[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2107 Reported in Senate (RS)]






                                                       Calendar No. 712
106th CONGRESS
  2d Session
                                S. 2107

                          [Report No. 106-360]

To amend the Securities Act of 1933 and the Securities Exchange Act of 
1934 to reduce securities fees in excess of those required to fund the 
    operations of the Securities and Exchange Commission, to adjust 
compensation provisions for employees of the Commission, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 28, 2000

 Mr. Gramm (for himself, Mr. Grams, Mr. Schumer, Mr. Mack, Mr. Hagel, 
  Mr. Bunning, Mr. Allard, Mr. Bennett, Mr. Bayh, Mr. Torricelli, Mr. 
Crapo, Mr. Enzi, Mr. Bond, and Mr. Reid) introduced the following bill; 
which was read twice and referred to the Committee on Banking, Housing, 
                           and Urban Affairs

                             July 25, 2000

                 Reported by Mr. Gramm, with amendments
  [Omit the part struck through and insert the part printed in italic]

_______________________________________________________________________

                                 A BILL


 
To amend the Securities Act of 1933 and the Securities Exchange Act of 
1934 to reduce securities fees in excess of those required to fund the 
    operations of the Securities and Exchange Commission, to adjust 
compensation provisions for employees of the Commission, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Competitive Market 
Supervision Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

<DELETED>Sec. 1. Short title; table of contents.
<DELETED>Sec. 2. Reduction in registration fee rates; elimination of 
                            general revenue component.
<DELETED>Sec. 3. Reduction in merger and tender fee rates; 
                            reclassification as offsetting collections.
<DELETED>Sec. 4. Reduction in transaction fees; elimination of general 
                            revenue component.
<DELETED>Sec. 5. Adjustments to fees.
<DELETED>Sec. 6. Comparability Provisions.
<DELETED>Sec. 7. Effective date.

</DELETED>Sec. 1. Short title; table of contents.

                    TITLE I--FEES AND COMPARABILITY

Sec. 101. Reduction in registration fee rates; elimination of general 
                            revenue component.
Sec. 102. Reduction in merger and tender fee rates; reclassification as 
                            offsetting collections.
Sec. 103. Reduction in transaction fees; elimination of general revenue 
                            component.
Sec. 104. Adjustments to fee rates.
Sec. 105. Comparability provisions.
Sec. 106. Authorization of appropriations.
Sec. 107. Effective date.

                TITLE II--SECURITIES MARKETS ENHANCEMENT

Sec. 201. Short title.

           Subtitle A--Reducing the Cost of Capital Formation

Sec. 211. Exempted securities and organizations.
Sec. 212. National market treatment for certain securities.

Subtitle B--Enhancement of Disclosure and Investment Adviser Regulation

Sec. 221. Ensuring adequate recordkeeping.
Sec. 222. Elimination of barriers to providing services.
Sec. 223. Reducing financial reporting burdens.
Sec. 224. Enhancing transparency of records.

                    TITLE I--FEES AND COMPARABILITY

SEC. <DELETED>2. </DELETED>101. REDUCTION IN REGISTRATION FEE RATES; 
              ELIMINATION OF GENERAL REVENUE COMPONENT.

    Section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) is 
amended--
            (1) by striking paragraph (2) and inserting the following:
            ``(2) Fee payment required.--At the time of filing a 
        registration statement, the applicant shall pay to the 
        Commission a fee that shall be equal to the amount determined 
        under the rate established by paragraph (3). The Commission 
        shall publish in the Federal Register notices of the fee rate 
        applicable under this section for each fiscal year.'';
            (2) by striking paragraph (3);
            (3) by redesignating paragraphs (4) and (5) as paragraphs 
        (3) and (4), respectively;
            (4) in paragraph (3), as redesignated--
                    (A) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), the rate determined under 
                this paragraph is a rate equal to the following amount 
                per $1,000,000 of the maximum aggregate price at which 
                the securities are proposed to be offered:
                            ``(i) $67 for each of fiscal years 2001 
                        through 2006.
                            ``(ii) $33 for fiscal year 2007 and each 
                        fiscal year thereafter.''; and
                    (B) in subparagraph (B), by striking ``this 
                paragraph (4)'' and inserting ``this paragraph''; and
            (5) by striking paragraph (4), as redesignated, and 
        inserting the following:
            ``(4) Pro rata application of rate.--The rate required by 
        this subsection shall be applied pro rata to amounts and 
        balances equal to or less than $1,000,000.''.

SEC. <DELETED>3. </DELETED>102. REDUCTION IN MERGER AND TENDER FEE 
              RATES; RECLASSIFICATION AS OFFSETTING COLLECTIONS.

    (a) Section 13.--Section 13(e)(3) of the Securities Exchange Act of 
1934 (15 U.S.C. 78m(e)(3)) is amended to read as follows:
            ``(3) Fees.--
                    ``(A) In general.--At the time of the filing of any 
                statement that the Commission may require by rule 
                pursuant to paragraph (1), the person making the filing 
                shall pay to the Commission a fee equal to--
                            ``(i) $67 for each $1,000,000 of the value 
                        of the securities proposed to be purchased, for 
                        each of fiscal years 2001 through 2006; and
                            ``(ii) $33 for each $1,000,000 of the value 
                        of securities proposed to be purchased, for 
                        fiscal year 2007 and each fiscal year 
                        thereafter.
                    ``(B) Reduction.--The fee required by this 
                paragraph shall be reduced with respect to securities 
                in an amount equal to any fee paid with respect to any 
                securities issued in connection with the proposed 
                transaction under section 6(b) of the Securities Act of 
                1933, or the fee paid under that section shall be 
                reduced in an amount equal to the fee paid to the 
                Commission in connection with such transaction under 
                this paragraph.
                    ``(C) Limitation; deposit of fees.--
                            ``(i) Limitation.--Except as provided in 
                        subparagraph (D), no amounts shall be collected 
                        pursuant to this paragraph for any fiscal year, 
except to the extent provided in advance in appropriations Acts.
                            ``(ii) Deposit of fees.--Fees collected 
                        during any fiscal year pursuant to this 
                        paragraph shall be deposited and credited as 
                        offsetting collections in accordance with 
                        appropriations Acts.
                    ``(D) Lapse of appropriations.--If, on the first 
                day of a fiscal year, a regular appropriation to the 
                Commission has not been enacted for that fiscal year, 
                the Commission shall continue to collect fees (as 
offsetting collections) under this paragraph at the rate in effect 
during the preceding fiscal year, until such a regular appropriation is 
enacted.
                    ``(E) Pro rata application of rate.--The rate 
                required by this paragraph shall be applied pro rata to 
                amounts and balances equal to or less than 
                $1,000,000.''.
    (b) Section 14.--
            (1) Preliminary proxy solicitations.--Section 14(g)(1) of 
        the Securities Exchange Act of 1934 (15 U.S.C. 78n(g)(1)) is 
        amended--
                    (A) in subparagraph (A), by striking ``Commission 
                the following fees'' and all that follows through the 
                end of the subparagraph and inserting ``Commission--
                            ``(i) for preliminary proxy solicitation 
                        material involving an acquisition, merger, or 
                        consolidation, if there is a proposed payment 
                        of each or transfer of securities or property 
                        to shareholders, a fee equal to--
                                    ``(I) $67 for each $1,000,000 of 
                                such proposed payment, or of the value 
                                of such securities or other property 
                                proposed to be transferred, for each of 
                                fiscal years 2001 through 2006; and
                                    ``(II) $33 for each $1,000,000 of 
                                such proposed payment, or of the value 
                                of such securities or other property 
                                proposed to be transferred, for fiscal 
                                year 2007 and each fiscal year 
                                thereafter; and
                            ``(ii) for preliminary proxy solicitation 
                        material involving a proposed sale or other 
                        disposition of substantially all of the assets 
                        of a company, a fee equal to--
                                    ``(I) $67 for each $1,000,000 of 
                                the cash or of the value of any 
                                securities or other property proposed 
                                to be received upon such sale or 
                                disposition, for each of fiscal years 
                                2001 through 2006; and
                                    ``(II) $33 for each $1,000,000 of 
                                the cash or of the value of any 
                                securities or other property proposed 
                                to be received upon such sale or 
                                disposition, for fiscal year 2007 and 
                                each fiscal year thereafter.'';
                    (B) in subparagraph (B), by inserting 
                ``Reduction.--'' before ``The fee''; and
                    (C) by adding at the end the following:
                    ``(C) Limitation; deposit of fees.--
                            ``(i) Limitation.--Except as provided in 
                        subparagraph (D), no amounts shall be collected 
                        pursuant to this paragraph for any fiscal year, 
                        except to the extent provided in advance in 
                        appropriations Acts.
                            ``(ii) Deposit of fees.--Fees collected 
                        during any fiscal year pursuant to this 
                        paragraph shall be deposited and credited as 
                        offsetting collections in accordance with 
                        appropriations Acts.
                    ``(D) Lapse of appropriations.--If, on the first 
                day of a fiscal year, a regular appropriation to the 
                Commission has not been enacted for that fiscal year, 
                the Commission shall continue to collect fees (as 
                offsetting collections) under this paragraph at the 
                rate in effect during the preceding fiscal year, until 
                such a regular appropriation is enacted.
                    ``(E) Pro rata application of rate.--The rate 
                required by this paragraph shall be applied pro rata to 
                amounts and balances equal to or less than 
                $1,000,000.''.
            (2) Other filings.--Section 14(g)(3) of the Securities 
        Exchange Act of 1934 (15 U.S.C. 78n(g)(3)) is amended--
                    (A) by striking ``At the time'' and inserting the 
                following: ``Other filings.--
                    ``(A) Fee rate.--At the time'';
                    (B) by striking ``the Commission a fee of'' and all 
                that follows through ``The fee'' and inserting the 
                following: ``the Commission a fee equal to--
                            ``(i) $67 for each $1,000,000 of the 
                        aggregate amount of cash or of the value of 
                        securities or other property proposed to be 
                        offered, for each of fiscal years 2001 through 
                        2006; and
                            ``(ii) $33 for each $1,000,000 of the 
                        aggregate amount of cash or of the value of 
                        securities or other property proposed to be 
                        offered, for fiscal year 2007 and each fiscal 
                        year thereafter.
                    ``(B) Reduction.--The fee required under 
                subparagraph (A)''; and
                    (C) by adding at the end the following:
                    ``(C) Limitation; deposit of fees.--
                            ``(i) Limitation.--Except as provided in 
                        subparagraph (D), no amounts shall be collected 
                        pursuant to this paragraph for any fiscal year, 
                        except to the extent provided in advance in 
                        appropriations Acts.
                            ``(ii) Deposit of fees.--Fees collected 
                        during any fiscal year pursuant to this 
                        paragraph shall be deposited and credited as 
                        offsetting collections in accordance with 
                        appropriations Acts.
                    ``(D) Lapse of appropriations.--If, on the first 
                day of a fiscal year, a regular appropriation to the 
                Commission has not been enacted for that fiscal year, 
                the Commission shall continue to collect fees (as 
                offsetting collections) under this paragraph at the 
                rate in effect during the preceding fiscal year, until 
                such a regular appropriations is enacted.
                    ``(E) Pro rata application of rate.--The rate 
                required by this paragraph shall be applied pro rata to 
                amounts and balances equal to or less than 
                $1,000,000.''.

SEC. <DELETED>4. </DELETED>103. REDUCTION IN TRANSACTION FEES; 
              ELIMINATION OF GENERAL REVENUE COMPONENT.

    Section 31 of the Securities Exchange Act of 1934 (15 U.S.C. 78ee) 
is amended--
            (1) by striking subsections (b) through (d) and inserting 
        the following:
    ``(b) Transaction Fees.--
            ``(1) In general.--Each national securities exchange and 
        national securities association shall pay to the Commission a 
        fee at a rate equal to the transaction offsetting collection 
        rate described in paragraph (2) of the aggregate dollar amount 
        of sales of securities (other than bonds, debentures, and other 
        evidences of indebtedness)--
                    ``(A) transacted on such national securities 
                exchange;
                    ``(B) transacted by or through any member of such 
                association otherwise than on a national securities 
                exchange of securities registered on such an exchange; 
                and
                    ``(C) transacted by or through any member of such 
                association otherwise than on a national securities 
                exchange of securities that are subject to prompt last 
                sale reporting pursuant to the rules of the Commission 
                or a registered national securities association, 
                excluding any sales for which a fee is paid under 
                subparagraph (B).
            ``(2) Fee rate.--
                    ``(A) Transaction offsetting collection rate.--For 
                purposes of this subsection, the `transaction 
                offsetting collection rate' for a fiscal year is the 
                uniform rate required to reach the transaction fee cap 
                for that fiscal year.
                    ``(B) Transaction fee cap.--For purposes of this 
                paragraph, the `transaction fee cap' shall be equal 
                to--
                            ``(i) $413,000,000 for fiscal year 2001;
                            ``(ii) $497,000,000 for fiscal year 2002;
                            ``(iii) $607,000,000 for fiscal year 2003;
                            ``(iv) $706,000,000 for fiscal year 2004;
                            ``(v) $896,000,000 for fiscal year 2005;
                            ``(vi) $1,094,000,000 for fiscal year 2006;
                            ``(vii) $554,000,000 for fiscal year 2007;
                            ``(viii) $580,000,000 for fiscal year 2008;
                            ``(ix) $719,000,000 for fiscal year 2009; 
                        and
                            ``(x) $884,000,000 for fiscal year 2010 and 
                        each fiscal year thereafter.
    ``(c) Limitation; Deposit of Fees.--
            ``(1) Limitation.--Except as provided in subsection (d), no 
        amount may be collected pursuant to subsection (b) for any 
        fiscal year, except to the extent provided in advance in 
        appropriation Acts.
            ``(2) Deposit of fees.--Fees collected during any fiscal 
        year pursuant to this section shall be deposited and credited 
        as offsetting collections in accordance with appropriations 
        Acts.
    ``(d) Lapse of Appropriations.--If, on the first day of a fiscal 
year, a regular appropriation to the Commission has not been enacted 
for that fiscal year, the Commission shall continue to collect fees (as 
offsetting collections) under this section at the rate in effect during 
the preceding fiscal year (prior to adjustments, if any, under 
subsections (b) and (c) of section <DELETED>5 </DELETED>104 of the 
Competitive Market Supervision Act), until such a regular 
appropriations is enacted.'';
            (2) in subsection (e), by striking ``subsections (b), (c), 
        and (d)'' and inserting ``subsection (b)''; and
            (3) in subsection (g), by striking ``rates'' and inserting 
        ``rate''.

SEC. <DELETED>5. </DELETED>104. ADJUSTMENTS TO FEE RATES.

    (a) Estimates of Collections.--
            (1) The Securities and Exchange Commission (hereafter in 
        this Act referred to as the ``Commission'') shall, 1 month 
        after submission of its initial report under subsection (e)(1) 
        and on a monthly basis thereafter, project the aggregate amount 
        of fees from all sources likely to be collected by the 
        Commission during the current fiscal year.
            (2) Each national securities exchange and national 
        securities association shall file with the Commission within 10 
days after the end of each month an estimate of the fee required to be 
paid pursuant to section 31 of the Securities Exchange Act of 1934 by 
such national securities exchange or national securities association 
for transactions and sales occurring during such month and such other 
information and documents as the Commission may require as necessary or 
appropriate to project the aggregate amount of fees pursuant to 
paragraph (1).
    (b) Floor for Total Fee Collections.--If, at any time after the end 
of the first half of the fiscal year, the Commission projects under 
subsection (a) that the aggregate amount of fees collected by the 
Commission will, during that fiscal year, fall below an amount equal to 
the floor for total fee collections, the Commission may by order, 
subject to subsection (e), increase the fee rate established under 
section 31 of the Securities Exchange Act of 1934 to the extent 
necessary to bring estimated collections to an amount equal to the 
floor for total fee collections. Such increase shall apply only to 
transactions and sales occurring on or after the effective date 
specified in such order through August 31 of that fiscal year. Such 
increase shall not affect the obligation of each national securities 
exchange and national securities association to pay the Commission the 
fee required by section 31 of the Securities Exchange Act of 1934 at 
the fee rate in effect prior to the effective date of such order for 
transactions and sales occurring prior to the effective date of such 
order. In exercising its authority under this subsection, the 
Commission shall not be required to comply with the provisions of 
section 553 of title 5, United States Code.
    (c) Cap on Total Fee Collections.--If, at any time after the end of 
the first half of the fiscal year, the Commission projects under 
subsection (a) that the aggregate amount of fees collected by the 
Commission will exceed the cap on total fee collections by more than 
<DELETED>five </DELETED>5 percent during any fiscal year, the 
Commission shall by order, subject to subsection (e), decrease the fee 
rate or suspend collection of fees under section 31 of the Securities 
Exchange Act of 1934 to the extent necessary to bring estimated 
collections to an amount equal to the cap on total fee collections. 
Such decrease or suspension shall apply only to transactions and sales 
occurring on or after the effective date specified in such order 
through August 31 of that fiscal year. Such decrease or suspension 
shall not affect the obligation of each national securities exchange 
and national securities association to pay the Commission the fee 
required by section 31 of the Securities Exchange Act of 1934 at the 
fee rate in effect prior to the effective date of such order for 
transactions and sales occurring prior to the effective date of such 
order. In exercising its authority under this subsection, the 
Commission shall not be required to comply with the provisions of 
section 553 of title 5, United States Code.
    (d) Definitions.--
            (1) For purposes of this section, the term ``floor for 
        total fee collections'' means the greater of--
                    (A) the total amount appropriated to the Commission 
                for fiscal year 2001 (adjusted annually, based on the 
                annual percentage change, if any, in the Consumer Price 
                Index for all urban consumers, as published by the 
                Department of Labor); or
                    (B) the amount authorized for the Commission 
                pursuant to section 35 of the Securities Exchange Act 
                of 1934 (15 U.S.C. 78kk), if applicable.
            (2) For purposes of this section, the term ``cap on total 
        fee collections'' means--
                    (A) for fiscal years 2001 through 2010, the 
                baseline amount for aggregate offsetting collections 
                for such fiscal year under section 6(b) of the 
                Securities Act of 1933 and section 31 of the Securities 
                Exchange Act of 1934, as projected for such fiscal year 
                by the Congressional Budget Office pursuant to section 
                257 of the Balanced Budget and Emergency Deficit 
                Control Act of 1985 in its most recently published 
                report of its baseline projection before the date of 
                enactment of this Act; and
                    (B) for fiscal years 2011 and thereafter, the 
                amount authorized for the Commission pursuant to 
                section 35 of the Securities Exchange Act of 1934 (15 
                U.S.C. 78kk).
    (e) Reports to Congress; Judicial Review; Notice.--
            (1) Initial report.--Not later than 90 days after the date 
        of enactment of this Act, the Commission shall report to the 
        Committee on Banking, Housing, and Urban Affairs of the Senate 
        and the Committee on Commerce of the House of Representatives 
        to explain the methodology used by the Commission to make 
        projections under subsection (a). Within 30 days after the 
        beginning of each fiscal year, the Commission may report to the 
        Committee on Banking, Housing, and Urban Affairs of the Senate 
        and the Committee on Commerce of the House of Representatives 
        on revisions to the methodology used by the Commission to make 
        projections under subsection (a) for such fiscal year and 
        subsequent fiscal years.
            (2) Judicial review; reports of intent to act.--The 
        determinations made and the actions taken by the Commission 
        under this subsection shall not be subject to judicial review. 
        Not later than 45 days before taking action under subsection 
        (b) or (c), the Commission shall report to the Committee on 
Banking, Housing, and Urban Affairs of the Senate and the Committee on 
Commerce of the House of Representatives on its intent to take such 
action.
            (3) Notice.--Not later than 30 days before taking action 
        under subsection (b) or (c), the Commission shall notify each 
        national securities exchange and national securities 
        association of its intent to take such action.

SEC. <DELETED>6. </DELETED>105. COMPARABILITY PROVISIONS.

    (a) Securities and Exchange Commission Employees.--
            (1) In general.--Section 4(b) of the Securities Exchange 
        Act of 1934 (15 U.S.C. 78d(b)) is amended by redesignating 
        paragraph (3) as paragraph (2), and by striking paragraphs (1) 
        and (2) and inserting the following:
            ``(1) Appointment and compensation.--
                    ``(A) In general.--The Commission may appoint and 
                fix the compensation of such officers, attorneys, 
                economists, examiners, and other employees as may be 
                necessary for carrying out its functions under this 
                Act.
                    ``(B) Rates of pay.--Rates of basic pay for all 
                employees of the Commission may be set and adjusted by 
                the Commission without regard to the provisions of 
                chapter 51 or subchapter III of chapter 53 of title 5, 
                United States Code.
                    ``(C) Comparability.--The Commission may provide 
                additional compensation and benefits to employees of 
                the Commission if the same type of compensation or 
                benefits are then being provided by any agency referred 
                to under section 1206(a) of the Financial Institutions 
                Reform, Recovery, and Enforcement Act of 1989 (12 
                U.S.C. 1833b) or, if not then being provided, could be 
                provided by such an agency under applicable provisions 
                of law, rule, or regulation. In setting and adjusting 
                the total amount of compensation and benefits for 
                employees, the Commission shall consult with, and seek 
                to maintain comparability with, the agencies referred 
                to under section 1206(a) of the Financial Institutions 
                Reform, Recovery, and Enforcement Act of 1989 (12 
                U.S.C. 1833b).''.
            (2) Employees represented by labor organizations.--To the 
        extent that any employee of the Commission is represented by a 
        labor organization with exclusive recognition in accordance 
        with chapter 71 of title 5, United States Code, no reduction in 
        base pay of such employee shall be made by reason of enactment 
        of this subsection.
    (b) Reporting on Information by the Commission.--Section 1206 of 
the Financial Institutions Reform, Recovery, and Enforcement Act of 
1989 (12 U.S.C. 1833b) is amended--
            (1) by inserting ``(a) In General.--'' before ``The Federal 
        Deposit'';
            (2) by striking ``the Thrift Depositor Protection Oversight 
        Board of the Resolution Trust Corporation''; and
            (3) by adding at the end the following:
    ``(b) In establishing and adjusting schedules of compensation and 
benefits for employees of the Securities and Exchange Commission under 
applicable provisions of law, the Commission shall inform the heads of 
the agencies referred to under subsection (a) and Congress of such 
compensation and benefits and shall seek to maintain comparability with 
such agencies regarding compensation and benefits.''.
    (c) Technical Amendments.--
            (1) Section 3132(a)(1) of title 5, United States Code, is 
        amended--
                    (A) in subparagraph (C), by striking ``or'' after 
                the semicolon;
                    (B) in subparagraph (D), by inserting ``or'' after 
                the semicolon; and
                    (C) by adding at the end the following:
                    ``(E) the Securities and Exchange Commission.''.
            (2) Section 5373(a) of title 5, United States Code, is 
        amended--
                    (A) in paragraph (2), by striking ``or'' after the 
                semicolon;
                    (B) in paragraph (3), by striking the period and 
                inserting ``; or''; and
                    (C) by adding at the end the following:
            ``(4) section 4(b) of the Securities Exchange Act of 
        1934.''.

SEC. 106. AUTHORIZATION OF APPROPRIATIONS.

    Section 35(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78kk(a)) is amended by striking ``$351,280,000'' and all that follows 
through ``1999'' and inserting ``$422,800,000 for fiscal year 2001''.

SEC. <DELETED>7. </DELETED>107. EFFECTIVE DATE.

    (a) In General.--Subject to subsection (b), this <DELETED>Act</DELETED> 
title and the amendments made by this <DELETED>Act </DELETED>title 
shall become effective on October 1, 2000.
    (b) Exceptions.--The authorities provided by section 13(e)(3)(D), 
section 14(g)(1)(D), section 14(g)(3)(D), and section 31(d) of the 
Securities Exchange Act of 1934, as so designated by this <DELETED>Act </DELETED> 
title, shall not apply until October 1, 2001.

                TITLE II--SECURITIES MARKETS ENHANCEMENT

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Securities Markets Enhancement Act 
of 2000''.

           Subtitle A--Reducing the Cost of Capital Formation

SEC. 211. EXEMPTED SECURITIES AND ORGANIZATIONS.

    (a) Securities Exemption Threshold.--Section 3(b) of the Securities 
Act of 1933 (15 U.S.C. 77c(b)) is amended by striking ``$5,000,000'' 
and inserting ``$12,000,000 (adjusted annually, based on the annual 
percentage change, if any, in the Consumer Price Index for all urban 
consumers, as published by the Department of Labor)''.
    (b) Charitable Gift Annuities.--Section 3(e)(2) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(e)(2)) is amended--
            (1) by striking ``The exemption'' and inserting the 
        following:
                    ``(A) In general.--The exemption''; and
            (2) by adding at the end the following:
                    ``(B) Exception.--The limitation on compensation 
                provided under subparagraph (A) does not apply to 
                compensation paid to any person for any service 
                rendered in connection with the issuance by a 
                charitable organization of a charitable gift annuity or 
                other exempted security described in subsection 
                (a)(12)(A)(v), if--
                            ``(i) the charitable organization has been 
                        in continuous operation for not less than 10 
                        years and has total net assets of not less than 
                        $10,000,000; and
                            ``(ii) the person receiving compensation--
                                    ``(I) is registered, licensed, or 
                                certified by a Federal or State agency, 
                                self-regulatory organization, or 
                                professional licensing authority as an 
                                attorney, financial planner, insurance 
                                agent, insurance broker, investment 
                                adviser, or public accountant;
                                    ``(II) is not subject to any 
                                suspension order or other disciplinary 
                                action from the Commission;
                                    ``(III) before completion of the 
                                exempted security transaction, clearly 
                                and conspicuously discloses in writing 
                                to the purchaser of the exempted 
                                security the fact that such person is 
                                receiving compensation in connection 
                                with the transaction; and
                                    ``(IV) obtains from the purchaser 
                                at the time of the purchase of the 
                                exempted security a signed statement 
                                acknowledging that the purchaser has 
                                received and understands the disclosure 
                                required under this clause.''.

SEC. 212. NATIONAL MARKET TREATMENT FOR CERTAIN SECURITIES.

    Section 18 of the Securities Act of 1933 (15 U.S.C. 77r) is 
amended--
            (1) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (B), by striking ``or'' 
                        at the end;
                            (ii) in subparagraph (C), by striking the 
                        period at the end and inserting a semicolon; 
                        and
                            (iii) by adding at the end the following:
                    ``(D) a warrant or right to purchase or subscribe 
                to any security described in subparagraph (A), (B), or 
                (C);
                    ``(E) a security issued by a foreign government, or 
                a political subdivision thereof, for which Schedule B 
                has been filed with the Commission pursuant to section 
                7; or
                    ``(F) an interest in an employee benefit plan and 
                the security underlying the employee benefit plan, if 
                the underlying security is--
                            ``(i) a security described in subparagraph 
                        (A), (B), or (C); or
                            ``(ii) a foreign equity security that is a 
                        `margin security', as that term (or any 
                        successor term) is defined in rules and 
                        regulations prescribed by the Board of 
                        Governors of the Federal Reserve System.''; and
                    (B) in paragraph (4)--
                            (i) by striking subparagraph (A) and 
                        inserting the following:
                    ``(A) paragraph (1) or (3) of section 4, if--
                            ``(i) the issuer of such security files 
                        reports with the Commission pursuant to section 
                        13 or 15(d) of the Securities Exchange Act of 
                        1934; or
                            ``(ii) the transaction involves a foreign 
                        equity security that is a `margin security', as 
                        that term (or any successor term) is defined in 
                        rules or regulations prescribed by the Board of 
                        Governors of the Federal Reserve System;''; and
                            (ii) in subparagraph (D), by inserting 
                        before the period at the end the following: ``, 
                        including any form prescribed by rule or 
                        regulation of the Commission that includes a 
                        listing of the States in which the securities 
                        are intended to be sold'';
            (2) in subsection (c)(2), by striking subparagraphs (C) and 
        (D) and inserting the following:
                    ``(C) Elimination of paperwork and fees on certain 
                covered securities.--Notwithstanding subparagraphs (A) 
                and (B), no State securities commission (or agency or 
                office performing like functions) may require a notice 
                filing or fee with respect to any security that is a 
                covered security pursuant to--
                            ``(i) subsection (b)(1), or will be such a 
                        covered security upon completion of the 
                        transaction; or
                            ``(ii) subparagraph (A), (B), or (C) of 
                        subsection (b)(4).''; and
            (3) by adding at the end the following:
    ``(e) Issuer Agents.--No law of any State, or political subdivision 
thereof, that requires the registration, licensing, or qualification of 
any individual who represents an issuer in effecting or attempting to 
effect the purchase or sale of securities of the issuer shall apply to 
any individual who represents an issuer in a transaction involving a 
covered security, as described in subsection (b)(4)(D), if the 
individual receives no compensation, directly or indirectly, in 
connection with the offer, sale, or purchase of the security.''.

Subtitle B--Enhancement of Disclosure and Investment Adviser Regulation

SEC. 221. ENSURING ADEQUATE RECORDKEEPING.

    Section 203A of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3a) is amended--
            (1) by striking subsection (d);
            (2) by redesignating subsection (e) as subsection (d); and
            (3) in subsection (b)(2)--
                    (A) by striking ``this subsection'' and inserting 
                ``this title'';
                    (B) by striking ``from investigating'' and 
                inserting ``from--
                    ``(A) investigating'';
                    (C) by striking the period at the end and inserting 
                ``; or''; and
                    (D) by adding at the end the following:
                    ``(B) except as provided in subsection (e), 
                requiring an investment adviser registered under 
                section 203 to file any document filed with the 
                Commission under this title solely for notice purposes, 
                together with a consent to service of process and any 
                required fee.''.

SEC. 222. ELIMINATION OF BARRIERS TO PROVIDING SERVICES.

    Section 203A of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3a) is amended by adding at the end the following:
    ``(e) Certain State Filings and Fees Prohibited; National De 
Minimis Standard for All Investment Advisers.--Notwithstanding 
subsection (b)(2)(B), no law of any State or political subdivision 
thereof requiring the registration, licensing, or qualification of an 
investment adviser shall require--
            ``(1) the filing of any document with respect to, or any 
        payment of any fee for, a supervised person of an investment 
        adviser registered under section 203, if the supervised person 
        does not have a place of business located in the State;
            ``(2) an investment adviser registered under section 203 to 
        file any document or pay any fee, unless the investment 
        adviser--
                    ``(A) has a place of business located within the 
                State; or
                    ``(B) during the 12-month period preceding the date 
                on which such filing or payment is required under the 
                State law, had more than 5 clients who are residents of 
                that State; or
            ``(3) an investment adviser to register, license, qualify, 
        or otherwise comply with such law (other than any provision 
        thereof prohibiting fraudulent conduct), or to file any 
        document or pay any fee, unless the investment adviser--
                    ``(A) has a place of business located within the 
                State; or
                    ``(B) during the 12-month period preceding the date 
                on which such compliance, filing, or payment is 
                required under the State law, had more than 5 clients 
                who are residents of that State.
    ``(f) Preservation of State Filing Fees.--Subject to the 
limitations provided in this title, a State or political subdivision 
thereof may require an investment adviser registered under section 203 
to pay filing fees.''.

SEC. 223. REDUCING FINANCIAL REPORTING BURDENS.

    Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
18a) is amended by striking subsection (d) and inserting the following:
    ``(d) Limitation on Financial Reporting Requirements.--No State may 
enforce any law or regulation that would require an investment adviser 
to maintain or file with that State any financial report, in addition 
to those required under the laws of the State in which the investment 
adviser maintains its principal place of business, if the investment 
adviser--
            ``(1) is registered or licensed as an investment adviser in 
        the State in which it maintains its principal place of 
        business;
            ``(2) is in compliance with the applicable financial 
        reporting requirements of the State in which it maintains its 
        principal place of business; and
            ``(3) has not taken custody of the assets of any client 
        residing in that State at any time during the 12-month period 
        preceding the date on which the financial report otherwise 
        would be required to be filed with that State.
    ``(e) Limitation on State Fees and Filings.--
            ``(1) In general.--Beginning 90 days after the date of 
        enactment of this subsection, no law of any State or political 
        subdivision thereof requiring the registration, licensing, or 
        qualification of an investment adviser may require an 
        investment adviser registered under section 203, an investment 
        adviser having its principal place of business in another 
        State, or an investment adviser representative of either such 
        adviser to pay any fee to or file any document with the 
        securities commission (or any agency or office performing like 
        functions) of that State, unless the State or the securities 
        commission accepts registration and renewal materials, 
        documents filed solely for notice purposes, and related fees 
        through an entity designated under section 204(b), except as 
        provided in paragraph (2).
            ``(2) Exception for direct payments and filings.--A State 
        may require the direct payment of any fees to and the paper 
        filing of any registration materials or documents with the 
        State, filed solely for notice purposes, if--
                    ``(A) the entity designated under section 204(b) is 
                not capable of electronically transmitting such fees, 
                filings, and documents to the State;
                    ``(B) the investment adviser having its principal 
                place of business in another State does not file 
                through the entity designated under section 204(b); or
                    ``(C) the investment adviser has otherwise been 
                granted regulatory relief from filing or payment in 
                accordance with paragraph (1) for hardship reasons.''.

SEC. 224. ENHANCING TRANSPARENCY OF RECORDS.

    (a) Disciplinary and Other Records of Brokers, Dealers, and 
Associated Persons.--Section 15A(i) of the Securities Exchange Act of 
1934 (15 U.S.C. 78o-3(i)) is amended--
            (1) by striking ``(i) A registered'' and inserting the 
        following:
    ``(i) Access to Disciplinary and Other Information.--
            ``(1) Telephone access.--A registered'';
            (2) by striking ``section, (1) establish'' and inserting 
        the following: ``section--
                    ``(A) establish'';
            (3) by striking ``, and (2) promptly'' and all that follows 
        through the end and inserting the following: ``and the members 
        and associated persons of any registered national securities 
        exchange; and
                    ``(B) promptly respond to such inquiries in 
                writing.''; and
            (4) by adding at the end the following:
            ``(2) Electronic access.--A registered securities 
        association shall--
                    ``(A) establish and maintain a readily accessible 
                electronic process to receive inquiries about its 
                members and their associated persons, and the members 
                and associated persons of any registered national 
                securities exchange, regarding--
                            ``(i) disciplinary actions, proceedings, 
                        and arbitrations involving members and their 
                        associated persons, including those that have 
                        been reported to the Central Registration 
                        Depository; and
                            ``(ii) the employment history, registration 
                        status, and licensing status of such members 
                        and their associated persons; and
                    ``(B) promptly respond to such inquiries.
            ``(3) Recovery of costs.--A registered securities 
        association may charge persons, other than individual 
        investors, reasonable fees for responses to inquiries referred 
        to in paragraphs (1) and (2).
            ``(4) Limitation on liability.--A registered securities 
        association or registered national securities exchange shall 
        not have any liability to any person for any action taken or 
        omitted in good faith under this subsection.''.
    (b) Disciplinary and Other Records of Investment Advisers and 
Associated Persons.--Section 204 of the Investment Advisers Act of 1940 
(15 U.S.C. 80b-4) is amended--
            (1) by inserting ``(a) In General.--'' after ``Sec. 204.''; 
        and
            (2) by adding at the end the following:
    ``(b) Filing Depositories.--The Commission, by rule, may require an 
investment adviser--
            ``(1) to file with the Commission any application, report, 
        or notice required to be filed by this title or the rules 
        issued under this title through an entity designated by the 
        Commission for that purpose; and
            ``(2) to pay the reasonable costs associated with such 
        filing and the establishment and maintenance of the systems 
        required by subsection (c).
    ``(c) Access to Disciplinary and Other Information.--
            ``(1) Maintenance of system to respond to inquiries.--The 
        Commission shall require an entity designated by the Commission 
        under subsection (b)(1)--
                    ``(A) to establish and maintain a toll-free 
                telephone listing or other readily accessible 
                electronic process to receive inquiries about 
                investment advisers and persons associated with 
                investment advisers concerning--
                            ``(i) disciplinary actions, proceedings, 
                        and arbitrations involving such investment 
                        advisers and associated persons; and
                            ``(ii) the registration status of such 
                        investment advisers and associated persons; and
                    ``(B) to respond promptly to such inquiries.
            ``(2) Recovery of costs.--An entity designated by the 
        Commission under subsection (b)(1) may charge persons, other 
        than individual investors, reasonable fees for responses to 
        inquiries made under paragraph (1).
            ``(3) Limitation on liability.--An entity designated by the 
        Commission under subsection (b)(1) shall not have any liability 
        to any person for any action taken or omitted in good faith 
        under this subsection.''.
    (c) Conforming Amendment to NSMIA of 1996.--Sections 306 and 307 of 
the National Securities Markets Improvement Act of 1996 (Public Law 
104-290; 110 Stat. 3438) are repealed.




                                                       Calendar No. 712

106th CONGRESS

  2d Session

                                S. 2107

                          [Report No. 106-360]

_______________________________________________________________________

                                 A BILL

To amend the Securities Act of 1933 and the Securities Exchange Act of 
1934 to reduce securities fees in excess of those required to fund the 
    operations of the Securities and Exchange Commission, to adjust 
compensation provisions for employees of the Commission, and for other 
                               purposes.

_______________________________________________________________________

                             July 25, 2000

                        Reported with amendments