HR 5939 IH
101st CONGRESS
2d Session
 H. R. 5939
To amend the Securities Exchange Act of 1934 to require disclosure of short
positions of major short position holders, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
October 26, 1990
Mr. DOUGLAS (for himself and Mr. BARNARD) introduced the following bill;
which was referred to the Committee on Energy and Commerce
A BILL
To amend the Securities Exchange Act of 1934 to require disclosure of short
positions of major short position holders, 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 Protection Act of 1990'.
SEC. 2. DISCLOSURE OF SIGNIFICANT SHORT POSITIONS.
  Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is
  amended by adding at the end thereof the following:
  `(h)(1) Any person who is or becomes, directly or indirectly, the beneficial
  owner of a short position equivalent to more than 5 percent of any class
  of equity security which is registered pursuant to section 12 of this
  title, or any equity security of an insurance company which would have
  been required to be so registered except for the exemption contained in
  section 12(g)(2)(G) of this title, or any equity security issued by a
  closed-end investment company registered under the Investment Company Act
  of 1940 or any equity security issued by a Native Corporation pursuant
  to section 37(d)(6) of the Alaska Native Claims Settlement Act shall,
  within 30 days after enactment hereof or, if later, within 10 days after
  acquiring a short position equivalent to more than 5 percent of such class,
  send to the issuer of the securities at its principal executive office, by
  registered or certified mail, send to each exchange where the securities
  are traded and to each registered securities association, and file with
  the Commission, a statement containing the following information, and such
  additional information, as the Commission may by rules and regulations
  prescribe as necessary or appropriate in the public interest or for the
  protection of investors:
  `(A) the background, and identity, residence, and citizenship of, and the
  nature of such beneficial ownership by, such person and all other persons
  by whom or on whose behalf the short sales have been or are to be effected;
  `(B) the person from whom such equity securities were borrowed, including
  a description of the transaction and the names of the parties thereto,
  and the source and amount of the funds or other consideration used or to
  be used in making the short sales;
  `(C) the number of shares of such security which have been beneficially
  sold short by (i) such person, and (ii) by each associate of such person,
  giving the background, identity, residence, and citizenship of each such
  associate; and
  `(D) information as to any contracts, arrangements, or understandings with
  any person with respect to any securities of the issuer, including but
  not limited to transfer of any of the securities, joint ventures, loan
  or option arrangements, puts or calls, guaranties of loans, guaranties
  against loss or guaranties of profits, division of losses or profits,
  or the giving or withholding of proxies, naming the persons with whom
  such contracts, arrangements, or understandings have been entered into,
  and giving the details thereof.
  `(2) If any material change occurs in the facts set forth in the statements
  to the issuer, the exchange, and the registered securities association,
  and in the statement filed with the Commission, an amendment shall be
  transmitted to the issuer, the exchange, and the registered securities
  association, and shall be filed with the Commission, in accordance with
  such rules and regulations as the Commission may prescribe as necessary
  or appropriate in the public interest or for the protection of investors.
  `(3) When 2 or more persons act as a partnership, limited partnership,
  syndicate, or other group for the purpose of selling short the securities
  of an issuer, such syndicate or group shall be deemed a `person' for the
  purposes of this subsection.
  `(4) In determining, for purposes of this subsection, any percentage of a
  class of any security, such class shall be deemed to consist of the amount of
  the outstanding securities of such class, exclusive of any securities of such
  class held by or for the account of the issuer or a subsidiary of the issuer.
  `(5) This subsection shall not apply to market makers and specialists with
  regard to any security in which they are registered or to which they are
  assigned to the extent that short sales effected by such market makers or
  specialists are transacted solely for bona fide market-making purposes in
  that security.'.
SEC. 3. PROHIBITION AGAINST MANIPULATION OF SECURITY PRICES.
  Section 9 of the Securities Exchange Act of 1934 (15 U.S.C. 78i) is amended--
  (1) in paragraphs (1) through (6) of subsection (a), by striking `registered
  on a national securities exchange' each place it appears;
  (2) in subsection (b), by inserting `or any interdealer quotation system'
  after `national securities exchange'; and
  (3) in subsection (d)--
  (A) by inserting `(1)' after `(d)'; and
  (B) by adding at the end thereof the following new paragraph:
  `(2) The term `interdealer quotation system' means any system of general
  circulation to brokers or dealers which regularly disseminates quotations
  of identified brokers or dealers.'.
SEC. 4. ENJOINING MARKET MANIPULATION.
  Section 10 of the Securities Exchange Act of 1934 (15 U.S.C. 78j) is
  amended by adding at the end thereof the following: `The issuer of any
  security which is registered pursuant to section 12 of this title shall
  have standing to bring an action for equitable relief in any court of
  competent jurisdiction against any person who violates any provision of
  this section or any rules promulgated thereunder by the Commission.'.