[Congressional Record Volume 148, Number 2 (Thursday, January 24, 2002)]
[Senate]
[Page S102]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. CARNAHAN (for herself and Mr. Dayton):
  S. 1897. A bill to require disclosure of the sale of securities by an 
affiliate of the issuer of the securities to be made available to the 
Commission and to the public in electronic form, and for other 
purposes; to the Committee on Banking, Housing, and Urban Affairs.
  Mrs. CARNAHAN. Mr. President, America has the most vibrant and 
dynamic economy in the world. The foundation of our economy is our 
capital markets, which are robust and resilient. But the success of 
these markets depends on the free flow of accurate, reliable 
information. Our markets are the envy of the world, because of the 
confidence investors have in the private and public institutions that 
produce, verify, and analyze this information.
  The collapse of Enron, represents a dramatic failure of these 
institutions. Even sophisticated investors did not detect that Enron 
was in was in poor financial condition. We need to create greater 
transparency and an early warning system so investors can better 
protect themselves.
  One warning sign that a company may be in trouble is when its 
executives are selling large amounts of company stock, as occurred at 
Enron. I have learned, however, that information about insider sales of 
stock is not easily accessible. Under our current system, a company's 
officers are required to file a disclosure form with the Securities and 
Exchange Commission, (SEC), any time they sell securities issued by 
their company. Tens of thousands of these forms are filed annually. 
However, the vast majority of these forms are filed on paper, rather 
than electronically.
  The paper disclosure forms are not easily accessible to the public. 
People can see the disclosure forms at the Public Reference Room of the 
SEC in Washington, DC. Alternatively, people can request in writing 
that the SEC mail copies of the disclosure forms to them. Requests 
submitted in writing may take weeks to process. This is unacceptable in 
the electronic age.
  So today I am introducing legislation that requires information about 
insider sales of publicly traded companies to be filed electronically 
on the day of the sale. The Fully Informed Investor Act mandates that 
disclosure forms required by the SEC be filed electronically whenever 
officers, directors or other affiliates of the company sell shares of 
their company. The forms will be due at the SEC by the end of the day 
of the transaction. The SEC would then make the forms available to the 
public over the Internet. In addition, any company that maintains an 
internal company website would be required to post these disclosure 
forms on that website on the day of the transaction.
  This single reform would dramatically level the playing field between 
insiders and ordinary investors. Never again would company executives 
be able to quietly dump large amounts of company stock without facing 
immediate scrutiny about the financial health of their company.
  As I said, our capital markets are the envy of the world. To continue 
to be worthy of that envy, we need to constantly improve and modernize 
our system. The Fully Informed Investor Act is an important aspect of 
that modernization.

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