I
107TH CONGRESS
2D SESSION
H. R. 3829
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 28, 2002
Mr. STUPAK (for himself and Mr. LAFALCE) introduced the following bill;
which was referred to the Committee on Financial Services, and in addi-
tion to the Committee on the Judiciary, for a period to be subsequently
determined by the Speaker, in each case for consideration of such provi-
sions 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 Stand-
ards Act that limit private securities actions, 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 ‘‘Shareholder and Em-
ployee Rights Restoration Act of 2002’’.
SEC. 2. REPEAL OF PROVISIONS OF LAW LIMITING SHARE-
HOLDER ACTIONS UNDER THE SECURITIES
LAWS.
(a) REPEALS.—The following provisions of law are
repealed:
(1) Subsections (b), (c), and (d) of section 27
of the Securities Act of 1933 (15 U.S.C. 77z–1(b),
(c), (d)).
(2) Section 27A of the Securities Act of 1933
(15 U.S.C. 77z–2).
(3) Section 21E of the Securities Exchange Act
of 1934 (15 U.S.C. 78u–5).
(4) Section 11(f)(2) of the Securities Act of
1933 (15 U.S.C. 77k(f)(2)).
(5) Subsections (b) through (f) of section 16 of
the Securities Act of 1933 (15 U.S.C. 77p(b)–(f)).
(6) Subsection (f) of section 28 of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78bb(f)).
(b) ADDITIONAL AMENDMENTS TO PROTECT SHARE-
HOLDER ACTIONS AND WHISTLEBLOWERS.—Section 21D
of the Securities Exchange Act of 1934 (15 U.S.C. 78u–
4) is amended—
(1) in subsection (a)—
(A) by striking paragraph (8); and
(B) by redesignating paragraph (9) as
paragraph (8);
(2) in subsection (b)—
(A) by inserting ‘‘, but not the sources of
those facts,’’ after ‘‘particularity all facts’’ in
paragraph (1);
(B) by striking ‘‘strong’’ in paragraph (2);
(C) by striking paragraph (3);
(D) by redesignating paragraph (4) as
paragraph (3); and
(3) by striking subsections (c) through (f).
(c) CONFORMING AMENDMENTS.—
(1) Section 16 of the Securities Act of 1933 (15
U.S.C. 77p) is amended by striking ‘‘(a) REMEDIES
ADDITIONAL.—Except as provided in subsection (b),
the rights’’ and inserting ‘‘The rights’’.
(2) Section 22(a) of the Securities Act of 1933
(15 U.S.C. 77v(a)) is amended—
(A) by striking ‘‘except as provided in sec-
tion 16 with respect to covered class actions,’’;
and
(B) by striking ‘‘Except as provided in sec-
tion 16(c), no case’’ and inserting ‘‘No case’’.
(3) Section 28(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78bb(a)) is amended by
striking ‘‘Except as provided in subsection (f), the
rights’’ and inserting ‘‘The rights’’.
sion and shall be liable to the same extent as the person
to whom such assistance is provided. No person shall be
liable under this subsection based on an omission or fail-
ure to act unless such omission or failure constituted a
breach of a duty owed by such person.’’.
(c) INVESTMENT COMPANY ACT OF 1940.—Section
42 of the Investment Company Act of 1940 (15 U.S.C.
80a–41) is amended by adding at the end the following
new subsection:
‘‘(f) PROSECUTION OF PERSONS WHO AID OR ABET
VIOLATIONS.—For purposes of subsections (d) and (e),
any person who knowingly or recklessly provides substan-
tial assistance to another person in the violation of a provi-
sion of this title, or of any rule, regulation, or order here-
under, shall be deemed to violate such provision to the
same extent as the person to whom such assistance is pro-
vided. No person shall be liable under this subsection
based on an omission or failure to act unless such omission
or failure constituted a breach of a duty owed by such
person.’’.
(d) INVESTMENT ADVISERS ACT OF 1940.—Section
209(d) of the Investment Advisers Act of 1940 (15 U.S.C.
80b–9) is amended—
(1) in subsection (d)—
(A) by striking ‘‘or that any person has
aided, abetted, counseled, commanded, induced,
or procured, is aiding, abetting, counseling,
commanding, inducing, or procuring, or is
about to aid, abet, counsel, command, induce,
or procure such a violation,’’; and
(B) by striking ‘‘or in aiding, abetting,
counseling, commanding, inducing, or procuring
any such act or practice’’; and
(2) by adding at the end the following new sub-
section:
‘‘(f) PROSECUTION OF PERSONS WHO AID OR ABET
VIOLATIONS.—For purposes of subsections (d) and (e),
any person who knowingly or recklessly provides substan-
tial assistance to another person in the violation of a provi-
sion of this title, or of any rule, regulation, or order here-
under, shall be deemed to violate such provision to the
same extent as the person to whom such assistance is pro-
vided. No person shall be liable under this subsection
based on an omission or failure to act unless such omission
or failure constituted a breach of duty owed by such per-
son.’’.
SEC. 4. LIMITATIONS PERIOD FOR IMPLIED PRIVATE
RIGHTS OF ACTION.
Section 27A of the Securities Exchange Act of 1934
(15 U.S.C. 78aa–1) is amended to read as follows:
‘‘SEC. 27A. LIMITATIONS PERIOD FOR IMPLIED PRIVATE
RIGHTS OF ACTION.
‘‘(a) IN GENERAL.—Except as otherwise provided in
this title, an implied private right of action arising under
this title shall be brought not later than 3 years after the
date on which the alleged violation was discovered.
‘‘(b) EFFECTIVE DATE.—The limitations period pro-
vided by this section shall apply to all proceedings pending
on or commenced after the date of enactment of the
Shareholder and Employee Rights Restoration Act.’’.
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