[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2131 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 2131

To amend the Federal securities laws in order to promote efficiency and 
              capital formation in the financial markets.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 27, 1995

 Mr. Fields of Texas (for himself, Mr. Frisa, Mr. Oxley, Mr. Gillmor, 
Mr. Paxon, Mr. Hastert, Mr. Barton of Texas, and Mr. White) introduced 
  the following bill; which was referred to the Committee on Commerce

_______________________________________________________________________

                                 A BILL


 
To amend the Federal securities laws in order to promote efficiency and 
              capital formation in the financial markets.
    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Capital Markets 
Deregulation and Liberalization Act of 1995''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Investment recommendations to institutional clients.
Sec. 3. Creation of national securities markets.
Sec. 4. Securities margin requirements.
Sec. 5. Minimizing transaction costs of corporate organization.
Sec. 6. Prospectus delivery.
Sec. 7. Exemptive authority.
Sec. 8. Promotion of efficiency, competition, and capital formation.
Sec. 9. Reduction in number of members of Commission.
Sec. 10. Privatization of EDGAR.
Sec. 11. Rules of self-regulatory organizations.
Sec. 12. Designation of primary SRO and examining authority.
Sec. 13. Treatment of press conferences.
Sec. 14. Repeal of Trust Indenture Act of 1939.

SEC. 2. INVESTMENT RECOMMENDATIONS TO INSTITUTIONAL CLIENTS.

    (a) Rules of National Securities Exchanges Pertaining to Investment 
Recommendations to Institutional Clients.--Section 6(b) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78f(b)) is amended by 
inserting after paragraph (9) the following new paragraph:
            ``(10) Investment recommendations to institutional 
        clients.--
                    ``(A) In general.--The rules of the exchange do not 
                provide that a member is responsible for the investment 
                decisions of an institutional client, except that the 
                rules of the association may contain a provision in 
                accordance with subparagraph (B).
                    ``(B) Provision for written agreements.--The rules 
                of the exchange may provide that a broker or dealer is 
                responsible for an investment decision of an 
                institutional client if the following conditions are 
                met--
                            ``(i) the broker or dealer and the 
                        institutional client expressly agree in 
                        writing, prior to or contemporaneously with the 
                        recommendation, that the recommendation will be 
                        made by the broker or dealer on a reasonable 
                        belief that the recommendation is suitable for 
                        such institutional client, based upon facts 
                        disclosed by such institutional client as to 
                        its other security holdings and as to its 
                        financial situation and needs; and
                            ``(ii) such other conditions as the 
                        exchange may establish in accordance with the 
                        requirements of this section.
                    ``(C) Definition of institutional client.--For 
                purposes of this paragraph, the term `institutional 
                client' means any person other than a natural person 
                that has at least $10,000,000 invested in securities in 
                the aggregate in its portfolio.''.
    (b) Presumption in Actions Pertaining to Recommendations to 
Institutional Clients.--Section 15 of the Securities Exchange Act of 
1934 (15 U.S.C. 78o) is amended by inserting after subsection (g) the 
following new subsection:
    ``(h) Investment Recommendations to Institutional Clients.--
            ``(1) Presumption.--In any action brought against a broker 
        or dealer or a person associated with a broker or dealer under 
        this title or under any rule or regulation thereunder 
        pertaining to an investment recommendation to an institutional 
        client, the broker or dealer or associated person shall be 
        entitled to a presumption that it is not liable for the 
        investment decisions of an institutional client.
            ``(2) Standard for rebutting presumption.--The presumption 
        set out in paragraph (1) may only be rebutted by proof that the 
        broker or dealer or associated person and the institutional 
        client expressly agreed in writing, prior to or 
        contemporaneously with the recommendation, that the 
        recommendation would be made by the broker or dealer or 
        associated person on a reasonable belief that the 
        recommendation would be suitable for such institutional client, 
        based upon facts disclosed by such institutional client as to 
        its other security holdings and as to its financial situation 
        and needs.
            ``(3) Definition of institutional client.--For purposes of 
        this subsection, the term `institutional client' means any 
        person other than a natural person that has at least 
        $10,000,000 invested in securities in the aggregate in its 
        portfolio.
            ``(4) Limitation.--This subsection shall not be deemed to 
        create or affirm any private right of action against a broker 
        or dealer or associated person for any investment 
        recommendation to an institutional client.''.
    (c) Rules of Securities Associations.--Section 15A(b) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78o-3(b)) is amended by 
inserting after paragraph (13) the following new paragraph:
            ``(14) Investment recommendations to institutional 
        clients.--
                    ``(A) In general.--The rules of the association do 
                not provide that a member is responsible for the 
                investment decisions of an institutional client, except 
                that the rules of the association may contain a 
                provision in accordance with subparagraph (B).
                    ``(B) Provision for written agreements.--The rules 
                of the association may provide that a broker or dealer 
                is responsible for an investment decision of an 
                institutional client if the following conditions are 
                met--
                            ``(i) the broker or dealer and the 
                        institutional client expressly agree in 
                        writing, prior to or contemporaneously with the 
                        recommendation, that the recommendation will be 
                        made by the broker or dealer on a reasonable 
                        belief that the recommendation is suitable for 
                        such institutional client, based upon facts 
                        disclosed by such institutional client as to 
                        its other security holdings and as to its 
                        financial situation and needs; and
                            ``(ii) such other conditions as the 
                        association may establish in accordance with 
                        the requirements of this section.
                    ``(C) Definition of institutional client.--For 
                purposes of this paragraph, the term `institutional 
                client' means any person other than a natural person 
                that has at least $10,000,000 invested in securities in 
                the aggregate in its portfolio.''.
SEC. 3. CREATION OF NATIONAL SECURITIES MARKETS.

    (a) Securities Act of 1933.--
            (1) Exemption from state control.--Section 18 of the 
        Securities Act of 1933 (15 U.S.C. 77r) is amended to read as 
        follows:

``SEC. 18. EXEMPTION FROM STATE CONTROL OF SECURITIES OFFERINGS.

    ``(a) Exemption From State Law for Registered Securities.--No law 
of any State or Territory of the United States, or the District of 
Columbia, or any political subdivision thereof, requiring, or with 
respect to, registration or qualification of securities or securities 
transactions shall apply to any securities that are offered or sold 
using any means or instruments of transportation or communication in 
interstate commerce or of the mails pursuant to--
            ``(1) a registration statement filed pursuant to this 
        title, with the exception of a registration statement filed by 
        an issuer which is a blank check company as defined in section 
        7(b) of this title;
            ``(2) an exemption from registration set forth in section 
        3(a) of this title, with the exception of section 3(a)(11) or 
        any rule or regulation promulgated thereunder; or
            ``(3) any other exemption from section 5 of this title, 
        except where the Commission may, by rule or regulation, exclude 
        such securities from the provisions of this section 18(a) upon 
        a finding that the public interest and the protection of 
        investors would be served by State regulation.
    ``(b) Preservation of Filing Requirements.--Nothing contained in 
this title shall prohibit the securities commission (or any agency or 
office performing like functions) of any State or Territory of the 
United States, or the District of Columbia, from requiring the filing 
of any documents filed with the Commission pursuant to this title 
solely for notice purposes, along with a consent to service of process 
and requisite fee; except that no such filing, consent, or fee may be 
required with respect to securities, or transactions relating to 
securities, that are of the same class as securities, or are senior to 
such a class, listed on the New York Stock Exchange or the American 
Stock Exchange or designated for trading in the National Market System 
of the National Association of Securities Dealers Automated Quotation 
System, or securities that will be so listed or designated for trading 
upon completion of the transaction.
    ``(c) Exceptions.--Nothing in this title shall affect the 
jurisdiction of the securities commission (or any agency or office 
performing like functions) of any State or Territory of the United 
States, or the District of Columbia, over--
            ``(1) any securities or transactions in securities 
        excluded, by statute, rule, or regulation, from the operation 
        of section 18(a), or
            ``(2) any person who, in the offer or sale of any 
        securities subject to section 18(a), directly or indirectly, 
        engages in conduct that violates section 17(a) of this title, 
        regardless of whether the jurisdictional means specified 
        therein are satisfied.''.
            (2) Federal-state cooperation.--Section 19(c)(1) of such 
        Act (15 U.S.C. 77s(c)(1)) is amended to read as follows:
    ``(c)(1) In connection with any regulation of securities, 
securities transactions or other securities matters by any State or 
Territory of the United States, or the District of Columbia, which has 
not been preempted by section 18 of this title, other Federal laws, or 
rules or regulations promulgated thereunder, the Commission is 
authorized to cooperate with any association composed of duly 
constituted representatives of State governments whose primary 
assignment is the regulation of the securities business within those 
States, and which, in the judgment of the Commission, could assist in 
effectuating greater uniformity in such Federal-State securities 
matters. The Commission may, at its discretion, cooperate, coordinate, 
and share information with such an association for the purposes of 
carrying out the policies and projects set forth in paragraphs (2) and 
(3).''.
            (3) Technical amendment.--Section 19(c)(3)(C) is amended by 
        striking the last sentence.
            (4) Effective date.--The amendments made by this subsection 
        shall be effective 180 days after the date of the enactment of 
        this Act.
    (b) Securities Exchange Act of 1934.--
            (1) Amendment.--Section 15 of the Securities Exchange Act 
        of 1934 (15 U.S.C. 78o) is amended by adding at the end the 
        following new subsection:
    ``(h) Exemption From State Law for Registered Persons.--
            ``(1) Exemption.--No law of any State or political 
        subdivision thereof requiring the registration, licensing, or 
        qualification of a broker, dealer, or person acting in a 
        similar capacity in connection with the purchase or sale of any 
        security, shall apply to--
                    ``(A) any person who is registered with the 
                Commission as a broker or dealer, municipal securities 
                dealer, or government securities broker or dealer under 
                this title, or who the Commission by rule or order has 
                exempted from registration, or any issuer;
                    ``(B) any member of a national securities exchange; 
                or
                    ``(C) any person associated with a broker or 
                dealer, member of a national securities exchange, 
                municipal securities dealer, government securities 
                broker or dealer, or any issuer, included within the 
                coverage of subparagraph (A) or (B).
            ``(2) Permitted state activities.--Nothing contained in 
        this subsection shall prohibit a State from requiring 
        registration, licensing, or qualification of any person, other 
        than an issuer, who is within the coverage of paragraph (1) of 
        this subsection--
                    ``(A) in the case of paragraphs (1) (A) and (B), 
                the State performs its registration, licensing, or 
                qualification procedures through a central registration 
                depository system operated by a national securities 
                association registered under section 15A of this title, 
                and the State's requirements are substantially similar 
                to the Commission's registration requirements and do 
                not include any provisions that are inconsistent with, 
                or in addition to, the Commission's registration 
                requirements; or
                    ``(B) in the case of paragraph (1)(C), the State 
                performs its registration, licensing, or qualification 
                procedures through a central registration depository 
                system operated by a national securities association 
                registered under section 15A of this title and the 
                State's requirements are substantially similar to, and 
                not inconsistent with, the registration requirements of 
                such association or the Commission.
            ``(3) Prohibited requirements.--No law of any State or 
        political subdivision thereof shall establish broker or dealer 
        capital, books, and records, or financial reporting 
        requirements regarding persons registered, licensed, or 
        qualified pursuant to subsection (h)(1) that differ from 
        requirements established in these areas by the Commission.
            ``(4) Exemptions.--The Commission may by rule, regulation, 
        or order exempt State requirements from the provisions of 
        paragraphs (1), (2), and (3) of this subsection, in whole or in 
        part, conditionally or unconditionally, upon a finding that the 
        public interest, the protection of investors, and the 
        maintenance of fair and orderly markets would be served by such 
        State regulation.
            ``(5) Fees permitted.--Nothing in this subsection shall 
        prohibit any State or political subdivision thereof from 
        charging requisite fees in connection with the registration, 
        licensing, or qualification of persons within the coverage of 
        this subsection.
            ``(6) Preservation of authority.--Nothing contained in this 
        subsection shall affect the jurisdiction of any State or 
        political subdivision thereof to administer or enforce any 
        provision of State law not preempted by this subsection.''.
            (2) Effective date.--The amendments made by this subsection 
        shall be effective upon enactment.
    (c) Federal Preemption of State Regulation of Matters Regulated 
Under the Investment Company Act of 1940.--Section 50 of the Investment 
Company Act of 1940 is amended by striking ``under such Act; nor'' and 
all that follows and inserting the following: ``under such Acts. The 
Commission shall have exclusive jurisdiction with respect to all 
securities and transactions to which this title applies, and to all 
persons to whom this title applies.''.
    (d) Federal Preemption of State Regulation of Persons Regulated 
Under the Investment Advisers Act of 1940.--Section 222 of the 
Investment Advisers Act of 1940 is amended to read as follows:
``SEC. 222. EXCLUSIVE JURISDICTION.

    ``The Commission shall have exclusive jurisdiction with respect to 
all securities and transactions to which this title applies, and to all 
persons to whom this title applies.''.

SEC. 4. SECURITIES MARGIN REQUIREMENTS.

    (a) Margin Requirements.--Section 7 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78g) is amended to read as follows:

``SEC. 7. MARGIN REQUIREMENTS.

    ``(a) Unlawful Credit Extension in Violation of Rules and 
Regulations; Exception to Application of Rules, Etc.--
            ``(1) General limitations.--It shall be unlawful for any 
        person to extend or maintain credit on any equity security of a 
        class designated by the Board of Governors of the Federal 
        Reserve System for the purpose of purchasing or carrying any 
        equity security of a class so designated, in contravention of 
        such rules and regulations as the Board of Governors of the 
        Federal Reserve System shall prescribe to prevent the excessive 
        use of credit for the purchasing or carrying of equity 
        securities of a class so designated.
            ``(2) Applicability.--Such rules and regulations shall 
        designate the classes of equity securities subject to credit 
        restrictions under this subsection and shall apply equally to 
        banks, brokers, dealers, and other lenders. This subsection and 
        the rules and regulations thereunder shall not apply to any 
        credit extended or maintained--
                    ``(A) by a person not in the ordinary course of 
                business;
                    ``(B) on an exempted security;
                    ``(C) to or for an excluded account; or
                    ``(D) as the Board of Governors of the Federal 
                Reserve System shall, by such rules, regulations, or 
                orders as it may deem necessary or appropriate in the 
                public interest or for the protection of investors, 
                exempt, either unconditionally or upon specified terms 
                and conditions, or for stated periods, from the 
                operation of this subsection and the rules and 
                regulations thereunder.
            ``(3) Exemption.--Notwithstanding subparagraphs (A), (B), 
        and (C) of paragraph (2), the Board of Governors of the Federal 
        Reserve System may impose such rules and regulations, in whole 
        or in part, on any extension of credit otherwise exempted by 
        such subparagraphs if the Board of Governors determines that 
        such action is necessary to deal with substantial instability 
        or the imminent threat of substantial instability in the 
        financial markets.
    ``(b) Unlawful Use of Foreign Credit Facilities.--
            ``(1) Limitations.--It shall be unlawful for any United 
        States person, or any foreign person controlled by a United 
        States person or acting on behalf of or in conjunction with 
        such person, to obtain, receive, or enjoy the beneficial use of 
        any extension of credit from any lender (without regard to 
        whether the lender's office or place of business is in a State 
        or the transaction occurred in whole or in part within a State) 
        for the purpose of--
                    ``(A) purchasing or carrying United States equity 
                securities of a class designated by the Board of 
                Governors of the Federal Reserve System pursuant to 
                subsection (a); or
                    ``(B) purchasing or carrying within the United 
                States of any other equity securities of a class so 
                designated, if, under this section or rules and 
                regulations prescribed thereunder, the extension of 
                credit is prohibited or would be prohibited if it had 
                been made or the transaction had otherwise occurred in 
                a lender's office or other place of business in a 
                State.
            ``(2) Definitions.--For the purposes of this subsection:
                    ``(A) The term `United States person' includes a 
                person which is organized or exists under the laws of 
                any State or, in the case of a natural person, a 
                citizen or resident of the United States; a domestic 
                estate; or a trust in which one or more of the 
                foregoing persons has a cumulative direct or indirect 
                beneficial interest in excess of 50 percent of the 
                value of the trust.
                    ``(B) The term `United States equity security' 
                means an equity security (other than an exempted 
                security) issued by a person incorporated under the 
                laws of any State, or whose principal place of business 
                is within a State.
                    ``(C) The term `foreign person controlled by a 
                United States person' includes any noncorporate entity 
                in which United States persons directly or indirectly 
                have more than a 50 percent beneficial interest, and 
                any corporation in which one or more United States 
                persons, directly or indirectly, own stock possessing 
                more than 50 percent of the total combined voting power 
                of all classes of stock entitled to vote, or more than 
                50 percent of the total value of shares of all classes 
                of stock.
            ``(3) Exemptions.--The Board of Governors of the Federal 
        Reserve System may, in its discretion and with due regard for 
        the purposes of this section, by rule, regulation, or order 
        exempt any class of United States persons or foreign persons 
        controlled by a United States person from the application of 
        this subsection.
    ``(c) Inconsistent Rules.--No margin, financial responsibility, or 
other rule of any national securities exchange or of any national 
securities association shall impose any limitation on the extension or 
maintenance of credit more restrictive than, or otherwise inconsistent 
with, those provided for in this section and the rules and regulations 
of the Board of Governors of the Federal Reserve System adopted 
hereunder.''.
    (b) Removal of Restrictions on Borrowing by Broker-Dealers.--
Section 8 of the Securities Exchange Act of 1934 (15 U.S.C. 78h) is 
amended--
            (1) by striking out ``member of a national securities 
        exchange, or broker or dealer who transacts
         business in securities through the medium of any member of a 
national securities exchange,''; and
            (2) by striking out subsection (a) and by redesignating 
        subsections (b) and (c) as subsections (a) and (b), 
        respectively.
    (c) Trading by Members of Exchanges, Brokers and Dealers.--Section 
11(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78k(d)) is 
amended--
            (1) by striking out ``a member of a national securities 
        exchange'' and inserting in lieu thereof ``any person'';
            (2) by striking out ``, or for any person who both as a 
        broker and a dealer transacts a business in securities through 
        the medium of a member or otherwise,'';
            (3) by striking out ``in the case of a member'';
            (4) by inserting ``(other than an excluded account)'' after 
        ``customer'' the first place it appears;
            (5) by inserting ``equity'' before ``security'' the first 
        place it appears;
            (6) by striking out ``(i)'' and by striking out ``or (ii) 
        any mortgage related security or any small business related 
        security against full payment of the entire purchase price 
        thereof upon such delivery within 180 days after such purchase 
        or within such shorter period as the Commission may prescribe 
        by rule or regulation''; and
            (7) by adding at the end thereof the following new 
        sentence: ``The Commission may, by such rules, regulations, or 
        orders as it may deem necessary or appropriate in the public 
        interest or for the protection of investors, exempt either 
        unconditionally or upon specified terms and conditions, or for 
        stated periods, any security or transaction, or class of 
        securities or transactions from the operation of this 
        subsection and the rules and regulations thereunder.''.
    (d) Definition.--Section 3(a) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a)) is amended by adding at the end thereof the 
following new paragraph:
            ``(54) The term `excluded account' means any person who 
        comes within any of the following categories:
                    ``(A) A financial institution, trust company, 
                savings association, or savings and loan association 
                (acting in an individual, fiduciary, or agency 
                capacity).
                    ``(B) A broker or dealer or an investment adviser 
                (acting on its own behalf or on behalf of another).
                    ``(C) A futures commission merchant, floor broker, 
                or floor trader (acting on its own behalf or on behalf 
                of another).
                    ``(D) An insurance company.
                    ``(E) An investment company, small business 
                investment company, business development company, or 
                private business development company.
                    ``(F) Any governmental entity (including the United 
                States, any State or any foreign government), any 
                political subdivision thereof, any multinational or 
                supranational entity, or any department, agency, or 
                instrumentality of any of the foregoing.
                    ``(G) A corporation, partnership, proprietorship, 
                organization, trust, or other entity, not formed for 
                the specific purpose of evading the requirements of any 
                rule or regulation adopted under section 7, with total 
                assets exceeding $5,000,000 or the obligations of which 
                with respect to any extension of credit are guaranteed 
                or otherwise supported by a letter of credit or 
                keepwell, support, or other agreement by any such 
                entity or by an entity referred to in subparagraph (A), 
                (B), (C), (D), (E), or (F) of this paragraph.
                    ``(H) An employee benefit plan with assets 
                exceeding $5,000,000 or whose investment decisions are 
                made by a bank, trust company, broker, dealer, or 
                registered investment adviser.
                    ``(I) Any entity in which all the equity owners are 
                `excluded accounts'.
                    ``(J) Any person, other than a natural person, who 
                is an affiliate of the person extending or maintaining 
                credit.
                    ``(K) Such other persons as the Board of Governors 
                of the Federal Reserve System shall, by rule, 
                regulation, or order, designate as an `excluded 
                account', either unconditionally or upon specified 
                terms and conditions, or for specified periods.''.
    (e) Effective Date.--The amendments made by this section shall be 
effective 270 days after the date of enactment of this Act.

SEC. 5. MINIMIZING TRANSACTION COSTS OF CORPORATE ORGANIZATION.

    (a) Amendments to Section 13 of the 1934 Act.--Section 13 of the 
Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended--
            (1) by striking subsections (d) and (e); and
            (2) by redesignating subsections (f), (g), and (h) as 
        subsections (d), (e), and (f), respectively.
    (b) Amendments to Section 14 of the 1934 Act.--Section 14 of such 
Act (15 U.S.C. 78n) is amended--
            (1) by striking subsections (d), (f), and (g); and
            (2) by redesignating subsections (e) and (h) as subsections 
        (d) and (e), respectively.
    (c) Conforming Amendments.--
            (1) Section 6(b)(9) of such Act (15 U.S.C. 78f(b)(9)) is 
        amended by striking ``section 14(h)'' and inserting ``section 
        14(e)''.
            (2) Section 12(i) of such Act (15 U.S.C. 78l(i)) is amended 
        by striking ``14(f),''.
            (3) Section 13(d)(1) of such Act (as redesignated by 
        subsection (a)(1) of this section) is amended--
                    (A) by striking ``equity securities of a class 
                described in section 13(d)(1) of this title'' and 
                inserting ``equity security of a class which is 
                registered pursuant to section 12 of this title, or any 
                equity security of an insurance company which would 
                have been required to be so registered except for the 
                exemption contained in section 12(g)(2)(G) of this 
                title, or any equity security issued by a closed-end 
                investment company registered under the Investment 
                Company Act of 1940 or any equity security issued by a 
                Native Corporation pursuant to section 37(d)(6) of the 
                Alaska Native Claims Settlement Act,'';
                    (B) in subparagraph (C), by striking ``each equity 
                security of a class described in section 13(d)(1) of 
                this title'' and inserting ``each such equity 
                security'';
                    (C) in subparagraph (E), by striking ``any equity 
                security of a class described in section 13(d)(1) of 
                this title'' and inserting ``any such equity 
                security''.
            (4) Section 13(d)(3) of such Act (as so redesignated) is 
        amended by striking ``all equity securities of a class 
        described in section 13(d)(1) of this title,'' and inserting 
        ``all equity securities of a class described in paragraph (1) 
        of this subsection''.
            (5) Section 14(e) of such Act (as so redesignated) is 
        amended--
                    (A) in paragraph (1), by striking ``subsections (a) 
                and (d)'' and inserting ``subsection (a)''; and
                    (B) in paragraph (3), by striking ``subsection (a) 
                or (d)'' each place it appears and inserting 
                ``subsection (a)''.
            (6) Paragraphs (12) and (13) of section 15A(b) of such Act 
        (15 U.S.C. 78o-3(b)(12), (13)) are each amended by striking 
        ``section 14(h)'' and inserting ``section 14(e)''.
            (7) Section 23(b)(4)(F) of such Act (15 U.S.C. 
        78w(b)(4)(F)) is amended by striking ``section 13(f)'' and 
        inserting ``section 13(d)''.

SEC. 6. PROSPECTUS DELIVERY.

    (a) Definition of Prospectus.--Section 2(10) of the Securities Act 
of 1933 (15 U.S.C. 77b(10)) is amended by striking ``or confirms the 
sale of any security''.
    (b) Delivery on Request.--Section 5(b)(2) of the Securities Act of 
1933 (15 U.S.C. 77e(b)(2)) is amended by inserting before the period at 
the end the following: ``, if the purchaser or prospective purchaser of 
such security has requested a prospectus''.
    (c) Authority To Exempt.--Section 5 of the Securities Act of 1933 
(15 U.S.C. 77(e)) is amended by adding a new subsection (d) after 
subsection (c) as follows:
    ``(d) Authority To Exempt.--The Commission may from time to time by 
its rules and regulations and subject to such terms and conditions as 
may be prescribed therein, upon its own motion or by order on 
application by an interested person, exempt from subsection (b) of 
section 5 any person or prospectus, or any class or classes of persons 
or prospectuses, if and to the extent that such exemption is necessary 
or appropriate in the public interest and consistent with the 
protection of investors. The Commission shall by rules and regulations 
determine the procedures under which an exemption under this subsection 
shall be granted, and may, in its sole discretion, decline to entertain 
any application for an order of exemption under this subsection.''.

SEC. 7. EXEMPTIVE AUTHORITY.

    (a) Small Offering Exemption.--Section 3(b) of the Securities Act 
of 1933 (15 U.S.C. 77c(b)) is amended by striking ``$5,000,000'' and 
inserting ``$15,000,000''.
    (b) General Exemptive Authority.--Section 3 of the Securities Act 
of 1933 (15 U.S.C. 77c) is amended by adding at the end the following 
new subsection:
    ``(d) Exemptive Authority.--The Commission may by rule, regulation, 
or order, exempt, in whole or in part, conditionally or 
unconditionally, any security or class of securities from the 
registration requirements of this title if it finds that such exemption 
is consistent with the public interest and the protection of 
investors.''.
SEC. 8. PROMOTION OF EFFICIENCY, COMPETITION, AND CAPITAL FORMATION.

    (a) Securities Act of 1933.--Section 2 of the Securities Act of 
1933 (15 U.S.C. 77b) is amended--
            (1) by inserting ``(a) Definitions.--'' after ``Sec. 2.''; 
        and
            (2) by adding at the end the following new subsection:
    ``(b) Consideration of Promotion of Efficiency, Competition, and 
Capital Formation.--Whenever in this title the Commission is required 
to consider or determine whether an action is consistent with the 
public interest or the protection of investors (or both), the 
Commission shall also consider or determine whether the action will 
promote efficiency, competition, and capital formation.''.
    (b) Securities Exchange Act of 1934.--Section 3 of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c) is amended by adding at the end 
the following new subsection:
    ``(e) Consideration of Promotion of Efficiency, Competition, and 
Capital Formation.--Whenever in this title the Commission is required 
to consider or determine whether an action is consistent with the 
public interest or the protection of investors (or both), the 
Commission shall also consider or determine whether the action will 
promote efficiency, competition, and capital formation.''.
    (c) Investment Company Act of 1940.--Section 2 of the Investment 
Company Act of 1940 (15 U.S.C. 80a-2) is amended by adding at the end 
the following new subsection:
    ``(c) Consideration of Promotion of Efficiency, Competition, and 
Capital Formation.--Whenever in this title the Commission is required 
to consider or determine whether an action is consistent with the 
public interest or the protection of investors (or both), the 
Commission shall also consider or determine whether the action will 
promote efficiency, competition, and capital formation.''.
    (d) Investment Advisers Act of 1940.--Section 202 of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-2) is amended by adding at the end 
the following new subsection:
    ``(c) Consideration of Promotion of Efficiency, Competition, and 
Capital Formation.--Whenever in this title the Commission is required 
to consider or determine whether an action is consistent with the 
public interest or the protection of investors (or both), the 
Commission shall also consider or determine whether the action will 
promote efficiency, competition, and capital formation.''.

SEC. 9. REDUCTION IN NUMBER OF MEMBERS OF COMMISSION.

    (a) Amendments.--Section 4(a) of the Securities Exchange Act of 
1934 (15 U.S.C. 78d(a)) is amended--
            (1) by striking ``five commissioners'' and inserting ``3 
        commissioners''; and
            (2) by striking ``three of such commissioners'' and 
        inserting ``2 of such commissioners''.
    (b) Effective Date; Implementation.--The amendments made by 
subsection (a) shall take effect on the date of enactment of this Act, 
except that--
            (1) the offices the terms of which expired on June 5, 1994, 
        and June 5, 1995, shall be abolished; and
            (2) notwithstanding section 4(a) of the Securities Exchange 
        Act of 1934--
                    (A) upon the expiration of the term of office 
                prescribed by law to occur on June 5, 1996, any person 
                appointed to serve as a commissioner of the Securities 
                and Exchange Commission to fill such office for the 
                following term shall be eligible to serve until June 5, 
                1999;
                    (B) upon the expiration of the term of office 
                prescribed by law to occur on June 5, 1997, any person 
                appointed to serve as a commissioner of the Securities 
                and Exchange Commission to fill such office for the 
                following term shall be eligible to serve until June 5, 
                2001; and
                    (C) upon the expiration of the term of office 
                prescribed by law to occur on June 5, 1998, any person 
                appointed to serve as a commissioner of the Securities 
                and Exchange Commission to fill such office for the 
                following term shall be eligible to serve until June 5, 
                2003.

SEC. 10. PRIVATIZATION OF EDGAR.

    (a) Request for Proposals.--The Securities and Exchange Commission 
shall, by public notice, request proposals for the privatization of the 
EDGAR system. Such notice shall specify the methods by which the 
Commission will evaluate such proposal, which shall include the 
following objectives:
            (1) return to the Government on its investment in the 
        establishment of such system; and
            (2) promote the automation and rapid dissemination of 
        information required to be disclosed.
    (b) Review and Report.--Within 180 days after the date of enactment 
of this Act, the Commission shall review the proposal received pursuant 
to subsection (a) and submit to the Congress a report thereon. Such 
report shall include such recommendations for such legislative action 
as may be necessary to implement the proposal that the Commission 
determines most effectively achieves the objections described in 
subsection (a).

SEC. 11. RULES OF SELF-REGULATORY ORGANIZATIONS.

    Section 19(b)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 
78s(b)(1)) is amended by striking ``upon the filing'' and inserting 
``within 30 days of the filing (unless the self-regulatory organization 
consents to a longer period)''.

SEC. 12. DESIGNATION OF PRIMARY SRO AND EXAMINING AUTHORITY.

    (a) Amendments.--Section 15 of the Securities Exchange Act of 1934 
(15 U.S.C. 78o) is amended by adding at the end the following new 
subsection:
    ``(g) Designation of Examining Authorities.--
            ``(1) Designation.--After notice and comment, the 
        Commission shall designate for each registered broker or 
        dealer, a self-regulatory organization (other than a registered 
        clearing agency) as its examining authority. In no event shall 
        the Commission designate more than one examining authority for 
        any broker or dealer.
            ``(2) Enforcement of rules by examining authority.--A 
        designated examining authority shall enforce its own rules with 
        respect to such broker or dealer, as well as the rules of any 
        other self-regulatory organization (other than a registered 
        clearing agency) of which such broker or dealer is a member.
            ``(3) Changes in designation.--A broker or dealer for which 
        the Commission previously has designated an examining 
        authority, may request that the Commission designate a 
        different examining authority. The Commission shall grant such 
        request by order if its is consistent with the public interest 
        and the protection of investors. The issuance of such an order 
        shall not alter or extinguish any pending disciplinary 
        proceeding that the originally designated examining authority 
        has brought against the broker or dealer or any person 
        associated with a broker or dealer.
            ``(4) Commission rules.--The Commission may adopt rules for 
        the designation of an examining authority for a broker or 
        dealer, and for changing such designation. Such rules shall be 
        designed to minimize the costs and burdens on the registered 
        broker or dealer, consistent with the protection of investors 
        and the public.
            ``(5) Preservation of existing authority.--Nothing in this 
        section shall alter the Commission's authority to bring any 
        action under this title against any broker or dealer, or 
        against any person associated with a broker or dealer.''.
    (b) Definition.--Section 3(a) of the Securities Exchange Act of 
1934 (15 U.S.C. 78e) is amended by adding the following paragraph:
            ``(53) The term `examining authority' means a self-
        regulatory organization (other than a registered clearing 
        agency), as designated by the Commission, with exclusive 
        authority to examine, inspect, and otherwise oversee the 
        activities of a registered broker or dealer.''.
    (c) Initial Designation.--The Commission shall complete the initial 
designations of examining authorities for brokers and dealers required 
by section 15(g) of the Security Exchange Act of 1934 no later than one 
year after the date of enactment of this Act.

SEC. 13. TREATMENT OF PRESS CONFERENCES.

    (a) Definition of Offer.--Section 2(3) of the Securities Act of 
1933 (15 U.S.C. 77b(3)) is amended by inserting after the third 
sentence the following new sentence: ``The terms defined in this 
paragraph and the term `offer to buy' as used in subsection (c) of 
section 5 also shall not include press conferences, press releases and 
meetings with issuer press spokespersons to which journalists for 
publications (including on-line services) with a general circulation in 
the United States are generally provided access, in which an offering 
of or exchange offer for securities is discussed.''
    (b) Definition of Prospectus.--Section 2(10) of the Securities Act 
of 1933 is amended--
            (1) by striking ``and'' at the end of clause (a); and
            (2) by inserting before the period at the end of clause (b) 
        the following: ``, and (c) any press release made generally 
        available to journalists for publications (including on-line 
        services) with a general circulation in the United States, in 
        which an offer of or exchange offer for securities is 
        discussed, shall not be deemed a prospectus if such press 
        releases states that it is not an offer of securities for sale, 
        that any public offering will be made by means of a prospectus, 
        and the person from whom a prospectus may be obtained''.

SEC. 14. REPEAL OF TRUST INDENTURE ACT OF 1939.

    The Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) is 
repealed.
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