The Republicans said their proposal was not pro- or anti-takeover, but was intended to give stockholders more information and flexibility in responding to takeovers and tender offers.
"The pre-eminence of our securities markets as the most honest and efficient in the world is at stake," Lent said.
H. Brewster Atwater Jr., chairman of General Mills Inc., told the subcommittee that the wave of corporate takeovers is "the worst manipulation" of the stock market since the 1920s. Atwater appeared in his capacity as chairman of the corporate-responsibility task force of the Business Roundtable.
He criticized incompetent corporate management, which he said sometimes spurs hostile takeover attempts, as well as corporate raiders and investment bankers who make millions of dollars, sometimes in only a few weeks or months, by targeting industries that they never actually intend to take over and manage.
"The real problem is the abuse of our capital markets by a few manipulators who put companies into play for short-term financial gain, with no intention of operating them over the long term," Atwater said.
The Republican bill, like the Democrats' measure, would require that anyone buying 5 percent or more of a company's stock disclose that acquisition within one day. Present laws allow 10 days for disclosure.
The Republican bill also would require that those acquiring the stock state whether they intend to seek control of the company and the effect this would have on the company and community. It would also require that tender offers be kept open for 30 business days, compared with 60 days in the Democrats' bill.
Subcommittee chairman Edward Markey (D., Mass.) said he welcomed the Republican measure and hoped a bipartisan bill could be approved.
The bills have been introduced because of concern in Congress about the effects of widespread hostile takeover attempts on the economy and in response to recent Wall Street scandals involving investors who made millions of
dollars in profits based on inside information about upcoming takeover attempts and mergers.
At the hearing, witnesses from several business organizations said they supported strong reforms.
"The recent spate of indictments exposing the greed and amoral attitude of some Wall Street players is an indictment of a system in trouble," said Stanley Gault, chairman of the National Association of Manufacturers.
Gault, chairman and chief executive of Rubbermaid Inc., said faster and better disclosure of takeover attempts was needed.
"All these proposals are aimed at putting shareholders and management in a better position to evaluate a takeover bid, without significantly increasing paper work," he said.
Atwater and other witnesses also said the legislative proposals should be amended to require that reports to the SEC about stock ownership in a targeted company be filed once would-be raiders had acquired only about 2 percent to 3 percent of outstanding stock, not 5 percent.
"The reporting threshold should be 2 percent to 3 percent so as to identify those investors who might possibly be part of a conspiracy to manipulate markets," Atwater said.
