[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 422 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 422

 To amend the Securities Exchange Act of 1934 to ensure the efficient 
  and fair operation of the government securities market, in order to 
  protect investors and facilitate government borrowing at the lowest 
    possible cost to taxpayers, and to prevent false and misleading 
   statements in connection with offerings of government securities.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             February 24 (legislative day, January 5), 1993

Mr. Dodd (for himself, Mr. Riegle, Mr. D'Amato, Mr. Shelby, Mr. Kerry, 
 Mr. Pryor, and Mrs. Murray) introduced the following bill; which was 
read twice and referred to the Committee on Banking, Housing, and Urban 
                                Affairs

_______________________________________________________________________

                                 A BILL


 
 To amend the Securities Exchange Act of 1934 to ensure the efficient 
  and fair operation of the government securities market, in order to 
  protect investors and facilitate government borrowing at the lowest 
    possible cost to taxpayers, and to prevent false and misleading 
   statements in connection with offerings of government securities.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Government Securities Act Amendments 
of 1993''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) the liquid and efficient operation of the government 
        securities market is essential to facilitate government 
        borrowing at the lowest possible cost to taxpayers;
            (2) the fair and honest treatment of investors will 
        strengthen the integrity and liquidity of the government 
        securities market;
            (3) rules promulgated by the Secretary of the Treasury 
        pursuant to the Government Securities Act of 1986 have worked 
        well to protect investors from unregulated dealers and maintain 
        the efficiency of the government securities market; and
            (4) extending the authority of the Secretary and providing 
        new authority will ensure the continued strength of the 
        government securities market.

SEC. 3. EXTENSION OF TREASURY RULEMAKING AUTHORITY.

    Section 15C of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
5) is amended by striking subsection (g).

SEC. 4. SALES PRACTICE RULEMAKING AUTHORITY.

    (a) Rules For Financial Institutions.--Section 15C(b) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78o-5(b)) is amended--
            (1) by redesignating paragraphs (3), (4), (5), and (6) as 
        paragraphs (4), (5), (6), and (7), respectively; and
            (2) by inserting after paragraph (2) the following new 
        paragraph:
    ``(3)(A) With respect to any financial institution that has filed 
notice as a government securities broker or government securities 
dealer or that is required to file notice under subsection (a)(1)(B), 
the appropriate regulatory agency for such government securities broker 
or government securities dealer may issue such rules and regulations 
with respect to transactions in government securities as may be 
necessary to prevent fraudulent and manipulative acts and practices and 
to promote just and equitable principles of trade, if the Secretary has 
not determined that the rule or regulation, if implemented would, or as 
applied does--
            ``(i) adversely affect the liquidity or efficiency of the 
        market for government securities; or
            ``(ii) impose any burden on competition not necessary or 
        appropriate in furtherance of the purposes of this section.
    ``(B) The appropriate regulatory agency shall consult with and 
consider the views of the Secretary prior to approving or amending a 
rule or regulation under this paragraph, except where the appropriate 
regulatory agency determines that an emergency exists requiring 
expeditious and summary action and publishes its reasons therefor. If 
the Secretary comments in writing to the appropriate regulatory agency 
on a proposed rule or regulation that has been published for comment, 
the appropriate regulatory agency shall respond in writing to such 
written comment before approving the proposed rule or regulation.
    ``(C) In promulgating rules under this section, the appropriate 
regulatory agency shall consider the sufficiency and appropriateness of 
then existing laws and rules applicable to government securities 
brokers, government securities dealers, and persons associated with 
government securities brokers and government securities dealers.''.
    (b) Rules by Registered Securities Associations.--Section 15A(f)(2) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3(f)(2)) is 
amended--
            (1) by striking ``and'' at the end of subparagraph (E); and
            (2) by striking the period at the end of subparagraph (F) 
        and inserting ``, and (G) with respect to transactions in 
        government securities, to prevent fraudulent and manipulative 
        acts and practices and to promote just and equitable principles 
        of trade.''.
    (c) Oversight of Registered Securities Associations.--Section 19 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78s) is amended--
            (1) in subsection (b), by adding at the end the following 
        new paragraphs:
    ``(5) The Commission shall consult with and consider the views of 
the Secretary of the Treasury prior to approving a proposed rule filed 
by a registered securities association pursuant to section 
15A(f)(2)(G), except where the Commission determines that an emergency 
exists requiring expeditious or summary action and publishes its 
reasons therefor. If the Secretary of the Treasury comments in writing 
to the Commission on a proposed rule that has been published for 
comment, the Commission shall respond in writing to such written 
comment before approving the proposed rule. The Commission may approve 
such a rule if the Secretary of the Treasury has not determined that 
the rule, if implemented, would, or as applied does--
            ``(A) adversely affect the liquidity or efficiency of the 
        market for government securities; or
            ``(B) impose any burden on competition not necessary or 
        appropriate in furtherance of the purposes of this section.
    ``(6) In approving rules filed by a registered securities 
association pursuant to section 15A(f)(2)(G), the Commission shall 
consider the sufficiency and appropriateness of then existing laws and 
rules applicable to government securities brokers, government 
securities dealers, and persons associated with government securities 
brokers and government securities dealers.''; and
            (2) in subsection (c), by adding at the end the following 
        new paragraph:
    ``(5) With respect to rules adopted pursuant to section 
15A(f)(2)(G), the Commission shall consult with and consider the views 
of the Secretary of the Treasury before abrogating, adding to, and 
deleting from such rules, except where the Commission determines that 
an emergency exists requiring expeditious or summary action and 
publishes its reasons therefor.''.

SEC. 5. DISCLOSURE BY GOVERNMENT SECURITIES BROKERS AND GOVERNMENT 
              SECURITIES DEALERS WHOSE ACCOUNTS ARE NOT INSURED BY THE 
              SECURITIES INVESTOR PROTECTION CORPORATION.

    Section 15C(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o-5(a)) is amended--
            (1) by redesignating paragraph (4) as paragraph (5); and
            (2) by inserting after paragraph (3) the following:
    ``(4) No government securities broker or government securities 
dealer that is not a member of the Securities Investor Protection 
Corporation shall effect any transaction in any security in 
contravention of such rules as the Commission shall prescribe pursuant 
to this subsection to assure that its customers receive complete, 
accurate, and timely disclosure of the inapplicability of Securities 
Investor Protection Corporation coverage to their accounts.''.

SEC. 6. TECHNICAL AMENDMENT.

    Section 15C(d)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o-5(d)(2)) is amended to read as follows:
    ``(2) Information received by any appropriate regulatory agency or 
the Secretary from or with respect to any government securities broker 
or government securities dealer or with respect to any person 
associated with a government securities broker or a government 
securities dealer may be made available by the Secretary or the 
recipient agency to the Commission, the Secretary, any appropriate 
regulatory agency, any self-regulatory organization, or any Federal 
Reserve bank.''.

SEC. 7. AMENDMENTS TO DEFINITIONS.

    Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)) is amended--
            (1) in paragraph (34)(G), by amending clauses (ii), (iii), 
        and (iv) to read as follows:
                            ``(ii) the Board of Governors of the 
                        Federal Reserve System, in the case of a State 
                        member bank of the Federal Reserve System, a 
                        foreign bank, an uninsured State branch or 
                        State agency of a foreign bank, a commercial 
                        lending company owned or controlled by a 
                        foreign bank (as such terms are used in the 
                        International Banking Act of 1978), or a 
                        corporation organized or having an agreement 
                        with the Board of Governors of the Federal 
                        Reserve System pursuant to section 25 or 
                        section 25(a) of the Federal Reserve Act;
                            ``(iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank insured by 
                        the Federal Deposit Insurance Corporation 
                        (other than a member of the Federal Reserve 
                        System or a Federal savings bank) or an insured 
                        State branch of a foreign bank (as such terms 
                        are used in the International Banking Act of 
                        1978);
                            ``(iv) the Director of the Office of Thrift 
                        Supervision, in the case of a savings 
                        association (as defined in section 3(b) of the 
                        Federal Deposit Insurance Act) the deposits of 
                        which are insured by the Federal Deposit 
                        Insurance Corporation;''; and
            (2) by amending paragraph (46) to read as follows:
            ``(46) The term `financial institution' means--
                    ``(A) a bank (as defined in paragraph (6));
                    ``(B) a foreign bank (as such term is used in the 
                International Banking Act of 1978); and
                    ``(C) a savings association (as defined in section 
                3(b) of the Federal Deposit Insurance Act) the deposits 
                of which are insured by the Federal Deposit Insurance 
                Corporation.''.

SEC. 8. STUDY RELATING TO GOVERNMENT SECURITIES INFORMATION.

    (a) In General.--The Secretary of the Treasury, the Securities and 
Exchange Commission, and the Board of Governors of the Federal Reserve 
System shall monitor and evaluate the effectiveness of private sector 
efforts to disseminate government securities price and volume 
information, and determine whether such efforts--
            (1) assure the prompt, accurate, reliable, and fair 
        reporting, collection, processing, distribution, and 
        publication of information with respect to quotations for and 
        transactions in government securities and the fairness and 
        usefulness of the form and content of such information;
            (2) assure that all government securities information 
        processors may, for purposes of distribution and publication, 
        obtain on fair and reasonable terms such information with 
        respect to quotations for and transactions in government 
        securities as is reported, collected, processed, or prepared 
        for distribution or publication by any processor of such 
        information (including self-regulatory organizations) acting in 
        an exclusive capacity; and
            (3) assure that all government securities brokers, 
        government securities dealers, government securities 
        information processors, and other appropriate persons may 
        obtain on terms which are not unreasonably discriminatory such 
        information with respect to quotations for and transactions in 
        government securities as is published or distributed.
    (b) Report.--A report describing any findings made under this 
section and any recommendations for legislation shall be submitted to 
Congress not later than 18 months after the date of enactment of this 
Act.

SEC. 9. OFFERINGS OF GOVERNMENT SECURITIES.

    Section 15(c) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o(c)) is amended by adding at the end the following new paragraph:
    ``(7) In connection with any bid for or purchase of a government 
security related to an offering of government securities by or on 
behalf of an issuer, no government securities broker, government 
securities dealer, or bidder for or purchaser of securities in such 
offering shall knowingly or willfully make any false or misleading 
written statement or omit any fact necessary to make any written 
statement made not misleading.''.

                                 <all>