January 22, 1990
TO: SEC RULES COMMITTEE NO. 6-90
CLOSED-END FUND COMMITTEE NO. 3-90
RE: RECENTLY PROPOSED SECURITIES LEGISLATION
__________________________________________________________
Attached are copies of three recently introduced bills,
which are briefly described below.
(1) "Individual Investor Fairness Act of 1989". This
bill, introduced by Congressman Wyden, would amend reporting
obligations under Section 16(a) of the Securities Exchange Act of
1934. Specifically, the bill would require initial ownership
reports to be filed within five days (rather than ten, as under
current law) upon becoming an insider and reports of changes of
ownership to be filed within five days of the change rather than
ten days after the end of the month in which the change occurred.
The bill would impose additional burdens on institutional
investors, the extent of which would depend, to a great degree,
on whether customer accounts can be excluded in determining
whether an investment adviser is a ten percent owner under
Section 16. (The current proposed rules under Section 16 would
so exclude customer accounts for persons eligible to file
Schedule 13Gs.)
(2) "Orderly Markets Act of 1989". This bill, introduced
by Congressman Eckart, would place securities derivitive
instruments, such as stock index futures, under the sole
jurisdiction of the SEC. The bill would require the SEC to
review any securities derivitive instrument before it could be
registered or traded on an exchange or interdealer quotation
system operated by a national securities association. The SEC
would have to make certain findings in order to approve the
trading of these instruments, including that the trading of the
instrument is "consistent with the public interest and the
protection of investors and will not adversely affect the
maintenance of fair and orderly markets". The SEC would also be
authorized to exempt trading in such instruments from the
requirements of Section 11(a) of the Securities Exchange Act.
(3) "Corporate Integrity and Full Disclosure Act". This
bill, introduced by Senator Kassebaum, contains various
provisions related to change in control situations. The bill
would (1) reduce the 10 day "window" under Section 13(d) to 5
days and prohibit further purchases until the filing is made, (2)
require that tender offers be approved by a majority of
independent directors and that an independent appraisal be made
of the target's value, (3) establish a private right of action
for violations of the margin rules, (4) broaden the class of
transactions covered by Section 13(e) of the Securities Exchange
Act (governing issuer stock repurchases) to cover purchases by
certain affiliates, (5) authorize the SEC to impose civil
penalties for violations of the disclosure requirements of the
Williams Act and (6) set forth that Congress intends that the
disclosure requirements for sources of financing under the
Williams Act include disclosure of "specific and committed
financing sources and financial arrangements at the outset" of
the transaction in question.
If you have any comments or questions with regard to any of
the above bills, please contact the undersigned. We will keep
you informed of developments.
Craig S. Tyle
Associate General Counsel
Attachments
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