Legislative Proposals--105th
Pension
Tax Legislation
- Pension
Coverage and Portability Act of 1998: S 2339 (Graham, Grassley and others)
- Retirement
Security for the 21st Century Act of 1998: HR 3788 (Portman and Cardin)
- Retirement
Account Portability Act of 1998: HR 3503 (Pomeroy, Kolbe and Others), S 2329 (Jeffords,
Bingamon, Graham)
- Retirement
Security Act of 1998: S 2249 (Daschle and Others) / Retirement Accessibility, Security and
Portability Act of 1998: HR 4152 (Gejdenson and Others)
- Rollover
Contributions From Deferred Compensation Plans Of State And Local Governments: HR 3554
(McNulty)
- Rollovers From Cafeteria
Plans: HR 3552 (Dreier)
- Flexible Spending Accounts: S
2304 (Bennett)
- Pension Expansion and
Portability: HR 3672 (Neal)
- Business Bankruptcy Reform
Act: S 1914 (Grassley)
- Pension Improvement Act of
1998: HR 3101 (Neal)
- Public
Plan Funding Legislation: HR 509, HR 510 / Retirement Protection Act of 1998: HR 3450
(Andrews)
- Comprehensive
Pension and Retirement Security Act of 1997: HR 83 (Schumer)
- Retirement Savings
Assistance Act: HR 4123 (Weller)
- Family Leave Pension
Relief Act of 1998: HR 4178 (Price)
- Safety
Officer Benefits for Emergency Workers: HR 3608 (Cramer)
- Enhanced
Savings Opportunities Act: S 1856 (Grassley) and HR 3663 (Leach)
- Pension ProSave Act: S 957
(Jeffords and Bingamon)
- Secure
Assets for Employees (SAFE) Plan Act of 1997: HR 1656 (N. Johnson, Fawell and Pomeroy)
- Comprehensive
Women's Pension Protection Act of 1997: S 320 (Moseley-Braun) and HR 766 (Kennelly)
- Women's
Investment and Savings Equity (WISE) Act of 1997: S 620 (Gregg) and HR 1496 (McClollum and
Dunn)
- Women's Pension Equity
Act of 1997: HR 1105 (Lowey)
- Retirement
Income, Security, and Savings Act of 1997: S 883 (Gregg)
- Retirement
Security for the 21st Century Act of 1997: S 889 (Graham, Grassley and Hatch)
- The
Retirement Security Act of 1997: S. 14 (Daschle) and HR 1130 (Gejdenson)
Social Security Reform Proposals
Tax Reform Bills
Securities Legislation
- Fairness in Securities
Act: HR 4269 (Hobson, Forbes)
- Commodity
Exchange Act Amendments: S 257 (Lugar, Harkin, Leahy), HR 467 (Ewing)
- Financial
Derivatives Supervisory Improvement Act: HR 4062 (Leach), HR 4507 (R. Smith), FY 1999
Agruculture Appropriations Bill
- Securities
Litigation Bills: S. 1260 (Gramm, Dodd and Others), HR 1653 (Campbell and others) and HR
1689 (Eshoo, White and others)
- Savings
and Investment Relief Act of 1998: HR 4213 (Solomon, Menendez)
- Decimalization:
HR 1053 (Oxley and Markey) and S 838 (Bryan)
Pension Tax Proposals
- Pension
Coverage and Portability Act of 1998: S 2339 (Graham, Grassley and others). On
July 21, 1998, Senate Finance Committee Members Bob Graham (D-FL), Charles Grassley
(R-IA), Jim Jeffords (R-VT), Max Baucus (D-MT), Orrin Hatch (R-UT) and John Breaux (D-LA)
introduced this comprehensive bipartisan pension tax package to expand coverage for small
businesses, enhance fairness for women and families, increase pension plan portability,
strengthen pension security and enforcement, and reduce red tape. The bill includes a
number of proposals that would apply to public plans, including: permitting rollovers
between various types of deferred compensation and defined contribution plans, allowing
rollovers and in-service transfers from all pension plans to public DB plans to purchase
permissive service credits, clarifying the tax treatment of 457 distributions upon
divorce, conforming 403(b) regulations to reflect the repeal of 415(e), increasing the
section 415(c) 25% of compensation limit, repealing the coordination requirements for 457
plans, and exempting governmental mirror plans from section 457 limits. Go to related Federal FAX article.
House
Ways and Means Committee Members Rob Portman (R-OH) and Benjamin Cardin (D-MD) introduced
this bipartisan pension legislation on May 5, 1998 to simplify plan administration and
encourage pension portability, coverage, participation and savings. The legislation
includes provisions to allow portability among various types of defined contribution and
deferred compensation plans and to allow transfers/rollovers from these plans to public
defined benefit plans to purchase permissive service credits. The bill would also increase
the maximum contribution and benefit limits under Section 415, and increase the 401(a)(17)
limits to pre-1985 levels. The bill would further repeal the 457 coordination
requirements, conform 403(b) regulations to reflect the repeal of 415(e), increase
flexibility for 457 distributions, clarify the tax treatment of 457 plans upon divorce,
would exempt governmental mirror plans from the 457 limits, and increase the 415(c) 25% of
compensation limit to 100%. Go to 5/11/98 Alert
- Retirement
Account Portability Act of 1998: HR 3503 (Pomeroy, Kolbe and Others), S 2329 (Jeffords,
Bingamon, Graham).
On March 19, 1998 Reps. Earl Pomeroy (D-ND) and Jim Kolbe
(R-AZ) introduced this legislation to promote the portability of retirement benefits by
removing existing barriers between various types deferred compensation, defined
contribution and defined benefit plans. Among other items, the bill would permit rollovers
between all deferred compensation, defined contribution and IRA plans, and would allow
transfers and rollovers from all such plans to public defined benefit plans to purchase
service credits. The bill has over 30 co-sponsors in the House and has received the
official endorsement of the White House. Companion legislation, S 2329, was introduced in
the Senate on July 17, 1998 with minor modifications. Go to related Federal FAX Article
- Retirement
Security Act of 1998: S 2249 (Daschle and Others) / Retirement Accessibility, Security and
Portability Act of 1998: HR 4152 (Gejdenson and Others).
On June 25, 1998,
Democratic leaders unveiled pension reform legislation that incorporates provisions from
three bills introduced in the Senate and seven bills introduced in the House and is based
on President Clinton’s 1998 pension tax proposal. Among numerous other provisions,
the bills would allow rollovers to and from 403(b) plans, rollovers from 457plans, and
rollovers and in-service transfers from all DC plans to public DB plans to purchase
service credits. The bills provide a number of simplification provisions for small
business, but would also require more reporting, disclosure and enforcement requirements,
particularly for 401(k) plans. The bills would additionally repeal Social Security
integration.
. On March 25, 1998, this legislation was introduced to
allow the carryover of unused nontaxable benefits under cafeteria plans and flexible
spending arrangements. The bill would allow the amounts to be transferred in a
trustee-to-trustee transfer, or to be contributed within 60 days of the date of the
distribution, to IRAs, 401(k)s, 403(b)s, 457s, medical savings accounts, or education
individual retirement accounts.
- Flexible Spending Accounts: S
2304 (Bennett).
This legislation was introduced on July 14, 1998 and would allow
individuals to carry over up to $500 of unused funds form their flexible spending accounts
into the next year or to deposit such funds into an IRA, a 401(k) retirement plan or a
Medical Savings Account.
- Pension Expansion and
Portability: HR 3672 (Neal). Based on the President's 1998 Pension Package, this
proposal is aimed at increasing pension coverage, participation and portability. The bill
would allow workers to contribute to IRAs through payroll deduction plans at work, would
provide tax credits to small businesses that establish pension plans, and would create a
new, simplified defined benefit pension plan for small employers. The proposal will
further seek faster vesting of employer matching contributions to 401(k) plans, would
expand pension right-to-know provisions for workers and spouses, and would simplify
pensions and increase retirement savings.
- Business Bankruptcy Reform
Act: S 1914 (Grassley, Durbin).
This bill was introduced on April 2, 1998 and
would revise the business provisions of the bankruptcy code to make
Bankruptcy Code Chapter 7 relief harder to obtain, and requiring those who are able to pay
30 percent of their debt to general unsecured creditors to instead move into Chapter 13
reorganization. On September 24, the Senate passed a substitute version of the Consumer
Bankruptcy Reform Act of 1998 (S. 1301), including an amendment offered by Senator Orrin
Hatch (R-UT) aimed at clarifying the exempt property treatment of retirement savings, and
protecting such savings from the bankruptcy estate. The House
passed its version of bankruptcy reform legislation June 10, however, it does not include
amendments protecting retirement savings. The House and Senate will put together a
conference committee to consider both versions of the bill. Retirement organizations are
weighing in to encourage conferees to retain the Senate pension amendments.
Introduced on January 27, 1998, this bill would require that
employers permit lump sum distributions from all DC and DB to be rolled over to individual
retirement accounts within three months after separation of service and would permit
involuntary cash-outs only when the distribution is rolled into an IRA. It also would
permit penalty-free distributions from IRAs during unemployment and would accelerate the
vesting schedule for private defined contribution plans.
- Public
Plan Funding Legislation: HR 509, HR 510 / Retirement Protection Act of 1998: HR 3450
(Andrews).
HR 509 and HR 510 would create private rights of action by plan
participants if changes in public pension plan funding are not reviewed by a three-member
board. If a state does not set up such a review board, each participant in the plan has
the right to sue. These private rights of action are not limited to funding changes, but
apply to any action taken by the fiduciaries that "violates the terms of the
plan." Rep. Andrews (D-NJ) recently introduced the Retirement Protection Act of 1998,
which, among other items, includes the plan funding provisions in HR 509 and HR 510.
One provision in
this bill would require defined benefit pension plans to offer each participant the
opportunity to elect coverage under a defined contribution plan in lieu of the defined
benefit plan coverage. The employer contributions to the defined contribution plan would
need to be at least equivalent to the contributions to the defined benefit plan. Unless
this option was offered, the defined benefit plan would lose its tax-exempt status. The
bill makes a number of other tax code and ERISA changes, including an increase in the 10%
early distribution penalty to 100%.
- Retirement Savings
Assistance Act:
HR 4123 (Weller). The legislation, introduced on June 24,
1998, would permit an additional $2000 annual catch-up contribution to 457, 403(b), and
401(k) plans for individuals between ages 35 and 50 who have not been active participants
in a 401(a), 403(b) or 457 during the five prior years. A $10,000 annual catch-up
contribution would be permitted for individuals 50 and older. The bill would also increase
the section 415(c) dollar limit to $40,000 and the 415(c) 25% of compensation limit to
100% of compensation.
This legislation was introduced on June 25,
1998 and would require that periods of leave taken under the Family and Medical Leave Act
be treated as hours of service for purposes of pension participation and vesting rules.
- Safety Officer
Benefits for Emergency Workers:
HR 3608 (Cramer). This
bill would allow emergency workers to be eligible for certain public safety officer death
benefits. It would amend the Omnibus Crime Control and Safe Streets Act of 1968 to provide
that rescue squad and ambulance crews, employees of the Federal emergency and Management
Agency (FEMA), and employees of State and local government emergency management and civil
defense agencies would be among those eligible for public safety officer death benefits
under the law.
This bill was introduced on June 25, 1997 and would
create a pension portability clearinghouse to provide employers simplified plan
administration and employees with a portable benefit.
- Secure
Assets for Employees (SAFE) Plan Act of 1997: HR 1656 (N. Johnson, Fawell and Pomeroy).
In order to encourage defined benefit plans among small employers, this bill creates a
simplified, portable defined benefit plan and provides a safe-harbor from many of the
complicated qualified plan rules. Such a defined benefit plan could be funded through
either an IRA or a trust that invests in restricted securities. The bill was introduced on
May 16, 1997 and has been included in large-scope pension bills such as HR 3788, S 2329
and S 889. Modified versions of the SAFE Act have also been included in the President's
Pension Tax Package, S 2249, HR 4152, HR 3870, S 2130 and HR 3672.
- Women's
Investment and Savings Equity (WISE) Act of 1997:
S 620 (Gregg) and HR 1496
(McClollum and Dunn). S. 620 was introduced on April 17, 1997 to allow deductible
IRAs for homemakers without regard to spousal participation in employer-sponsored pension
plan, and would allow persons who are absent from the workplace for Family and Medical
Leave Act eligible situations or are unable to participate in the workforce because of a
dependent child to make catch-up contributions to 401(k) plans. Employer are permitted,
but not mandated to match such catch-up contributions. HR 1496 was introduced as companion
legislation on April 30, 1997. Provisions were included in larger pension packages (S 889
and S 883).
- Women's Pension Equity Act
of 1997: HR 1105 (Lowey).
This bill was introduced on March 18, 1997 and would
require the Secretary of the Treasury to develop a model spousal consent form and a model
QDRO, and to publicize the creation of these forms in public outreach efforts undertaken
by both the Secretaries of the Treasury and Labor.
- Retirement
Income, Security, and Savings Act of 1997: S 883 (Gregg).
This legislation was
introduced on June 11, 1997 and contains provisions for a simplified defined benefit plan
for small businesses (same as the SAFE Act), and requirements for Treasury and DOL to
facilitate the use of technology in pension plan operations, among other things. Several
provisions were passed as part of the Taxpayer Relief Act of 1997.
- Retirement
Security for the 21st Century Act of 1997:
S 889 (Graham, Grassley and
Hatch). Introduced on June 12, 1997, this bill included many pension
simplification provisions that were passed as part of the Taxpayer Relief Act of 1997,
including the permanent moratorium on the application of nondiscrimination rules for
governmental plans.
- The
Retirement Security Act of 1997: S. 14 (Daschle) and HR 1130 (Gejdenson).
S 14 was
introduced on January 21, 1997 by the Senate Democratic leadership to promote pension
security. Provisions include 401(k) asset investment diversification and various
provisions regarding the audit process, vesting schedules and regulation of private plans.
The permanent nondiscrimination moratorium for governmental plans was also included. HR
1130 was introduced as companion legislation on March 19, 1997. A few of the provisions in
these bills were passed as part of the Taxpayer Relief Act of 1997. A number were
incorporated in S. 2249, the Retirement Accessibility, Security and Portability Act of
1998 and in HR 4152, the Retirement Security Act of 1998.
Social Security Reform
- The
Protect Social Security Account: H.R. 4578 (Archer and Others).
This bill would amend the Social Security Act to establish the Protect Social Security
Account into which the Secretary of the Treasury shall deposit budget surpluses until a
reform measure is enacted to ensure the long-term solvency of the OASDI trust funds.
The measure to set aside 90 percent of the projected budget surplus until a reform measure
is enacted to ensure the long term solvency of the Social Security program.
- 21st
Century Retirement Act: HR 4256 (Kolbe) S 2313 (Gregg). These bills were
introduced on July 15 and 16, 1998 and would reform the Social Security system by adding
Individual Security Accounts; mandating coverage of all newly hired state and local
government employees; eliminating the Social Security earnings test; gradually increasing
the number of benefit computation years and early and delayed retirement credits; changing
the CPI; phasing-in a reduction in spousal benefits other than survivor's benefits; and
increasing the Social Security normal and early retirement ages; among other things.
- National
Dialogue on Social Security Act: HR 3546 (Archer, Kasich, Bunning and Others). On
April 29, 1998 the House voted to create a national commission charged with finding ways
ensure the long-term viability and stability of the Social Security system (H.R. 3546).
The legislation was introduced by Ways and Means Committee Chairman Bill Archer (R-TX),
Budget Committee Chairman John Kasich (R-OH), and Social Security Subcommittee Chairman
Jim Bunning (R-KY), and is supported by the House leadership. The bill would establish an
eight-member panel, with four members appointed jointly by the Speaker of the House and
the Senate Majority Leader, two by the president, and two jointly by the Senate and House
Minority Leaders. The commission members are to represent multiple generations with a
stake in the viability of the Social Security system, with at least one member
representing employees’ interests and one member representing employers’
interests. They would be required to issue a report by February 1, 1999, which must
include only recommendations that are approved by at least six of the eight members.
- Creation of
Social Security Panel: HR 3095 (Archer, Kasich). This legislation would establish
a bipartisan panel to design a single set of legislative and administrative
recommendations for Social Security reform. It would create an eight-member panel
comprised of both public- and private-sector representatives, and would be required to
issue a report by February 1, 1999.
- Social Security Solvency Act:
HR 179 (Moynihan).
Considered by many to be one of the most thorough Social
Security reform proposals is legislation introduced by Senator Daniel Patrick Moynihan
(D-NY). Among other things, this legislation would lower the Social Security payroll tax
by 2 percentage points (from 12.4% to 10.4%) between 2001 and 2024 with the payroll tax
remaining below 12.4% until 2045. Workers would be permitted to participate in voluntary
individual accounts financed with proceeds from the 2% tax cut, or workers could increase
their take home pay by 1%. The bill would also reduce federal cost-of-living adjustments
by modifying the CPI, would gradually phase in a retirement age increase, would increase
the amount of wages subject to taxation above the current $68,500, and would repeal the
earnings test beginning in 2003. The legislation would also require the mandatory
participation in Social Security by all newly hired state and local government employees
beginning in 2001.
- Personal Retirement Accounts:
HR 2782
(Sanford). Legislation introduced by Rep. Mark Sanford (R-SC),
would fully privatize the Social Security System by requiring all individuals to maintain
an IRA-like "Personal Retirement Account" (PRA) administered by a custodian.
Under the proposal, both employees and employers would contribute 6% of salary. Of the
total 12% employer and employee contributions, 8% would go to employees’ PRA account
and 4% would help pay for benefits under the current Social Security system. Individuals
could contribute more to their PRA if they wished. A mandatory insurance premium would be
levied on the PRA accounts to purchase a guaranteed minimum annual benefit. HR 2782 would
provide various pay-out options, would cap COLAs, would increase the retirement age, would
continue a trust for Social Security disability payments, and would mandate coverage for
all newly hired sate and local government employees. The concept of personal retirement
accounts has also been forwarded by House Speaker Newt Gingrich and House Budget Committee
Chairman John Kasich. Both lawmakers propose using the projected budget surplus to create
such accounts as an addition to the current Social Security system.
- Social Security Reform: S 321 (Gregg).
This bill would create personal investment plans funded by employee Social Security
payroll deductions of one percent. To increase the solvency of the overall Social Security
system, this bill would increase the retirement age to 70 and the early retirement age to
65 by 2029 and continue to gradually increase the ages after that. The bill would also
reduce the Consumer Price Index for Social Security purposes by 0.5 percentage point each
year.
- Two-Tiered System: HR 3082 (N. Smith).
This legislation would establish a two-tiered Social Security System that would
include both a basic defined benefit and a personal retirement account carved out of the
system.
- Investment
of Social Security Trust Funds in Stock Market:
HR 3822 (N. Smith). The
legislation would require investment of the Social Security trust funds in equities and
would take the trust funds off budget. Congressman Earl Pomeroy (D-ND) recently announced
plans to draft legislation that would invest up to half of Social Security assets in the
stock market. A recent GAO report, Implications of Government Stock Investing for the
Trust Fund, the Federal Budget and the Economy (GAO/AIMD/HEHS-98-74) addresses issues
that are likely to be debated regarding such proposals.
- Social
Security Offset Bills: HR 2273 (Jefferson and Others), S 1365 (Mikulski and Others).
These
bills would modify the government pension offset provision so that there would be no
offset in cases where the combined total benefit (the earned government pension plus the
spousal benefit or survivor's benefit) did not exceed $1,200. If the combined total
benefit exceeded $1,200, then two-thirds of the amount over $1,200 would be used as an
offset for the survivor's or spousal benefit. Currently, two-thirds of a spouse's total
earned government pension is applied to reduce his or her spousal or survivor's benefit.
There are over 150 cosponsors of the House legislation and 14 cosponsors of the senate
bill. The offset provisions were also incorporated into S 2249 and HR 4152.
- Social
Security Integration: S 320 (Moseley-Braun, Murray) and HR 766 (Kennelly).
Integration with Social Security allows a pension to be combined with Social Security to
achieve overall retirement income objectives. Section 401(l) of the Internal Revenue Code
allows for several methods for integration. These bills, among other provisions, would
repeal Sec 401(l) and related sections of 401(a) after January 1, 2004. This provision has
been a component in other pension packages, including S 2249 and HR 4152.
- Mandatory
Medicare/Increase in Eligibility Age and Certain Premiums (Blue Dog Budget Proposal,
Senate Medicare Plan).
The House "Blue Dog" Coalition's FY1998 budget
outline that produced a budget surplus by FY 2002 included a provision extending the
Medicare hospital insurance tax to those Federal, state and local workers who are not
currently covered. A similar provision was included in the Senate's initial Medicare Plan
proposal. The final Medicare plan passed by the Senate in 1997 included additional monthly
Part B premiums for higher-income Americans, on top of what is already scheduled to be
paid, and a gradual increase of the eligibility age to 67. None of these proposals were
included in the final 1997 legislation.
Membership is complete for
the commission charged with making recommendations by March 1999 for keeping Medicare
financially sound. The panel includes: Sen. Bill First (R-TN); Sen. Phil Gram (R-TX); Sen.
Bob Kerrey (D-NE); Sen. John Rockefeller (D-WV); Rep. Michael Billirakis (R-FL); Rep. Greg
Ganske (R-IA); Rep. John Dingell (D-MI); Rep. Jim McDermott (D-WA); Rep. Bill Thomas
(R-CA); Stuart Altman, health economist; Illlene Gordon, Medicare beneficiary; Samuel H.
Howard, President & CEO Phoenix Health Care Corp.; Deborah Steelman, health policy
specialist; Laura Tyson, economics professor; Bruce Vladeck, former HCFA administrator;
Anthony Watkins, chief executive HIP Health Plan.
Tax Reform
- 10 Percent Tax Act: HR 3620 (Gephardt).
This legislation was introduced on April 1, 1998 and would impose a maximum federal
income tax of 10% on three-quarters of families in the United States. According to reports
from the sponsor, the 10 Percent Tax Act would reduce the tax rate by broadening the
current tax base and eliminating $50 billion in "corporate welfare." The
legislation would also eliminate nearly all deductions except the one for mortgage
interest and the preferred tax status of health insurance. The plan calls for retaining
the progressive nature of the current tax system through five tax brackets from 10% to a
maximum 34%. Gephardt said the proposal would not increase the deficit. Fringe benefits
(except health care), employer and employee pension contributions and tax-exempt interest
would be included in income. Inside build-up in pensions would continue to be excluded
from income as in current law. In addition, a portion of pension distributions would be
nontaxable to reflect the non-exclusion of the contribution to the plan. Early withdrawal
penalties would continue to apply.
- Flat Tax: HR 1040 (Armey) and S
1040 (Shelby).
HR 1040 would apply a 20% single tax rate (17% starting in 1999) to
individuals and businesses. A hefty standard deduction is provided to make the proposal
more progressive and itemized deductions are eliminated. Salary-reduction contributions to
plans such as 401(k), 457 and 403(b) would no longer receive income tax advantages.
However, the bill would significantly simplify the rules relating to qualified retirement
plans by repealing the nondiscrimination test for all plans, the top heavy rules, the
401(a)(17) compensation limits, the minimum participation and coverage rules, ADP and ACP
tests, various contribution and benefit limits, and the tax on employer reversions of
pension assets. S 1040 would also replace the current income tax with a flat tax regime
featuring a single tax rate of 17 percent and hefty standard deductions.
National Retail
Sales Tax: HR 1325 (Shaefer).
- Sunset of the Tax Code: HR 3097 (Largent).
On July 17, the House passed legislation to
abolish most components of the federal tax code at the end of 2001. The bill would require
Congress to institute an alternative system by July 4, 2002. Defenders of the legislation
believe it is necessary to force policy-makers and the citizenry to take action on
replacing the current system. The White House and many Democrats argue that scrapping the
code without any viable alternative in hand would be irresponsible and economically
disruptive. The bill would retain payroll taxes that support Social Security and Medicare.
The bill has been sent to the Senate and referred to the Finance Committee without further
action.
Securities Issues
- Financial
Derivatives Supervisory Improvement Act: HR 4062 (Leach), HR 4507 (R. Smith), FY 1999 Agruculture Appropriations Bill. HR 4062 and HR 4507 would
prevent the CFTC from moving forward with possible regualtory action regarding the over-the-counter derivatives market until Congress has had a full
opportunity to review the situation. On September 28,
House-Senate conferees agreed to an amendment to the FY 1999 funding measure for the
Commodity Futures Trading Commission that would bar the commission from changing its
current light regulatory approach to the almost $30 trillion market for six months, giving
Congress until next spring to determine how best to regulate OTC derivatives.
- Securities
Litigation Bills: S. 1260 (Gramm, Dodd and Others), HR 1653 (Campbell and others) and HR
1689 (Eshoo, White and others). These bills would bar securities class actions
against nationally traded companies from being brought in state courts, requiring them to
be instead be brought in federal court under the restrictions enacted in the 1995 Private
Securities Litigation Reform Act. The Senate passed S. 1260 on May 13, 1998. During
consideration of the measure, Senators agreed by unanimous consent to an amendment offered
by Senator Paul Sarbanes (D-MD), the Senate Banking Committee’s ranking minority
member, that would preserve the right of State and local governments and their pension
plans to bring their securities fraud class actions under state law. The House passed its
version of the legislation, HR 1689, on July 21, 1998. A much narrower exemption for state
and local governments and their pension funds was provided in the House legislation, which
would further require that the public entities in the class be named plaintiffs and that
such entities have authorized the action in order to bring the action in state court.
Conferees to work out the differences in the two bills have been named in the Senate, but
not yet in the House. Both bills would clarify that the certain corporate governance
claims would not be preempted and that investors would not be barred from recovering
lo9sses due to a company’s "reckless misconduct." Go to
related Federal FAX article.
The Securities Investors Privacy Enhancement Act: H.R.
4479 (Markey), and The Depository Institution Customers Financial Privacy Enhancement
Act: H.R. 4478 (Markey). Rep. Edward Markey (D-Mass.) introduced
these two bills, which would establish under federal law the principle that financial
services institutions generally must provide notice to the consumer of when information is
being gathered about them, disclosure whenever the institutions intend to offer such
information to any other person, and a requirement for the express written consent of the
consumer if the information is to be transferred or sold to any other person.
- Decimalization:
HR 1053 (Oxley and Markey) and S 838 (Bryan). This legislation would change U.S.
stock pricing from fractions to decimals. It is designed to bring the U.S. in line with
other industrialized nations that now use decimal pricing. Hearings were held in the
House, but the House bill was withdrawn when the NASDAQ Stock Market and the New York
Stock Exchange agreed to shift to the use of decimals.