House Panel to Vote on Wall Street Bills

As Congress returns from a recess, Wall Street is on the radar screen.

A key House subcommittee is planning votes over the next several weeks on bills to streamline federal securities laws, modernize mutual fund regulation and reauthorize the Securities and Exchange Commission.

Rep. Jack Fields (R-Texas), chairman of the House telecommunications and finance subcommittee, is expected to soon unveil a rewritten bill to modernize the Depression-era laws governing Wall Street.

Consumer groups and state securities regulators have denounced the original proposal. They said it would restrict the role of state enforcers, limit information about corporate takeovers and make it more difficult for institutional investors to sue brokerage firms for peddling unsuitable investments.

There are major changes in the new Fields bill, the Capital Markets Deregulation and Liberalization Act, according to several sources who spoke on condition of anonymity.

The new version wouldn’t repeal key elements of the Williams Act, the law requiring disclosure of pending corporate takeovers as well as transactions by a company’s large shareholders, sources said.

Fields’ initial attempt to restrict the Williams Act was criticized for denying investors valuable information about corporate takeovers and denying the SEC a major enforcement tool. The new bill will call for a study of the Williams Act and the Trust Indenture Act, sources said.

Two other controversial items remain essentially unchanged, including a new “suitability” standard for institutional investors, sources said.

The new standard would presume the large investor has the expertise to analyze investment risks, unless there was a separate agreement for the investor’s broker-dealer firm to provide investment advice. Such a change, coveted by major brokerages, would make it harder for pension funds and state governments to sue Wall Street firms for selling risky investments.

Also unchanged are provisions for regulation of national securities markets, which would prevent states from enforcing any law that’s different from federal securities laws.