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As I blogged a few days ago, there are over 200 amendments proposed for the Dodd bill in the Senate. There is a lot happening on the Senate floor daily right now (and continuing into the night) and it’s hard to separate fact from rumor (I’m not even sure that those on the Senate floor can keep track). For starters, some people report that President Obama wants to sign a bill by the end of June; some say he wants it by Labor Day.

There are so many proposed amendments, it would be hard to discuss even a fraction of them in this blog, particularly since the ground moves daily beneath the bill. But here are two that you may want to be aware of – thanks to the “heads up” from Rick Hansen of Chevron: the Byrd (#3880) and Rockefeller (#3886) amendments. Both of these would significantly expand the disclosure obligations of ’34 Act companies – principally because they contain no meaningful disclosure thresholds (i.e. materiality), and in the case of the Byrd Amendment, would significantly expand the bases upon which directors and officers may be found personally liable for failures to disclose.

1. The Byrd Amendment

Amends Securities Exchange Act of 1934 by inserting new Section 21B. Health and Safety Disclosure Violations. Requires issuers subject to the Securities Exchange Act of 1934 to disclose, at least annually:

– “any pending litigation concerning a health or safety condition or violation under Federal or State law involving the issuer, other than ordinary, routine litigation that is incidental to the business of the issuer, as determined by the [SEC]”;

– “any significant health or safety condition, or significant health or safety violation, at any business unit of the issuer in which routine activities pose a risk of loss of life”;

– “any significant health or safety condition, or significant health or safety violation, at any business unit of the issuer in which routine activities pose a risk of accident or fatalities, injuries, or illnesses, the occurrence of which could cause reported financial information not to be necessarily indicative of future financial condition of the issuer, or which could cause a negative effect on operating results of the issuer or any subsidiary thereof”; and

– “any trend in health or safety conditions or violations under Federal law, at any business unit of the issuer, that may change the relationship between cost and revenue for the issuer or any subsidiary thereof.”

Permits the SEC and stockholders to file claims in federal court “whenever it shall appear that any issuer has violated” the disclosure requirements. The SEC or stockholders may seek equitable relief or civil penalties “to be paid by the senior executive officers or members of the board of directors” of the issuer “(i) who knew about such violations; or (ii) whose duties and decisions affected matters regarding production or safety and therefore had reason to know about such violation.”

Key defined terms include:

– “pending litigation” means “any civil action or administrative proceeding for a penalty for violating a federal or state health and safety law that (i) is being contested before an administrative law judge under the Occupational Safety and Health Review Commission or the Federal Mine Safety and Health Review Commission; or (ii) is being otherwise contested or appealed under a state review board or other body.”

– “significant health or safety condition” means “a condition that a certified worker or manager could identify as reasonably likely to be cited, were the condition to be observed by a Federal inspector, as (i) a significant and substantial health or safety violation under the Federal Mine Safety and Health Act of 1977; (ii) a serious or repeated violation under the Occupational Safety and Health Act of 1970; or (iii) another health or safety related violation carrying a high degree of gravity under Federal law.”

– “significant health or safety violation” means “(i) a significant and substantial health or safety violation under the Federal Mine Safety and Health Act of 1977; (ii) a serious or repeated violation under the Occupational Safety and Health Act of 1970; or (iii) another health or safety related violation carrying a high degree of gravity under State or Federal law.”

2. The Rockefeller Amendment

Requires issuers who are subject to the Securities Exchange Act of 1934 and that are an operator, or that have a subsidiary that is an operator, “of a coal or other mine” to disclose in the issuer’s quarterly and annual reports:

– For each coal or other mine, (a) “the total number of violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard under section 104 of the Federal Mine Safety and Health Act of 1977,” (the “Act”) (b) “the total number of orders issued under Section 104(b) of the Act”; (c) “the total number of citations or orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under section 104(d) of the Act”; (d) “the total number of flagrant violations under section 110(b) of the Act”; (e) “the total number of imminent danger orders issued under section 107(a) of the Act”; and (f) “the total dollar value of proposed assessments from the Mine Safety and Health Administration under the Act”;

– A list of each coal or other mine that received written notice from the Mine Safety and Health Administration of(a) “a pattern of violations of mandatory health or safety standards” or (b) “the potential to have such a pattern”; and

– “Any pending legal action before the Federal Mine Safety and Health Review Commission involving such coal or other mine.”

Requires issuers who are subject to the Securities Exchange Act of 1934 and that are an operator, or that have a subsidiary that is an operator, “of a coal or other mine” to file a current report on Form 8-K with the SEC disclosing the following:

– “The receipt of an imminent danger order issued under section 107(a)” of the Federal Mine Safety and Health Act of 1977;” or

– “The receipt of a written notice from the Mine Safety and Health Administration that the coal or other mine has (a) “a pattern of violations of mandatory health or safety standards” or (b) “the potential to have such a pattern.”

Key defined terms include:

– “Coal or other mine” means a coal or other mine as defined in section 3 of the Federal Mine Safety and Health Act of 1977.

– “Operator” has the meaning given that term in section 3 of the Federal Mine Safety and Health Act of 1977.

A Fake SEC? The “U.S. Securities and Equities Administration”

Just when you get old enough to think that you’ve seen everything – something new comes along. Yesterday, the SEC issued this alert to note that “an entity calling itself the “U.S. Securities and Equities Administration” and other similar names, including the “U.S. Securities Administration” or the “U.S. Securities Bureau.” In conversations with members of the public, the entity may have represented that its address is 225 Franklin Street, Boston, Massachusetts. The entity also claims to operate a website at www.gov.ussea.us. It appears that this entity may be requesting up-front fees to remove purported restrictions on shares of stock that investors own, or to release funds purportedly being held by the U.S. government on investors’ behalf.”

I wonder how much this fake “SEA” pays a Staff attorney these days – I imagine a lot as they could just pay in Monopoly money…

Short Selling: A New SEC Enforcement Priority

In his “SEC Actions” Blog, Tom Gorman explains how the SEC’s Enforcement Division took action against individuals for short-selling, as compared to other recent cases that involved market professionals and hedge funds.

– Broc Romanek