I
107TH CONGRESS
2D SESSION
H. R. 5496
To permit certain funds assessed for securities laws violations to be used
to compensate employees who are victims of excessive pension fund
investments in the securities of their employers, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 26, 2002
Mr. TIAHRT introduced the following bill; which was referred to the Com-
mittee on Financial Services, and in addition to the Committee on House
Administration, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned
A BILL
To permit certain funds assessed for securities laws violations
to be used to compensate employees who are victims
of excessive pension fund investments in the securities
of their employers, and for other purposes.
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 ‘‘Justice for Victims
of Corporate Fraud Act’’.
SEC. 2. SECURITIES AND EXCHANGE COMMISSION AUTHOR-
ITY TO PROVIDE RELIEF.
(a) PROCEEDS
OF
S.E.C. ENFORCEMENT
AC-
TIONS.—If in any administrative or judicial proceeding
brought by the Securities and Exchange Commission
against—
(1) a corporation, or any officer, director, or
principal shareholder of such corporation, for any
violation of the securities laws; or
(2) the accounting firm performing audit serv-
ices for such corporation, any subsidiary or affiliate
of such firm, or any general or limited partner of
such firm, subsidiary, or affiliate, for any violation
of the securities laws with respect to any audit serv-
ices performed for or in relation to the corporation
described in paragraph (1);
the Commission obtains an order providing for an account-
ing and disgorgement of funds, such disgorgement fund
(including any addition to such fund required or permitted
under this section) shall be allocated in accordance with
the requirements of this section.
(b) PRIORITY FOR FORMER EMPLOYEES OF COR-
PORATION.—The Commission shall, by rule, establish an
allocation system for the disgorgement fund. Such system
shall provide that, in allocating the disgorgement fund
amount to the victims of the securities laws violations, the
first priority shall be given to individuals who were em-
ployed by the corporation described in subsection (a)(1)
or a subsidiary or affiliate of such corporation, and who
were participants in an individual account plan established
by such corporation, subsidiary, or affiliate. Such alloca-
tions among such individuals shall be in proportion to the
extent to which the nonforfeitable accrued benefit of each
such individual under the plan was invested in the securi-
ties of such corporation, subsidiary, or affiliate.
(c) ADDITION OF CIVIL PENALTIES.—Any civil pen-
alty assessed and collected in any proceeding described in
subsection (a) shall be added to and become part of the
disgorgement fund pursuant to section 308 of the Sar-
banes-Oxley Act of 2002 (15 U.S.C. 7246), and shall be
allocated pursuant to subsection (b) of this section.
(d) ACCEPTANCE
OF FEDERAL CAMPAIGN CON-
TRIBUTIONS.—
(1) IN GENERAL.—Section 313 of the Federal
Election Campaign Act of 1971 (2 U.S.C. 439a) is
amended by inserting before ‘‘or may be used’’ the
following: ‘‘may be transferred to any disgorgement
fund which is required to be allocated in accordance
with the requirements of the ‘‘Justice for Victims of
Corporate Fraud Act’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply with respect to any
amounts received by a candidate at any time before,
on, or after the date of the enactment of this Act.
(e) ACCEPTANCE OF ADDITIONAL DONATIONS.—The
Commission is authorized to accept, hold, administer, and
utilize gifts, bequests, and devises of property, both real
and personal, to the United States for the disgorgement
fund. Gifts, bequests, and devises of money and proceeds
from sales of other property received as gifts, bequests,
or devises shall be deposited in the disgorgement fund and
shall be available for allocation in accordance with sub-
section (b).
(f) DEFINITIONS.—As used in this section:
(1) COMMISSION.—The term ‘‘Commission’’
means the Securities Exchange Commission.
(2) SECURITIES LAWS.—The term ‘‘securities
laws’’ means the Securities Act of 1933 (15 U.S.C.
78a et seq.), the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.), the Trust Indenture Act of
1939 (15 U.S.C. 77aaa et seq.), the Investment
Company Act of 1940 (15 U.S.C. 80a–1 et seq.), the
Investment Advisers Act of 1940 (15 U.S.C. 80b et
seq.), the Securities Investor Protection Act of 1970
(15 U.S.C. 78aaa et seq.), and the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7201 et seq.).
(3) 
DISGORGEMENT
FUND.—The 
term
‘‘disgorgement fund’’ means a disgorgement fund es-
tablished in any administrative or judicial proceeding
described in subsection (a).
(4) SUBSIDIARY
OR
AFFILIATE.—The term
‘‘subsidiary or affiliate’’ when used in relation to a
person means any entity that controls, is controlled
by, or is under common control with such person.
(5) OFFICER, DIRECTOR, OR PRINCIPAL SHARE-
HOLDER.—The term ‘‘officer, director, or principal
shareholder’’ means any person that is subject to the
requirements of section 16 of the Securities Ex-
change Act of 1934 (15 U.S.C. 78p) in relation to
the corporation described in section 2(a), or any
subsidiary or affiliate of such corporation.
(6) NONFORFEITABLE; ACCRUED BENEFIT; IN-
DIVIDUAL ACCOUNT PLAN.—The terms ‘‘nonforfeit-
able’’, ‘‘accrued benefit’’, and ‘‘individual account
plan’’ have the meanings provided such terms, re-
spectively, in paragraphs (19), (23), and (34) of sec-
tion 3 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002(19), (23), (34)).
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