I 
107TH CONGRESS 
2D SESSION 
H. R. 5625
To restore aiding and abetting liability under the Federal securities laws. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 10, 2002
Mr. MARKEY introduced the following bill; which was referred to the Com-
mittee on Financial Services, and in addition to the Committee on the 
Judiciary, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To restore aiding and abetting liability under the Federal 
securities laws.
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 ‘‘Stop Enablers of 
Fraud Act’’.
SEC. 2. RESTORATION OF AIDING AND ABETTING LIABIL-
ITY. 
(a) SECURITIES ACT OF 1933.—Section 20 of the Se-
curities Act of 1933 (15 U.S.C. 77t) is amended by adding 
at the end the following new subsection: 
‘‘(h) PROSECUTION OF PERSONS WHO AID OR ABET 
VIOLATIONS.—For purposes of subsections (b) and (d), 
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 or regulation hereunder, 
shall be deemed to violate such provision to the same ex-
tent as the person to whom such assistance is provided. 
No person shall be liable under this subsection based on 
an omission or failure to act unless such omission or fail-
ure constituted a breach of a duty owed by such person.’’. 
(b) SECURITIES EXCHANGE ACT OF 1934.—Section 
20(e) of the Securities Exchange Act of 1934 (15 U.S.C. 
78t(e)) is amended to read as follows: 
‘‘(e) PROSECUTION OF PERSONS WHO AID OR ABET 
VIOLATIONS.—For purposes of subsections (d)(1) and 
(d)(3) of section 21, or an action by a self-regulatory orga-
nization, or an express or implied private right of action 
under this title, any person who knowingly or recklessly
provides substantial assistance to another person in the 
violation of a provision of this title, or of any rule or regu-
lation thereunder, shall be deemed to violate such provi-
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 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.’’.
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