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Sarbanes Passed Bill [1]
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2014-0373-F
[
]
Wednesday, May 13, 2015
FOIA Marker
This is not a textual record. This FOIA Marker indicates that material has been removed
during FOIA processing by George W. Bush Presidential Library staff.
Counsel's Office, White House
Newstead, Jennifer (Jen)
Location or
NARA Number:
FRC ID:
OA Number:
Stack: Row: Sect.: Shelf: Pos.:
Hollinger ID:
W
20
20
5
2
9825
22688
2230
2318
Folder Title:
Sarbanes Passed Bill [1]
Withdrawn/Redacted Material
The George W. Bush Library
DOCUMENT FORM
SUBJECT/TITLE
PAGES
DATE
RESTRICTION(S)
NO.
001
Bill
Biden's Amendment from His Counsel [with attachments]
4
07/15/2002 P5;
002
Email
FW: Urgent Help [with attachments] - To: Jennifer
5
07/12/2002 P5;
Newstead - From: Adam Charnes
003
Email
FW: Urgent WH Request for Help [with attachments] -
4
07/11/2002 P5;
To: Adam Charnes, et al. - From: Gregory Katsas
COLLECTION TITLE:
Counsel's Office, White House
SERIES:
Newstead, Jennifer (Jen)
FOLDER TITLE:
Sarbanes Passed Bill [1]
FRC ID:
9825
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
b(9) Release would disclose geological or geophysical information
Deed of Gift Restrictions
concerning wells [(b)(9) of the FOIA]
A. Closed by Executive Order 13526 governing access to national
Records Not Subject to FOIA
security information.
B. Closed by statute or by the agency which originated the document.
Court Sealed - The document is withheld under a court seal and is not subject to
C. Closed in accordance with restrictions contained in donor's deed
the Freedom of Information Act.
of gift.
2014-0373-F
Page 1 of 1
This document was prepared on Tuesday, May 19, 2015
Withdrawal Marker
The George W. Bush Library
FORM
SUBJECT/TITLE
PAGES
DATE
RESTRICTION(S)
Bill
Biden's Amendment from His Counsel [with attachments]
4
07/15/2002
P5;
This marker identifies the original location of the withdrawn item listed above.
For a complete list of items withdrawn from this folder, see the
Withdrawal/Redaction Sheet at the front of the folder.
COLLECTION:
Counsel's Office, White House
SERIES:
Newstead, Jennifer (Jen)
FOLDER TITLE:
Sarbanes Passed Bill [1]
FRC ID:
FOIA ID and Segment:
9825
2014-0373-F
OA Num.:
2318
NARA Num.:
2230
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law. enforcement
purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
b(9) Release would disclose geological or geophysical information
Deed of Gift Restrictions
concerning wells [(b)(9) of the FOIA]
A. Closed by Executive Order 13526 governing access to national
Records Not Subject to FOIA
security information.
B. Closed by statute or by the agency which originated the document.
Court Sealed - The document is withheld under a court seal and is not subject to
C. Closed in accordance with restrictions contained in donor's deed
the Freedom of Information Act.
of gift.
This Document was withdrawn on 5/19/2015
by erl
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JUL y. 2002 0:31PM
SENMIC
O:\CUL\CUL02.488
S.L.C.
107TH CONGRESS
2D SESSION
S.
IN THE SENATE OF THE UNITED STATES
Mr. BIDEN introduced the following bill; which was read twice and referred
to the Committee on
A BILL
To increase criminal penalties relating to conspiracy, mail
fraud, wire fraud, certain ERISA violations, tax fraud,
and tax evasion.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE
4
This Act may be cited as the "White-Collar Crime
5 Penalty Enhancement Act of 2002".
6 SEC. 2. CRIMINAL PENALTIES FOR CONSPIRACY TO COM-
7
MIT OFFENSE OR TO DEFRAUD THE UNITED
8
STATES.
9
Section 371 of title 18, United States Code, is
10 amended by striking "each shall be fined under this title
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2
1 or imprisoned not more than five years, or both." and in-
2 serting "each person shall be fined or imprisoned, or both,
3 in accordance with the specific substantive offense which
4 was the object of the conspiracy, or if such penalty does
5 not apply, each person shall be fined under this title or
6 imprisoned for not more than 10 years, or both.".
7 SEC. S. FRAUD.
8
(a) MAIL FRAUD.-Section 1341 of title 1S, United
9 States Code, is amended by striking "five years" and in-
10 serting "10 years".
11
(b) WIRE FRAUD.-Section 1343 of title 18, United
12 States Code, is amended by striking "five years" and in-
13 serting "10 years".
14 SEC. 4. CRIMINAL PENALTIES FOR VIOLATIONS OF THE EM-
15
PLOYEE RETIREMENT INCOME SECURITY
16
ACT OF 1974.
17
Section 501 of the Employee Retirement Income Se-
18 curity Act of 1974 (29 U.S.C. 1131) is amended-
19
(1) by striking "$5,000" and inserting
20
"$100,000";
21
(1) by striking "one year" and inserting "10
22
years"; and
23
(3) by striking "$100,000" and inserting
24
"$500,000".
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S.L.C.
3
1 SEC. 5. TAX EVASION AND TAX FRAUD PENALTIES.
2
The Internal Revenue Code of 1986 is amended—
3
(1) in section 7201, by striking "5 years" and
4
inserting "10 years";
5
(2) in section 7203-
6
(A) by striking "misdemeanor" and insert-
7
ing "felony";
8
(B) by striking "1 year" and inserting "
9
10 years"; and
10
(C) by striking "In the case of a willful
11
violation of any provision of section 6050I" and
12
all that follows through the period at the end;
13
and
14
(3) in section 7206, by striking "3 years" and
15
inserting "5 years".
16 SEC. 6. SENTENCING GUIDELINES.
17
Pursuant to its authority under section 994(p) of title
18 18, United States Code, and in accordance with this sec-
19 tion, the United States Sentencing Commission shall re-
20 view and, as appropriate, amend the Federal Sentencing
21 Guidelines and policy statements to provide for increased
22 penalties to reflect the increases in maximum penalties
23 provided under this Act.
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4
1 SEC. 7. CORPORATE RESPONSIBILITY FOR FINANCIAL RE-
2
PORTS.
3
(a) CERTIFICATION OF PERIODIC FINANCIAL RE-
4 PORTS.-Each periodic report containing financial state-
5 ments filed by an issuer with the Commission pursuant
6 to section 13(a) or 15(d) of the Securities Exchange Act
7 of 1934 (15 U.S.C. 78m(a) or 78o(d)) shall be accom-
8 panied by a written- statement by the chairman of the
9 board, chief executive officer, and chief financial officer
10 (or equivalent thereof) of the issuer.
11
(b) CONTENT.-The statement required under sub-
12 section (a) shall certify the appropriateness of the finan-
13 cial statements and disclosures contained in the periodic
14 report or financial report, and that those financial state-
15 ments and disclosures fairly present, in all material re-
16 spects, the operations and financial condition of the issuer.
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KMW
Possible Floor Amendments to S. 2673
1)
Pensions
Kenney ERISA Remedies
Possible 2nd Degree Amendments
- Finance/HELP 2nd Degree Pension Amendment (being negotiated)
2)
Securities Litigation Reform
Leahy bill, S. 2010, either as reported out unanimously OR as introduced (i.e.,
with aiding and abetting liability and civil RICO provisions).
Shelby amendment re: aiding and abetting liability, repeal of proportionate
liability, and repeal of 1998 Uniform Standards Act (applies PLSRA to states).
Nelson (FL) amendment re: aiding and abetting liability
Unspecified amendment re: Civil RICO
3)
Tax and Accounting Treatment of Stock Options
McCain amendment re: taxation of options (see below)
Enzi/Lieberman et. al. 2nd Degree re: SEC Study (see below)
4)
Regulation of Derivatives Trading
Re-draft of Feinstein amendment
The Senate voted 48-50 against invoking cloture on an earlier version of this
amendment on April 10 (www.senate.gov/legislative/vote1072/vote_00061.htm)
5)
Regulation of Lawyers
Edwards/Enzi/Corzine amendment re: SEC setting standards of conduct for
lawyers practicing before the Commission.
6)
McCain Amendments (See Attached)
7)
Grassley Amendments (See Attached)
8)
Multiple Levin Amendments Re: Executive Compensation (See Attached)
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Grassley Amendments
1)
Whistleblowers -- Provides whistleblower protection to auditors and other privates sector
persons to facilitate reporting of business or accounting wrongdoing.
2)
Bankruptcy preferential transfers to insiders -- Amends the bankruptcy law to pull back
into the bankruptcy estate improper bonuses and other compensation paid before
bankruptcy. This amendment is directed at insiders who engage in improper, fraudulent,
or illegal behavior.
3)
Expand SEC's disgorgement remedy -- SEC staff proposal that would provide the SEC an
equitable remedy to protect investors from the effect of financial benefits derived from a
violation of securities laws.
4)
Oversight auditors -- establishes a team of auditors, charged with periodic audits of
financial statements. Team of auditors would be based in the SEC and report to the Chief
Accountant. Chief Accountant would become a confirmable position.
5)
Limitation on auditors selling tax products -- Auditors could not opine on financial
effects of tax shelter transactions that they have sold to the firm. An independent audit
would be required for these kinds of transactions.
McCain Amendments
1)
Prohibit top executives from selling company stock while managing the company.
Options could still be exercised to avoid their expiration, but any after tax gains must be
held in company stock until 90 days after the executive has left the company.
2)
Prohibit accounting firms from providing any non-audit services to their accounting
clients.
3)
Require all members, except the CEO, of a company's board to be completely
independent. Independent directors cannot receive any remuneration of any kind from the
company, any affiliated persons, or any subsidiaries of the company.
4)
Require options to be expensed on public financial filings if the company takes advantage
of the tax benefits of granting the option (identical to Levin-McCain Stock Options bill).
5)
Require disciplinary hearings of the new public oversight board to be open to the public.
6)
Supplement the requirement of the underlying bill requiring top executives to certify the
accuracy of their filings by requiring, in addition to such certification, a brief narrative
describing why the filing is accurate and identifying any "close calls."
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Levin Amendments
Amendment #1
Provides the SEC the authority to ban officers and directors through administrative
proceedings
Allows the SEC to impose civil fines on companies and other individuals not registered
as a broker/dealer for violations of SEC rules
Allows the Commission to obtain copies of financial records without providing notice to
the company. This provision would require an actual vote from the Commissioners
Allows the U.S. Attorney, state Attorneys General, and state securities regulators to
prosecute officers and directors who coerce or mislead an auditor
Amendment #2
Require auditors to offer statement to attest the quality of financial statement.
Amendment #3
Requires the auditor to discuss with the audit committee the quality and clarity of the financial
statements and the aggressiveness of the accounting principles the company uses.
Amendment #4
Requires that the provision in the legislation which requires disclosure of corporate loans be
given a regulatory deadline.
Amendment #5
Requires that, if a sanction is imposed by the Board, the sanction is public unless a stay is
imposed by the SEC.
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Enzi, Allen, Boxer, Bayh, Dodd, Kerry, Lieberman 2ⁿᵈ Degree Stock Options Amendment
NOTE: The following is a summary of what is under consideration, rather than the final shape of
the negotiations:
SEC study, due 180 days after date of enactment, analyzing:
1)
Accounting treatment of options under current law
2)
Adequacy of current law disclosure requirements regarding stock options
3)
Adequacy of current law corporate governance/shareholder approval requirements for
stock options
4)
The need, if any, for new holding requirements for senior executives receiving options
5)
Effect of new expensing rules on small, medium, and large businesses
6)
Effect of new expensing rules on the ability of businesses to hire and retain skilled
workers.
7)
Effect of new expensing rules on low, middle, and high income employees and on female
employees.
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FAX COVER SHEET
KEVIN WARSH
NATIONAL ECONOMIC COUNCIL
THE WHITE HOUSE
WASHINGTON, DC 20502
PHONE: 202/456-2800 FAX: 202/456-2223
DATE:
JULY 15, 2002
NUMBER OF PAGES (INCL. COVER):
TO:
JEN NEWSTEAD
FAX:
65053
COMMENTS:
The document accompanying this Facsimile Transmission Sheet is intended only for the use of the individual or entity to which it
is addressed. This message contains information which may be privileged, confidential or exempt from disclosure under
applicable law. If the reader of this message is not the intended recipient, or the employee or agent responsible for delivering the
message to the intended recipient, you are hereby notified that any disclosure, dissemination, copying or distribution, or taking
any action in reliance on the contents of this communication is strictly prohibited. If you have received this communication in
error! please notify us immediately at the number above.
07/15/02 11:14 FAX 2024566687
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VICE PRESIDENT'S OFFICE
007
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0:\CUL\CUL02.452
S.L.C.
PENDING
AMENDMENT NO.
Calendar No.
Purpose: To increase criminal penalties relating to con-
spiracy, mail fraud, wire fraud, and certain ERISA vio-
lations, and for other purposes.
IN THE SENATE OF THE UNITED STATES-107th Cong., 2d Sess.
S.2673
To impr
AMENDMENT No
4190 g
and
)-
lic
Ove
By Paschle for Biden
g
ess
To: Amdt No 4186
:-
1-
enc
corp
as modified
se
e
fina
7
e-
pen
Page(s)
es
and
GPQ:2000 58-330 (mac)
d
for other purposes.
Referred to the Committee on
and ordered to be printed
Ordered to lie on the table and to be printed
AMENDMENT intended to be proposed by Mr. BIDEN
Viz: the slowsof the matter proposed to be
1
Strike Atzthe the end all add after the following the first word and
inserted insert the following :
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ONCUL\CUL02.452
S.L.C.
2
1
AMAR
VIII-WHITE-COLLAR
2
CRIME PENALTY ENHANCE-
3
MENTS.
4 SEC. 801 SHORT TITLE.
5
This title may be cited as the "White-Collar Crime
6 Penalty Enhancement Act of 2002".
7 SEC. 802. CRIMINAL PENALTIES FOR CONSPIRACY TO COM-
8
MIT OFFENSE OR TO DEFRAUD THE UNITED
9
STATES.
10
Section 371 of title 18, United States Code, is
11 amended by striking "If two or more" and all that follows
12 through "If, however," and inserting the following:
13
"(a) IN GENERAL.-If 2 or more persons-
14
"(1) conspire to commit any offense against the
15
United States, in any manner or for any purpose,
16
and 1 or more of such persons do any act to effect
17
the object of the conspiracy, each person shall be
18
fined or imprisoned, or both, as set forth in the spe-
19
cific substantive offense which was the object of the
20
conspiracy; or
21
"(2) conspire to defraud the United States, or
22
any agency thereof in any manner or for any pur-
23
pose, and 1 or more of such persons do any act to
24
effect the object of the conspiracy, each person shall
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3
1
be fined under this title, or imprisoned not more
2
than 10 years, or both.
3
"(b) MISDEMEANOR OFFENSE.-If, however,".
4 SEC. 803. CRIMINAL PENALTIES FOR MAIL AND WIRE
5
FRAUD.
6
(a) MAIL FRAUD.-Section 1341 of title 18, United
7 States Code, is amended by striking "five years" and in-
8 serting "10 years".
9
(b) WIRE FRAUD.-Section 1343 of title 18, United
10 States Code, is amended by striking "five years" and in-
11 serting "10 years".
12 SEC. 804. CRIMINAL PENALTIES FOR VIOLATIONS OF THE
13
EMPLOYEE RETIREMENT INCOME SECURITY
14
ACT OF 1974.
15
Section 501 of the Employee Retirement Income Se-
16 curity Act of 1974 (29 U.S.C. 1131) is amended—
17
(1) by striking "$5,000" and inserting
18
"$100,000";
19
(1) by striking "one year" and inserting "10
20
years!'; and
21
(3) by striking "$100,000" and inserting
22
"$500,000".
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4
1 SEC. 805. AMENDMENT TO SENTENCING GUIDELINES RE-
2
LATING TO CERTAIN WHITE-COLLAR OF-
3
FENSES.
4
(a) DIRECTIVE TO THE UNITED STATES SEN-
5 TENCING COMMISSION-Pursuant to its authority under
6 section 994(p) of title 18, United States Code, and in ac-
7 cordance with this section, the United States Sentencing
8 Commission shall review and, as appropriate, amend the
9 Federal Sentencing Guidelines and related policy state-
10 ments to implement the provisions of this title.
11
(b) REQUIREMENTS.-In carrying out this section,
12 the Sentencing Commission shall-
13
(1) ensure that the sentencing guidelines and
14
policy statements reflect the serious nature of the of-
15
fenses and the penalties set forth in this title, the
16
growing incidence of serious fraud offenses which
17
are identified above, and the need to modify the sen-
18
tencing guidelines and policy statements to deter,
19
prevent, and punish such offenses;
20
(2) consider the extent to which the guidelines
21
and policy statements adequately address-
22
(1) whether the guideline offense levels
23
and enhancements for violations of the sections
24
amended by this title are sufficient to deter and
25
punish such offenses, and specifically, are ade-
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5
1
quate in view of the statutory increases in pen-
2
alties contained in this title; and
3
(B) whether a specific offense char-
4
acteristic should be added in United States
5
Sentencing Guideline section 2B1.1 in order to
6
provide for stronger penalties for fraud when
7
the crime is committed by a corporate officer or
8
director;
9
(3) assure reasonable consistency with other
10
relevant directives and sentencing guidelines;
11
(4) account for any additional aggravating or
12
mitigating circumstances that might justify excep-
13
tions to the generally applicable sentencing ranges;
14
(5) make any necessary conforming changes to
15
the sentencing guidelines; and
16
(6) assure that the guidelines adequately meet
17
the purposes of sentencing as set forth in section
18
3553(a)(2) of title 18, United States Code.
19 SEC. 806. CORPORATE RESPONSIBILITY FOR FINANCIAL
20
REPORTS.
21
(a) IN GENERAL.-Chapter 63 of title 18, United
22 States Code, is amended by adding at the end the fol-
23 lowing:
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6
1 1348. Failure of corporate officers to certify finan-
2
cial reports
3
"(a) CERTIFICATION OF PERIODIC FINANCIAL RE-
4 PORTS.-Each periodic report containing financial state-
5 ments filed by an issuer with the Securities Exchange
6 Commission pursuant to section 13(a) or 15(d) of the Se-
7 curities Exchange Act of 1934 (15 U.S.C. 78m(a) or
8 78o(d)) shall be accompanied by a written statement by
9 the chairman of the board, chief executive officer, and
10 chief financial officer (or equivalent thereof) of the issuer.
11
"(b) CONTENT.-The statement required under sub-
12 section (a) shall certify the appropriateness of the finan-
13 cial statements and disclosures contained in the periodic
14 report or financial report, and that those financial state-
15 ments and disclosures fairly present, in all material re-
16 spects, the operations and financial condition of the issuer.
17
"(c) CRIMINAL PENALTIES.-Notwithstanding any
18 other provision of law-
19
"(1) any person who recklessly and violates any pro-
knowingly
20
vision of this section shall upon conviction be fined
21
not more than $500,000, or imprisoned not more
22
than 5 years, or both; or
23
"(2) any person who willfully violates any provi-
24
sion of this section shall upon conviction be fined not
25
more than $1,000,000, or imprisoned not more than
26
10 years, or both.'
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7
1
(b) TECHNICAL AND CONFORMING AMENDMENT.-
2 The section analysis for chapter 63 of title 18, United
3 States Code, is amended by adding at the end the fol-
4 lowing:
'1348. Failure of corporate officers to certify financial reports."
This Section shall take effect
one day after date of this bill's enactment.
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0:\MDM\MDM02.397
LEAHY
Patrat S.L.C. Leahy
PENDING PENDI ING
Jody Hunt 4-1259.
AMENDMENT NO.
Calendar No.
Purpose: To provide for criminal prosecution of persons who
alter or destroy evidence in certain Federal investiga-
tions or defraud investors of publicly traded securities,
and for other purposes.
IN THE SENATE OF THE UNITED STATES-107th Cong., 2d Sess.
S.2673
To in
AMENDMENT No
ting
4174
a
bub-
1.
By Daschle for Leahy
ting
(
roc-
e
To:
5.2673
end-
e
ease
C
rate
f'
13
ade-
F
Page(s)
ities
a
GPO: 2000 68-330 (mac)
and
for other purposes.
Referred to the Committee on
and ordered to be printed
Ordered to lie on the table and to be printed
AMENDMENT intended to be proposed by Mr. LEAHY (for
himself, Mr. McCAIN, Mr. DASCHLE, Mr. DURBIN, Mr.
HARKIN, Mr. CLELAND, Mr. LEVIN, Mr. KENNEDY, Mr.
BIDEN, Mr. FEINGOLD, Mr. MILLER, Mr. EDWARDS,
Mrs. BOXER, and Mr. KERRY)
Viz:
mr. CorziNE
1
On page 117, after line 12, add the following:
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2
1 TITLE VIII-CORPORATE AND
2
CRIMINAL FRAUD ACCOUNT-
3
ABILITY
4 SEC. 801. SHORT TITLE.
5
This title may be cited as the "Corporate and Crimi-
6 nal Fraud Accountability Act of 2002".
7 SEC. 802. CRIMINAL PENALTIES FOR ALTERING DOCU-
8
MENTS.
9
(a) IN GENERAL-Chapter 73 of title 18, United
10 States Code, is amended by adding at the end the fol-
11 lowing:
12 "§ 1519. Destruction, alteration, or falsification of
13
records in Federal investigations and
14
bankruptcy
15
"Whoever knowingly alters, destroys, mutilates, con-
16 ceals, covers up, falsifies, or makes a false entry in any
17 record, document, or tangible object with the intent to im-
18 pede, obstruct, or influence the investigation or proper ad-
19 ministration of any matter within the jurisdiction of any
20 department or agency of the United States or any case
21 filed under title 11, or in relation to or contemplation of
22 any such matter or case, shall be fined under this title,
23 imprisoned not more than 10 years, or both.
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1 "§ 1520. Destruction of corporate audit records
2
"(a)(1) Any accountant who conducts an audit of an
3 issuer of securities to which section 10A(a) of the Securi-
4 ties Exchange Act of 1934 (15 U.S.C. 78j-1(a)) applies,
5 shall maintain all audit or review workpapers for a period
6 of 5 years from the end of the fiscal period in which the
7 audit or review was concluded.
8
"(2) The Securities and Exchange Commission shall
9 promulgate, within 180 days, after adequate notice and
10 an opportunity for comment, such rules and regulations,
11 as are reasonably necessary, relating to the retention of
12 relevant records such as workpapers, documents that form
13 the basis of an audit or review, memoranda, correspond-
14 ence, communications, other documents, and records (in-
15 cluding electronic records) which are created, sent, or re-
16 ceived in connection with an audit or review and contain
17 conclusions, opinions, analyses, or financial data relating
18 to such an audit or review, which is conducted by any ac-
19 countant who conducts an audit of an issuer of securities
20 to which section 10A(a) of the Securities Exchange Act
21 of 1934 (15 U.S.C. 78j-1(a)) applies.
22
"(b) Whoever knowingly and willfully violates sub-
23 section (a)(1), or any rule or regulation promulgated by
24 the Securities and Exchange Commission under subsection
25 (a)(2), shall be fined under this title, imprisoned not more
26 than 5 years, or both.
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1
"(c) Nothing in this section shall be deemed to dimin-
2 ish or relieve any person of any other duty or obligation,
3 imposed by Federal or State law or regulation, to main-
4 tain, or refrain from destroying, any document."
5
(b) CLERICAL AMENDMENT.-The table of sections
6 at the beginning of chapter 73 of title 18, United States
7 Code, is amended by adding at the end the following new
8 items:
"1519. Destruction, alteration, or falsification of records in Federal investiga-
tions and bankruptcy.
"1520. Destruction of corporate audit records."
9 SEC. 803. DEBTS NONDISCHARGEABLE IF INCURRED IN
10
VIOLATION OF SECURITIES FRAUD LAWS.
11
Section 523(a) of title 11, United States Code, is
12 amended—
13
(1) in paragraph (17), by striking "or" after
14
the semicolon;
15
(2) in paragraph (18), by striking the period at
16
the end and inserting "; or"; and
17
(3) by adding at the end, the following:
18
(19) that-
19
"(A) arises under a claim relating to-
20
"(i) the violation of any of the Fed-
21
eral securities laws (as that term is defined
22
in section (a) (47) of the Securities Ex-
23
change Act of 1934 (15 U.S.C.
24
78c(a)(+7)), any State securities laws, or
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5
1
any regulations or orders issued under
2
such Federal or State securities laws; or
3
"(ii) common law fraud, deceit, or
4
manipulation in connection with the pur-
5
chase or sale of any security; and
6
"(B) results, in relation to any claim de-
7
scribed in subparagraph (A), from-
8
"(i) any judgment, order, consent
9
order, or decree entered in any Federal or
10
State judicial or administrative proceeding;
11
"(ii) any settlement agreement en-
12
tered into by the debtor; or
13
"(iii) any court or administrative
14
order for any damages, fine, penalty, cita-
15
tion, restitutionary payment, disgorgement
16
payment, attorney fee, cost, or other pay-
17
ment owed by the debtor.
18 SEC. 804. STATUTE OF LIMITATIONS FOR SECURITIES
19
FRAUD.
20
(a) IN GENERAL-Section 1658 of title 28, United
21 States Code, is amended—
22
(1) by inserting "(a)" before "Except"; and
23
(2) by adding at the end the following:
24
"(b) Notwithstanding subsection (a), a private right
25 of action that involves a claim of fraud, deceit, manipula-
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1 tion, or contrivance in contravention of a regulatory re-
2 quirement concerning the securities laws, as defined in
3 section 3(a)(47) of the Securities Exchange Act of 1934
4 (15 U.S.C. 78c(a)(47)), may be brought not later than
5 the earlier of-
6
"(1) 5 years after the date on which the alleged
7
violation occurred; or
8
"(2) 2 years after the date on which the alleged
9
violation was discovered."
10
(b) EFFECTIVE DATE.-The limitations period pro-
11 vided by section 1658(b) of title 28, United States Code,
12 as added by this section, shall apply to all proceedings ad-
13 dressed by this section that are commenced on or after
14 the date of enactment of this Act.
15
(c) No CREATION OF ACTIONS.-Nothing in this sec-
16 tion shall create a new, private right of action.
17 SEC. 805. REVIEW OF FEDERAL SENTENCING GUIDELINES
18
FOR OBSTRUCTION OF JUSTICE AND EXTEN-
19
SIVE CRIMINAL FRAUD.
20
Pursuant to section 994 of title 28, United States
21 Code, and in accordance with this section, the United
22 States Sentencing Commission shall review and amend, as
23 appropriate, the Federal Sentencing Guidelines and re-
24 lated policy statements to ensure that-
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1
(1) the base offense level and existing enhance-
2
ments contained in United States Sentencing Guide-
3
line 2J1.2 relating to obstruction of justice are suffi-
4
cient to deter and punish that activity;
5
(2) the enhancements and specific offense char-
6
acteristics relating to obstruction of justice are ade-
7
quate in cases where—
8
(d) documents and other physical evidence
9
are actually destroyed, altered, or fabricated;
10
(B) the destruction, alteration, or fabrica-
11
tion of evidence involves—
12
(i) a large amount of evidence, a large
13
number of participants, or is otherwise ex-
14
tensive;
15
(ii) the selection of evidence that is
16
particularly probative or essential to the
17
investigation; or
18
(iii) more than minimal planning; or
19
(C) the offense involved abuse of a special
20
skill or a position of trust;
21
(3) the guideline offense levels and enhance-
22
ments for violations of section 1519 or 1520 of title
23
18, United States Code, as added by this title, are
24
sufficient to deter and punish that activity;
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1
(4) the guideline offense levels and enhance-
2
ments under United States Sentencing Guideline
3
2B1.1 (as in effect on the date of enactment of this
4
Act) are sufficient for a fraud offense when the
5
number of victims adversely involved is significantly
6
greater than 50;
7
(5) a specific offense characteristic enhancing
8
sentencing is provided under United States Sen-
9
tencing Guideline 2B1.1 (as in effect on the date of
10
enactment of this Act) for a fraud offense that en-
11
dangers the solvency or financial security of a sub-
12
stantial number of victims; and
13
(6) the guidelines that apply to organizations in
14
United States Sentencing Guidelines, chapter 8, are
15
sufficient to deter and punish organizational crimi-
16
nal misconduct.
17 SEC. 806. PROTECTION FOR EMPLOYEES OF PUBLICLY
18
TRADED COMPANIES WHO PROVIDE EVI-
19
DENCE OF FRAUD.
20
(a) IN GENERAL.-Chapter 73 of title 18, United
21 States Code, is amended by inserting after section 1514
22 the following:
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9
1 "§ 1514A Civil action to protect against retaliation in
2
fraud cases
3
"(a) WHISTLEBLOWER PROTECTION FOR EMPLOY-
4 EES OF PUBLICLY TRADED COMPANIES.-No company
5 with a class of securities registered under section 12 of
6 the Securities Exchange Act of 1934 (15 U.S.C. 781), or
7 that is required to file reports under section 15(d) of the
8 Securities Exchange Act of 1934 (15 U.S.C. 78o(d)), or
9 any officer, employee, contractor, subcontractor, or agent
10 of such company, may discharge, demote, suspend, threat-
11 en, harass, or in any other manner discriminate against
12 an employee in the terms and conditions of employment
13 because of any lawful act done by the employee-
14
"(1) to provide information, cause information
15
to be provided, or otherwise assist in an investiga-
16
tion regarding any conduct which the employee rea-
17
sonably believes constitutes a violation of section
18
1341, 1343, 1344, or 1348, any rule or regulation
19
of the Securities and Exchange Commission, or any
20
provision of Federal law relating to fraud against
21
shareholders, when the information or assistance is
22
provided to or the investigation is conducted by-
23
"(A) a Federal regulatory or law enforce-
24
ment agency;
25
"(B) any Member of Congress or any com-
26
mittee of Congress; or
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10
1
"(C) a person with supervisory authority
2
over the employee (or such other person work-
3
ing for the employer who has the authority to
4
investigate, discover, or terminate misconduct);
5
or
6
"(2) to file, cause to be filed, testify, participate
7
in, or otherwise assist in a proceeding filed or about
8
to be filed (with any knowledge of the employer) re-
9
lating to an alleged violation of section 1341, 1343,
10
1344, or 1348, any rule or regulation of the Securi-
11
ties and Exchange Commission, or any provision of
12
Federal law relating to fraud against shareholders.
13
"(b) ENFORCEMENT ACTION.-
14
"(1) IN GENERAL.-A person who alleges dis-
15
charge or other discrimination by any person in vio-
16
lation of subsection (a) may seek relief under sub-
17
section (c), by-
18
"(A) filing a complaint with the Secretary
19
of Labor; or
20
"(B) if the Secretary has not issued a final
21
decision within 180 days of the filing of the
22
complaint and there is no showing that such
23
delay is due to the bad faith of the claimant,
24
bringing an action at law or equity for de novo
25
review in the appropriate district court of the
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11
1
United States, which shall have jurisdiction
2
over such an action without regard to the
3
amount in controversy.
4
"(2) PROCEDURE.-
5
"(A) IN GENERAL.-An action under para-
6
graph (1)(A) shall be governed under the rules
7
and procedures set forth in section 42121(b) of
8
title 49, United States Code.
9
"(B) EXCEPTION-Notification made
10
under section 42121(b)(1) of title 49, United
11
States Code, shall be made to the person named
12
in the complaint and to the employer.
13
"(C) BURDENS OF PROOF.-An action
14
brought under paragraph (1) (B) shall be gov-
15
erned by the legal burdens of proof set forth in
16
section 42121(b) of title 49, United States
17
Code.
18
"(D) STATUTE OF LIMITATIONS.-An ac-
19
tion under paragraph (1) shall be commenced
20
not later than 90 days after the date on which
21
the violation occurs.
22
"(c) REMEDIES.-
23
"(1) IN GENERAL.-An employee prevailing in
24
any action under subsection (b) (1) shall be entitled
25
to all relief necessary to make the employee whole.
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12
1
"(2) COMPENSATORY DAMAGES.-Relief for any
2
action under paragraph (1) shall include-
3
"(A) reinstatement with the same seniority
4
status that the employee would have had, but
5
for the discrimination;
6
"(B) the amount of back pay, with inter-
7
est; and
8
"(C) compensation for any special damages
9
sustained as a result of the discrimination, in-
10
cluding litigation costs, expert witness fees, and
11
reasonable attorney fees.
12
"(d) RIGHTS RETAINED BY EMPLOYEE.-Nothing in
13 this section shall be deemed to diminish the rights, privi-
14 leges, or remedies of any employee under any Federal or
15 State law, or under any collective bargaining agreement.".
16
(b) CLERICAL AMENDMENT.-The table of sections
17 at the beginning of chapter 73 of title 18, United States
18 Code, is amended by inserting after the item relating to
19 section 1514 the following new item:
"1514A. Civil action to protect against retaliation in fraud cases.".
20 SEC. 807. CRIMINAL PENALTIES FOR DEFRAUDING SHARE-
21
HOLDERS OF PUBLICLY TRADED COMPANIES.
22
(a) IN GENERAL.-Chapter 63 of title 18, United
23 States Code, is amended by adding at the end the fol-
24 lowing:
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13
1 "§ 1348. Securities fraud
2
"Whoever knowingly executes, or attempts to execute,
3 a scheme or artifice-
4
"(1) to defraud any person in connection with
5
any security of an issuer with a class of securities
6
registered under section 12 of the Securities Ex-
7
change Act of 1934 (15 U.S.C. 7817 or that is re-
8
quired to file reports under section 15(d) of the Se-
9
curities Exchange Act of 1934 (15 U.S.C. 78o(d));
10
or
11
"(2) to obtain, by means of false or fraudulent
12
pretenses, representations, or promises, any money
13
or property in connection with the purchase or sale
14
of any security of an issuer with a class of securities
15
registered under section 12 of the Securities Ex-
16
change Act of 1934 (15 U.S.C.\78L) or that is re-
17
quired to file reports under section 15(d) of the Se-
18
curities Exchange Act of 1934 (15 U.S.C. 78o(d));
19 shall be fined under this title, or imprisoned not more than
20 10 years, or both.".
21
(b) CLERICAL AMENDMENT-The table of sections
22 at the beginning of chapter 63 of title 18, United States
23 Code, is amended by adding at the end the following new
24 item:
"1348. Securities fraud.".
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FRC ID:
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RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRAJ
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
b(9) Release would disclose geological or geophysical information
Deed of Gift Restrictions
concerning wells [(b)(9) of the FOIA]
A. Closed by Executive Order 13526 governing access to national
Records Not Subject to FOIA
security information.
B. Closed by statute or by the agency which originated the document.
Court Sealed - The document is withheld under a court seal and is not subject to
C. Closed in accordance with restrictions contained in donor's deed
the Freedom of Information Act.
of gift.
This Document was withdrawn on 5/19/2015 by
erl
Rule 10b-5
Section 1348
Scienter requirement
"willful" violation (15 U.S.C. §
"knowingly" execute/attempt to
78ff(a)); see also Ernst & Ernst V.
execute fraudulent scheme
Hochfelder, 425 U.S. 185 (1975)
Prohibited acts
[1] employ device/scheme/artifice to
Executing or attempting to execute a
defraud, or
scheme/artifice to:
[2] untrue statements of material fact
[1] defraud any person in connection
or material omissions, or
with securities or
[3] any act of fraud or deceit upon any
[2] obtain by false/fraudulent
person,
pretenses money/property in
connection with purchase/sale of
in connection with purchase/sale of
securities
securities (see Blue Chip Stamps V.
Manor Drug Stores, 421 U.S. 723
(1975))
Covered securities
Any security
Any security of an issuer [1] who has
a class of securities registered under
Securities Exchange Act § 12 or [2]
who is required to file reports under
§ 15(d)
Other
Materiality requirement for false
No explicit materiality requirement
statements and omissions (see Basic
(assuming that 1348's general
Inc. V. Levinson, 485 U.S. 224, 231-32
anti-fraud language reaches false
(1988), for standard)
statements/omissions)
Explicit "commerce" jurisdictional
No explicit requirement
requirement: means/instrumentality of
interstate commerce, mails, national
securities exchange facilities
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FOLDER TITLE:
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FRC ID:
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OA Num.:
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NARA Num.:
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RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRAJ
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
b(9) Release would disclose geological or geophysical information
Deed of Gift Restrictions
concerning wells [(b)(9) of the FOIA]
A. Closed by Executive Order 13526 governing access to national
Records Not Subject to FOIA
security information.
B. Closed by statute or by the agency which originated the document.
Court Sealed - The document is withheld under a court seal and is not subject to
C. Closed in accordance with restrictions contained in donor's deed
the Freedom of Information Act.
of gift.
This Document was withdrawn on 5/19/2015
by erl
001
07/16/02 TUE 20:44 FAX
THE
Amount
THE WHITE HOUSE
WASHINGTON
OFFICE OF LEGISLATIVE AFFAIRS
HOUSE LIAISON
112 East Wing
(202) 456-6620 Phone
(202) 456-3501 Fax
FACSIMILE TRANSMISSION
DATE:
7/16/2
TO:
Jennifer Newstead
PAGES:
(Including Cover Sheet)
FAX:
62146
PHONE:
FROM:
DAVID HOBBS
BOB MARSH
BRIAN CONKLIN
DAN KENIRY
KIRSTEN CHADWICK
NELSON LITTERST
ADAM INGOLS
CHRISTAL WEST
DAVID HOLT
MESSAGE:
002
07/16/02 TUE 20:44 FAX
PEACASASUSAMDB.SUS
11,12C.
Orginal Signature 1.1' Members
SUSPEND THE RULES AND PASS THE BHLL... U.R. 5118, WITH AN
AMENDMENT
(The amendment strikes out all after the enacting clause and insurts
a new toxt)
10777 CONGRESS
20 SESSION
H.R.5118
IN THE HOUSE OF REPRESENTATIVES
Mr. SENSENTHENNER (Thi himself. attached list 111' cosponsors]) intru-
dined the following hill; which Tills referred 1.11 the Committee 1111
A BILL
To provide fir enhanced penalties lim accounting and audit-
ing impropriéties itt publicly traded companies, and for
other purposes.
I
Be it cuacled by the Senate 11761/ House of Representation
2 Lines of 1/11 United States of Imerica i'll Congress assembled
July 10. 2002
003
07/16/02 TUE 20:44 FAX
PENCASASUSAMDR.SUS
11.1.0.
12
I SECTION I.. SHORT TITLE.
2
This Act may In cited HS the "Corporate Frand , 11:-
3 countability Act of 2002".
4 SEC. 2. HIGHER MAXIMUM PENALTIES FOR MAIL AND WIRE
5
FRAUD.
6
(ii) MAIL 1341 of title 18, United
7 5 States Code, is amended by striking "five" and inserting
8 "20".
9
(1) WIRE FRAPD.-Seation 1343 of title 18, United
10 States Code, is amended by striking "five" and inserting
11 "20".
12
(e) SECURITIES PRACD-Chapter 63 of title 18.
13 United States Code, is amended by adding at the end the
14 following:
IS "$1348. Securities fraud
16
"Whoever knowingly executes 11. scheme OF artifice-
17
**(1) to defraud any person in confection with
18
any security registered under section 12 or 15(d) of
19
the Securities Exchange of 1984 (15 U.S.O. 78/,
20
780(d)) or section (i of the Securities Act of 1933
21
/
(15 U.S.C. 77f); or
22
"(2) to obtain. by means of Palse or frandulent
23
pretenses, representations. or promises, any money
24
or property in comeetion with the purchase or sale
25
of any security registered under section 12 or 15(d)
26
of the Securities Exchange Act of 1934 (15 U.S.C.
July 18. 2002
004
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FENCASASUSAMDB.SUS
11,1,0.
::
I
78/, 780(d)) 01 section 6 of the Securities Act of
?
1933 (15 U.S.C. 771).
3 shall be fined under this title. or imprisoned not more than
4 25 years, or both."
5
(il) CLERICAL AMPNDMENT -The table of sections
6 at the beginning of chapter 63 of Litle 18, United States
7 Code, is amended by adding i.I.I. the end the following:
"13.18. Securities Trand.'
8 SEC. 3. TAMPERING WITH A RECORD OR OTHERWISE IM-
9
PEDING AN OFFICIAL PROCEEDING.
10
Section 1512 of title 18, United States Code. is
11 amended-
12
(1) by redesignating subsections (ii) through (i)
13
H.S subsections (d) through (j). respectively; and
14
(2) by inserting after subsection (b) the Fol-
15
lowing new subsection:
16
"(«) Whoever corruptly-
17
"(1) afters, destroys, mutitates, or conceals it
18
record, doeument, or other object, (II' attempts 10 do
19
so, with the intent 10 impair the object's integrity or
20
availability for use in an official proceeding; OF
21
(2) otherwise obstructs, influences, 01" impodes
22
any official proceeding, or attempts In do SO.
23 shall he fined mater this title or imprisoned not more than
24 30 years, DP both."
July 16. 2002
005
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FENCASASOSAMDR.SUS
11.1.C.
I
I SEC. + AMENDMENT TO THE FEDERAL SENTENCING
2
GUIDELINES.
3
(H) REQUEST FOR IMMEDIATE CONSIDERATION BY
4 THE UNITED STATES SENTENCING COMMUSSION-Por
5 snamt to its authority under section 994(p) of title 38,
G United States Code, and in accordance with this section,
7 the United States Senteneing Commission is requested
X
(ii)
)
(1) promptly review the sentencing guidelines
10
applicable (ii) securities and accounting fraud and I'('-
11
lated offenses;
12
(2) expeditionsly consider the promulgation of
13
new senteneing guidelines 011' amendments to existing
14
sentencing guidelines to provide an enhancement for
IS
officers (11" directors of publicly traded corporations
16
who commit fraud and related offenses; and
17
(3) submit to Congress ILII explanation of 1115-
18
tions taken by the Senteneing Commission present
19
to paragraph (2) and any additional policy rue-
20
ommendations the Sentencing Commission may have
21
for combating offenses described in paragraph (1).
22
(b) COSSIDERATIONS IN REVIEW.-In earrying out
23 this section, the Sentencing Commission is requested to-
24
(1) ensire Mart the senteneing guidelines and
25
policy statements reflect thu-serions nature of securi-
26
ries, pension. illid necounting fraud and the need for
.haly 1B. 2002
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FACAS\SUSAMDR.SUS
11.1.
i
I
aggressive and appropriate law enforcement netion
2
to prevent such offenses:
3
(2) ASSURT rensonable consistency with other
4
relevant directives and with other guidelines;
5
(3) account for BUY aggravating of mitigating
6
circumstances that might justify exceptions, includ-
7
ing eireumstances for which the sentencing guide-
8
lines engrently provide sentencing enhancements:
9
(-1) ensure that guideline offense levels and en-
10
bancements for its obstruction of justice offense are
11
advequide in cases where doemnents or other physical
12
evidence are netailly destroyed or Pubricated:
13
(5) cusure that the guideline offense levels naid
14
enhancements under United States Sentencing
<
15
Guideline 2B1.1 (HS in effect on the date of chack-
16
ment of this Aer) are sufficient For a Grand offense
17
when the number of victims adversely involved is sig-
18
nificantly greater their 50:
19
((i) make arry necessary conforming changes to
20
the sentencing guidelines; and
21
(7) assure that the guidelines adequately undel
22
the purposes of senteneing as set. forth in section
23
3553 (a)(2) of title 18, United States Code.
24
(1:) EMERGENCY AUTHORITY AND DEADLINE FOR
25 COMMISSION United States Senteneing
July 16. 2002
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007
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H.L.C.
(i
I Commission is requested to promitilyate the gitidelines or
2 amendments provided for under this sections ILS 8000 HS
: practicable, and in any event. not. later than the 120 days
4 after the date of of this Act. in necombance with
5 the procedures sent forth in section 21(ii) of the Sen-
6 teneing Reform Act. of 1987, MS though the authority
7 under that Act had not expired.
8 SEC. fr. DEBTS NONDISCHARGEABLE IF INCURRED IN VIO-
9
LATION OF SECURITIES FRAUD LAWS.
10
Section 523(m) of title 11. United States Code. is
11 amended
12
(1) in paragraph (17). by striking "OP" after
13
the semicolon:
14
(2) in paragraph (18). by striking the period at
15
the end and inserting :: or": and
16
(31) by adding at thesend. the following:
17
(19) that-
18
"(&) is it chini for
19
"(i) the violation of any of the Fed-
20
oral securities laws (PIN that term is defined
21
in section 3(a)(47) of the Securities Ex-
22
change Act of 1934). any of the State se-
23
curities hays, or any regulation or order
24
issued under such Pederal OF State securi-
25
Lies laws; 01°
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H.L.C.
7
I
(iii) COMMOND law Traud, deceit. or
2
manipulation in connection with the pin-
in
chase n|' sale of any security; and
4
"(B) results, in relation to any claim de-
5
scribed in subparagraph (.\). from:
6
"(i) any judgment, order, consent
7
order. of decree entered in MAY Pederal or
a
State judicial or administrative proceeding:
9
"(ii) any settlement agreement 111-
10
tered into by the debtor; 01'
11
"(iii) any court or administrative
12
order fur any damages, fine. penalty, eitm-
13
tion, restitutionary payment, disgorgement
14
payment. attorney fee, cost, (j)' other pay-
15
ment owed by the debtor.".
16 SEC. 6. CORPORATE RESPONSIBILITY FOR FINANCIAL RE-
17
PORTS.
18
(ii) IN GENERMA- hapter 6: of title 18. United
19 States Code, is amended by adding it the end the Pol-
20 lowing:
21 "§ 1349. Failure of corporate officers to certify finan-
22
cial reports
23
"(a) CERTIFICATION OF PERIODIC FINANCIAL RR-
24 PORTS. - Bach periodic report containing financial state-
25 ments Filed by HII issuer with the Securities Exchange
July IB: 2002
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FENCASASUSAMDB.SUS
11.1.1
,
I Commission pursuant. 11) section 13(ii) OF 15(d) of the S.-
? enrities Exchange Act of 1934 (15 U.S.C. 78m(a) 11)"
3 780(d)) shall be accompanied by il written statement by
4 the chairman of the board, chief executive officer, and
5 chief financial officer (ii)- equivalent thereof) of the issuer.
6
"(h) CONTENT.-The statement required under sub-
7 section (ii) shall certify that those financial statements
8 fairly and accurately represent, in all material respects,
9 the operations and financial condition of the issuer.
10
"(n) CRIMINAL PENALTIES-Wloever-
11
"(1) knowingly violates this section shall be
12
fined not more than $1,000,000, or imprisoned not
13
more than 10 years. (11' both: or
14
"(2) willfully violates this section shall be fined
15
not more than $5,000,000, 01 imprisoned not more
16
than 20 years, 01' both.".
17
(h) CERRICAL AMENDMENT.-The table of sections
18 at the beginning of chapter 63 of title 18, United States
19 Code, is amended by adiling at the end the following:
"1" 19. Failure of corporate officers 111 certify financial reports.".
20 SEC. 7. ATTEMPTS AND CONSPIRACIES TO COMMIT CRIMI-
21
NAL OFFENSES.
22
(ii.) IN GRNEHAL-Uhaptor I of title 18, United
23 States Code, is amended by inserting before section 2 the
24 following:
July 16, 2002
010
07/16/02 TUE 20:46 FAX
11
(it) IN UNNIMAL SPETION 111 (1) 01 LIII Securities
22 Exchange Act of 1084 (15 U.S.C. 78n-3(e)) is amended
23 by adding at the end the following:
24
"(:}) TEMPORARY FREEZE.-
25
"(il) IN GENERAL-
July 16. 2002
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TI.L.C.
11
1
(iii) EFFECTIVE PERIOD.- A (rm-
2
poraly order issued under clause (i)
3
shall-
4
"(I) become effective imme-
5
dintely;
6
"(II) be served upon the parties
7
subject. to it; and
8
"(111) unless set aside, limited 01'
9
suspended by 11. court of competent ju-
10
risdiction, shall remain effective and
11
enforceable for 45 days.
12
(iv) EXTENSIONS All THOREED.-
13
The offective period of 7111 order under this
14
subparagreiph THAN be extended by the
15
court upon good cause shown for not
16
forger than 15 additional days, provided
17
Clear the combined period of the order shall
18
not exceed 90 days.
19
"(B) PROCESS ON DETERMINATION OF
20
VIOLATIONS-
21
"(i) VIOLATIONS CHARGED. -If the
22
issuer 01' other person described in sub-
23
paragraph (.\) is charged with any violne
24
tion of the Rederal securities laws before
25
the expiration of the effective period of a
July 16, 2002
1012
07/16/02 TUE 20:46 FAX
PNCASASUSAMDB.SUS
11.1.C.
12
I
temporary order under subparagraph (.\)
2
(including any applicable extension period),
3
the order shall remain in offect, subject ID
4
court approval. until the conclusion of any
5
legal proceedings related thereto, and the
G
affected issuer of other person, shall have
7
the right to petition the court for review of
%
the order.
9
"(ii) VIOLATIONS NOT CHARGED. If
10
the issuer or other person described in sub-
11
paragraph (.\) is not charged with any (ii)-
12
lation of the Federal securities laws before
13
the expiration of the effective period of a
14
temporary order under subparagraph (.\)
15
(including any applicable untension period),
16
the CSOPOW shall terminate at the expira-
17
tion of the 45-day offective period (or the
18
expiration of any extension period. as ill)-
19
plicable). and the dispited payments (with
20
account interest) shall be returned to the
21
issuer ill' other affected person."
22
(h) TECHNICAL AMENDMENT- Section 21('(c)(2)
23 of the Securities Exchange And of 1934 (15 U.S.C. THIR
24 3(c)(2)) is amended by striking "This" and inserting
25 "paragraph (1)".
July 16, 2002
013
07/16/02 TUE 20:46 FAX
FNCASASUSAMDB.STUS
H.T.C.
13
1 SEC. 1.0. AUTHORITY OF THE COMMISSION TO PROHIBIT
10
PERSONS FROM SERVING AS OFFICERS OR
3
DIRECTORS.
4
(ii) SECURITIES EXCHANGE ,NCT OF 1934.-Section
5 210 of the Securities Exchange Art. of 1934 (15 U.S.C.
6 78n-8) is amended by adding All the end the Following:
7
"(f) AUTHORITY OF THE COMMISSION TO PROHIBIT
8 PERSONS FROM SERVING AN OFFICERS OR DIRECTORS.-
9 In THEY conse-and-desist proceeding under súbsection (ii),
10 the Commission may issue all order 10 prohibit, condi-
11 tionally or unconditionally, and permanently (11" for such
12 period of time U.S it shall determine, any person who has
13 violated section 10(b) or the rules or regulations there-
14 under, from acting HS in officer (11' director of Any issuer
15 that has it. class of securities registered pursuant to sex-
16 tion, OF that is required to file reports pursuant 10 section
17 (d), if the conduct of that person demonstrates infitness
18 10 serve H.S :1.11 officer or director of any such Issuer.".
19
(h) SECURITIES ACT 01/1 1033.--Section N.\ of the
20 Securities Aut of 1933 (15 U.S.C. 77h-1) is anended by
21 adding all the and of the following:
22
-(f) AUTHORITY 01/- THE COMMISSION TO PROHIBIT
23 PERSONS PROM SERVING AN OFFICERS OR DIRECTORS.-
24 In any cease-and-desist proceeding under subsection (a),
25 the Commission may issue an order to prohibit. entudi-
26 Fiorally or unronditionally, and permanently 01' for such
July 16. 2002
HAV7\07 1602\07 1602.083
07/16/02 TUE 20:46 FAX
FNCASTSUSAMDB.SUS
II.I.C.
11
I period of time IIN il shall determine, any person who has
2 violated section 17(n)(1) or the rules or regulations there-
3 inder; from acting HN an officer or director of any issuer
4 that has a class of securities registered pursuant 1.11 section
5 of the Securities Exchange Act of 1934, or that is required
6 ID file reports pursuant to section 15(d) of that Net, if
7 the conduct. of that person demonstrates infituess (1) serve
8 as an officer or director of any such issuer,".
9 SEC. I.I.. RETALIATION AGAINST INFORMANT.
10
(ii) 1x GENERAL-Seution 1513 of Litle 18, United
11 States ( Code. is amended by adding it.t. the and the for-
12 lowing:
13
(((i) Whoever knowingly, with the intent to retaliate.
14 Mikes may action harmful to any person, including inter-
15 ference with the lawful employment or livelihood of any
16 person, for providing ID a law enforcement officer any
17 tenthful information relating to the commission or possible
18 commission of any Federal offense, shall be fined under
19 this sitte 011' imprisoned not more thin 10 years, or both.",
July Hj. 2002
FAVA071602071602.089