[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5625 Introduced in House (IH)]







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 
 Committee 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 jurisdiction 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 Representatives 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 LIABILITY.

    (a) Securities Act of 1933.--Section 20 of the Securities 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 substantial assistance to another person in the 
violation of a provision of this title, or of any rule or regulation 
hereunder, shall be deemed to violate such provision 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 failure to act 
unless such omission or failure 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 organization, 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 regulation 
thereunder, shall be deemed to violate such provision 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 failure 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 substantial assistance to another person in the 
violation of a provision of this title, or of any rule, regulation, or 
order hereunder, shall be deemed to violate such provision 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 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 subsection:
    ``(f) Prosecution of Persons Who Aid or Abet Violations.--For 
purposes of subsections (d) and (e), 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, regulation, or 
order hereunder, shall be deemed to violate such provision 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 failure 
to act unless such omission or failure constituted a breach of duty 
owed by such person.''.
                                 <all>