyd Doggett (D-TX). Prevents corporations who reincorporate abroad for tax avoidance purposes from benefiting from U.S. international tax treaties. 99 co-sponsors

H.R. 4831, “Patriotic Purchasing Act of 2002” Introduced by Jim Turner (D-TX). Prohibits companies that reincorporate offshore for tax avoidance purposes from receiving government contracts. 46 co-sponsors