[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1408 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 1408

To safeguard the public from fraud in the financial services industry, 
to streamline and facilitate the antifraud information-sharing efforts 
        of Federal and State regulators, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 4, 2001

Mr. Rogers of Michigan (for himself, Mr. Oxley, Mrs. Kelly, Mr. Bachus, 
 and Mr. Tiberi) introduced the following bill; which was referred to 
the Committee on Financial Services, and in addition to the Committees 
  on the Judiciary, and Agriculture, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To safeguard the public from fraud in the financial services industry, 
to streamline and facilitate the antifraud information-sharing efforts 
        of Federal and State regulators, 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 ``Financial Services 
Antifraud Network Act of 2001''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
                    TITLE I--ANTIFRAUD SUBCOMMITTEE

Sec. 101. Establishment.
Sec. 102. Duties of the Subcommittee.
Sec. 103. Chairperson; term of chairperson; meetings; officers and 
                            staff.
Sec. 104. Purposes of the Subcommittee.
Sec. 105. Powers of the Subcommittee.
Sec. 106. Agreement on cost structure.
Sec. 107. Agency supervisory privilege.
Sec. 108. Confidentiality of information.
Sec. 109. Liability provisions.
Sec. 110. Authorization for identification and criminal background 
                            check.
Sec. 111. Definitions.
Sec. 112. Technical and conforming amendments to other Acts.
               TITLE II--SECURITIES INDUSTRY COORDINATION

                  Subtitle A--Disciplinary Information

Sec. 201. Investment Advisers Act of 1940.
Sec. 202. Securities Exchange Act of 1934.
 Subtitle B--Preventing Migration of Rogue Financial Professionals to 
                        the Securities Industry

Sec. 211. Securities Exchange Act of 1934.
Sec. 212. Investment Advisers Act of 1940.

SEC. 2. PURPOSES.

    The purposes of this Act are--
            (1) to safeguard the public from fraud in the financial 
        services industry;
            (2) to streamline the antifraud coordination efforts of 
        Federal and State regulators and prevent failure to communicate 
        essential information;
            (3) to reduce duplicative information requests by, and 
        other inefficiencies of, financial services regulation;
            (4) to assist financial regulators in detecting patterns of 
        fraud, particularly patterns that only become apparent when 
        viewed across the full spectrum of the financial services 
        industry; and
            (5) to take advantage of Internet technology and other 
        advanced data-sharing technology to modernize the fight against 
        fraud in all of its evolving manifestations and permutations.

                    TITLE I--ANTIFRAUD SUBCOMMITTEE

SEC. 101. ESTABLISHMENT.

    (a) In General.--There shall be within the President's Working 
Group on Financial Markets (as established by Executive Order Numbered 
12631) a subcommittee to be known as the `Antifraud Subcommittee' 
(hereafter in this title referred to as the `Subcommittee') which shall 
consist of the following members:
            ``(1) The Secretary of the Treasury, or a designee of the 
        Secretary.
            ``(2) The Chairman of the Securities and Exchange 
        Commission or a designee of the Chairman.
            ``(3) A State insurance commissioner designated by the 
        National Association of Insurance Commissioners, or a designee 
        of such commissioner.
    (b) Financial Liaisons.--The following shall serve as liaisons 
between the Subcommittee and the agencies represented by each such 
liaison:
            (1) A representative of each Federal banking agency 
        appointed by the head of each such agency.
            (2) A representative of the Commodity Futures Trading 
        Commission appointed by the Commodity Futures Trading 
        Commission.
            (3) A representative of the National Credit Union 
        Administration appointed by the National Credit Union 
        Administration Board.
            (4) A representative of the Farm Credit Administration, 
        appointed by the Farm Credit Administration Board.
            (5) A representative of the Federal Housing Finance Board, 
        appointed by such Board.
            (6) A representative of the Office of Federal Housing 
        Enterprise Oversight of the Department of Housing and Urban 
        Development appointed by the Director of such Office.
            (7) A representative of State bank supervisors designated 
        by the Conference of State Bank Supervisors.
            (8) A representative of State credit union supervisors 
        designated by the National Association of State Credit Union 
        Supervisors.
            (9) A representative of State securities administrators 
        designated by the North American Securities Administrators 
        Association.
            (10) A representative of State insurance commissioners 
        designated by the National Association of Insurance 
        Commissioners.
            (11) A representative of the National Association of 
        Securities Dealers appointed by the National Association of 
        Securities Dealers.
            (12) A representative of the National Futures Association 
        appointed by the National Futures Association.
            (13) Any other financial liaison as the Subcommittee may 
        provide to represent any other financial regulator, including 
        self-regulatory agencies or organizations that maintain 
        significant databases on persons engaged in the business of 
        conducting financial activities, designated in the manner 
        provided by the Subcommittee.
    (c) Other Liaisons.--The following shall serve as liaisons between 
the Subcommittee and the agencies represented by each such liaison:
            (1) A representative of the Department of Justice appointed 
        by the Attorney General.
            (2) A representative of the Federal Bureau of Investigation 
        appointed by the Director of such Bureau.
            (3) A representative of the United States Secret Service 
        appointed by the Director of such Service.
            (4) Any other liaison as the Subcommittee may provide to 
        represent any other regulator, including self-regulatory 
        agencies or organizations that maintain significant databases 
        on persons engaged in the business of conducting financial 
        activities, designated in the manner provided by the 
        Subcommittee.
    (d) Vacancy.--If, for any reason, the position of any member of or 
liaison to the Subcommittee is not filled within a reasonable period of 
time after being created or becoming vacant, the President shall 
appoint a person to fill the position after consulting the agency or 
entity to be represented by such member or liaison, and to the extent 
possible, shall appoint such person from a list of possible 
representatives submitted by such agency or entity.
    (e) Reorganization Authority.--If the President disbands the 
Working Group referred to in subsection (a), the President shall 
provide for the reorganization of the Subcommittee in such manner as 
the President determines to be appropriate.

SEC. 102. DUTIES OF THE SUBCOMMITTEE.

    (a) In General.--The duties of the Subcommittee are as follows:
            (1) To coordinate access by the participants to antifraud 
        databases of various regulators, by facilitating the 
        establishment, maintenance, and use of a computer network of 
        existing antifraud information maintained by such regulators 
        with respect to persons engaged in the business of conducting 
        financial activities.
            (2) Coordinate access by each participating regulator to 
        such computer network in a manner that allows the regulator to 
        review, at a minimal cost, existing information in the 
        databases of other regulators, as a part of licensure, change 
        of control, or investigation, of any person engaged in the 
        business of conducting financial activities.
            (3) Coordinate information-sharing, where appropriate, 
        among State, Federal, and international financial regulators 
        and law enforcement agencies where sufficient privacy and 
        confidentiality safeguards exist.
            (4) Coordinate development by participants of a name-
        relationship index for persons engaged in the business of 
        conducting financial activities using existing information from 
        the databases of regulators.
            (5) Advise regulators in updating their antifraud databases 
        to better coordinate with the computer network.
            (6) Consider establishing a tracking and recordkeeping 
        procedure that allows a record of the inquiries made through 
        the network and the information transferred through the network 
        by one regulator to another to be maintained, in such manner as 
        the Subcommittee considers to be appropriate.
            (7) After the end of each year, transmit to the Congress a 
        summary of the coordination efforts undertaken by the 
        Subcommittee during the preceding year and a description of any 
        impediments to or recommended legislation for facilitating such 
        efforts.
    (b) Criteria for Network With Respect to Any Person Engaged in the 
Business of Conducting Financial Activities.--
            (1) Final disciplinary and formal enforcement actions.--
        Each regulator that is represented by a member of the 
        Subcommittee under section 101(a) or by a financial liaison to 
        the Subcommittee under section 101(b) shall allow any 
        participant access, through the network, to any public final 
        disciplinary or formal enforcement action by the member or 
        financial liaison which is accessible electronically relating 
        to fraudulent, wrongful, or dishonest conduct of persons 
        engaged in the business of conducting financial activities.
            (2) Other information.--Subject to such limitations and 
        criteria that may be established by any participant in 
        accordance with subsection (c) regarding the access to 
        information maintained by such participant and the requirements 
        of subsection (d), each participant may permit access through 
        the network to the following information as it relates to 
        persons engaged in the business of conducting financial 
        activities:
                    (A) To the extent the regulator determines the 
                disclosure to be appropriate and cost-effective, 
                information concerning--
                            (i) the registrations, licenses, approved 
                        applications, or notices that have been granted 
                        or approved by, or are otherwise within the 
                        regulatory jurisdiction of, the participant and 
                        are in effect with respect to any person 
                        engaged in the business of conducting financial 
                        activities; and
                            (ii) any significant affiliations or name-
                        relationships of such person on which the 
                        participant maintains records.
                    (B) To the extent the regulator determines the 
                disclosure to be appropriate, information concerning 
                investigations conducted by the participant, such as 
                the issuance of a notice of charges or on-going 
                investigations after notice has been provided to the 
                subject of the investigation, public notice has been 
                given, or some public action has been taken in 
                connection with the investigation.
                    (C) To the extent the participant determines the 
                disclosure to be appropriate, consumer complaints 
                relating to fraudulent activities or matters within the 
                jurisdiction of the requesting member or liaison.
                    (D) To the extent the appropriate Federal banking 
                agency and the Secretary of the Treasury may determine 
                the disclosure to be appropriate, suspicious activity 
                reports filed in accordance with section 5318(g) of 
                title 31, United States Code, and regulations 
                prescribed by the Secretary under such section, or 
pursuant to regulations prescribed by the appropriate Federal banking 
agency, particularly where such reports reference persons engaged in 
the business of conducting financial activities other than a depository 
institution or an institution-affiliated party (as defined in section 3 
of the Federal Deposit Insurance Act).
                    (E) To the extent the appropriate State insurance 
                commissioner determines the disclosure to be 
                appropriate, special activity reports from any State 
                insurance commissioner, including the National 
                Association of Insurance Commissioners only to the 
                extent such association is acting as the agent of, and 
                is subject to the oversight of, such insurance 
                commissioner.
                    (F) Any other regulatory or supervisory information 
                that any participant may determine to be appropriate to 
                provide access to through the network, including 
                financial records or examination reports.
            (3) Use of centralized databases.--
                    (A) In general.--A member or financial liaison 
                shall be deemed to have met the requirements of 
                paragraph (1) if the Subcommittee determines that the 
                participants have access to a centralized database that 
                contains information on public final disciplinary or 
                formal enforcement actions sufficiently similar to that 
                described in paragraph (1).
                    (B) Factors for determination.--The Subcommittee 
                shall make the determination under subparagraph (A) on 
                an ongoing basis, considering both short-term costs and 
                technological limitations, as well as the need for 
                long-term comprehensive coverage, and other appropriate 
                factors.
                    (C) State supervisors.--It is the sense of the 
                Congress that the National Association of Insurance 
                Commissioners, the Conference of State Bank 
                Supervisors, the National Association of State Credit 
                Union Supervisors, and the North American Securities 
                Administrators Association should develop model 
                guidelines for their respective regulated financial 
                industries, where appropriate, to promote uniform 
                standards for sharing information with the network 
                under this section.
    (c) Financial Regulator Control of Access.--
            (1) In general.--Except as provided in paragraph (4), each 
        participant that allows access to its databases by other 
        participants through the network may establish parameters for 
        controlling or limiting such access, including the regulation 
        of--
                    (A) the type or category of information that may be 
                accessed by other participants and the extent to which 
                any such type or category of information may be 
                accessed;
                    (B) the participants that may have access to the 
                database or any specific type or category of 
                information in the database; and
                    (C) The disclosure by any other participant of any 
                type or category of information that may be accessed by 
                the participant.
            (2) Procedures.--Any action by a participant under 
        paragraph (1) may be established by regulations, orders, or 
        guidelines or on a case-by-case basis.
            (3) Disclaimer.--
                    (A) In general.--The Subcommittee and a participant 
                shall ensure that any transfer of information under 
                this section, other than information described in 
                subsection (b)(1), from such participant to another 
                participant be subject to a disclaimer that the 
                information accessed may be unsubstantiated and may not 
                be relied on as the sole basis for denying any 
                application or license.
                    (B) Subcommittee flexibility.--The Subcommittee may 
                prescribe such guidelines or procedures as the 
                Subcommittee determines to be appropriate governing the 
                location and frequency of disclaimers under this 
                paragraph and the manner in which any such disclaimer 
                shall be made.
            (4) Final disciplinary and formal enforcement actions not 
        subject to limitation.--This subsection, and standards or 
        procedures adopted by any participant under this subsection, 
        shall not apply with respect to information described in 
        subsection (b)(1).
            (5) No effect on public or company access.--It is the sense 
        of the Congress that it is not the intent of this section to 
        replace, supersede, or otherwise affect access to any databases 
        existing on the date of the enactment of this Act which are 
        accessible by the public or persons engaged in the business of 
        conducting financial activities.
    (d) Eligibility Requirements for State Securities Administrators.--
No State securities administrator shall be eligible to be a participant 
and access the network maintained by the Subcommittee unless--
            (1) such State securities administrator participates in a 
        centralized database for broker-dealers, broker-dealer agents, 
        investment advisers, and investment advisor representatives, 
        registered or required to be registered, as designated by the 
        North American Securities Administrators Association; and
            (2) such State securities administrator requires the 
        broker-dealer, broker-dealer agent, investment adviser, or 
        investment adviser representative, currently registered or 
        required to be registered, to file any application, amendment 
        to an application, or a renewal of an application through the 
        centralized registration database.
    (e) Eligibility Requirements for State Insurance Commissioners.--
            (1) In general.--No State insurance commissioner shall be 
        eligible to access the network maintained by the Subcommittee 
        unless--
                    (A) such State insurance commissioner participates 
                with other State insurance commissioners in a 
                centralized database that, with respect to persons 
                engaged in the business of insurance, address--
                            (i) disciplinary actions taken against 
                        persons engaged in the business of insurance;
                            (ii) suspicious activities or ongoing 
                        investigations of persons engaged in the 
                        business of insurance;
                            (iii) consumer complaints concerning a 
                        person engaged in the business of insurance; 
                        and
                            (iv) corporate and other business 
                        affiliations or relationships; and
                    (B) the State insurance department which such 
                commissioner represents meets one of the following 
                accreditation requirements at the time of access to the 
                network:
                            (i) Is accredited by the National 
                        Association of Insurance Commissioners.
                            (ii) Has an application for accredited 
                        status pending with the National Association of 
                        Insurance Commissioners.
                            (iii) Has a determination by the 
                        Subcommittee in effect that such State 
                        insurance department meets or exceeds the 
                        standards established by the National 
                        Association of Insurance Commissioners for 
                        accreditation.
            (2) Qualification of naic networks.--A State insurance 
        commissioner shall be deemed to have met the requirements of 
        paragraph (1)(A) if the commissioner participates in--
                    (A) the following networks maintained by the 
                National Association of Insurance Commissioners:
                            (i) Producer Database.
                            (ii) Regulatory Information Retrieval 
                        System.
                            (iii) Special Activities Database.
                            (iv) Complaints Database; or
                    (B) each network or database designated by the 
                National Association of Insurance Commissioners as a 
                successor to any network described in subparagraph (A).
    (f) Subcommittee Standards.--The Subcommittee shall consider 
developing policies or guidelines for participants setting forth--
            (1) how to denote which types of information are to receive 
        different levels of privileges or confidential treatment; and
            (2) how entities or associations that act as agents for 
        financial regulators should denote such agency status when 
        acting in that capacity.
    (g) Deadline for Establishing Network.--The computer network which 
is required under subsection (a)(1) shall be established before the end 
of the 2-year period beginning on the date of the enactment of the 
Financial Services Antifraud Network Act of 2001 or such other time as 
the Subcommittee may determine to be appropriate.
    (h) Other Sharing Arrangements Not Affected.--No provision of this 
section shall be construed as limiting or otherwise affecting the 
authority of a participant to provide any person, including another 
participant, access to any information in accordance with any provision 
of law other than this Act.

SEC. 103. CHAIRPERSON; TERM OF CHAIRPERSON; MEETINGS; OFFICERS AND 
              STAFF.

    (a) Chairperson.--
            (1) Selection.--The Subcommittee shall select the 
        Chairperson of the Subcommittee from among the members of the 
        Subcommittee.
            (2) Term.--The term of the Chairperson shall be 2 years.
    (b) Meetings.--The Subcommittee shall meet at the call of the 
Chairperson or a majority of the members when there is business to be 
conducted.
    (c) Quorum.--A majority of members of the Subcommittee shall 
constitute a quorum.
    (d) Majority Vote.--Decisions of the Subcommittee shall be made by 
the vote of a majority of the members of the Subcommittee.
    (e) Officers and Staff.--The Chairperson of the Subcommittee shall 
appoint such officers and staff as may be necessary to carry out the 
functions of this title.

SEC. 104. PURPOSES OF THE SUBCOMMITTEE.

    The purposes of the Subcommittee shall include the purposes of this 
Act and the promotion of greater cross-industry efficiency, 
effectiveness, and coordination, in general, across all sectors of our 
Nation's financial markets.

SEC. 105. POWERS OF THE SUBCOMMITTEE.

    (a) In General.--The Subcommittee shall have such powers as are 
necessary to carry out the duties and functions under this section.
    (b) Information to Facilitate Coordination.--Each agency and entity 
represented by a member or liaison shall, to the extent permitted by 
law, provide the Subcommittee such information, concerning the 
databases maintained by the agency or entity, as the Subcommittee may 
require to perform the duties described in section 102(a).
    (c) Service of Members and Liaisons.--Members of and liaisons to 
the Subcommittee shall serve without additional compensation for their 
work on the Subcommittee.
    (d) Administrative and Technical Support.--The Subcommittee may 
request that any agency or entity represented by a member or liaison 
provide the Subcommittee with any administrative, technical, or other 
support service that the Subcommittee determines is necessary or 
appropriate for it to perform the duties described in section 102(a).

SEC. 106. AGREEMENT ON COST STRUCTURE.

    (a) In General.--The Subcommittee shall determine the means for 
providing for the necessary costs of carrying out the purposes of this 
title.
    (b) Consultation and Agreement on Fees and Contributions.--
Notwithstanding any other provision of this title, the Subcommittee may 
not impose any fee or assessment on, or apportion any contribution 
against, any member or liaison under this section in connection with 
allowing such member or liaison access through the network unless--
            (1) the Subcommittee consults with such member or liaison; 
        and
            (2) the member or liaison consents to the amounts, or on a 
        schedule, of such fees, assessments, or contributions.
    (c) Reimbursement of Participant Costs.--Before allowing access by 
the Subcommittee or a participant to any information described in 
section 102, other than access described in subsection (b)(1) of such 
section, a member or liaison may request the reimbursement of 
reasonable costs for providing such access.
    (d) Review of Optimal Networking Methods.--Before the end of the 
120-day period beginning on the date of the enactment of this Act, the 
Comptroller General shall submit a report to the Committee on Financial 
Services of the House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs of the Senate regarding the most efficient 
and cost-effective methods for the Subcommittee to fulfill its duties 
under this title.

SEC. 107. AGENCY SUPERVISORY PRIVILEGE.

    (a) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Supervisory process.--The term `supervisory process' 
        means any activity engaged in by a financial regulator to carry 
        out the official responsibilities of the financial regulator 
        with regard to the regulation or supervision of persons engaged 
        in the business of conducting financial activities.
            (2) Confidential supervisory information.--Subject to 
        paragraph (3), the term `confidential supervisory information' 
        means any of the following information, or any portion of any 
        such information, which is treated as, or considered to be, 
        confidential information by a financial regulator, regardless 
        of the form or format in which the information is created, 
        conveyed, or maintained:
                    (A) Any report of examination, inspection, 
                visitation, or investigation, and information prepared 
                or collected by the financial regulator in connection 
                with the supervisory process, including any computer 
                file, work paper, or similar information.
                    (B) Any correspondence or communication from a 
                financial regulator to a person engaged in the business 
                of conducting financial activities relating to an 
                examination, inspection, visitation, or investigation 
                by a financial regulator.
                    (C) Any correspondence, communication, or document, 
                including any compliance and other reports, created by 
                or on behalf of a person engaged in the business of 
                conducting financial activities in response to any 
                request, inquiry, or directive from a financial 
                regulator in connection with any examination, 
                inspection, visitation, or investigation and provided 
                to a financial regulator.
                    (D) Any record of a financial regulator to the 
                extent it contains information derived from any report, 
                correspondence, communication or other information 
                described in subparagraph (A), (B), or (C).
            (3) Ordinary business records excluded.--The term 
        `confidential supervisory information' shall not include--
                    (A) any book or record in the possession of the 
                person engaged in the business of conducting financial 
                activities that is routinely prepared by or on behalf 
                of such person and maintained in the ordinary course of 
                business; or
                    (B) any information required to be made publicly 
                available--
                            (i) by any applicable Federal law or 
                        regulation; or
                            (ii) in the case of confidential 
                        supervisory information of a State financial 
                        regulator, any applicable State law or 
                        regulation that specifically refers to such 
                        type of information.
    (b) Financial Regulator Supervisory Privilege.--
            (1) Privilege established.--
                    (A) In general.--All confidential supervisory 
                information shall be the property of the financial 
                regulator that created the information, or requested 
                the information from a person engaged in the business 
                of conducting financial activities, and shall be 
                privileged from disclosure to any other person.
                    (B) Prohibition on unauthorized disclosures.--No 
                person in possession of confidential supervisory 
                information may disclose such information, in whole or 
                in part, without the prior authorization of the 
                financial regulator that created the information, or 
                requested the information from a person engaged in the 
                business of conducting financial activities, except for 
                a disclosure made in published statistical material 
                that does not disclose, either directly or when used in 
                conjunction with publicly available information, the 
                affairs of any person.
                    (C) Agency waiver.--The financial regulator 
                described in subparagraph (A) may waive, in whole or in 
                part, in the discretion of the regulator, any privilege 
                established under this paragraph.
            (2) Exceptions.--
                    (A) In general.--No provision of paragraph (1) 
                shall be construed as preventing access to confidential 
                supervisory information by duly authorized committees 
                of the United States Congress or the Comptroller 
                General of the United States.
                    (B) Agency oversight.--No financial regulator which 
                is subject to the oversight of a Federal agency may 
                assert the privilege described in paragraph (1) to 
                prevent access to confidential supervisory information 
                by such Federal agency.
    (c) Treatment of Foreign Supervisory Information.--In any 
proceeding before a Federal or State court of the United States, in 
which a person seeks to compel production or disclosure by a foreign 
financial regulator with network access in accordance with section 
102(a)(3), any other financial regulator, or any other person, of 
information or a document prepared or collected by a foreign financial 
regulator that would, had they been prepared or collected by a Federal 
financial regulator, be confidential supervisory information for 
purposes of this section, the information or document shall be 
privileged to the same extent that the information and documents of 
Federal financial regulators are privileged under this title.
    (d) Other Privileges Not Waived by Disclosure to Financial 
Regulator.--The submission by a person engaged in the business of 
conducting financial activities of any information to a Federal 
financial regulator, a State financial regulator, or a foreign 
financial regulator described in subsection (c) for any purpose in the 
course of the supervisory process of such financial regulator shall not 
waive, destroy, or otherwise affect any privilege such person may claim 
with respect to such information under Federal or State law.
    (e) Discovery and Disclosure of Information.--
            (1) Information available only from financial regulator.--
                    (A) In general.--No person or financial regulator 
                may disclose, in whole or in part, any confidential 
                supervisory information to any person who seeks such 
                information through subpoena, discovery procedures, or 
                other process from any such person or regulator, except 
                that such information may be sought in accordance with 
                this section from the financial regulator that created 
                the information or requested the information from a 
                person engaged in the business of conducting financial 
                activity.
                    (B) Procedure for requests submitted to financial 
                regulator.--Any request for discovery or disclosure of 
                confidential supervisory information shall be made to 
                the financial regulator that created the information, 
                or requested the information from a person engaged in 
                the business of conducting financial activities, which 
                shall determine within a reasonable time period whether 
                to disclose such information pursuant to procedures and 
                criteria established by the financial regulator.
                    (C) Notification.--
                            (i) In general.--Before any financial 
                        regulator releases information that was 
                        requested from a person engaged in the business 
                        of conducting financial activities to a person 
                        under subparagraph (B), notice and a reasonable 
                        time for comment shall be provided to the 
                        person from whom such information was requested 
                        unless such information--
                                    (I) is being provided to another 
                                financial regulator, liaison, or 
                                Federal or State government (or any 
                                agency or instrumentality of any such 
                                government);
                                    (II) is being sought for use in a 
                                criminal proceeding or investigation or 
                                a regulatory or supervisory enforcement 
                                or disciplinary action or 
                                investigation; or
                                    (III) was originally created, or 
                                included in information created, by the 
                                financial regulator.
                            (ii) Procedures and requirements.--The 
                        notice and time period required by clause (i) 
                        shall be in accordance with the procedures and 
                        requirements that the financial regulator 
                        releasing the information may establish by 
                        regulation or otherwise.
            (2) Federal court jurisdiction over disputes.--
                    (A) In general.--In any action or proceeding in 
                which a party seeks to compel disclosure of 
                confidential supervisory information, a financial 
                regulator may, in its sole discretion, elect to remove 
                the action or proceeding on the disclosure issue to 
                Federal court, and any such Federal court shall have 
                exclusive jurisdiction.
                    (B) Judicial review.--Judicial review of the final 
                action of a financial regulator with regard to the 
                disposition of a request for confidential supervisory 
                information shall be before a district court of the 
                United States of competent jurisdiction, subject to 
                chapter 7 of part I of title 5, United States Code.
    (f) Authority to Intervene.--In the case of any action or 
proceeding to compel compliance with a subpoena, order, discovery 
request, or other judicial or administrative process with respect to 
any confidential supervisory information relating to any person engaged 
in the business of conducting financial activities, a financial 
regulator may intervene in such action or proceeding, and such person 
may intervene with such regulator, for the purpose of--
            (1) enforcing the limitations established in paragraph (1) 
        of subsections (b) and (e);
            (2) seeking the withdrawal of any compulsory process with 
        respect to such information; and
            (3) registering appropriate objections with respect to the 
        action or proceeding to the extent the action or proceeding 
        relates to or involves such information.
    (g) Right to Appeal.--Any court order that compels production of 
confidential supervisory information may be immediately appealed by the 
financial regulator and the order compelling production shall be 
automatically stayed, pending the outcome of such appeal.
    (h) Regulations.--
            (1) Authority to prescribe.--Each financial regulator may 
        prescribe such regulations as the regulator considers to be 
        appropriate, after consultation with the other financial 
        regulators (to the extent the prescribing financial regulator 
        considers appropriate and feasible), to carry out the purposes 
        of this section.
            (2) Authority to require notice.--Any regulations 
        prescribed by a financial regulator under paragraph (1) may 
        require any person in possession of confidential supervisory 
        information to notify the financial regulator whenever the 
        person is served with a subpoena, order, discovery request, or 
        other judicial or administrative process requiring the personal 
        attendance of such person as a witness or requiring the 
        production of such information in any proceeding.
    (i) Access in Accordance With Regulations and Orders.--
Notwithstanding any other provision of this section, a financial 
regulator may, without waiving any privilege, authorize access to 
confidential supervisory information created by such agency, or 
requested by such regulator from any person engaged in the business of 
conducting financial activities, for any appropriate governmental, law 
enforcement, or public purpose in accordance with agency regulations or 
orders.''.

SEC. 108. CONFIDENTIALITY OF INFORMATION.

    (a) In General.--
            (1) Financial regulators.--Except as otherwise provided in 
        this section or section 107, any requirement under Federal or 
        State law regarding the privacy or confidentiality of any 
        information or material in the possession of any participant to 
        the Subcommittee, and any privilege arising under Federal or 
        State law (including the rules of any Federal or State court) 
        with respect to such information or material, shall continue to 
        apply to such information or material--
                    (A) after the information or material has been 
                disclosed to another participant through the network; 
                and
                    (B) while the information or material is held by 
                the Subcommittee, whether acquired directly or through 
                the network.
            (2) Certain insurance information.--Except as otherwise 
        provided in this section or section 107, any requirement under 
        Federal or State law regarding the privacy or confidentiality 
        of any information or material in the possession of the 
        National Association of Insurance Commissioners, or any member 
        or affiliate of the Association, and any privilege arising 
        under Federal or State law (including the rules of any Federal 
        or State court) with respect to such information or material, 
        shall continue to apply to such information or material after 
        the information has been disclosed to the Association, or any 
        other member or affiliate of the Association, through the 
        computer network maintained by the Association.
            (3) Nonapplicability of certain requirements.--
                    (A) In general.--Information or material that is 
                subject to a privilege or confidentiality under any 
                other paragraph of this subsection shall not be subject 
                to--
                            (i) disclosure under any Federal or State 
                        law governing the disclosure to the public of 
                        information held by an officer or an agency of 
                        the Federal Government or the respective State; 
                        or
                            (ii) subpoena or discovery, or admission 
                        into evidence, in any private civil action or 
                        administrative process,
                unless with respect to any privilege held by a 
                participant with respect to such information or 
                material, the participant waives, in whole or in part, 
                in the discretion of the participant, such privilege.
            (4) Treatment of certain international financial 
        regulators.--Except as otherwise provided in this section or 
        section 107, any international regulator that is allowed by the 
        Subcommittee, pursuant to section 103(a)(3), to access the 
        network shall be considered to be a participant financial 
        regulator for purposes of this section and section 107.
    (b) Preemption of State Law.--Any State law relating to the 
disclosure of confidential supervisory information that is the property 
of any participant or any information or material to which subsection 
(a) applies that is inconsistent with any provision of section 107 or 
subsection (a) of this section shall be superseded by the requirements 
of such provision to the extent of the inconsistency.
    (c) Duty of Financial Regulator To Maintain Confidentiality.--A 
participant may not receive, download, copy, or otherwise maintain any 
information or material from any other member of or liaison to the 
Subcommittee through the network unless--
            (1) the participant maintains a system that enables the 
        participant to maintain full compliance with the requirements 
        of sections 102 and 107 and this section, with respect to such 
        information and material; and
            (2) if and to the extent required by the Subcommittee, a 
        record is maintained of each attempt to access such information 
        and material, and the identity of the person making the 
        attempt, in order to prevent evasions of such requirements.

SEC. 109. LIABILITY PROVISIONS.

    (a) No Liability for Good Faith Disclosures.--
            (1) In general.--An entity described in paragraph (2), the 
        members and affiliates of such entity, the officers and 
        employees of such entity, member, or affiliate, the 
        Subcommittee, and officers and employees of the Subcommittee 
        shall not be subject to any civil action or proceeding for 
        monetary damages by reason of the action or omission of any 
        officer or employee of such entity, member, affiliate, or 
        Subcommittee, while acting within the scope of his or her 
        office or employment, relating to collecting, furnishing, or 
        disseminating, directly or through any network maintained by 
        the entity or the Subcommittee, regulatory information, 
        including suspicious or special activity reports, concerning or 
        related to persons engaged in the business of conducting 
        financial activities.
            (2) Entities described.--The entities referred to in 
        paragraph (1) are as follows:
                    (A) The National Association of Insurance 
                Commissioners.
                    (B) The Conference of State Bank Supervisors.
                    (C) The North American Securities Administrators 
                Association.
                    (D) The National Association of Securities Dealers.
                    (E) The National Futures Association.
                    (F) The National Association of State Credit Union 
                Supervisors.
    (b) Criminal Liability for Intentional Unlawful Disclosures.--
Whoever willfully discloses to any person any information or material 
maintained by a participant concerning any person engaged in the 
business of conducting financial activities knowing the disclosure to 
be in violation of any provision of this title requiring the 
confidentiality of such information or material, or establishing a 
privilege from disclosure for any participant which has not been waived 
by the participant, shall be fined in accordance with title 18, United 
States Code, or imprisoned not more than 5 years, or both.
    (c) Full, Continued Protection Under the So-Called ``Federal Tort 
Claims Act''.--No provision of this Act shall be construed as reducing 
or limiting any protection provided for any Federal agency, or any 
officer or employee of any Federal agency, under section 2679 of title 
28, United States Code.

SEC. 110. AUTHORIZATION FOR IDENTIFICATION AND CRIMINAL BACKGROUND 
              CHECK.

    (a) Authorization and Duties of the Antifraud Subcommittee.--Upon 
the request of a financial regulator, the Antifraud Subcommittee 
shall--
            (1) obtain from the Attorney General criminal background 
        records corresponding to fingerprints or other biometric 
        identification provided by the Subcommittee; and
            (2) screen the records obtained under paragraph (1) to 
        provide to the requesting financial regulator (or such 
        regulator's designated representative under subsection (i)(1)) 
        any information relating to any crime for which a person could 
        be barred under Federal law by such regulator with respect to 
        the financial activities over which the regulator has 
        jurisdiction.
    (b) Form of Request.--A request under subsection (a) shall include 
a copy of any necessary identification information required by the 
Attorney General, such as the name and fingerprints of the person about 
whom the record is requested and a statement signed by the person 
acknowledging that the regulator (or such regulator's designated 
representative under subsection (i)(1)) may request the search.
    (c) Attorney General Authorization.--Upon receiving a request 
described in subsection (b), the Attorney General shall--
            (1) search the records of the Criminal Justice Information 
        Services Division of the Federal Bureau of Investigation, and 
        any other similar database over which the Attorney General has 
        authority and deems appropriate, for any criminal background 
        records (including wanted persons information) corresponding to 
        the identification information provided under subsection (b); 
        and
            (2) provide such records to the Subcommittee for screening.
    (d) Permissible Uses of Information.--A financial regulator may use 
information obtained under this section for regulatory or law 
enforcement purposes and disclose such information to any other 
financial regulator or Federal or State governmental agency, for 
regulatory or law enforcement purposes, if the recipient agrees to 
maintain the confidentiality of such records.
    (e) Limitation on Use of Information.--Information obtained under 
this section may be used only--
            (1) by the authorized recipient of such information; and
            (2) for the purpose of determining the suitability of the 
        person about whom the information is obtained for engaging in 
        the business of conducting financial activities.
    (f) Penalty for Improper Use.--Whoever knowingly uses any 
information obtained under this section for an unauthorized purpose 
shall be imprisoned for not more than 2 years or fined under title 18, 
United States Code, or both.
    (g) Reliance on Information.--A financial regulator (or such 
regulator's designated representative under subsection (i)(1)) who 
reasonably relies on information provided under this section shall not 
be liable in any action based on an employment determination resulting 
from the incompleteness or inaccuracy of such information.
    (h) Safe Harbor.--No person engaged in the business of conducting 
financial activities shall be subject to any civil action or proceeding 
for monetary damages or any action brought under section 1033(e)(1)(B) 
of title 18, United States Code, for permitting an individual to engage 
in the business of conducting financial activities in violation of 
section 1033(e)(1)(A) of such title, if such individual is licensed, or 
approved (as part of an application or otherwise), by a financial 
regulator that performs criminal background checks under this section, 
unless such person has actual knowledge that the individual is in 
violation of section 1033(e)(1)(A) of such title and that the violation 
would not be known to the financial regulator.
    (i) Designation of Representative.--
            (1) In general.--A financial regulator may designate a 
        representative, to be approved by the Antifraud Subcommittee, 
        for facilitating requests and exchanges of information under 
        this section between the financial regulator and the 
        Subcommittee.
            (2) Sense of congress regarding representatives of 
        insurance regulators.--It is the sense of the Congress that--
                    (A) each State insurance commissioner should 
                designate the National Association of Insurance 
                Commissioners as a representative under paragraph (1);
                    (B) persons engaged in the business of insurance 
                should be able to use the National Association of 
                Insurance Commissioners to facilitate obtaining 
                fingerprints and supplying identification information 
                for use in background checks under this section on a 
                multijurisdictional basis;
                    (C) the National Association of Insurance 
                Commissioners should maintain a database to obtain 
                records under this section for use by State insurance 
                commissioners to reduce multiple or duplicative 
                fingerprinting requirements and criminal background 
                checks; and
                    (D) other financial regulators that require 
                fingerprints and criminal background checks should 
                similarly coordinate efforts to reduce duplication for 
                persons engaged in the business of conducting multiple 
                types financial activities.
    (j) Sense of Congress Regarding Use of Detailees.--It is the sense 
of the Congress that a criminal background records screening described 
in subsection (a)(2) may be performed by a detailee of the requesting 
financial regulator (or such regulator's designated representative 
under subsection (i)(1)), if such detailee does not disclose to such 
regulator (or representative) information from such records other than 
the resulting screened information described in subsection (a)(2).
    (k) Fees.--The Attorney General and the Antifraud Subcommittee may 
charge a reasonable fee for the provision of information under this 
section.
    (l) Rule of Construction.--This section shall not be interpreted--
            (1) to provide independent authorization for a financial 
        regulator to require fingerprinting as a part of a licensure or 
        other application; or
            (2) to require a financial regulator to perform criminal 
        background checks under this section.
    (m) Regulations.--The Attorney General may prescribe regulations to 
carry out this section.

SEC. 111. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Federal banking agency.--The term ``Federal banking 
        agency'' has the same meaning as given in section 3(z) of the 
        Federal Deposit Insurance Act.
            (2) Financial activities.--The term ``financial 
        activities'' means activities that are financial in nature or 
        are incidental to a financial activity (as defined under 
        section 4(k) of the Bank Holding Company Act of 1956).
            (3) Financial regulator.--The term ``financial regulator'' 
        means--
                    (A) each Federal banking agency;
                    (B) the Securities and Exchange Commission;
                    (C) the Commodity Futures Trading Commission;
                    (D) the National Credit Union Administration;
                    (E) the Farm Credit Administration;
                    (F) the Federal Housing Finance Board;
                    (G) the Federal Trade Commission, with respect to 
                creditors subject to the jurisdiction of the Commission 
                under section 108(c) of the Truth in Lending Act;
                    (H) the Director of the Office of Federal Housing 
                Enterprise Oversight of the Department of Housing and 
                Urban Development;
                    (I) any State bank supervisor (as defined in 
                section 3(r) of the Federal Deposit Insurance Act), 
                including the Conference of State Bank Supervisors only 
                to the extent--
                            (i) such conference is acting as an agent 
                        of, and is subject to the oversight of, any 
                        such State bank supervisor; and
                            (ii) the conference provides notice to the 
                        Subcommittee when it is acting in such capacity 
                        as an agent;
                    (J) any State insurance commissioner, including the 
                National Association of Insurance Commissioners only to 
                the extent--
                            (i) such association is acting as the agent 
                        of, and is subject to the oversight of, any 
                        such insurance commissioner; and
                            (ii) the association provides notice to the 
                        Subcommittee when it is acting in such capacity 
                        as an agent;
                    (K) any State securities administrator, including 
                the North American Securities Administrators 
                Association only to the extent--
                            (i) such association is acting as the agent 
                        of, and is subject to the oversight of, any 
                        such securities administrator; and
                            (ii) the association provides notice to the 
                        Subcommittee when it is acting in such capacity 
                        as an agent;
                    (L) any State credit union supervisor, including 
                the National Association of State Credit Union 
                Supervisors only to the extent--
                            (i) such association is acting as the agent 
                        of, and is subject to the oversight of, any 
                        such credit union supervisor; and
                            (ii) the association provides notice to the 
                        Subcommittee when it is acting in such capacity 
                        as an agent;
                    (M) the National Association of Securities Dealers, 
                only to the extent that--
                            (i) such association is acting in 
                        connection with the financial services industry 
                        and is subject to the oversight of the 
                        Securities and Exchange Commission; and
                            (ii) the association provides notice to the 
                        Subcommittee when it is acting in such 
                        capacity;
                    (N) the National Futures Association, only to the 
                extent that--
                            (i) such association is acting in 
                        connection with the financial services industry 
                        and is subject to the oversight of the 
                        Commodity Futures Trading Commission or the 
                        Securities and Exchange Commission; and
                            (ii) the association provides notice to the 
                        Subcommittee when it is acting in such 
                        capacity; and
                    (O) any other self-regulatory organization that 
                engages in or coordinates regulatory and enforcement 
                activities, with respect to any person engaged in the 
                business of conducting financial activities, that is 
                subject to the oversight of the Securities and Exchange 
                Commission or the Commodity Futures Trading Commission.
            (4) Participant.--The term ``participant'' means any 
        regulator which--
                    (A) is represented by a member of, or a liaison to, 
                the Subcommittee; and
                    (B) is allowed access to the network by the 
                Subcommittee.
            (5) Person engaged in the business of conducting financial 
        activities.--The term ``person engaged in the business of 
        conducting financial activities'' includes, to the extent 
        appropriate under the laws applicable to the jurisdiction of a 
        financial regulator over such person--
                    (A) any director, officer, employee, or controlling 
                stockholder of, or agent for, any such person;
                    (B) any other person who has filed or is required 
                to file a change-in-control notice with the appropriate 
                financial regulator before acquiring control of such 
                person; and
                    (C) any shareholder, consultant, joint venture 
                partner, and any other person, including an independent 
                contractor, as determined by the appropriate financial 
                regulator (by regulation or case-by-case) who 
                participates in the conduct of the affairs of such 
                person.
            (6) State insurance commissioner.--The term ``State 
        insurance commissioner'' means any officer, agency, or other 
        entity of any State which has primary regulatory authority over 
        the business of insurance and over any person engaged in the 
        business of insurance to the extent of such activities, in such 
        State.
            (7) State securities administrator.--The term ``State 
        securities administrator'' means the securities commission (or 
        any agency or office performing like functions) of any State.

SEC. 112. TECHNICAL AND CONFORMING AMENDMENTS TO OTHER ACTS.

    (a) Subsection (b) of section 552a of title 5, United States Code, 
is amended--
            (1) by striking ``or'' at the end of paragraph (11);
            (2) by striking the period at the end of paragraph (12) and 
        inserting ``; or''; and
            (3) by inserting after paragraph (12) the following new 
        paragraph:
            ``(13) for recordkeeping, licensing, and other regulatory 
        and law enforcement purposes in accordance with title I of the 
        Financial Services Antifraud Network Act of 2001--
                    ``(A) through a computer network or name-
                relationship index maintained by the Antifraud 
                Subcommittee under such title; or
                    ``(B) to a multistate database maintained by the 
                National Association of Insurance Commissioners and any 
                subsidiary or affiliate of such association, subject to 
                the requirements of such title.''.
    (b) Section 1113 of the Financial Institutions Regulatory and 
Interest Rate Control Act of 1978 (12 U.S.C. 3413) is amended by adding 
at the end the following new subsection:
    ``(r) This title shall not apply to disclosure by a financial 
regulator represented by a member of or liaison to the Antifraud 
Subcommittee of information which is subject to section 107 or 108 of 
the Financial Services Antifraud Network Act of 2001 to the extent the 
disclosure is made in accordance with the requirements of such Act.''.

               TITLE II--SECURITIES INDUSTRY COORDINATION

                  Subtitle A--Disciplinary Information

SEC. 201. INVESTMENT ADVISERS ACT OF 1940.

    Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
4) is amended--
            (1) by striking ``Every investment'' and inserting the 
        following:
    ``(a) In General.--Every investment''; 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 fee, application, 
        report, or notice required to be filed by this title or the 
        rules issued under this title through any 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 the 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 regarding 
                disciplinary actions and proceedings and other 
                information involving investment advisers and persons 
                associated with investment advisers; 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 actions taken or omitted in good faith 
        under this subsection.''.

SEC. 202. SECURITIES EXCHANGE ACT OF 1934.

    Subsection (i) of section 15A of the Securities Exchange Act of 
1934 (15 U.S.C. 78o-3) is amended to read as follows:
    ``(i) Obligation To Maintain Disciplinary and Other Data.--
            ``(1) Maintenance of system to respond to inquiries.--A 
        registered securities association shall--
                    ``(A) establish and maintain a toll-free telephone 
                listing or other readily accessible electronic process 
                to receive inquiries regarding disciplinary actions and 
                proceedings and other information involving its members 
                and their associated persons and regarding disciplinary 
                actions and proceedings and other information that has 
                been reported to the Central Registration Depository by 
                any registered national securities exchange involving 
                its members and their associated persons; and
                    ``(B) promptly respond to such inquiries.
            ``(2) Recovery of costs.--Such association may charge 
        persons, other than individual investors, reasonable fees for 
        responses to such inquiries.
            ``(3) Limitation on liability.--Such an association or 
        exchange shall not have any liability to any person for any 
        actions taken or omitted in good faith under this 
        subsection.''.

 Subtitle B--Preventing Migration of Rogue Financial Professionals to 
                        the Securities Industry

SEC. 211. SECURITIES EXCHANGE ACT OF 1934.

    (a) Brokers and Dealers.--Section 15(b) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78o(b)) is amended--
            (1) in paragraph (4), by striking subparagraphs (F) and (G) 
        and inserting the following:
            ``(F) is subject to any order of the Commission barring or 
        suspending the right of the person to be associated with a 
        broker or dealer.
            ``(G) has been found by a foreign financial regulatory 
        authority to have--
                    ``(i) made or caused to be made in any application 
                for registration or report required to be filed with a 
                foreign financial regulatory authority, or in any 
                proceeding before a foreign financial regulatory 
                authority with respect to registration, any statement 
                that was at the time and in the light of the 
                circumstances under which it was made false or 
                misleading with respect to any material fact, or 
                omitted to state in any such application, report, or 
                proceeding any material fact that is required to be 
                stated therein;
                    ``(ii) violated any foreign statute or regulation 
                regarding securities, banking, thrift activities, 
                credit union activities, insurance, or contracts of 
                sale of a commodity for future delivery, traded on or 
                subject to the rules of a contract market or any board 
                of trade; or
                    ``(iii) aided, abetted, counseled, commanded, 
                induced, or procured the violation by any other person 
                of any provision of any statutory provisions enacted by 
                a foreign government, or rules or regulations 
                thereunder, regarding securities, banking, thrift 
                activities, credit union activities, insurance, or 
                contracts of sale of a commodity for future delivery 
                traded on or subject to the rules of a contract market 
                or any board of trade, or to have failed reasonably to 
                supervise, with a view to preventing violations of such 
                statutory provisions, rules, and regulations, another 
                person who commits such a violation, if such other 
                person is subject to his supervision.
            ``(H) is subject to any final order of a State securities 
        commission (or any agency or officer performing like 
        functions), State authority that supervises or examines banks, 
        thrifts, or credit unions, State insurance commission (or any 
        agency or office performing like functions), an appropriate 
        Federal banking agency (as defined in section 3 of the Federal 
        Deposit Insurance Act (12 U.S.C. 1813(q)), or the National 
        Credit Union Administration, that--
                    ``(i) bars such person from association with an 
                entity regulated by such commission, authority, agency, 
                or officer, or from engaging in the business of 
                securities, insurance, banking, thrift activities, or 
                credit union activities; or
                    ``(ii) constitutes a final order based on 
                violations of any laws or regulations that prohibit 
                fraudulent, manipulative, or deceptive conduct.''; and
            (2) in paragraph (6)(A)(i), by striking ``or omission 
        enumerated in subparagraph (A), (D), (E), or (G)'' and 
        inserting ``, or is subject to an order or finding, enumerated 
        in subparagraph (A), (D), (E), (G), or (H)''.
    (b) Municipal Securities Brokers and Dealers.--Section 15B(c) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(c)) is amended--
            (1) in paragraph (2)--
                    (A) by striking ``or omission enumerated in 
                subparagraph (A), (D), (E), or (G)'' and inserting ``, 
                or is subject to an order or finding, enumerated in 
                subparagraph (A), (D), (E), (G), or (H)''; and
                    (B) by striking ``ten'' and inserting ``10'';
            (2) in paragraph (4)--
                    (A) by striking ``or omission enumerated in 
                subparagraph (A), (D), (E), or (G)'' and inserting ``, 
                or is subject to an order or finding, enumerated in 
                subparagraph (A), (D), (E), (G), or (H)'' and
                    (B) by striking ``ten'' and inserting ``10'';
    (c) Government Securities Brokers and Dealers.--Section 15C(c)(1) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78o-5(c)(1)) is 
amended--
            (1) in subparagraph (A), by striking ``or omission 
        enumerated in subparagraph (A), (D), (E), or (G)'' and 
        inserting ``, or is subject to an order or finding, enumerated 
        in subparagraph (A), (D), (E), (G), or (H)''; and
            (2) in subparagraph (C), by striking ``or omission 
        enumerated in subparagraph (A), (D), (E), or (G)'' and 
        inserting ``, or is subject to an order or finding, enumerated 
        in subparagraph (A), (D), (E), (G), or (H)''.
    (d) Clearance and Settlement.--Section 17A(c) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78q-1(c)) is amended--
            (1) in paragraph (3)(A), by striking ``enumerated in 
        subparagraph (A), (D), (E), or (G)'' and inserting ``, or is 
        subject to an order or finding, enumerated in subparagraph (A), 
        (D), (E), (G), or (H)''; and
            (2) in paragraph (4)(C)--
                    (A) by striking ``enumerated in subparagraph (A), 
                (D), (E), or (G)'' and inserting ``, or is subject to 
                an order or finding, enumerated in subparagraph (A), 
                (D), (E), (G), or (H)''; and
                    (B) by striking ``ten years'' and inserting ``10 
                years''.
    (e) Definition of Statutory Disqualification.--Section 3(a)(39)(F) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(39)(F)) is 
amended by striking ``has committed or omitted any act enumerated in 
subparagraph (D), (E), or (G)'' and inserting ``has committed or 
omitted any act, or is subject to an order or finding, enumerated in 
subparagraph (D), (E), (G), or (H)''.

SEC. 212. INVESTMENT ADVISERS ACT OF 1940.

    (a) Authority To Deny or Revoke Registration Based on State (and 
Other Governmental) Administrative Actions.--Section 203(e) of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-3(e)) is amended by 
striking paragraphs (7) and (8) and inserting the following:
            ``(7) is subject to any order of the Commission barring or 
        suspending the right of the person to be associated with an 
        investment adviser.
            ``(8) has been found by a foreign financial regulatory 
        authority, State securities commission (or any State agency or 
        officer performing similar functions), State authority that 
        supervises or examines banks, thrifts, or credit unions, State 
        insurance commission (or any State agency or officer performing 
        similar functions), any appropriate Federal banking agency (as 
        such term is defined in section 3 of the Federal Deposit 
        Insurance Act (12 U.S.C. 1813(q)), or the National Credit Union 
        Administration to have--
                    ``(A) made or caused to be made in any application 
                for registration or report required to be filed with, 
                or in any proceeding before, the authority, commission, 
                or agency any statement that was, at the time and in 
                light of the circumstances under which it was made, 
                false or misleading with respect to any material fact, 
                or omitted to state in any application or report filed 
                with, or in any proceeding before, the authority, 
                commission, or agency any material fact that is 
                required to be stated in the application, report, or 
                proceeding;
                    ``(B) violated any foreign, State, or Federal 
                statute or regulation regarding securities, insurance, 
                banking, thrift activities, credit union activities, or 
                contracts of sale of a commodity for future delivery 
                traded on or subject to the rules of a contract market 
                or any board of trade; or
                    ``(C) aided, abetted, counseled, commanded, 
                induced, or procured the violation by any other person 
                of any foreign, State, or Federal statute or regulation 
                regarding securities, insurance, banking, thrift 
                activities, credit union activities, or contracts of 
                sale of a commodity for future delivery traded on or 
                subject to the rules of a contract market or any board 
                of trade, or failed reasonably to supervise, with a 
                view to preventing violations of any such statute or 
                regulation, another person who commits such a 
                violation, if the other person is subject to his or its 
                supervision.''.
    (b) Bars on Felons Associated With Investment Advisers.--Section 
203(f) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(f)) is 
amended by inserting ``or (3)'' after ``paragraph (2)''.
                                 <all>