[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2179 Introduced in House (IH)]







108th CONGRESS
  1st Session
                                H. R. 2179

 To enhance the authority of the Securities and Exchange Commission to 
   investigate, punish, and deter securities laws violations, and to 
  improve its ability to return funds to defrauded investors, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 21, 2003

Mr. Baker (for himself, Mr. Oxley, Mr. Tiberi, Mr. Ose, and Mrs. Kelly) 
 introduced the following bill; which was referred to the Committee on 
                           Financial Services

_______________________________________________________________________

                                 A BILL


 
 To enhance the authority of the Securities and Exchange Commission to 
   investigate, punish, and deter securities laws violations, and to 
  improve its ability to return funds to defrauded investors, 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 ``The Securities Fraud Deterrence and 
Investor Restitution Act of 2003''.

SEC. 2. RECOVERY BY COMMISSION OF SECURITIES LAW JUDGMENTS.

    Title III of the Sarbanes-Oxley Act of 2002 is amended by adding 
after section 308 (15 U.S.C. 7246) the following new section:

``SEC. 309. RECOVERY OF SECURITIES LAW JUDGMENTS; REMOVAL OF STATE LAW 
              IMPEDIMENTS.

    ``If in any judicial or administrative action brought by the 
Commission under the securities laws the Commission obtains a judgment 
or order (either by litigation or settlement) against any person based 
upon an alleged fraudulent, deceptive, or manipulative act or practice 
in violation of such laws or the rules or regulations thereunder, the 
Commission may obtain the foreclosure and forced sale of any property 
owned in whole or in part by that person, or by any person to whom such 
ownership was transferred without adequate consideration, to satisfy 
that judgment or order in a Federal or State court notwithstanding any 
homestead provision of any State constitution or any other State law 
that exempts or protects property from either foreclosure and forced 
sale under any process of court or from any lien thereon for the 
payment of debts.''.

SEC. 3. CIVIL ENFORCEMENT PROVISIONS.

    (a) Authority To Impose Civil Penalties in Cease and Desist 
Proceedings.--
            (1) Under the securities act of 1933.--Section 8A of the 
        Securities Act of 1933 (15 U.S.C. 77h-1) is amended by adding 
        at the end the following new subsection:
    ``(g) Authority to Impose Money Penalties.--
            ``(1) Grounds for imposing.--In any cease-and-desist 
        proceeding under subsection (a), the Commission may impose a 
        civil penalty on a person if it finds, on the record after 
        notice and opportunity for hearing, that--
                    ``(A) such person--
                            ``(i) is violating or has violated any 
                        provision of this title, or any rule or 
                        regulation thereunder; or
                            ``(ii) is or was a cause of the violation 
                        of any provision of this title, or any rule or 
                        regulation thereunder; and
                    ``(B) such penalty is in the public interest.
            ``(2) Maximum amount of penalty.--
                    ``(A) First tier.--The maximum amount of penalty 
                for each act or omission described in subsection (1) 
                shall be $100,000 for a natural person or $250,000 for 
                any other person.
                    ``(B) Second tier.--Notwithstanding paragraph (A), 
                the maximum amount of penalty for each such act or 
                omission shall be $500,000 for a natural person or 
                $1,000,000 for any other person if the act or omission 
                described in subsection (1) involved fraud, deceit, 
                manipulation, or deliberate or reckless disregard of a 
                regulatory requirement.
                    ``(C) Third tier.--Notwithstanding paragraphs (A) 
                and (B), the maximum amount of penalty for each such 
                act or omission shall be $1,000,000 for a natural 
                person or $2,000,000 for any other person if--
                            ``(i) the act or omission described in 
                        subsection (1) involved fraud, deceit, 
                        manipulation, or deliberate or reckless 
                        disregard of a regulatory requirement; and
                            ``(ii) such act or omission directly or 
                        indirectly resulted in substantial losses or 
                        created a significant risk of substantial 
                        losses to other persons or resulted in 
                        substantial pecuniary gain to the person who 
                        committed the act or omission.
            ``(3) Evidence concerning ability to pay.--In any 
        proceeding in which the Commission may impose a penalty under 
        this section, a respondent may present evidence of the 
        respondent's ability to pay such penalty. The Commission may, 
        in its discretion, consider such evidence in determining 
        whether such penalty is in the public interest. Such evidence 
        may relate to the extent of such person's ability to continue 
        in business and the collectability of a penalty, taking into 
        account any other claims of the United States or third parties 
        upon such person's assets and the amount of such person's 
        assets.''.
            (2) Under the securities exchange act of 1934.--Subsection 
        (a) of section 21B of the Securities Exchange Act of 1934 (15 
        U.S.C. 78u-2(a)) is amended--
                    (A) by striking ``(a) Commission Authority To 
                Assess Money Penalties.--In any proceeding'' and 
                inserting the following:
    ``(a) Commission Authority To Assess Money Penalties.--
            ``(1) In general.--In any proceeding'';
                    (B) by redesignating paragraphs (1) through (4) of 
                such subsection as subparagraphs (A) through (D), 
                respectively; and
                    (C) by adding at the end of such subsection the 
                following new paragraph:
            ``(2) Cease-and-desist proceedings.--In any proceeding 
        instituted pursuant to section 21C of this title against any 
        person, the Commission may impose a civil penalty if it finds, 
        on the record after notice and opportunity for hearing, that 
        such person--
                    ``(A) is violating or has violated any provision of 
                this title, or any rule or regulation thereunder; or
                    ``(B) is or was a cause of the violation of any 
                provision of this title, or any rule or regulation 
                thereunder.''.
            (3) Under the investment company act of 1940.--Paragraph 
        (1) of section 9(d) of the Investment Company Act of 1940 (15 
        U.S.C. 80a-9(d)(1))) is amended--
                    (A) by striking ``(1) Authority of commission.--In 
                any proceeding'' and inserting the following:
            ``(1) Authority of commission.--
                    ``(A) In general.--In any proceeding'';
                    (B) by redesignating subparagraphs (A) through (D) 
                of such paragraph as clauses (i) through (iv), 
                respectively; and
                    (C) by adding at the end of such paragraph the 
                following new subparagraph:
                    ``(B) Cease-and-desist proceedings.--In any 
                proceeding instituted pursuant to subsection (f) 
                against any person, the Commission may impose a civil 
                penalty if it finds, on the record after notice and 
                opportunity for hearing, that such person--
                            ``(i) is violating or has violated any 
                        provision of this title, or any rule or 
                        regulation thereunder; or
                            ``(ii) is or was a cause of the violation 
                        of any provision of this title, or any rule or 
                        regulation thereunder.''.
            (4) Under the investment advisers act of 1940.--Paragraph 
        (1) of section 203(i) of the Investment Advisers Act of 1940 
        (15 U.S.C. 80b-3(i)(1)) is amended--
                    (A) by striking ``(1) Authority of commission.--In 
                any proceeding'' and inserting the following:
            ``(1) Authority of commission.--
                    ``(A) In general.--In any proceeding'';
                    (B) by redesignating subparagraphs (A) through (D) 
                of such paragraph as clauses (i) through (iv), 
                respectively; and
                    (C) by adding at the end of such paragraph the 
                following new subparagraph:
                    ``(B) Cease-and-desist proceedings.--In any 
                proceeding instituted pursuant to subsection (k) 
                against any person, the Commission may impose a civil 
                penalty if it finds, on the record after notice and 
                opportunity for hearing, that such person--
                            ``(i) is violating or has violated any 
                        provision of this title, or any rule or 
                        regulation thereunder; or
                            ``(ii) is or was a cause of the violation 
                        of any provision of this title, or any rule or 
                        regulation thereunder.''.
    (b) Increased Maximum Civil Money Penalties.--
            (1) Securities act of 1933.--Section 20(d)(2) of the 
        Securities Act of 1933 (15 U.S.C. 77t(d)(2)) is amended--
                    (A) in subparagraph (A)(i)--
                            (i) by striking ``$5,000'' and inserting 
                        ``$100,000''; and
                            (ii) by striking ``$50,000'' and inserting 
                        ``$250,000'';
                    (B) in subparagraph (B)(i)--
                            (i) by striking ``$50,000'' and inserting 
                        ``$500,000''; and
                            (ii) by striking ``$250,000'' and inserting 
                        ``$1,000,000''; and
                    (C) in subparagraph (C)(i)--
                            (i) by striking ``$100,000'' and inserting 
                        ``$1,000,000''; and
                            (ii) by striking ``$500,000'' and inserting 
                        ``$2,000,000''.
            (2) Securities exchange act of 1934.--
                    (A) Penalties.--Section 32 of the Securities 
                Exchange Act of 1934 (15 U.S.C. 78ff) is amended--
                            (i) in subsection (b), by striking ``$100'' 
                        and inserting ``$10,000''; and
                            (ii) in subsection (c)--
                                    (I) in paragraph (1)(B), by 
                                striking ``$10,000'' and inserting 
                                ``$500,000''; and
                                    (II) in paragraph (2)(B), by 
                                striking ``$10,000'' and inserting 
                                ``$500,000''.
                    (B) Insider trading.--Section 21A(a)(3) of the 
                Securities Exchange Act of 1934 (15 U.S.C. 78u-1(a)(3)) 
                is amended by striking ``$1,000,000'' and inserting 
                ``$2,000,000''.
                    (C) Administrative proceedings.--Section 21B(b) of 
                the Securities Exchange Act of 1934 (15 U.S.C. 78u-
                2(b)) is amended--
                            (i) in paragraph (1)--
                                    (I) by striking ``$5,000'' and 
                                inserting ``$100,000''; and
                                    (II) by striking ``$50,000'' and 
                                inserting ``$250,000'';
                            (ii) in paragraph (2)--
                                    (I) by striking ``$50,000'' and 
                                inserting ``$500,000''; and
                                    (II) by striking ``$250,000'' and 
                                inserting ``$1,000,000''; and
                            (iii) in paragraph (3)--
                                    (I) by striking ``$100,000'' and 
                                inserting ``$1,000,000''; and
                                    (II) by striking ``$500,000'' and 
                                inserting ``$2,000,000''.
                    (D) Civil actions.--Section 21(d)(3)(B) of the 
                Securities Exchange Act of 1934 (15 U.S.C. 
                78u(d)(3)(B)) is amended--
                            (i) in clause (i)--
                                    (I) by striking ``$5,000'' and 
                                inserting ``$100,000''; and
                                    (II) by striking ``$50,000'' and 
                                inserting ``$250,000'';
                            (ii) in clause (ii)--
                                    (I) by striking ``$50,000'' and 
                                inserting ``$500,000''; and
                                    (II) by striking ``$250,000'' and 
                                inserting ``$1,000,000''; and
                            (iii) in clause (iii)--
                                    (I) by striking ``$100,000'' and 
                                inserting ``$1,000,000''; and
                                    (II) by striking ``$500,000'' and 
                                inserting ``$2,000,000''.
            (3) Investment company act of 1940.--
                    (A) Ineligibility.--Section 9(d)(2) of the 
                Investment Company Act of 1940 (15 U.S.C. 80a-9(d)(2)) 
                is amended--
                            (i) in subparagraph (A)--
                                    (I) by striking ``$5,000'' and 
                                inserting ``$100,000''; and
                                    (II) by striking ``$50,000'' and 
                                inserting ``$250,000'';
                            (ii) in subparagraph (B)--
                                    (I) by striking ``$50,000'' and 
                                inserting ``$500,000''; and
                                    (II) by striking ``$250,000'' and 
                                inserting ``$1,000,000''; and
                            (iii) in subparagraph (C)--
                                    (I) by striking ``$100,000'' and 
                                inserting ``$1,000,000''; and
                                    (II) by striking ``$500,000'' and 
                                inserting ``$2,000,000''.
                    (B) Enforcement of investment company act.--Section 
                42(e)(2) of the Investment Company Act of 1940 (15 
                U.S.C. 80a-41(e)(2)) is amended--
                            (i) in subparagraph (A)--
                                    (I) by striking ``$5,000'' and 
                                inserting ``$100,000''; and
                                    (II) by striking ``$50,000'' and 
                                inserting ``$250,000'';
                            (ii) in subparagraph (B)--
                                    (I) by striking ``$50,000'' and 
                                inserting ``$500,000''; and
                                    (II) by striking ``$250,000'' and 
                                inserting ``$1,000,000''; and
                            (iii) in subparagraph (C)--
                                    (I) by striking ``$100,000'' and 
                                inserting ``$1,000,000''; and
                                    (II) by striking ``$500,000'' and 
                                inserting ``$2,000,000''.
            (4) Investment advisers act of 1940.--
                    (A) Registration.--Section 203(i)(2) of the 
                Investment advisers Act of 1940 (15 U.S.C. 80b-3(i)(2)) 
                is amended--
                            (i) in subparagraph (A)--
                                    (I) by striking ``$5,000'' and 
                                inserting ``$100,000''; and
                                    (II) by striking ``$50,000'' and 
                                inserting ``$250,000'';
                            (ii) in subparagraph (B)--
                                    (I) by striking ``$50,000'' and 
                                inserting ``$500,000''; and
                                    (II) by striking ``$250,000'' and 
                                inserting ``$1,000,000''; and
                            (iii) in subparagraph (C)--
                                    (I) by striking ``$100,000'' and 
                                inserting ``$1,000,000''; and
                                    (II) by striking ``$500,000'' and 
                                inserting ``$2,000,000''.
                    (B) Enforcement of investment advisers act.--
                Section 209(e)(2) of the Investment advisers Act of 
                1940 (15 U.S.C. 80b-9(e)(2)) is amended--
                            (i) in subparagraph (A)--
                                    (I) by striking ``$5,000'' and 
                                inserting ``$100,000''; and
                                    (II) by striking ``$50,000'' and 
                                inserting ``$250,000'';
                            (ii) in subparagraph (B)--
                                    (I) by striking ``$50,000'' and 
                                inserting ``$500,000''; and
                                    (II) by striking ``$250,000'' and 
                                inserting ``$1,000,000''; and
                            (iii) in subparagraph (C)--
                                    (I) by striking ``$100,000'' and 
                                inserting ``$1,000,000''; and
                                    (II) by striking ``$500,000'' and 
                                inserting ``$2,000,000''.
    (c) Authority To Obtain Financial Records.--Section 21(h) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78u(h)) is amended--
            (1) by striking paragraphs (2) through (8);
            (2) in paragraph (9), by striking ``(9)(A)'' and all that 
        follows through ``(B) The'' and inserting ``(3) The'';
            (3) by inserting after paragraph (1), the following:
            ``(2) Access to financial records.--
                    ``(A) In general.--Notwithstanding section 1105 or 
                1107 of the Right to Financial Privacy Act of 1978, the 
                Commission may obtain access to and copies of, or the 
                information contained in, financial records of any 
                person held by a financial institution, including the 
                financial records of a customer, without notice to that 
                person, when it acts pursuant to a subpoena authorized 
                by a formal order of investigation of the Commission 
                and issued under the securities laws or pursuant to an 
                administrative or judicial subpoena issued in a 
                proceeding or action to enforce the securities laws.
                    ``(B) Nondisclosure of requests.--If the Commission 
                so directs in its subpoena, no financial institution, 
                or officer, director, partner, employee, shareholder, 
                representative or agent of such financial institution, 
                shall, directly or indirectly, disclose that records 
                have been requested or provided in accordance with 
                subparagraph (A), if the Commission finds reason to 
                believe that such disclosure may--
                            ``(i) result in the transfer of assets or 
                        records outside the territorial limits of the 
                        United States;
                            ``(ii) result in improper conversion of 
                        investor assets;
                            ``(iii) impede the ability of the 
                        Commission to identify, trace, or freeze funds 
                        involved in any securities transaction;
                            ``(iv) endanger the life or physical safety 
                        of an individual;
                            ``(v) result in flight from prosecution;
                            ``(vi) result in destruction of or 
                        tampering with evidence;
                            ``(vii) result in intimidation of potential 
                        witnesses; or
                            ``(viii) otherwise seriously jeopardize an 
                        investigation or unduly delay a trial.
                    ``(C) Transfer of records to government 
                authorities.--The Commission may transfer financial 
                records or the information contained therein to any 
                government authority, if the Commission proceeds as a 
                transferring agency in accordance with section 1112 of 
                the Right to Financial Privacy Act of 1978 (12 U.S.C. 
                3412), except that a customer notice shall not be 
                required under subsection (b) or (c) of that section 
                1112, if the Commission determines that there is reason 
                to believe that such notification may result in or lead 
                to any of the factors identified under clauses (i) 
                through (viii) of subparagraph (B) of this 
                paragraph.'';
            (4) by striking paragraph (10); and
            (5) by redesignating paragraphs (11), (12), and (13) as 
        paragraphs (4), (5), and (6), respectively.

SEC. 4. AUTHORITY TO ACCEPT PRIVILEGED AND PROTECTED INFORMATION.

    Section 24 of the Securities Exchange Act of 1934 (15 U.S.C. 78x) 
is amended--
            (1) by redesignating subsection (e) as subsection (f); and
            (2) by inserting after subsection (d) the following new 
        subsection:
    ``(e) Authority to Accept Privileged and Protected Information.--
Notwithstanding any other provision of law, whenever the Commission and 
any person agree in writing to terms pursuant to which such person will 
produce or disclose to the Commission any document or information that 
is subject to any Federal or State law privilege, or to the protection 
provided by the work product doctrine, such production or disclosure 
shall not constitute a waiver of the privilege or protection as to any 
person other than the Commission.''.

SEC. 5. ACCESS TO GRAND JURY INFORMATION.

    Title VI of the Sarbanes-Oxley Act of 2002 is amended by adding at 
the end thereof the following new section:

``SEC. 605. ACCESS TO GRAND JURY INFORMATION.

    ``(a) Disclosure of Certain Matters Occurring Before Grand Jury for 
Use in Enforcing Securities Laws.--
            ``(1) In general.--Upon motion of an attorney for the 
        government, a court may direct disclosure of matters occurring 
        before a grand jury during an investigation of conduct that may 
        constitute a violation of any provision of the securities laws 
        to identified personnel of the Commission for use in relation 
        to any matter within the jurisdiction of the Commission.
            ``(2) Finding of substantial need required.--A court may 
        issue an order under paragraph (1) only upon a finding of a 
        substantial need in the public interest.
    ``(b) Restricted Use of Information.--A person to whom a matter has 
been disclosed under this section shall not use such matter other than 
for the purpose for which such disclosure was authorized.
    ``(c) Definition.--As used in this section, the terms `attorney for 
the government' and `grand jury information' have the meanings given to 
those terms in section 3322 of title 18, United States Code.''.

SEC. 6. NATIONWIDE SERVICE OF PROCESS.

    (a) Securities Act of 1933.--Section 22(a) of the Securities Act of 
1933 (15 U.S.C. 77v(a)) is amended by inserting after the second 
sentence the following: ``In any action or proceeding instituted by the 
Commission under this title in a United States district court for any 
judicial district, subpoenas issued by or on behalf of such court to 
compel the attendance of witnesses or the production of documents or 
tangible things (or both) may be served in any other district. Such 
subpoenas may be served and enforced without application to the court 
or a showing of cause, notwithstanding the provisions of rule 45(b)(2), 
(c)(3)(A)(ii), and (c)(3)(B)(iii) of the Federal Rules of Civil 
Procedure.''.
    (b) Securities Exchange Act of 1934.--Section 27 of the Securities 
Exchange Act of 1934 (15 U.S.C. 78aa) is amended by inserting after the 
second sentence the following: ``In any action or proceeding instituted 
by the Commission under this title in a United States district court 
for any judicial district, subpoenas issued by or on behalf of such 
court to compel the attendance of witnesses or the production of 
documents or tangible things (or both) may be served in any other 
district. Such subpoenas may be served and enforced without application 
to the court or a showing of cause, notwithstanding the provisions of 
rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of the Federal Rules 
of Civil Procedure.''.
    (c) Investment Company Act of 1940.--Section 44 of the Investment 
Company Act of 1940 (15 U.S.C. 80a-43) is amended by inserting after 
the fourth sentence the following: ``In any action or proceeding 
instituted by the Commission under this title in a United States 
district court for any judicial district, subpoenas issued by or on 
behalf of such court to compel the attendance of witnesses or the 
production of documents or tangible things (or both) may be served in 
any other district. Such subpoenas may be served and enforced without 
application to the court or a showing of cause, notwithstanding the 
provisions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of the 
Federal Rules of Civil Procedure.''.
    (d) Investment Advisers Act of 1940.--Section 214 of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-14) is amended by inserting after 
the third sentence the following: ``In any action or proceeding 
instituted by the Commission under this title in a United States 
district court for any judicial district, subpoenas issued by or 
on behalf of such court to compel the attendance of witnesses or the 
production of documents or tangible things (or both) may be served in 
any other district. Such subpoenas may be served and enforced without 
application to the court or a showing of cause, notwithstanding the 
provisions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of the 
Federal Rules of Civil Procedure.''.

SEC. 7. AUTHORITY TO CONTRACT WITH PRIVATE COUNSEL FOR LEGAL SERVICES 
              TO COLLECT DELINQUENT JUDGMENTS AND ORDERS.

    Subsection (b) of section 4 of the Securities Exchange Act of 1934 
(15 U.S.C. 78d(b)) is amended--
            (1) in the subsection heading by striking ``and Leasing 
        Authority.--'' and inserting ``, Leasing Authority, and 
        Contracting Authority.--''; and
            (2) by adding at the end of such subsection the following 
        new paragraph:
            ``(4) Contracting authority.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, the Commission is authorized to enter 
                into contracts to retain private legal counsel to 
                furnish legal services, including representation in 
                litigation, negotiation, compromise, and settlement, in 
                the case of any claim of indebtedness resulting from 
                any judgment or order (either by litigation or 
                settlement) obtained by the Commission in any judicial 
                action or administrative proceeding brought by or on 
                behalf of the Commission. Private counsel retained 
                under this paragraph may represent the Commission in 
                such debt collection matters to the same extent as the 
                Commission may represent itself.
                    ``(B) Terms and conditions of contract.--Each such 
                contract shall include such terms and conditions as the 
                Commission considers necessary and appropriate, and 
                shall include provisions specifying--
                            ``(i) the amount of the fee to be paid to 
                        the private counsel under such contract or the 
                        method for calculating that fee;
                            ``(ii) that the Commission retains the 
                        authority to represent itself, resolve a 
                        dispute, compromise a claim, end collection 
                        efforts, and refer a matter to other private 
                        counsel or to the Attorney General; and
                            ``(iii) that the Commission may terminate 
                        either the contract or the private counsel's 
                        representation of the Commission in particular 
                        cases for any reason, including for the 
                        convenience of the Commission.
                    ``(C) Payment of fees.--Notwithstanding section 
                3302(b) of title 31, United States Code, a contract 
                under this paragraph may provide that fees and costs 
                incurred by private counsel under such contracts are 
                payable from the amounts recovered.
                    ``(D) Competition requirements.--Nothing in this 
                paragraph shall relieve the Commission of the 
                competition requirements set forth in title III of the 
                Federal Property and Administrative Services Act of 
                1949 (41 U.S.C. 251 et seq.).
                    ``(E) Counterclaims.--In any action to recover 
                indebtedness which is brought on behalf of the 
                Commission by private counsel retained under this 
                paragraph, no counterclaim may be asserted against the 
                Commission unless the counterclaim is served directly 
                on the Commission. Such service shall be made in 
                accordance with the rules of procedure of the court in 
                which the action is brought.''.

SEC. 8. FAIR ACT AMENDMENTS.

    (a) Civil Penalties.--Section 308(a) of the Sarbanes-Oxley Act of 
2002 (15 U.S.C. 7246(a)) is amended to read as follows;
    ``(a) Civil Penalties To Be Used for the Relief of Victims.--If in 
any judicial or administrative action brought by the Commission under 
the securities laws (as such term is defined in section 3(a)(47) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47))) the Commission 
obtains pursuant to such laws a civil penalty against any person, such 
civil penalty monies shall, on the motion or at the direction of the 
Commission, be added to and become part of a fund for the benefit of 
the victims of such violation.''.
    (b) Additional Provisions.--Section 308 of the Sarbanes-Oxley Act 
of 2002 (15 U.S.C. 7246) is further amended--
            (1) by redesignation subsections (c), (d), and (e) as 
        subsections (e), (f), and (g), respectively; and
            (2) by inserting the following after subsection (b):
    ``(c) Civil Penalties and Disgorgement Funds in Actions brought by 
States.--If a State or political subdivision of a State establishes, as 
a result of an agreement or judgment obtained by such State or 
political subdivision, any requirements for brokers or dealers 
(including government securities brokers and dealers) relating to 
capital, custody, margin, financial responsibility, recordkeeping, 
bonding, or financial or operational reporting or disclosure that 
differ from or are in addition to the requirements in those areas 
established under the securities laws (as such term is defined in 
section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(47))), or by the Commission or by any national securities 
exchange or self-regulatory organization under such laws, and such 
agreement or judgment includes civil penalties or an order requiring 
disgorgement, the amount of such penalty or disgorgement shall be 
remitted to the Commission for distribution in accordance with 
subsection (a).
    ``(d) Undistributed Funds To Be Used for Investor Education.--In 
any judicial or administrative action in which a fund is created 
pursuant to subsection (a) or in which the Commission had obtained 
disgorgement, if the Commission determines (due to the size of the fund 
to be distributed, the number of investors, the nature of the 
underlying violation, or for other reasons) that it would be infeasible 
to distribute such fund or disgorgement to the victims of the 
violation, or if after distribution of the fund or disgorgement to 
victims there are excess monies remaining, the Commission may move for 
an order in a judicial action, or may issue an order in an 
administrative proceeding, requiring that the undistributed amount of 
the fund or disgorgement be used for investor education programs 
administered by an established not-for-profit or governmental 
organization whose purposes include investor education and financial 
literacy.''.
                                 <all>