[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6513 Engrossed in House (EH)]

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
110th CONGRESS
  2d Session
                                H. R. 6513

_______________________________________________________________________

                                 AN ACT


 
 To amend the Federal securities laws to enhance the effectiveness of 
   the Securities and Exchange Commission's enforcement, corporation 
 finance, trading and markets, investment management, and examination 
                   programs, 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 ``Securities Act of 
2008''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Authority to impose civil penalties in cease and desist 
                            proceedings.
Sec. 3. Formerly associated persons.
Sec. 4. Scope of exemption from State securities regulation.
Sec. 5. Covered securities.
Sec. 6. Collateral bars.
Sec. 7. Unlawful margin lending.
Sec. 8. Securities Investor Protection Act of 1970 amendments.
Sec. 9. Annual testimony on reducing complexity in financial reporting.
Sec. 10. Equal treatment for self-regulatory organization rules.
Sec. 11. Lost and stolen securities.
Sec. 12. Fingerprinting.
Sec. 13. Clarification that section 205 of the Investment Advisers Act 
                            of 1940 does not apply to State-registered 
                            advisers.
Sec. 14. Amendments to section 31 of the Securities Exchange Act of 
                            1934.
Sec. 15. Protecting confidentiality of materials submitted to 
                            Commission.
Sec. 16. Sharing privileged information with other authorities.
Sec. 17. Technical corrections.
Sec. 18. Conforming amendments for the repeal of the Public Utility 
                            Holding Company Act of 1935.
Sec. 19. Nationwide service of subpoenas.

SEC. 2. AUTHORITY TO IMPOSE CIVIL PENALTIES IN CEASE AND DESIST 
              PROCEEDINGS.

    (a) 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 paragraph (1) 
                shall be $6,500 for a natural person or $65,000 for any 
                other person.
                    ``(B) Second tier.--Notwithstanding paragraph (A), 
                the maximum amount of penalty for each such act or 
                omission shall be $65,000 for a natural person or 
                $325,000 for any other person if the act or omission 
                described in paragraph (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 $130,000 for a natural person 
                or $650,000 for any other person if--
                            ``(i) the act or omission described in 
                        paragraph (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.''.
    (b) 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--
            (1) 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'';
            (2) by redesignating paragraphs (1) through (4) of such 
        subsection as subparagraphs (A) through (D), respectively and 
        moving such redesignated subparagraphs and the matter following 
        such subparagraphs 2 ems to the right; and
            (3) 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.''.
    (c) 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--
            (1) by striking ``(1) Authority of commission.--In any 
        proceeding'' and inserting the following:
            ``(1) Authority of commission.--
                    ``(A) In general.--In any proceeding'';
            (2) by redesignating subparagraphs (A) through (C) of such 
        paragraph as clauses (i) through (iii), respectively and by 
        moving such redesignated clauses and the matter following such 
        subparagraphs 2 ems to the right; and
            (3) 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.''.
    (d) 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--
            (1) by striking ``(1) Authority of commission.--In any 
        proceeding'' and inserting the following:
            ``(1) Authority of commission.--
                    ``(A) In general.--In any proceeding'';
            (2) by redesignating subparagraphs (A) through (D) of such 
        paragraph as clauses (i) through (iv), respectively and moving 
        such redesignated clauses and the matter following such 
        subparagraphs 2 ems to the right; and
            (3) 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.''.

SEC. 3. FORMERLY ASSOCIATED PERSONS.

    (a) Member or Employee of the Municipal Securities Rulemaking 
Board.--Section 15B(c)(8) of the Securities Exchange Act of 1934 (15 
U.S.C. 78o-4(c)(8)) is amended by striking ``any member or employee'' 
and inserting ``any person who is, or at the time of the alleged 
misconduct was, a member or employee''.
    (b) Person Associated With a Government Securities Broker or 
Dealer.--Section 15C of the Securities Exchange Act of 1934 (15 U.S.C. 
78o-5) is amended--
            (1) in subsection (c)(1)(C), by striking ``or seeking to 
        become associated,'' and inserting ``seeking to become 
        associated, or, at the time of the alleged misconduct, 
        associated or seeking to become associated'';
            (2) in subsection (c)(2)(A), by inserting ``, seeking to 
        become associated, or, at the time of the alleged misconduct, 
        associated or seeking to become associated'' after ``any person 
        associated''; and
            (3) in subsection (c)(2)(B), by inserting ``, seeking to 
        become associated, or, at the time of the alleged misconduct, 
        associated or seeking to become associated'' after ``any person 
        associated''.
    (c) Person Associated With a Member of a National Securities 
Exchange or Registered Securities Association.--Section 21(a)(1) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is amended by 
inserting ``, or, as to any act or practice, or omission to act, while 
associated with a member, formerly associated'' after ``member or a 
person associated''.
    (d) Participant of a Registered Clearing Agency.--Section 21(a)(1) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is amended 
by inserting ``or, as to any act or practice, or omission to act, while 
a participant, was a participant,'' after ``in which such person is a 
participant,''.
    (e) Officer or Director of a Self-Regulatory Organization.--Section 
19(h)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(h)(4)) 
is amended--
            (1) by striking ``any officer or director'' and inserting 
        ``any person who is, or at the time of the alleged misconduct 
        was, an officer or director''; and
            (2) by striking ``such officer or director'' and inserting 
        ``such person''.
    (f) Officer or Director of an Investment Company.--Section 36(a) of 
the Investment Company Act of 1940 (15 U.S.C. 80a-35(a)) is amended--
            (1) by striking ``a person serving or acting'' and 
        inserting ``a person who is, or at the time of the alleged 
        misconduct was, serving or acting''; and
            (2) by striking ``such person so serves or acts'' and 
        inserting ``such person so serves or acts, or at the time of 
        the alleged misconduct, so served or acted''.

SEC. 4. SCOPE OF EXEMPTION FROM STATE SECURITIES REGULATION.

    Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. 
77r(b)(1)) is amended--
            (1) in subparagraph (A)--
                    (A) by striking ``or the American Stock Exchange, 
                or listed, or authorized for listing, on the National 
                Market System of the Nasdaq Stock Market (or any 
                successor to such entities)'' and inserting ``, the 
                American Stock Exchange, or the Nasdaq Stock Market (or 
                any successor to such entities)''; and
                    (B) by inserting before the semicolon the 
                following: ``, except that a security listed, or 
                authorized for listing, on the New York Stock Exchange, 
                the American Stock Exchange, or the Nasdaq Stock Market 
                (or any successor to such entities) shall not be a 
                covered security if the exchange adopts listing 
                standards pursuant to section 19(b) of the Securities 
                Exchange Act of 1934 (15 U.S.C. 78s(b)) that designates 
                a tier or segment of such securities as securities that 
                are not covered securities for purposes of this section 
                and such security is listed, or authorized for listing, 
                on such tier or segment''; and
            (2) in subparagraph (B), by inserting ``covered'' after 
        ``applicable to''.

SEC. 5. COVERED SECURITIES.

    (a) Warrants and Rights.--Section 18(b)(1) of the Securities Act of 
1933 (15 U.S.C. 77r(b)(1)) is amended--
            (1) in subparagraph (B), by striking ``or'' at the end;
            (2) in subparagraph (C), by striking the period at the end 
        and inserting ``; or''; and
            (3) by adding at the end the following:
                    ``(D) a warrant or right to subscribe to or 
                purchase any of the foregoing.''.
    (b) Exempt Offerings.--Section 18(b)(4)(D) of the Securities Act of 
1933 (15 U.S.C. 77r(b)(4)(D)) is amended to read as follows:
                    ``(D) Commission rules or regulations issued under 
                section 4(2), except that this subparagraph does not 
                prohibit a State from imposing notice filing 
                requirements that are substantially similar to those 
                required by rule or regulation under section 4(2) that 
                are in effect on September 1, 1996, including 
                information corresponding to that in all the parts and 
                the appendix to Form D.''.

SEC. 6. COLLATERAL BARS.

    (a) Section 15(b)(6)(A) of the Securities Exchange Act of 1934.--
Section 15(b)(6)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o(b)(6)(A)) is amended by striking ``12 months, or bar such person 
from being associated with a broker or dealer,'' and inserting ``12 
months, or bar any such person from being associated with a broker, 
dealer, investment adviser, municipal securities dealer, or transfer 
agent,''.
    (b) Section 15B(c)(4) of the Securities Exchange Act of 1934.--
Section 15B(c)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o-4(c)(4)) is amended by striking ``twelve months or bar any such 
person from being associated with a municipal securities dealer,'' and 
inserting ``twelve months or bar any such person from being associated 
with a broker, dealer, investment adviser, municipal securities dealer, 
or transfer agent,''.
    (c) Section 17A(c)(4)(C) of the Securities Exchange Act of 1934.--
Section 17A(c)(4)(C) of the Securities Exchange Act of 1934 (15 U.S.C. 
78q-1(c)(4)(C)) is amended by striking ``twelve months or bar any such 
person from being associated with the transfer agent,'' and inserting 
``twelve months or bar any such person from being associated with any 
transfer agent, broker, dealer, investment adviser, or municipal 
securities dealer,''.
    (d) Section 203(f) of the Investment Advisers Act of 1940.--Section 
203(f) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(f)) is 
amended by striking ``twelve months or bar any such person from being 
associated with an investment adviser,'' and inserting ``twelve months 
or bar any such person from being associated with an investment 
adviser, broker, dealer, municipal securities dealer, or transfer 
agent,''.

SEC. 7. UNLAWFUL MARGIN LENDING.

    Section 7(c)(1)(A) of the Securities Exchange Act of 1934 (15 
U.S.C. 78g(c)(1)(A)) is amended by striking ``; and'' and inserting ``; 
or''.

SEC. 8. SECURITIES INVESTOR PROTECTION ACT OF 1970 AMENDMENTS.

    (a) SIPC Advances.--Section 9(a)(1) of the Securities Investor 
Protection Act of 1970 (15 U.S.C. 78fff-3(a)(1)) is amended by 
inserting ``or options on commodity futures contracts'' after ``claim 
for securities''.
    (b) Definitions.--Section 16 of such Act (15 U.S.C. 78lll) is 
amended--
            (1) by amending paragraph (2) to read as follows:
            ``(2) Customer.--
                    ``(A) In general.--The term `customer' of a debtor 
                means any person (including any person with whom the 
                debtor deals as principal or agent) who has a claim on 
                account of securities received, acquired, or held by 
                the debtor in the ordinary course of its business as a 
                broker or dealer from or for the securities accounts of 
                such person for safekeeping, with a view to sale, to 
                cover consummated sales, pursuant to purchases, as 
                collateral, security, or for purposes of effecting 
                transfer.
                    ``(B) Included persons.--The term `customer' 
                includes--
                            ``(i) any person who has deposited cash 
                        with the debtor for the purpose of purchasing 
                        securities;
                            ``(ii) any person who has a claim against 
                        the debtor for cash, securities, futures 
                        contracts, or options on futures contracts 
                        received, acquired, or held in a portfolio 
                        margining account carried as a securities 
                        account pursuant to a portfolio margining 
                        program approved by the Commission; and
                            ``(iii) any person who has a claim against 
                        the debtor arising out of sales or conversions 
                        of such securities.
                    ``(C) Excluded persons.--The term `customer' does 
                not include--
                            ``(i) any person to the extent that the 
                        claim of such person arises out of transactions 
                        with a foreign subsidiary of a member of SIPC; 
                        or
                            ``(ii) any person to the extent that such 
                        person has a claim for cash or securities which 
                        by contract, agreement, or understanding, or by 
                        operation of law, is part of the capital of the 
                        debtor, or is subordinated to the claims of any 
                        or all creditors of the debtor, notwithstanding 
                        that some ground exists for declaring such 
                        contract, agreement, or understanding void or 
                        voidable in a suit between the claimant and the 
                        debtor.'';
            (2) in paragraph (4), by inserting after the first sentence 
        the following new sentence: ``In the case of portfolio 
        margining accounts of customers that are carried as securities 
        accounts pursuant to a portfolio margining program approved by 
        the Commission, such term shall also include futures contracts 
        and options on futures contracts received, acquired, or held by 
        or for the account of a debtor from or for such accounts, and 
        the proceeds thereof.'';
            (3) in paragraph (9), by inserting before ``Such term'' in 
        the matter following subparagraph (L) the following: ``The term 
        includes revenues earned by a broker or dealer in connection 
        with transactions in customers' portfolio margining accounts 
        carried as securities accounts pursuant to a portfolio 
        margining program approved by the Commission.''; and
            (4) in paragraph (11)--
                    (A) by amending subparagraph (A) to read as 
                follows:
                    ``(A) calculating the sum which would have been 
                owed by the debtor to such customer if the debtor had 
                liquidated, by sale or purchase on the filing date--
                            ``(i) all securities positions of such 
                        customer (other than customer name securities 
                        reclaimed by such customer); and
                            ``(ii) all positions in futures contracts 
                        and options on futures contracts held in a 
                        portfolio margining account carried as a 
                        securities account pursuant to a portfolio 
                        margining program approved by the Commission; 
                        minus''; and
                    (B) by inserting before ``In determining'' in the 
                matter following subparagraph (C) the following: ``A 
                claim for a commodity futures contract received, 
                acquired, or held in a portfolio margining account 
                pursuant to a portfolio margining program approved by 
                the Commission, or a claim for a security futures 
                contract, shall be deemed to be a claim for the mark-
                to-market (variation) payments due with respect to such 
                contract as of the filing date, and such claim shall be 
                treated as a claim for cash.''.

SEC. 9. ANNUAL TESTIMONY ON REDUCING COMPLEXITY IN FINANCIAL REPORTING.

    (a) Findings.--Congress finds the following:
            (1) Transparent and clear financial reporting is integral 
        to the continued growth and strength of our capital markets and 
        the confidence of investors.
            (2) The increasing detail and volume of accounting, 
        auditing, and reporting guidance pose a major challenge.
            (3) The complexity of accounting and auditing standards in 
        the United States has added to the costs and effort involved in 
        financial reporting.
    (b) Testimony Required on Reducing Complexity in Financial 
Reporting.--The Securities and Exchange Commission, the Financial 
Accounting Standards Board, and the Public Company Accounting Oversight 
Board shall annually provide oral testimony by their respective 
Chairpersons or a designee of the Chairperson, beginning in 2009, and 
for 5 years thereafter, to the Committee on Financial Services of the 
House of Representatives on their efforts to reduce the complexity in 
financial reporting to provide more accurate and clear financial 
information to investors, including--
            (1) reassessing complex and outdated accounting standards;
            (2) improving the understandability, consistency, and 
        overall usability of the existing accounting and auditing 
        literature;
            (3) developing principles-based accounting standards;
            (4) encouraging the use and acceptance of interactive data; 
        and
            (5) promoting disclosures in ``plain English''.

SEC. 10. EQUAL TREATMENT FOR SELF-REGULATORY ORGANIZATION RULES.

    Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78cc(a)) is amended by striking ``an exchange required thereby'' and 
inserting ``a self-regulatory organization''.

SEC. 11. LOST AND STOLEN SECURITIES.

    Section 17(f)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 
78q(f)(1)) is amended--
            (1) in subparagraph (A), by striking ``missing, lost, 
        counterfeit, or stolen securities'' and inserting ``securities 
        that are missing, lost, counterfeit, stolen, cancelled, or any 
        other category of securities as the Commission, by rule, may 
        prescribe''; and
            (2) in subparagraph (B), by striking ``or stolen'' and 
        inserting ``stolen, cancelled, or reported in such other manner 
        as the Commission, by rule, may prescribe''.

SEC. 12. FINGERPRINTING.

    Section 17(f)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 
78q(f)(2)) is amended--
            (1) by striking ``and registered clearing agency,'' and 
        inserting ``registered clearing agency, registered securities 
        information processor, national securities exchange, and 
        national securities association''; and
            (2) by striking ``or clearing agency,'' and inserting 
        ``clearing agency, securities information processor, national 
        securities exchange, or national securities association,''.

SEC. 13. CLARIFICATION THAT SECTION 205 OF THE INVESTMENT ADVISERS ACT 
              OF 1940 DOES NOT APPLY TO STATE-REGISTERED ADVISERS.

    Section 205(a) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-5(a)) is amended--
            (1) by striking ``, unless exempt from registration 
        pursuant to section 203(b),'' and inserting ``registered or 
        required to be registered with the Commission'';
            (2) by striking ``make use of the mails or any means or 
        instrumentality of interstate commerce, directly or indirectly, 
        to''; and
            (3) by striking ``to'' after ``in any way''.

SEC. 14. AMENDMENTS TO SECTION 31 OF THE SECURITIES EXCHANGE ACT OF 
              1934.

    Section 31 of the Securities Exchange Act of 1934 (15 U.S.C. 78ee) 
is amended--
            (1) in subsection (e)(2), by striking ``September 30'' and 
        inserting ``September 25''; and
            (2) in subsection (g), by striking ``April 30'' and 
        inserting ``August 31''.

SEC. 15. PROTECTING CONFIDENTIALITY OF MATERIALS SUBMITTED TO 
              COMMISSION.

    (a) Securities Exchange Act of 1934.--Section 17(j) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78q(j)) is amended to read 
as follows:
    ``(j) Authority To Limit Disclosure of Information.--
Notwithstanding any other provision of law, the Commission shall not be 
compelled to disclose any information, documents, records, or reports 
that relate to an examination of a person subject to or described in 
this section, including subsection (i)(5)(A), or the financial or 
operational condition of such persons, or any information supplied to 
the Commission by any domestic or foreign regulatory agency that 
relates to the financial or operational condition of such persons, of 
any associated person of such persons, or any affiliate of an 
investment bank holding company. Nothing in this subsection shall 
authorize the Commission to withhold information from Congress, or 
prevent the Commission from complying with a request for information 
from any other Federal department or agency or any self-regulatory 
organization requesting the information for purposes within the scope 
of its jurisdiction. Nothing in this subsection shall prevent the 
Commission from complying with an order of a court of the United States 
in an action brought by the United States or the Commission against 
such a person to produce information, documents, records, or reports 
relating directly to the examination of that person or the financial or 
operational condition of that person or an associated or affiliated 
person of that person. For purposes of section 552 of title 5, United 
States Code, this subsection shall be considered a statute described in 
subsection (b)(3)(B) of such section 552. In prescribing regulations to 
carry out the requirements of this subsection, the Commission shall 
designate information described in or obtained pursuant to 
subparagraphs (A), (B), and (C) of subsection (i)(3) as confidential 
information for purposes of section 24(b)(2) of this title.''.
    (b) Investment Company Act of 1940.--Section 31(b) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-30(b)) is amended by 
adding at the end the following:
            ``(4) Confidentiality.--Notwithstanding any other provision 
        of law, the Commission shall not be compelled to disclose any 
        information, documents, records, or reports that relate to an 
        examination of a person subject to or described in this 
        section. Nothing in this subsection shall authorize the 
        Commission to withhold information from Congress, or prevent 
        the Commission from complying with a request for information 
        from any other Federal department or agency requesting the 
        information for purposes within the scope of its jurisdiction. 
        Nothing in this subsection shall prevent the Commission from 
        complying with an order of a court of the United States in an 
        action brought by the United States or the Commission against 
        such a person to produce information, documents, records, or 
        reports relating directly to the examination of that person or 
        the financial or operational condition of that person or an 
        associated or affiliated person of that person. For purposes of 
        section 552 of title 5, United States Code, this subsection 
        shall be considered a statute described in subsection (b)(3)(B) 
        of such section 552.''.
    (c) Investment Advisers Act of 1940.--Section 204 of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-4) is amended by adding at the end 
the following new subsection:
    ``(d) Confidentiality.--Notwithstanding any other provision of law, 
the Commission shall not be compelled to disclose any information, 
documents, records, or reports that relate to an examination of a 
person subject to or described in this section. Nothing in this 
subsection shall authorize the Commission to withhold information from 
Congress, or prevent the Commission from complying with a request for 
information from any other Federal department or agency requesting the 
information for purposes within the scope of its jurisdiction. Nothing 
in this subsection shall prevent the Commission from complying with an 
order of a court of the United States in an action brought by the 
United States or the Commission against such a person to produce 
information, documents, records, or reports relating directly to the 
examination of that person or the financial or operational condition of 
that person or an associated or affiliated person of that person. For 
purposes of section 552 of title 5, United States Code, this subsection 
shall be considered a statute described in subsection (b)(3)(B) of such 
section 552.''.

SEC. 16. SHARING PRIVILEGED INFORMATION WITH OTHER AUTHORITIES.

    Section 24 of the Securities Exchange Act of 1934 (15 U.S.C. 78x) 
is amended--
            (1) by redesignating subsections (d) and (e) as subsections 
        (e) and (f), respectively;
            (2) in subsection (e), as redesignated, by striking ``as 
        provided in subsection (e)'' and inserting ``as provided in 
        subsection (f)''; and
            (3) by inserting after subsection (c) the following new 
        subsection (d)--
    ``(d) Sharing Privileged Information With Other Authorities.--
            ``(1) Privileged information provided by the commission.--
        The Commission shall not be deemed to have waived any privilege 
        applicable to any information by transferring that information 
        to or permitting that information to be used by--
                    ``(A) any agency (as defined in section 6 of title 
                18, United States Code);
                    ``(B) any foreign securities authority;
                    ``(C) any foreign law enforcement authority; or
                    ``(D) any State securities or law enforcement 
                authority.
            ``(2) Non-disclosure of privileged information provided to 
        the commission.--Except as provided in subsection (f), the 
        Commission shall not be compelled to disclose privileged 
        information obtained from any foreign securities authority, or 
        foreign law enforcement authority, if the authority has in good 
        faith determined and represented to the Commission that the 
        information is privileged.
            ``(3) Non-waiver of privileged information provided to the 
        commission.--No Federal agency or State securities or law 
        enforcement authority shall be deemed to have waived any 
        privilege applicable to any information by transferring that 
        information to or permitting that information to be used by the 
        Commission.
            ``(4) Definitions.--For purposes of this subsection:
                    ``(A) The term `privilege' includes any work-
                product privilege, attorney-client privilege, 
                governmental privilege, or other privilege recognized 
                under Federal, Foreign, or State law.
                    ``(B) The term `foreign law enforcement authority' 
                means any foreign authority that is empowered under 
                foreign law to detect, investigate or prosecute 
                potential violations of law.
                    ``(C) The term `State securities or law enforcement 
                authority' means the authority of any State or 
                territory that is empowered under State or territory 
                law to detect, investigate or prosecute potential 
                violations of law.''.

SEC. 17. TECHNICAL CORRECTIONS.

    (a) Securities Act of 1933.--The Securities Act of 1933 (15 U.S.C. 
77a et seq.) is amended--
            (1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by striking 
        ``individual;'' and inserting ``individual,'';
            (2) in section 18(b)(1)(C) (15 U.S.C. 77r(b)(1)(C)), by 
        striking ``is a security'' and inserting ``a security'';
            (3) in section 18(c)(2)(B)(i) (15 U.S.C. 77r(c)(2)(B)(i)), 
        by striking ``State, or'' and inserting ``State or'';
            (4) in section 19(d)(6)(A) (15 U.S.C. 77s(d)(6)(A)), by 
        striking ``in paragraph (1) of (3)'' and inserting ``in 
        paragraph (1) or (3)''; and
            (5) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z-
        2(c)(1)(B)(ii)), by striking ``business entity;'' and inserting 
        ``business entity,''.
    (b) Securities Exchange Act of 1934.--The Securities Exchange Act 
of 1934 (15 U.S.C. 78 et seq.) is amended--
            (1) in section 2(1)(a) (15 U.S.C. 78b(1)(a)), by striking 
        ``affected'' and inserting ``effected'';
            (2) in section 3(a)(55)(A) (15 U.S.C. 78c(a)(55)(A)), by 
        striking ``section 3(a)(12) of the Securities Exchange Act of 
        1934'' and inserting ``section 3(a)(12) of this Act'';
            (3) in section 3(g) (15 U.S.C. 78c(g)), by striking 
        ``company, account person, or entity'' and inserting ``company, 
        account, person, or entity'';
            (4) in section 10A(i)(1)(B)(i) (15 U.S.C. 78j-
        1(i)(1)(B)(i)), by striking ``nonaudit'' and inserting ``non-
        audit'';
            (5) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by striking 
        ``earning statement'' and inserting ``earnings statement'';
            (6) in section 15(b)(1) (15 U.S.C. 78o(b)(1))--
                    (A) by striking the sentence beginning ``The order 
                granting'' and ending ``from such membership.'' in 
                subparagraph (B); and
                    (B) by inserting such sentence in the matter 
                following such subparagraph after ``are satisfied.'';
            (7) in section 15 (15 U.S.C. 78o), by redesignating 
        subsection (i), as added by section 303(f) of the Commodity 
        Futures Modernization Act of 2000 (114 Stat. 2763A-455), as 
        subsection (j);
            (8) in section 15C(a)(2) (15 U.S.C. 78o-5(a)(2))--
                    (A) by redesignating clauses (i) and (ii) as 
                subparagraphs (A) and (B), respectively;
                    (B) by striking the sentence beginning ``The order 
                granting'' and ending ``from such membership.'' in such 
                subparagraph (B), as redesignated; and
                    (C) by inserting such sentence in the matter 
                following such redesignated subparagraph after ``are 
                satisfied.'';
            (9) in section 16(a)(2)(C) (15 U.S.C. 78p(a)(2)(C)), by 
        striking ``section 206(b)'' and inserting ``section 206B'';
            (10) in section 17(b)(1)(B) (15 U.S.C. 78q(b)(1)(B)), by 
        striking ``15A(k) gives'' and inserting ``15A(k), give''; and
            (11) in section 21C(c)(2) (15 U.S.C. 78u-3(c)(2)), by 
        striking ``paragraph (1) subsection'' and inserting ``Paragraph 
        (1)''.
    (c) Trust Indenture Act of 1939.--The Trust Indenture Act of 1939 
(15 U.S.C. 77aaa et seq.) is amended--
            (1) in section 304(b) (15 U.S.C. 77ddd(b)), by striking 
        ``section 2 of such Act'' and inserting ``section 2(a) of such 
        Act'';
            (2) in section 313(a)(4) (15 U.S.C. 77mmm(a)(4)) by 
        striking ``subsection 311'' and inserting ``section 311(b)''; 
        and
            (3) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), by 
        striking ``(1),'' and inserting ``(1)''.
    (d) Investment Company Act of 1940.--The Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.) is amended--
            (1) in section 2(a)(19) (15 U.S.C. 80a-2(a)(19)) by 
        striking ``clause (vi)'' both places it appears in the last two 
        sentences and inserting ``clause (vii)'';
            (2) in section 9(b)(4)(B) (15 U.S.C. 80a-9(b)(4)(B)), by 
        inserting ``or'' after the semicolon at the end;
            (3) in section 12(d)(1)(J) (15 U.S.C. 80a-12(d)(1)(J)), by 
        striking ``any provision of this subsection'' and inserting 
        ``any provision of this paragraph'';
            (4) in section 13(a)(3) (15 U.S.C. 80a-13(a)(3)), by 
        inserting ``or'' after the semicolon at the end;
            (5) in section 17(f)(4) (15 U.S.C. 80a-17(f)(4)), by 
        striking ``No such member'' and inserting ``No member of a 
        national securities exchange'';
            (6) in section 17(f)(6) (15 U.S.C. 80a-17(f)(6)), by 
        striking ``company may serve'' and inserting ``company, may 
        serve''; and
            (7) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a-
        60(a)(3)(B)(iii))--
                    (A) by striking ``paragraph (1) of section 205'' 
                and inserting ``section 205(a)(1)''; and
                    (B) by striking ``clause (A) or (B) of that 
                section'' and inserting ``section 205(b)(1) or (2)''.
    (e) Investment Advisers Act of 1940.--The Investment Advisers Act 
of 1940 (15 U.S.C. 80b-1 et seq.) is amended--
            (1) in each of the following sections, by striking 
        ``principal business office'' or ``principal place of 
        business'' (whichever and wherever it appears) and inserting 
        ``principal office and place of business'': sections 
        203(c)(1)(A), 203(k)(4)(B), 213(a), 222(b), and 222(c) (15 
        U.S.C. 80b-3(c)(1)(A), 80b-3(k)(4)(B), 80b-13(a), 80b-18a(b), 
        and 80b-18a(c)); and
            (2) in section 206(3) (15 U.S.C. 80b-6(3)), by inserting 
        ``or'' after the semicolon at the end.

SEC. 18. CONFORMING AMENDMENTS FOR THE REPEAL OF THE PUBLIC UTILITY 
              HOLDING COMPANY ACT OF 1935.

    (a) Securities Exchange Act of 1934.--The Securities Exchange Act 
of 1934 (15 U.S.C. 78 et seq.) is amended--
            (1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), by striking 
        ``the Public Utility Holding Company Act of 1935 (15 U.S.C. 79a 
        et seq.),''; and
            (2) in section 12(k) (15 U.S.C. 78l(k)), by amending 
        paragraph (7) to read as follows:   
            ``(7) Definition.--For purposes of this subsection, the 
        term `emergency' means--
                    ``(A) a major market disturbance characterized by 
                or constituting--
                            ``(i) sudden and excessive fluctuations of 
                        securities prices generally, or a substantial 
                        threat thereof, that threaten fair and orderly 
                        markets; or
                            ``(ii) a substantial disruption of the safe 
                        or efficient operation of the national system 
                        for clearance and settlement of transactions in 
                        securities, or a substantial threat thereof; or
                    ``(B) a major disturbance that substantially 
                disrupts, or threatens to substantially disrupt--
                            ``(i) the functioning of securities 
                        markets, investment companies, or any other 
                        significant portion or segment of the 
                        securities markets; or
                            ``(ii) the transmission or processing of 
                        securities transactions.''.
            (3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), by striking 
        ``section 18(c) of the Public Utility Holding Company Act of 
        1935,''.
    (b) Trust Indenture Act of 1939.--The Trust Indenture Act of 1939 
(15 U.S.C. 77aaa et seq.) is amended--
            (1) in section 303 (15 U.S.C. 77ccc), by amending paragraph 
        (17) to read as follows:
            ``(17) The terms `Securities Act of 1933' and `Securities 
        Exchange Act of 1934' shall be deemed to refer, respectively, 
        to such Acts, as amended, whether amended prior to or after the 
        enactment of this title.'';
            (2) in section 308 (15 U.S.C. 77hhh), by striking 
        ``Securities Act of 1933, the Securities Exchange Act of 1934, 
        or the Public Utility Holding Company Act of 1935'' each place 
        it appears and inserting ``Securities Act of 1933 or the 
        Securities Exchange Act of 1934'';
            (3) in section 310 (15 U.S.C. 77jjj), by striking 
        subsection (c) (including the preceding heading);
            (4) in section 311 (15 U.S.C. 77kkk) by striking subsection 
        (c);
            (5) in section 323(b) (15 U.S.C. 77www(b)), by striking 
        ``Securities Act of 1933, or the Securities Exchange Act of 
        1934, or the Public Utility Holding Company Act of 1935'' and 
        inserting ``Securities Act of 1933 or the Securities Exchange 
        Act of 1934''; and
            (6) in section 326 (15 U.S.C. 77zzz), by striking 
        ``Securities Act of 1933, or the Securities Exchange Act of 
        1934, or the Public Utility Holding Company Act of 1935,'' and 
        inserting ``Securities Act of 1933 or the Securities Exchange 
        Act of 1934''.
    (c) Investment Company Act of 1940.--The Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.) is amended--
            (1) in section 2(a)(44) (15 U.S.C. 80a-2(a)(44)), by 
        striking ```Public Utility Holding Company Act of 1935','';
            (2) in section 3(c) (15 U.S.C. 80a-3(c)), by amending 
        paragraph (8) to read as follows:
            ``(8) [Repealed]'';
            (3) in section 38(b) (15 U.S.C. 80a-37(b)), by striking 
        ``the Public Utility Holding Company Act of 1935,''; and
            (4) in section 50 (15 U.S.C. 80a-49), by striking ``the 
        Public Utility Holding Company Act of 1935,''.
    (d) Investment Advisers Act of 1940.--Section 202(a)(21) of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(21)) is amended by 
striking ```Public Utility Holding Company Act of 1935',''.

SEC. 19. NATIONWIDE SERVICE OF SUBPOENAS.

    (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 
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.''.
    (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.''.

            Passed the House of Representatives September 11, 2008.

            Attest:

                                                                 Clerk.
110th CONGRESS

  2d Session

                               H. R. 6513

_______________________________________________________________________

                                 AN ACT

 To amend the Federal securities laws to enhance the effectiveness of 
   the Securities and Exchange Commission's enforcement, corporation 
 finance, trading and markets, investment management, and examination 
                   programs, and for other purposes.