Citizen Works

Securities Reform
Bill Summaries

S. 1897 | S. 1895 | H.R. 3644 | SEC/NASD | H.R. 3725 |
SEC | H.R. 3769 | H.R. 3763| H.R. 3764| H.R. 3818 | H.R. 3840 | S.1985 | S.1992 | H.R.4084

Jan. 24, 2002: Sen. Jean Carnahan (D-MO) introduce S. 1897, Fully Informed Investor Act of 2002.

"To require disclosure of the sale of securities by an affiliate of the issuer of the securities to be made available to the Commission and to the public in electronic form, and for other purposes."

Requires that "affiliates" of a company file an electronic disclosure form on the same day they sell any company stock.
Any company with an internal database will be required to post these disclosure forms the day of the stock sale.

Jan. 24, 2002: Sen. Peter Fitzgerald introduces S. 1895,Independent Investment Advisers Act of 2002.

"To require investment advisers to make prominent public disclosures of ties with companies being analyzed by them, and for other purposes."

(Introduced in the House on Feb. 4, 2002 by Alcee Hastings (D-FL) as H.R. 3671).

Any time an investment adviser publishes an analysis or report on a company or its securities, the investment adviser must also disclose:

the fees that adviser has received from the company in the last five years.
any merger or acquisitions involving the company handled by the investment adviser over the last five years.
Any personal financial relationship the investment adviser or anyone associated with the adviser has with the company.
The extent to which the investment adviser or anyone associated with the adviser has debt or equity holdings in the company.

Investment advisors are prohibited from transacting in securities of a company they publish information about for 30 days following that publication.
Any public accountant or any person associated with that accountant is prohibited from transacting in the security of a company 30 days before and 30 days after the accountant certifies a company financial document.

Jan. 29, 2002: Rep. John J. Coyners Jr. (D-MI) introduces H.R. 3644, Securities Fraud Prevention Act of 2002.

"To amend title 18, United States Code, to eliminate the securities fraud exception fro the civil remedy for racketeering violations."

Eliminates the securities fraud exception from the civil remedy for racketeering violations.

Feb 7, 2002: The Securities and Exchange Commission (SEC), The House Capital Markets Subcommittee, and the National Association of Security Dealers (NASD) announce "Historic Reforms" for Market Analysts.

Analysts would be limited in their ability to invest in areas they cover.
Analysts would no longer report to investment bankers or receive compensation directly tied to investment banking fees.
Analysts would be required to disclose financial relationships with companies they analyze.
Research departments could no longer promise favorable reports to companies to attract investment baking businesses.
Investment banking relationships would have to be disclosed in research report.
After underwriting an IPO, there would be a 40-day moratorium before an analyst could issue a research report, up from 25 days.
The rules would be enforced by the NASD

Feb 12, 2002: Rep. Major Owens (D-NY) introduces H.R. 3725, Investment Disclosure Act of 2002.

"To require disclosure of the sale of securities by insiders of issuers of the securities to be made available to the Commission and to the public in electronic form before the transaction is conducted, and for other purposes."

Requires company officers or directors to notify the Securities and Exchange Commission on the sale of any company stock on the day before they actually sell the stock.
Requires the Securities and Exchange Commission to notify the public of the sale on that same day.
Requires companies with an internal web site to post details of inside sales the day before the sale.

Feb. 13, 2002:The Securities and Exchange Commission announces plans to propose changes in corporate disclosure rules as the first in a series of steps to improve the financial reporting and disclosure system.

Specifically, the Commission intends to propose rule that will:

Provide accelerated reporting by companies of transactions by company insiders in company securities, including transactions with the company;
Accelerate filing by companies of their quarterly and annual reports;
Expand the list of significant events requiring current disclosure on existing Form 8-K. Such events could include changes in rating agency decisions, obligations that are not currently disclosed and lockout periods affecting employee stock-ownership plans.
Add a requirement that public companies post their Exchange Act reports on their web sites at the same time they are filed with the SEC; and
Require disclosure of critical accounting policies in Management's Discussion and Analysis of Financial Condition and Results of Operations, contained in annual reports.

Feb. 14, 2002: Rep. Ken Bensten (D-TX) introduces H.R. 3769, Insider Trading Disclosure Act of 2002.

"To require the disclosure of the sale of securities by an officer, director, affiliate, or principal shareholder of an issuer of the securities of such issuer to be made available to the Commission and to the public in electronic form, and for other purposes."

Requires company affiliates to notify the Securities and Exchange Commission on the sale of any company stock on the day of the transaction.
Requires the Securities and Exchange Commission to notify the public of the sale by the next business day.
Requires companies with an internal web site to post details of such transactions by the next calendar day.

Feb. 14, 2002: Rep. Michael Oxley (R-OH)introduces H.R. 3763, Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002.

"To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to securities laws, and for other purposes."

Prohibits public accountants from performing the following services for a company they are also auditing:

financial information system design or implementation
internal audit services.

Establishes a new oversight bodies, "public regulatory organizations" (PROs), that would be under Securities and Exchange Commission (SEC) control and be made up of two-thirds non-accounting professionals. PROs would be responsible for ensuring the integrity of accounting firms and would have statutory authority to punish accountants who violate securities laws and standards of ethics, competency, or independence.
Requires disclosure of off-balance sheet transactions.
Requires corporate insiders to inform the Securities and Exchange Commission on the day they sell company stock and to inform the public the next day.
Prohibits anybody associated with a company ton interfere with the auditing process.
Prohibits insider sales during blackout periods.
Requires the SEC to conduct a study and review of any final rules by any self-regulatory organization registered with the SEC on the topic of equity research and analyst conflicts.
Requires the SEC to "regularly and thoroughly" review the largest corporations.
Requires the President's Working Group of Financial Market to review current corporate governance procedures.
Requires the SEC to review and analyze all enforcement actions over the last five years involving violations of securities law reporting and all financial restatements.
Requires the SEC to study the role and function of credit rating agencies in the operation of the securities market.

*Passed by a full House 15 April 2002 (255-165 vote)

Feb. 14, 2002: Rep. Michael Oxley (R-OH)introduces H.R. 3764, Securities and Exchange Commission Authorization Act of 2002.

"To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to securities laws, and for other purposes."

Authorizes $700 million for the 2003 SEC budget, up from $480 million, a rise of 45 percent.
Authorizes at least $134 million for the division of corporate finance.
Authorizes at least $326 million for the division of enforcement.

February 28, 2002: Rep. John LaFalce (D-NY) introduces H.R. 3818, Comprehensive Investor Protection Act of 2002.

"To protect investors by enhancing regulation of public auditors, improving corporate governance, overhauling corporate disclosure made pursuant to the securities laws, and for other purposes."

Prohibits auditors from providing nonaudit services to the same client during the same fiscal year
Requires companies to change auditors after using the same firm for four consecutive fiscal years.
Calls for a "Study of Corporate Practices," to examine whether: 1) current standards and practices promote full disclosure; 2) corporate codes of ethics protect shareholders; 3) existing requirements for members of audit and finance committee of issuer boards are sufficient; 4) conflicts of interests are aggressively reviewed; 5) there are significant disincentives to serve as an independent director.
Prohibits insider trading during "blackout" periods.
Calls for increased financial disclosure with respect to: 1) off-balance sheet transactions; 2) insider transactions; 3) relationships with philanthropic organizations; 4) insider-controlled affiliates; 5) joint ownership; and 6) provision of services by related persons.
Creates a current disclosure reporting system to provide timely information and calls for the Securities and Exchange Commission (SEC) to review disclosures on a "more regular and systematic basis."
Calls for an $876 million SEC budget for 2003, including $134 million for the division of corporate finance and $326 million for the division of enforcement.
Requires immediate electronic disclosure of all insider trades so that both the public and company employees are informed on the day of the trade.
Restores joint and several liability for employers in special cases of securities law violation.
Restores aiding and abetting liability in securities law violations.
Requires all audit records to be kept for seven years.
Calls for a study of the role and function of credit rating agencies in the operation of the securities market.

March 5, 2002: Rep. George Miller (D-CA) introduces H.R. 3840, Inside Stock Sales Notification Act of 2002:

"To amend title I of the Employee Retirement Income Security Act of 1974 to provide for timely notification of plan participants and beneficiaries whose individual accounts hold employer securities of insider trading in employer securities."