[Congressional Record Volume 148, Number 12 (Tuesday, February 12, 2002)]
[Senate]
[Pages S661-S662]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SHELBY:
  S. 1933. A bill to amend the Securities Exchange Act of 1934 and the 
Securities Act of 1933, to address liability standards in connection 
with violations of the Federal securities laws, and for other purposes; 
to the Committee on Banking, Housing, and Urban Affairs.
  Mr. SHELBY Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1933

       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 ``Investor Protection Act of 
     2002''.

[[Page S662]]

     SEC. 2. LIABILITY STANDARDS IN PRIVATE SECURITIES LITIGATION.

       (a) In General.--Section 21D(f) of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78u-4(f)) is amended to read as 
     follows:
       ``(f) Civil Liability.--
       ``(1) Joint and several liability for damages.--Any covered 
     person against whom a final judgment is entered in a private 
     action arising under this title shall be liable for damages 
     jointly and severally.
       ``(2) Settlement discharge.--
       ``(A) In general.--A covered person who settles any private 
     action arising under this title at any time before final 
     verdict or judgment shall be discharged from all claims for 
     contribution brought by other persons.
       ``(B) Bar order.--Upon entry of a settlement described in 
     subparagraph (A) by the court, the court shall enter a bar 
     order constituting the final discharge of all obligations to 
     the plaintiff of the settling covered person arising out of 
     the action, which order shall bar all future claims for 
     contribution arising out of the action--
       ``(i) by any person against the settling covered person; 
     and
       ``(ii) by the settling covered person against any person, 
     other than a person whose liability has been extinguished by 
     the settlement of the settling covered person.
       ``(C) Reduction.--If a covered person enters into a 
     settlement with the plaintiff prior to final verdict or 
     judgment, the verdict or judgment shall be reduced by the 
     greater of--
       ``(i) an amount that corresponds to the percentage of 
     responsibility of that covered person; or
       ``(ii) the amount paid to the plaintiff by that covered 
     person.
       ``(3) Contribution.--
       ``(A) In general.--A covered person who is jointly and 
     severally liable for damages in any private action arising 
     under this title may recover contribution from any other 
     person who, if joined in the original action, would have been 
     liable for the same damages. A claim for contribution shall 
     be determined based on the percentage of responsibility of 
     the claimant and of each person against whom a claim for 
     contribution is made, as determined by the court.
       ``(B) Statute of limitations for contribution.--In any 
     private action arising out of this title determining 
     liability, an action for contribution shall be brought not 
     later than 6 months after the date of entry of a final, 
     nonappealable judgment in the action.
       ``(4) Applicability.--Nothing in this subsection shall be 
     construed to create, affect, or in any manner modify, the 
     standard for liability associated with any action arising 
     under the securities laws.
       ``(5) Definitions.--For purposes of this subsection--
       ``(A) the term `covered person' means--
       ``(i) a defendant in any private action arising under this 
     title; or
       ``(ii) a defendant in any private action arising under 
     section 11 of the Securities Act of 1933, who is an outside 
     director of the issuer of the securities that are the subject 
     of the action; and
       ``(B) the term `outside director' shall have the meaning 
     given such term by rule or regulation of the Commission.''.
       (b) Conforming Amendment to the Securities Act of 1933.--
     Section 11(f)(2)(A) of the Securities Act of 1933 (15 U.S.C. 
     77k(f)(2)(A)) is amended by striking ``in accordance'' and 
     all that follows through the period and inserting ``in 
     accordance with section 21D(f) of the Securities Exchange Act 
     of 1934.''.
       (c) Applicability.--The amendments made by this section 
     shall not affect or apply to any private action arising under 
     the securities laws commenced before and pending on the date 
     of enactment of this Act.

     SEC. 3. PERSONS WHO AID AND ABET VIOLATIONS.

       (a) Commission Authority.--Section 20(e) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78t(e)) is amended by 
     striking ``knowingly'' and inserting ``recklessly''.
       (b) Private Litigation.--Section 21D of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78u-4) is amended by adding 
     at the end the following:
       ``(g) Persons That Aid or Abet Violations.--Any person that 
     recklessly provides substantial assistance to another person 
     in violation of a provision of this title, or of any rule or 
     regulation issued under this title, shall be deemed to be in 
     violation of such provision to the same extent as the person 
     to whom such assistance is provided.''.

     SEC. 4. STATUTE OF LIMITATIONS.

       Title I of the Securities Exchange Act of 1934 (15 U.S.C. 
     78a et seq.) is amended by adding at the end the following 
     new section:

     ``SEC. 37. STATUTE OF LIMITATIONS.

       ``(a) In General.--Except as otherwise specifically 
     provided in this title, and notwithstanding section 9(e), an 
     implied private right of action arising under this title may 
     be brought not later than the earlier of--
       ``(1) 5 years after the date on which the alleged violation 
     occurred; or
       ``(2) 3 years after the date on which the alleged violation 
     was discovered.
       ``(b) Effective Date.--The limitations period provided by 
     this section shall apply to all proceedings commenced after 
     the date of enactment of the Investor Protection Act of 
     2002.''.

     SEC. 5. REPEAL OF CERTAIN CLASS ACTION LIMITATIONS.

       (a) Securities Exchange Act of 1934.--Section 28 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78bb) is amended--
       (1) in subsection (a), by striking ``Except as provided in 
     subsection (f), the'' and inserting ``The''; and
       (2) by striking subsection (f).
       (b) Securities Act of 1933.--Section 16 of the Securities 
     Act of 1933 (15 U.S.C. 77p) is amended to read as follows:

     ``SEC. 16. REMEDIES ADDITIONAL.

       ``The rights and remedies provided by this title shall be 
     in addition to any and all other rights and remedies that may 
     exist at law or in equity.''.
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