To repeal the provisions of the Private Securities Litigation Reform Act and the Securities Litigation Uniform Standards Act that limit private securities actions, and for other purposes.

February 5, 2003

Mr. STUPAK introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To repeal the provisions of the Private Securities Litigation Reform Act and the Securities Litigation Uniform Standards Act that limit private securities actions, and for other purposes.

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 `Shareholder and Employee Rights Restoration Act of 2003'.

SEC. 2. REPEAL OF PROVISIONS OF LAW LIMITING SHAREHOLDER ACTIONS UNDER THE SECURITIES LAWS.

(a) REPEALS- The following provisions of law are repealed:

(1) Subsections (b), (c), and (d) of section 27 of the Securities Act of 1933 (15 U.S.C. 77z-1(b), (c), (d)).

(2) Section 27A of the Securities Act of 1933 (15 U.S.C. 77z-2).

(3) Section 21E of the Securities Exchange Act of 1934 (15 U.S.C. 78u-5).

(4) Section 11(f)(2) of the Securities Act of 1933 (15 U.S.C. 77k(f)(2)).

(5) Subsections (b) through (f) of section 16 of the Securities Act of 1933 (15 U.S.C. 77p(b)-(f)).

(6) Subsection (f) of section 28 of the Securities Exchange Act of 1934 (15 U.S.C. 78bb(f)).

(b) ADDITIONAL AMENDMENTS TO PROTECT SHAREHOLDER ACTIONS AND WHISTLEBLOWERS- Section 21D of the Securities Exchange Act of 1934 (15 U.S.C. 78u-4) is amended--

(1) in subsection (a)--

(A) by striking paragraph (8); and

(B) by redesignating paragraph (9) as paragraph (8);

(2) in subsection (b)--

(A) by inserting `, but not the sources of those facts,' after `particularity all facts' in paragraph (1);

(B) by striking `strong' in paragraph (2);

(C) by striking paragraph (3);

(D) by redesignating paragraph (4) as paragraph (3); and

(3) by striking subsections (c) through (f).

(c) CONFORMING AMENDMENTS-

(1) Section 16 of the Securities Act of 1933 (15 U.S.C. 77p) is amended by striking `(a) REMEDIES ADDITIONAL- Except as provided in subsection (b), the rights' and inserting `The rights'.

(2) Section 22(a) of the Securities Act of 1933 (15 U.S.C. 77v(a)) is amended--

(A) by striking `except as provided in section 16 with respect to covered class actions,'; and

(B) by striking `Except as provided in section 16(c), no case' and inserting `No case'.

(3) Section 28(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78bb(a)) is amended by striking `Except as provided in subsection (f), the rights' and inserting `The rights'.

SEC. 3. RESTORATION OF AIDING AND ABETTING LIABILITY.

(a) SECURITIES ACT OF 1933- Section 20 of the Securities Act of 1933 (15 U.S.C. 77t) is amended by adding at the end the following new subsection:

`(h) PROSECUTION OF PERSONS WHO AID OR ABET VIOLATIONS- For purposes of subsections (b) and (d), any person who knowingly or recklessly provides substantial assistance to another person in the violation of a provision of this title, or of any rule or regulation hereunder, shall be deemed to violate such provision to the same extent as the person to whom such assistance is provided. No person shall be liable under this subsection based on an omission or failure to act unless such omission or failure constituted a breach of a duty owed by such person.'.

(b) SECURITIES EXCHANGE ACT OF 1934- Section 20(e) of the Securities Exchange Act of 1934 (15 U.S.C. 78t(e)) is amended to read as follows:

`(e) PROSECUTION OF PERSONS WHO AID OR ABET VIOLATIONS- For purposes of subsections (d)(1) and (d)(3) of section 21, or an action by a self-regulatory organization, or an express or implied private right of action under this title, any person who knowingly or recklessly provides substantial assistance to another person in the violation of a provision of this title, or of any rule or regulation thereunder, shall be deemed to violate such provision and shall be liable to the same extent as the person to whom such assistance is provided. No person shall be liable under this subsection based on an omission or failure to act unless such omission or failure constituted a breach of a duty owed by such person.'.

(c) INVESTMENT COMPANY ACT OF 1940- Section 42 of the Investment Company Act of 1940 (15 U.S.C. 80a-41) is amended by adding at the end the following new subsection:

`(f) PROSECUTION OF PERSONS WHO AID OR ABET VIOLATIONS- For purposes of subsections (d) and (e), any person who knowingly or recklessly provides substantial assistance to another person in the violation of a provision of this title, or of any rule, regulation, or order hereunder, shall be deemed to violate such provision to the same extent as the person to whom such assistance is provided. No person shall be liable under this subsection based on an omission or failure to act unless such omission or failure constituted a breach of a duty owed by such person.'.

(d) INVESTMENT ADVISERS ACT OF 1940- Section 209(d) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-9) is amended--

(1) in subsection (d)--

(A) by striking `or that any person has aided, abetted, counseled, commanded, induced, or procured, is aiding, abetting, counseling, commanding, inducing, or procuring, or is about to aid, abet, counsel, command, induce, or procure such a violation,'; and

(B) by striking `or in aiding, abetting, counseling, commanding, inducing, or procuring any such act or practice'; and

(2) by adding at the end the following new subsection:

`(f) PROSECUTION OF PERSONS WHO AID OR ABET VIOLATIONS- For purposes of subsections (d) and (e), any person who knowingly or recklessly provides substantial assistance to another person in the violation of a provision of this title, or of any rule, regulation, or order hereunder, shall be deemed to violate such provision to the same extent as the person to whom such assistance is provided. No person shall be liable under this subsection based on an omission or failure to act unless such omission or failure constituted a breach of duty owed by such person.'.

SEC. 4. LIMITATIONS PERIOD FOR IMPLIED PRIVATE RIGHTS OF ACTION.

Section 27A of the Securities Exchange Act of 1934 (15 U.S.C. 78aa-1) is amended to read as follows:

`SEC. 27A. LIMITATIONS PERIOD FOR IMPLIED PRIVATE RIGHTS OF ACTION.

`(a) IN GENERAL- Except as otherwise provided in this title, an implied private right of action arising under this title shall be brought not later than 3 years after the date on which the alleged violation was discovered.

`(b) EFFECTIVE DATE- The limitations period provided by this section shall apply to all proceedings pending on or commenced after the date of enactment of the Shareholder and Employee Rights Restoration Act.'.

END