[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1196 Enrolled Bill (ENR)]

        S.1196

                      One Hundred Seventh Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

         Begun and held at the City of Washington on Wednesday,
             the third day of January, two thousand and one


                                 An Act


 
   To amend the Small Business Investment Act of 1958, and for other 
                                purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Investment Company 
Amendments Act of 2001''.

SEC. 2. SUBSIDY FEES.

    (a) In General.--Section 303 of the Small Business Investment Act 
of 1958 (15 U.S.C. 683) is amended--
        (1) in subsection (b)--
            (A) by striking ``of not more than 1 percent per year'';
            (B) by inserting ``which amount may not exceed 1.38 percent 
        per year, and'' before ``which shall be paid''; and
            (C) by striking ``September 30, 2000'' and inserting 
        ``September 30, 2001''; and
        (2) in subsection (g)(2)--
            (A) by striking ``of not more than 1 percent per year'';
            (B) by inserting ``which amount may not exceed 1.38 percent 
        per year, and'' before ``which shall be paid''; and
            (C) by striking ``September 30, 2000'' and inserting 
        ``September 30, 2001''.
    (b) Effective Date.--The amendments made by this section shall 
become effective on October 1, 2001.

SEC. 3. CONFLICTS OF INTEREST.

    Section 312 of the Small Business Investment Act of 1958 (15 U.S.C. 
687d) is amended by striking ``(including disclosure in the locality 
most directly affected by the transaction)''.

SEC. 4. PENALTIES FOR FALSE STATEMENTS.

    (a) Criminal Penalties.--Section 1014 of title 18, United States 
Code, is amended by inserting ``, as defined in section 103 of the 
Small Business Investment Act of 1958 (15 U.S.C. 662), or the Small 
Business Administration in connection with any provision of that Act'' 
after ``small business investment company''.
    (b) Civil Penalties.--Section 951 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833a) is 
amended--
        (1) by redesignating subsections (d) through (g) as subsections 
    (e) through (h), respectively; and
        (2) in subsection (c)--
            (A) in paragraph (1), by striking ``or'' at the end;
            (B) in paragraph (2)--
                (i) by striking ``1341;'' and inserting ``1341''; and
                (ii) by striking ``institution.'' and inserting 
            ``institution; or'';
            (C) by inserting immediately after paragraph (2) the 
        following:
        ``(3) section 16(a) of the Small Business Act (15 U.S.C. 
    645(a)).''; and
            (D) by striking ``This section shall'' and inserting the 
        following:
    ``(d) Effective Date.--This section shall''.

SEC. 5. REMOVAL OR SUSPENSION OF MANAGEMENT OFFICIALS.

    Section 313 of the Small Business Investment Act of 1958 (15 U.S.C. 
687e) is amended to read as follows:

``SEC. 313. REMOVAL OR SUSPENSION OF MANAGEMENT OFFICIALS.

    ``(a) Definition of `Management Official'.--In this section, the 
term `management official' means an officer, director, general partner, 
manager, employee, agent, or other participant in the management or 
conduct of the affairs of a licensee.
    ``(b) Removal of Management Officials.--
        ``(1) Notice of removal.--The Administrator may serve upon any 
    management official a written notice of its intention to remove 
    that management official whenever, in the opinion of the 
    Administrator--
            ``(A) such management official--
                ``(i) has willfully and knowingly committed any 
            substantial violation of--

                    ``(I) this Act;
                    ``(II) any regulation issued under this Act; or
                    ``(III) a cease-and-desist order which has become 
                final; or

                ``(ii) has willfully and knowingly committed or engaged 
            in any act, omission, or practice which constitutes a 
            substantial breach of a fiduciary duty of that person as a 
            management official; and
            ``(B) the violation or breach of fiduciary duty is one 
        involving personal dishonesty on the part of such management 
        official.
        ``(2) Contents of notice.--A notice of intention to remove a 
    management official, as provided in paragraph (1), shall contain a 
    statement of the facts constituting grounds therefor, and shall fix 
    a time and place at which a hearing will be held thereon.
        ``(3) Hearings.--
            ``(A) Timing.--A hearing described in paragraph (2) shall 
        be fixed for a date not earlier than 30 days nor later than 60 
        days after the date of service of notice of the hearing, unless 
        an earlier or a later date is set by the Administrator at the 
        request of--
                ``(i) the management official, and for good cause 
            shown; or
                ``(ii) the Attorney General of the United States.
            ``(B) Consent.--Unless the management official shall appear 
        at a hearing described in this paragraph in person or by a duly 
        authorized representative, that management official shall be 
        deemed to have consented to the issuance of an order of removal 
        under paragraph (1).
        ``(4) Issuance of order of removal.--
            ``(A) In general.--In the event of consent under paragraph 
        (3)(B), or if upon the record made at a hearing described in 
        this subsection, the Administrator finds that any of the 
        grounds specified in the notice of removal has been 
        established, the Administrator may issue such orders of removal 
        from office as the Administrator deems appropriate.
            ``(B) Effectiveness.--An order under subparagraph (A) 
        shall--
                ``(i) become effective at the expiration of 30 days 
            after the date of service upon the subject licensee and the 
            management official concerned (except in the case of an 
            order issued upon consent as described in paragraph (3)(B), 
            which shall become effective at the time specified in such 
            order); and
                ``(ii) remain effective and enforceable, except to such 
            extent as it is stayed, modified, terminated, or set aside 
            by action of the Administrator or a reviewing court in 
            accordance with this section.
    ``(c) Authority to Suspend or Prohibit Participation.--
        ``(1) In general.--The Administrator may, if the Administrator 
    deems it necessary for the protection of the licensee or the 
    interests of the Administration, suspend from office or prohibit 
    from further participation in any manner in the management or 
    conduct of the affairs of the licensee, or both, any management 
    official referred to in subsection (b)(1), by written notice to 
    such effect served upon the management official.
        ``(2) Effectiveness.--A suspension or prohibition under 
    paragraph (1)--
            ``(A) shall become effective upon service of notice under 
        paragraph (1); and
            ``(B) unless stayed by a court in proceedings authorized by 
        paragraph (3), shall remain in effect--
                ``(i) pending the completion of the administrative 
            proceedings pursuant to a notice of intention to remove 
            served under subsection (b); and
                ``(ii) until such time as the Administrator shall 
            dismiss the charges specified in the notice, or, if an 
            order of removal or prohibition is issued against the 
            management official, until the effective date of any such 
            order.
        ``(3) Judicial review.--Not later than 10 days after any 
    management official has been suspended from office or prohibited 
    from participation in the management or conduct of the affairs of a 
    licensee, or both, under paragraph (1), that management official 
    may apply to the United States district court for the judicial 
    district in which the home office of the licensee is located, or 
    the United States District Court for the District of Columbia, for 
    a stay of the suspension or prohibition pending the completion of 
    the administrative proceedings pursuant to a notice of intent to 
    remove served upon the management official under subsection (b), 
    and such court shall have jurisdiction to stay such action.
    ``(d) Authority To Suspend on Criminal Charges.--
            ``(1) In general.--Whenever a management official is 
        charged in any information, indictment, or complaint authorized 
        by a United States attorney, with the commission of or 
        participation in a felony involving dishonesty or breach of 
        trust, the Administrator may, by written notice served upon 
        that management official, suspend that management official from 
        office or prohibit that management official from further 
        participation in any manner in the management or conduct of the 
        affairs of the licensee, or both.
            ``(2) Effectiveness.--A suspension or prohibition under 
        paragraph (1) shall remain in effect until the subject 
        information, indictment, or complaint is finally disposed of, 
        or until terminated by the Administrator.
            ``(3) Authority upon conviction.--If a judgment of 
        conviction with respect to an offense described in paragraph 
        (1) is entered against a management official, then at such time 
        as the judgment is not subject to further appellate review, the 
        Administrator may issue and serve upon the management official 
        an order removing that management official, which removal shall 
        become effective upon service of a copy of the order upon the 
        licensee.
            ``(4) Authority upon dismissal or other disposition.--A 
        finding of not guilty or other disposition of charges described 
        in paragraph (1) shall not preclude the Administrator from 
        thereafter instituting proceedings to suspend or remove the 
        management official from office, or to prohibit the management 
        official from participation in the management or conduct of the 
        affairs of the licensee, or both, pursuant to subsection (b) or 
        (c).
    ``(e) Notification to Licensees.--Copies of each notice required to 
be served on a management official under this section shall also be 
served upon the interested licensee.
    ``(f) Procedural Provisions; Judicial Review.--
        ``(1) Hearing venue.--Any hearing provided for in this section 
    shall be--
            ``(A) held in the Federal judicial district or in the 
        territory in which the principal office of the licensee is 
        located, unless the party afforded the hearing consents to 
        another place; and
            ``(B) conducted in accordance with the provisions of 
        chapter 5 of title 5, United States Code.
        ``(2) Issuance of orders.--After a hearing provided for in this 
    section, and not later than 90 days after the Administrator has 
    notified the parties that the case has been submitted for final 
    decision, the Administrator shall render a decision in the matter 
    (which shall include findings of fact upon which its decision is 
    predicated), and shall issue and cause to be served upon each party 
    to the proceeding an order or orders consistent with the provisions 
    of this section.
        ``(3) Authority to modify orders.--The Administrator may 
    modify, terminate, or set aside any order issued under this 
    section--
            ``(A) at any time, upon such notice, and in such manner as 
        the Administrator deems proper, unless a petition for review is 
        timely filed in a court of appeals of the United States, as 
        provided in paragraph (4)(B), and thereafter until the record 
        in the proceeding has been filed in accordance with paragraph 
        (4)(C); and
            ``(B) upon such filing of the record, with permission of 
        the court.
        ``(4) Judicial review.--
            ``(A) In general.--Judicial review of an order issued under 
        this section shall be exclusively as provided in this 
        subsection.
            ``(B) Petition for review.--Any party to a hearing provided 
        for in this section may obtain a review of any order issued 
        pursuant to paragraph (2) (other than an order issued with the 
        consent of the management official concerned, or an order 
        issued under subsection (d)), by filing in the court of appeals 
        of the United States for the circuit in which the principal 
        office of the licensee is located, or in the United States 
        Court of Appeals for the District of Columbia Circuit, not 
        later than 30 days after the date of service of such order, a 
        written petition praying that the order of the Administrator be 
        modified, terminated, or set aside.
            ``(C) Notification to administration.--A copy of a petition 
        filed under subparagraph (B) shall be forthwith transmitted by 
        the clerk of the court to the Administrator, and thereupon the 
        Administrator shall file in the court the record in the 
        proceeding, as provided in section 2112 of title 28, United 
        States Code.
            ``(D) Court jurisdiction.--Upon the filing of a petition 
        under subparagraph (A)--
                ``(i) the court shall have jurisdiction, which, upon 
            the filing of the record under subparagraph (C), shall be 
            exclusive, to affirm, modify, terminate, or set aside, in 
            whole or in part, the order of the Administrator, except as 
            provided in the last sentence of paragraph (3)(B);
                ``(ii) review of such proceedings shall be had as 
            provided in chapter 7 of title 5, United States Code; and
                ``(iii) the judgment and decree of the court shall be 
            final, except that the judgment and decree shall be subject 
            to review by the Supreme Court of the United States upon 
            certiorari, as provided in section 1254 of title 28, United 
            States Code.
            ``(E) Judicial review not a stay.--The commencement of 
        proceedings for judicial review under this paragraph shall not, 
        unless specifically ordered by the court, operate as a stay of 
        any order issued by the Administrator under this section.''.

SEC. 6. REDUCTION OF FEES.

    (a) Two-Year Reduction of Section 7(a) Fees.--
        (1) Guarantee fees.--Section 7(a)(18) of the Small Business Act 
    (15 U.S.C. 636(a)(18)) is amended by adding at the end the 
    following:
            ``(C) Two-year reduction in fees.--With respect to loans 
        approved during the 2-year period beginning on October 1, 2002, 
        the guarantee fee under subparagraph (A) shall be as follows:
                ``(i) A guarantee fee equal to 1 percent of the 
            deferred participation share of a total loan amount that is 
            not more than $150,000.
                ``(ii) A guarantee fee equal to 2.5 percent of the 
            deferred participation share of a total loan amount that is 
            more than $150,000, but not more than $700,000.
                ``(iii) A guarantee fee equal to 3.5 percent of the 
            deferred participation share of a total loan amount that is 
            more than $700,000.''.
        (2) Annual fees.--Section 7(a)(23)(A) of the Small Business Act 
    (15 U.S.C. 636(a)(23)(A)) is amended by adding at the end the 
    following: ``With respect to loans approved during the 2-year 
    period beginning on October 1, 2002, the annual fee assessed and 
    collected under the preceding sentence shall be in an amount equal 
    to 0.25 percent of the outstanding balance of the deferred 
    participation share of the loan.''.
    (b) Reduction of Section 504 Fees.--Section 503 of the Small 
Business Investment Act of 1958 (15 U.S.C. 697) is amended--
        (1) in subsection (b)(7)(A)--
            (A) by redesignating clauses (i) and (ii) as subclauses (I) 
        and (II), respectively, and moving the margins 2 ems to the 
        right;
            (B) by striking ``not exceed the lesser'' and inserting 
        ``not exceed--
                ``(i) the lesser''; and
            (C) by adding at the end the following:
                ``(ii) 50 percent of the amount established under 
            clause (i) in the case of a loan made during the 2-year 
            period beginning on October 1, 2002, for the life of the 
            loan; and''; and
        (2) by adding at the end the following:
    ``(i) Two-Year Waiver of Fees.--The Administration may not assess 
or collect any up front guarantee fee with respect to loans made under 
this title during the 2-year period beginning on October 1, 2002.''.
    (c) Budgetary Treatment of Loans and Financings.--Assistance made 
available under any loan made or approved by the Small Business 
Administration under section 7(a) of the Small Business Act (15 U.S.C. 
636(a)) or financings made under title V of the Small Business 
Investment Act of 1958 (15 U.S.C. 695 et seq.), during the 2-year 
period beginning on October 1, 2002, shall be treated as separate 
programs of the Small Business Administration for purposes of the 
Federal Credit Reform Act of 1990 only.
    (d) Use of Funds.--The amendments made by this section to section 
503 of the Small Business Investment Act of 1958, shall be effective 
only to the extent that funds are made available under appropriations 
Acts, which funds shall be utilized by the Administrator to offset the 
cost (as such term is defined in section 502 of the Federal Credit 
Reform Act of 1990) of such amendments.
    (e) Effective Date.--The amendments made by this section shall 
become effective on October 1, 2002.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.