[Congressional Record Volume 148, Number 96 (Tuesday, July 16, 2002)]
[House]
[Pages H4683-H4694]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               CORPORATE FRAUD ACCOUNTABILITY ACT OF 2002

  Mr. SENSENBRENNER. Mr. Speaker, I move to suspend the rules and pass 
the bill (H.R. 5118) to provide for enhanced penalties for accounting 
and auditing improprieties at publicly traded companies, and for other 
purposes, as amended.
  The Clerk read as follows:

                               H.R. 5118

       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 ``Corporate Fraud 
     Accountability Act of 2002''.

     SEC. 2. HIGHER MAXIMUM PENALTIES FOR MAIL AND WIRE FRAUD.

       (a) Mail Fraud.--Section 1341 of title 18, United States 
     Code, is amended by striking ``five'' and inserting ``20''.
       (b) Wire Fraud.--Section 1343 of title 18, United States 
     Code, is amended by striking ``five'' and inserting ``20''.
       (c) Securities Fraud.--Chapter 63 of title 18, United 
     States Code, is amended by adding at the end the following:

     ``Sec. 1348. Securities fraud

       ``Whoever knowingly executes a scheme or artifice--
       ``(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
       ``(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),
     shall be fined under this title, or imprisoned not more than 
     25 years, or both.''.
       (d) 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:

``1348. Securities fraud.'.

     SEC. 3. TAMPERING WITH A RECORD OR OTHERWISE IMPEDING AN 
                   OFFICIAL PROCEEDING.

       Section 1512 of title 18, United States Code, is amended--
       (1) by redesignating subsections (c) through (i) as 
     subsections (d) through (j), respectively; and
       (2) by inserting after subsection (b) the following new 
     subsection:
       ``(c) Whoever corruptly--
       ``(1) alters, destroys, mutilates, or conceals a record, 
     document, or other object, or attempts to do so, with the 
     intent to impair the object's integrity or availability for 
     use in an official proceeding; or
       ``(2) otherwise obstructs, influences, or impedes any 
     official proceeding, or attempts to do so,
     shall be fined under this title or imprisoned not more than 
     20 years, or both.''

     SEC. 4. AMENDMENT TO THE FEDERAL SENTENCING GUIDELINES.

       (a) Request for Immediate Consideration by The United 
     States Sentencing Commission.--Pursuant to its authority 
     under section 994(p) of title 28, United States Code, and in 
     accordance with this section, the United States Sentencing 
     Commission is requested to--
       (1) promptly review the sentencing guidelines applicable to 
     securities and accounting fraud and related offenses;
       (2) expeditiously consider the promulgation of new 
     sentencing guidelines or amendments to existing sentencing 
     guidelines to provide an enhancement for officers or 
     directors of publicly traded corporations who commit fraud 
     and related offenses; and
       (3) submit to Congress an explanation of actions taken by 
     the Sentencing Commission pursuant to paragraph (2) and any 
     additional policy recommendations the Sentencing Commission 
     may have for combating offenses described in paragraph (1).
       (b) Considerations in Review.--In carrying out this 
     section, the Sentencing Commission is requested to--
       (1) ensure that the sentencing guidelines and policy 
     statements reflect the serious nature of securities, pension, 
     and accounting fraud and the need for aggressive and 
     appropriate law enforcement action to prevent such offenses;
       (2) assure reasonable consistency with other relevant 
     directives and with other guidelines;
       (3) account for any aggravating of mitigating circumstances 
     that might justify exceptions, including circumstances for 
     which the sentencing guidelines currently provide sentencing 
     enhancements;
       (4) ensure that 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;
       (5) ensure that 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;
       (6) make any necessary conforming changes to the sentencing 
     guidelines; and
       (7) assure that the guidelines adequately meet the purposes 
     of sentencing as set forth in section 3553 (a)(2) of title 
     18, United States Code.
       (c) Emergency Authority and Deadline For Commission 
     Action.--The United States Sentencing Commission is requested 
     to promulgate the guidelines or amendments provided for under 
     this sections as soon as practicable, and in any event not 
     later than the 120 days after the date of enactment of this 
     Act, in accordance with the procedures sent forth in section 
     21(a) of the Sentencing Reform Act of 1987, as though the 
     authority under that Act had not expired.

     SEC. 5. 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) is a claim for--
       ``(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), any of the State securities 
     laws, or any regulation or order 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. 6. CORPORATE RESPONSIBILITY FOR FINANCIAL REPORTS.

       (a) In General.--Chapter 63 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 1349. Failure of corporate officers to certify 
       financial reports

       ``(a) Certification of Periodic Financial Reports.--Each 
     periodic report containing financial statements filed by an 
     issuer with the Securities Exchange Commission pursuant to 
     section 13(a) or 15(d) of the Securities Exchange Act of 1934 
     (15 U.S.C. 78m(a) or 78o(d)) shall be accompanied by a 
     written statement by the chairman of the board, chief 
     executive officer, and chief financial officer (or equivalent 
     thereof) of the issuer.
       ``(b) Content.--The statement required under subsection (a) 
     shall certify that those financial statements fairly and 
     accurately represent, in all material respects, the 
     operations and financial condition of the issuer.
       ``(c) Criminal Penalties.--Whoever--
       ``(1) knowingly violates this section shall be fined not 
     more than $1,000,000, or imprisoned not more than 10 years, 
     or both; or
       ``(2) willfully violates this section shall be fined not 
     more than $5,000,000, or imprisoned not more than 20 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:

``1349. Failure of corporate officers to certify financial reports.''.

     SEC. 7. ATTEMPTS AND CONSPIRACIES TO COMMIT CRIMINAL 
                   OFFENSES.

       (a) In General.--Chapter 1 of title 18, United States Code, 
     is amended by inserting before section 2 the following:

     ``Sec. 1. Attempt and conspiracy

       ``Any person who attempts or conspires to commit any 
     offense against the United States shall be subject to the 
     same penalties as those prescribed for the offense, the 
     commission of which was the object of the attempt or 
     conspiracy.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of title 18, United States Code, is amended so that 
     the item relating to section 1 reads as follows:

``1. Attempt and conspiracy.''.

     SEC. 8. INCREASED CRIMINAL PENALTIES UNDER SECURITIES 
                   EXCHANGE ACT OF 1934.

       Section 32(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78ff(a)) is amended--
       (1) by striking ``$1,000,000, or imprisoned not more than 
     10 years'' and inserting ``$5,000,000, or imprisoned not more 
     than 20 years''; and
       (2) by striking ``$2,500,000'' and inserting 
     ``$25,000,000''.

     SEC. 9. TEMPORARY FREEZE AUTHORITY FOR THE SECURITIES AND 
                   EXCHANGE COMMISSION.

       (a) In General.--Section 21C(c) of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78u-3(c)) is amended by adding at the 
     end the following:

[[Page H4684]]

       ``(3) Temporary freeze.--
       ``(A) In general.--
       ``(i) Issuance of temporary order.--Whenever, during the 
     course of a lawful investigation involving possible 
     violations of the Federal securities laws by an issuer of 
     publicly traded securities or any of its directors, officers, 
     partners, controling persons, agents, or employees, it shall 
     appear to the Commission that it is likely that the issuer 
     will make extraordinary payments (whether compensation of 
     otherwise) to any of the foregoing persons, the Commission 
     may petition a Federal district court for a temporary order 
     requiring the issuer to escrow, subject to court supervision, 
     those payments in an interest-bearing account for 45 days.
       ``(ii) Standard.--A temporary order shall be entered under 
     clause (i), only after notice and opportunity for a hearing, 
     unless the court determines that notice and hearing prior to 
     entry of the order would be impracticable or contrary to the 
     public interest.
       ``(iii) Effective period.--A temporary order issued under 
     clause (i) shall--

       ``(I) become effective immediately;
       ``(II) be served upon the parties subject to it; and
       ``(III) unless set aside, limited or suspended by a court 
     of competent jurisdiction, shall remain effective and 
     enforceable for 45 days.

       ``(iv) Extensions authorized.--The effective period of an 
     order under this subparagraph may be extended by the court 
     upon good cause shown for not longer than 45 additional days, 
     provided that the combined period of the order shall not 
     exceed 90 days.
       ``(B) Process on Determination of violations.--
       ``(i) Violations charged.--If the issuer or other person 
     described in subparagraph (A) is charged with any violation 
     of the Federal securities laws before the expiration of the 
     effective period of a temporary order under subparagraph (A) 
     (including any applicable extension period), the order shall 
     remain in effect, subject to court approval, until the 
     conclusion of any legal proceedings related thereto, and the 
     affected issuer or other person, shall have the right to 
     petition the court for review of the order.
       ``(ii) Violations not charged.--If the issuer or other 
     person described in subparagraph (A) is not charged with any 
     violation of the Federal securities laws before the 
     expiration of the effective period of a temporary order under 
     subparagraph (A) (including any applicable extension period), 
     the escrow shall terminate at the expiration of the 45-day 
     effective period (or the expiration of any extension period, 
     as applicable), and the disputed payments (with accrued 
     interest) shall be returned to the issuer or other affected 
     person.''
       ``(b) Technical Amendment.--Section 21C(c)(2) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78u-3(c)(2)) is 
     amended by striking ``This'' and inserting ``paragraph (1)''.

     SEC. 10. AUTHORITY OF THE COMMISSION TO PROHIBIT PERSONS FROM 
                   SERVING AS OFFICERS OR DIRECTORS.

       (a) Securities Exchange Act of 1934.--Section 21C of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78u-3) is amended 
     by adding at the end the following:
       ``(f) Authority of the Commission to Prohibit Persons From 
     Serving as Officers or Directors.--In any cease-and-desist 
     proceeding under subsection (a), the Commission may issue an 
     order to prohibit, conditionally or unconditionally, and 
     permanently or for such period of time as it shall determine, 
     any person who has violated section 10(b) or the rules or 
     regulations thereunder, from acting as an officer or director 
     of any issuer that has a class of securities registered 
     pursuant to section, or that is required to file reports 
     pursuant to section (d), if the conduct of that person 
     demonstrates unfitness to serve as an officer or director of 
     any such Issuer.''.
       (b) Securities Act of 1933.--Section 8A of the Securities 
     Act of 1933 (15 U.S.C. 77h-1) is amended by adding at the end 
     of the following:
       ``(f) Authority of the Commission to Prohibit Persons From 
     Serving as Officers or Directors.--In any cease-and-desist 
     proceeding under subsection (a), the Commission may issue an 
     order to prohibit, conditionally or unconditionally, and 
     permanently or for such period of time as it shall determine, 
     any person who has violated section 17(a)(1) or the rules or 
     regulations thereunder, from acting as an officer or director 
     of any issuer that has a class of securities registered 
     pursuant to section of the Securities Exchange Act of 1934, 
     or that is required to file reports pursuant to section 15(d) 
     of that Act, if the conduct of that person demonstrates 
     unfitness to serve as an officer or director of any such 
     issuer.''.

     SEC. 11. RETALIATION AGAINST INFORMANT.

       (a) In General.--Section 1513 of title 18, United States 
     Code, is amended by adding at the end the following:
       ``(e) Whoever knowingly, with the intent to retaliate, 
     takes any action harmful to any person, including 
     interference with the lawful employment or livelihood of any 
     person, for providing to a law enforcement officer any 
     truthful information relating to the commission or possible 
     commission of any Federal offense, shall be fined under this 
     title or imprisoned not more than 10 years, or both.''.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Wisconsin (Mr. Sensenbrenner) and the gentleman from Michigan (Mr. 
Conyers) each will control 20 minutes.
  The Chair recognizes the gentleman from Wisconsin (Mr. 
Sensenbrenner).


                             General Leave

  Mr. SENSENBRENNER. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days within which to revise and extend 
their remarks and include extraneous material on H.R. 5118, the bill 
currently under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Wisconsin?
  There was no objection.
  Mr. SENSENBRENNER. Mr. Speaker, I also ask unanimous consent that an 
additional 20 minutes on the motion to suspend the rules be granted, 
and be equally divided between the chairman and the ranking minority 
member of the Committee on Financial Services.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Wisconsin?
  There was no objection.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, Xerox, WorldCom, Global Crossing, Enron, and Tyco are 
among several of the U.S. elite corporations now in Wall Street's Hall 
of Shame. They have all apparently cooked the books and served their 
employees with a recipe for disaster with pink slips and lost pension 
funds.
  Enron overstated its profits by over half a billion dollars in 1997. 
WorldCom admitted that it had hidden a staggering $3.50 billion in 
losses. Many Americans have been hurt badly by this irresponsible 
behavior, and tragically, everybody's 401(k) assets have tanked. 
Employees who receive stock options as part of their income package 
have lost their life savings, on top of losing their jobs.
  Much of these shenanigans appear to have begun in the 1990s, the 
decade when personal accountability and responsibility became 
irrelevant. It appears that for some in corporate America, the 
incentives for fraud and ill-gotten gain outweigh the consequences of 
getting caught.
  Well, maybe the potential penalties for these crimes are just not 
strong enough. Today, it is our duty to fix that. Mr. Speaker, these 
few bad actors have not only harmed the employees that depended on 
them, the public that invested in them, but also the integrity and 
reputation of all of corporate America, which is the backbone of the 
greatest economic machine the world has ever seen.
  We must return this country to personal accountability and 
responsibility, and help rebuild America and the world's confidence in 
our markets. We must crack down on the corporate crooks, and 
reestablish the honor of the vast majority of men and women in 
corporate America who are hardworking and honest.
  The best way to do that is to punish the corporate wrongdoers, and 
punish them harshly. The American public needs to know that under this 
bill, H.R. 5118, the Corporate Fraud Accountability Act of 2002, 
corporate criminals will do real time, real long time.
  If they commit mail or wire fraud in the furtherance of their 
corporate crimes, which is often how prosecutors nail these criminals, 
they will face 20 years in jail, not the current 5 years, nor the 10 
years called for in the other body's legislation.
  In addition, a distinct securities fraud crime is established with a 
maximum penalty of 25 years in jail. Again, the other body only calls 
for a 10-year penalty.
  Importantly, H.R. 5118 strengthens laws that criminalize document 
shredding and other forms of obstruction of justice, and provides a 
maximum penalty of 20 years. The other body calls for just 10 years.
  H.R. 5118 also requires top corporate executives to certify that the 
financial statements of the company fairly and accurately represent the 
financial condition of the company. Violating this section can subject 
corporate executives to fines of up to $5 million and up to 20 years in 
prison. Under the version passed by the other body, the maximum penalty 
a corporate officer would face is only a $1 million fine and 10 years 
in prison.
  The Corporate Fraud Accountability Act also increases the criminal 
penalties for those who file false statements with the Securities and 
Exchange Commission to a maximum

[[Page H4685]]

penalty of $5 million and 20 years in prison. If a corporation files a 
false statement, those fines can increase up to a maximum of $25 
million.
  The bill passed by the other body does not change the current 
penalties of a maximum fine of $1 million and 10 years in prison, and 
corporations would still only face maximum fines of $2.5 million.
  By passing this bill today, the House is telling the American people 
that the law will make CEOs directly responsible for the integrity of 
their company's financial statements, and face severe financial and 
criminal penalties for falsifying such statements.
  Under this legislation, top executives will not be allowed to pilfer 
the assets of the company by giving themselves huge bonuses and other 
extraordinary payments if the company is subject to an SEC 
investigation. Their pay and benefits are frozen when the investigation 
starts. Americans will know that corporate officers will no longer be 
able to misuse the bankruptcy laws to discharge liabilities based upon 
securities fraud, and the honest brokers of corporate America will know 
that those who abuse the law and tarnish corporate America's reputation 
will go to jail for a long, long time.
  Finally, Mr. Speaker, this bill creates criminal sanctions against 
those who retaliate against corporate whistleblowers, similar to 
witness tampering in another context. The only thing the other body's 
bill does is provide for more lawsuits, a civil cause of action for the 
whistleblowers against the retaliators. Under the current bankruptcy 
law, if the whistleblower wins the civil lawsuit, the retaliator will 
be able to discharge that judgment in bankruptcy.
  Mr. Speaker, H.R. 5118 is a tough bill that cracks down on the 
corporate crooks. It goes a long way to protecting the life savings of 
many Americans by making the price of theft too high.
  Mr. Speaker, I urge my colleagues to support the bill, and I reserve 
the balance of my time.
  Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I greet the gentleman from Wisconsin (Mr. 
Sensenbrenner), my chairman. Before I begin my comments, could I ask my 
friend and chairman of the committee, why is this bill coming up under 
suspension?
  Mr. SENSENBRENNER. Mr. Speaker, will the gentleman yield?
  Mr. CONYERS. I yield to the gentleman from Wisconsin.
  Mr. SENSENBRENNER. Mr. Speaker, I would tell the gentleman, it is 
because there is an urgency that we restore confidence in the markets 
that corporate wrongdoing is going to be dealt with firmly and 
severely, which the increased penalties in this bill do.
  Last week, the minority leader, the distinguished gentleman from 
Missouri (Mr. Gephardt), on three occasions called on taking bipartisan 
action to correct the problems now. At least insofar as weak criminal 
penalties are concerned, this bill meets the minority leader's call.
  Mr. CONYERS. Mr. Speaker, I thank the gentleman for his response. Can 
he explain to me if this bill has been referred to the Committee on the 
Judiciary?
  Mr. SENSENBRENNER. Mr. Speaker, if the gentleman will continue to 
yield, the bill was introduced yesterday. It was jointly referred to 
the Committee on the Judiciary and the Committee on Financial Services.
  The leadership and I made a decision, together with the gentleman 
from Ohio (Chairman Oxley) and the gentleman from Louisiana (Chairman 
Tauzin), that it is really important that the bill be passed quickly, 
given the volatility in the stock market. Hopefully, we can provide 
some assurance that corporate wrongdoers will go to jail for a very 
long time, and this bill does that.
  Mr. CONYERS. Mr. Speaker, I thank the gentleman. About what time was 
that yesterday that the bill was introduced?
  Mr. SENSENBRENNER. If the gentleman will continue to yield, the bill 
was introduced at the time we cast our votes yesterday afternoon. The 
gentleman from Michigan (Mr. Conyers) was given an opportunity to 
cosponsor the legislation, and I do not see his name on the list of 
cosponsors.
  Mr. CONYERS. I know the gentleman does not see my name on the list. 
Did the gentleman tell me what time it was introduced, which was what 
my question was?
  Mr. SENSENBRENNER. Yes, I did.
  Mr. CONYERS. What time?
  Mr. SENSENBRENNER. When we voted last night at 6:30.
  Mr. CONYERS. It was 6:30 p.m. I thank the gentleman. Has the bill 
been changed since the bill was introduced at 6:30?
  Mr. SENSENBRENNER. The motion to suspend the rules was.
  Mr. CONYERS. Was it changed?
  Mr. SENSENBRENNER. The motion to suspend the rules was as amended.
  Mr. CONYERS. Was the bill changed?
  Mr. SENSENBRENNER. The answer is yes.
  If the gentleman will yield further, I will explain that the criminal 
penalties against those who retaliate against corporate whistleblowers 
was the addition, which was one loophole that was plugged, and the 
gentleman from Ohio (Chairman Oxley) thinks this is a good amendment.
  Mr. CONYERS. I am happy to learn of the zeal of the leadership in the 
House.
  Now, let me just ask the gentleman, was there any consultation on the 
part of the Republican leadership with the Democratic leadership?
  Mr. SENSENBRENNER. If the gentleman will yield further, I am not 
aware of whether it was or not. I am informed by staff, this is not 
personal knowledge, that there was a consultation; and furthermore, the 
majority staff on the Committee on the Judiciary consulted with the 
minority staff, and a few of the provisions that the minority suggested 
are contained in the bill.
  Mr. CONYERS. In other words, what we have here today is a jacked-up 
version of a ``let's-run-and-deal-with-an-emergency'' that is so 
critical to the stabilization of the stock markets that the bill was 
introduced less than 24 hours ago, has never been before the Committee 
on the Judiciary, has never been consulted with the Democratic 
leadership, no consultations, and then has been amended in the process, 
and we now find ourselves under a suspension procedure in the House in 
which we are now told that this is very important that we do it, it is 
a very important piece of legislation, information on which there has 
never been a hearing in the Committee on the Judiciary.
  Mr. Speaker, I do not mean to use up all my time with my friend, the 
gentleman from Wisconsin, but for my final question I would ask the 
gentleman from Wisconsin (Chairman Sensenbrenner), are there any civil 
penalties for retaliation against whistleblowers in this bill?
  Mr. SENSENBRENNER. If the gentleman will continue to yield, there are 
no civil penalties, but there are criminal penalties. People who 
retaliate against whistleblowers ought to go to jail rather than being 
allowed to file a lawsuit, which, if they win, would be dischargeable 
in bankruptcy.
  Mr. CONYERS. In other words, the gentleman thought this out, or 
somebody, whoever put this bill together, and they have come to the 
conclusion that we do not want civil penalties, in other words, hitting 
these corporations and the crooked CEOs in the pocketbook, which is 
what motivates much of this malevolent corporate behavior; but the 
gentleman wants them to now go to jail, which was a provision that I 
had in the original bill that we proposed, I say to the gentleman from 
Wisconsin, that he and the Republicans voted against.
  What newfound energies. This is really wonderful.

                              {time}  1200

  Mr. SENSENBRENNER. There are criminal fines in this bill that are 
$250,000 or double the amount of ill-gotten gain, whichever is greater.
  Mr. CONYERS. I am talking about the civil penalties now. I am not 
talking about the criminal penalties. I agree with the criminal 
penalties. But there must have been some profound legal reasoning that 
led to the omission of civil penalties.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, the gentleman from Michigan (Mr. Conyers) must want to

[[Page H4686]]

have more lawsuits. The gentleman from Wisconsin (Mr. Sensenbrenner) 
wants to have people who retaliated against whistleblowers being thrown 
in jail because that is a kind of form of witness tampering.
  Now criminal penalties are not dischargeable in bankruptcy under the 
current law and under the proposal that has passed both Houses and is 
in conference. Civil judgments are dischargeable in bankruptcy. So 
under my plan, the bad folks who have stripped corporate issues of 
their assets and treated their employees are not going to be able to 
run to the bankruptcy court to get a discharge.
  Under what the gentleman from Michigan is proposing, they can be sued 
civilly, they can lose the lawsuit. The court can enter a huge judgment 
against them, and then they are back in court, and they will get a 
discharge in bankruptcy, and as a result there will be no money that 
will be going out of their pocket. That is the difference between his 
complaint and my bill.
  Mr. Speaker, I reserve the balance of my time.
  The SPEAKER pro tempore (Mr. LaHood). The gentleman from Ohio (Mr. 
Oxley) may proceed and then the gentleman from New York (Mr. LaFalce). 
Each gentleman has 10 minutes.
  Mr. OXLEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in strong support of this legislation and commend 
the gentleman from Wisconsin (Mr. Sensenbrenner), the chairman of the 
Committee on the Judiciary, for his excellent work.
  This bill addresses corporate wrong-doing in a responsible and 
measured way. Specifically, the bill raises the criminal penalties for 
securities fraud under section 32 of the 1934 act by increasing the 
maximum fines and doubling of the potential jail time to a maximum of 
20 years. It authorizes the SEC to place a temporary freeze on 
extraordinary payments to directors, officers, partners, or employees 
of public companies under investigation for a possible violation of 
securities fraud. Finally, it gives the SEC the authority to prohibit 
bad actors from ever serving as an officer or director in a public 
company.
  I urge my colleagues to pass this tough measure. It is a good 
complement to the bipartisan legislation we passed in April with 119 
Democrat votes in support to improve corporate responsibility, 
accounting practices, and the quality and timeliness of information to 
investors.
  We need responsible measures to clean up corporate America, not 
measures that create loopholes for voracious trial lawyers. I again 
thank the gentleman for his leadership on this important issue. Our 
committee, the Committee on Financial Services, did not have 
jurisdiction over the criminal penalties side of the issue and so we 
welcome the complementary bill by the chairman of the Committee on the 
Judiciary.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of this bill; but I do so with 
several, many, critical reservations. First of all the process. The 
bill was introduced at 6:30 last night. It is brought up on the 
Suspension Calendar. That means there is hardly a soul in the House of 
Representatives who has even had the time to read the bill, especially 
since it was amended after it was introduced. Secondly, for those of us 
who would like to offer strengthening amendments by bringing it up on 
the Suspension Calendar, we cannot offer one single amendment. That is 
what the Republicans decided to do: do not permit the Democrats to 
offer any amendments; this is as far as we want to go. On a scale of 
one to 10, this is a two. We want to make it a 10. You will not permit 
us an amendment to make it a 3, a 4, a 5, a 6, much less a 10. That is 
totally unacceptable.
  Something else, too. The President wants a bill passed, and he wants 
a bill signed into law before we recess in August. The only way we will 
be able to do that, and you know this, is if we take the Senate bill 
that passed 97 to nothing. If President Bush really means what he says, 
he ought to say what he means, and that is take the Senate bill and 
pass it, and then we can come back in September and negotiate; but that 
should be the law of the land because 97 Members of the Senate, every 
Democrat who voted, every Republican who voted, voted for it. I hope 
this is not simply a tour de force.
  Now, I am going to support this two out of 10, but there are an awful 
lot of things that it fails to do, that it omits to do. It omits 
critical safeguards contained in the Senate bill. For example, it fails 
to extend the time in which the victims of fraud may bring suit to 
recover their damages. For over 40 years, courts held that the statute 
of limitations for private securities fraud lawsuits brought under the 
Securities Exchange Act of 1934 was the statute of limitations 
determined under applicable State law. This rule provided adequate time 
for fraud victims to discover the fraud and bring a lawsuit against the 
perpetrators of the fraud.
  Unfortunately, in a 1991 case in a 5-4 decision, the Supreme Court 
significantly shortened the period of time in which investors may bring 
securities fraud action: the earlier of 1 year from the discovery of 
fraud or 3 years from the fraudulent act. That Supreme Court decision, 
the Lampf case, adopting a shorter period, does not permit individual 
investors adequate time to discover and pursue violations of securities 
laws. We must change that.
  Despite urging from the SEC, State securities regulators and experts, 
Congress failed to overturn Lampf when it adopted the Private 
Securities Litigation Reform Act of 1995.
  The gentleman from Michigan (Mr. Conyers) wants to change that. I 
want to change that. We ought to permit this body an opportunity to 
vote on that issue. The Republicans are saying no, we will not even 
permit you to vote on the issue.
  The Senate has seen fit to protect investors by extending the time 
period to bring a suit for up to 2 years after the date in which the 
alleged violations were discovered or 5 years after the date in which 
the violation occurred. Why is that not in this bill?
  This bill omits many of the other critical safeguards in the Senate 
bill, namely, the corporate whistleblower civil protections, a 
requirement for document retention, important sentencing guideline 
enhancements.
  So I will vote for this bill today, but I hope that when the Congress 
sends the bill to the President, it will have the full arsenal of tools 
to fight securities fraud and corporate misconduct contained in the 
Senate bill, not merely the sprinkling few that the Republican 
leadership deems fit to bring to the floor of the House.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, the gentleman from New York (Mr. LaFalce) says this bill 
is a two on a scale of 10. If this bill is a two, then the Senate bill 
is a one, because in most cases the penalties in this bill are double 
the penalties in the bill passed by the other body. And this bill 
creates two new crimes that were not created in the bill that was 
passed by the other body.
  Secondly, at least on the Committee on the Judiciary side, the 
majority and minority staffs worked together beginning on Friday of 
last week on the provisions of this bill, which was the day after the 
agreement was reached in the other body on the provisions contained in 
their bill. And there are at least four provisions in this bill that 
are patterned after provisions in similar legislation offered by my 
friend from Michigan (Mr. Conyers) H.R. 4098.
  They are higher-maximum penalties for wire and mail fraud; an 
amendment to the Federal sentencing guidelines which pertain in cases 
where there is actual destruction or fabrication of evidence; and in 
fraud cases where a large number of victims are involved, the debt is 
nondischargeable, and bankruptcy, if incurred in violation of 
securities fraud laws; and, fourthly, tampering with records and 
otherwise impeding with official proceedings. There the language is a 
little bit different, but the thrust between the Conyers bill and this 
bill are the same.
  Now the other complaint that I have heard from both the gentleman 
from Michigan (Mr. Conyers) and the gentleman from New York (Mr. 
LaFalce) is that we are speeding too fast on this bill. Well, I pulled 
up out of the records what the minority leader, Mr. Gephardt, had to 
say last week. On July 9,

[[Page H4687]]

the gentleman from Missouri said, ``Now is the time to apply this 
lesson to corporate reform and go beyond the rhetoric and actually pass 
strong legislation to protect Americans and to improve cooperate 
responsibility and accountability.''
  Then the next day the gentleman from Missouri (Mr. Gephardt), the 
minority leader said, ``Americans need financial reforms that are black 
and white. If we continue to practice corporate accounting in shades of 
gray, our economy will suffer. Failing to take action is not an option. 
We must take bipartisan action to correct these problems now.'' July 
10.
  Now, sometimes we are accused of being too partisan around here. We 
have listened to what the minority leader has to say. He wanted action 
taken now, and we are taking action now.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CONYERS. Mr. Speaker, how much remains?
  The SPEAKER pro tempore. The gentleman from Michigan (Mr. Conyers) 
has 13 minutes remaining. The gentleman from Wisconsin (Mr. 
Sensenbrenner) has 9\1/2\ minutes remaining. The gentleman from Ohio 
(Mr. Oxley) has 8\1/2\ minutes remaining. The gentleman from New York 
(Mr. LaFalce) has 6 minutes remaining.
  Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, it is this kind of legislative process that gives our 
body a bad name. Now, it must take a certain amount of chutzpah to say 
that this is a bipartisan bill. There has not been any bipartisan input 
on this bill whatsoever, and it is a very important bill. There is no 
way that, as the gentleman from New York (Mr. LaFalce) pointed out, 
there is no way that we can amend this bill.
  The curious thing is back in April when I introduced a motion to 
recommit, it was April 9, the bill was voted down by the Republicans. 
All these provisions that were rejected are now the ones that are being 
brought forth with great pride. And so I just want to point out that it 
may have had something to do with the Senate voting unanimously to 
include the provisions that both the chairman of the Committee on the 
Judiciary and I have introduced to bring real accountability to 
wrongdoers.
  Now, maybe this move to criminalize but not have civil penalties 
might be due to the fact that the Attorney General has yet to bring one 
case in this area for prosecution against any individual. Has he 
changed his attitude? I do not know and I wonder if anyone in the House 
does.
  So we come here in some shock, some disappointment that we are here 
doing this kind of a run and catch up; let us get cover to make sure we 
might be able to head off the work that is being done in the other 
body.
  Now, I want to ask this question to anybody in the House. Is it true 
that the whistleblowers language that is in this bill which was, I 
think, subsequently added, was that given any help or assistance from 
those in the securities industry?
  You can answer that yes or no.
  The criminal relief requires that an employee prove beyond a 
reasonable doubt to get a conviction; we are now eliminating the civil 
provisions which only require a preponderance of evidence. Are we aware 
of what we are doing here and why we are doing it?
  So I am very disappointed in the way this is being done.
  Mr. Speaker, I reserve my time at this point.

                              {time}  1215

  Mr. OXLEY. Mr. Speaker, I yield myself such time as I may consume.
  I would point out to my friend from Michigan that I suggest this will 
be a strong bipartisan vote when the vote is taken and it will be very 
much of a bipartisan effort in the House.
  Mr. Speaker, I yield 3 minutes to the gentleman from Louisiana (Mr. 
Baker), and pending that, I ask unanimous consent that the gentleman 
from Louisiana be allowed to control the time for our side.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Ohio?
  There was no objection.
  Mr. BAKER. Mr. Speaker, I thank the chairman for yielding me the 
time, and I wish to extend my appreciation to the gentleman from 
Wisconsin (Mr. Sensenbrenner) as well as the gentleman from Ohio (Mr. 
Oxley) for their good work on this most important matter.
  Most Americans at home today are watching anxiously as the volatility 
of the stock market takes its toll in their personal savings or 
retirement plans, and they are looking to this Congress to take some 
action to stem the flow of capital away from those markets, to sit on 
the sidelines.
  It is not only bad for corporations, it is not only bad for 
shareholders, it is bad for the economy when people are afraid to trust 
the CEO, the accountant, the analyst, anyone involved in the process, 
and failing to make that investment, curtail the ability to create jobs 
and provide opportunities. What they are saying to us is go get the bad 
guys, stop them from doing this in the future and make them pay a 
price.
  The gentleman from Wisconsin (Mr. Sensenbrenner) and the gentleman 
from Ohio (Mr. Oxley) have before us a proposal which establishes new 
penalties for CEOs who fail to certify their financials or certify them 
knowing there is a material misstatement. They create a new penalty for 
failure to do so up to $5 million. They require a criminal penalty be 
assessed to those individuals who file false statements with the 
Securities and Exchange Commission and create a new penalty of up to $5 
million. They provide for penalties relating to mail and wire fraud. A 
person communicates a material fact that is incorrect, misleading or 
false, they go to jail, not for 5 years, for up to 25 years.
  With regard to those extraordinary benefits that are granted these 
executives who have manipulated the books and benefited themselves, 
this requires the SEC to freeze extraordinary payments until 
appropriate investigation may be concluded to determine whether such 
payments were warranted or not. When there is a determination that a 
CEO has violated his fiduciary responsibility to the shareholders and 
the public, there is a lifetime prohibition on that individual from 
ever serving on a board in a corporate management responsibility ever 
again.
  This is a first step. This is not the end. We all know the Senate has 
acted. The House has acted on important reforms. There will be a 
conference, I assume a conference, which will meet very soon of the 
Committee on Financial Services and all interested stakeholders in this 
matter to pass additional restraints on inappropriate corporate 
behavior with guarantees of recompense to those who have been 
fraudulently abused.
  This work deals with the criminal statutes in establishing those 
criminal penalties which ought to be appropriate given the egregious 
statements that CEOs have made across this country relative to the 
financial condition of their corporation, and we gave. More than 50 
percent of Americans have investments in the markets today through on-
line investing, which was not possible six years ago. Now 800,000 
trades a day occur with moms and pops investing $100 at a time for 
their child's education, for their first home, for their own 
retirement.
  This is no longer about institutional investors investing hundreds of 
millions of dollars at a time. It is no longer a question of sharks 
eating the sharks. It is the sharks after the minnows, and we are going 
to stop it.
  Mr. LaFALCE. Mr. Speaker, I yield myself 2 minutes.
  First of all, the allegation has been made that this is a bipartisan 
bill. My colleagues are going to get Democrats voting for this because 
we would rather vote for a 2 than a 0, although we prefer a 10, and 
that does not make it bipartisan.
  I am the ranking Democrat on the House Committee on Financial 
Services. This morning I had a breakfast meeting with the former 
chairman, the gentleman from Iowa (Mr. Leach), the president of Intra-
American Development Bank, got to the office at 10 o'clock, discovered 
for the first time that a bill had been introduced and that we were 
going to be taking it up today, we thought later today. At about 11 
o'clock we discover it is at 11:30. That is not bipartisanship.
  When my colleagues do not include us in the drafting of the bill, in 
the introduction of the bill, in the formulation of the bill, when my 
colleagues

[[Page H4688]]

tell the ranking Democrat on the relevant committee an hour or a half 
an hour beforehand that something is coming to the floor, do not have 
the audacity to call that bipartisanship.
  Mr. Speaker, I yield 2 minutes to the gentlewoman from Oregon (Ms. 
Hooley).
  Ms. HOOLEY of Oregon. Mr. Speaker, I support this legislation and I 
applaud the leadership of this body for bringing this bill before us.
  Let us not kid ourselves. Three months ago the gentleman from New 
York (Mr. LaFalce) offered a substitute to the accounting reform bill 
that called for better corporate governance and it did not receive a 
single vote from the other side. Let me say that again. It did not 
receive a single vote from the other side.
  Now we are considering a bill that would send CEOs to prison for up 
to 25 years for securities fraud or accountants to prison for 5 years 
for shredding their paperwork. We are making progress, but we have got 
a lot more work to do.
  The gentleman from New York (Mr. LaFalce) called for better corporate 
governance a long time ago. President Bush on March 2, that was 5 
months ago, called for better corporate governance, and yet we have had 
no action from this body. So I applaud the leadership for bringing this 
bill forward, but we must also get to conference committee and put that 
on the President's desk by next week.
  I urge my colleagues to support this measure.
  Mr. BAKER. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
West Virginia (Mrs. Capito).
  Mrs. CAPITO. Mr. Speaker, recent news from the corporate world has 
been pretty grim. All too often we have seen headlines from 
corporations like Enron and WorldCom that reveal appalling abuse and 
fraud leading to layoffs and bankruptcies. From the magnitude of the 
problem, it looks as though corporate fines are simply not enough to 
discourage billions of dollars in fraud. It is time for stronger 
penalties such as those offered in this bill.
  The workers in my district of West Virginia and everywhere else have 
concerns about their families' futures. Whether they are saving to 
educate their children, working to secure their own retirements, 
hardworking West Virginians do not want to see another corporate hocus-
pocus act where they get the raw end of the deal.
  I am proud to say that we passed legislation, CARTA, Corporate and 
Auditing Accountability, Responsibility and Transparency Act and the 
Pension Security Act, and today we are taking another step in the right 
direction.
  This legislation strengthens laws that criminalize obstruction of 
justice, close gaping loopholes and requires top executives to certify 
that their financial statements of their companies are fairly and 
accurately representing the financial condition of their company.
  Mr. Speaker, the workers in America want assurances that the dollars 
they are working for today and saving will be there when it is needed 
down the road. That is why it is imperative that our colleagues join 
together and continue to get tough on corporate crooks. I certainly 
support this legislation.
  Mr. CONYERS. Mr. Speaker, I am pleased to yield 3 minutes to the 
gentlewoman from Texas (Ms. Jackson-Lee), a distinguished member of the 
Committee on the Judiciary.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the distinguished 
gentleman from Detroit, the ranking member, for yielding me the time. I 
thank the chairman for what I know is a well-intended effort.
  Mr. Speaker, many of us have been exposed to this issue and none of 
us can claim oneupmanship. Might I, however, claim at least the 
personal exposure to the pain of 5,000 employees and a continuing saga 
of trying to rebuild the crumbling remains of a company of which we had 
great respect for in my district. Having experienced that in Houston, 
Texas, I realized that this is systemic and that they are hurting 
people across the Nation.
  I also realize that this Congress and this particular body, this 
House, in Texas lingo, started with a hurricane, blowing fury, and now 
has ended with a mere raindrop, some might call it a teardrop, because 
the process by which this legislation came to the floor denigrates and 
disrespects those of us who have both felt the pain but have also dealt 
with this from a legislative perspective.
  My legislation, H.R. 5110, is an omnibus bill. I made a commitment to 
my constituents that I would not have a pride of authorship and would 
work with those in this House on a bipartisan basis on legislation 
proceeding to solve this problem of corporate responsibility and 
accountability. I am an original cosponsor of the Conyers bill, H.R. 
4098, that speaks particularly and clearly to the issues of criminal 
penalties. That would have been a bipartisan bill inasmuch as it is 
destined for a hearing on Friday.
  I am a supporter of the bill in the other body that we should, in 
fact, take up today in substitute of this particular legislation that 
falls short.
  Mr. Speaker, if we are talking about serious legislation, I agree 
with the good ranking member and friend of the Committee on Financial 
Services bill, we have fallen short. We have fallen short of his work, 
fallen short of the gentleman from Michigan's (Mr. Conyers) work, and 
let me tell my colleagues why.
  This bill does not have in it, as the bill in the other body, a 
document retention requirement as it relates to auditors, the key 
element to part of the fall of Enron and many other places. If we 
willy-nilly suggest, because the United States Chamber of Commerce is 
pressing on the Members of the other party that we not have a document 
destruction provision of which gives criminal penalties, then we are in 
trouble. If we do not protect whistleblowers like Sharon Watkins who 
came forward in the Enron case, we are in trouble.
  We well know that the investment community is not interested in 
words. The President has given words and the market has fallen. They 
are not interested in Harvey Pitt's of the SEC's words and actions. The 
market has fallen.
  The marketplace wants and corporate America wants clear delineation 
as to what we are doing in Congress so the market can regain confidence 
and we can expand on the corporate confidence and as well tell America 
that we stand behind capitalism, but we also stand behind integrity.
  I would like a bill that I can support. I am considering what we have 
here, Mr. Speaker, but let me say this, it is a shame that we could not 
do this in a bipartisan way and put some teeth into this so that 
investors can know what Congress means and what Congress stands for.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may 
consume.
  I am really befuddled on how Members on the other side of the aisle 
can come up and say that this bill is inadequate on criminal penalties 
when the criminal penalties are double those that were passed by the 
other body, and that we have turned our back on whistleblowers, when 
this bill provides criminal sanctions against those who retaliate 
against corporate whistleblowers. If someone would retaliate against a 
corporate whistleblower, they go to jail. The other body does not do 
that at all.
  We have heard comments about the fact that this bill really does not 
deal with the whole issue of document shredding and other forms of 
obstruction of justice. Twenty years in this bill, 20 years in jail, 
that is a pretty tough penalty, and it is drafted broadly enough so 
that those who do shred documents can be caught in other obstruction-
of-justice prosecutions.
  The bill which the gentleman from Michigan (Mr. Conyers) has 
introduced is only talking about 5-year penalties for these types of 
offenses. So if this is just a little teardrop, I think my colleague 
has had a wrong choice of words, because people who violate the law and 
the crimes that are set forth in this bill are going to go to jail for 
the rest of their productive lives, and that is a pretty serious 
penalty.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CONYERS. Mr. Speaker, I yield such time as she may consume to the 
gentlewoman from Texas (Ms. Jackson-Lee).
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the distinguished 
gentleman for yielding me the time.
  The bad news is that corporations cannot go to jail, and so there are 
no

[[Page H4689]]

civil penalties dealing with those particular issues.
  I also would ask, if I had the time, but I will just pose the 
question, where in the bill that is on the floor has document retention 
requirements on auditors and where do we have the provision giving 
defrauded investors more time to seek relief? That is the question 
about helping these small investors, but we cannot send a corporation 
to jail. We need civil penalties in this legislation.
  I thank the gentleman for yielding me the time.
  Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
  This is the time for truth-telling. We put in 5 years and it was 
unanimously opposed by the other side. Where did the sudden legislative 
conversion take place? Over the weekend? Yesterday? Sometime before 
6:30 when the bill was dropped by all of my colleagues? Five years was 
no good in April, May, June, July, but this morning that is nothing, we 
have got to get them.
  Maybe it is because the Attorney General and the Department of 
Justice do not bring these kinds of cases, and I would like to ask the 
chairman and all of his lawyers and the other Members to tell us where 
there have been any cases brought like this. This is a sham, not 
against individuals, and that is why leaving out the civil penalties is 
a dead giveaway.

                              {time}  1230

  What about giving the defrauded investors more time to seek relief? 
Is that being covered? I do not think so. And my colleague has heard of 
sentencing enhancement, has he not? But they are not in the gentleman's 
bill.
  So without trying to draw nitpicking distinctions, this bill is 
seriously flawed. I am voting against it. I know there may be Members 
that feel inclined to show that they are doing something rather than 
nothing. We are back to this scale of two versus 10. But this is a very 
flawed bill, and that is why we cannot bring it before the Committee on 
the Judiciary for hearings and the discussion it deserves.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may 
consume.
  We provide in our bill the sentencing commission the authority to 
have sentence enhancements, and it comes right out of the bill the 
gentleman introduced. And we are going to have a hearing on the 
gentleman's bill on Friday. That was the date that we agreed upon. So 
what is the beef?
  Mr. Speaker, I reserve the balance of my time.
  Mr. BAKER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Indiana (Mr. Pence).
  (Mr. PENCE asked and was given permission to revise and extend his 
remarks.)
  Mr. PENCE. Mr. Speaker, I thank the gentleman for yielding me this 
time, and I thank the chairman for his extraordinary leadership on this 
issue.
  Mr. Speaker, I rise in strong support of the Corporate Fraud and 
Accountability Act of 2002. It was President Calvin Coolidge, Mr. 
Speaker, who said simply that ``the business of America is business.'' 
And many people over the last century have used that term to denounce 
and deride those of us who believe in the free enterprise system in 
America.
  The truth is that President Coolidge was a moralist. And when he said 
the business of America is business, he was fundamentally suggesting 
that American business relies on the integrity and the character of the 
people that occupy the chief executive officerships and the boards of 
directors rooms of America's corporations. It has always been the case; 
it will always be the case. But the backstop, Mr. Speaker, is and has 
ever been the law. Today, in the Corporate Fraud and Accountability Act 
of 2002, we raise the barrier of criminal law in the area of corporate 
fraud.
  Now, some of our friends on the other side of the aisle may say that 
we are playing politics, that we are less than sincere; but the facts 
speak for themselves. As the chairman of the Committee on the 
Judiciary, on which I serve, just said, those who extol the bill passed 
in the other body in the last 24 hours apparently are prepared to vote 
against the bill that has two times the criminal penalties for 
corporate fraud.
  This legislation increases the penalties for mail and wire fraud from 
5 years to 25 years. There are $25 million fines in this legislation 
when corporations file false statements. It increases criminal 
penalties for individuals who file false statements with the SEC to $5 
million, just to name a few.
  Despite the best efforts of some on the other side of the aisle, Mr. 
Speaker, to politicize this issue, the truth is opposition to crime is 
a bipartisan position in this institution. All of us believe that 
righteousness exalts a nation. All of us believe in the rule of law. 
Let us vote in favor of this bill today.
  Mr. LaFALCE. Mr. Speaker, I yield myself 1\1/2\ minutes.
  The gentleman from Indiana referred to Calvin Coolidge. The 
difficulty is that President Bush has been playing the role of Calvin 
Coolidge for a year and a half, when the times demand a Teddy 
Roosevelt. A week ago he started to try to act like Teddy Roosevelt 
and, instead, he appeared to be Teddy Bear.
  With respect to the bill before us today, I must make reference to 
what went on in the Committee on Financial Services and what went on on 
the floor of the House.
  I offered a number of amendments, two in particular, one dealing with 
the question of substantial unfitness or unfitness to serve as an 
officer or director. The SEC had complained that the bar was too high 
having to prove substantial unfitness. I said let us just make it 
fitness. The Republicans monolithically voted no. They have now had a 
conversion belatedly.
  Secondly, I said let us legislatively require that CEOs and CFOs 
certify as to the accuracy and reliability of the financial statements. 
The Republicans voted no.
  I included those two provisions, and those two provisions alone, in 
the motion to recommit with the accounting bill, the Oxley bill, word 
for word. Those were the only two changes. The Republicans 
monolithically voted no. I welcome their belated conversion.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may 
consume to note that the motion to recommit we found out about 15 
minutes before it was offered. So that was a shorter period of time 
than this bill.
  Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. 
Smith), the chairman of the Subcommittee on Crime.
  Mr. SMITH of Texas. Mr. Speaker, I thank the full Committee on the 
Judiciary chairman for yielding me this time.
  I want to say first of all that this is a good bill. It is an 
improvement over other bills that have either been introduced or 
considered on either side of the Capitol, and I hope all our colleagues 
will take the opportunity to vote for corporate responsibility by 
supporting this legislation.
  Mr. Speaker, in the wake of the recent scandals involving such 
companies as Enron, WorldCom, Global Crossing, Arthur Andersen, and 
Tyco, we should reform our laws to restore confidence in our markets 
and hold accountable those corporations and their executives who have 
defrauded investors and harmed the American economic system.
  H.R. 5118, the Corporate Fraud Accountability Act of 2002, will 
punish corporate wrongdoing and punish those who would tarnish the 
integrity and reputation of all corporate America. And I might say that 
the vast majority of individuals, the vast majority of companies, of 
business owners, of the heads of corporations are hard working and 
honest. The dishonest represent just a small fraction of the whole.
  Mr. Speaker, we need to remind some of our colleagues that this bill 
does in fact increase the penalties for mail and wire fraud from 5 
years to 20 years and creates a new securities fraud section that 
carries a maximum penalty of 25 years. It also strengthens laws that 
criminalize document shredding and other forms of obstruction of 
justice and provides a maximum penalty of 20 years for such violations. 
It also grants emergency authority to the U.S. Sentencing Commission to 
promulgate guidelines that reflect the serious nature of securities 
pension and accounting fraud.

[[Page H4690]]

  The legislation closes loopholes by which corporate officers can use 
bankruptcy laws to discharge liabilities based on securities fraud. And 
it requires top corporate executives to certify that the financial 
statements of the company fairly and accurately represent the financial 
condition of the company. Violating this section can subject corporate 
executives to fines up to $5 million and 20 years in prison.
  Mr. Speaker, this bill provides additional tools to prosecutors to 
prosecute wrongdoing by corporate criminals who attempt and conspire to 
violate the law. This is a good piece of legislation; it should be 
supported by all Members who want to restore corporate responsibility 
to America.
  Mr. CONYERS. Mr. Speaker, I yield myself 30 seconds.
  Could I ask my distinguished chairman of the Subcommittee on Crime, 
has his committee held hearings on this bill?
  Mr. SMITH of Texas. Mr. Speaker, will the gentleman yield?
  Mr. CONYERS. I yield to the gentleman from Texas. This is a yes or no 
response.
  Mr. SMITH of Texas. Mr. Speaker, as I understand it, there is a 
hearing scheduled on the gentleman's legislation this Friday.
  Mr. CONYERS. Reclaiming my time, Mr. Speaker, I simply ask, has the 
gentleman had a hearing on the bill?
  Mr. SMITH of Texas. Mr. Speaker, if the gentleman will continue to 
yield, there is a joint hearing by two subcommittees of the Committee 
on the Judiciary.
  Mr. CONYERS. After this is passed, the gentleman is going to hold 
hearings. I thank the gentleman very much.
  Mr. SMITH of Texas. I would say to the gentleman that that is on a 
different piece of legislation.
  Mr. LaFALCE. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Indiana (Ms. Carson).
  Ms. CARSON of Indiana. Mr. Speaker, I thank the gentleman from New 
York for yielding me this time as well as the gentleman from Michigan 
(Mr. Conyers).
  Mr. Speaker, I will be very brief. I understand, in terms of 
listening to the debate, because I was not at a hearing when this bill 
was discussed, that the kind of action taken on this bill was quite 
similar to the shredding of documents by the Arthur Andersen company 
that gave rise to this whole debate at this time.
  I was not a Member of Congress, but remember very well when, and, 
yes, it is political, when in 1994 there was a young man who was 
Speaker of the House that talked about a Contract With America. In 
fact, it turned out to be a contract on America. The Private Securities 
Litigation Reform Act of 1995 got us to where we are today. It repealed 
the civil RICO, thereby preventing defrauded investors from obtaining 
triple damages when they bring securities fraud claims.
  This bill does nothing to address that problem. It is a cruel hoax. 
It is a farce. It should go back, perhaps on another midnight hour, and 
be fixed. It is broken.
  Today, on the Suspension Calendar, with no opportunity to amend or 
improve it, the House Republican Leadership will offer up a so-called 
corporate responsibility bill. This bill eviscerates the bill that 
passed the Senate 97 to 0 and that the President said ``shares [his] 
goals.'' Why?
  The U.S. Chamber of Commerce, which is the second leading Republican 
donor in this cycle, and other corporate interests lobbied to roll back 
the Senate bill's prohibitions on document shredding, corporate 
whistleblower protection, increasing the time allotted for shareholders 
to seek relief in court, and to create a new enhanced securities fraud 
law.
  Unlike the Senate, which sided with working families, the House 
Republican Leadership gave corporate fat cats everything they asked 
for.
  Not one Senate Republican voted against any of the provisions dropped 
by the House Republican Leadership. Specifically, the Republican 
leadership bill excludes:
  Document retention requirements on auditors. The bill passed 
yesterday by the Senate would require auditors to maintain all audit or 
review workpapers for a period of five years after the conclusion of an 
audit or review. This was part of the bipartisan Leahy-Hatch amendment, 
which passed the Senate 97 to 0. As has been exhaustively documented, 
Arthur Andersen impeded a Securities and Exchange Commission inquiry 
into Enron's finances last fall by destroying huge numbers of documents 
and e-mails. The Republican leadership bill drops these provisions.
  Giving defrauded investors more time to seek relief. The bipartisan 
Leahy-Hatch amendment, which passed the Senate 97 to 0, reformed the 
unnecessarily restrictive statute of limitations governing private 
securities claims. Under current law, defrauded investors have one year 
from the date on which the alleged violation was discovered or three 
years after the date on which the alleged violation occurred. Because 
these type of violations are often successfully concealed for several 
years, the Senate increased the time period to 2 years after the date 
on which the alleged violation was discovered or 5 years after the date 
on which the alleged violation occurred. The Republican leadership bill 
drops these provisions.
  Protecting Whistleblowers--The bill that passed yesterday in the 
Senate contained the Grassley amendment, which unanimously passed the 
Senate Judiciary Committee, extended whistleblower protections to 
corporate employees, thereby protecting them from retaliation in cases 
of fraud and other acts of corporate misconduct.
  Sentencing Enhancements--The bill that passed in the Senate yesterday 
had bipartisan Leahy-Hatch sentencing enhancements when a securities 
fraud endangers to solvency of a corporation and for egregious 
obstruction of justice cases, where countless documents are destroyed. 
The Republican leadership bill drops these provisions.
  Finally the Republican Leadership hides behind the penalties 
smokescreen, in the hopes that no one will notice everything that is 
missing from their bill. They mindlessly increase penalties for mail 
fraud and other offenses to ten years greater than the Senate bill. In 
reality, in most of these cases, there are numerous counts of mail 
fraud and whatever penalty that is assigned to the offense is 
multiplied by the number of counts.
  The difference between a ten and twenty year penalty is, therefore, 
negligible in these cases.
  Mr. BAKER. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Pennsylvania (Ms. Hart), a member of the Committee on Financial 
Services.
  Ms. HART. Mr. Speaker, I rise in support of the bill and stand here 
at a loss as to why anyone would not support this bill.
  In light of the news that we have heard lately about corporate fraud 
and cries from the general public that people go to jail, this bill 
provides for that. This bill provides for up to a 25-year maximum 
prison term for securities fraud. It provides an increase from 5 years 
of a prison term.
  Now, I am not sure, but it seems to me that 25 years is a lot more of 
a deterrent than 5. We are given a wonderful, very clear, to-the-point 
bill by the gentleman from Wisconsin (Mr. Sensenbrenner), supported by 
the Committee on Financial Services.
  We are telling the general public that we mean business when it comes 
to punishing people who defraud our investors and people who work for 
these corporations in the United States. I urge my colleagues to 
support this bill. It certainly is clear. It will certainly provide a 
good sentence, a reasonable serious sentence, to send a message to 
corporate officers in America that we mean business.
  Mr. LaFALCE. Mr. Speaker, I yield 1 minute to the gentleman from 
Michigan (Mr. Stupak).
  Mr. STUPAK. Mr. Speaker, we have heard a lot about crime this 
morning, but let us remember it was this very House of Representatives 
that gave the green light to corporate executives to lie to their 
boards and to their shareholders; and we provided them with a safe 
harbor. It was called the Private Securities Litigation Reform Act of 
1995 that was part of the Contract on America. It was vetoed by 
President Clinton and his veto was overridden.
  Anything we try to do in this bill regarding the punishing of 
criminals is just a legislative Band-Aid unless and until we restore 
shareholders' rights. We will not restore shareholders' rights or 
investors' confidence until we repeal the Private Securities Litigation 
Reform Act of 1995.
  This bill is nothing more than a feel-good bill. It never strikes at 
the root of the problem, of corporate corruption and corporate fraud. 
We have to repeal the Private Securities Litigation Reform Act. There 
are bills out there, like the Shareholders and Employees Rights 
Restoration Act of 2002, and we cannot even get a hearing on it, let 
alone a vote on it.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself 30 seconds.

[[Page H4691]]

  The gentleman from Michigan says this is a feel-good bill. Anybody 
that is convicted of the fraud that is discussed in this bill and goes 
to jail for at least 20 years or 25 years I do not think is going to be 
feeling very good as they are sitting behind bars.
  Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Virginia 
(Mr. Goodlatte).
  Mr. GOODLATTE. Mr. Speaker, I commend the chairman of the Committee 
on the Judiciary for introducing this very important legislation to 
hold accountable those corporations and their executives who defraud 
the American public through manipulative accounting and other 
fraudulent practices.
  President Bush has said that corporate America must be made more 
accountable to employees and stockholders. He was right in calling for 
tougher penalties for companies who use unethical accounting procedures 
to falsify profits at the expense of their employees and other 
investors.
  As I travel through my district, I hear from many constituents whose 
confidence in the integrity of our markets has been shaken. Their faith 
in corporate management has been replaced with a fear of losing their 
retirement nest egg. They have demanded accountability from our 
corporate leaders, and we must ensure they have that accountability.
  H.R. 5118 increases the penalties for activities like mail and wire 
fraud and provides additional tools for prosecutors to crack down on 
corporate criminals. This legislation is needed to restore confidence 
in our markets and hold corporate criminals accountable.
  Hard-working Americans who save responsibly for their retirement 
should be able to have confidence in their retirement plans. Congress 
should enact meaningful reforms that provide safeguards for those who 
are saving for their retirement years.
  As I listen to this debate, I see my colleagues on the other side of 
the aisle attempting to dance on the head of a pin. Instead, it is time 
to join us in passing this powerful new tool for prosecutors to crack 
down on crime.
  Mr. CONYERS. Mr. Speaker, I yield 1 minute to the gentlewoman from 
California (Ms. Waters), who serves on both committees, incidentally.

                              {time}  1245

  Ms. WATERS. Mr. Speaker, this is precisely why the American public 
does not trust the Members of Congress. We passed a bill out of the 
Committee on Financial Services that was not good enough. It was weak. 
The chairman of the Committee on the Judiciary, the gentleman from 
Wisconsin (Mr. Sensenbrenner), refused to take up a good corporate 
responsibility bill that was headed up by the gentleman from Michigan 
(Mr. Conyers).
  Now the Senate has passed out a pretty strong bill, and finally, this 
gentleman is a Johnny-come-lately with a bill on the floor that we have 
never heard in the Committee of the Judiciary. Do not be tricked or 
fooled by this. There is no reason to be here. If there is some 
concern, go to the Conference Committee where we have a House bill and 
a Senate bill to be reconciled, and try to get additional concerns put 
in. But to do it this way does not make good sense. We are undermining 
the process and trying to jump on the bandwagon at the last minute when 
the gentleman should have been leading on this a long time ago.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 30 seconds to myself.
  Mr. Speaker, the gentleman from Michigan (Mr. Conyers) last week 
asked me to schedule a hearing on his corporate responsibility, H.R. 
4098, and I agreed. It is an important issue. That hearing is going to 
be held this Friday. That was the date that we agreed on.
  I guess the thanks I get for being bipartisan and agreeing to 
schedule the bill of the gentleman from Michigan is the attack that I 
just heard from the gentlewoman from California (Ms. Waters). The 
gentlewoman should be more bipartisan in what is said on the floor.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the Republicans have been having a deathbed conversion 
because they have voted against so many of the reforms that they now 
advocate. But they have to do a little bit of repentance. This bill is 
not adequate. They have determined their own penance. It is two Hail 
Marys. We deserve a bill that can be called a complete Rosary. That 
should be their penance.
  Mr. CONYERS. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman 
from California (Mr. George Miller).
  Mr. GEORGE MILLER of California. Mr. Speaker, the Republicans have 
been caught with an embarrassing bill. They passed a securities bill to 
tell the American public they cared about their pensions and their 
financial well-being. Then the Senate took really tough action, and now 
the Republicans have been caught with egg all over their face.
  What do they want to do? They want to put everybody in jail. Fine, we 
will vote for the bill. But it is the things that people do today that 
are legal that is causing the heartburn.
  They pass an embarrassingly weak pension bill, and embarrassingly 
weak securities bill. It is not the things that they do that are 
illegal, it is the fact that people under the pension bill are still 
locked into that stock for 3 years. They still cannot have a 
representative of employees on the board of their pensions. They cannot 
have an independent representative of their employees on the board. 
They cannot be notified on a timely basis of inside sales. So the 
pensioners absorb all of the financial shock for the ill-doings, but 
they happen to be legal under the law, just as many of the provisions 
that the Senate outlawed under their securities act continue to remain 
legal.
  Now they come along and say if somebody engages in fraud, they should 
be put in jail. Where is the Attorney General today when they engage in 
fraud? The Republican bill is going to give it to the Attorney General 
to come up against these people on whistleblowers. Where does Sharon 
Watkins go to get her job back if she loses her job? Where does she go 
to be made financially whole? Nowhere. She goes to John Ashcroft and 
begs him to bring a case.
  In the past 6 months as we have been having a meltdown in stock 
markets and peoples' pension plans where investors have lost over $5 
trillion, we have not heard a word from the Attorney General; not a 
word from the Attorney General. The Republican plan puts all of their 
eggs there. I know they are covering their tracks. They are like the 
cowboys that did the bank robbery, and now they are dragging the trees 
behind their horses to cover their tracks. Good try. It will not work.
  Mr. BAKER. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, we know we are going to have to cut down some of the 
trees to see the facts. In the year in which Harvey Pitt was appointed 
chairman of the SEC in late August, September 11 followed only days 
behind with destruction of the New York SEC offices.
  Despite that, in the first 7 months of his term, for officer and 
director bars sought, and that is to keep officers and directors from 
continuing in a professional responsibility, he has sought 71. In the 
entire year preceding his appointment, only 51.
  Disgorgement of compensation, bonuses, and stock options sought, 17 
in a 7-month period, versus 18 in the entire year preceding.
  Temporary restraining orders in all categories, 42 sought in 7 
months, 31 in the preceding year.
  Asset freezes in all categories, 50 in 7 months, versus 43 in the 
entire preceding year.
  Trading suspensions, 10 versus 2 in the entire preceding year.
  Subpoena enforcement proceedings, 18 versus 13 in the preceding year. 
Chairman Pitt has not only acted, he has acted forcefully. Today this 
Congress will act. It is appropriate, and the people of America are 
waiting.
  Mr. CONYERS. Mr. Speaker, I yield 1 minute to the gentleman from 
Massachusetts (Mr. Markey).
  Mr. MARKEY. Mr. Speaker, this bill is too weak, too weak. The 
President gets to name three people to the Securities and Exchange 
Commission. Who has he named? Three accounting industry employees. That 
is it. That is his decision. This Republican majority opposed an 
independent accounting board oversight; opposed it. And now it is 
looking for a legislative get well card as though now they are 
converted to protecting the investor.

[[Page H4692]]

  What does this bill not include? Well, it does not require these 
companies to preserve all their auditing records for 5 years. It does 
not extend from 3 years out to 5 years the period upon which people can 
sue if they have been defrauded. We are only finding out right now 
about fraud from 2 or 3 years ago. We need to stretch out the statute 
of limitations so they can sue. We need whistleblower protection. This 
is a bad bill. Vote no.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself the balance of my 
time.
  Mr. Speaker, the gentleman from Massachusetts (Mr. Markey) has not 
read this bill. Apparently he wrote his speech before he read the bill. 
Now this bill is not too weak. It provides twice the criminal penalties 
than the bill that was passed by the other body. It provides criminal 
sanctions against those who retaliate against whistleblowers. The other 
body provides more lawsuits.
  Every criminal penalty does allow the judge to enter a restitution 
order. Restitution orders are nondischargeable in bankruptcy. The huge 
fines in my bill are nondischargeable in bankruptcy. Corporate 
executives up to $5 million in fines, nondischargeable. Corporations up 
to $25 million in fines for filing a false statement, nondischargeable 
in bankruptcy.
  So what we do is we provide jail terms for the bad actors, we provide 
nondischargeable fines for the bad actors, and we get tough on those 
that have looted the pensions and the savings of the employees that 
have worked dutifully for those corporations where the officers and the 
boards of directors have not fulfilled their fiduciary responsibility.
  This is a tough bill because it puts people in jail for a long time. 
It ought to be passed, and passed now, as the gentleman from Missouri 
(Mr. Gephardt) has urged us to address this issue. I urge an aye vote.
  Mr. BONIOR. Mr. Speaker, I rise to express my support for the Senate 
corporate accounting reform bill and applaud this long-overdue effort 
to punish those who break our securities laws.
  We must hold those who break our securities laws responsible for 
their actions. Gone are the days when the threat of a fine or bad 
publicity is an effective deterrent for corporate fraud. It's time that 
corporate criminals get jail time when they ignore our securities laws 
and consumer protections. It's time that we put real teeth in our laws 
and the regulations of the SEC. We need to send the message loud and 
clear that corporate irresponsibility will not be tolerated by the 
Congress, by our courts, and by the American people.
  In my home state of Michigan, thousands of public employees have 
watched as their pension funds have lost millions of dollars in the 
downfall of corporations like WorldCom and DCT, Inc. Investors and 
retirees have lost faith and confidence in a market that has been 
continuously shaken by reports of corporate irresponsibility and 
misleading financial statements. These workers have a right to know 
that their wages, pensions, and benefits are secure. They have a right 
to financial security in their later years. It's time that we stand up 
for them and enact meaningful reforms that will prevent the kinds of 
corporate scandals we've seen in recent months and prohibit corporate 
inside deals and murky accounting that puts the pensions of hard-
working Americans at risk.
  The legislation before us today follows the Senate's lead and 
establishes stricter criminal penalties for securities fraud. I applaud 
this effort as a good first step, but I believe we should ultimately 
enact the even tougher penalties set forth in the Senate accounting and 
corporate responsibility reform bill. There should be no question that 
corporate fraud is a serious crime in the eyes of the law.
  In the months ahead, I will continue to fight for the rights of our 
workers and retirees to be financially secure. I will continue to press 
the House Republican leadership to pass the strong corporate 
responsibility legislation that the Senate recently passed. We need to 
act swiftly to pass meaningful reforms that will reign in corporate 
abuse and protect the rights of workers and investors before any more 
retirement savings are lost.
  Mr. FRELINGHUYSEN. Mr. Speaker, I rise in strong support of H.R. 
5118, the Corporate Fraud Accountability Act of 2002.
  You've heard that expression, ``crime doesn't pay?'' Well, Mr. 
Speaker, for too long, for some business executives in America, crime 
has paid, and is has paid them well! We've got to put an end to this 
now--punishment for corporate crimes should be paid by those who break 
the law, not by those who have invested their hard-earned incomes, or 
worked for years, only to see their jobs, pensions, health care and 
retirements disappear as some CEO's absconded with millions!
  For months now, we've seen company heads testify before this Congress 
only to invoke the Fifth Amendment. Why? For fear of incriminating 
themselves.
  To my mind, Mr. Speaker, these executives should be scared. They 
should fear jail time for lying to employees and investors, and for 
betraying our market-based economy.
  And jail time is exactly what corporate criminals will get under the 
bill we now consider, the bill we must pass to provide the ``teeth'' 
behind the President's strong message of corporate responsibility.
  These tough new criminal penalties and enforcement provisions to 
punish those who refuse to ``play by the rules'' and threaten to 
undermine the integrity of our financial markets will do what every 
American believes to be fair, just and necessary.
  The Corporate Fraud Accountability Act, increases the penalties for 
mail and wire fraud, strengthens laws that criminalize document 
shredding, grants emergency authority to the U.S. Sentencing Commission 
to promulgate securities, pension and accounting fraud guidelines, 
closes loopholes by which corporate officers can use bankruptcy laws to 
discharge liabilities based on securities fraud, increases the criminal 
penalties for those who file false statements with the Securities 
Exchange Commission and requires corporate executives to certify their 
company's financial statements, freezes extraordinary payments to 
executives while the company is under SEC investigation, and finally it 
bans company executives who clearly abuse their power from serving in 
any corporate leadership position. H.R. 5118 builds upon our efforts to 
hold corporations accountable contained in H.R. 3762, the Pension 
Security Act, and H.R. 3763, the Corporate and Auditing Accountability, 
Responsibility, and Transparency Act, passed by the House last April.
  Specifically, the bipartisan Pension Security Act, H.R. 3762, bars 
company insiders from selling their own stock during ``blackout'' 
periods when workers can't make changes to their 401(k)'s, give workers 
new freedoms to sell their company stock within three years of 
receiving it in their 401(k) plans, fixes outdated Federal rules that 
discourage employers from giving workers access to professional 
investment advice, empowers workers to hold company insiders 
accountable for abuses, and requires that workers be notified 30 days 
before the start of any ``blackout'' period affecting their pensions.
  The Corporate and Auditing Accountability, Responsibility, and 
Transparency Act, H.R. 3763, recognizes the need for corporate leaders 
to act responsibly, and holds them accountable if they fail to do so. 
It seeks to restore confidence in accounting standards, increases 
corporate disclosure and responsibility, better protects 401(k) plan 
participants, and reduces analyst conflicts of interests.
  These legislative reforms, and the President's plan for corporate 
responsibility, will benefit small investors and employees and will 
help strengthen faith and confidence in the corporate community in our 
own backyard. In New Jersey, I am mindful of the personal tragedy 
encountered by countless citizens who have lost their jobs, 
investments, pensions and even health care benefits. And poor 
management decisions at companies like Lucent have resulted in millions 
of investors and 401(k) plans having catastrophic losses. Furthermore, 
we must remember those employees whose pension benefits decreased when 
employers, like AT&T and others, transitioned from a traditional 
pension plan to a cash balance pension plan. While these transitions 
were within current legal boundaries, such moves have had devastating 
effects on long-time, dedicated workers, especially those who thought 
themselves secure in their retirement.
  Clearly, not all companies or their executives fall into the ``bad 
apple'' categories about which there's been so much news recently, To 
those who, without stricter rules and reforms, have lived to the 
highest standards of ethical behavior, I commend you. But to those who 
have ventured from the truth, and who have been overwhelmed by greed, 
the party's over.
  Mrs. ROUKEMA. Mr. Speaker, I rise in strong support of H.R. 5118, the 
Corporate Fraud Accountability Act of 2002. I commend Chairman 
Sensenbrenner for acting expeditiously to ensure that this important 
element of corporate responsibility, namely the strengthening of 
criminal penalties, is part of Congress' effort to eliminate corruption 
in corporate America. This bill tells corporate criminals that they are 
no longer ``above the law.'' It holds those executives who have 
defrauded investors and harmed the American economic system accountable 
with tough new criminal penalties. It helps to close the loopholes that 
have allowed for continued offenses in America's corporate community.
  The reckless actions of corporate wrongdoers have undermined trust in 
our markets and our economy. We must return confidence

[[Page H4693]]

back to the markets and to the accounting profession. Individual 
investors have to be certain that the information they are receiving is 
accurate and complete. House passage of the Corporate and Auditing 
Accountability, Responsibility and Transparency Act was a giant step in 
the right direction. CARTA includes important provisions to strengthen 
supervision and oversight of the accounting industry, increase the 
standard of corporate responsibility, and improve the quality of 
corporate disclosure and the auditing of publicly traded companies. 
Passage of H.R. 5118 will take us a step further.
  This bill builds on CARTA by:
  Increasing the penalties for mail and wire fraud.
  Creating a new crime of ``securities fraud.''
  Strengthening laws that criminalize obstruction of justice.
  Granting emergency authority to the U.S. Sentencing Commission to 
promulgate guidelines that reflect the serious nature of securities, 
pension, and accounting fraud.
  Closing loopholes that currently allow corporate officers to use 
bankruptcy laws to discharge liabilities.
  Requiring top corporate executives to certify that financial 
statements of the company fairly and accurately represent the financial 
condition of the company.
  Providing additional tools to prosecute wrongdoing by corporate 
criminals who attempt and conspire to violate the law.
  Increasing the criminal penalties for those who file false statements 
with the Securities and Exchange Commission.
  Freezing extraordinary payments to executives while the company is 
subject to an SEC investigation.
  The bottom line is that criminals can steal more money with a 
briefcase than with a gun. Businessmen who extort the American public 
should be punished like the common criminals they are. This bill 
ensures that corporate wrongdoers go to jail for their crimes.
  I am outraged by the fact that corporate executives consider 
themselves above the law and out of reach of the arm of justice. Some 
auditors and accountants have the impression that they have the right 
to skew numbers and reports, robbing hard-working Americans of their 
pension funds and stock investments. One of the pillars of our economy 
is confidence. And Americans are close to losing this confidence in our 
financial markets because of prominent corporate crooks. Passage of 
this bill is an important step toward restoring the confidence of the 
American people. I urge my colleagues to support it.
  Further, I urge the leadership of the House and the Senate to act 
expeditiously to bring a final conference agreement back to this House 
on CARTA and the so-called Sarbanes bill, legislation that combines new 
corporate accounting reforms with tough new criminal penalties for 
corporate crooks.
  Time is of the essence. Irresponsible corporate leaders have forced 
us to act. The American people expect us to act. The American economy 
needs us to act. We should not leave this Chamber next year having 
acted.
  Mr. BLUMENAUER. Mr. Speaker, this bill brought before us is not the 
way in which Congress should craft legislation. While I'm supportive of 
increased criminal penalties for corporate misconduct, which this bill 
includes, it falls far short in other areas necessary to bring needed 
changes to the corporate world--lack of whistleblower protection and 
extending the statute of limitations for investor lawsuits.
  No time was provided to review and analyze this legislation. It did 
not go through the committee process where it could be debated and 
refined in a bipartisan manner and was brought to the floor in a manner 
that does not allow amendments to be offered. Therefore, I do not 
support this bill. The only reason to treat Congress and the American 
public this way is to provide political cover.
  Mr. SENSENBRENNER. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. LaHood). The question is on the motion 
offered by the gentleman from Wisconsin (Mr. Sensenbrenner) that the 
House suspend the rules and pass the bill, H.R. 5118, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mr. CONYERS. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  Pursuant to clause 8 of rule XX, this 15-minute vote on H.R. 5118 
will be followed by two 5-minute votes on motions debated yesterday.
  The vote was taken by electronic device, and there were--yeas 391, 
nays 28, not voting 15, as follows:

                             [Roll No. 299]

                               YEAS--391

     Ackerman
     Aderholt
     Akin
     Andrews
     Armey
     Baca
     Bachus
     Baird
     Baker
     Baldacci
     Ballenger
     Barcia
     Barr
     Barrett
     Bartlett
     Barton
     Bass
     Becerra
     Bentsen
     Bereuter
     Berkley
     Berman
     Berry
     Biggert
     Bilirakis
     Bishop
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boozman
     Borski
     Boswell
     Boucher
     Boyd
     Brady (TX)
     Brown (FL)
     Brown (OH)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Castle
     Chabot
     Chambliss
     Clayton
     Clement
     Clyburn
     Coble
     Collins
     Combest
     Condit
     Cooksey
     Costello
     Cox
     Coyne
     Cramer
     Crane
     Crenshaw
     Crowley
     Cubin
     Culberson
     Cummings
     Cunningham
     Davis (CA)
     Davis (FL)
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeFazio
     Delahunt
     DeLauro
     DeLay
     DeMint
     Deutsch
     Diaz-Balart
     Dicks
     Dingell
     Doggett
     Dooley
     Doolittle
     Doyle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Eshoo
     Etheridge
     Evans
     Everett
     Farr
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Ford
     Fossella
     Frank
     Frelinghuysen
     Frost
     Gallegly
     Ganske
     Gekas
     Gephardt
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Goode
     Goodlatte
     Gordon
     Goss
     Graham
     Granger
     Graves
     Green (TX)
     Green (WI)
     Greenwood
     Grucci
     Gutierrez
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hansen
     Harman
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill
     Hilliard
     Hinojosa
     Hobson
     Hoeffel
     Hoekstra
     Holden
     Holt
     Hooley
     Horn
     Hostettler
     Houghton
     Hoyer
     Hulshof
     Hunter
     Hyde
     Inslee
     Isakson
     Israel
     Issa
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, E. B.
     Johnson, Sam
     Jones (NC)
     Kanjorski
     Kaptur
     Keller
     Kelly
     Kennedy (MN)
     Kennedy (RI)
     Kerns
     Kildee
     Kilpatrick
     Kind (WI)
     King (NY)
     Kingston
     Kirk
     Kleczka
     Knollenberg
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     Linder
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     Meehan
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     Meeks (NY)
     Menendez
     Mica
     Millender-McDonald
     Miller, Dan
     Miller, Gary
     Miller, George
     Miller, Jeff
     Mink
     Mollohan
     Moore
     Moran (KS)
     Moran (VA)
     Murtha
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     Petri
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     Wolf
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     Young (AK)
     Young (FL)

                                NAYS--28

     Abercrombie
     Baldwin
     Blumenauer
     Brady (PA)
     Clay
     Conyers
     Davis (IL)
     DeGette
     Fattah
     Filner
     Hinchey
     Honda
     Jones (OH)
     Kucinich
     Lee
     Markey
     McDermott
     McGovern
     McKinney
     Oberstar
     Olver
     Paul

[[Page H4694]]


     Sabo
     Sanders
     Schakowsky
     Scott
     Stark
     Waters

                             NOT VOTING--15

     Allen
     Blagojevich
     Bonior
     Gibbons
     Hastings (FL)
     Hilleary
     John
     Lewis (GA)
     Mascara
     Morella
     Nadler
     Riley
     Roukema
     Schaffer
     Traficant

                              {time}  1318

  Ms. DeGETTE, Mr. McGOVERN, Mr. DAVIS of Illinois and Mrs. JONES of 
Ohio changed their vote from ``yea'' to ``nay.''
  Mr. TOWNS and Mr. WATT of North Carolina changed their vote from 
``nay'' to ``yea.''
  So (two-thirds having voted in favor thereof) the rules were 
suspended and the bill, as amended, was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  Stated for:
  Mrs. MORELLA. Mr. Speaker, on rollcall No. 299, I was unavoidably 
detained in the Capitol. Had I been present, I would have voted 
``yea.''
  Mr. GIBBONS. Mr. Speaker, on rollcall No. 299, I was unavoidably 
detained. Had I been present, I would have voted ``yea.''

                          ____________________