I
107TH CONGRESS
2D SESSION
H. R. 5110
To provide for improved pension plan security, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 12, 2002
Ms. JACKSON-LEE of Texas introduced the following bill; which was referred
to the Committee on Education and the Workforce, and in addition to
the Committees on Ways and Means, Financial Services, the Judiciary,
and Energy and Commerce, 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 provide for improved pension plan security, 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 AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Omnibus Corporate Reform and Restoration Act of
2002’’.
(b) TABLE OF CONTENTS.—The table of contents is
as follows:
Sec. 1. Short title and table of contents.
Sec. 2. 20-percent limitation on employer stock and real property held by par-
ticipant in certain individual account plans.
Sec. 3. Improvements in ability of employees to diversify assets in ESOPs.
Sec. 4. Reduction in deduction for employer matching contributions to defined
contribution plans made in employer securities.
Sec. 5. Prohibited transaction exemption for the provision of investment advice.
Sec. 6. Plan investment committee.
Sec. 7. Study regarding insurance system for individual account plans.
Sec. 8. Improvement of accounting standards for special purpose entities.
Sec. 9. Periodic pension benefits statements.
Sec. 10. Report to participants and beneficiaries of trades in employer securi-
ties.
Sec. 11. Prohibition on loans to officers and directors.
Sec. 12. Priority of certain claims in bankruptcy cases.
Sec. 13. Criminal penalties for altering documents.
Sec. 14. Effective dates.
SEC. 2. 20-PERCENT LIMITATION ON EMPLOYER STOCK
AND REAL PROPERTY HELD BY PARTICIPANT
IN CERTAIN INDIVIDUAL ACCOUNT PLANS.
(a) IN GENERAL.—Section 407 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1107)
is amended by adding at the end the following:
‘‘(g) DIVERSIFICATION REQUIREMENTS APPLICABLE
TO CERTAIN INDIVIDUAL ACCOUNT PLANS.—
‘‘(1) IN GENERAL.—An applicable individual ac-
count plan shall not be treated as an eligible indi-
vidual account plan (as defined in subsection (d)(3))
unless the plan meets—
‘‘(A) the acquisition and holding require-
ments of paragraph (2), and
‘‘(B) the divestment requirement of para-
graph (3).
‘‘(2) ACQUISITION
AND
HOLDING
REQUIRE-
MENTS.—
‘‘(A) IN GENERAL.—A plan meets the re-
quirements of this paragraph only if—
‘‘(i) the plan may not acquire quali-
fying employer securities or qualifying em-
ployer real property to the extent that, im-
mediately after the acquisition, the fair
market value of all qualifying employer se-
curities and qualifying employer real prop-
erty allocated (or to be allocated) to any
participant or beneficiary would exceed 20
percent of the fair market value of all as-
sets allocated (or to be allocated) to such
participant or beneficiary under the plan,
and
‘‘(ii) as of the last day of any calendar
quarter, the fair market value of all quali-
fying employer securities and qualifying
employer real property allocated (or to be
allocated) to any participant or beneficiary
does not exceed 20 percent of the fair mar-
ket value of all assets allocated (or to be
allocated) to such participant or bene-
ficiary.
‘‘(B) ELECTION
TO
WAIVE
REQUIRE-
MENTS.—The requirements of subparagraph
(A) shall not apply in connection with the indi-
vidual account of a participant or beneficiary
upon the filing by such participant or bene-
ficiary with the plan administrator (in such
form and manner as shall be prescribed in reg-
ulations of the Secretary) a written and signed
notice waiving such requirements, until such
time as the participant or beneficiary files with
the plan administrator (in such form and man-
ner as shall be prescribed in such regulations)
a written and signed notice revoking such waiv-
er.
‘‘(3) OPPORTUNITY FOR EMPLOYEE TO DIVEST
EMPLOYER SECURITIES.—A plan meets the require-
ments of this paragraph if each employee who has
a nonforfeitable right to 100 percent of the employ-
ee’s accrued benefit derived from employer contribu-
tions may, at any time after the 90th day following
the allocation of any qualifying employer securities
or qualifying employer real property to the employee
under the plan, direct the plan to divest the employ-
ee’s account of such securities or property and rein-
vest an equivalent amount in other assets.
‘‘(4) DIVESTITURE.—
‘‘(A) IN
GENERAL.—The Secretary shall
prescribe regulations under which—
‘‘(i) a plan is given a reasonable pe-
riod of time to divest itself of qualifying
employer securities and qualifying em-
ployer real property in order to meet the
requirements of this subsection, and
‘‘(ii) in the case of a plan in which a
participant or beneficiary exercises control
over assets in an account, the participant
is given reasonable notice of the require-
ment, and a reasonable period of time, to
make such divestiture.
‘‘(B) WAIVER IN DE MINIMIS CASES.—The
Secretary may by regulations waive the applica-
tion of paragraph (2)(B) in cases where the
failure with respect to any participant or bene-
ficiary is de minimis and due solely to market
fluctuation.
‘‘(5) DEFINITIONS AND SPECIAL RULES.—For
purposes of this subsection—
‘‘(A) APPLICABLE
INDIVIDUAL
ACCOUNT
PLAN.—The term ‘applicable individual account
plan’ means an individual account plan other
than an employee stock ownership plan as de-
fined in section 4975(e)(7) of the Internal Rev-
enue Code of 1986.
‘‘(B) AGGREGATION.—All applicable indi-
vidual account plans (other than multiemployer
plans) maintained by the same employer shall
be treated as a single plan.
‘‘(6) TRANSITION RULES.—
‘‘(A) IN GENERAL.—If, as of December 31,
2002, the fair market value of qualifying em-
ployer securities and qualifying employer real
property allocated (or to be allocated) under
any plan to any one participant or beneficiary
exceeds 20 percent of the fair market value of
all assets so allocated (or to be allocated), the
plan shall be treated as meeting the require-
ments of paragraph (2)(B). This subparagraph
shall cease to apply if any such securities or
property are allocated after December 31,
2002, to the participant or beneficiary without
the requirements of paragraph (2)(A) or sub-
paragraph (B) being met.
‘‘(B) CONTRACTUAL
REQUIREMENTS.—If
qualifying employer securities or qualifying em-
ployer real property are acquired after Decem-
ber 31, 2002, pursuant to a contract in effect
on the date of enactment of this subsection and
at all times thereafter, the fair market value of
such securities or property as of December 31,
2002, shall be taken into account under sub-
paragraph (A).’’
(b) CONFORMING AMENDMENT.—Section 407(b)(1)
of such Act (29 U.S.C. 1107(b)(1)) is amended by striking
‘‘Subsection (a)’’ and inserting ‘‘Subject to subsection (g),
subsection (a)’’.
SEC. 3. IMPROVEMENTS IN ABILITY OF EMPLOYEES TO DI-
VERSIFY ASSETS IN ESOPS.
(a) IN GENERAL.—Subparagraph (B)(iii) of section
401(a)(28) of the Internal Revenue Code of 1986 (relating
to additional requirements for employee stock ownerships
plans) is amended—
(1) by striking ‘‘10 years’’ and inserting ‘‘5
years’’, and
(2) by striking ‘‘age 55’’ and inserting ‘‘age
35’’.
(b) TRUSTEE-TO-TRUSTEE TRANSFER REQUIRED.—
Clause (ii) of section 401(a)(28)(B) of such Code is
amended by adding at the end the following new flush sen-
tence:
‘‘In the case of a qualified participant who
has not attained the age of 55 on or before
the date of any distribution described in
subclause (I), a plan shall be treated as
meeting the requirements of subclause (I)
only if such distribution is made in the
form of a direct trustee-to-trustee transfer
to an eligible retirement plan (as defined
in paragraph (31)(D)) specified by the
participant.’’
SEC. 
4. 
REDUCTION 
IN 
DEDUCTION 
FOR 
EMPLOYER
MATCHING 
CONTRIBUTIONS 
TO 
DEFINED
CONTRIBUTION PLANS MADE IN EMPLOYER
SECURITIES.
Section 404(a) of the Internal Revenue Code of 1986
(relating to deduction for contributions of an employer to
an employee trust, etc.) is amended by adding at the end
the following:
‘‘(12) LIMITATIONS ON DEDUCTIONS FOR EM-
PLOYER MATCHING CONTRIBUTIONS MADE IN EM-
PLOYER SECURITIES.—In the case of an employer
matching contribution of employer securities (as de-
fined in section 409(l)) to a defined contribution
plan other than an employee stock ownership plan
(as defined in section 4975(e)(7)), the amount of the
deduction allowed shall be equal to 50 percent of the
amount allowable without regard to this paragraph.’’
SEC. 5. PROHIBITED TRANSACTION EXEMPTION FOR THE
PROVISION OF INVESTMENT ADVICE.
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974.—
(1) EXEMPTION
FROM
PROHIBITED
TRANS-
ACTIONS.—Section 408(b) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C.
1108(b)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(14)(A) Any transaction described in subpara-
graph (B) in connection with the provision of invest-
ment advice described in section 3(21)(A)(ii), in any
case in which—
‘‘(i) the investment of assets of the plan is
subject to the direction of plan participants or
beneficiaries,
‘‘(ii) the advice is provided to the plan or
a participant or beneficiary of the plan by a fi-
duciary adviser in connection with any sale, ac-
quisition, or holding of a security or other prop-
erty for purposes of investment of plan assets,
and
‘‘(iii) the requirements of subsection (g)
are met in connection with the provision of the
advice.
‘‘(B) The transactions described in this sub-
paragraph are the following:
‘‘(i) the provision of the advice to the plan,
participant, or beneficiary;
‘‘(ii) the sale, acquisition, or holding of a
security or other property (including any lend-
ing of money or other extension of credit associ-
ated with the sale, acquisition, or holding of a
security or other property) pursuant to the ad-
vice; and
‘‘(iii) the direct or indirect receipt of fees
or other compensation by the fiduciary adviser
or an affiliate thereof (or any employee, agent,
or registered representative of the fiduciary ad-
viser or affiliate) in connection with the provi-
sion of the advice or in connection with a sale,
acquisition, or holding of a security or other
property pursuant to the advice.’’.
(2) REQUIREMENTS.—Section 408 of such Act
is amended further by adding at the end the fol-
lowing new subsection:
‘‘(g) REQUIREMENTS RELATING TO PROVISION OF
INVESTMENT ADVICE BY FIDUCIARY ADVISERS.—
‘‘(1) IN GENERAL.—The requirements of this
subsection are met in connection with the provision
of 
investment 
advice 
referred 
to 
in 
section
3(21)(A)(ii), provided to an employee benefit plan or
a participant or beneficiary of an employee benefit
plan by a fiduciary adviser with respect to the plan
in connection with any sale, acquisition, or holding
of a security or other property for purposes of in-
vestment of amounts held by the plan, if—
‘‘(A) in the case of the initial provision of
the advice with regard to the security or other
property by the fiduciary adviser to the plan,
participant, or beneficiary, the fiduciary adviser
provides to the recipient of the advice, at a time
reasonably contemporaneous with the initial
provision of the advice, a written notification
(which may consist of notification by means of
electronic communication)—
‘‘(i) of all fees or other compensation
relating to the advice that the fiduciary ad-
viser or any affiliate thereof is to receive
(including compensation provided by any
third party) in connection with the provi-
sion of the advice or in connection with the
sale, acquisition, or holding of the security
or other property,
‘‘(ii) of any material affiliation or con-
tractual relationship of the fiduciary ad-
viser or affiliates thereof in the security or
other property,
‘‘(iii) of any limitation placed on the
scope of the investment advice to be pro-
vided by the fiduciary adviser with respect
to any such sale, acquisition, or holding of
a security or other property,
‘‘(iv) of the types of services provided
by the fiduciary advisor in connection with
the provision of investment advice by the
fiduciary adviser,
‘‘(v) that the adviser is acting as a fi-
duciary of the plan in connection with the
provision of the advice, and
‘‘(vi) that a recipient of the advice
may separately arrange for the provision of
advice by another adviser, that could have
no material affiliation with and receive no
fees or other compensation in connection
with the security or other property.
‘‘(B) the fiduciary adviser provides appro-
priate disclosure, in connection with the sale,
acquisition, or holding of the security or other
property, in accordance with all applicable secu-
rities laws,
‘‘(C) the sale, acquisition, or holding oc-
curs solely at the direction of the recipient of
the advice,
‘‘(D) the compensation received by the fi-
duciary adviser and affiliates thereof in connec-
tion with the sale, acquisition, or holding of the
security or other property is reasonable, and
‘‘(E) the terms of the sale, acquisition, or
holding of the security or other property are at
least as favorable to the plan as an arm’s
length transaction would be.
‘‘(2) STANDARDS FOR PRESENTATION OF IN-
FORMATION.—
‘‘(A) IN
GENERAL.—The notification re-
quired to be provided to participants and bene-
ficiaries under paragraph (1)(A) shall be writ-
ten in a clear and conspicuous manner and in
a manner calculated to be understood by the av-
erage plan participant and shall be sufficiently
accurate and comprehensive to reasonably ap-
prise such participants and beneficiaries of the
information required to be provided in the noti-
fication.
‘‘(B) MODEL FORM FOR DISCLOSURE OF
FEES AND OTHER COMPENSATION.—The Sec-
retary shall issue a model form for the disclo-
sure of fees and other compensation required in
paragraph (1)(A)(i) which meets the require-
ments of subparagraph (A).
‘‘(3) EXEMPTION CONDITIONED ON CONTINUED
AVAILABILITY OF REQUIRED INFORMATION ON RE-
QUEST
FOR
YEAR.—The requirements of para-
graph (1)(A) shall be deemed not to have been met
in connection with the initial or any subsequent pro-
vision of advice described in paragraph (1) to the
plan, participant, or beneficiary if, at any time dur-
ing the provision of advisory services to the plan,
participant, or beneficiary, the fiduciary adviser fails
to maintain the information described in clauses (i)
through (iv) of subparagraph (A) in currently accu-
rate form and in the manner described in paragraph
(2) or fails—
‘‘(A) to provide, without charge, such cur-
rently accurate information to the recipient of
the advice no less than annually,
‘‘(B) to make such currently accurate in-
formation available, upon request and without
charge, to the recipient of the advice, or
‘‘(C) in the event of a material change to
the information described in clauses (i) through
(iv) of paragraph (1)(A), to provide, without
charge, such currently accurate information to
the recipient of the advice at a time reasonably
contemporaneous to the material change in in-
formation.
‘‘(4) MAINTENANCE FOR 6 YEARS OF EVIDENCE
OF COMPLIANCE.—A fiduciary adviser referred to in
paragraph (1) who has provided advice referred to in
such paragraph shall, for a period of not less than
6 years after the provision of the advice, maintain
any records necessary for determining whether the
requirements of the preceding provisions of this sub-
section and of subsection (b)(14) have been met. A
transaction prohibited under section 406 shall not be
considered to have occurred solely because the
records are lost or destroyed prior to the end of the
6-year period due to circumstances beyond the con-
trol of the fiduciary adviser.
‘‘(5) EXEMPTION FOR PLAN SPONSOR AND CER-
TAIN OTHER FIDUCIARIES.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a plan sponsor or other person who
is a fiduciary (other than a fiduciary adviser)
shall not be treated as failing to meet the re-
quirements of this part solely by reason of the
provision of investment advice referred to in
section 3(21)(A)(ii) (or solely by reason of con-
tracting for or otherwise arranging for the pro-
vision of the advice), if—
‘‘(i) the advice is provided by a fidu-
ciary adviser pursuant to an arrangement
between the plan sponsor or other fidu-
ciary and the fiduciary adviser for the pro-
vision by the fiduciary adviser of invest-
ment advice referred to in such section,
‘‘(ii) the terms of the arrangement re-
quire compliance by the fiduciary adviser
with the requirements of this subsection,
and
‘‘(iii) the terms of the arrangement
include a written acknowledgment by the
fiduciary adviser that the fiduciary adviser
is a fiduciary of the plan with respect to
the provision of the advice.
‘‘(B) CONTINUED DUTY OF PRUDENT SE-
LECTION OF ADVISER AND PERIODIC REVIEW.—
Nothing in subparagraph (A) shall be construed
to exempt a plan sponsor or other person who
is a fiduciary from any requirement of this part
for the prudent selection and periodic review of
a fiduciary adviser with whom the plan sponsor
or other person enters into an arrangement for
the provision of advice referred to in section
3(21)(A)(ii). The plan sponsor or other person
who is a fiduciary has no duty under this part
to monitor the specific investment advice given
by the fiduciary adviser to any particular recipi-
ent of the advice.
‘‘(C) AVAILABILITY OF PLAN ASSETS FOR
PAYMENT FOR ADVICE.—
‘‘(i) IN
GENERAL.—Nothing in this
part shall be construed to preclude the use
of plan assets to pay for reasonable ex-
penses in providing investment advice re-
ferred to in section 3(21)(A)(ii).
‘‘(ii) REIMBURSEMENT
FOR
ADVICE
SECURED
BY
PARTICIPANT
OR
BENE-
FICIARY.—In accordance such regulations
as may be prescribed by the Secretary, the
plan shall reimburse any participant or
beneficiary for reasonable expenses in-
curred by the participant or beneficiary in
securing investment advice referred to in
section 
3(21)(A)(ii) 
from 
a 
fiduciary
adviser—
‘‘(iii) on at least one occasion during
the participant’s employment with the em-
ployer maintaining the plan, and
‘‘(iv) at the time of retirement or sep-
aration from service under the plan.
‘‘(7) DEFINITIONS.—For purposes of this sub-
section and subsection (b)(14)—
‘‘(A) FIDUCIARY ADVISER.—The term ‘fi-
duciary adviser’ means, with respect to a plan,
a person who is a fiduciary of the plan by rea-
son of the provision of investment advice by the
person to the plan or to a participant or bene-
ficiary and who is—
‘‘(i) registered as an investment ad-
viser under the Investment Advisers Act of
1940 (15 U.S.C. 80b–1 et seq.) or under
the laws of the State in which the fiduciary
maintains its principal office and place of
business,
‘‘(ii) a bank or similar financial insti-
tution referred to in section 408(b)(4), but
only if the advice is provided through a
trust department of the bank or similar fi-
nancial institution which is subject to peri-
odic examination and review by Federal or
State banking authorities,
‘‘(iii) an insurance company qualified
to do business under the laws of a State,
‘‘(iv) a person registered as a broker
or dealer under the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.),
‘‘(v) an affiliate of a person described
in any of clauses (i) through (iv), or
‘‘(vi) an employee, agent, or registered
representative of a person described in any
of clauses (i) through (v) who satisfies the
requirements 
of 
applicable 
insurance,
banking, and securities laws relating to the
provision of the advice.
‘‘(B) AFFILIATE.—The term ‘affiliate’ of
another entity means an affiliated person of the
entity (as defined in section 2(a)(3) of the In-
vestment Company Act of 1940 (15 U.S.C.
80a–2(a)(3))).
‘‘(C) 
REGISTERED
REPRESENTATIVE.—
The term ‘registered representative’ of another
entity means a person described in section
3(a)(18) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(18)) (substituting the
entity for the broker or dealer referred to in
such section) or a person described in section
202(a)(17) of the Investment Advisers Act of
1940 (15 U.S.C. 80b–2(a)(17)) (substituting
the entity for the investment adviser referred to
in such section).’’.
(b) AMENDMENTS
TO
THE INTERNAL REVENUE
CODE OF 1986.—
(1) EXEMPTION
FROM
PROHIBITED
TRANS-
ACTIONS.—Subsection (d) of section 4975 of the In-
ternal Revenue Code of 1986 (relating to exemptions
from tax on prohibited transactions) is amended—
(A) in paragraph (14), by striking ‘‘or’’ at
the end;
(B) in paragraph (15), by striking the pe-
riod at the end and inserting ‘‘; or’’; and
(C) by adding at the end the following new
paragraph:
‘‘(16) any transaction described in subsection
(f)(7)(A) in connection with the provision of invest-
ment advice described in subsection (e)(3)(B), in
any case in which—
‘‘(A) the investment of assets of the plan
is subject to the direction of plan participants
or beneficiaries,
‘‘(B) the advice is provided to the plan or
a participant or beneficiary of the plan by a fi-
duciary adviser in connection with any sale, ac-
quisition, or holding of a security or other prop-
erty for purposes of investment of plan assets,
and
‘‘(C) 
the 
requirements 
of 
subsection
(f)(7)(B) are met in connection with the provi-
sion of the advice.’’.
(2) ALLOWED
TRANSACTIONS
AND
REQUIRE-
MENTS.—Subsection (f) of such section 4975 (relat-
ing to other definitions and special rules) is amended
by adding at the end the following new paragraph:
‘‘(7) PROVISIONS
RELATING
TO
INVESTMENT
ADVICE PROVIDED BY FIDUCIARY ADVISERS.—
‘‘(A) TRANSACTIONS ALLOWABLE IN CON-
NECTION WITH INVESTMENT ADVICE PROVIDED
BY FIDUCIARY ADVISERS.—The transactions re-
ferred to in subsection (d)(16), in connection
with the provision of investment advice by a fi-
duciary adviser, are the following:
‘‘(i) the provision of the advice to the
plan, participant, or beneficiary;
‘‘(ii) the sale, acquisition, or holding
of a security or other property (including
any lending of money or other extension of
credit associated with the sale, acquisition,
or holding of a security or other property)
pursuant to the advice; and
‘‘(iii) the direct or indirect receipt of
fees or other compensation by the fiduciary
adviser or an affiliate thereof (or any em-
ployee, agent, or registered representative
of the fiduciary adviser or affiliate) in con-
nection with the provision of the advice or
in connection with a sale, acquisition, or
holding of a security or other property pur-
suant to the advice.
‘‘(B) REQUIREMENTS RELATING TO PROVI-
SION OF INVESTMENT ADVICE BY FIDUCIARY
ADVISERS.—The requirements of this subpara-
graph (referred to in subsection (d)(16)(C)) are
met in connection with the provision of invest-
ment advice referred to in subsection (e)(3)(B),
provided to a plan or a participant or bene-
ficiary of a plan by a fiduciary adviser with re-
spect to the plan in connection with any sale,
acquisition, or holding of a security or other
property for purposes of investment of amounts
held by the plan, if—
‘‘(i) in the case of the initial provision
of the advice with regard to the security or
other property by the fiduciary adviser to
the plan, participant, or beneficiary, the fi-
duciary adviser provides to the recipient of
the advice, at a time reasonably contem-
poraneous with the initial provision of the
advice, a written notification (which may
consist of notification by means of elec-
tronic communication)—
‘‘(I) of all fees or other com-
pensation relating to the advice that
the fiduciary adviser or any affiliate
thereof is to receive (including com-
pensation provided by any third
party) in connection with the provi-
sion of the advice or in connection
with the sale, acquisition, or holding
of the security or other property,
‘‘(II) of any material affiliation
or contractual relationship of the fidu-
ciary adviser or affiliates thereof in
the security or other property,
‘‘(III) of any limitation placed on
the scope of the investment advice to
be provided by the fiduciary adviser
with respect to any such sale, acquisi-
tion, or holding of a security or other
property,
‘‘(IV) of the types of services
provided by the fiduciary advisor in
connection with the provision of in-
vestment advice by the fiduciary ad-
viser, and
‘‘(V) that the adviser is acting as
a fiduciary of the plan in connection
with the provision of the advice,
‘‘(ii) the fiduciary adviser provides ap-
propriate disclosure, in connection with the
sale, acquisition, or holding of the security
or other property, in accordance with all
applicable securities laws,
‘‘(iii) the sale, acquisition, or holding
occurs solely at the direction of the recipi-
ent of the advice,
‘‘(iv) the compensation received by the
fiduciary adviser and affiliates thereof in
connection with the sale, acquisition, or
holding of the security or other property is
reasonable, and
‘‘(v) the terms of the sale, acquisition,
or holding of the security or other property
are at least as favorable to the plan as an
arm’s length transaction would be.
‘‘(C) STANDARDS FOR PRESENTATION OF
INFORMATION.—The notification required to be
provided to participants and beneficiaries under
subparagraph (B)(i) shall be written in a clear
and conspicuous manner and in a manner cal-
culated to be understood by the average plan
participant and shall be sufficiently accurate
and comprehensive to reasonably apprise such
participants and beneficiaries of the information
required to be provided in the notification.
‘‘(D) EXEMPTION CONDITIONED ON MAK-
ING REQUIRED INFORMATION AVAILABLE ANNU-
ALLY, ON REQUEST, AND IN THE EVENT OF MA-
TERIAL
CHANGE.—The requirements of sub-
paragraph (B)(i) shall be deemed not to have
been met in connection with the initial or any
subsequent provision of advice described in sub-
paragraph (B) to the plan, participant, or bene-
ficiary if, at any time during the provision of
advisory services to the plan, participant, or
beneficiary, the fiduciary adviser fails to main-
tain the information described in subclauses (I)
through (IV) of subparagraph (B)(i) in cur-
rently accurate form and in the manner re-
quired by subparagraph (C), or fails—
‘‘(i) to provide, without charge, such
currently accurate information to the re-
cipient of the advice no less than annually,
‘‘(ii) to make such currently accurate
information available, upon request and
without charge, to the recipient of the ad-
vice, or
‘‘(iii) in the event of a material
change to the information described in
subclauses (I) through (IV) of subpara-
graph (B)(i), to provide, without charge,
such currently accurate information to the
recipient of the advice at a time reasonably
contemporaneous to the material change in
information.
‘‘(E) MAINTENANCE FOR 6 YEARS OF EVI-
DENCE OF COMPLIANCE.—A fiduciary adviser
referred to in subparagraph (B) who has pro-
vided advice referred to in such subparagraph
shall, for a period of not less than 6 years after
the provision of the advice, maintain any
records necessary for determining whether the
requirements of the preceding provisions of this
paragraph and of subsection (d)(16) have been
met. A transaction prohibited under subsection
(c)(1) shall not be considered to have occurred
solely because the records are lost or destroyed
prior to the end of the 6-year period due to cir-
cumstances beyond the control of the fiduciary
adviser.
‘‘(F) EXEMPTION FOR PLAN SPONSOR AND
CERTAIN OTHER FIDUCIARIES.—A plan sponsor
or other person who is a fiduciary (other than
a fiduciary adviser) shall not be treated as fail-
ing to meet the requirements of this section
solely by reason of the provision of investment
advice referred to in subsection (e)(3)(B) (or
solely by reason of contracting for or otherwise
arranging for the provision of the advice), if—
‘‘(i) the advice is provided by a fidu-
ciary adviser pursuant to an arrangement
between the plan sponsor or other fidu-
ciary and the fiduciary adviser for the pro-
vision by the fiduciary adviser of invest-
ment advice referred to in such section,
‘‘(ii) the terms of the arrangement re-
quire compliance by the fiduciary adviser
with the requirements of this paragraph,
‘‘(iii) the terms of the arrangement
include a written acknowledgment by the
fiduciary adviser that the fiduciary adviser
is a fiduciary of the plan with respect to
the provision of the advice, and
‘‘(iv) the requirements of part 4 of
subtitle B of title I of the Employee Re-
tirement Income Security Act of 1974 are
met in connection with the provision of
such advice.
‘‘(G) DEFINITIONS.—For purposes of this
paragraph and subsection (d)(16)—
‘‘(i) FIDUCIARY ADVISER.—The term
‘fiduciary adviser’ means, with respect to a
plan, a person who is a fiduciary of the
plan by reason of the provision of invest-
ment advice by the person to the plan or
to a participant or beneficiary and who
is—
‘‘(I) registered as an investment
adviser under the Investment Advisers
Act of 1940 (15 U.S.C. 80b–1 et seq.)
or under the laws of the State in
which the fiduciary maintains its prin-
cipal office and place of business,
‘‘(II) a bank or similar financial
institution referred to in subsection
(d)(4),
‘‘(III) an insurance company
qualified to do business under the
laws of a State,
‘‘(IV) a person registered as a
broker or dealer under the Securities
Exchange Act of 1934 (15 U.S.C. 78a
et seq.),
‘‘(V) an affiliate of a person de-
scribed in any of subclauses (I)
through (IV), or
‘‘(VI) an employee, agent, or reg-
istered representative of a person de-
scribed in any of subclauses (I)
through (V) who satisfies the require-
ments of applicable insurance, bank-
ing, and securities laws relating to the
provision of the advice.
‘‘(ii) AFFILIATE.—The term ‘affiliate’
of another entity means an affiliated per-
son of the entity (as defined in section
2(a)(3) of the Investment Company Act of
1940 (15 U.S.C. 80a–2(a)(3))).
‘‘(iii) 
REGISTERED
REPRESENTA-
TIVE.—The term ‘registered representa-
tive’ of another entity means a person de-
scribed in section 3(a)(18) of the Securi-
ties Exchange Act of 1934 (15 U.S.C.
78c(a)(18)) (substituting the entity for the
broker or dealer referred to in such sec-
tion) or a person described in section
202(a)(17) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b–2(a)(17)) (sub-
stituting the entity for the investment ad-
viser referred to in such section).’’.
SEC. 6. PLAN INVESTMENT COMMITTEE.
Section 404 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1104) is amended by adding
at the end the following new subsection:
‘‘(e) An individual account plan shall provide (in ac-
cordance with such regulations as the Secretary may pre-
scribe) for a plan investment committee, the members of
which shall be elected by plan participants. Such com-
mittee shall be currently informed by the plan adminis-
trator of all decisions regarding investment of plan assets.
All fiduciaries of the plan whose duties include authority
or control respecting management or disposition of plan
assets shall regularly consult with the committee (in ac-
cordance with such regulations) regarding plan policies
and decisions affecting investment of plan assets.’’.
SEC. 7. STUDY REGARDING INSURANCE SYSTEM FOR INDI-
VIDUAL ACCOUNT PLANS.
(a) STUDY.—As soon as practicable after the date of
the enactment of this Act, the Pension Benefit Guaranty
Corporation shall undertake a study relating to the estab-
lishment of an insurance system for individual account
plans. In conducting such study, the Corporation shall
consider—
(1) the feasibility of such a system, and
(2) options for developing such a system.
(b) SPECIFIC MATTERS TO BE ADDRESSED.—Among
the matters to be considered by the Corporation in its
study, the Corporation shall consider—
(1) the appropriate insurable event in connec-
tion with such an insurance system;
(2) the manner in which insurable loss should
be determined;
(3) the parties who should bear the burden of
the cost of coverage; and
(4) the manner in which applicable premiums
should be measured and whether premiums should
be variable in relation to particular groups of plans,
based on the extent of investment diversification or
other factors.
(c) REPORT.—Not later than 3 years after the date
of the enactment of this Act, the Corporation shall report
the results of its study, together with any recommenda-
tions for legislative changes, to the Committee on Edu-
cation and the Workforce and the Committee on Ways and
Means of the House of Representatives and the Committee
on Health, Education, Labor, and Pensions of the Senate.
SEC. 8. IMPROVEMENT OF ACCOUNTING STANDARDS FOR
SPECIAL PURPOSE ENTITIES.
(a) COMMISSION ACTION REQUIRED.—Within 60
days after the date of enactment of this Act, the Securities
and Exchange Commission shall direct the Financial Ac-
counting Standards Board to revise the accounting stand-
ards applicable to a special purpose entity to require the
assets and liabilities of any such entity to be included on
a consolidated basis on the financial statements of the
sponsoring issuer unless one or more independent third
parties own and control at least 10 percent of the total
debt and equity of such entity.
(b) DEFINITION OF SPECIAL PURPOSE ENTITY.—
The term ‘‘special purpose entity’’—
(1) means an entity that is created solely to
carry out an activity or series of transactions di-
rectly related to a specific purpose;
(2) may take on any legal form including a cor-
poration, a partnership, a limited liability company,
or a trust;
(3) are commonly used—
(A) as financing vehicles to which a spon-
soring issuer sells assets in exchange for cash
or other assets;
(B) to acquire, construct, or manufacture
assets that are used by another entity under
leases, management contracts, or other arrange-
ments;
(C) to reduce the credit risk or other risks
for lenders or investors and, thus, lower financ-
ing costs; or
(D) to may create certain tax advantages
for the participating parties.
SEC. 9. PERIODIC PENSION BENEFITS STATEMENTS.
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974.—
(1) REQUIREMENTS.—
(A) IN GENERAL.—Section 105(a) of the
Employee Retirement Income Security Act of
1974 (29 U.S.C. 1025(a)) is amended to read
as follows:
‘‘(a)(1)(A) The administrator of an individual ac-
count plan shall furnish a pension benefit statement—
‘‘(i) to each plan participant at least annually,
‘‘(ii) to each plan beneficiary upon written re-
quest, and
‘‘(iii) in the case of an applicable individual ac-
count plan, to each plan participant (and to each
beneficiary with a right to direct investments) at
least quarterly.
‘‘(B) The administrator of a defined benefit plan
shall furnish a pension benefit statement—
‘‘(i) at least once every 3 years to each partici-
pant with a nonforfeitable accrued benefit who is
employed by the employer maintaining the plan at
the time the statement is furnished to participants,
and
‘‘(ii) to a plan participant or plan beneficiary of
the plan upon written request.
‘‘(2) A pension benefit statement under paragraph
(1)—
‘‘(A) shall indicate, on the basis of the latest
available information—
‘‘(i) the total benefits accrued, and
‘‘(ii) the nonforfeitable pension benefits, if
any, which have accrued, or the earliest date on
which benefits will become nonforfeitable,
‘‘(B) shall be written in a manner calculated to
be understood by the average plan participant, and
‘‘(C) may be provided in written form or in
electronic or other appropriate form to the extent
that such form is reasonably accessible to the recipi-
ent.
‘‘(3) In the case of an applicable individual account
plan, the requirements of paragraph (1)(A) shall be treat-
ed as met if the quarterly statement (together with the
information required in subparagraphs (A) and (B) of
subsection (d)(1)) is available electronically in reasonably
accessible form, and the participant or beneficiary is pro-
vided at least once each year a notice that such statement
(together with such information) is available in such form.
Such notice shall be in written, electronic, or other appro-
priate form.
‘‘(4)(A) In the case of a defined benefit plan, the re-
quirements of paragraph (1)(B)(i) shall be treated as met
with respect to a participant if the administrator provides
the participant at least once each year with notice of the
availability of the pension benefit statement and the ways
in which the participant may obtain such statement. Such
notice shall be provided in written, electronic, or other ap-
propriate form, and may be included with other commu-
nications to the participant if done in a manner reasonably
designed to attract the attention of the participant.
‘‘(B) The Secretary may provide that years in which
no employee or former employee benefits (within the
meaning of section 410(b) of the Internal Revenue Code
of 1986) under the plan need not be taken into account
in determining the 3-year period under paragraph
(1)(B)(i).’’.
(B) CONFORMING AMENDMENTS.—
(i) Section 105 of the Employee Re-
tirement Income Security Act of 1974 (29
U.S.C. 1025) is amended by striking sub-
section (d).
(ii) Section 105(b) of such Act (29
U.S.C. 1025(b)) is amended to read as fol-
lows:
‘‘(b) In no case shall a participant or beneficiary of
a plan be entitled to more than one statement described
in clause (i) or (ii) of subsection (a)(1)(A) or clause (i)
or (ii) of subsection (a)(1)(B), whichever is applicable, in
any 12-month period. If such report is required under sub-
section (a) to be furnished at least quarterly, the require-
ments of the preceding sentence shall be applied with re-
spect to each quarter in lieu of the 12-month period.’’.
(2) INFORMATION
REQUIRED
FROM
APPLICA-
BLE INDIVIDUAL ACCOUNT PLANS.—Section 105 of
such Act (as amended by paragraph (1)) is amended
further by adding at the end the following new sub-
section:
‘‘(d)(1) The statements required to be provided at
least quarterly under subsection (a) shall include (together
with the information required in subsection (a)) the fol-
lowing:
‘‘(A) the value of investments allocated to the
individual account, including the value of any assets
held in the form of employer securities, without re-
gard to whether such securities were contributed by
the plan sponsor or acquired at the direction of the
plan or of the participant or beneficiary, and an ex-
planation of any limitations or restrictions on the
right of the participant or beneficiary to direct an
investment; and
‘‘(B) an explanation, written in a manner cal-
culated to be understood by the average plan partici-
pant, of the importance, for the long-term retire-
ment security of participants and beneficiaries, of a
well-balanced and diversified investment portfolio,
including a discussion of the risk of holding more
than 25 percent of a portfolio in the security of any
one entity, such as employer securities.
‘‘(2) The value of any employer securities that are
not readily tradable on an established securities market
that is required to be reported under paragraph (1)(A)
may be determined by using the most recent valuation of
the employer securities.
‘‘(3) The Secretary shall issue guidance and model
notices which meet the requirements of this subsection.’’.
(3) DEFINITION
OF
APPLICABLE
INDIVIDUAL
ACCOUNT PLAN.—Section 3 of such Act (29 U.S.C.
1002) is amended by adding at the end the following
new paragraph:
‘‘(42)(A) The term ‘applicable individual account
plan’ means any individual account plan, except that such
term does not include an employee stock ownership plan
(within the meaning of section 4975(e)(7) of the Internal
Revenue Code of 1986) unless there are any contributions
to such plan (or earnings thereunder) held within such
plan that are subject to subsection (k)(3) or (m)(2) of sec-
tion 401 of the Internal Revenue Code of 1986. Such term
shall not include a one-participant retirement plan.
‘‘(B) The term ‘one-participant retirement plan’
means a retirement plan that—
‘‘(i) on the first day of the plan year—
‘‘(I) covered only the employer (and the
employer’s spouse) and the employer owned the
entire business (whether or not incorporated),
or
‘‘(II) covered only one or more partners
(and their spouses) in a business partnership
(including partners in an S or C corporation),
‘‘(ii) meets the minimum coverage requirements
of section 410(b) of the Internal Revenue Code of
1986 (as in effect on the date of the enactment of
this paragraph) without being combined with any
other plan of the business that covers the employees
of the business,
‘‘(iii) does not provide benefits to anyone except
the employer (and the employer’s spouse) or the
partners (and their spouses),
‘‘(iv) does not cover a business that is a mem-
ber of an affiliated service group, a controlled group
of corporations, or a group of businesses under com-
mon control, and
‘‘(v) does not cover a business that leases em-
ployees.’’.
(4) CIVIL PENALTIES FOR FAILURE TO PRO-
VIDE QUARTERLY BENEFIT STATEMENTS.—Section
502 of such Act (29 U.S.C. 1132) is amended—
(A) in subsection (a)(6), by striking ‘‘(5),
or (6)’’ and inserting ‘‘(5), (6), or (7)’’;
(B) by redesignating paragraph (7) of sub-
section (c) as paragraph (8); and
(C) by inserting after paragraph (6) of
subsection (c) the following new paragraph:
‘‘(7) The Secretary may assess a civil penalty against
any plan administrator of up to $1,000 a day from the
date of such plan administrator’s failure or refusal to pro-
vide participants or beneficiaries with a benefit statement
on at least a quarterly basis in accordance with section
105(a)(1)(A)(iii).’’.
(5) MODEL
STATEMENTS.—The Secretary of
Labor shall, not later than January 1, 2003, issue
initial guidance and a model benefit statement, writ-
ten in a manner calculated to be understood by the
average plan participant, that may be used by plan
administrators in complying with the requirements
of section 105 of the Employee Retirement Income
Security Act of 1974. Not later than 75 days after
the date of the enactment of this Act, the Secretary
shall promulgate interim final rules necessary to
carry out the amendments made by this subsection.
(b) AMENDMENTS
TO
THE INTERNAL REVENUE
CODE OF 1986.—
(1) PROVISION
OF
INVESTMENT
EDUCATION
NOTICES
TO
PARTICIPANTS
IN
CERTAIN
PLANS.—
Section 414 of the Internal Revenue Code of 1986
(relating to definitions and special rules) is amended
by adding at the end the following:
‘‘(w) PROVISION OF INVESTMENT EDUCATION NO-
TICES TO PARTICIPANTS IN CERTAIN PLANS.—
‘‘(1) IN GENERAL.—The plan administrator of
an applicable pension plan shall provide to each ap-
plicable individual an investment education notice
described in paragraph (2) at the time of the enroll-
ment of the applicable individual in the plan and not
less often than annually thereafter.
‘‘(2) INVESTMENT EDUCATION NOTICE.—An in-
vestment education notice is described in this para-
graph if such notice contains—
‘‘(A) an explanation, for the long-term re-
tirement security of participants and bene-
ficiaries, of generally accepted investment prin-
ciples, including principles of risk management
and diversification, and
‘‘(B) a discussion of the risk of holding
substantial portions of a portfolio in the secu-
rity of any one entity, such as employer securi-
ties.
‘‘(3) UNDERSTANDABILITY.—Each notice re-
quired by paragraph (1) shall be written in a man-
ner calculated to be understood by the average plan
participant and shall provide sufficient information
(as determined in accordance with guidance provided
by the Secretary) to allow recipients to understand
such notice.
‘‘(4) FORM AND MANNER OF NOTICES.—The
notices required by this subsection shall be in writ-
ing, except that such notices may be in electronic or
other form (or electronically posted on the plan’s
website) to the extent that such form is reasonably
accessible to the applicable individual.
‘‘(5) DEFINITIONS.—For purposes of this
subsection—
‘‘(A) APPLICABLE INDIVIDUAL.—The term
‘applicable individual’ means—
‘‘(i) any participant in the applicable
pension plan,
‘‘(ii) any beneficiary who is an alter-
nate payee (within the meaning of section
414(p)(8)) under a qualified domestic rela-
tions order (within the meaning of section
414(p)(1)(A)), and
‘‘(iii) any beneficiary of a deceased
participant or alternate payee.
‘‘(B) APPLICABLE
PENSION
PLAN.—The
term ‘applicable pension plan’ means—
‘‘(i) a plan described in clause (i), (ii),
or (iv) of section 219(g)(5)(A), and
‘‘(ii) an eligible deferred compensation
plan (as defined in section 457(b)) of an
eligible employer described in section
457(e)(1)(A), which permits any partici-
pant to direct the investment of some or
all of his account in the plan or under
which the accrued benefit of any partici-
pant depends in whole or in part on hypo-
thetical investments directed by the partici-
pant. Such term shall not include a one-
participant retirement plan or a plan to
which section 105 of the Employee Retire-
ment Income Security Act of 1974 applies.
‘‘(C) 
ONE-PARTICIPANT
RETIREMENT
PLAN DEFINED.—The term ‘one-participant re-
tirement plan’ means a retirement plan that—
‘‘(i) on the first day of the plan
year—
‘‘(I) covered only the employer
(and the employer’s spouse) and the
employer owned the entire business
(whether or not incorporated), or
‘‘(II) covered only one or more
partners (and their spouses) in a busi-
ness partnership (including partners
in an S or C corporation),
‘‘(ii) meets the minimum coverage re-
quirements of section 410(b) without being
combined with any other plan of the busi-
ness that covers the employees of the busi-
ness,
‘‘(iii) does not provide benefits to any-
one except the employer (and the employ-
er’s spouse) or the partners (and their
spouses),
‘‘(iv) does not cover a business that is
a member of an affiliated service group, a
controlled group of corporations, or a
group of businesses under common control,
and
‘‘(v) does not cover a business that
leases employees.
‘‘(6) CROSS REFERENCE.—
‘‘For provisions relating to penalty for failure to
provide the notice required by this section, see sec-
tion 6652(m).’’.
(2) PENALTY FOR FAILURE TO PROVIDE NO-
TICE.—Section 6652 of such Code (relating to fail-
ure to file certain information returns, registration
statements, etc.) is amended by redesignating sub-
section (m) as subsection (n) and by inserting after
subsection (l) the following new subsection:
‘‘(m) FAILURE TO PROVIDE INVESTMENT EDU-
CATION
NOTICES
TO
PARTICIPANTS
IN
CERTAIN
PLANS.—In the case of each failure to provide a written
explanation as required by section 414(w) with respect to
an applicable individual (as defined in such section), at
the time prescribed therefor, unless it is shown that such
failure is due to reasonable cause and not to willful ne-
glect, there shall be paid, on notice and demand of the
Secretary and in the same manner as tax, by the person
failing to provide such notice, an amount equal to $100
for each such failure, but the total amount imposed on
such person for all such failures during any calendar year
shall not exceed $50,000.’’.
SEC. 10. REPORT TO PARTICIPANTS AND BENEFICIARIES
OF TRADES IN EMPLOYER SECURITIES.
Section 104 of the Employee Retirement Income Se-
curity 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 notification of such transaction. Such notification
shall be in writing, except that such notification may be
in electronic or other form to the extent that such form
is reasonably accessible to the participant or beneficiary.
‘‘(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).’’.
SEC. 11. PROHIBITION ON LOANS TO OFFICERS AND DIREC-
TORS.
Section 16 of the Securities Exchange Act of 1934
(15 U.S.C. 78p) is amended by adding at the end the fol-
lowing new subsection:
‘‘(h) PROHIBITION ON LOANS TO OFFICERS AND DI-
RECTORS.—It shall be unlawful for any issuer of any eq-
uity security registered under section 12 to make any sub-
stantial loan or other extension of credit to any such bene-
ficial owner, officer, or director in violation of such regula-
tions as the Commission shall prescribe as necessary to
prevent self-dealing and for the protection of investors.
Such regulations may take into account different cir-
cumstances of such issuers, beneficial owners, officers, and
directors in defining whether a loan or other extension of
credit shall be considered to be substantial for the pur-
poses of the regulations under this subsection.’’.
SEC. 12. PRIORITY OF CERTAIN CLAIMS IN BANKRUPTCY
CASES.
Section 507(a) of title 11 of the United States Code
is amended in paragraphs (3) and (4)(B)(ii) by striking
‘‘$4,000’’ and inserting ‘‘$15,000’’.
SEC. 13. CRIMINAL PENALTIES FOR ALTERING DOCU-
MENTS.
(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. 14. EFFECTIVE DATES.
(a) IN GENERAL.—The amendments made by sec-
tions 2, 3, 4, 6, and 9 of this Act shall apply to plan years
beginning after December 31, 2002.
(b) COLLECTIVE BARGAINING AGREEMENTS.—In the
case of a plan maintained pursuant to one or more collec-
tive bargaining agreements between employee representa-
tives and one or more employers ratified by the date of
the enactment of this Act, the amendments made by sec-
tions 2, 3, 4, 6, and 9 of this Act shall not apply with
respect to employees covered by any such agreement for
plan years beginning before the earlier of—
(1) the later of—
(A) the date on which the last of such col-
lective bargaining agreements terminates (de-
termined without regard to any extension there-
of on or after such date of enactment), or
(B) January 1, 2003, or
(2) January 1, 2005.
(c) AMENDMENTS RELATING TO INVESTMENT AD-
VICE.—The amendments made by section 5 shall apply
with respect to advice referred to in section 3(21)(A)(ii)
of the Employee Retirement Income Security Act of 1974
or section 4975(c)(3)(B) of the Internal Revenue Code of
1986 provided on or after January 1, 2003.
(d) AMENDMENTS
RELATING
TO
REPORTS
ON
TRADES IN EMPLOYER SECURITIES.—The amendments
made by section 10 shall apply with respect to trans-
actions occurring on or after October 1, 2002.
(e) AMENDMENT RELATING TO LOANS TO OFFICERS
AND DIRECTORS.—The amendment made by section 11
shall take effect on the date of the enactment of this Act.
(f) AMENDMENTS RELATING TO PRIORITY OF CER-
TAIN CLAIMS IN BANKRUPTCY CASES.—The amendments
made by section 12 shall apply with respect to cases under
title 11 of the United States Code pending on and after
the date of the enactment of this Act.
Æ