U.S. SECURITIES GROUP BACKS INSIDER RESTRAINTS
  The Securities Industry Association
  backed a variety of restraints on insider trading and hostile
  corporate takeovers and asked Congress to define insider
  trading in law.
      The industry trade association called on U.S. securities
  firms to take steps to protect sensitive corporate secrets to
  guard against illegal trading by employees.
      The association also backed broad federal restrictions on a
  variety of tactics used in hostile corporate takeovers.
      But it said investment banking firms should be allowed to
  continue to engage in both arbitrage and merger and acquisition
  activities so long as those functions were kept separate.
      The SIA, in a report adopted yesterday by its board of
  directors, backed a higher enforcement budget for the federal
  Securities and Exchange Commission and called on U.S. stock
  exchanges to beef up their supervision of member brokerages.
      The report said securities firms "should be more rigorous in
  restricting sensitive information on a need-to-know basis."
      It said firms should train their employees to understand
  the need for confidentiality of market-sensitive information.
      It said legislation to define insider trading should avoid
  expanding current law in a way that would impede the market.
      It said an insider trading definition should exempt a
  securities firm from liability for law violations by its
  employees unless the firm had participated in or was aware of
  the wrongdoing.
      In the mergers and acquisitions area, the association
  advocated a ban on greenmail payments or poison pill takeover
  protection plans without prior shareholder approval.
      It said a group or individual buying up a company's stock
  should be required to file a public disclosure statement before
  acquiring more than five pct of the company's shares. Under
  current law, disclosure may be made as late as ten days after
  exceeding the five pct limit.
      The association said all purchases exceeding 20 pct of a
  company's voting stock shouls be made only through a tender
  offer open to all shareholders. Under current law there is no
  limit on open market purchases.
      The group said the federal government should preempt state
  regulation of defensive takeover tactics.
      The group said all tender offers should remain open for at
  least 30 calendar days.
      The current requirement is expressed in business days.
      It said so-called "lockup" devices, in which securities are
  issued to a friendly investor to seal a takeover deal or fend
  off an unfriendly predator should be limited to 18.5 pct of the
  target company's total common stock.
      Association president Edward O'Brien said the group acted
  out of concern over the ad hoc restructuring of corporate
  America on Wall Street and investor fears about insider trading
  and fairness in the marketplace.
  

