[Congressional Record Volume 142, Number 51 (Friday, April 19, 1996)]
[Extensions of Remarks]
[Pages E591-E592]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             CONTRACT WITH AMERICA ADVANCEMENT ACT OF 1996

                                 ______


                               speech of

                       HON. THOMAS J. BLILEY, JR.

                              of virginia

                    in the house of representatives

                        Thursday, March 28, 1996

  Mr. BLILEY. Mr. Speaker, I commend Chairman Hyde of the Judiciary 
Committee and Senator Bond for their leadership on this bill. We share 
the goals of reducing regulatory burdens on small business and, in so 
doing, promoting job creation and economic growth.
  S. 942 sweeps across a wide range of Federal regulation. Oversight of 
the Securities and Exchange Commission [SEC] falls within the 
jurisdiction of the Commerce. The SEC is charged with the important 
role of preventing fraud in our securities markets. Though its 
enforcement of the anti-fraud provisions of the securities laws, the 
SEC builds confidence of investors and makes our financial markets 
liquid and transparent.
  My analysis of the provisions of S. 942 indicates that the bill will 
not have any negative effect on the enforcement activities of the SEC. 
We will not tolerate, and this bill does

[[Page E592]]

not create, any free pass for financial fraud. Specifically, Section 
323(b)(4) of the bill expressly excludes ``violations involving wilful 
or criminal conduct'' from the small business enforcement variance. In 
the context of the Federal securities laws, I understand ``wilful'' to 
have the longstanding judicial construction as expressed in, for 
example, Tager v. Securities and Exchange Commission, 344 F.2d 5, 7 
(2d. Cir. 1965).
  In addition, it is my understanding that the enforcement procedures 
followed by the SEC under current law, specifically the Securities 
Enforcement Remedies and Penny Stock Reform Act of 1990, satisfy the 
requirements of Section 323, and said section does not impose 
requirements beyond those of the Remedies Act.
  In connection with the provisions of S. 942 dealing with attorneys 
fees, the fill excludes awards of attorneys fees in connection with 
wilful violations. In the context of the Federal securities laws, the 
term ``wilful'' has the meaning set forth in Tager, supra at 7.
  Additionally, provisions of S. 942 makes useful changes in what 
constitutes a demand by the Government. My understanding is that the 
term ``demand'' when applied in the context of the Federal securities 
laws, does not include notices or other communication with the staff or 
members of the SEC that occur in the context of the ``Wells'' 
procedure.
  Finally, my understanding of the provisions for Congressional review 
of major rules, the definition of major rules would not extend to 
actions for exemptive relief under the securities laws. Such exemptive 
rules are those that permit regulated entities to engage in 
transactions that would otherwise be proscribed by statute. It would be 
perverse to read this deregulatory bill in such a way as to inhibit 
exemptive relief for regulated persons by the SEC.

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