II

105TH CONGRESS

1ST SESSION S. 1518

To require publicly traded corporations to make specific disclosures in their

initial offering statements and quarterly reports regarding the ability

of their computer systems to operate after January 1, 2000.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 10, 1997

Mr. BENNETT introduced the following bill; which was read twice and referred

to the Committee on Banking, Housing, and Urban Affairs

A BILL

To require publicly traded corporations to make specific disclosures in their initial offering statements and quarterly

reports regarding the ability of their computer systems

to operate after January 1, 2000.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Year 2000 Computer

5 Remediation and Shareholder (CRASH) Protection Act of

6 1997’’.

7 SEC. 2. FINDINGS AND PURPOSES.

8 (a) FINDINGS.—Congress finds that—
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1 (1) most computer systems in the United States

2 and around the world are not prepared to operate

3 successfully after January 1, 2000;

4 (2) the failure of computer systems to operate

5 correctly after January 1, 2000 threatens the inter6 est of consumers and investors, the financial results

7 of United States corporations, and the continued

8 soundness of the global economy;

9 (3) corporations have not provided adequate

10 disclosure on the Year 2000 readiness of their com11 puter systems, the costs of remediation, and their

12 ability to manage the business risks associated with

13 possible computer system problems after January 1,

14 2000;

15 (4) corporations may resist making specific dis16 closures about their management of the ‘‘Year 2000

17 Problem’’ fearing competitive disadvantage; and

18 (5) disclosure of Year 2000 readiness by pub19 licly traded corporations will promote the free flow

20 of information on this issue, further the remediation

21 effort, and help business and government leaders

22 avert a potential economic downturn.

23 (b) PURPOSES.—The purposes of this Act are to en24 sure that—
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1 (1) publicly traded corporations disclose specific

2 information about the Year 2000 readiness of their

3 computer systems and their ability to manage the

4 business risks associated with possible computer sys5 tem problems after January 1, 2000; and

6 (2) the interests of consumers and investors are

7 adequately protected.

8 SEC. 3. DISCLOSURES.

9 (a) INCORPORATED DEFINITIONS.—In this section,

10 the terms ‘‘Commission’’, ‘‘issuer’’, and ‘‘security’’ have

11 the meanings given those terms in section 3 of the Securi12 ties Exchange Act of 1934 (15 U.S.C. 78c).

13 (b) DISCLOSURES REQUIRED.—Not later than 120

14 days after the date of enactment of this Act, the Commis15 sion shall amend the regulations promulgated pursuant to

16 section 13 of the Securities Exchange Act of 1934 (15

17 U.S.C. 78m) to require each issuer of a security registered

18 pursuant to section 12 of that Act (15 U.S.C. 78l) to in19 clude, in each initial offering statement and in each quar20 terly report filed with the Commission under section 13

21 of that Act—

22 (1) a description of the progress of the issuer

23 in completing the 5 recognized phases of Year 2000

24 remediation (i.e., awareness, assessment, renovation,

25 validation, and implementation), by division, depart-
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1 ment, or other appropriate business unit of the is2 suer;

3 (2) a summary of costs incurred by the issuer

4 in connection with any remediation effort described

5 in paragraph (1) and an estimate of additional costs

6 that the issuer expects to incur in connection with

7 future remediation efforts;

8 (3) an estimate of anticipated litigation costs

9 and liability outlays associated with the defense of

10 legal actions against the issuer (or the directors or

11 officers of the issuer) as a result of Year 2000 com12 puter system problems, including breach of contract,

13 tort, shareholder class action, and product liability

14 actions;

15 (4) information relating to the existence of any

16 insurance policies of the issuer that cover specific

17 Year 2000 computer system problems, as well as the

18 defense of legal actions against the issuer (and the

19 officers and directors of the issuer) in connection

20 with those problems; and

21 (5) information relating to any contingency

22 plans developed by the issuer to ensure continued

23 operation of the essential business functions of the

24 issuer in the event of a Year 2000 computer system
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1 problem by the issuer itself or by a vendor, partner,

2 or other affiliate of the issuer.

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