Tender Offer Disclosure and Fairness Act of 1987

Summary

Tender Offer Disclosure and Fairness Act of 1987 - Amends the Securities Exchange Act of 1934 to decrease from five percent to three percent the amount of securities acquired in a corporation which triggers disclosure requirements. Reduces from ten days to one day the time in which public disclosure must be filed with the Securities and Exchange Commission (Commission). Requires such disclosure to include: (1) the identity of all persons with whom the filing person had communications regarding such acquisition within 90 days prior to the acquisition; (2) the sources of financing used to make the acquisition; (3) a statement by the filing person as to whether the acquisition is for the purpose of investment or for the purpose of taking control of such corporation; and (4) an itemized statement of all fees and other expenses paid or incurred in connection with the acquisition. Prohibits any person required to file such a disclosure from acquiring any additional amount of securities until the disclosure has been filed with the Commission and an announcement has been publicly disseminated. Requires that any material changes in facts relating to a filing must be made by the end of the next business day following such change. (Present law requires such a change to be made promptly.) Includes within the definition of those required to file such disclosures any group of two or more persons acting in concert or in a coordinated or consciously parallel manner (whether or not pursuant to an express agreement). (Present law requires disclosure only from groups of persons acting as a partnership, limited partnership, syndicate, or other group.) Prohibits anyone who has disclosed that the purpose of the acquisition is investment from making any tender offer for additional shares of securities until six months after the filing of an amended disclosure statement indicating that the purpose is to obtain control of the corporation. Makes unlawful: (1) the making of any false statements of material fact or the omission of any material fact regarding any required disclosure statement; and (2) engaging in any fraudulent, deceptive, or manipulative acts or practices in connection with any required disclosure statement. Provides for a private right of action for damages and equitable relief by the issuer of securities for any intentional disclosure violations or for any violation of margin requirements in connection with tender offer financing. Requires any person making a tender offer for shares of securities of a corporation to keep such offer open for a minimum of at least 35 business days. Prohibits any person to acquire more than 15 percent of any of the shares of any class of securities in a corporation unless such acquisition is made pursuant to a tender offer. Allows the Commission to exempt any person or transaction from such prohibition to the extent that such exemption is necessary or appropriate in the public interest and for the protection of investors. Prohibits an issuer from: (1) buying back its securities at a price above the market value (Greenmail) from any person holding more than three percent of those securities if that person held the stock less than six months, unless the stock is purchased by a tender offer open to all shareholders or the repurchase is approved by a majority of the issuer's shareholders; (2) during the pendency of a tender offer, entering into agreements that increase the current or future compensation (except for a routine increase) of any officer or director (Golden Parachute payments); and (3) establishing any rights to acquire any securities, during the pendency of the tender offer, if such rights would permit such shareholders to purchase securities of an acquiring company or the issuer (Poison Pill defense). Prohibits any person from acting as a "tender offer arbitrageur" unless registered with the Commission. Defines a "tender offer arbitrageur" as any person who regularly buys and sells registered securities, for his or her own account or for the account of others, in response to, or in anticipation of, a merger, tender offer, recapitalization, restructuring, or other similar transaction. Amends the Employee Retirement Income Security Act (ERISA) to exempt from liability for breach of fiduciary duties any employee benefit plan trustees who decide in response to a tender offer not to tender securities which are held in trust by the benefit plan. Prohibits any part of the residual assets of a benefit plan from being used to finance, directly or indirectly, any acquisition of the securities of the employer pursuant to a tender offer including the repayment, redemption, or refinancing of any indebtedness incurred by such person in connection with any such acquisition. Increases the insider trading criminal penalties from a maximum of five years imprisonment or a $100,000 fine to a maximum of ten years imprisonment or a $1,000,000 fine. Requires a minimum criminal penalty of one year imprisonment for perjury or obstruction of justice in connection with an insider trading investigation. States that the Congress declares that the internal affairs or governance of corporations shall be subject to regulation by the laws of the State under which such corporation is organized.

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2 official files

• Reported to Senate with amendment(s)

  summary · EN · 17 December 1987

  Open at official source

• Introduced in Senate

  summary · EN · 4 June 1987

  Open at official source

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