I 

108TH CONGRESS 

1ST SESSION H. R. 636

To repeal the provisions of the Private Securities Litigation Reform Act 

and the Securities Litigation Uniform Standards Act that limit private 

securities actions, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 5, 2003

Mr. STUPAK introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on the 

Judiciary, for a period to be subsequently determined by the Speaker, in 

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL

To repeal the provisions of the Private Securities Litigation 

Reform Act and the Securities Litigation Uniform Standards Act that limit private securities actions, and for 

other purposes.

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 ‘‘Shareholder and Em5 ployee Rights Restoration Act of 2003’’. 
2

•HR 636 IH 

1 SEC. 2. REPEAL OF PROVISIONS OF LAW LIMITING SHARE2 HOLDER ACTIONS UNDER THE SECURITIES 

3 LAWS. 

4 (a) REPEALS.—The following provisions of law are 

5 repealed: 

6 (1) Subsections (b), (c), and (d) of section 27 

7 of the Securities Act of 1933 (15 U.S.C. 77z–1(b), 

8 (c), (d)). 

9 (2) Section 27A of the Securities Act of 1933 

10 (15 U.S.C. 77z–2). 

11 (3) Section 21E of the Securities Exchange Act 

12 of 1934 (15 U.S.C. 78u–5). 

13 (4) Section 11(f)(2) of the Securities Act of 

14 1933 (15 U.S.C. 77k(f)(2)). 

15 (5) Subsections (b) through (f) of section 16 of 

16 the Securities Act of 1933 (15 U.S.C. 77p(b)–(f)). 

17 (6) Subsection (f) of section 28 of the Securi18 ties Exchange Act of 1934 (15 U.S.C. 78bb(f)). 

19 (b) ADDITIONAL AMENDMENTS TO PROTECT SHARE20 HOLDER ACTIONS AND WHISTLEBLOWERS.—Section 21D 

21 of the Securities Exchange Act of 1934 (15 U.S.C. 78u–

22 4) is amended—

23 (1) in subsection (a)—

24 (A) by striking paragraph (8); and 

25 (B) by redesignating paragraph (9) as 

26 paragraph (8); 
3

•HR 636 IH 

1 (2) in subsection (b)—

2 (A) by inserting ‘‘, but not the sources of 

3 those facts,’’ after ‘‘particularity all facts’’ in 

4 paragraph (1); 

5 (B) by striking ‘‘strong’’ in paragraph (2); 

6 (C) by striking paragraph (3); 

7 (D) by redesignating paragraph (4) as 

8 paragraph (3); and 

9 (3) by striking subsections (c) through (f). 

10 (c) CONFORMING AMENDMENTS.—

11 (1) Section 16 of the Securities Act of 1933 (15 

12 U.S.C. 77p) is amended by striking ‘‘(a) REMEDIES

13 ADDITIONAL.—Except as provided in subsection (b), 

14 the rights’’ and inserting ‘‘The rights’’. 

15 (2) Section 22(a) of the Securities Act of 1933 

16 (15 U.S.C. 77v(a)) is amended—

17 (A) by striking ‘‘except as provided in sec18 tion 16 with respect to covered class actions,’’; 

19 and 

20 (B) by striking ‘‘Except as provided in sec21 tion 16(c), no case’’ and inserting ‘‘No case’’. 

22 (3) Section 28(a) of the Securities Exchange 

23 Act of 1934 (15 U.S.C. 78bb(a)) is amended by 

24 striking ‘‘Except as provided in subsection (f), the 

25 rights’’ and inserting ‘‘The rights’’. 
4

•HR 636 IH 

1 SEC. 3. RESTORATION OF AIDING AND ABETTING LIABIL2 ITY. 

3 (a) SECURITIES ACT OF 1933.—Section 20 of the Se4 curities Act of 1933 (15 U.S.C. 77t) is amended by adding 

5 at the end the following new subsection: 

6 ‘‘(h) PROSECUTION OF PERSONS WHO AID OR ABET

7 VIOLATIONS.—For purposes of subsections (b) and (d), 

8 any person who knowingly or recklessly provides substan9 tial assistance to another person in the violation of a provi10 sion of this title, or of any rule or regulation hereunder, 

11 shall be deemed to violate such provision to the same ex12 tent as the person to whom such assistance is provided. 

13 No person shall be liable under this subsection based on 

14 an omission or failure to act unless such omission or fail15 ure constituted a breach of a duty owed by such person.’’. 

16 (b) SECURITIES EXCHANGE ACT OF 1934.—Section 

17 20(e) of the Securities Exchange Act of 1934 (15 U.S.C. 

18 78t(e)) is amended to read as follows: 

19 ‘‘(e) PROSECUTION OF PERSONS WHO AID OR ABET

20 VIOLATIONS.—For purposes of subsections (d)(1) and 

21 (d)(3) of section 21, or an action by a self-regulatory orga22 nization, or an express or implied private right of action 

23 under this title, any person who knowingly or recklessly 

24 provides substantial assistance to another person in the 

25 violation of a provision of this title, or of any rule or regu26 lation thereunder, shall be deemed to violate such provi-
5

•HR 636 IH 

1 sion and shall be liable to the same extent as the person 

2 to whom such assistance is provided. No person shall be 

3 liable under this subsection based on an omission or fail4 ure to act unless such omission or failure constituted a 

5 breach of a duty owed by such person.’’. 

6 (c) INVESTMENT COMPANY ACT OF 1940.—Section 

7 42 of the Investment Company Act of 1940 (15 U.S.C. 

8 80a–41) is amended by adding at the end the following 

9 new subsection: 

10 ‘‘(f) PROSECUTION OF PERSONS WHO AID OR ABET

11 VIOLATIONS.—For purposes of subsections (d) and (e), 

12 any person who knowingly or recklessly provides substan13 tial assistance to another person in the violation of a provi14 sion of this title, or of any rule, regulation, or order here15 under, shall be deemed to violate such provision to the 

16 same extent as the person to whom such assistance is pro17 vided. No person shall be liable under this subsection 

18 based on an omission or failure to act unless such omission 

19 or failure constituted a breach of a duty owed by such 

20 person.’’. 

21 (d) INVESTMENT ADVISERS ACT OF 1940.—Section 

22 209(d) of the Investment Advisers Act of 1940 (15 U.S.C. 

23 80b–9) is amended—

24 (1) in subsection (d)—
6

•HR 636 IH 

1 (A) by striking ‘‘or that any person has 

2 aided, abetted, counseled, commanded, induced, 

3 or procured, is aiding, abetting, counseling, 

4 commanding, inducing, or procuring, or is 

5 about to aid, abet, counsel, command, induce, 

6 or procure such a violation,’’; and 

7 (B) by striking ‘‘or in aiding, abetting, 

8 counseling, commanding, inducing, or procuring 

9 any such act or practice’’; and 

10 (2) by adding at the end the following new sub11 section: 

12 ‘‘(f) PROSECUTION OF PERSONS WHO AID OR ABET

13 VIOLATIONS.—For purposes of subsections (d) and (e), 

14 any person who knowingly or recklessly provides substan15 tial assistance to another person in the violation of a provi16 sion of this title, or of any rule, regulation, or order here17 under, shall be deemed to violate such provision to the 

18 same extent as the person to whom such assistance is pro19 vided. No person shall be liable under this subsection 

20 based on an omission or failure to act unless such omission 

21 or failure constituted a breach of duty owed by such per22 son.’’. 
7

•HR 636 IH 

1 SEC. 4. LIMITATIONS PERIOD FOR IMPLIED PRIVATE 

2 RIGHTS OF ACTION. 

3 Section 27A of the Securities Exchange Act of 1934 

4 (15 U.S.C. 78aa–1) is amended to read as follows: 

5 ‘‘SEC. 27A. LIMITATIONS PERIOD FOR IMPLIED PRIVATE 

6 RIGHTS OF ACTION. 

7 ‘‘(a) IN GENERAL.—Except as otherwise provided in 

8 this title, an implied private right of action arising under 

9 this title shall be brought not later than 3 years after the 

10 date on which the alleged violation was discovered. 

11 ‘‘(b) EFFECTIVE DATE.—The limitations period pro12 vided by this section shall apply to all proceedings pending 

13 on or commenced after the date of enactment of the 

14 Shareholder and Employee Rights Restoration Act.’’.

Æ