[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2010 Reported in Senate (RS)]






                                                       Calendar No. 366
107th CONGRESS
  2d Session
                                S. 2010

                          [Report No. 107-146]

  To provide for criminal prosecution of persons who alter or destroy 
  evidence in certain Federal investigations or defraud investors of 
publicly traded securities, to disallow debts incurred in violation of 
 securities fraud laws from being discharged in bankruptcy, to protect 
 whistleblowers against retaliation by their employers, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 12, 2002

   Mr. Leahy (for himself, Mr. Daschle, Mr. Durbin, Mr. Harkin, Ms. 
Stabenow, Mr. Cleland, and Mr. Edwards) introduced the following bill; 
  which was read twice and referred to the Committee on the Judiciary

                              May 6, 2002

  Reported by Mr. Leahy, from the Committee on the Judiciary, with an 
                               amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
  To provide for criminal prosecution of persons who alter or destroy 
  evidence in certain Federal investigations or defraud investors of 
publicly traded securities, to disallow debts incurred in violation of 
 securities fraud laws from being discharged in bankruptcy, to protect 
 whistleblowers against retaliation by their employers, and for other 
                               purposes.

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

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Corporate and Criminal 
Fraud Accountability Act of 2002''.</DELETED>

<DELETED>SEC. 2. CRIMINAL PENALTIES FOR ALTERING DOCUMENTS.</DELETED>

<DELETED>    (a) In General.--Chapter 73 of title 18, United States 
Code, is amended by adding at the end the following:</DELETED>
<DELETED>``Sec. 1519. Destruction, alteration, or falsification of 
              records in Federal investigations and 
              bankruptcy</DELETED>
<DELETED>    ``Whoever knowingly alters, destroys, mutilates, conceals, 
covers up, falsifies, or makes a false entry in any record, document, 
or tangible object with the intent to impede, obstruct, or influence 
the investigation or proper administration of any matter within the 
jurisdiction of any department or agency of the United States or any 
case filed under title 11, or in relation to or contemplation of any 
such matter or case, shall be fined under this title, imprisoned not 
more than 5 years, or both.</DELETED>
<DELETED>``Sec. 1520. Destruction of corporate audit records</DELETED>
<DELETED>    ``(a) Any accountant who conducts an audit of an issuer of 
securities to which section 10A(a) of the Securities Exchange Act of 
1934 (15 U.S.C. 78j-1(a)) applies, shall maintain all documents 
(including electronic documents) sent, received, or created in 
connection with any audit, review, or other engagement for such issuer 
for a period of 5 years from the end of the fiscal period in which the 
audit, review, or other engagement was concluded.</DELETED>
<DELETED>    ``(b) Whoever knowingly and willfully violates subsection 
(a) shall be fined under this title, imprisoned not more than 5 years, 
or both.</DELETED>
<DELETED>    ``(c) Nothing in this section shall be deemed to diminish 
or relieve any person of any other duty or obligation, imposed by 
Federal or State law or regulation, to maintain, or refrain from 
destroying, any document.''.</DELETED>
<DELETED>    (b) Clerical Amendment.--The table of sections at the 
beginning of chapter 73 of title 18, United States Code, is amended by 
adding at the end the following new items:</DELETED>

<DELETED>``1519. Destruction, alteration, or falsification of records 
                            in Federal investigations and bankruptcy.
<DELETED>``1520. Destruction of corporate audit records.''.

<DELETED>SEC. 3. ENHANCED ENFORCEMENT OF LAWS AFFECTING RACKETEER-
              INFLUENCED AND CORRUPT ORGANIZATIONS.</DELETED>

<DELETED>    Section 1964 of title 18, United States Code, is amended--
</DELETED>
        <DELETED>    (1) in subsection (b), by inserting after ``The 
        Attorney General'' the following: ``, the Attorney General of 
        any State, or the Securities and Exchange Commission''; 
        and</DELETED>
        <DELETED>    (2) in subsection (d), by inserting before the 
        period the following: ``or any State''.</DELETED>

<DELETED>SEC. 4. DEBTS NONDISCHARGEABLE IF INCURRED IN VIOLATION OF 
              SECURITIES FRAUD LAWS.</DELETED>

<DELETED>    Section 523(a) of title 11, United States Code, is 
amended--</DELETED>
        <DELETED>    (1) in paragraph (17), by striking ``or'' after 
        the semicolon;</DELETED>
        <DELETED>    (2) in paragraph (18), by striking the period at 
        the end and inserting ``; or''; and</DELETED>
        <DELETED>    (3) by adding at the end, the following:</DELETED>
        <DELETED>    ``(19) that--</DELETED>
                <DELETED>    ``(A) arises under a claim relating to--
                </DELETED>
                        <DELETED>    ``(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 (15 U.S.C. 78c(a)(47)), 
                        any State securities laws, or any regulations 
                        or orders issued under such Federal or State 
                        securities laws; or</DELETED>
                        <DELETED>    ``(ii) common law fraud, deceit, 
                        or manipulation in connection with the purchase 
                        or sale of any security; and</DELETED>
                <DELETED>    ``(B) results, in relation to any claim 
                described in subparagraph (A), from--</DELETED>
                        <DELETED>    ``(i) any judgment, order, consent 
                        order, or decree entered in any Federal or 
                        State judicial or administrative 
                        proceeding;</DELETED>
                        <DELETED>    ``(ii) any settlement agreement 
                        entered into by the debtor; or</DELETED>
                        <DELETED>    ``(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.''.</DELETED>

<DELETED>SEC. 5. STATUTE OF LIMITATIONS FOR SECURITIES FRAUD.</DELETED>

<DELETED>    (a) In General.--Section 1658 of title 28, United States 
Code, is amended--</DELETED>
        <DELETED>    (1) by inserting ``(a)'' before ``Except''; 
        and</DELETED>
        <DELETED>    (2) by adding at the end the following:</DELETED>
<DELETED>    ``(b) Notwithstanding subsection (a), a private right of 
action that involves a claim of fraud, deceit, manipulation, or 
deliberate or reckless disregard of a regulatory requirement concerning 
the securities laws, as defined in section 3(a)(47) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(47)), may be brought not later 
than the earlier of--</DELETED>
        <DELETED>    ``(1) 5 years after the date on which the alleged 
        violation occurred; or</DELETED>
        <DELETED>    ``(2) 3 years after the date on which the alleged 
        violation was discovered.''.</DELETED>
<DELETED>    (b) Effective Date.--The limitations period provided by 
section 1658(b) of title 28, United States Code, as added by this 
section, shall apply to all proceedings addressed by this section that 
are commenced on or after the date of enactment of this Act.</DELETED>

<DELETED>SEC. 6. REVIEW OF FEDERAL SENTENCING GUIDELINES FOR 
              OBSTRUCTION OF JUSTICE AND EXTENSIVE CRIMINAL 
              FRAUD.</DELETED>

<DELETED>    Pursuant to section 994 of title 28, United States Code, 
and in accordance with this section, the United States Sentencing 
Commission shall review and amend, as appropriate, the Federal 
Sentencing Guidelines and related policy statements to ensure that--
</DELETED>
        <DELETED>    (1) the 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;</DELETED>
        <DELETED>    (2) the guideline offense levels and enhancements 
        for violations of section 1519 or 1520 of title 18, United 
        States Code, as added by this Act, are sufficient to deter and 
        punish that activity;</DELETED>
        <DELETED>    (3) 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; and</DELETED>
        <DELETED>    (4) a specific offense characteristic enhancing 
        sentencing is provided under United States Sentencing Guideline 
        2B1.1 (as in effect on the date of enactment of this Act) for a 
        fraud offense that endangers the solvency or financial security 
        of 1 or more victims.</DELETED>

<DELETED>SEC. 7. PROTECTION FOR EMPLOYEES OF PUBLICLY TRADED COMPANIES 
              WHO PROVIDE EVIDENCE OF FRAUD.</DELETED>

<DELETED>    (a) In General.--Chapter 73 of title 18, United States 
Code, is amended by inserting after section 1514 the 
following:</DELETED>
<DELETED>``Sec. 1514A. Civil action to protect against retaliation in 
              fraud cases</DELETED>
<DELETED>    ``(a) Whistleblower Protection for Employees of Publicly 
Traded Companies.--No company with securities registered under section 
6 of the Securities Act of 1933 (15 U.S.C. 77f) or section 12 or 15(d) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78l, 78o(d)), or any 
officer, employee, contractor, subcontractor, or agent of such company, 
may discharge, demote, suspend, threaten, harass, or in any other 
manner discriminate against an employee in the terms and conditions of 
employment because of any lawful act done by the employee--</DELETED>
        <DELETED>    ``(1) to provide information, cause information to 
        be provided, or otherwise assist in an investigation regarding 
        any conduct which the employee reasonably believes constitutes 
        a violation of section 1341, 1343, 1344, or 1348, any rule or 
        regulation of the Securities and Exchange Commission, or any 
        provision of Federal law relating to fraud against 
        shareholders, when the information or assistance is provided to 
        or the investigation is conducted by--</DELETED>
                <DELETED>    ``(A) a Federal regulatory or law 
                enforcement agency;</DELETED>
                <DELETED>    ``(B) any Member of Congress or any 
                committee of Congress; or</DELETED>
                <DELETED>    ``(C) a person with supervisory authority 
                over the employee (or such other person working for the 
                employer who has the authority to investigate, 
                discover, or terminate misconduct); or</DELETED>
        <DELETED>    ``(2) to file, cause to be filed, testify, 
        participate in, or otherwise assist in a proceeding filed or 
        about to be filed (with any knowledge of the employer) relating 
        to an alleged violation of section 1341, 1343, 1344, or 1348, 
        any rule or regulation of the Securities and Exchange 
        Commission, or any provision of Federal law relating to fraud 
        against shareholders.</DELETED>
<DELETED>    ``(b) Election of Action.--</DELETED>
        <DELETED>    ``(1) In general.--A person who alleges discharge 
        or other discrimination by any person in violation of 
        subsection (a) may seek relief under subsection (c), by--
        </DELETED>
                <DELETED>    ``(A) filing a complaint with the 
                Secretary of Labor; or</DELETED>
                <DELETED>    ``(B) bringing an action at law or equity 
                in the appropriate district court of the United 
                States.</DELETED>
        <DELETED>    ``(2) Procedure.--</DELETED>
                <DELETED>    ``(A) In general.--An action under 
                paragraph (1)(A) shall be governed under the rules and 
                procedures set forth in section 42121(b) of title 49, 
                United States Code.</DELETED>
                <DELETED>    ``(B) Exception.--Notification made under 
                section 42121(b)(1) of title 49, United States Code, 
                shall be made to the person named in the complaint and 
                to the employer.</DELETED>
                <DELETED>    ``(C) Burdens of proof.--An action brought 
                under paragraph (1)(B) shall be governed by the legal 
                burdens of proof set forth in section 42121(b) of title 
                49, United States Code.</DELETED>
                <DELETED>    ``(D) Statute of limitations.--An action 
                under paragraph (1) shall be commenced not later than 
                180 days after the date on which the violation 
                occurs.</DELETED>
<DELETED>    ``(c) Remedies.--</DELETED>
        <DELETED>    ``(1) In general.--An employee prevailing in any 
        action under subsection (b)(1) (A) or (B) shall be entitled to 
        all relief necessary to make the employee whole.</DELETED>
        <DELETED>    ``(2) Compensatory damages.--Relief for any action 
        under paragraph (1) shall include--</DELETED>
                <DELETED>    ``(A) reinstatement with the same 
                seniority status that the employee would have had, but 
                for the discrimination;</DELETED>
                <DELETED>    ``(B) 2 times the amount of back pay, with 
                interest; and</DELETED>
                <DELETED>    ``(C) compensation for any special damages 
                sustained as a result of the discrimination, including 
                litigation costs, expert witness fees, and reasonable 
                attorney fees.</DELETED>
        <DELETED>    ``(3) Punitive damages.--</DELETED>
                <DELETED>    ``(A) In general.--In a case in which the 
                finder of fact determines that the protected conduct of 
                the employee under subsection (a) involved a 
                substantial risk to the health, safety, or welfare of 
                shareholders of the employer or the public, the finder 
                of fact may award punitive damages to the 
                employee.</DELETED>
                <DELETED>    ``(B) Factors.--In determining the amount, 
                if any, to be awarded under this paragraph, the finder 
                of fact shall take into account--</DELETED>
                        <DELETED>    ``(i) the significance of the 
                        information or assistance provided by the 
                        employee under subsection (a) and the role of 
                        the employee in advancing any investigation, 
                        proceeding, congressional inquiry or action, or 
                        internal remedial process, or in protecting the 
                        health, safety, or welfare of shareholders of 
                        the employer or of the public;</DELETED>
                        <DELETED>    ``(ii) the nature and extent of 
                        both the actual and potential discrimination to 
                        which the employee was subjected as a result of 
                        the protected conduct of the employee under 
                        subsection (a); and</DELETED>
                        <DELETED>    ``(iii) the nature and extent of 
                        the risk to the health, safety, or welfare of 
                        shareholders or the public under subparagraph 
                        (A).</DELETED>
<DELETED>    ``(d) Rights Retained by Employee.--</DELETED>
        <DELETED>    ``(1) Other remedies unaffected.--Nothing in this 
        section shall be deemed to diminish the rights, privilege, or 
        remedies of any employee under any Federal or State law, or 
        under any collective bargaining agreement.</DELETED>
        <DELETED>    ``(2) Voluntary adjudication.--No employee may be 
        compelled to adjudicate his or her rights under this section 
        pursuant to an arbitration agreement.''.</DELETED>
<DELETED>    (b) Clerical Amendment.--The table of sections at the 
beginning of chapter 73 of title 18, United States Code, is amended by 
inserting after the item relating to section 1514 the following new 
item:</DELETED>

<DELETED>``1514A. Civil action to protect against retaliation in fraud 
                            cases.''.

<DELETED>SEC. 8. CRIMINAL PENALTIES FOR DEFRAUDING SHAREHOLDERS OF 
              PUBLICLY TRADED COMPANIES.</DELETED>

<DELETED>    (a) In General.--Chapter 63 of title 18, United States 
Code, is amended by adding at the end the following:</DELETED>
<DELETED>``Sec. 1348. Securities fraud</DELETED>
<DELETED>    ``Whoever knowingly executes, or attempts to execute, a 
scheme or artifice--</DELETED>
        <DELETED>    ``(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</DELETED>
        <DELETED>    ``(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),</DELETED>
<DELETED>shall be fined under this title, or imprisoned not more than 
10 years, or both.''.</DELETED>
<DELETED>    (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 new item:</DELETED>

<DELETED>``1348. Securities fraud.''.

</DELETED>SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Corporate and Criminal Fraud 
Accountability Act of 2002''.

SEC. 2. CRIMINAL PENALTIES FOR ALTERING DOCUMENTS.

    (a) In General.--Chapter 73 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1519. Destruction, alteration, or falsification of records in 
              Federal investigations and bankruptcy
    ``Whoever knowingly alters, destroys, mutilates, conceals, covers 
up, falsifies, or makes a false entry in any record, document, or 
tangible object with the intent to impede, obstruct, or influence the 
investigation or proper administration of any matter within the 
jurisdiction of any department or agency of the United States or any 
case filed under title 11, or in relation to or contemplation of any 
such matter or case, shall be fined under this title, imprisoned not 
more than 10 years, or both.
``Sec. 1520. Destruction of corporate audit records
    ``(a)(1) Any accountant who conducts an audit of an issuer of 
securities to which section 10A(a) of the Securities Exchange Act of 
1934 (15 U.S.C. 78j-1(a)) applies, shall maintain all audit or review 
workpapers for a period of 5 years from the end of the fiscal period in 
which the audit or review was concluded.
    ``(2) The Securities and Exchange Commission shall promulgate, 
within 180 days, after adequate notice and an opportunity for comment, 
such rules and regulations, as are reasonably necessary, relating to 
the retention of relevant records such as workpapers, documents that 
form the basis of an audit or review, memoranda, correspondence, 
communications, other documents, and records (including electronic 
records) which are created, sent, or received in connection with an 
audit or review and contain conclusions, opinions, analyses, or 
financial data relating to such an audit or review, which is conducted 
by any accountant who conducts an audit of an issuer of securities to 
which section 10A(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78j-1(a)) applies.
    ``(b) Whoever knowingly and willfully violates subsection (a)(1), 
or any rule or regulation promulgated by the Securities and Exchange 
Commission under subsection (a)(2), shall be fined under this title, 
imprisoned not more than 5 years, or both.
    ``(c) Nothing in this section shall be deemed to diminish or 
relieve any person of any other duty or obligation, imposed by Federal 
or State law or regulation, to maintain, or refrain from destroying, 
any document.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 73 of title 18, United States Code, is amended by adding at the 
end the following new items:

``1519. Destruction, alteration, or falsification of records in Federal 
                            investigations and bankruptcy.
``1520. Destruction of corporate audit records.''.

SEC. 3. DEBTS NONDISCHARGEABLE IF INCURRED IN VIOLATION OF SECURITIES 
              FRAUD LAWS.

    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) arises under a claim relating to--
                            ``(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 (15 U.S.C. 78c(a)(47)), any State 
                        securities laws, or any regulations or orders 
                        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.''.

SEC. 4. STATUTE OF LIMITATIONS FOR SECURITIES FRAUD.

    (a) In General.--Section 1658 of title 28, United States Code, is 
amended--
            (1) by inserting ``(a)'' before ``Except''; and
            (2) by adding at the end the following:
    ``(b) Notwithstanding subsection (a), a private right of action 
that involves a claim of fraud, deceit, manipulation, or contrivance in 
contravention of a regulatory requirement concerning the securities 
laws, as defined in section 3(a)(47) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a)(47)), may be brought not later than the earlier 
of--
            ``(1) 5 years after the date on which the alleged violation 
        occurred; or
            ``(2) 2 years after the date on which the alleged violation 
        was discovered.''.
    (b) Effective Date.--The limitations period provided by section 
1658(b) of title 28, United States Code, as added by this section, 
shall apply to all proceedings addressed by this section that are 
commenced on or after the date of enactment of this Act.
    (c) No Creation of Actions.--Nothing in this section shall create a 
new, private right of action.

SEC. 5. REVIEW OF FEDERAL SENTENCING GUIDELINES FOR OBSTRUCTION OF 
              JUSTICE AND EXTENSIVE CRIMINAL FRAUD.

    Pursuant to section 994 of title 28, United States Code, and in 
accordance with this section, the United States Sentencing Commission 
shall review and amend, as appropriate, the Federal Sentencing 
Guidelines and related policy statements to ensure that--
            (1) the base offense level and existing enhancements 
        contained in United States Sentencing Guideline 2J1.2 relating 
        to obstruction of justice are sufficient to deter and punish 
        that activity;
            (2) the enhancements and specific offense characteristics 
        relating to obstruction of justice are adequate in cases 
        where--
                    (A) documents and other physical evidence are 
                actually destroyed, altered or fabricated;
                    (B) the destruction, alteration, or fabrication of 
                evidence involves--
                            (i) a large amount of evidence, a large 
                        number of participants, or is otherwise 
                        extensive;
                            (ii) the selection of evidence that is 
                        particularly probative or essential to the 
                        investigation; or
                            (iii) more than minimal planning; or
                    (C) the offense involved abuse of a special skill 
                or a position of trust;
            (3) the guideline offense levels and enhancements for 
        violations of section 1519 or 1520 of title 18, United States 
        Code, as added by this Act, are sufficient to deter and punish 
        that activity;
            (4) 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;
            (5) a specific offense characteristic enhancing sentencing 
        is provided under United States Sentencing Guideline 2B1.1 (as 
        in effect on the date of enactment of this Act) for a fraud 
        offense that endangers the solvency or financial security of a 
        substantial number of victims; and
            (6) the guidelines that apply to organizations in United 
        States Sentencing Guidelines, Chapter 8, are sufficient to 
        deter and punish organizational criminal misconduct.

SEC. 6. PROTECTION FOR EMPLOYEES OF PUBLICLY TRADED COMPANIES WHO 
              PROVIDE EVIDENCE OF FRAUD.

    (a) In General.--Chapter 73 of title 18, United States Code, is 
amended by inserting after section 1514 the following:
``Sec. 1514A. Civil action to protect against retaliation in fraud 
              cases
    ``(a) Whistleblower Protection for Employees of Publicly Traded 
Companies.--No company with a class of securities registered under 
section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l), or 
that is required to file reports under section 15(d) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o(d)), or any officer, employee, 
contractor, subcontractor, or agent of such company, may discharge, 
demote, suspend, threaten, harass, or in any other manner discriminate 
against an employee in the terms and conditions of employment because 
of any lawful act done by the employee--
            ``(1) to provide information, cause information to be 
        provided, or otherwise assist in an investigation regarding any 
        conduct which the employee reasonably believes constitutes a 
        violation of section 1341, 1343, 1344, or 1348, any rule or 
regulation of the Securities and Exchange Commission, or any provision 
of Federal law relating to fraud against shareholders, when the 
information or assistance is provided to or the investigation is 
conducted by--
                    ``(A) a Federal regulatory or law enforcement 
                agency;
                    ``(B) any Member of Congress or any committee of 
                Congress; or
                    ``(C) a person with supervisory authority over the 
                employee (or such other person working for the employer 
                who has the authority to investigate, discover, or 
                terminate misconduct); or
            ``(2) to file, cause to be filed, testify, participate in, 
        or otherwise assist in a proceeding filed or about to be filed 
        (with any knowledge of the employer) relating to an alleged 
        violation of section 1341, 1343, 1344, or 1348, any rule or 
        regulation of the Securities and Exchange Commission, or any 
        provision of Federal law relating to fraud against 
        shareholders.
    ``(b) Enforcement Action.--
            ``(1) In general.--A person who alleges discharge or other 
        discrimination by any person in violation of subsection (a) may 
        seek relief under subsection (c), by--
                    ``(A) filing a complaint with the Secretary of 
                Labor; or
                    ``(B) if the Secretary has not issued a final 
                decision within 180 days of the filing of the complaint 
                and there is no showing that such delay is due to the 
                bad faith of the claimant, bringing an action at law or 
                equity for de novo review in the appropriate district 
                court of the United States, which shall have 
                jurisdiction over such an action without regard to the 
                amount in controversy.
            ``(2) Procedure.--
                    ``(A) In general.--An action under paragraph (1)(A) 
                shall be governed under the rules and procedures set 
                forth in section 42121(b) of title 49, United States 
                Code.
                    ``(B) Exception.--Notification made under section 
                42121(b)(1) of title 49, United States Code, shall be 
                made to the person named in the complaint and to the 
                employer.
                    ``(C) Burdens of proof.--An action brought under 
                paragraph (1)(B) shall be governed by the legal burdens 
                of proof set forth in section 42121(b) of title 49, 
                United States Code.
                    ``(D) Statute of limitations.--An action under 
                paragraph (1) shall be commenced not later than 90 days 
                after the date on which the violation occurs.
    ``(c) Remedies.--
            ``(1) In general.--An employee prevailing in any action 
        under subsection (b)(1) shall be entitled to all relief 
        necessary to make the employee whole.
            ``(2) Compensatory damages.--Relief for any action under 
        paragraph (1) shall include--
                    ``(A) reinstatement with the same seniority status 
                that the employee would have had, but for the 
                discrimination;
                    ``(B) the amount of back pay, with interest; and
                    ``(C) compensation for any special damages 
                sustained as a result of the discrimination, including 
                litigation costs, expert witness fees, and reasonable 
                attorney fees.
    ``(d) Rights Retained by Employee.--Nothing in this section shall 
be deemed to diminish the rights, privilege, or remedies of any 
employee under any Federal or State law, or under any collective 
bargaining agreement.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 73 of title 18, United States Code, is amended by inserting 
after the item relating to section 1514 the following new item:

``1514A. Civil action to protect against retaliation in fraud cases.''.

SEC. 7. CRIMINAL PENALTIES FOR DEFRAUDING SHAREHOLDERS OF PUBLICLY 
              TRADED COMPANIES.

    (a) In General.--Chapter 63 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1348. Securities fraud
    ``Whoever knowingly executes, or attempts to execute, a scheme or 
artifice--
            ``(1) to defraud any person in connection with any security 
        of an issuer with a class of securities registered under 
        section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 
        78l) or that is required to file reports under section 15(d) of 
        the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)); 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 of an 
        issuer with a class of securities registered under section 12 
        of the Securities Exchange Act of 1934 (15 U.S.C. 78l) or that 
        is required to file reports under section 15(d) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78o(d));
shall be fined under this title, or imprisoned not more than 10 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 new item:

``1348. Securities fraud.''.




                                                       Calendar No. 366

107th CONGRESS

  2d Session

                                S. 2010

                          [Report No. 107-146]

_______________________________________________________________________

                                 A BILL

  To provide for criminal prosecution of persons who alter or destroy 
  evidence in certain Federal investigations or defraud investors of 
publicly traded securities, to disallow debts incurred in violation of 
 securities fraud laws from being discharged in bankruptcy, to protect 
 whistleblowers against retaliation by their employers, and for other 
                               purposes.

_______________________________________________________________________

                              May 6, 2002

                       Reported with an amendment