[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1689 Reported in House (RH)]





                                                 Union Calendar No. 361

105th CONGRESS

  2d Session

                               H. R. 1689

                          [Report No. 105-640]

_______________________________________________________________________

                                 A BILL

To amend the Securities Act of 1933 and the Securities Exchange Act of 
1934 to limit the conduct of securities class actions under State law, 
                        and for other purposes.

_______________________________________________________________________

                             July 21, 1998

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed





                                                 Union Calendar No. 361
105th CONGRESS
  2d Session
                                H. R. 1689

                          [Report No. 105-640]

To amend the Securities Act of 1933 and the Securities Exchange Act of 
1934 to limit the conduct of securities class actions under State law, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 21, 1997

 Mr. White (for himself, Ms. Eshoo, Mr. Barton of Texas, Mr. Brown of 
Ohio, Mr. Bilbray, Mr. Dooley of California, Mr. Campbell, Mr. Fazio of 
California, Mr. Coburn, Mr. Farr of California, Mr. Cox of California, 
Mr. Frank of Massachusetts, Ms. Dunn, Ms. Harman, Mr. Klug, Mr. Kennedy 
 of Massachusetts, Mr. Nethercutt, Ms. Lofgren, Mr. Paxon, Mr. Roemer, 
   Ms. Pryce of Ohio, Mrs. Tauscher, Mr. Tauzin, Mr. Towns, and Mr. 
   Deutsch) introduced the following bill; which was referred to the 
                         Committee on Commerce

                             July 21, 1998

Additional sponsors: Mr. Rogan, Ms. Pelosi, Mr. Burr of North Carolina, 
    Mr. Shimkus, Mr. Deal of Georgia, Mr. Kleczka, Mr. Pickett, Mr. 
Hastert, Mr. Pallone, Mr. Rush, Ms. Furse, Mr. Ganske, Mrs. Myrick, Mr. 
Crapo, Mr. Stearns, Mr. Boehner, Mr. Moran of Virginia, Mr. Blumenauer, 
Mr. Gordon, Mr. Green, Mr. Hall of Texas, Ms. McCarthy of Missouri, Mr. 
 Hoyer, Mr. Davis of Virginia, Mr. Wynn, Mr. Norwood, Mr. Strickland, 
 Mr. Boucher, Mr. Dan Schaefer of Colorado, Mr. Peterson of Minnesota, 
  Mr. McCollum, Ms. Hooley of Oregon, Mr. Whitfield, Mr. Sherman, Mr. 
    Holden, Mr. Shaw, Mr. Upton, Mr. Largent, Mr. Rohrabacher, Mr. 
 Cunningham, Ms. Stabenow, Mr. Kennedy of Rhode Island, Mr. Baker, Mr. 
 Royce, Mr. Weldon of Florida, Mr. Bilirakis, Mr. Sawyer, Mr. Cooksey, 
  Mr. Livingston, Mr. Boyd, Mr. Edwards, Mr. Hefley, Mr. Porter, Mr. 
 Riggs, Mr. Miller of Florida, Mr. Calvert, Mr. Dreier, Mr. Doyle, Mr. 
     Barcia, Mr. Bunning, Mr. McHale, Mr. Goodling, Mr. Pitts, Mr. 
Greenwood, Mr. Condit, Mr. Barr of Georgia, Mr. Gekas, Mr. McKeon, Mrs. 
Cubin, Mr. Schiff, Mr. Linder, Mr. Bono, Mr. Gejdenson, Mr. Luther, Mr. 
   Thornberry, Mr. Fox of Pennsylvania, Mr. Mica, Mr. Houghton, Mr. 
   Metcalf, Mr. Hayworth, Mr. Collins, Mr. Minge, Mr. Adam Smith of 
Washington, Mr. Frelinghuysen, Mr. Forbes, Ms. Granger, Mr. Pappas, Mr. 
 Manzullo, Mr. Aderholt, Mr. Pombo, Mr. LaHood, Mr. Camp, Mr. Cramer, 
    Mrs. Linda Smith of Washington, Mr. Pickering, Mr. Packard, Mr. 
  Snowbarger, Mr. Kind, Mr. Hilleary, Mr. Hastings of Washington, Mr. 
 Ortiz, Mr. Crane, Mr. Salmon, Mr. Neal of Massachusetts, Ms. DeLauro, 
Mr. Davis of Florida, Mr. Bishop, Mr. Vento, Mr. Franks of New Jersey, 
Ms. Slaughter, Mr. Herger, Mrs. Kennelly of Connecticut, Mr. Jefferson, 
 Mr. Rothman, Mr. Stenholm, Mr. Etheridge, Mr. Goss, Mrs. Kelly, Mrs. 
  Northup, Mr. Gallegly, Mr. Goode, Mr. Peterson of Pennsylvania, Mr. 
Ramstad, Mr. Ensign, Mr. Wicker, Mr. Skeen, Mr. Watts of Oklahoma, Mr. 
 King, Mr. Combest, Mr. Inglis of South Carolina, Mr. Shadegg, Mr. Sam 
 Johnson of Texas, Mr. Lewis of Kentucky, Mr. Sununu, Mr. Turner, Mr. 
 Weygand, Mr. LoBiondo, Mr. Hostettler, Mr. Meehan, Mr. Kingston, Mr. 
 Shays, Mr. McIntosh, Mr. Clement, Mr. Hill, Mr. Bartlett of Maryland, 
  Mr. Stump, Mr. Snyder, Mr. Ehrlich, Mr. Fossella, Mr. Hoekstra, Mr. 
Ford, Mr. McCrery, Mr. Graham, Mr. Weller, Mr. Maloney of Connecticut, 
 Ms. Sanchez, Mr. Riley, Mr. Rogers, Mr. Neumann, Mr. Christensen, Mr. 
McGovern, Mr. Lazio of New York, Mr. Gillmor, Mr. Cannon, Mr. Redmond, 
 Ms. Velazquez, Mr. Lantos, Mrs. Morella, Mr. Archer, Mrs. Johnson of 
Connecticut, Mr. Foley, Mr. Walsh, Mr. Bentsen, Mr. Burton of Indiana, 
 Mr. Sensenbrenner, Mr. Doolittle, Mr. Ackerman, Mr. Souder, Mr. Wolf, 
 Mr. Gutknecht, Mr. Smith of Texas, Mr. Ryun, Mr. Ney, Mr. Chabot, Mr. 
  DeLay, Mr. Cook, Mr. Bryant, Mr. Smith of New Jersey, Mr. John, Mr. 
   Pomeroy, Mr. Talent, Mr. Kolbe, Mr. Bob Schaffer of Colorado, Mr. 
  Brady, Mr. Armey, Mr. Gibbons, Mr. Berry, Mr. Baesler, Mr. Sisisky, 
 Mrs. Bono, Mr. McIntyre, Mr. Ballenger, Mrs. Roukema, Mr. Goodlatte, 
    Mr. Thomas, Mr. Moran of Kansas, Mr. Andrews, and Mr. Chambliss

                             July 21, 1998

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
[For text of introduced bill, see copy of bill as introduced on May 21, 
                                 1997]

_______________________________________________________________________

                                 A BILL


 
To amend the Securities Act of 1933 and the Securities Exchange Act of 
1934 to limit the conduct of securities class actions under State law, 
                        and for other purposes.

    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 ``Securities Litigation Uniform 
Standards Act of 1998''.

            TITLE I--SECURITIES LITIGATION UNIFORM STANDARDS

SEC. 101. LIMITATION ON REMEDIES.

    (a) Amendments to the Securities Act of 1933.--
            (1) Amendment.--Section 16 of the Securities Act of 1933 
        (15 U.S.C. 77p) is amended to read as follows:

``SEC. 16. ADDITIONAL REMEDIES; LIMITATION ON REMEDIES.

    ``(a) Remedies Additional.--Except as provided in subsection (b), 
the rights and remedies provided by this title shall be in addition to 
any and all other rights and remedies that may exist at law or in 
equity.
    ``(b) Class Action Limitations.--No class action based upon the 
statutory or common law of any State or subdivision thereof may be 
maintained in any State or Federal court by any private party 
alleging--
            ``(1) an untrue statement or omission of a material fact in 
        connection with the purchase or sale of a covered security; or
            ``(2) that the defendant used or employed any manipulative 
        or deceptive device or contrivance in connection with the 
        purchase or sale of a covered security.
    ``(c) Removal of Class Actions.--Any class action brought in any 
State court involving a covered security, as set forth in subsection 
(b), shall be removable to the Federal district court for the district 
in which the action is pending, and shall be subject to subsection (b).
    ``(d) Preservation of Certain Actions.--
            ``(1) Actions under state law of state of incorporation.--
                    ``(A) Actions preserved.--Notwithstanding 
                subsection (b) or (c), a class action described in 
                subparagraph (B) of this paragraph that is based upon 
                the statutory or common law of the State in which the 
                issuer is incorporated (in the case of a corporation) 
                or organized (in the case of any other entity) may be 
                maintained in a State or Federal court by a private 
                party.
                    ``(B) Permissible actions.--A class action is 
                described in this subparagraph if it involves--
                            ``(i) the purchase or sale of securities by 
                        the issuer or an affiliate of the issuer 
                        exclusively from or to holders of equity 
                        securities of the issuer; or
                            ``(ii) any recommendation, position, or 
                        other communication with respect to the sale of 
                        securities of the issuer that--
                                    ``(I) is made by or on behalf of 
                                the issuer or an affiliate of the 
                                issuer to holders of equity securities 
                                of the issuer; and
                                    ``(II) concerns decisions of those 
                                equity holders with respect to voting 
                                their securities, acting in response to 
                                a tender or exchange offer, or 
                                exercising dissenters' or appraisal 
                                rights.
            ``(2) State actions.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this section, nothing in this section may 
                be construed to preclude a State or political 
                subdivision thereof or a State pension plan from 
                bringing an action involving a covered security on its 
                own behalf, or as a member of a class comprised solely 
                of other States, political subdivisions, or State 
                pension plans that are named plaintiffs, and that have 
                authorized participation, in such action.
                    ``(B) State pension plan defined.--For purposes of 
                this paragraph, the term `State pension plan' means a 
                pension plan established and maintained for its 
                employees by the government of the State or political 
                subdivision thereof, or by any agency or 
                instrumentality thereof.
            ``(3) Actions under contractual agreements between issuers 
        and indenture trustees.--Notwithstanding subsection (b) or (c), 
        a class action that seeks to enforce a contractual agreement 
        between an issuer and an indenture trustee may be maintained in 
        a State or Federal court by a party to the agreement or a 
        successor to such party.
            ``(4) Remand of removed actions.--In an action that has 
        been removed from a State court pursuant to subsection (c), if 
        the Federal court determines that the action may be maintained 
        in State court pursuant to this subsection, the Federal court 
        shall remand such action to such State court.
    ``(e) Preservation of State Jurisdiction.--The securities 
commission (or any agency or office performing like functions) of any 
State shall retain jurisdiction under the laws of such State to 
investigate and bring enforcement actions.
    ``(f) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Affiliate of the issuer.--The term `affiliate of the 
        issuer' means a person that directly or indirectly, through 1 
        or more intermediaries, controls or is controlled by or is 
        under common control with, the issuer.
            ``(2) Class action.--
                    ``(A) In general.--The term `class action' means--
                            ``(i) any single lawsuit in which--
                                    ``(I) damages are sought on behalf 
                                of more than 50 persons or prospective 
                                class members, and questions of law or 
                                fact common to those persons or members 
                                of the prospective class, without 
                                reference to issues of individualized 
                                reliance on an alleged misstatement or 
                                omission, predominate over any 
                                questions affecting only individual 
                                persons or members; or
                                    ``(II) 1 or more named parties seek 
                                to recover damages on a representative 
                                basis on behalf of themselves and other 
                                unnamed parties similarly situated, and 
                                questions of law or fact common to 
                                those persons or members of the 
                                prospective class predominate over any 
                                questions affecting only individual 
                                persons or members; or
                            ``(ii) any group of lawsuits filed in or 
                        pending in the same court and involving common 
                        questions of law or fact, in which--
                                    ``(I) damages are sought on behalf 
                                of more than 50 persons; and
                                    ``(II) the lawsuits are joined, 
                                consolidated, or otherwise proceed as a 
                                single action for any purpose.
                    ``(B) Exception for derivative actions.--
                Notwithstanding subparagraph (A), the term `class 
                action' does not include an exclusively derivative 
                action brought by 1 or more shareholders on behalf of a 
                corporation.
                    ``(C) Counting of certain class members.--For 
                purposes of this paragraph, a corporation, investment 
                company, pension plan, partnership, or other entity, 
                shall be treated as 1 person or prospective class 
                member, but only if the entity is not established for 
                the purpose of participating in the action.
                    ``(D) Rule of construction.--Nothing in this 
                paragraph shall be construed to affect the discretion 
                of a State court in determining whether actions filed 
                in such court should be joined, consolidated, or 
                otherwise allowed to proceed as a single action.
            ``(3) Covered security.--The term `covered security' means 
        a security that satisfies the standards for a covered security 
        specified in section 18(b)(1) at the time during which it is 
        alleged that the misrepresentation, omission, or manipulative 
        or deceptive conduct occurred, except that such term shall not 
        include any debt security that is exempt from registration 
        under this title pursuant to rules issued by the Commission 
        under section 4(2) of this title.''.
            (2) Circumvention of stay of discovery.--Section 27(b) of 
        the Securities Act of 1933 (15 U.S.C. 77z-1(b)) is amended by 
        inserting after paragraph (3) the following new paragraph:
            ``(4) Circumvention of stay of discovery.--Upon a proper 
        showing, a court may stay discovery proceedings in any private 
        action in a State court as necessary in aid of its 
        jurisdiction, or to protect or effectuate its judgments, in an 
        action subject to a stay of discovery pursuant to this 
        subsection.''.
            (3) Conforming amendments.--Section 22(a) of the Securities 
        Act of 1933 (15 U.S.C. 77v(a)) is amended--
                    (A) by inserting ``except as provided in section 16 
                with respect to class actions,'' after ``Territorial 
                courts,''; and
                    (B) by striking ``No case'' and inserting ``Except 
                as provided in section 16(c), no case''.
    (b) Amendments to the Securities Exchange Act of 1934.--
            (1) Amendment.--Section 28 of the Securities Exchange Act 
        of 1934 (15 U.S.C. 78bb) is amended--
                    (A) in subsection (a), by striking ``The rights and 
                remedies'' and inserting ``Except as provided in 
                subsection (f), the rights and remedies''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(f) Limitations on Remedies.--
            ``(1) Class action limitations.--No class action based upon 
        the statutory or common law of any State or subdivision thereof 
        may be maintained in any State or Federal court by any private 
        party alleging--
                    ``(A) a misrepresentation or omission of a material 
                fact in connection with the purchase or sale of a 
                covered security; or
                    ``(B) that the defendant used or employed any 
                manipulative or deceptive device or contrivance in 
                connection with the purchase or sale of a covered 
                security.
            ``(2) Removal of class actions.--Any class action brought 
        in any State court involving a covered security, as set forth 
        in paragraph (1), shall be removable to the Federal district 
        court for the district in which the action is pending, and 
        shall be subject to paragraph (1).
            ``(3) Preservation of certain actions.--
                    ``(A) Actions under state law of state of 
                incorporation.--
                            ``(i) Actions preserved.--Notwithstanding 
                        paragraph (1) or (2), a class action described 
                        in clause (ii) of this subparagraph that is 
                        based upon the statutory or common law of the 
                        State in which the issuer is incorporated (in 
                        the case of a corporation) or organized (in the 
                        case of any other entity) may be maintained in 
                        a State or Federal court by a private party.
                            ``(ii) Permissible actions.--A class action 
                        is described in this clause if it involves--
                                    ``(I) the purchase or sale of 
                                securities by the issuer or an 
                                affiliate of the issuer exclusively 
                                from or to holders of equity securities 
                                of the issuer; or
                                    ``(II) any recommendation, 
                                position, or other communication with 
                                respect to the sale of securities of an 
                                issuer that--
                                            ``(aa) is made by or on 
                                        behalf of the issuer or an 
                                        affiliate of the issuer to 
                                        holders of equity securities of 
                                        the issuer; and
                                            ``(bb) concerns decisions 
                                        of such equity holders with 
                                        respect to voting their 
                                        securities, acting in response 
                                        to a tender or exchange offer, 
                                        or exercising dissenters' or 
                                        appraisal rights.
                    ``(B) State actions.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of this subsection, nothing in 
                        this subsection may be construed to preclude a 
                        State or political subdivision thereof or a 
                        State pension plan from bringing an action 
                        involving a covered security on its own behalf, 
                        or as a member of a class comprised solely of 
                        other States, political subdivisions, or State 
                        pension plans that are named plaintiffs, and 
                        that have authorized participation, in such 
                        action.
                            ``(ii) State pension plan defined.--For 
                        purposes of this subparagraph, the term `State 
                        pension plan' means a pension plan established 
                        and maintained for its employees by the 
                        government of a State or political subdivision 
                        thereof, or by any agency or instrumentality 
                        thereof.
                    ``(C) Actions under contractual agreements between 
                issuers and indenture trustees.--Notwithstanding 
                paragraph (1) or (2), a class action that seeks to 
                enforce a contractual agreement between an issuer and 
                an indenture trustee may be maintained in a State or 
                Federal court by a party to the agreement or a 
                successor to such party.
                    ``(D) Remand of removed actions.--In an action that 
                has been removed from a State court pursuant to 
                paragraph (2), if the Federal court determines that the 
                action may be maintained in State court pursuant to 
                this subsection, the Federal court shall remand such 
                action to such State court.
            ``(4) Preservation of state jurisdiction.--The securities 
        commission (or any agency or office performing like functions) 
        of any State shall retain jurisdiction under the laws of such 
        State to investigate and bring enforcement actions.
            ``(5) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Affiliate of the issuer.--The term `affiliate 
                of the issuer' means a person that directly or 
                indirectly, through 1 or more intermediaries, controls 
                or is controlled by or is under common control with, 
                the issuer.
                    ``(B) Class action.--The term `class action' 
                means--
                            ``(i) any single lawsuit in which--
                                    ``(I) damages are sought on behalf 
                                of more than 50 persons or prospective 
                                class members, and questions of law or 
                                fact common to those persons or members 
                                of the prospective class, without 
                                reference to issues of individualized 
                                reliance on an alleged misstatement or 
                                omission, predominate over any 
                                questions affecting only individual 
                                persons or members; or
                                    ``(II) 1 or more named parties seek 
                                to recover damages on a representative 
                                basis on behalf of themselves and other 
                                unnamed parties similarly situated, and 
                                questions of law or fact common to 
                                those persons or members of the 
                                prospective class predominate over any 
                                questions affecting only individual 
                                persons or members; or
                            ``(ii) any group of lawsuits filed in or 
                        pending in the same court and involving common 
                        questions of law or fact, in which--
                                    ``(I) damages are sought on behalf 
                                of more than 50 persons; and
                                    ``(II) the lawsuits are joined, 
                                consolidated, or otherwise proceed as a 
                                single action for any purpose.
                    ``(C) Exception for derivative actions.--
                Notwithstanding subparagraph (B), the term `class 
                action' does not include an exclusively derivative 
                action brought by 1 or more shareholders on behalf of a 
                corporation.
                    ``(D) Counting of certain class members.--For 
                purposes of this paragraph, a corporation, investment 
                company, pension plan, partnership, or other entity, 
                shall be treated as 1 person or prospective class 
                member, but only if the entity is not established for 
                the purpose of participating in the action.
                    ``(E) Covered security.--The term `covered 
                security' means a security that satisfies the standards 
                for a covered security specified in section 18(b)(1) of 
                the Securities Act of 1933, at the time during which it 
is alleged that the misrepresentation, omission, or manipulative or 
deceptive conduct occurred, except that such term shall not include any 
debt security that is exempt from registration under the Securities Act 
of 1933 pursuant to rules issued by the Commission under section 4(2) 
of such Act.
                    ``(F) Rule of construction.--Nothing in this 
                paragraph shall be construed to affect the discretion 
                of a State court in determining whether actions filed 
                in such court should be joined, consolidated, or 
                otherwise allowed to proceed as a single action.''.
            (2) Circumvention of stay of discovery.--Section 21D(b)(3) 
        of the Securities Exchange Act of 1934 (15 U.S.C. 78u-4(b)(3)) 
        is amended by inserting after subparagraph (C) the following 
        new subparagraph:
                    ``(D) Circumvention of stay of discovery.--Upon a 
                proper showing, a court may stay discovery proceedings 
                in any private action in a State court as necessary in 
                aid of its jurisdiction, or to protect or effectuate 
                its judgments, in an action subject to a stay of 
                discovery pursuant to this paragraph.''.
    (c) Applicability.--The amendments made by this section shall not 
affect or apply to any action commenced before and pending on the date 
of enactment of this Act.

SEC. 102. ISSUANCE OF SUBPOENAS IN JUDICIAL ACTIONS.

    (a) Securities Act.--Section 22(a) of the Securities Act of 1933 
(15 U.S.C. 77v(a)) is amended by inserting after the second sentence 
the following: ``In any action or proceeding instituted by the 
Commission under this title in the district court of the United States 
for any judicial district, subpoenas issued by such court to compel the 
attendance of witnesses may be served in any other district.''.
    (b) Securities Exchange Act.--Section 27 of the Securities Act of 
1934 (15 U.S.C. 78aa) is amended by inserting after the third sentence 
the following: ``In any action or proceeding instituted by the 
Commission under this title in the district court of the United States 
for any judicial district, subpoenas issued by such court to compel the 
attendance of witnesses may be served in any other district.''.
    (c) Investment Company Act.--Section 44 of the Investment Company 
Act of 1940 (15 U.S.C. 80a-43) is amended by inserting after the fourth 
sentence the following: ``In any action or proceeding instituted by the 
Commission under this title in the district court of the United States 
for any judicial district, subpoenas issued by such court to compel the 
attendance of witnesses may be served in any other district.''.
    (d) Investment Advisers Act.--Section 214 of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-14) is amended by inserting after 
the third sentence the following: ``In any action or proceeding 
instituted by the Commission under this title in the district court of 
the United States for any judicial district, subpoenas issued by such 
court to compel the attendance of witnesses may be served in any other 
district.''.
    (e) Public Utility Holding Company Act.--Section 25 of the Public 
Utility Holding Company Act of 1935 (15 U.S.C. 79y) is amended by 
inserting after the third sentence the following: ``In any action or 
proceeding instituted by the Commission under this title in the 
district court of the United States for any judicial district, 
subpoenas issued by such court to compel the attendance of witnesses 
may be served in any other district.''.

SEC. 103. PROMOTION OF RECIPROCAL SUBPOENA ENFORCEMENT.

    (a) Commission Action.--The Securities and Exchange Commission, in 
consultation with State securities commissions, shall seek to encourage 
the adoption of State laws providing for reciprocal enforcement by 
State securities commissions of subpoenas issued by another State 
securities commission seeking to compel persons to attend, testify in, 
or produce documents or records in connection with an action or 
investigation by a State securities commission of an alleged violation 
of State securities laws.
    (b) Report.--Within 24 months after the date of enactment of this 
Act, the Commission shall submit a report to the Congress--
            (1) identifying the States that have adopted laws described 
        in subsection (a);
            (2) describing the actions undertaken by the Commission and 
        State securities commissions to promote the adoption of such 
        laws; and
            (3) identifying any further actions the Commission 
        recommends for such purposes.

SEC. 104. REPORT ON CONSEQUENCES.

    The Securities and Exchange Commission shall include in each of its 
first 3 annual reports submitted after the date of enactment of this 
Act a report regarding--
            (1) the nature and the extent of the class action cases 
        that are preempted by, or removed pursuant to, the amendments 
        made by section 101 of this title;
            (2) the extent to which that preemption or removal either 
        promotes or adversely affects the protection of securities 
        investors or the public interest; and
            (3) if adverse effects are found, alternatives to, or 
        revisions of, such preemption or removal that--
                    (A) would not have such adverse effects;
                    (B) would further promote the protection of 
                investors and the public interest; and
                    (C) would still substantially reduce the risk of 
                abusive securities litigation.

  TITLE II--REAUTHORIZATION OF THE SECURITIES AND EXCHANGE COMMISSION

SEC. 201. AUTHORIZATION OF APPROPRIATIONS.

    Section 35 of the Securities Exchange Act of 1934 (15 U.S.C. 78kk) 
is amended to read as follows:

``SEC. 35. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) In General.--In addition to any other funds authorized to be 
appropriated to the Commission, there are authorized to be appropriated 
to carry out the functions, powers, and duties of the Commission 
$351,280,000 for fiscal year 1999.
    ``(b) Miscellaneous Expenses.--Funds appropriated pursuant to this 
section are authorized to be expended--
            ``(1) not to exceed $3,000 per fiscal year, for official 
        reception and representation expenses;
            ``(2) not to exceed $10,000 per fiscal year, for funding a 
        permanent secretariat for the International Organization of 
        Securities Commissions; and
            ``(3) not to exceed $100,000 per fiscal year, for expenses 
        for consultations and meetings hosted by the Commission with 
        foreign governmental and other regulatory officials, members of 
        their delegations, appropriate representatives, and staff to 
        exchange views concerning developments relating to securities 
        matters, for development and implementation of cooperation 
        agreements concerning securities matters and provision of 
        technical assistance for the development of foreign securities 
        markets, such expenses to include necessary logistic and 
        administrative expenses and the expenses of Commission staff 
        and foreign invitees in attendance at such consultations and 
        meetings, including--
                    ``(A) such incidental expenses as meals taken in 
                the course of such attendance;
                    ``(B) any travel or transportation to or from such 
                meetings; and
                    ``(C) any other related lodging or subsistence.''.

              TITLE III--CLERICAL AND TECHNICAL AMENDMENTS

SEC. 301. CLERICAL AND TECHNICAL AMENDMENTS.

    (a) Securities Act of 1933.--The Securities Act of 1933 (15 U.S.C. 
77 et seq.) is amended as follows:
            (1) Section 2(a)(15)(i) (15 U.S.C. 77b(a)(15)(i)) is 
        amended by striking ``section 2(13) of the Act'' and inserting 
        ``paragraph (13) of this subsection''.
            (2) Section 11(f)(2)(A) (15 U.S.C. 77k(f)(2)(A)) is amended 
        by striking ``section 38'' and inserting ``section 21D(f)''.
            (3) Section 13 (15 U.S.C. 77m) is amended--
                    (A) by striking ``section 12(2)'' each place it 
                appears and inserting ``section 12(a)(2)''; and
                    (B) by striking ``section 12(1)'' each place it 
                appears and inserting ``section 12(a)(1)''.
            (4) Section 18 (15 U.S.C. 77r) is amended--
                    (A) in subsection (b)(1)(A), by inserting ``, or 
                authorized for listing,'' after ``Exchange, or 
                listed'';
                    (B) in subsection (c)(2)(B)(i), by striking 
                ``Capital Markets Efficiency Act of 1996'' and 
                inserting ``National Securities Markets Improvement Act 
                of 1996'';
                    (C) in subsection (c)(2)(C)(i), by striking 
                ``Market'' and inserting ``Markets'';
                    (D) in subsection (d)(1)(A)--
                            (i) by striking ``section 2(10)'' and 
                        inserting ``section 2(a)(10)''; and
                            (ii) by striking ``subparagraphs (A) and 
                        (B)'' and inserting ``subparagraphs (a) and 
                        (b)'';
                    (E) in subsection (d)(2), by striking ``Securities 
                Amendments Act of 1996'' and inserting ``National 
                Securities Markets Improvement Act of 1996''; and
                    (F) in subsection (d)(4), by striking ``For 
                purposes of this paragraph, the'' and inserting 
                ``The''.
            (5) Sections 27, 27A, and 28 (15 U.S.C. 77z-1, 77z-2, 77z-
        3) are transferred to appear after section 26.
            (6) Paragraph (28) of schedule A of such Act (15 U.S.C. 
        77aa(28)) is amended by striking ``identic'' and inserting 
        ``identical''.
    (b) Securities Exchange Act of 1934.--The Securities Exchange Act 
of 1934 (15 U.S.C. 78 et seq.) is amended as follows:
            (1) Section 3(a)(10) (15 U.S.C. 78c(a)(10)) is amended by 
        striking ``deposit, for'' and inserting ``deposit for''.
            (2) Section 3(a)(12)(A) (15 U.S.C. 78c(a)(12)(A)) is 
        amended by moving clause (vi) two em spaces to the left.
            (3) Section 3(a)(22)(A) (15 U.S.C. 78c(a)(22)(A)) is 
        amended--
                    (A) by striking ``section 3(h)'' and inserting 
                ``section 3''; and
                    (B) by striking ``section 3(t)'' and inserting 
                ``such section 3''.
            (4) Section 3(a)(39)(B)(i) (15 U.S.C. 78c(a)(39)(B)(i)) is 
        amended by striking ``an order to the Commission'' and 
        inserting ``an order of the Commission''.
            (5) The following sections are each amended by striking 
        ``Federal Reserve Board'' and inserting ``Board of Governors of 
        the Federal Reserve System'': subsections (a) and (b) of 
        section 7 (15 U.S.C. 78g(a), (b)); section 17(g) (15 U.S.C. 
        78q(g)); and section 26 (15 U.S.C. 78z).
            (6) The heading of subsection (d) of section 7 (15 U.S.C. 
        78g(d)) is amended by striking ``Exception'' and inserting 
        ``Exceptions''.
            (7) Section 14(g)(4) (15 U.S.C. 78n(g)(4)) is amended by 
        striking ``consolidation sale,'' and inserting ``consolidation, 
        sale,''.
            (8) Section 15 (15 U.S.C. 78o) is amended--
                    (A) in subsection (c), by moving paragraph (8) two 
                em spaces to the left;
                    (B) in subsection (h)(2), by striking ``affecting'' 
                and inserting ``effecting'';
                    (C) in subsection (h)(3)(A)(i)(II)(bb), by 
                inserting ``or'' after the semicolon;
                    (D) in subsection (h)(3)(A)(ii)(I), by striking 
                ``maintains'' and inserting ``maintained'';
                    (E) in subsection (h)(3)(B)(ii), by striking 
                ``association'' and inserting ``associated''.
            (9) Section 15B(c)(4) (15 U.S.C. 78o-4(c)(4)) is amended by 
        striking ``convicted by any offense'' and inserting ``convicted 
        of any offense''.
            (10) Section 15C(f)(5) (15 U.S.C. 78o-5(f)(5)) is amended 
        by striking ``any person or class or persons'' and inserting 
        ``any person or class of persons''.
            (11) Section 19(c) (15 U.S.C. 78s(c)) is amended by moving 
        paragraph (5) two em spaces to the right.
            (12) Section 20 (15 U.S.C. 78t) is amended by redesignating 
        subsection (f) as subsection (e).
            (13) Section 21D (15 U.S.C. 78u-4) is amended--
                    (A) by redesignating subsection (g) as subsection 
                (f); and
                    (B) in paragraph (2)(B)(i) of such subsection, by 
                striking ``paragraph (1)'' and inserting ``subparagraph 
                (A)''.
            (14) Section 31(a) (15 U.S.C. 78ee(a)) is amended by 
        striking ``this subsection'' and inserting ``this section''.
    (c) Investment Company Act of 1940.--The Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.) is amended as follows:
            (1) Section 2(a)(8) (15 U.S.C. 80a-2(a)(8)) is amended by 
        striking ``Unitde'' and inserting ``United''.
            (2) Section 3(b) (15 U.S.C. 80a-3(b)) is amended by 
        striking ``paragraph (3) of subsection (a)'' and inserting 
        ``paragraph (1)(C) of subsection (a)''.
            (3) Section 12(d)(1)(G)(i)(III)(bb) (15 U.S.C. 80a-
        12(d)(1)(G)(i)(III)(bb)), by striking ``the acquired fund'' and 
        inserting ``the acquired company''.
            (4) Section 18(e)(2) (15 U.S.C. 80a-18(e)(2)) is amended by 
        striking ``subsection (e)(2)'' and inserting ``paragraph (1) of 
        this subsection''.
            (5) Section 30 (15 U.S.C. 80a-29) is amended--
                    (A) by inserting ``and'' after the semicolon at the 
                end of subsection (b)(1);
                    (B) in subsection (e), by striking ``semi-
                annually'' and inserting ``semiannually''; and
                    (C) by redesignating subsections (g) and (h) as 
                added by section 508(g) of the National Securities 
                Markets Improvement Act of 1996 as subsections (i) and 
                (j), respectively.
            (6) Section 31(f) (15 U.S.C. 80a-30(f)) is amended by 
        striking ``subsection (c)'' and inserting ``subsection (e)''.
    (d) Investment Advisers Act of 1940.--The Investment Advisers Act 
of 1940 (15 U.S.C. 80b et seq.) is amended as follows:
            (1) Section 203(e)(8)(B) (15 U.S.C. 80b-3(e)(8)(B)) is 
        amended by inserting ``or'' after the semicolon.
            (2) Section 222(b)(2) of (15 U.S.C. 80b-18a(b)(2)) is 
        amended by striking ``principle'' and inserting ``principal''.
    (e) Trust Indenture Act of 1939.--The Trust Indenture Act of 1939 
(15 U.S.C. 77aaa et seq.) is amended as follows:
            (1) Section 303 (15 U.S.C. 77ccc) is amended by striking 
        ``section 2'' each place it appears in paragraphs (2) and (3) 
        and inserting ``section 2(a)''.
            (2) Section 304(a)(4)(A) (15 U.S.C. 77ddd(a)(4)(A)) is 
        amended by striking ``(14) of subsection'' and inserting ``(13) 
        of section''.
            (3) Section 313(a) (15 U.S.C. 77mmm(a)) is amended--
                    (A) by inserting ``any change to'' after the 
                paragraph designation at the beginning of paragraph 
                (4); and
                    (B) by striking ``any change to'' in paragraph (6).
            (4) Section 319(b) (15 U.S.C. 77sss(b)) is amended by 
        striking ``the Federal Register Act'' and inserting ``chapter 
        15 of title 44, United States Code,''.

SEC. 302. EXEMPTION OF SECURITIES ISSUED IN CONNECTION WITH CERTAIN 
              STATE HEARINGS.

    Section 18(b)(4)(C) of the Securities Act of 1933 (15 U.S.C. 
77r(b)(4)(C)) is amended by striking ``paragraph (4) or (11)'' and 
inserting ``paragraph (4), (10), or (11)''.