Trade Highlights from House and Senate Versions of Financial Reform Bill

H.R. 4173 is currently subject to a House-Senate conference to resolve the differences between the two versions. The House-Senate conference has been meeting for the past few weeks and is scheduled to continue meeting on June 23-24, 2010.

Although the House and Senate have passed H.R. 4173, it is not yet in effect. Generally, in order for a bill to be implemented, identical versions of that bill must be passed by both the House and Senate, and then the bill must be approved (enacted) by the President.

The following are highlights of the trade-related provisions in the House- and Senate-passed versions of H.R. 4173. It should be noted that the language of the final Conference Report could differ from the provisions summarized below.

SEC Reports for Companies Using Conflict Minerals

Senate. The Senate-passed version of H.R. 4173 contains a provision that would affect gold, columbite-tantalite, cassiterite, and wolframite (collectively “minerals”) and their derivatives (such as metals). This provision would:

• Require persons (e.g. corporations) required to file reports with the Securities and Exchange Commission, for whom such minerals, or their derivatives, are necessary for the functionality or production of a product they manufacture, to annually disclose to the SEC whether the minerals used originated or may have originated in the Democratic Republic of the Congo or an adjoining country, etc.(These disclosure requirements (i) would terminate 5 years after the date of enactment; but could be extended for one year periods if certain conditions are met; and (ii) could be temporarily waived by the SEC, if the President determined that doing so would be in the public interest.)
• Require a report to Congress that evaluates the implementation, impact, and makes recommendations regarding these provisions.

(See ITT’s Online Archives or 05/21/10 news, 10052170, for BP summary of the conflict minerals provision in the Senate-passed H.R. 4173.)

House. The House-passed version does not contain a provision on conflict minerals.

Whistleblower Rewards for Securities Violations Such as FCPA

House. Section 7203 of the House-passed version of H.R. 4173 contains a provision which would amend the Securities Exchange Act of 1934 (15 USC 78a et seq.) so that in any judicial or administrative action brought by the SEC under the securities laws, such as the Foreign Corrupt Practices Act¹, that results in monetary sanctions exceeding $1 million, the SEC may pay an award(s) not exceeding an amount equal to 30%, of the monetary sanctions imposed in the action or related actions to one or more whistleblowers who voluntarily provided original information to the SEC that led to the successful enforcement of the action.

Senate. Section 922 of the Senate-passed version of H.R. 4173 contains a similar whistleblower provision.

Expanded Authority for the Federal Trade Commission

House. Section 4901 of House-passed H.R. 4173 contains provisions that would expand the authority of the Federal Trade Commission.

According to a letter to H.R. 4173 conferees from Senate Commerce, Science, and Transportation Committee Republicans, House Section 4901 would remove checks on the FTC’s rulemaking authority and eliminate current provisions requiring coordination with the Justice Department. The letter urges the conferees to remove the FTC authority expansion from the final Conference Report.

Senate. The Senate version of H.R. 4173 does not contain these provisions.

¹The FCPA was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. The FCPA also requires companies whose securities are listed in the U.S. to meet the FCPA’s accounting provisions. These accounting provisions, which were designed to operate in tandem with the anti-bribery provisions of the FCPA, require corporations covered by the accounting provisions to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls.)