Judiciary Bill 4
H. R. 5118
AN ACT
Be it enacted by the Senate and House of
Representatives of the United States of America in Congress assembled,
(a) MAIL FRAUD- Section 1341 of title 18, United 5
States Code, is amended by striking `five' and inserting `20'.
(b) WIRE FRAUD- Section 1343 of title 18, United
States Code, is amended by striking `five' and inserting `20'.
(c) SECURITIES FRAUD- Chapter 63 of title 18, United
States Code, is amended by adding at the end the following:
`Whoever knowingly executes 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 25 years, or both.'.
(d) 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:
`1348. Securities fraud.'.
Section 1512 of title 18, United States Code, is
amended--
(1) by redesignating subsections (c) through (i) as
subsections (d) through (j), respectively; and
(2) by inserting after subsection (b) the following
new subsection:
`(c) Whoever corruptly--
`(1) alters, destroys, mutilates, or conceals a
record, document, or other object, or attempts to do so, with the intent to
impair the object's integrity or availability for use in an official
proceeding; or
`(2) otherwise obstructs, influences, or impedes any
official proceeding, or attempts to do so,
shall be fined under this title or imprisoned not
more than 20 years, or both.'.
(a) REQUEST FOR IMMEDIATE CONSIDERATION BY THE
UNITED STATES SENTENCING COMMISSION- Pursuant to its authority under section
994(p) of title 28, United States Code, and in accordance with this section,
the United States Sentencing Commission is requested to--
(1) promptly review the sentencing guidelines
applicable to securities and accounting fraud and related offenses;
(2) expeditiously consider the promulgation of new
sentencing guidelines or amendments to existing sentencing guidelines to
provide an enhancement for officers or directors of publicly traded
corporations who commit fraud and related offenses; and
(3) submit to Congress an explanation of actions
taken by the Sentencing Commission pursuant to paragraph (2) and any additional
policy recommendations the Sentencing Commission may have for combating
offenses described in paragraph (1).
(b) CONSIDERATIONS IN REVIEW- In carrying out this
section, the Sentencing Commission is requested to--
(1) ensure that the sentencing guidelines and policy
statements reflect the serious nature of securities, pension, and accounting
fraud and the need for aggressive and appropriate law enforcement action to
prevent such offenses;
(2) assure reasonable consistency with other
relevant directives and with other guidelines;
(3) account for any aggravating of mitigating
circumstances that might justify exceptions, including circumstances for which
the sentencing guidelines currently provide sentencing enhancements;
(4) ensure that guideline offense levels and
enhancements for an obstruction of justice offense are adequate in cases where
documents or other physical evidence are actually destroyed or fabricated;
(5) ensure that the guideline offense levels and enhancements
under United States Sentencing Guideline 2B1.1 (as in effect on the date of
enactment of this Act) are sufficient for a fraud offense when the number of
victims adversely involved is significantly greater than 50;
(6) make any necessary conforming changes to the
sentencing guidelines; and
(7) assure that the guidelines adequately meet the
purposes of sentencing as set forth in section 3553 (a)(2) of title 18, United
States Code.
(c) EMERGENCY AUTHORITY AND DEADLINE FOR COMMISSION
ACTION- The United States Sentencing Commission is requested to promulgate the
guidelines or amendments provided for under this sections as soon as
practicable, and in any event not later than the 120 days after the date of
enactment of this Act, in accordance with the procedures sent forth in section
21(a) of the Sentencing Reform Act of 1987, as though the authority under that
Act had not expired.
Section 523(a) of title 11, United States Code, is
amended--
(1) in paragraph (17), by striking `or' after the
semicolon;
(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) is a claim for--
`(i) the violation of any of the Federal securities
laws (as that term is defined in section 3(a)(47) of the Securities Exchange
Act of 1934), any of the State securities laws, or any regulation or order
issued under such Federal or State securities laws; or
`(ii) common law fraud, deceit, or manipulation in
connection with the purchase or sale of any security; and
`(B) results, in relation to any claim described 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 entered into by the
debtor; or
`(iii) any court or administrative order for any
damages, fine, penalty, citation, restitutionary payment, disgorgement payment,
attorney fee, cost, or other payment owed by the debtor.'.
(a) IN GENERAL- Chapter 63 of title 18, United
States Code, is amended by adding at the end the following:
`(a) CERTIFICATION OF PERIODIC FINANCIAL REPORTS-
Each periodic report containing financial statements filed by an issuer with
the Securities Exchange Commission pursuant to section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)) shall be
accompanied by a written statement by the chairman of the board, chief
executive officer, and chief financial officer (or equivalent thereof) of the
issuer.
`(b) CONTENT- The statement required under
subsection (a) shall certify that those financial statements fairly and
accurately represent, in all material respects, the operations and financial
condition of the issuer.
`(c) CRIMINAL PENALTIES- Whoever--
`(1) knowingly violates this section shall be fined
not more than $1,000,000, or imprisoned not more than 10 years, or both; or
`(2) willfully violates this section shall be fined
not more than $5,000,000, or imprisoned not more than 20 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:
`1349. Failure of corporate officers to certify
financial reports.'.
(a) IN GENERAL- Chapter 1 of title 18, United States
Code, is amended by inserting before section 2 the following:
`Any person who attempts or conspires to commit any
offense against the United States shall be subject to the same penalties as
those prescribed for the offense, the commission of which was the object of the
attempt or conspiracy.
(b) CLERICAL AMENDMENT- The table of sections at the
beginning of title 18, United States Code, is amended so that the item relating
to section 1 reads as follows:
`1. Attempt and conspiracy.'.
Section 32(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78ff(a)) is amended--
(1) by striking `$1,000,000, or imprisoned not more
than 10 years' and inserting `$5,000,000, or imprisoned not more than 20
years'; and
(2) by striking `$2,500,000' and inserting
`$25,000,000'.
(a) IN GENERAL- Section 21C(c) of the Securities
Exchange Act of 1934 (15 U.S.C. 78u-3(c)) is amended by adding at the end the
following:
`(3) TEMPORARY FREEZE-
`(A) IN GENERAL-
`(i) ISSUANCE OF TEMPORARY ORDER- Whenever, during
the course of a lawful investigation involving possible violations of the
Federal securities laws by an issuer of publicly traded securities or any of
its directors, officers, partners, controlling persons, agents, or employees,
it shall appear to the Commission that it is likely that the issuer will make
extraordinary payments (whether compensation of otherwise) to any of the
foregoing persons, the Commission may petition a Federal district court for a
temporary order requiring the issuer to escrow, subject to court supervision, those
payments in an interest-bearing account for 45 days.
`(ii) STANDARD- A temporary order shall be entered
under clause (i), only after notice and opportunity for a hearing, unless the
court determines that notice and hearing prior to entry of the order would be
impracticable or contrary to the public interest.
`(iii) EFFECTIVE PERIOD- A temporary order issued
under clause (i) shall--
`(I) become effective immediately;
`(II) be served upon the parties subject to it; and
`(III) unless set aside, limited or suspended by a
court of competent jurisdiction, shall remain effective and enforceable for 45
days.
`(iv) EXTENSIONS AUTHORIZED- The effective period of
an order under this subparagraph may be extended by the court upon good cause
shown for not longer than 45 additional days, provided that the combined period
of the order shall not exceed 90 days.
`(B) PROCESS ON DETERMINATION OF VIOLATIONS-
`(i) VIOLATIONS CHARGED- If the issuer or other
person described in subparagraph (A) is charged with any violation of the
Federal securities laws before the expiration of the effective period of a
temporary order under subparagraph (A) (including any applicable extension
period), the order shall remain in effect, subject to court approval, until the
conclusion of any legal proceedings related thereto, and the affected issuer or
other person, shall have the right to petition the court for review of the
order.
`(ii) VIOLATIONS NOT CHARGED- If the issuer or other
person described in subparagraph (A) is not charged with any violation of the
Federal securities laws before the expiration of the effective period of a
temporary order under subparagraph (A) (including any applicable extension
period), the escrow shall terminate at the expiration of the 45-day effective
period (or the expiration of any extension period, as applicable), and the
disputed payments (with accrued interest) shall be returned to the issuer or
other affected person.'.
(b) TECHNICAL AMENDMENT- Section 21C(c)(2) of the
Securities Exchange Act of 1934 (15 U.S.C. 78u-3(c)(2)) is amended by striking
`This' and inserting `paragraph (1)'.
(a) SECURITIES EXCHANGE ACT OF 1934- Section 21C of
the Securities Exchange Act of 1934 (15 U.S.C. 78u-3) is amended by adding at
the end the following:
`(f) AUTHORITY OF THE COMMISSION TO PROHIBIT PERSONS
FROM SERVING AS OFFICERS OR DIRECTORS- In any cease-and-desist proceeding under
subsection (a), the Commission may issue an order to prohibit, conditionally or
unconditionally, and permanently or for such period of time as it shall
determine, any person who has violated section 10(b) or the rules or
regulations thereunder, from acting as an officer or director of any issuer
that has a class of securities registered pursuant to section, or that is
required to file reports pursuant to section (d), if the conduct of that person
demonstrates unfitness to serve as an officer or director of any such issuer.'.
(b) SECURITIES ACT OF 1933- Section 8A of the
Securities Act of 1933 (15 U.S.C. 77h-1) is amended by adding at the end of the
following:
`(f) AUTHORITY OF THE COMMISSION TO PROHIBIT PERSONS
FROM SERVING AS OFFICERS OR DIRECTORS- In any cease-and-desist proceeding under
subsection (a), the Commission may issue an order to prohibit, conditionally or
unconditionally, and permanently or for such period of time as it shall
determine, any person who has violated section 17(a)(1) or the rules or
regulations thereunder, from acting as an officer or director of any issuer
that has a class of securities registered pursuant to section of the Securities
Exchange Act of 1934, or that is required to file reports pursuant to section
15(d) of that Act, if the conduct of that person demonstrates unfitness to
serve as an officer or director of any such issuer.'.
(a) IN GENERAL- Section 1513 of title 18, United
States Code, is amended by adding at the end the following:
`(e) Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any Federal offense, shall be fined under this title or imprisoned not more than 10 years, or both.'.