CONGRESSIONAL UPDATE
EMPLOYEE BENEFITS LEGISLATION WATCH
Congress overwhelmingly passed a corporate accountability act on July 25th (H.R. 3763). The House passed the bill 423-3 and the Senate unanimously approved the measure 99-0. The corporate reform legislation now goes before President Bush, who is expected to sign it. Heated debate over the corporate reform legislation suddenly subsided after WorldCom's accounting scandal was revealed and the stock market began its recent volatile run. This legislation is hoped to restore public confidence in corporate accounting and reporting practices. In addition to the legislation's most prominent feature-a federal accounting oversight board-the legislation also includes the following provisions of interest to employee benefits practitioners:
1. a prohibition against directors and executives buying, selling, or transferring company stock during a pension fund blackout period;
2. a requirement that notice be given to participants and beneficiaries 30 days prior to the blackout period. (The Labor Department will issue further guidance and a model notice by January 1, 2003);
3.
a prohibition of below-market interest rate loans to executives; and
4.
a significant increase in the criminal penalties for ERISA violations.
In other Congressional news, on July 11th the Senate Finance Committee approved the National Employee Savings and Trust Equity Guarantee Act ("NESTEG"). NESTEG is a measure containing Enron-inspired reforms for nonqualified deferred compensation plans and is expected to be joined with the general pension reform legislation (for qualified plans) approved by the Senate Health, Education, Labor and Pensions Committee in March. Congress is in recess during August, but the joint retirement plan reform bill should be brought before the full Senate in September. (The House passed the Pension Security Act of 2002 (H.R. 3762) in April.)
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