I
107TH CONGRESS
2D SESSION
H. R. 4098
To provide for criminal prosecution of persons who alter or destroy evidence
in certain Federal investigations or defraud investors of publicly traded
securities, to disallow debts incurred in violation of securities fraud
laws from being discharged in bankruptcy, to protect whistleblowers
against retaliation by their employers, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 9, 2002
Mr. CONYERS (for himself, Mr. FRANK, Mr. BERMAN, Ms. JACKSON-LEE of
Texas, Ms. WATERS, Mr. GEPHARDT, Mr. LAFALCE, Mr. ENGEL, Mr.
DINGELL, Mr. JACKSON of Illinois, Mrs. CHRISTENSEN, Mr. DAVIS of Il-
linois, Mr. CUMMINGS, Mr. SANDERS, Ms. SOLIS, Mrs. CLAYTON, Ms.
BROWN of Florida, Mr. LYNCH, Mr. HOEFFEL, Mr. GUTIERREZ, and Ms.
SCHAKOWSKY) introduced the following bill; which was referred to the
Committee on the Judiciary
A BILL
To provide for criminal prosecution of persons who alter
or destroy evidence in certain Federal investigations or
defraud investors of publicly traded securities, to disallow
debts incurred in violation of securities fraud laws from
being discharged in bankruptcy, to protect whistleblowers
against retaliation by their employers, and for other pur-
poses.
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 ‘‘Corporate and Crimi-
nal Fraud Accountability Act of 2002’’.
SEC. 2. CRIMINAL PENALTIES FOR ALTERING DOCUMENTS.
(a) IN GENERAL.—Chapter 73 of title 18, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 1519. Destruction, alteration, or falsification of
records in Federal investigations and
bankruptcy
‘‘Whoever knowingly alters, destroys, mutilates, con-
ceals, covers up, falsifies, or makes a false entry in any
record, document, or tangible object with the intent to im-
pede, obstruct, or influence the investigation or proper ad-
ministration of any matter within the jurisdiction of any
department or agency of the United States or any case
filed under title 11, or in relation to or contemplation of
any such matter or case, shall be fined under this title,
imprisoned not more than 5 years, or both.
‘‘§ 1520. Destruction of corporate audit records
‘‘(a) Any accountant who conducts an audit of an
issuer of securities to which section 10A(a) of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78j–1(a)) applies,
shall maintain all documents (including electronic docu-
ments) sent, received, or created in connection with any
audit, review, or other engagement for such issuer for a
period of 5 years from the end of the fiscal period in which
the audit, review, or other engagement was concluded.
‘‘(b) Whoever knowingly and willfully violates sub-
section (a) shall be fined under this title, imprisoned not
more than 5 years, or both.
‘‘(c) Nothing in this section shall be deemed to dimin-
ish or relieve any person of any other duty or obligation,
imposed by Federal or State law or regulation, to main-
tain, or refrain from destroying, any document.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 73 of title 18, United States
Code, is amended by adding at the end the following new
items:
‘‘1519. Destruction, alteration, or falsification of records in Federal investiga-
tions and bankruptcy.
‘‘1520. Destruction of corporate audit records.’’.
SEC. 3. CRIMINAL PENALTIES FOR DEFRAUDING SHARE-
HOLDERS OF PUBLICLY TRADED COMPANIES.
(a) IN GENERAL.—Chapter 63 of title 18, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 1348. Securities fraud
‘‘Whoever knowingly executes, or attempts to execute,
a scheme or artifice—
‘‘(1) to defraud any person in connection with
any security registered under section 12 or 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78l,
78o(d)) or section 6 of the Securities Act of 1933
(15 U.S.C. 77f); or
‘‘(2) to obtain, by means of false or fraudulent
pretenses, representations, or promises, any money
or property in connection with the purchase or sale
of any security registered under section 12 or 15(d)
of the Securities Exchange Act of 1934 (15 U.S.C.
78l, 78o(d)) or section 6 of the Securities Act of
1933 (15 U.S.C. 77f),
shall be fined under this title, or imprisoned not more than
10 years, or both.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 63 of title 18, United States
Code, is amended by adding at the end the following new
item:
‘‘1348. Securities fraud.’’.
SEC. 4. REVIEW OF FEDERAL SENTENCING GUIDELINES
FOR OBSTRUCTION OF JUSTICE AND EXTEN-
SIVE CRIMINAL FRAUD.
Pursuant to section 994 of title 28, United States
Code, and in accordance with this section, the United
States Sentencing Commission shall review and amend, as
appropriate, the Federal Sentencing Guidelines and re-
lated policy statements to ensure that—
(1) the guideline offense levels and enhance-
ments for an obstruction of justice offense are ade-
(2) in paragraph (18), by striking the period at
the end and inserting ‘‘; or’’; and
(3) by adding at the end, the following:
‘‘(19) that—
‘‘(A) arises under a claim relating to—
‘‘(i) the violation of any of the Fed-
eral securities laws (as that term is defined
in section 3(a)(47) of the Securities Ex-
change 
Act 
of 
1934 
(15 
U.S.C.
78c(a)(47)), any State securities laws, or
any regulations or orders issued under
such Federal or State securities laws; or
‘‘(ii) common law fraud, deceit, or
manipulation in connection with the pur-
chase or sale of any security; and
‘‘(B) results, in relation to any claim de-
scribed in subparagraph (A), from—
‘‘(i) any judgment, order, consent
order, or decree entered in any Federal or
State judicial or administrative proceeding;
‘‘(ii) any settlement agreement en-
tered into by the debtor; or
‘‘(iii) any court or administrative
order for any damages, fine, penalty, cita-
tion, restitutionary payment, disgorgement
payment, attorney fee, cost, or other pay-
ment owed by the debtor.’’.
SEC. 6. INCREASED PROTECTION OF EMPLOYEES WAGES
UNDER CHAPTER 11 PROCEEDINGS.
Section 507(a) of title 11, United States Code, is
amended—
(1) in paragraph (3) by striking ‘‘90’’ and in-
serting ‘‘180’’, and
(2) in paragraphs (3) and (4) by striking
‘‘$4,000’’ each place it appears and inserting
‘‘$10,000’’.
SEC. 7. STATUTE OF LIMITATIONS FOR SECURITIES FRAUD.
(a) IN GENERAL.—Section 1658 of title 28, United
States Code, is amended—
(1) by inserting ‘‘(a)’’ before ‘‘Except’’; and
(2) by adding at the end the following:
‘‘(b) Notwithstanding subsection (a), a private right
of action that involves a claim of fraud, deceit, manipula-
tion, or deliberate or reckless disregard of a regulatory re-
quirement concerning the securities laws, as defined in
section 3(a)(47) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(47)), may be brought not later than
the earlier of—
‘‘(1) 5 years after the date on which the alleged
violation occurred; or
‘‘(2) 3 years after the date on which the alleged
violation was discovered.’’.
(b) EFFECTIVE DATE.—The limitations period pro-
vided by section 1658(b) of title 28, United States Code,
as added by this section, shall apply to all proceedings ad-
dressed by this section that are commenced on or after
the date of enactment of this Act.
SEC. 8. PROTECTION FOR EMPLOYEES OF PUBLICLY TRAD-
ED COMPANIES WHO PROVIDE EVIDENCE OF
FRAUD.
(a) IN GENERAL.—Chapter 73 of title 18, United
States Code, is amended by inserting after section 1514
the following:
‘‘§ 1514A. Civil action to protect against retaliation in
fraud cases
‘‘(a) WHISTLEBLOWER PROTECTION FOR EMPLOY-
EES OF PUBLICLY TRADED COMPANIES.—No company
with securities registered under section 6 of the Securities
Act of 1933 (15 U.S.C. 77f) or section 12 or 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78l,
78o(d)), or any officer, employee, contractor, subcon-
tractor, or agent of such company, may discharge, demote,
suspend, threaten, harass, or in any other manner dis-
criminate against an employee in the terms and conditions
of employment because of any lawful act done by the
employee—
‘‘(1) to provide information, cause information
to be provided, or otherwise assist in an investiga-
tion regarding any conduct which the employee rea-
sonably believes constitutes a violation of section
1341, 1343, 1344, or 1348, any rule or regulation
of the Securities and Exchange Commission, or any
provision of Federal law relating to fraud against
shareholders, when the information or assistance is
provided to or the investigation is conducted by—
‘‘(A) a Federal regulatory or law enforce-
ment agency;
‘‘(B) any Member of Congress or any com-
mittee of Congress; or
‘‘(C) a person with supervisory authority
over the employee (or such other person work-
ing for the employer who has the authority to
investigate, discover, or terminate misconduct);
or
‘‘(2) to file, cause to be filed, testify, participate
in, or otherwise assist in a proceeding filed or about
to be filed (with any knowledge of the employer) re-
lating to an alleged violation of section 1341, 1343,
1344, or 1348, any rule or regulation of the Securi-
ties and Exchange Commission, or any provision of
Federal law relating to fraud against shareholders.
‘‘(b) ELECTION OF ACTION.—
‘‘(1) IN GENERAL.—A person who alleges dis-
charge or other discrimination by any person in vio-
lation of subsection (a) may seek relief under sub-
section (c), by—
‘‘(A) filing a complaint with the Secretary
of Labor; or
‘‘(B) bringing an action at law or equity in
the appropriate district court of the United
States.
‘‘(2) PROCEDURE.—
‘‘(A) IN GENERAL.—An action under para-
graph (1)(A) shall be governed under the rules
and procedures set forth in section 42121(b) of
title 49, United States Code.
‘‘(B) 
EXCEPTION.—Notification 
made
under section 42121(b)(1) of title 49, United
States Code, shall be made to the person named
in the complaint and to the employer.
‘‘(C) BURDENS
OF
PROOF.—An action
brought under paragraph (1)(B) shall be gov-
erned by the legal burdens of proof set forth in
section 42121(b) of title 49, United States
Code.
‘‘(D) STATUTE OF LIMITATIONS.—An ac-
tion under paragraph (1) shall be commenced
not later than 180 days after the date on which
the violation occurs.
‘‘(c) REMEDIES.—
‘‘(1) IN GENERAL.—An employee prevailing in
any action under subsection (b)(1) (A) or (B) shall
be entitled to all relief necessary to make the em-
ployee whole.
‘‘(2) COMPENSATORY DAMAGES.—Relief for any
action under paragraph (1) shall include—
‘‘(A) reinstatement with the same seniority
status that the employee would have had, but
for the discrimination;
‘‘(B) 2 times the amount of back pay, with
interest; and
‘‘(C) compensation for any special damages
sustained as a result of the discrimination, in-
cluding litigation costs, expert witness fees, and
reasonable attorney fees.
‘‘(3) PUNITIVE DAMAGES.—
‘‘(A) IN GENERAL.—In a case in which the
finder of fact determines that the protected