[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3840 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 3840

To amend title I of the Employee Retirement Income Security Act of 1974 
      to provide for timely notification of plan participants and 
  beneficiaries whose individual accounts hold employer securities of 
                insider trading in employer securities.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 5, 2002

Mr. George Miller of California (for himself, Ms. Pelosi, Mr. Andrews, 
  Mr. Ford, Mr. Kildee, Mr. Kucinich, Mrs. McCarthy of New York, Mr. 
Owens, Mr. Payne, Ms. Rivers, Ms. Solis, Mr. Tierney, Ms. Woolsey, Mr. 
    Wu, Mrs. Jones of Ohio, Mr. Sanders, Mr. Brown of Ohio, and Mr. 
   Doggett) introduced the following bill; which was referred to the 
                Committee on Education and the Workforce

_______________________________________________________________________

                                 A BILL


 
To amend title I of the Employee Retirement Income Security Act of 1974 
      to provide for timely notification of plan participants and 
  beneficiaries whose individual accounts hold employer securities of 
                insider trading in employer securities.

    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 ``Inside Stock Sales Employee 
Notification Act of 2002''.

SEC. 2. REPORT TO PARTICIPANTS AND BENEFICIARIES OF TRADES IN EMPLOYER 
              SECURITIES.

    (a) In General.--Section 104 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1024) is amended--
            (1) by redesignating subsection (d) as subsection (e); and
            (2) by inserting after subsection (c) the following 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 engages 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 reported by such person 
        to the Securities and Exchange Commission, or
            ``(B) such person is a named fiduciary of the plan,
such person shall comply with the requirements of paragraph (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 person provides to the plan 
administrator of the plan a written notification of the transaction not 
later than 1 business 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 beneficiary a written 
notification of such transaction.
    ``(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 
paragraph (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 subparagraph (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 include 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 Secretary 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 
exemptions are consistent with the best interests of plan participants 
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 `employer security' 
has the meaning provided in section 407(d)(1).''.
    (b) Enforcement.--
            (1) In general.--Section 502(c) of such Act (29 U.S.C. 
        1132(c)) is amended--
                    (A) by redesignating paragraph (7) as paragraph 
                (8); and
                    (B) by inserting after paragraph (6) the following 
                new paragraph:
    ``(7) The Secretary may assess a civil penalty against any person 
required to provide notification under paragraph (2) or (3) of section 
104(d) of up to $1,000 a day from the date of any failure by such 
person to provide such notification in accordance with such 
paragraph.''.
            (2) Conforming amendment.--Section 502(a)(6) of such Act 
        (29 U.S.C. 1132(a)(6)) is amended by striking ``(5), or (6)'' 
        and inserting ``(5), (6), or (7)''.

SEC. 3. EFFECTIVE DATE.

    The amendments made by this Act shall apply with respect to 
transactions occurring on or after July 1, 2002.
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