[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3623 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 3623

To amend title I of the Employee Retirement Income Security Act of 1974 
 to prohibit knowing misrepresentations by fiduciaries of 401(k) plans 
  which may induce participants and beneficiaries to act contrary to 
    their own best interest in controlling the assets in their own 
 accounts, and to amend title 11 of the United States Code to protect 
                claims based on such misrepresentations.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 24, 2002

 Mr. Bentsen introduced the following bill; which was referred to the 
   Committee on Education and the Workforce, 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 jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend title I of the Employee Retirement Income Security Act of 1974 
 to prohibit knowing misrepresentations by fiduciaries of 401(k) plans 
  which may induce participants and beneficiaries to act contrary to 
    their own best interest in controlling the assets in their own 
 accounts, and to amend title 11 of the United States Code to protect 
                claims based on such misrepresentations.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Employee Savings Protection Act of 
2002''.

SEC. 2. PROHIBITION OF MISREPRESENTATIONS BY PLAN FIDUCIARIES RELATING 
              TO THE PRESENT OR EXPECTED VALUATION OF EMPLOYER 
              SECURITIES.

    (a) In General.--Section 404(a) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1104(a)) is amended by adding at the 
end the following new paragraph:
    ``(3) Any knowing misrepresentation by a fiduciary of an individual 
account plan that includes a cash or deferred arrangement (as defined 
in section 401(k)(2) of the Internal Revenue Code of 1986) to a 
participant or beneficiary under the plan relating to the present or 
expected valuation of employer securities that--
            ``(A) was made at a time reasonably contemporaneous with a 
        period of decisionmaking by the participant or beneficiary in 
        the exercise of his or her control over the assets in his or 
        her account, or
            ``(B) could otherwise be reasonably perceived as likely to 
        induce decisions that were made by the participant or 
        beneficiary in the exercise of his or her control over such 
        assets,
shall be treated as a failure by the fiduciary to discharge the 
fiduciary's duties with respect to a plan in accordance with the 
preceding provisions of this subsection.''.
    (b) Liability for Misrepresentation.--Section 404(c) of such Act 
(29 U.S.C. 1104(c)) is amended by adding at the end the following new 
paragraph:
    ``(4) In the case of an individual account plan that includes a 
cash or deferred arrangement (as defined in section 401(k)(2) of the 
Internal Revenue Code of 1986), paragraph (1)(B) shall not apply in 
connection with any loss which results from any exercise of control by 
a participant or beneficary over the assets in his or her account 
undertaken in reliance on a misrepresentation described in paragraph 
(a)(3).''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to misrepresentations made on or after January 1, 
2000.

SEC. 3. PROTECTION OF CERTAIN EMPLOYEE CLAIMS IN BANKRUPTCY.

    (a) Amendments.--Title 11 of the United States Code is amended--
            (1) in section 507(a) by adding at the end the following:
            ``(10) Tenth, allowed unsecured claims arising under part 4 
        of subtitle B of title I of the Employee Retirement Income 
        Security Act of 1974 by operation of section 404(c)(4) of such 
        Act for failures by fiduciaries to discharge their duties as 
        described in section 404(a)(3) of such Act.''; and
            (2) in section 1129(a)(9)(B) by striking ``or 507(a)(7)'' 
        and inserting ``507(a)(7), or 507(a)(10)''.
    (b) Effective Date; Application of Amendments.--The amendments made 
by subsection (a) shall take effect on January 1, 2000, and shall apply 
with respect to cases commenced under title 11 of the United States 
Code on or after such date.
                                 <all>