[Congressional Record Volume 148, Number 37 (Tuesday, April 9, 2002)]
[Extensions of Remarks]
[Page E460]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  INTRODUCTION OF H.R. 4083, THE CORPORATE RESPONSIBILITY ACT OF 2002

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                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                         Tuesday, April 9, 2002

  Mr. LaFalce. Mr. Speaker, today I introduce H.R. 4083, the Corporate 
Responsibility Act of 2002. This bill gives legislative substance and 
real teeth to meritorious portions of President Bush's 10-point plan 
unveiled several weeks ago regarding corporate disclosure and 
accountability. This bill supplements the important and comprehensive 
reforms in H.R. 3818, the Comprehensive Investor Protection Act, that I 
introduced with Minority Leader Gephardt and many other Democratic 
colleagues in the wake of the Enron collapse.
  This bill would make it clear that the CEO and CFO are the 
gatekeepers of honest and understandable disclosure. To the extent that 
corporate officers violate their duty to shareholders, this legislation 
empowers the SEC to take action. My bill includes:
  1. Disgorgement of Bonuses: Requires the SEC to adopt rules to 
require the disgorgement of bonuses and other incentive-based 
compensation obtained by an officer or director of an issuer who filed 
financial statements which were at the time they were filed misleading.
  2. CEO and CFO Certification: The CEO and CFO certify in each annual 
or quarterly report filed that: such officer reviewed the support; the 
report does not contain any untrue statement of material fact; the 
financial statements fairly present the financial condition of the 
company; and the company has evaluated its internal controls and have 
disclosed to the auditors and the audit company (a) all significant 
deficiencies in such controls and (b) any fraud that involves 
management or other employees who have a significant role in the 
company's internal controls, among other things. In addition, corporate 
officers must indicate whether or not there were significant changes in 
internal controls subsequent to the day of the evaluation of internal 
controls and whether any corrective actions have been taken.
  Violation of the certification provisions may be enforced by the 
remedies granted to the SEC under Securities Act of 1934, including 
criminal penalties for any willful violations of such certifications.
  3. Officer and Director Removal: Reduces the SEC's burden in court 
for establishing unfitness to serve as an officer and director. In 
addition, the bill provides that the Commission in its own 
administrative proceeding may remove an officer and director (subject 
to judicial review). Current law requires that the SEC must go to court 
to seek officer and director removal.
  I intend to seek the bi-partisan support of my colleagues by offering 
each section of this legislation as separate amendments at the upcoming 
markup of H.R. 3673. I hope to have the support of the White House and 
my Republican colleagues to make real the enhancement of corporate 
accountability.

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