==========================================START OF PAGE 1====== SECURITIES AND EXCHANGE COMMISSION [Release No. 34-37009; File No. S7-8-96] Study and Report on Protections for Senior Citizens and Qualified Retirement Plans AGENCY: Securities and Exchange Commission ACTION: Request for Comments SUMMARY: The Private Securities Litigation Reform Act of 1995 directs the Securities and Exchange Commission (the "Commission") to determine whether investors that are senior citizens or qualified retirement plans require greater protection against securities fraud than is currently provided under the federal securities laws; and whether investors that are senior citizens or qualified retirement plans have been adversely impacted by abusive or unnecessary securities fraud litigation, and whether the current provisions of the federal securities laws are sufficient to protect them from such litigation. The Commission is soliciting comment on these questions and on the more general question of the role of senior citizens and qualified retirement plans in our securities markets. DATES: Comments must be received no later than April 30, 1996. ADDRESSES: Persons wishing to respond should file three copies of their written comments with Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Comments may also be submitted electronically at the following E-mail address: rule- comments@sec.gov. All written comments should refer to File No. S7-8-96; this file number should be included on the subject line if E-mail is used. The comments will be available for public inspection and copying in the Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. Electronically submitted comments will be posted on the Commission's Internet web site (http://www.sec.gov). FOR FURTHER INFORMATION CONTACT: John W. Avery, Office of the General Counsel, at (202) 942-0816; or Ann M. Gerg, Office of the General Counsel, at (202) 942-0857. SUPPLEMENTARY INFORMATION: I. Introduction On December 22, 1996, Congress overrode the President's veto and enacted the Private Securities Litigation Reform Act of 1995 (the "Act"). Section 106 of the Act requires the Commission to: (1) determine whether investors that are senior citizens or qualified retirement plans require greater protection against securities fraud than is provided in the Act and the amendments made by the Act; and (2) determine whether investors that are senior citizens or qualified retirem0ent plans have been adversely impacted by abusive or unnecessary securities fraud litigation, and whether the provisions in the Act or amendments made by the Act are sufficient to protect their investments from such litigation. ==========================================START OF PAGE 2====== If the Commission determines that greater protections are necessary, it must submit a report to the Congress by June 19, 1996. For purposes of section 106 of the Act, the term "senior citizen" means an individual who is 62 years of age or older, and the term "qualified retirement plan" has the same meaning as in section 4974(c) of the Internal Revenue Code of 1986. II. Background Senior citizens and qualified retirement plans are substantial participants in our financial markets and play a vital role in capital formation. As the population ages, the importance of seniors and qualified retirement plans to our markets will increase. Many employers are moving away from traditional pension plans in which the plan participants have little, if any, investment discretion, to defined contribution plans in which the participants have significant investment discretion. Thus, seniors and qualified retirement plans may be more vulnerable to securities fraud and to the effects of abusive securities fraud litigation. The Commission believes that it would be valuable to examine generally the role of senior citizens and qualified retirement plans as investors and their importance to our markets and to capital formation, and to consider whether the federal securities laws provide adequate protections to senior citizens and qualified retirement plans against securities fraud and abusive securities litigation. The Commission also believes that it would be appropriate to consider the special needs of senior citizens and qualified retirement plans and whether changes to the federal securities laws or to the Commission's rules or regulations are necessary or desirable to address those needs. III. Solicitation of Public Comment The Commission seeks comment on the issues and questions described above and, more particularly, on the following questions with respect to investors that are senior citizens or qualified retirement plans: 1. What is the role and importance of senior citizens and qualified retirement plans as investors in our financial markets, and how is that role and importance changing? 2. What are their special needs as investors, and what changes to the federal securities laws or to the Commission's rules or regulations may be necessary or desirable to address those needs? 3. Do they require greater protection against securities fraud than is provided in the Act and the amendments made by the Act, or than is provided under the federal securities laws? 4. Have they been adversely impacted by abusive or unnecessary securities fraud litigation? Are the provisions in the Act or amendments made by the Act sufficient to protect their investments from such litigation, or, more generally, are the provisions of ==========================================START OF PAGE 3====== the federal securities laws sufficient to protect their investments from such litigation? 5. What changes to the federal securities laws or to the Commission's rules or regulations may be necessary or desirable to thoroughly protect senior citizens and qualified retirement plans against securities fraud and abusive or unnecessary securities fraud litigation? Commenters are requested to direct their comments to the special needs and circumstances of senior citizens and qualified retirement plans. Comments should not simply voice support for, or criticism of, the Act generally. By the Commission Jonathan G. Katz Secretary March 21, 1996