I
107TH CONGRESS
2D SESSION
H. R. 3840
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.
IN THE HOUSE OF REPRESENTATIVES
MARCH 5, 2002
Mr. GEORGE MILLER of California (for himself, Ms. PELOSI, Mr. ANDREWS,
Mr. FORD, Mr. KILDEE, Mr. KUCINICH, Mrs. MCCARTHY of New York,
Mr. OWENS, Mr. PAYNE, Ms. RIVERS, Ms. SOLIS, Mr. TIERNEY, Ms.
WOOLSEY, Mr. WU, Mrs. JONES of Ohio, Mr. SANDERS, Mr. BROWN of
Ohio, and Mr. DOGGETT) introduced the following bill; which was re-
ferred to the Committee on Education and the Workforce
A BILL
To amend title I of the Employee Retirement Income Secu-
rity Act of 1974 to provide for timely notification of
plan participants and beneficiaries whose individual ac-
counts hold employer securities of insider trading in em-
ployer securities.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Inside Stock Sales Em-
ployee Notification Act of 2002’’.
SEC. 2. REPORT TO PARTICIPANTS AND BENEFICIARIES OF
TRADES IN EMPLOYER SECURITIES.
(a) IN GENERAL.—Section 104 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1024)
is amended—
(1) by redesignating subsection (d) as sub-
section (e); and
(2) by inserting after subsection (c) the fol-
lowing new subsection:
‘‘(d)(1) In any case in which assets in the individual
account of a participant or beneficiary under an individual
account plan include employer securities, if any person en-
gages in a transaction constituting a direct or indirect
purchase or sale of employer securities and—
‘‘(A) such transaction is required under section
16 of the Securities Exchange Act of 1934 to be re-
ported by such person to the Securities and Ex-
change Commission, or
‘‘(B) such person is a named fiduciary of the
plan,
such person shall comply with the requirements of para-
graph (2).
‘‘(2) A person described in paragraph (1) complies
with the requirements of this paragraph in connection
with a transaction described in paragraph (1) if such per-
son provides to the plan administrator of the plan a writ-
ten notification of the transaction not later than 1 busi-
ness day after the date of the transaction.
‘‘(3)(A) If the plan administrator is made aware, on
the basis of notifications received pursuant to paragraph
(2) or otherwise, that the proceeds from any transaction
described in paragraph (1), constituting direct or indirect
sales of employer securities by any person described in
paragraph (1), exceed $100,000, the plan administrator
of the plan shall provide to each participant and bene-
ficiary a written notification of such transaction.
‘‘(B) In any case in which the proceeds from any
transaction described in paragraph (1) (with respect to
which a notification has not been provided pursuant to
this paragraph), together with the proceeds from any
other such transaction or transactions described in para-
graph (1) occurring during the preceding one-year period,
constituting direct or indirect sales of employer securities
by any person described in paragraph (1), exceed (in the
aggregate) $100,000, such series of transactions by such
person shall be treated as a transaction described in sub-
paragraph (A) by such person.
‘‘(C) Each notification required under this paragraph
shall be provided as soon as practicable, but not later than
3 business days after receipt of the written notification
or notifications indicating that the transaction (or series
of transactions) requiring such notice has occurred.
‘‘(4) Each notification required under paragraph (2)
or (3) shall be made in such form and manner as may
be prescribed in regulations of the Secretary and shall in-
clude the number of shares involved in each transaction
and the price per share, and the notification required
under paragraph (3) shall be written in language designed
to be understood by the average plan participant. The Sec-
retary may provide by regulation, in consultation with the
Securities and Exchange Commission, for exemptions
from the requirements of this subsection with respect to
specified types of transactions to the extent that such ex-
emptions are consistent with the best interests of plan par-
ticipants and beneficiaries. Such exemptions may relate to
transactions involving reinvestment plans, stock splits,
stock dividends, qualified domestic relations orders, and
similar matters.
‘‘(5) For purposes of this subsection, the term ‘em-
ployer security’ has the meaning provided in section
407(d)(1).’’.
(b) ENFORCEMENT.—
(1) IN GENERAL.—Section 502(c) of such Act
(29 U.S.C. 1132(c)) is amended—