1.This Act may be cited as the
Investor Protection Act of
2009
.
2.The table of contents
for this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
Title I—Disclosure
Sec. 101. Investor Advisory Committee
established.
Sec. 102. Clarification of the commission’s
authority to engage in consumer testing.
Sec. 103. Establishment of a fiduciary duty for
brokers, dealers, and investment advisers, and harmonization of
regulation.
Sec. 104. Commission study on disclosure to
retail customers before purchase of products or services.
Sec. 105. Beneficial ownership and short-swing
profit reporting.
Sec. 106. Revision to recordkeeping
rules.
Sec. 107. Study on enhancing investment advisor
examinations.
Sec. 108. GAO study of financial
planning.
Title II—Enforcement and Remedies
Sec. 201. Authority to restrict mandatory
pre-dispute arbitration.
Sec. 202. Comptroller General study to review
securities arbitration system.
Sec. 203. Whistleblower protection.
Sec. 204. Conforming amendments for
whistleblower protection.
Sec. 205. Implementation and transition
provisions for whistleblower protections.
Sec. 206. Collateral bars.
Sec. 207. Aiding and abetting authority under
the Securities Act and the Investment Company Act.
Sec. 208. Authority to impose penalties for
aiding and abetting violations of the Investment Advisers Act.
Sec. 209. Deadline for completing examinations,
inspections and enforcement actions.
Sec. 210. Nationwide service of
subpoenas.
Sec. 211. Authority to impose civil penalties
in cease and desist proceedings.
Sec. 212. Formerly associated
persons.
Sec. 213. Sharing privileged information with
other authorities.
Sec. 214. Expanded access to grand jury
material.
Sec. 215. Aiding and abetting standard of
knowledge satisfied by recklessness.
Sec. 216. Extraterritorial jurisdiction of the
antifraud provisions of the Federal securities laws.
Sec. 217. Fidelity bonding.
Sec. 218. Enhanced SEC authority to conduct
surveillance and risk assessment.
Sec. 219. Investment company
examinations.
Sec. 220. Control person liability under the
Securities Exchange Act.
Sec. 221. Enhanced application of anti-fraud
provisions.
Sec. 222. SEC Authority to Issue Rules on Proxy
Access.
Title III—Commission funding and
organization
Sec. 301. Authorization of
appropriations.
Sec. 302. Investment adviser regulation
funding.
Sec. 303. Amendments to section 31 of the
Securities Exchange Act of 1934.
Sec. 304. Commission organizational study and
reform.
Sec. 305. Capital Markets Safety
Board.
Sec. 306. Report on implementation of
post-Madoff reforms
.
Sec. 307. Joint Advisory Committee.
Title IV—Additional Commission
reforms
Sec. 401. Regulation of securities
lending.
Sec. 402. Lost and stolen
securities.
Sec. 403. Fingerprinting.
Sec. 404. Equal treatment of self-regulatory
organization rules.
Sec. 405. Clarification that section 205 of the
Investment Advisers Act of 1940 does not apply to State-registered
advisers.
Sec. 406. Conforming amendments for the repeal
of the Public Utility Holding Company Act of 1935.
Sec. 407. Promoting transparency in financial
reporting.
Sec. 408. Unlawful margin lending.
Sec. 409. Protecting confidentiality of
materials submitted to the Commission.
Sec. 410. Technical corrections.
Sec. 411. Municipal securities.
Sec. 412. Interested person
definition.
Sec. 413. Rulemaking authority to protect
redeeming investors.
Sec. 414. Study on SEC revolving
door.
Sec. 415. Study on internal control evaluation
and reporting cost burdens on smaller issuers.
Sec. 416. Analysis of rule regarding smaller
reporting companies.
Sec. 417. Financial Reporting
Forum.
Sec. 418. Investment advisers subject to State
authorities.
Sec. 419. Custodial requirements.
Sec. 420. Ombudsman.
Title V—Securities Investor Protection Act
amendments
Sec. 501. Increasing the minimum assessment
paid by SIPC members.
Sec. 502. Increasing the borrowing limit on
treasury loans.
Sec. 503. Increasing the cash limit of
protection.
Sec. 504. SIPC as trustee in SIPA liquidation
proceedings.
Sec. 505. Insiders ineligible for SIPC
advances.
Sec. 506. Eligibility for direct payment
procedure.
Sec. 507. Increasing the fine for prohibited
acts under SIPA.
Sec. 508. Penalty for misrepresentation of SIPC
membership or protection.
Sec. 509. Futures held in a portfolio margin
securities account protection.
Sec. 510. Study and report on the feasibility
of risk-based assessments SIPC members.
Sec. 511. Budgetary treatment of Commission
loans to SIPC.
Title VI—Sarbanes-Oxley Act
Amendments
Sec. 601. Public Company Accounting Oversight
Board oversight of auditors of brokers and dealers.
Sec. 602. Foreign regulatory information
sharing.
Sec. 603. Expansion of audit information to be
produced and exchanged with foreign counterparts.
Sec. 604. Conforming amendment related to
registration.
Sec. 605. Fair fund amendments.
Sec. 606. Exemption for nonaccelerated
filers.
Sec. 607. Whistleblower protection against
retaliation by a subsidiary of an issuer.
Sec. 608. Congressional access to
information.
Sec. 609. Creation of ombudsman for the
PCAOB.
Sec. 610. Auditing Oversight Board.
Title VII—Senior Investment
Protection
Sec. 701. Findings.
Sec. 702. Definitions.
Sec. 703. Grants to States for enhanced
protection of seniors from being mislead by false designations.
Sec. 704. Applications.
Sec. 705. Length of participation.
Sec. 706. Authorization of
appropriations.
Title VIII—Registration of Municipal Financial
Advisors
Sec. 801. Municipal financial adviser
registration requirement.
Sec. 802. Conforming amendments.
Sec. 803. Effective dates.
<enum>I</enum><header>Disclosure</header>
<section id="H7DFC7CF4662A4434B4BA594FDB970A8F"><enum>101.</enum><header>Investor Advisory
Committee established</header><text display-inline="no-display-inline">The
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by adding
after section 4C the following new section:</text>
<quoted-block changed="added" committee-id="HBA00" id="H876437552ADA480C8159BFEC98EFC029" reported-display-style="italic" style="OLC">
<section id="H481D2B3B7BB247CAAF2FA7986A8E5612"><enum>4D.</enum><header>Investor Advisory
Committee</header>
<subsection id="H276B77A6E2FF4E94A4AB45178D91F4EF"><enum>(a)</enum><header>Establishment and
purpose</header><text display-inline="yes-display-inline">There is established
an Investor Advisory Committee (in this section referred to as the
<quote>Committee</quote>) to advise and consult with the Commission on—</text>
<paragraph id="HCDF505D244944E0D8184CF3F43EF8ED3"><enum>(1)</enum><text>regulatory priorities and
issues regarding new products, trading strategies, fee structures and the
effectiveness of disclosures;</text>
</paragraph><paragraph id="H6E3329BFEDA146129B83234E1F79111D"><enum>(2)</enum><text>initiatives to protect
investor interest; and</text>
</paragraph><paragraph id="H1EF2B457EE1644A9AD2449DA322BEF81"><enum>(3)</enum><text>initiatives to promote
investor confidence in the integrity of the marketplace.</text>
</paragraph></subsection><subsection id="H82E413E4EB8A4B19B6113A9570DA0CFB"><enum>(b)</enum><header>Membership</header>
<paragraph id="H7E46EC509E4449039DFA2B885BD1737B"><enum>(1)</enum><header>Appointment</header><text>The
Chairman of the Commission shall appoint the members of the Committee, which
members shall—</text>
<subparagraph id="H1FE8B2A6193B4A258C144630BDED3F1F"><enum>(A)</enum><text>represent the interests
of individual investors;</text>
</subparagraph><subparagraph id="H2D62887A5C2F456A8716F26C96CB99FF"><enum>(B)</enum><text>represent the interests
of institutional investors; and</text>
</subparagraph><subparagraph commented="no" id="HA01C2C792FA44136A0A36F76C2898676"><enum>(C)</enum><text>use a wide range of
investment approaches.</text>
</subparagraph></paragraph><paragraph id="HBFD509DC5E05466D89068365A47534F0"><enum>(2)</enum><header>Members not commission
employees</header><text>Members shall not be considered employees or agents of
the Commission solely because of membership on the Committee.</text>
</paragraph></subsection><subsection id="HE27889150EEB483AAB0470F94FC3FE92"><enum>(c)</enum><header>Meetings</header><text>The
Committee shall meet from time to time at the call of the Commission, but, at a
minimum, shall meet at least twice each year.</text>
</subsection><subsection id="H4EAC3CE947474644B02B6ACE6E765E8D"><enum>(d)</enum><header>Compensation and travel
expenses</header><text display-inline="yes-display-inline">Members of the
Committee who are not full-time employees of the United States shall—</text>
<paragraph id="H2CD0636F13174509BAB5DC187B0C266B"><enum>(1)</enum><text>be entitled to receive
compensation at a rate fixed by the Commission while attending meetings of the
Committee, including travel time; and</text>
</paragraph><paragraph id="H8ABD91C2C1674652BCA02F86380C905A"><enum>(2)</enum><text>be allowed travel
expenses, including transportation and subsistence, while away from their homes
or regular places of business.</text>
</paragraph></subsection><subsection id="H5831AEC0261243E795EC11CDD6A1A46C"><enum>(e)</enum><header>Committee
findings</header><text display-inline="yes-display-inline">Nothing in this
section requires the Commission to accept, agree, or act upon the findings or
recommendations of the Committee.</text>
</subsection><subsection id="H49FE003F80FD45D19CC8D1191269A1A3"><enum>(f)</enum><header>Authorization of
appropriations</header><text display-inline="yes-display-inline">There is
authorized to be appropriated to the Commission such sums as are necessary for
the activities of the
Committee.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H19B12369187B4855B1653414E5FB2DEE"><enum>102.</enum><header>Clarification of the
commission’s authority to engage in consumer testing</header>
<subsection id="H222D0D395A024FC99AED0A83F241BEFA"><enum>(a)</enum><header>Amendment to Securities
Act of 1933</header><text>Section 19 of the Securities Act of 1933 (15 U.S.C.
77s) is amended by adding at the end the following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" id="H7EBB293E35C04FC2A21026EF71B1C481" reported-display-style="italic" style="OLC">
<subsection id="H6677159E694B4E5FB4AFAED63366F56C"><enum>(e)</enum><text>For the purposes of
evaluating its rules and programs and for considering, proposing, adopting, or
engaging in rules or programs, the Commission is authorized to gather
information, communicate with investors or other members of the public, and
engage in such temporary or experimental programs as the Commission in its
discretion determines is in the public interest or for the protection of
investors. The Commission may delegate to its staff some or all of the
authority conferred by this
subsection.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H5B93E9235C8943CAA5C5224794160B7F"><enum>(b)</enum><header>Amendment to Securities
Exchange Act of 1934</header><text>Section 23 of the Securities Exchange Act of
1934 (15 U.S.C. 78w) is amended by redesignating subsections (b), (c), and (d)
as subsections (c), (d), and (e), respectively, and inserting after subsection
(a) the following:</text>
<quoted-block changed="added" committee-id="HBA00" id="H5E76F89A69D347C582744EAE63C45060" reported-display-style="italic" style="OLC">
<subsection id="H173700E870444E63AC601FBE3CA43AF7"><enum>(b)</enum><text>For the purposes of
evaluating its rules and programs and for considering proposing, adopting, or
engaging in rules or programs, the Commission is authorized to gather
information, communicate with investors or other members of the public, and
engage in such temporary or experimental programs as the Commission in its
discretion determines is in the public interest or for the protection of
investors. The Commission may delegate to its staff some or all of the
authority conferred by this
subsection.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H525734F75CA94A5EB68EE8C22C9B2AAD"><enum>(c)</enum><header>Amendment to Investment
Company Act of 1940</header><text>Section 38 of the Investment Company Act of
1940 (15 U.S.C. 80a–38) is amended by adding at the end the following new
subsection:</text>
<quoted-block changed="added" committee-id="HBA00" id="HD42856D4C4BD41CA8EAE3238D9CFCF54" reported-display-style="italic" style="OLC">
<subsection id="H69730C0F26E14777A2B08257EDC1511E"><enum>(d)</enum><header>Gathering
information</header><text>For the purposes of evaluating its rules and programs
and for considering proposing, adopting, or engaging in rules or programs, the
Commission is authorized to gather information, communicate with investors or
other members of the public, and engage in such temporary or experimental
programs as the Commission in its discretion determines is in the public
interest or for the protection of investors. The Commission may delegate to its
staff some or all of the authority conferred by this
subsection.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H9F45B5D982E94EB3B25AEB09D1BC5D61"><enum>(d)</enum><header>Amendment to the
Investment Advisers Act of 1940</header><text>Section 211 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b–11) is amended by adding at the end the
following new subsections:</text>
<quoted-block changed="added" committee-id="HBA00" id="H672312ADFE2E4DFDACED08FF11E1BA27" reported-display-style="italic" style="OLC">
<subsection id="H8E50BB30130C43BD91BC0DE79C316305"><enum>(e)</enum><text>For the purposes of
evaluating its rules and programs and for considering proposing, adopting, or
engaging in rules or programs, the Commission is authorized to gather
information, communicate with investors or other members of the public, and
engage in such temporary or experimental programs as the Commission in its
discretion determines is in the public interest or for the protection of
investors. The Commission may delegate to its staff some or all of the
authority conferred by this
subsection.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="HA17A88E621F64E08B6B33255C3F99C85"><enum>103.</enum><header>Establishment of a
fiduciary duty for brokers, dealers, and investment advisers, and harmonization
of regulation</header>
<subsection id="HB04BD38902DE4B61A9B6FA44CA664C4F"><enum>(a)</enum><header>In general</header>
<paragraph id="H66D93581B1DA419D91880E441D9365B7"><enum>(1)</enum><header>Securities Exchange Act
of 1934</header><text display-inline="yes-display-inline">Section 15 of the
Securities Exchange Act of 1934 (15 U.S.C. 78o) is amended—</text>
<subparagraph id="HF6A458602ABE4A6B8DFA181B54AF9311"><enum>(A)</enum><text>by redesignating the
second subsection (i) as subsection (j); and</text>
</subparagraph><subparagraph id="H01108CED01D14FB7A455485F59F9D033"><enum>(B)</enum><text>by adding at the end the
following new subsections:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H289AFC1198114CCC8213C31C2992C392" reported-display-style="italic" style="OLC">
<subsection id="HB6B6E1E50C2A4A379C2332E6438A44E4"><enum>(k)</enum><header>Standard of
conduct</header>
<paragraph id="H3270E9C09A2A457FB64D1541578EA74E"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Notwithstanding any
other provision of this Act or the Investment Advisers Act of 1940, the
Commission shall promulgate rules to provide that, with respect to a broker or
dealer, when providing personalized investment advice about securities to a
retail customer (and such other customers as the Commission may by rule
provide), the standard of conduct for such broker or dealer with respect to
such customer shall be the same as the standard of conduct applicable to an
investment adviser under the Investment Advisers Act of 1940. The receipt of
compensation based on commission or other standard compensation for the sale of
securities shall not, in and of itself, be considered a violation of such
standard applied to a broker or dealer.</text>
</paragraph><paragraph id="H85A1D6FB6E8B4BF58884209BDC3ACFC3"><enum>(2)</enum><header>Disclosure of range of
products offered</header><text display-inline="yes-display-inline">Where a
broker or dealer sells only proprietary or other limited range of products, as
determined by the Commission, the Commission shall by rule require that such
broker or dealer provide notice to each retail customer and obtain the consent
or acknowledgment of the customer. The sale of only proprietary or other
limited range of products by a broker or dealer shall not, in and of itself, be
considered a violation of the standard set forth in paragraph (1).</text>
</paragraph><paragraph id="HB9ABD3F793374977AF84C6F18F9E4BE0"><enum>(3)</enum><header>Retail customer
defined</header><text display-inline="yes-display-inline">For purposes of this
subsection, the term <term>retail customer</term> means a natural person, or
the legal representative of such natural person, who—</text>
<subparagraph id="HEA2CD85DA74B4CAB9F66D8D97B81041B"><enum>(A)</enum><text>receives personalized
investment advice about securities from a broker or dealer; and</text>
</subparagraph><subparagraph id="H8074EE3FCA3D43E29D978920EDBD6969"><enum>(B)</enum><text>uses such advice
primarily for personal, family, or household purposes.</text>
</subparagraph></paragraph></subsection><subsection id="H0C22D38CFF6749F4BA6797E6E700256C"><enum>(l)</enum><header>Other
matters</header><text display-inline="yes-display-inline">The Commission
shall—</text>
<paragraph id="H5142061A5D3B460C92549D735311977B"><enum>(1)</enum><text>facilitate the provision
of simple and clear disclosures to investors regarding the terms of their
relationships with brokers, dealers, and investment advisers, including any
material conflicts of interest; and</text>
</paragraph><paragraph id="HA9461C38F40344C8B95F22BA83BFB134"><enum>(2)</enum><text>examine and, where
appropriate, promulgate rules prohibiting or restricting certain sales
practices, conflicts of interest, and compensation schemes for brokers,
dealers, and investment advisers that the Commission deems contrary to the
public interest and the protection of
investors.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="H08BA161855964043B4732BBF4D1A5D19"><enum>(2)</enum><header>Investment Advisers Act
of 1940</header><text>Section 211 of the Investment Advisers Act of 1940, as
amended by section 102(d), is further amended by adding at the end the
following new subsections:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H3ACAEB6E302E4401B2C58FB0D5C99A50" reported-display-style="italic" style="OLC">
<subsection id="HA25A2124D8AC49D8B5A6909A72C2FC03"><enum>(f)</enum><header>Standard of
conduct</header>
<paragraph id="HBF8177C168B0454BA6586632F572FB0F"><enum>(1)</enum><header>In
general</header><text>The Commission shall promulgate rules to provide that the
standard of conduct for all brokers, dealers, and investment advisers, when
providing personalized investment advice about securities to retail customers
(and such other customers as the Commission may by rule provide), shall be to
act in the best interest of the customer without regard to the financial or
other interest of the broker, dealer, or investment adviser providing the
advice. In accordance with such rules, any material conflicts of interest shall
be disclosed and may be consented to by the customer. Such rules shall provide
that such standard of conduct shall be no less stringent than the standard
applicable to investment advisers under section 206(1) and (2) of this Act when
providing personalized investment advice about securities, except the
Commission shall not ascribe a meaning to the term <quote>customer</quote> that
would include an investor in a private fund managed by an investment adviser,
where such private fund has entered into an advisory contract with such
adviser. The receipt of compensation based on commission or fees shall not, in
and of itself, be considered a violation of such standard applied to a broker,
dealer, or investment adviser.</text>
</paragraph><paragraph id="H25395CEB8FEE491980AA52837176951D"><enum>(2)</enum><header>Retail customer
defined</header><text display-inline="yes-display-inline">For purposes of this
subsection, the term <term>retail customer</term> means a natural person, or
the legal representative of such natural person, who—</text>
<subparagraph id="HC440366961AC489891DDC82936732B5D"><enum>(A)</enum><text>receives personalized
investment advice about securities from a broker, dealer, or investment
adviser; and</text>
</subparagraph><subparagraph id="H5B60E79BDDB7497696543463EF2A3882"><enum>(B)</enum><text>uses such advice
primarily for personal, family, or household purposes.</text>
</subparagraph></paragraph></subsection><subsection display-inline="no-display-inline" id="H23D5BE6CB1274CED95583FEAC654FAFE"><enum>(g)</enum><header>Other
matters</header><text display-inline="yes-display-inline">The Commission
shall—</text>
<paragraph id="HEC4FA700B0A34172AD7E094DEF71D218"><enum>(1)</enum><text>facilitate the provision
of simple and clear disclosures to investors regarding the terms of their
relationships with brokers, dealers, and investment advisers, including any
material conflicts of interest; and</text>
</paragraph><paragraph id="HB68C54A5838C4C65AA110596DAF811E7"><enum>(2)</enum><text>examine and, where
appropriate, promulgate rules prohibiting or restricting certain sales
practices, conflicts of interest, and compensation schemes for brokers,
dealers, and investment advisers that the Commission deems contrary to the
public interest and the protection of
investors.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H8BE65CCCF8714E459D803D6FFD8E0632"><enum>(b)</enum><header>Harmonization of
enforcement</header>
<paragraph id="H2952CD10AE1E4ED1BD72B938190C3BBD"><enum>(1)</enum><header>Securities Exchange Act
of 1934</header><text>Section 15 of the Securities Exchange Act of 1934, as
amended by subsection (a)(1), is further amended by adding at the end the
following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H77EC0939D72D4C008E838F6C4AD02E49" reported-display-style="italic" style="OLC">
<subsection id="H181FF52EF686473DB301B308482F648D"><enum>(m)</enum><header>Harmonization of
enforcement</header><text display-inline="yes-display-inline">The enforcement
authority of the Commission with respect to violations of the standard of
conduct applicable to a broker or dealer providing personalized investment
advice about securities to a retail customer shall include—</text>
<paragraph id="H22E26E09940649A5B5756D2C18AB7940"><enum>(1)</enum><text display-inline="yes-display-inline">the enforcement authority of the Commission
with respect to such violations provided under this Act, and</text>
</paragraph><paragraph id="H3D749800CDB84890B27BD681CDC8C98E"><enum>(2)</enum><text display-inline="yes-display-inline">the enforcement authority of the Commission
with respect to violations of the standard of conduct applicable to an
investment advisor under the Investment Advisers Act of 1940, including the
authority to impose sanctions for such violations, and</text>
</paragraph><continuation-text continuation-text-level="subsection">the
Commission shall seek to prosecute and sanction violators of the standard of
conduct applicable to a broker or dealer providing personalized investment
advice about securities to a retail customer under this Act to same extent as
the Commission prosecutes and sanctions violators of the standard of conduct
applicable to an investment advisor under the Investment Advisers Act of
1940.</continuation-text></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HB6A90E4C9E0647B5B6C3FAE27264B02D"><enum>(2)</enum><header>Investment Advisers Act
of 1940</header><text display-inline="yes-display-inline">Section 211 of the
Investment Advisers Act of 1940, as amended by section (a)(2), is further
amended by adding at the end the following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H9DDB8D609BAD4588BCE73208AEE14C60" reported-display-style="italic" style="OLC">
<subsection id="H6DB15B68112F4B7AA91054D411B4FC5A"><enum>(h)</enum><header>Harmonization of
enforcement</header><text display-inline="yes-display-inline">The enforcement
authority of the Commission with respect to violations of the standard of
conduct applicable to an investment adviser shall include—</text>
<paragraph id="HF320469F56F549E7A11A2060E30524F7"><enum>(1)</enum><text display-inline="yes-display-inline">the enforcement authority of the Commission
with respect to such violations provided under this Act, and</text>
</paragraph><paragraph id="H60D7D0ED18DF43B48D088409D92F81A4"><enum>(2)</enum><text display-inline="yes-display-inline">the enforcement authority of the Commission
with respect to violations of the standard of conduct applicable to a broker or
dealer providing personalized investment advice about securities to a retail
customer under the Securities Exchange Act of 1934, including the authority to
impose sanctions for such violations, and</text>
</paragraph><continuation-text continuation-text-level="subsection">the
Commission shall seek to prosecute and sanction violators of the standard of
conduct applicable to an investment advisor under this Act to same extent as
the Commission prosecutes and sanctions violators of the standard of conduct
applicable to a broker or dealer providing personalized investment advice about
securities to a retail customer under the Securities Exchange Act of
1934.</continuation-text></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection></section><section id="HE16FFBC4F3C84D5C80E49EF12CE30923"><enum>104.</enum><header>Commission study on
disclosure to retail customers before purchase of products or services</header>
<subsection id="HB54F48007B6745F4BE2E884FCAE783F9"><enum>(a)</enum><header>Study
required</header><text>Prior to proposing any rules or regulations pursuant to
subsection (b)(1) regarding the manner in which investment products or services
are sold or provided in the United States to retail customers or the
information that must be provided to retail customers prior to the purchase of
such products or services, and within 180 days after the date of the enactment
of this Act, the Securities and Exchange Commission shall publish a study that
examines—</text>
<paragraph id="HD15900DEC0A845E49DC845C19991C39A"><enum>(1)</enum><text display-inline="yes-display-inline">the nature of a <quote>retail
customer</quote>, taking into consideration the definition in section 15(k) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o), as amended by section 103
of this Act;</text>
</paragraph><paragraph id="HFFFB3DBC309D4B62907F2BCA0D4110A9"><enum>(2)</enum><text>the range of products and
services sold or provided to retail customers, and the sellers or providers of
such products and services, that are within the Commission’s
jurisdiction;</text>
</paragraph><paragraph id="H6183A2A51CBC4F90B0D65106BEB50D6E"><enum>(3)</enum><text>how such products and
services are sold or provided to retail customers, the fees charged for such
products and services, and the conflicts of interest that may arise during the
sales process or provision of services;</text>
</paragraph><paragraph id="H1D17892A711340019345B887323AF0EA"><enum>(4)</enum><text>information that retail
customers should receive prior to purchasing each product or service, and the
appropriate person or entity to provide such information; and</text>
</paragraph><paragraph id="HEDFC63ACCFEB46E6A4DEDB8E2E4296C1"><enum>(5)</enum><text>ways to ensure that,
where possible, reasonably similar products and services are subject to similar
regulatory treatment, including with respect to information that must be
provided to retail customers prior to the purchase of such products or services
and how such information is provided.</text>
</paragraph></subsection><subsection id="H2BD867B8177C4C3D9F005B7DAD221B34"><enum>(b)</enum><header>Rulemaking</header>
<paragraph id="H9459D4E584C54E0A8A5CB3DDF8A4CF2C"><enum>(1)</enum><text display-inline="yes-display-inline">Notwithstanding any other provision of the
Securities Act of 1933 (15 U.S.C. 77a et seq.) or the Investment Company Act of
1940 (15 U.S.C. 80a–1 et seq.), following completion of the study required by
subsection (a), the Commission is authorized to promulgate rules to require
that the appropriate persons or entities provide designated documents or
information to retail customers prior to the purchase of identified investment
products or services. Any such rules shall—</text>
<subparagraph id="H06A0AB10A4A04E3A91C5D75DDE4656CD"><enum>(A)</enum><text>take into account the
findings of the study conducted pursuant to subsection (a);</text>
</subparagraph><subparagraph id="H37C93EC3CC2A4DD3B19F75F7B25B9701"><enum>(B)</enum><text display-inline="yes-display-inline">take into consideration, to the extent
possible, the need for such documents and information to be consistent and
comparable across investment products or services sold or provided to retail
customers; and</text>
</subparagraph><subparagraph id="H13DCDFF8BDC64A67951E30156A105513"><enum>(C)</enum><text display-inline="yes-display-inline">reduce, to the extent possible, disruptions
to the purchase process for investment products and services sold or provided
to retail customers, by means such as permitting required disclosures to be
made via the Internet.</text>
</subparagraph></paragraph><paragraph id="HA6996D8482604D4EB1D33C198449BBD6"><enum>(2)</enum><text>Notwithstanding paragraph
(1), the Commission is authorized to promulgate rules in connection
with—</text>
<subparagraph id="H2794D09CBFE6493592390E68DFD0F58D"><enum>(A)</enum><text>the implementation of
section 103; and</text>
</subparagraph><subparagraph id="HF408C00E96D04286B27FD368FB0020BD"><enum>(B)</enum><text>disclosure to retail
customers other than in connection with the purchase of investment products or
services.</text>
</subparagraph></paragraph></subsection></section><section id="HEFA97DCA233E419D9EB584DF6ED6D73A"><enum>105.</enum><header>Beneficial ownership
and short-swing profit reporting</header>
<subsection id="H083BDAA22E65461984691FEB6AE58395"><enum>(a)</enum><header>Beneficial ownership
reporting</header><text display-inline="yes-display-inline">Section 13 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended—</text>
<paragraph id="HE01D1D7B17FE459E92D166630F3A4323"><enum>(1)</enum><text display-inline="yes-display-inline">in subsection (d)(1)—</text>
<subparagraph id="HD4074C20A7F54E7E9AFD35F36EAAC921"><enum>(A)</enum><text>by inserting after
<quote>within ten days after such acquisition</quote> the following: <quote>or
within such shorter time as the Commission may establish by rule</quote>;
and</text>
</subparagraph><subparagraph id="HF0048A6E4FA64CC1864FD3C769DD6739"><enum>(B)</enum><text>by striking <quote>send
to the issuer of the security at its principal executive office, by registered
or certified mail, send to each exchange where the security is traded,
and</quote>;</text>
</subparagraph></paragraph><paragraph id="H143C36A1B3A548298BBF24BB5FD93ECA"><enum>(2)</enum><text>in subsection
(d)(2)—</text>
<subparagraph id="H0B5DB5DB27394C14B7D1003397F75E61"><enum>(A)</enum><text>by striking <quote>in the
statements to the issuer and the exchange, and</quote>; and</text>
</subparagraph><subparagraph id="HEF62D59547E744C69692C7D0D6448B6A"><enum>(B)</enum><text>by striking <quote>shall
be transmitted to the issuer and the exchange and</quote>;</text>
</subparagraph></paragraph><paragraph id="HE688B4E7440E4D1A85404D97043FB62D"><enum>(3)</enum><text>in subsection (g)(1), by
striking <quote>shall send to the issuer of the security and</quote>;
and</text>
</paragraph><paragraph id="HA89503BB7DDD4F4596A1697DA1537606"><enum>(4)</enum><text>in subsection
(g)(2)—</text>
<subparagraph id="HE501F122E3454250A1FBE072C40FB622"><enum>(A)</enum><text>by striking <quote>sent
to the issuer and</quote>; and</text>
</subparagraph><subparagraph id="H0F930A35B2BD4523A164B329F8F4872E"><enum>(B)</enum><text>by striking <quote>shall
be transmitted to the issuer and</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="H7C95EFA96F4B4079B507DB20FBADB152"><enum>(b)</enum><header>Short-swing profit
reporting</header><text display-inline="yes-display-inline">Section 16(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78p(a)) is amended—</text>
<paragraph id="HC88E368C9A52423BA98EC2A4D68F273B"><enum>(1)</enum><text>in paragraph (1), by
striking <quote>(and, if such security is registered on a national securities
exchange, also with the exchange)</quote>; and</text>
</paragraph><paragraph id="H72326C633A78417DB184A6D8BA179812"><enum>(2)</enum><text display-inline="yes-display-inline">in paragraph (2)(B), by inserting after
<quote>officer</quote> the following: <quote>, or within such shorter time as
the Commission may establish by rule</quote>.</text>
</paragraph></subsection></section><section id="HFBE61635BBCB4DC0A52741289F1B902B"><enum>106.</enum><header>Revision to
recordkeeping rules</header>
<subsection id="H0AA98BAE3AAE42F08488A8D1C93FEF79"><enum>(a)</enum><header>Investment Company Act
of 1940 amendments</header><text display-inline="yes-display-inline">Section 31
of the Investment Company Act of 1940 (15 U.S.C. 80a–30) is amended—</text>
<paragraph id="H34DB32A22C6A4B7AA1FA7E81C40499E8"><enum>(1)</enum><text>in subsection (a)(1), by
adding at the end the following: <quote>Each person with custody or use of a
registered investment company’s securities, deposits, or credits shall maintain
and preserve all records that relate to the person’s custody or use of the
registered investment company’s securities, deposits, or credits for such
period or periods as the Commission, by rules and regulations, may prescribe as
necessary or appropriate in the public interest or for the protection of
investors.</quote>; and</text>
</paragraph><paragraph id="H7F50A1B52F614D908099E83840240330"><enum>(2)</enum><text>in subsection (b), by
adding at the end the following new paragraph:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H3DE5148049164F43A8C32D3B347A4024" reported-display-style="italic" style="OLC">
<paragraph id="HB221D8E8C55E417DBEF1E2380D84A0DB"><enum>(4)</enum><header>Records of persons with
custody or use</header>
<subparagraph id="HF64E8CAC4D8145EA9BD7BB777F515240"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">Notwithstanding
paragraph (1), records of persons with custody or use of a registered
investment company’s securities, deposits, or credits, that relate to such
custody or use, are subject at any time, or from time to time, to such
reasonable periodic, special, or other examinations and other information and
document requests by representatives of the Commission as the Commission deems
necessary or appropriate in the public interest or for the protection of
investors.</text>
</subparagraph><subparagraph id="H6FC5ACCB98904E25AFE0B177CF14A874"><enum>(B)</enum><header>Certain persons subject
to other regulation</header><text>Persons subject to regulation and examination
by a Federal financial institution regulatory agency (as such term is defined
under section 212(c)(2) of title 18, United States Code) may satisfy any
examination request, information request, or document request described under
subparagraph (A), by providing the Commission with a detailed listing, in
writing, of the registered investment company’s securities, deposits, or
credits within such person’s custody or
use.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H43E9DE06FB44410E97929B2962C8EB80"><enum>(b)</enum><header>Investment Advisers Act
of 1940 amendment</header><text display-inline="yes-display-inline">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:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H47FF34986A2A4BBEA022F2B10BC979D8" reported-display-style="italic" style="OLC">
<subsection id="HBB60CB63ED5D4AD09E856AB90B4ED732"><enum>(d)</enum><header>Records of persons with
custody or use</header>
<paragraph id="HAAF842259D8248BDA35A569504833AEE"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Records of persons
with custody or use of a client’s securities, deposits, or credits, that relate
to such custody or use, are subject at any time, or from time to time, to such
reasonable periodic, special, or other examinations and other information and
document requests by representatives of the Commission as the Commission deems
necessary or appropriate in the public interest or for the protection of
investors.</text>
</paragraph><paragraph id="H1FBC091F4E094EBFABF32D7EAE562506"><enum>(2)</enum><header>Certain persons subject
to other regulation</header><text>Persons subject to regulation and examination
by a Federal financial institution regulatory agency (as such term is defined
under section 212(c)(2) of title 18, United States Code) may satisfy any
examination request, information request, or document request described under
paragraph (1), by providing the Commission with a detailed listing, in writing,
of the client’s securities, deposits, or credits within such person’s custody
or
use.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="HBA82D39508AA49CDBD5A8DE2E4B6CA79"><enum>107.</enum><header>Study on enhancing
investment advisor examinations</header>
<subsection id="HCCDF1043FDF94BE6ACD5BC5A52FBADD6"><enum>(a)</enum><header>Study required</header>
<paragraph id="H66AF7F668971434EA66EAFDA154E3830"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The Commission shall
review and analyze the need for enhanced examination and enforcement resources
for investment advisers.</text>
</paragraph><paragraph id="HFFA846C6B01645CF9469F07E29A23DD6"><enum>(2)</enum><header>Areas of
consideration</header><text>The study required by this subsection shall
examine—</text>
<subparagraph id="H5A73A7AB02A94048A7F8CEFFFAE04D39"><enum>(A)</enum><text>the number and frequency
of examinations of investment advisers by the Commission over the 5 years
preceding the date of the enactment of this Act;</text>
</subparagraph><subparagraph id="HE1F57347F0904E55BA8DF98946F167FA"><enum>(B)</enum><text>the extent to which
having Congress authorize the Commission to designate one or more
self-regulatory organizations to augment the Commission’s efforts in overseeing
investment advisers would improve the frequency of examinations of investment
advisers; and</text>
</subparagraph><subparagraph id="HE4E68FDA57774912BF912237CA8DEE56"><enum>(C)</enum><text>current and potential
approaches to examining the investment advisory activities of dually registered
broker-dealers and investment advisers or affiliated broker-dealers and
investment advisers.</text>
</subparagraph></paragraph></subsection><subsection id="H77B4C4A82B21425C8A8E97CB54D2489B"><enum>(b)</enum><header>Report
required</header><text>The Commission shall report its findings to the
Committee on Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate, not later than
180 days after the date of enactment of this Act, and shall use such findings
to revise its rules and regulations, as necessary. The report shall include a
discussion of regulatory or legislative steps that are recommended or that may
be necessary to address concerns identified in the study.</text>
</subsection></section><section id="H74E5B7D1DCDF4D2C99BA0A22BD44435F"><enum>108.</enum><header>GAO study of financial
planning</header>
<subsection id="H34FCC4D037324923B96628C2B124A1F8"><enum>(a)</enum><header>Study
required</header><text display-inline="yes-display-inline">The Comptroller
General of the United States shall conduct a study on the regulation and
oversight of financial planning. The study shall consider—</text>
<paragraph id="H8ED166B47B674C7CA5FF6534A84B312D"><enum>(1)</enum><text>the unique role of
financial planners in providing comprehensive advice in investment planning,
income tax planning, education planning, retirement planning, estate planning,
risk management, and other areas with respect to the management of financial
resources; and</text>
</paragraph><paragraph id="H99998D9F79F84B75B4190B5AECA35020"><enum>(2)</enum><text>any gaps in the
regulation of financial planners given existing State and Federal regulation of
financial planning activities and the need to provide related consumer
protections for such financial planning activities.</text>
</paragraph></subsection><subsection id="H635A8F37931A42B6AE25A2DE4FAA3306"><enum>(b)</enum><header>Report</header><text display-inline="yes-display-inline">Not later than the end of the 180-day
period beginning on the date of the enactment of this Act, the Comptroller
General of the United States shall submit to the Congress a report containing
the findings and determinations made by the Comptroller General in carrying out
the study required under subsection (a), including recommendations for the
appropriate regulation of, or standards for, financial planners as a profession
and how such regulations or standards should be established.</text>
</subsection></section><enum>II</enum><header>Enforcement and
Remedies</header>
<section id="H5C327FDDCEE74434BC952CA6F3D7CC83"><enum>201.</enum><header>Authority to restrict
mandatory pre-dispute arbitration</header>
<subsection id="H509E9F95B4814757946B9345C84CE9A5"><enum>(a)</enum><header>Amendment to Securities
Exchange Act of 1934</header><text>Section 15 of the Securities Exchange Act of
1934 (15 U.S.C. 78o), as amended by section 103, is further amended by adding
at the end the following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" id="HC7458EBADC2D47B6AF185AA2FB527894" reported-display-style="italic" style="OLC">
<subsection id="HB1EE5738A6B5404B9E481FBD33B82280"><enum>(n)</enum><header>Authority to restrict
mandatory pre-dispute arbitration</header><text>The Commission, by rule, may
prohibit, or impose conditions or limitations on the use of, agreements that
require customers or clients of any broker, dealer, or municipal securities
dealer to arbitrate any future dispute between them arising under the Federal
securities laws, the rules and regulations thereunder, or the rules of a
self-regulatory organization if it finds that such prohibition, imposition of
conditions, or limitations are in the public interest and for the protection of
investors.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H1F5171807D094E008BF34B50F1C7A4A3"><enum>(b)</enum><header>Amendment to Investment
Advisers Act of 1940</header><text>Section 205 of the Investment Advisers Act
of 1940 (15 U.S.C. 80b–5) is amended by adding at the end the following new
subsection:</text>
<quoted-block changed="added" committee-id="HBA00" id="H73F9B7D4C35545008EDB60B0DF691168" reported-display-style="italic" style="OLC">
<subsection id="H80A185E35C004D018448B19B63669D04"><enum>(f)</enum><header>Authority to restrict
mandatory pre-dispute arbitration</header><text>The Commission, by rule, may
prohibit, or impose conditions or limitations on the use of, agreements that
require customers or clients of any investment adviser to arbitrate any future
dispute between them arising under the Federal securities laws, the rules and
regulations thereunder, or the rules of a self-regulatory organization if it
finds that such prohibition, imposition of conditions, or limitations are in
the public interest and for the protection of
investors.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="H48F11DF6C9534C359116DB088FBFA8F1"><enum>202.</enum><header>Comptroller General
study to review securities arbitration system</header>
<subsection id="H3A4D87E189874D24A526400572B0F949"><enum>(a)</enum><header>Study</header><text display-inline="yes-display-inline">The Comptroller General of the United
States shall conduct a study to review—</text>
<paragraph id="H1A28F471D6A343E4B50EABCCFC5F2CE8"><enum>(1)</enum><text display-inline="yes-display-inline">the costs to parties of an arbitration
proceeding using the arbitration system operated by the Financial Industry
Regulatory Authority and overseen by the Securities and Exchange Commission as
compared to litigation;</text>
</paragraph><paragraph id="H055C43700C5F43D683972081230B59B8"><enum>(2)</enum><text display-inline="yes-display-inline">the percentage of recovery of the total
amount of a claim in an arbitration proceeding using the arbitration system
operated by the Financial Industry Regulatory Authority and overseen by the
Securities and Exchange Commission; and</text>
</paragraph><paragraph id="HB1D4C716DF2B43A4A8DDA6973DEE6AE9"><enum>(3)</enum><text display-inline="yes-display-inline">other additional issues as may be raised
during the course of the study conducted under this subsection.</text>
</paragraph></subsection><subsection id="HB54F1EE11167426DBCC23B98B2A942CD"><enum>(b)</enum><header>Report</header><text display-inline="yes-display-inline">Not later than 1 year after the date of
enactment of this Act, the Comptroller General of the United States shall
submit to the Committee on Financial Services of the House of Representatives
and the Committee on Banking, Housing, and Urban Affairs of the Senate a report
on the results of the study required by subsection (a), including in such
report recommendations for improvements to the arbitration system referenced in
such subsection.</text>
</subsection></section><section id="H490965C2A9DD470BA80D35904C2A65A6"><enum>203.</enum><header>Whistleblower
protection</header>
<subsection id="HAC9723093C014986A7B4CE9A7829FA7E"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">The Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by adding after section
21E the following new section:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HAF648F02ED274613B5F0255C80A462D6" reported-display-style="italic" style="OLC">
<section id="H1BE30C7CB5B44C36820DC4BA7A4FA981"><enum>21F.</enum><header>Securities
whistleblower incentives and protection</header>
<subsection id="HC35A20D8A61F49AD8BC03AE297F81301"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">In any judicial or
administrative action brought by the Commission under the securities laws that
results in monetary sanctions exceeding $1,000,000, the Commission, under
regulations prescribed by the Commission and subject to subsection (b), may pay
an award or awards not exceeding an amount equal to 30 percent, in total, of
the monetary sanctions imposed in the action or related actions to one or more
whistleblowers who voluntarily provided original information to the Commission
that led to the successful enforcement of the action. Any amount payable under
the preceding sentence shall be paid from the fund described in subsection
(f).</text>
</subsection><subsection id="HF64BAF2FD8BC4D77B97C1B98603C3E53"><enum>(b)</enum><header>Determination of amount
of award; denial of award</header>
<paragraph id="H42696C5BC5064CB09AC382881FF46A5A"><enum>(1)</enum><header>Determination of amount
of award</header><text display-inline="yes-display-inline">The determination of
the amount of an award, within the limit specified in subsection (a), shall be
in the sole discretion of the Commission. The Commission may take into account
the significance of the whistleblower’s information to the success of the
judicial or administrative action described in subsection (a), the degree of
assistance provided by the whistleblower and any legal representative of the
whistleblower in such action, the Commission’s programmatic interest in
deterring violations of the securities laws by making awards to whistleblowers
who provide information that leads to the successful enforcement of such laws,
and such additional factors as the Commission may establish by rules or
regulations.</text>
</paragraph><paragraph id="H00276966FA4D48E69FA00A05944DCFEC"><enum>(2)</enum><header>Denial of
award</header><text display-inline="yes-display-inline">No award under
subsection (a) shall be made—</text>
<subparagraph id="HA7BEEB1CF1614EC785213B832EAE3F64"><enum>(A)</enum><text>to any whistleblower who
is, or was at the time he or she acquired the original information submitted to
the Commission, a member, officer, or employee of any appropriate regulatory
agency, the Department of Justice, the Public Company Accounting Oversight
Board, or a self-regulatory organization;</text>
</subparagraph><subparagraph id="HEA63480CB8154AEE848E85202FD8746D"><enum>(B)</enum><text>to any whistleblower who
is convicted of a criminal violation related to the judicial or administrative
action for which the whistleblower otherwise could receive an award under this
section; or</text>
</subparagraph><subparagraph id="HC240B1E46C38437287CCB372E0D1CDEB"><enum>(C)</enum><text>to any whistleblower who
fails to submit information to the Commission in such form as the Commission
may, by rule, require.</text>
</subparagraph></paragraph></subsection><subsection id="HE07DE633E0D14A79A0939827B6C2215A"><enum>(c)</enum><header>Representation</header>
<paragraph id="H8659076CB95D4C3F959799FDCE4A54ED"><enum>(1)</enum><header>Permitted
representation</header><text display-inline="yes-display-inline">Any
whistleblower who makes a claim for an award under subsection (a) may be
represented by counsel.</text>
</paragraph><paragraph id="H795008108B254134ADFEC2B570EA19F4"><enum>(2)</enum><header>Required
representation</header><text display-inline="yes-display-inline">Any
whistleblower who makes a claim for an award under subsection (a) must be
represented by counsel if the whistleblower submits the information upon which
the claim is based anonymously. Prior to the payment of an award, the
whistleblower must disclose his or her identity and provide such other
information as the Commission may require.</text>
</paragraph></subsection><subsection id="H780448E0C1824E2EBD035BC41F53A1F7"><enum>(d)</enum><header>No contract
necessary</header><text display-inline="yes-display-inline">No contract with
the Commission is necessary for any whistleblower to receive an award under
subsection (a), unless the Commission, by rule or regulation, so
requires.</text>
</subsection><subsection id="H7C7E31ABE2674FBB9CD92370717B2AD9"><enum>(e)</enum><header>Appeals</header><text>Any
determinations under this section, including whether, to whom, or in what
amounts to make awards, shall be in the sole discretion of the Commission, and
any such determinations shall be final and not subject to judicial
review.</text>
</subsection><subsection id="H3428FB5E9DC94D899FBCA0422908D391"><enum>(f)</enum><header>Investor protection
fund</header>
<paragraph id="HE03EEB33FFF3402599C14A2DE28E4528"><enum>(1)</enum><header>Fund
established</header><text>There is established in the Treasury of the United
States a fund to be known as the <quote>Securities and Exchange Commission
Investor Protection Fund</quote> (referred to in this section as the
<quote>Fund</quote>).</text>
</paragraph><paragraph id="HB8EAA004996546F99E14E817C1DC88AF"><enum>(2)</enum><header>Use of
fund</header><text>The Fund shall be available to the Commission, without
further appropriation or fiscal year limitation, for the following
purposes:</text>
<subparagraph commented="no" id="HB83D1FE3B7614B8383DC1AB8FB95132D"><enum>(A)</enum><text>Paying awards to
whistleblowers as provided in subsection (a).</text>
</subparagraph><subparagraph commented="no" id="H82C0D43E271F445CAE5B990CC4DF8B1B"><enum>(B)</enum><text>Funding investor
education initiatives designed to help investors protect themselves against
securities fraud or other violations of the securities laws, or the rules and
regulations thereunder.</text>
</subparagraph></paragraph><paragraph id="HA3934711B9FE40DA809D2610FE8387F9"><enum>(3)</enum><header>Deposits and
credits</header><text>There shall be deposited into or credited to the
Fund—</text>
<subparagraph id="H17B320A6A90F49F4B2C6DEA1B983C846"><enum>(A)</enum><text>any monetary sanction
collected by the Commission in any judicial or administrative action brought by
the Commission under the securities laws that is not added to a disgorgement
fund or other fund pursuant to section 308 of the Sarbanes-Oxley Act of 2002 or
otherwise distributed to victims of a violation of the securities laws, or the
rules and regulations thereunder, underlying such action, unless the balance of
the Fund at the time the monetary sanction is collected exceeds
$100,000,000;</text>
</subparagraph><subparagraph id="H8D11C754F91E4588A10B7BE0DF08E782"><enum>(B)</enum><text>any monetary sanction
added to a disgorgement fund or other fund pursuant to section 308 of the
Sarbanes-Oxley Act of 2002 that is not distributed to the victims for whom the
disgorgement fund or other fund was established, unless the balance of the Fund
at the time the determination is made not to distribute the monetary sanction
to such victims exceeds $100,000,000; and</text>
</subparagraph><subparagraph id="HE67A3C5513C74FF2AB247C323CAEB3AB"><enum>(C)</enum><text>all income from
investments made under paragraph (4).</text>
</subparagraph></paragraph><paragraph id="H72CA271C812F49198B53DCE69996ABB0"><enum>(4)</enum><header>Investments</header>
<subparagraph id="H03D83B1D3FFF4FB48DDCEF4FC4DF9E7E"><enum>(A)</enum><header>Amounts in fund may be
invested</header><text>The Commission may request the Secretary of the Treasury
to invest the portion of the Fund that is not, in the Commission’s judgment,
required to meet the current needs of the Fund.</text>
</subparagraph><subparagraph id="HFF2EDE5FCD9B4568AA9C45B98EAF244C"><enum>(B)</enum><header>Eligible
investments</header><text>Investments shall be made by the Secretary of the
Treasury in obligations of the United States or obligations that are guaranteed
as to principal and interest by the United States, with maturities suitable to
the needs of the Fund as determined by the Commission.</text>
</subparagraph><subparagraph id="HA3538421273B45E1B7F12D7BC502CDC2"><enum>(C)</enum><header>Interest and proceeds
credited</header><text>The interest on, and the proceeds from the sale or
redemption of, any obligations held in the Fund shall be credited to, and form
a part of, the Fund.</text>
</subparagraph></paragraph><paragraph id="H5E792CA136BF43A0AA4DCAB9A95A332A"><enum>(5)</enum><header>Reports to
Congress</header><text>Not later than October 30 of each year, the Commission
shall transmit to the Committee on Banking, Housing, and Urban Affairs of the
Senate, and the Committee on Financial Services of the House of Representatives
a report on—</text>
<subparagraph id="HDA7CFB7DCDE74BCCBFAA35C256936D8E"><enum>(A)</enum><text>the Commission’s
whistleblower award program under this section, including a description of the
number of awards that were granted and the types of cases in which awards were
granted during the preceding fiscal year;</text>
</subparagraph><subparagraph id="H5DAB29C533E647CD97CE17CDDCB3595A"><enum>(B)</enum><text>investor education
initiatives described in paragraph (2)(B) that were funded by the Fund during
the preceding fiscal year;</text>
</subparagraph><subparagraph id="H73F055AB1CCC4F378557DE2648153EFC"><enum>(C)</enum><text>the balance of the Fund
at the beginning of the preceding fiscal year;</text>
</subparagraph><subparagraph id="H4B43B3D2CB324A2AACA355A9524F41E9"><enum>(D)</enum><text>the amounts deposited
into or credited to the Fund during the preceding fiscal year;</text>
</subparagraph><subparagraph id="HDE80EFEA7D8C46A091798743A82BDD74"><enum>(E)</enum><text>the amount of earnings on
investments of amounts in the Fund during the preceding fiscal year;</text>
</subparagraph><subparagraph id="H2A053E803B904407BCDDBA08196921D0"><enum>(F)</enum><text>the amount paid from the
Fund during the preceding fiscal year to whistleblowers pursuant to subsection
(a);</text>
</subparagraph><subparagraph id="H98EC3B9F11234478A0C14503CA0AFEAA"><enum>(G)</enum><text>the amount paid from the
Fund during the preceding fiscal year for investor education initiatives
described in paragraph (1)(B);</text>
</subparagraph><subparagraph id="H3B8B5554C53946469A5BE95F15FD586B"><enum>(H)</enum><text>the balance of the Fund
at the end of the preceding fiscal year; and</text>
</subparagraph><subparagraph id="H583301A678E542DDB722BB8DB50BB735"><enum>(I)</enum><text>a complete set of audited
financial statements, including a balance sheet, income statement, and cash
flow analysis.</text>
</subparagraph></paragraph></subsection><subsection id="HA39B89E7D13A407D84F687AF7618B4BD"><enum>(g)</enum><header>Protection of
whistleblowers</header>
<paragraph id="H81027824B5224B51A408445DBAF3AC99"><enum>(1)</enum><header>Prohibition against
retaliation</header>
<subparagraph id="H72F291DA18C54A6A860210870AFD9917"><enum>(A)</enum><header>In
general</header><text>No employer may discharge, demote, suspend, threaten,
harass, or in any other manner discriminate against an employee, contractor, or
agent in the terms and conditions of employment because of any lawful act done
by the employee, contractor, or agent in providing information to the
Commission in accordance with subsection (a), or in assisting in any
investigation or judicial or administrative action of the Commission based upon
or related to such information.</text>
</subparagraph><subparagraph id="HFFA2A75466CF410AB911D6984728E428"><enum>(B)</enum><header>Enforcement</header>
<clause id="H137FFCE4A51D47B0A1B74D2FDC8AC8FC"><enum>(i)</enum><header>Cause of
action</header><text>An individual who alleges discharge or other
discrimination in violation of subparagraph (A) may bring an action under this
subsection in the appropriate district court of the United States for the
relief provided in subparagraph (C).</text>
</clause><clause id="HB1781CD227114CDE8BA99C584B31422B"><enum>(ii)</enum><header>Subpoenas</header><text>A
subpoena requiring the attendance of a witness at a trial or hearing conducted
under this section may be served at any place in the United States.</text>
</clause><clause id="H42C293046CBD45E9858A6AAE7ABC8412"><enum>(iii)</enum><header>Statute of
limitations</header><text>An action under this subsection may not be brought
more than 6 years after the date on which the violation of subparagraph (A)
occurred, or more than 3 years after the date when facts material to the right
of action are known or reasonably should have been known by the employee
alleging a violation of subparagraph (A), but in no event after 10 years after
the date on which the violation occurs.</text>
</clause></subparagraph><subparagraph id="H0A04A2F22B3E4987ADC00F454BD518B8"><enum>(C)</enum><header>Relief</header><text display-inline="yes-display-inline">An employee, contractor, or agent
prevailing in any action brought under subparagraph (B) shall be entitled to
all relief necessary to make that employee, contractor, or agent whole,
including reinstatement with the same seniority status that the employee,
contractor, or agent would have had, but for the discrimination, 2 times the
amount of back pay, with interest, and compensation for any special damages
sustained as a result of the discrimination, including litigation costs, expert
witness fees, and reasonable attorneys’ fees.</text>
</subparagraph></paragraph><paragraph id="HFDF6A06BC40B4AD297C838BC3A3AB840"><enum>(2)</enum><header>Confidentiality</header>
<subparagraph id="H61B37FCE2CD647C385269A29974E9912"><enum>(A)</enum><header>In
general</header><text>Except as provided in subparagraph (B), all information
provided to the Commission by a whistleblower shall be confidential and
privileged as an evidentiary matter (and shall not be subject to civil
discovery or other legal process) in any proceeding in any Federal or State
court or administrative agency, and shall be exempt from disclosure, in the
hands of an agency or establishment of the Federal Government, under the
Freedom of Information Act (5 U.S.C. 552), or otherwise, unless and until
required to be disclosed to a defendant or respondent in connection with a
proceeding instituted by the Commission or any entity described in subparagraph
(B). For purposes of section 552 of title 5, United States Code, this paragraph
shall be considered a statute described in subsection (b)(3)(B) of such section
552. Nothing herein is intended to limit the Attorney General’s ability to
present such evidence to a grand jury or to share such evidence with potential
witnesses or defendants in the course of an ongoing criminal
investigation.</text>
</subparagraph><subparagraph id="HCFD16427FF854F5DABC24FE298D0F3E9"><enum>(B)</enum><header>Availability to
government agencies</header><text>Without the loss of its status as
confidential and privileged in the hands of the Commission, all information
referred to in subparagraph (A) may, in the discretion of the Commission, when
determined by the Commission to be necessary to accomplish the purposes of this
Act and protect investors, be made available to—</text>
<clause id="HFC0BF02EE0E34A96B91431CE6879F734"><enum>(i)</enum><text>the Attorney General of
the United States,</text>
</clause><clause id="H455264218487484FB069579BD8D0A57A"><enum>(ii)</enum><text>an appropriate
regulatory authority,</text>
</clause><clause id="H3B3DE289660149E39E9CB52DEE1C0C6C"><enum>(iii)</enum><text>a self-regulatory
organization,</text>
</clause><clause id="H2FB600F5967E40E48B7842C9DF5088D2"><enum>(iv)</enum><text display-inline="yes-display-inline">the Public Company Accounting Oversight
Board,</text>
</clause><clause id="H5626C2AF70FD4A14AB5166CE01FF57BF"><enum>(v)</enum><text>State attorneys general
in connection with any criminal investigation, and</text>
</clause><clause id="H1FCFCFE99BEE4137AD550438808C0BC8"><enum>(vi)</enum><text>any appropriate State
regulatory authority,</text>
</clause><continuation-text continuation-text-level="subparagraph">each of which shall maintain such
information as confidential and privileged, in accordance with the requirements
in subparagraph (A).</continuation-text></subparagraph></paragraph><paragraph id="H55FCF4672CB54CFCA56C416E236D4799"><enum>(3)</enum><header>Rights
retained</header><text>Nothing in this section shall be deemed to diminish the
rights, privileges, or remedies of any whistleblower under any Federal or State
law, or under any collective bargaining agreement.</text>
</paragraph></subsection><subsection id="H23A0353938B94658A36C971322AFF2CB"><enum>(h)</enum><header>Provision of false
information</header><text display-inline="yes-display-inline">Any whistleblower
who knowingly and willfully makes any false, fictitious, or fraudulent
statement or representation, or makes or uses any false writing or document
knowing the same to contain any false, fictitious, or fraudulent statement or
entry, shall not be entitled to an award under this section and shall be
subject to prosecution under section 1001 of title 18, United States
Code.</text>
</subsection><subsection id="H6CE6F37D85FB4FB1B332D17EACF67734"><enum>(i)</enum><header>Rulemaking
authority</header><text>The Commission shall have the authority to issue such
rules and regulations as may be necessary or appropriate to implement the
provisions of this section.</text>
</subsection><subsection id="H016AB53DBCD6451C9D68BF0D9CAC7B26"><enum>(j)</enum><header>Definitions</header><text>For
purposes of this section, the following terms have the following
meanings:</text>
<paragraph id="H8E99DF20838E43B5926A02BF12AA4426"><enum>(1)</enum><header>Original
information</header><text>The term <quote>original information</quote> means
information that—</text>
<subparagraph id="H1D8C272D8F9E4808849B40D7B15E15B2"><enum>(A)</enum><text>is based on the direct
and independent knowledge or analysis of a whistleblower;</text>
</subparagraph><subparagraph id="H278A5B1EE13C428A99DDC5CABCF53B72"><enum>(B)</enum><text>is not known to the
Commission from any other source, unless the whistleblower is the initial
source of the information; and</text>
</subparagraph><subparagraph id="H568AEE22D34546DDB25D146AD991E8A9"><enum>(C)</enum><text>is not based on
allegations in a judicial or administrative hearing, in a governmental report,
hearing, audit, or investigation, or from the news media, unless the
whistleblower is the initial source of the information that resulted in the
judicial or administrative hearing, governmental report, hearing, audit, or
investigation, or the news media’s report on the allegations.</text>
</subparagraph></paragraph><paragraph id="H28DC68CAB89F4E45B1BF2ACA2D48ECA0"><enum>(2)</enum><header>Monetary
sanctions</header><text>The term <quote>monetary sanctions</quote>, when used
with respect to any judicial or administrative action, means any monies,
including but not limited to penalties, disgorgement, and interest, ordered to
be paid, and any monies deposited into a disgorgement fund or other fund
pursuant to section 308(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7246(b)), as a result of such action or any settlement of such action.</text>
</paragraph><paragraph id="H70FF010AB8C649B4A6D5C5F9324A14D5"><enum>(3)</enum><header>Related
action</header><text>The term <quote>related action</quote>, when used with
respect to any judicial or administrative action brought by the Commission
under the securities laws, means any judicial or administrative action brought
by an entity described in subsection (g)(2)(B) that is based upon the same
original information provided by a whistleblower pursuant to subsection (a)
that led to the successful enforcement of the Commission action.</text>
</paragraph><paragraph id="H31895BC89D2D4634B44181A890C57040"><enum>(4)</enum><header>Whistleblower</header><text>The
term <quote>whistleblower</quote> means an individual, or two or more
individuals acting jointly, who submit information to the Commission as
provided in this
section.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H98A7EDC02D5F4923A59F14E8BAB7516D"><enum>(b)</enum><header>Administration and
enforcement</header><text display-inline="yes-display-inline">The Securities
and Exchange Commission shall establish a separate office within the Commission
to administer and enforce the provisions of section 21F of the Securities
Exchange Act of 1934, as added by subsection (a). Such office shall report
annually to Congress on its activities, whistleblower complaints, and the
response of the Commission to such complaints.</text>
</subsection></section><section id="HA14B24109A014AD49CAAC34934A2126B"><enum>204.</enum><header>Conforming amendments
for whistleblower protection</header>
<subsection id="HAC2B910127C24F6C9D961B85FD715B52"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Each of the following
provisions is amended by inserting <quote>and section 21F of the Securities
Exchange Act of 1934” after “the Sarbanes-Oxley Act of 2002</quote>:</text>
<paragraph id="H055C3E6B886C43E9A640BAD662A4B1BD"><enum>(1)</enum><text>Section 20(d)(3)(A) of
the Securities Act of 1933 (15 U.S.C. 77t(d)(3)(A)).</text>
</paragraph><paragraph id="H21FCFBC356DD4E16A5F8B74AED686E8A"><enum>(2)</enum><text display-inline="yes-display-inline">Section 42(e)(3)(A) of the Investment
Company Act of 1940 (15 U.S.C. 80a–41(e)(3)(A)).</text>
</paragraph><paragraph id="HA0618940752143B9A3B602B55F2B6458"><enum>(3)</enum><text display-inline="yes-display-inline">Section 209(e)(3)(A) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b–9(e)(3)(A)).</text>
</paragraph></subsection><subsection id="HD72A2D938887414585F07D616A310502"><enum>(b)</enum><header>Securities Exchange
Act</header><text>The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended—</text>
<paragraph id="H30F62F56047744B381D0AF8D5B513D36"><enum>(1)</enum><text display-inline="yes-display-inline">in section 21(d)(3)(C)(i) (15 U.S.C.
78u(d)(3)(C)(i)), by inserting <quote>and section 21F of this title</quote>
after <quote>the Sarbanes-Oxley Act of 2002</quote>;</text>
</paragraph><paragraph id="HADA99AD7B2B24B1A9183CAC466C5CCB6"><enum>(2)</enum><text>in section 21A(d)(1) (15
U.S.C. 78u–1(d)(1))—</text>
<subparagraph id="HA446BE49A92C443EB90CEF7563704C09"><enum>(A)</enum><text>by striking
<quote>(subject to subsection (e))</quote>; and</text>
</subparagraph><subparagraph id="HE3D97B9F2202489BA314E3CBE80FAD39"><enum>(B)</enum><text>by inserting <quote>and
section 21F of this title</quote> after <quote>the Sarbanes-Oxley Act of
2002</quote>; and</text>
</subparagraph></paragraph><paragraph id="HACD16C1A335D467C8983258977CCA422"><enum>(3)</enum><text>in section 21A, by
striking subsection (e) and redesignating subsections (f) and (g) as subsection
(e) and (f), respectively.</text>
</paragraph></subsection></section><section id="HFE4E3080E4104BD6AE64A8DBDCB8E123"><enum>205.</enum><header>Implementation and
transition provisions for whistleblower protections</header>
<subsection id="H42A6CFBEE4E14DA188DE3C7B78775342"><enum>(a)</enum><header>Implementing
rules</header><text>The Securities and Exchange Commission shall issue final
regulations implementing the provisions of section 21F of the Securities
Exchange Act of 1934, as added by this title, no later than 270 days after the
date of enactment of this Act.</text>
</subsection><subsection id="HB450A82D2EC446CD89EDE014319E6459"><enum>(b)</enum><header>Original
information</header><text>Information submitted to the Commission by a
whistleblower in accordance with regulations implementing the provisions of
section 21F of the Securities Exchange Act of 1934, as added by this title,
shall not lose its status as original information, as defined in subsection
(i)(1) of such section, solely because the whistleblower submitted such
information prior to the effective date of such regulations, provided such
information was submitted after the date of enactment of this Act, or related
to insider trading violations for which a bounty could have been paid at the
time such information was submitted.</text>
</subsection><subsection id="H31F3D1795FA54FAF8895EB4AA6C33FC5"><enum>(c)</enum><header>Awards</header><text display-inline="yes-display-inline">A whistleblower may receive an award
pursuant to section 21F of the Securities Exchange Act of 1934, as added by
this title, regardless of whether any violation of a provision of the
securities laws, or a rule or regulation thereunder, underlying the judicial or
administrative action upon which the award is based occurred prior to the date
of enactment of this Act.</text>
</subsection></section><section id="H71A53EEC110F492A853D19FD40830753"><enum>206.</enum><header>Collateral
bars</header>
<subsection id="H9930FE9EFC9D4D119D2A1477ABEDE6B6"><enum>(a)</enum><header>Section 15 of the
Securities Exchange Act of 1934</header><text display-inline="yes-display-inline">Section 15(b)(6)(A) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is amended by striking <quote>12
months, or bar such person from being associated with a broker or
dealer,</quote> and inserting <quote>12 months, or bar any such person from
being associated with a broker, dealer, investment adviser, municipal
securities dealer, transfer agent, or nationally recognized statistical rating
organization,</quote>.</text>
</subsection><subsection id="H80FAE63F34FF4AA8AA93BA62F0154E0D"><enum>(b)</enum><header>Section 15B of the
Securities Exchange Act of 1934</header><text>Section 15B(c)(4) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o–4(c)(4)) is amended by striking
<quote>twelve months or bar any such person from being associated with a
municipal securities dealer, </quote> and inserting <quote>12 months or bar any
such person from being associated with a broker, dealer, investment adviser,
municipal securities dealer, transfer agent, or nationally recognized
statistical rating organization,</quote>.</text>
</subsection><subsection id="H3B19592920F244E487DEEC6875449910"><enum>(c)</enum><header>Section 17A of the
Securities Exchange Act of 1934</header><text>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 <quote>twelve months or bar any such person from being associated with
the transfer agent, </quote> and inserting <quote>12 months or bar any such
person from being associated with any transfer agent, broker, dealer,
investment adviser, municipal securities dealer, or nationally recognized
statistical rating organization,</quote>.</text>
</subsection><subsection id="HEDA542DD4DF3437A922B37920448491E"><enum>(d)</enum><header>Section 203 of the
Investment Advisers Act of 1940</header><text>Section 203(f) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b–3(f)) is amended by striking <quote>twelve
months or bar any such person from being associated with an investment adviser,
</quote> and inserting <quote>12 months or bar any such person from being
associated with an investment adviser, broker, dealer, municipal securities
dealer, transfer agent, or nationally recognized statistical rating
organization,</quote>.</text>
</subsection></section><section id="H90609F5EAA9C4094AE0A86713E6D7A7E"><enum>207.</enum><header>Aiding and abetting
authority under the Securities Act and the Investment Company Act</header>
<subsection id="H52656E6FB5B04EE096FCF19C7B4367B7"><enum>(a)</enum><header>Under the securities
act of 1933</header><text>Section 15 of the Securities Act of 1933 (15 U.S.C.
77o) is amended—</text>
<paragraph id="HD724016713A044D28A848C14D267E9CA"><enum>(1)</enum><text>by striking <quote>Every
person who</quote> and inserting <quote>(a)
<header-in-text level="subsection" style="OLC">Controlling
persons</header-in-text>.—Every person who</quote>; and</text>
</paragraph><paragraph id="H63251A6710494FC1A622DD4E919D6C2C"><enum>(2)</enum><text>by adding at the end the
following:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HD2B2952C5B8144878953B97E2F525FC3" reported-display-style="italic" style="OLC">
<subsection id="HDE2E5EE0EE264933B342A6C4941E9C17"><enum>(b)</enum><header>Prosecution of persons
who aid and abet violations</header><text>For purposes of any action brought by
the Commission under subparagraph (b) or (d) of section 20, any person that
knowingly or recklessly provides substantial assistance to another person in
violation of a provision of this Act, or of any rule or regulation issued under
this Act, shall be deemed to be in violation of such provision to the same
extent as the person to whom such assistance is
provided.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HBEF18F827AEE4B15ADF66517898D3555"><enum>(c)</enum><header>Under the Investment
Company Act of 1940</header><text>Section 48 of the Investment Company Act of
1940 (15 U.S.C. 80a–48) is amended by redesignating subsection (b) as
subsection (c) and inserting after subsection (a) the following:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H4BBBA356B2924FF5AB0CCA83871EBC48" reported-display-style="italic" style="traditional">
<subsection id="HD333D94EB2914F2D8CAF7AB7DF0B053E"><enum>(b)</enum><text>For purposes of any
action brought by the Commission under subsection (d) or (e) of section 42, any
person that knowingly or recklessly provides substantial assistance to another
person in violation of a provision of this Act, or of any rule or regulation
issued under this Act, shall be deemed to be in violation of such provision to
the same extent as the person to whom such assistance is
provided.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="H62B17CF407EE4D0EBA2E68ED0574CA0A"><enum>208.</enum><header>Authority to impose
penalties for aiding and abetting violations of the Investment Advisers
Act</header><text display-inline="no-display-inline">Section 209 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b–9) is amended by inserting at
the end the following new subsections:</text>
<quoted-block changed="added" committee-id="HBA00" id="H62277EAD1F5347AC9513A830ACA441A3" reported-display-style="italic" style="OLC">
<subsection id="H2C9EF7E9B3234311AF6D7AE5D12C43F5"><enum>(f)</enum><header>Aiding and
abetting</header><text>For purposes of any action brought by the Commission
under subsection (e), any person that knowingly or recklessly has aided,
abetted, counseled, commanded, induced, or procured a violation of any
provision of this Act, or of any rule, regulation, or order hereunder, shall be
deemed to be in violation of such provision, rule, regulation, or order to the
same extent as the person that committed such violation.</text>
</subsection><subsection id="HD3CCE283CD11400AB244F8BC4E61FE61"><enum>(g)</enum><header>enforcement by national
securities associations</header><text display-inline="yes-display-inline">The
Commission may permit or require a national securities association registered
under the Securities Exchange Act of 1934 to enforce compliance by its members
and persons associated with its members with the provisions of this Act, the
rules and regulations thereunder, and to adopt such rules (subject to any rule
or order of the Commission pursuant to the Securities Exchange Act of 1934) as
the association may deem necessary and in the public interest to further the
purposes of this
Act.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H65ED7B764EA2440AA56D9BD5CE9C09F1"><enum>209.</enum><header>Deadline for
completing examinations, inspections and enforcement actions</header><text display-inline="no-display-inline">The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by inserting after section 4D (as added by
section 101) the following new section:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H628DED113F1A44678B141B07AFBCD23B" reported-display-style="italic" style="OLC">
<section id="H6731BC933D7E421F821C968D474F5C23"><enum>4E.</enum><header>Deadline for completing
enforcement investigations and compliance examinations and inspections</header>
<subsection id="H1ACC5D0CCB594613A912F9275F5A92C2"><enum>(a)</enum><header>Enforcement
investigations</header>
<paragraph id="H57D2C7F56D534B9F9F91BFF2BFD44D4B"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Not later than 180
days after the date on which Commission staff provide a written Wells
notification to any person, the Commission staff shall either file an action
against such person or provide notice to the Director of the Division of
Enforcement of its intent to not file an action.</text>
</paragraph><paragraph id="H02B87A904D704D76A97E3CAB0C060782"><enum>(2)</enum><header>Exceptions for certain
complex actions</header><text>Notwithstanding paragraph (1), if the head of any
division or office within the Commission or his designee determines that a
particular enforcement investigation is sufficiently complex such that a
determination regarding the filing of an action against a person cannot be
completed within the deadline specified in paragraph (1), the head of any
division or office within the Commission or his designee may, after providing
notice to the Chairman of the Commission, extend such deadline as needed for
one additional 180-day period. If after the additional 180-day period the head
of any division or office within the Commission or his designee determines that
a particular enforcement investigation is sufficiently complex such that a
determination regarding the filing of an action against a person cannot be
completed within the additional 180-day period, the head of any division or
office within the Commission or his designee may, after providing notice to and
receiving approval of the Commission, extend such deadline as needed for one or
more additional successive 180-day periods.</text>
</paragraph></subsection><subsection id="H652BA723C19D4B5981836E0DE07B6ABD"><enum>(b)</enum><header>Compliance examinations
and inspections</header>
<paragraph id="H14CEAFB4D9A0470D8C7DC7A0F23E4089"><enum>(1)</enum><header>In
general</header><text>Not later than 180 days after the date on which
Commission staff completes the on-site portion of its compliance examination or
inspection or receives all records requested from the entity being examined or
inspected, whichever is later, Commission staff shall provide the entity being
examined or inspected with written notification indicating either that the
examination or inspection has concluded without findings or that the staff
requests the entity undertake corrective action.</text>
</paragraph><paragraph id="H27302E029F6C40E6A2F111C1C27EA997"><enum>(2)</enum><header>Exception for certain
complex actions</header><text>Notwithstanding paragraph (1), if the head of any
division or office within the Commission or his designee determines that a
particular compliance examination or inspection is sufficiently complex such
that a determination regarding concluding the examination or inspection or
regarding the staff requests the entity undertake corrective action cannot be
completed within the deadline specified in paragraph (1), the head of any
division or office within the Commission or his designee may, after providing
notice to the Chairman of the Commission, extend such deadline as needed for
one additional 180-day
period.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H720FD32B84B64A84A5299FF0092A463C"><enum>210.</enum><header>Nationwide service of
subpoenas</header>
<subsection id="H701EEE4BD21F42CEBAE0D5DDBB1BF29E"><enum>(a)</enum><header>Securities Act of
1933</header><text display-inline="yes-display-inline">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: <quote>In any action or proceeding instituted by
the Commission under this title in a United States district court for any
judicial district, subpoenas issued to compel the attendance of witnesses or
the production of documents or tangible things (or both) at a hearing or trial
may be served at any place within the United States.</quote>.</text>
</subsection><subsection id="H0813E06E231449F991CF26497F18825E"><enum>(b)</enum><header>Securities Exchange Act
of 1934</header><text display-inline="yes-display-inline">Section 27 of the
Securities Exchange Act of 1934 (15 U.S.C. 78aa) is amended by inserting after
the third sentence the following: <quote>In any action or proceeding instituted
by the Commission under this title in a United States district court for any
judicial district, subpoenas issued to compel the attendance of witnesses or
the production of documents or tangible things (or both) at a hearing or trial
may be served at any place within the United States.</quote>.</text>
</subsection><subsection id="H677CF53179C84A6F8D1F063CB69740F6"><enum>(c)</enum><header>Investment Company Act
of 1940</header><text display-inline="yes-display-inline">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: <quote>In any action or proceeding
instituted by the Commission under this title in a United States district court
for any judicial district, subpoenas issued to compel the attendance of
witnesses or the production of documents or tangible things (or both) at a
hearing or trial may be served at any place within the United
States.</quote>.</text>
</subsection><subsection id="H5EA0FE3D10F44C9FBA0245A834F4D51C"><enum>(d)</enum><header>Investment Advisers Act
of 1940</header><text display-inline="yes-display-inline">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: <quote>In any action or proceeding
instituted by the Commission under this title in a United States district court
for any judicial district, subpoenas issued to compel the attendance of
witnesses or the production of documents or tangible things (or both) at a
hearing or trial may be served at any place within the United
States.</quote>.</text>
</subsection></section><section id="H579911834E3A4151952A0FBE119A6C83"><enum>211.</enum><header>Authority to impose
civil penalties in cease and desist proceedings</header>
<subsection id="H5E255BBF60EF42CD8F268F3876DC6CF9"><enum>(a)</enum><header>Under the Securities
Act of 1933</header><text>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:</text>
<quoted-block changed="added" committee-id="HBA00" id="HEA2664C6D74E482FB0B4A3CCF071EE3E" reported-display-style="italic" style="OLC">
<subsection id="H5D2F99E8A4BC432685B086602CA37A1D"><enum>(g)</enum><header>Authority to impose
money penalties</header>
<paragraph id="H4D331ADFF41F4738B41C62D0D3E030F6"><enum>(1)</enum><header>Grounds for
imposing</header><text>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—</text>
<subparagraph id="HF5AB3D262D094EBB8CFE28C36CB8A33E"><enum>(A)</enum><text>such person—</text>
<clause id="HF14D373E87B844E484A29461B33157BF"><enum>(i)</enum><text>is violating or has
violated any provision of this title, or any rule or regulation thereunder;
or</text>
</clause><clause id="H01C739B563C049128D5D74498F15106C"><enum>(ii)</enum><text>is or was a cause of the
violation of any provision of this title, or any rule or regulation thereunder;
and</text>
</clause></subparagraph><subparagraph id="HD7A6003111C8426BA00EF01E837F2D81"><enum>(B)</enum><text>such penalty is in the
public interest.</text>
</subparagraph></paragraph><paragraph id="H2AD3DE32354A4B0EBFAE4EB7295C3C80"><enum>(2)</enum><header>Maximum amount of
penalty</header>
<subparagraph id="HE243C9E15A0B40A691CA569ABD92CFAC"><enum>(A)</enum><header>First
tier</header><text>The maximum amount of penalty for each act or omission
described in paragraph (1) shall be $7,500 for a natural person or $75,000 for
any other person.</text>
</subparagraph><subparagraph id="H3A3A9CE8DAE44193876BD820F5BEB2ED"><enum>(B)</enum><header>Second
tier</header><text>Notwithstanding paragraph (A), the maximum amount of penalty
for each such act or omission shall be $75,000 for a natural person or $375,000
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.</text>
</subparagraph><subparagraph id="HDC1A3FD9D64A4FBA88D96A59A64D3768"><enum>(C)</enum><header>Third
tier</header><text>Notwithstanding paragraphs (A) and (B), the maximum amount
of penalty for each such act or omission shall be $150,000 for a natural person
or $725,000 for any other person if—</text>
<clause id="H1503598B5B184AA392D61723E5C24761"><enum>(i)</enum><text>the act or omission
described in paragraph (1) involved fraud, deceit, manipulation, or deliberate
or reckless disregard of a regulatory requirement; and</text>
</clause><clause id="H33806D39B5B14EAE8B5E248CB3755239"><enum>(ii)</enum><text>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.</text>
</clause></subparagraph></paragraph><paragraph id="H2CC24BB904D04D048C5A42B0A29BFE39"><enum>(3)</enum><header>Evidence concerning
ability to pay</header><text>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.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HBA682C88C85D4250819725C2C67288CD"><enum>(b)</enum><header>Under the Securities
Exchange Act of 1934</header><text>Subsection (a) of section 21B of the
Securities Exchange Act of 1934 (15 U.S.C. 78u–2(a)) is amended—</text>
<paragraph id="HD742C114584C4C688054C9B103589411"><enum>(1)</enum><text>by striking <quote>(a)
<header-in-text level="subsection" style="OLC">Commission Authority To Assess
Money Penalties</header-in-text>.—In any proceeding</quote> and inserting the
following:</text>
<quoted-block changed="added" committee-id="HBA00" id="H66D6CF47221F4E73A37D6B1C2D3C6EBB" reported-display-style="italic" style="OLC">
<subsection id="H65960642DC9C4AE896A7FA480AA18875"><enum>(a)</enum><header>Commission authority To
assess money penalties</header>
<paragraph id="H0A08D959499141F8A5DF413BE2F5AB63"><enum>(1)</enum><header>In
general</header><text>In any
proceeding</text>
</paragraph></subsection><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph id="HC715C64EB830440E8F6734ACAA9AB9B7"><enum>(2)</enum><text>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</text>
</paragraph><paragraph id="HB68D02EF097246FD96FE72C107759117"><enum>(3)</enum><text>by adding at the end of
such subsection the following new paragraph:</text>
<quoted-block changed="added" committee-id="HBA00" id="H8C974F7A2F2F4776ACF6B99B22503BD9" reported-display-style="italic" style="OLC">
<paragraph id="H0A730F79C54B483398677B6E673B3516"><enum>(2)</enum><header>Cease-and-desist
proceedings</header><text>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—</text>
<subparagraph id="HF0B9361D46604E8CAA1986EF1B86E2B0"><enum>(A)</enum><text>is violating or has
violated any provision of this title, or any rule or regulation thereunder;
or</text>
</subparagraph><subparagraph id="H74BDF8B736E54525B144B5C72CE613B7"><enum>(B)</enum><text>is or was a cause of the
violation of any provision of this title, or any rule or regulation
thereunder.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H380CAC7876C641A0A439AD115C8D0561"><enum>(c)</enum><header>Under the Investment
Company Act of 1940</header><text>Paragraph (1) of section 9(d) of the
Investment Company Act of 1940 (15 U.S.C. 80a–9(d)(1)) is amended—</text>
<paragraph id="H2718E8EE475547E0B93C93E3337E59AD"><enum>(1)</enum><text>by striking <quote>(1)
<header-in-text level="paragraph" style="OLC">Authority of
commission</header-in-text>.—In any proceeding</quote> and inserting the
following:</text>
<quoted-block changed="added" committee-id="HBA00" id="HAF031C804D034493B8760CDBBF6FEFCF" reported-display-style="italic" style="OLC">
<paragraph id="H5D400ED78DCF42F58D83A6AA09A04C3F"><enum>(1)</enum><header>Authority of
commission</header>
<subparagraph id="HDB97556F9D2940A2BB6D96E8D4C356AE"><enum>(A)</enum><header>In
general</header><text>In any
proceeding</text>
</subparagraph></paragraph><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph id="HAE08857B920D4F0C900160224170A70E"><enum>(2)</enum><text>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</text>
</paragraph><paragraph id="H2021B7DC6F76487AB9BF2BDBC93166CF"><enum>(3)</enum><text>by adding at the end of
such paragraph the following new subparagraph:</text>
<quoted-block changed="added" committee-id="HBA00" id="H7520CBE5858B40018F088615A1A7C3D9" reported-display-style="italic" style="OLC">
<subparagraph id="HAB932C7997AD451EB2C9D2C179DEF7F2"><enum>(B)</enum><header>Cease-and-desist
proceedings</header><text>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—</text>
<clause id="H298E7D5DD983437FB27100F747AAF467"><enum>(i)</enum><text>is violating or has
violated any provision of this title, or any rule or regulation thereunder;
or</text>
</clause><clause id="HEADD44E0D2854519B007C93258B47A4B"><enum>(ii)</enum><text>is or was a cause of the
violation of any provision of this title, or any rule or regulation
thereunder.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HDCF62710FEE5405B8A2635284BA3029B"><enum>(d)</enum><header>Under the Investment
Advisers Act of 1940</header><text>Paragraph (1) of section 203(i) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b–3(i)(1)) is amended—</text>
<paragraph id="H1DA156D9BD324CA09209EC074DAB97AA"><enum>(1)</enum><text>by striking <quote>(1)
<header-in-text level="paragraph" style="OLC">Authority of
commission</header-in-text>.—In any proceeding</quote> and inserting the
following:</text>
<quoted-block changed="added" committee-id="HBA00" id="H9D6BB2E4430C4A379A62BE948A54ACF7" reported-display-style="italic" style="OLC">
<paragraph id="H38E38FED20364505913BF4B9CB2F2EF3"><enum>(1)</enum><header>Authority of
commission</header>
<subparagraph id="HB5DEE9A8A6B94C528BA9A61E3717BF05"><enum>(A)</enum><header>In
general</header><text>In any
proceeding</text>
</subparagraph></paragraph><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph id="HA7D902FB5AA548A6B1CABF1E54087296"><enum>(2)</enum><text>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</text>
</paragraph><paragraph id="H49E253B337434ACA959DF227DE9DB2CF"><enum>(3)</enum><text>by adding at the end of
such paragraph the following new subparagraph:</text>
<quoted-block changed="added" committee-id="HBA00" id="H0EB91D1AD0C5431AAFAAAF36E545D6C4" reported-display-style="italic" style="OLC">
<subparagraph id="HE6FE4A8F55FB46B4A506675BBA6E5C83"><enum>(B)</enum><header>Cease-and-desist
proceedings</header><text>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—</text>
<clause id="H6B8BAED3510E401DA81B460D22E94DF3"><enum>(i)</enum><text>is violating or has
violated any provision of this title, or any rule or regulation thereunder;
or</text>
</clause><clause id="H7B7FCDCEEEAC47B09A6042293410CBD0"><enum>(ii)</enum><text>is or was a cause of the
violation of any provision of this title, or any rule or regulation
thereunder.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection></section><section display-inline="no-display-inline" id="HAC0099F5AF7A4079A64F427E501AC0CF" section-type="subsequent-section"><enum>212.</enum><header>Formerly associated
persons</header>
<subsection id="H3F64A2D6FF6443189659B3929DBD88E4"><enum>(a)</enum><header>Member or employee of
the municipal securities rulemaking board</header><text>Section 15B(c)(8) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o–4(c)(8)) is amended by
striking <quote>any member or employee</quote> and inserting <quote>any person
who is, or at the time of the alleged misconduct was, a member or
employee</quote>.</text>
</subsection><subsection id="HD7B8154415DB4093AB51216205872B15"><enum>(b)</enum><header>Person associated with
a government securities broker or dealer</header><text>Section 15C of the
Securities Exchange Act of 1934 (15 U.S.C. 78o–5) is amended—</text>
<paragraph id="H841D6D3DD7DC4A9284FD1579A2D19EDC"><enum>(1)</enum><text>in subsection (c)(1)(C),
by striking <quote>or seeking to become associated,</quote> and inserting
<quote>seeking to become associated, or, at the time of the alleged misconduct,
associated or seeking to become associated</quote>;</text>
</paragraph><paragraph id="H12D3B638219E408CBC56733D4161984E"><enum>(2)</enum><text>in subsection (c)(2)(A),
by inserting <quote>, seeking to become associated, or, at the time of the
alleged misconduct, associated or seeking to become associated</quote> after
<quote>any person associated</quote>; and</text>
</paragraph><paragraph id="H784A77B8671C4B058E7BF75E429665BC"><enum>(3)</enum><text>in subsection (c)(2)(B),
by inserting <quote>, seeking to become associated, or, at the time of the
alleged misconduct, associated or seeking to become associated</quote> after
<quote>any person associated</quote>.</text>
</paragraph></subsection><subsection id="H2117FDDC01554017BAB11AF0331BBD74"><enum>(c)</enum><header>Person associated with
a member of a national securities exchange or registered securities
association</header><text>Section 21(a)(1) of the Securities Exchange Act of
1934 (15 U.S.C. 78u(a)(1)) is amended by inserting <quote>, or, as to any act
or practice, or omission to act, while associated with a member, formerly
associated</quote> after <quote>member or a person associated</quote>.</text>
</subsection><subsection id="HA5603EE623084ACFB328B200AA8ECB78"><enum>(d)</enum><header>Participant of a
registered clearing agency</header><text>Section 21(a)(1) of the Securities
Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is amended by inserting <quote>or,
as to any act or practice, or omission to act, while a participant, was a
participant,</quote> after <quote>in which such person is a
participant,</quote>.</text>
</subsection><subsection id="H842160D8CDDF47709FB2DC2263405220"><enum>(e)</enum><header>Officer or director of
a self-regulatory organization</header><text>Section 19(h)(4) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(h)(4)) is amended—</text>
<paragraph id="H6CAF154105A044B294AFF0F1FD8D5DD4"><enum>(1)</enum><text>by striking <quote>any
officer or director</quote> and inserting <quote>any person who is, or at the
time of the alleged misconduct was, an officer or director</quote>; and</text>
</paragraph><paragraph id="H9B9BB59D3FE24CE5A619B34EC2F9A121"><enum>(2)</enum><text>by striking <quote>such
officer or director</quote> and inserting <quote>such person</quote>.</text>
</paragraph></subsection><subsection id="HD8122A750FFB49DFB360593A2F423A7D"><enum>(f)</enum><header>Officer or director of
an investment company</header><text>Section 36(a) of the Investment Company Act
of 1940 (15 U.S.C. 80a–35(a)) is amended—</text>
<paragraph id="H16D6860039A44D2E8D42459FA5FD86FE"><enum>(1)</enum><text>by striking <quote>a
person serving or acting</quote> and inserting <quote>a person who is, or at
the time of the alleged misconduct was, serving or acting</quote>; and</text>
</paragraph><paragraph id="H1BD8ABE72FC14FE7BA7D8F156E6E558A"><enum>(2)</enum><text>by striking <quote>such
person so serves or acts</quote> and inserting <quote>such person so serves or
acts, or at the time of the alleged misconduct, so served or
acted</quote>.</text>
</paragraph></subsection><subsection id="HD22745B5DB5841D39B37ED63BF81E6AA"><enum>(g)</enum><header>Person associated with
a public accounting firm</header>
<paragraph id="HB3FB15AAB0034E249DFC14695087FF6E"><enum>(1)</enum><header>Sarbanes-Oxley Act of
2002 amendment</header><text>Section 2(a)(9) of the Sarbanes-Oxley Act of 2002
(15 U.S.C. 7201(9)) is amended by adding at the end the following new
subparagraph:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H55CA2DE1F5D448B8A0B4C05A79F40CF7" reported-display-style="italic" style="OLC">
<subparagraph id="H30143C3A5D2A400DB67E1BF06C9825FD"><enum>(C)</enum><header>Investigative and
enforcement authority</header><text display-inline="yes-display-inline">For
purposes of the provisions of sections 3(c), 101(c), 105, and 107(c) and Board
or Commission rules thereunder, except to the extent specifically excepted by
such rules, the terms defined in subparagraph (A) shall include any person
associated, seeking to become associated, or formerly associated with a public
accounting firm, except—</text>
<clause id="H7E4C4D5350D24B2C963EA855E57F106C"><enum>(i)</enum><text>the authority to conduct
an investigation of such person under section 105(b) shall apply only with
respect to any act or practice, or omission to act, while such person was
associated or seeking to become associated with a registered public accounting
firm; and</text>
</clause><clause id="H2BBA3A2DAD68454B90993EE2BE2EA111"><enum>(ii)</enum><text>the authority to
commence a proceeding under section 105(c)(1), or impose disciplinary sanctions
under section 105(c)(4), against such person shall apply only on—</text>
<subclause id="H80F9101F0D884775B01A995B3C968BE2"><enum>(I)</enum><text>the basis of conduct
occurring while such person was associated or seeking to become associated with
a registered public accounting firm; or</text>
</subclause><subclause id="HD30E180B1E12498D8F179D906C8D2E30"><enum>(II)</enum><text display-inline="yes-display-inline">non-cooperation as described in section
105(b)(3) with respect to a demand in a Board investigation for testimony,
documents, or other information relating to a period when such person was
associated or seeking to become associated with a registered public accounting
firm.</text>
</subclause></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H47BE82A822DE4CD7B05360E8C817EA6D"><enum>(2)</enum><header>Securities Exchange Act
of 1934 amendment</header><text display-inline="yes-display-inline">Section
21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is
amended by striking <quote>or a person associated with such a firm</quote> and
inserting “, a person associated with such a firm, or, as to any act, practice,
or omission to act while associated with such firm, a person formerly
associated with such a firm”.</text>
</paragraph></subsection><subsection id="HF6F2FCA11BCC4E2FBF6CBDEA37A5DA18"><enum>(h)</enum><header>Supervisory personnel
of an audit firm</header><text>Section 105(c)(6) of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7215(c)(6)) is amended—</text>
<paragraph id="HFD285B8FC16944E88FB369D098A59350"><enum>(1)</enum><text>in subparagraph (A), by
striking <quote>the supervisory personnel</quote> and inserting <quote>any
person who is, or at the time of the alleged failure reasonably to supervise
was, a supervisory person</quote>; and</text>
</paragraph><paragraph id="H267CE0C7FD144936AB6AB6B20B446ACD"><enum>(2)</enum><text>in subparagraph
(B)—</text>
<subparagraph id="H3D4EF75345CA44BD90089312822CEA3F"><enum>(A)</enum><text>by striking <quote>No
associated person</quote> and inserting <quote>No current or former supervisory
person</quote>; and</text>
</subparagraph><subparagraph id="H37BFFAD671A04F8286951A2DDD3BFEE0"><enum>(B)</enum><text>by striking <quote>any
other person</quote> and inserting <quote>any associated person</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="HABC2C009163B4561AB8B517D5EFCCDF5"><enum>(i)</enum><header>Member of the Public
Company Accounting Oversight Board</header><text>Section 107(d)(3) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7217(d)(3)) is amended by striking
<quote>any member</quote> and inserting <quote>any person who is, or at the
time of the alleged misconduct was, a member</quote>.</text>
</subsection></section><section id="H5907C7A1E9F94794A3A81ADB82C61788"><enum>213.</enum><header>Sharing privileged
information with other authorities</header><text display-inline="no-display-inline">Section 24 of the Securities Exchange Act of
1934 (15 U.S.C. 78x) is amended—</text>
<paragraph id="H407832C4F9D54D04A4885063FC9C3D0A"><enum>(1)</enum><text display-inline="yes-display-inline">by redesignating subsections (d) and (e) as
subsections (e) and (f), respectively;</text>
</paragraph><paragraph id="H95ACF20BA495416CB4D5688A80B871F8"><enum>(2)</enum><text display-inline="yes-display-inline">in subsection (e), as redesignated, by
striking <quote>as provided in subsection (e)</quote> and inserting <quote>as
provided in subsection (f)</quote>; and</text>
</paragraph><paragraph id="HACE50CA8453040C4AE47603D32EFA257"><enum>(3)</enum><text display-inline="yes-display-inline">by inserting after subsection (c) the
following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" id="HE836D1E699C74B5DA7EE25425490626D" reported-display-style="italic" style="OLC">
<subsection id="H9FCF2815627F479586BB3D718F1BAD2B"><enum>(d)</enum><header>Sharing privileged
information with other authorities</header>
<paragraph id="H069FA0713E1D44F89C0E54BA7650F4C8"><enum>(1)</enum><header>Privileged information
provided by the commission</header><text>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—</text>
<subparagraph id="HFB1A291D422045F990B3DDEE64F26756"><enum>(A)</enum><text>any agency (as defined in
section 6 of title 18, United States Code);</text>
</subparagraph><subparagraph id="H17905644F61740F28993BE4900DA2745"><enum>(B)</enum><text>any foreign securities
authority;</text>
</subparagraph><subparagraph id="HE7DB9FB8195F4125A8A3272FA9273E38"><enum>(C)</enum><text display-inline="yes-display-inline">the Public Company Accounting Oversight
Board;</text>
</subparagraph><subparagraph id="HE014AF8924A9421298F598CCCF63328B"><enum>(D)</enum><text>any self-regulatory
organization;</text>
</subparagraph><subparagraph id="H75067BAB731042969EC3A84521D93406"><enum>(E)</enum><text>any foreign law
enforcement authority; or</text>
</subparagraph><subparagraph id="HDDDC698CEE274797B7BA83B6B77717D8"><enum>(F)</enum><text>any State securities or
law enforcement authority.</text>
</subparagraph></paragraph><paragraph id="H3C77CC8E10D74BC3BBCECC9FA0A73528"><enum>(2)</enum><header>Non-disclosure of
privileged information provided to the commission</header><text>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.</text>
</paragraph><paragraph id="H45EE1A826FF94FC498F0E99AF47C322A"><enum>(3)</enum><header>Non-waiver of
privileged information provided to the commission</header>
<subparagraph id="HFC534CA6F40F45268D756A8F49992955"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">Federal agencies,
State securities and law enforcement authorities, self-regulatory
organizations, and the Public Company Accounting Oversight Board 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
the Commission.</text>
</subparagraph><subparagraph id="H7511703462874B59BA7A00ED9A66EA74"><enum>(B)</enum><header>Exception with respect
to certain actions</header><text display-inline="yes-display-inline">The
provisions of subparagraph (A) shall not apply to a self-regulatory
organization or the Public Company Accounting Oversight Board with respect to
information used by the Commission in an action against such
organization.</text>
</subparagraph></paragraph><paragraph id="HD498E5A6B0A44F81B14013529A95B0FC"><enum>(4)</enum><header>Definitions</header><text>For
purposes of this subsection:</text>
<subparagraph id="H55EA5CCD839D4DED8D9AE6015F73D711"><enum>(A)</enum><text>The term
<term>privilege</term> includes any work-product privilege, attorney-client
privilege, governmental privilege, or other privilege recognized under Federal,
foreign, or State law.</text>
</subparagraph><subparagraph id="HE13721FCC1DD4A3BB56F18AE3DAA826D"><enum>(B)</enum><text>The term <term>foreign
law enforcement authority</term> means any foreign authority that is empowered
under foreign law to detect, investigate or prosecute potential violations of
law.</text>
</subparagraph><subparagraph id="H064E9359451B4DB09585832AB39FB089"><enum>(C)</enum><text>The term <term>State
securities or law enforcement authority</term> 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.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><section id="H078714435BEF4E0D81E96240459675D4"><enum>214.</enum><header>Expanded access to
grand jury material</header>
<subsection id="HF56CA8F6F9BB4976AE7318635FF34369"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Title VI of the
Sarbanes-Oxley Act of 2002 is amended by adding at the end the following new
section:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H915E84930CF742928024E4DFA9DA6A57" reported-display-style="italic" style="OLC">
<section id="HBB2BF016230048EBA8F39EC38E496C95"><enum>605.</enum><header>Access to grand jury
information</header>
<subsection id="HB152502B620B4589A04D1F8023F13A2B"><enum>(a)</enum><header>Disclosure</header>
<paragraph id="H9F3E5DB8F1A24573B51CBC376363CE63"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">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 the Commission for use in
relation to any matter within the jurisdiction of the Commission.</text>
</paragraph><paragraph id="HE3476B8E4BFB4D789E78FDC9DA745335"><enum>(2)</enum><header>Substantial need
required</header><text display-inline="yes-display-inline">A court may issue an
order under paragraph (1) only upon a finding of a substantial need in the
public interest.</text>
</paragraph></subsection><subsection id="HB9D8459BA89943CA92CDA695E1FB11A3"><enum>(b)</enum><header>Use of
matter</header><text display-inline="yes-display-inline">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.</text>
</subsection><subsection id="H85EBA605F99B43AFAD09F7F69B119FBF"><enum>(c)</enum><header>Definitions</header><text>As
used in this section, the terms <quote>attorney for the government</quote> and
<quote>grand jury information</quote> have the meanings given to those terms in
section 3322 of title 18, United States
Code.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H05F9CCD4D0B84670B3FB4B57D771909C"><enum>(b)</enum><header>Conforming
amendment</header><text>The table of contents in section 1(b) of the
Sarbanes-Oxley Act of 2002 is amended by inserting after the item relating to
section 604 the following:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H98F01EAAE15948A1B74A508501CCFD98" reported-display-style="italic" style="OLC">
<toc changed="added" committee-id="HBA00" regeneration="no-regeneration" reported-display-style="italic">
<toc-entry level="section">Sec. 605. Access to grand jury
information.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="H9D113B4E61CE4F5CA4AB2B9B1F93BB64"><enum>215.</enum><header>Aiding and abetting
standard of knowledge satisfied by recklessness</header><text display-inline="no-display-inline">Section 20(e) of the Securities Exchange Act
of 1934 (15 U.S.C. 78t(e)) is amended by inserting “or recklessly” after
“knowingly”.</text>
</section><section id="H69123588267F413691D3706C634273C6"><enum>216.</enum><header>Extraterritorial
jurisdiction of the antifraud provisions of the Federal securities
laws</header>
<subsection id="HA18DA74D04774FEBA4D46E6E00BD2B31"><enum>(a)</enum><header>Under the Securities
Act of 1933</header><text display-inline="yes-display-inline">Section 22 of the
Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by adding at the end the
following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HB632028541664A369454A9995EABD53F" reported-display-style="italic" style="OLC">
<subsection id="HD07E54015B114758846124A746605A1B"><enum>(c)</enum><header>Extraterritorial
jurisdiction</header><text display-inline="yes-display-inline">The jurisdiction
of the district courts of the United States and the United States courts of any
Territory described under subsection (a) includes violations of section 17(a),
and all suits in equity and actions at law under that section,
involving—</text>
<paragraph id="H6958C2CC929D4B97B2C8F0A7EB956FA5"><enum>(1)</enum><text>conduct within the United
States that constitutes significant steps in furtherance of the violation, even
if the securities transaction occurs outside the United States and involves
only foreign investors; or</text>
</paragraph><paragraph id="HFA8FC42881A64538B4A25F890CF640A0"><enum>(2)</enum><text>conduct occurring outside
the United States that has a foreseeable substantial effect within the United
States.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H5C1B0082C9C1407BB100A3E1A29EC579"><enum>(b)</enum><header>Under the Securities
Exchange Act of 1934</header><text display-inline="yes-display-inline">Section
27 of the Securities Exchange Act of 1934 (15 U.S.C. 78aa) is amended—</text>
<paragraph id="H4ADECD9347A34999A8F90EC86C2D87DB"><enum>(1)</enum><text>by striking <quote>The
district</quote> and inserting the following:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H37EAD896E58B45E0AE291DA3BC37B09E" reported-display-style="italic" style="OLC">
<subsection id="H6AAAB851E37C4F6284A6D2DF1D9F0B93"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">The
district</text>
</subsection><after-quoted-block>;
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="H34EC1CF768304C3EA85A512F7FFD0F4E"><enum>(2)</enum><text>by inserting at the end
the following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HE412F201786E40118040C1272754C402" reported-display-style="italic" style="OLC">
<subsection id="H76FC5F6BF1954454B106FE786E9089BE"><enum>(b)</enum><header>Extraterritorial
jurisdiction</header><text display-inline="yes-display-inline">The jurisdiction
of the district courts of the United States and the United States courts of any
Territory or other place subject to the jurisdiction of the United States
described under subsection (a) includes violations of the antifraud provisions
of this title, and all suits in equity and actions at law under those
provisions, involving—</text>
<paragraph id="H05BAAC5A76874728896C5B26432CADF5"><enum>(1)</enum><text>conduct within the United
States that constitutes significant steps in furtherance of the violation, even
if the securities transaction occurs outside the United States and involves
only foreign investors; or</text>
</paragraph><paragraph id="H0A41BC54726A47109F735D7FBE661B0E"><enum>(2)</enum><text>conduct occurring outside
the United States that has a foreseeable substantial effect within the United
States.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HDE4E92E506444ED6844309C585855DB2"><enum>(c)</enum><header>Under the Investment
Advisers Act of 1940</header><text display-inline="yes-display-inline">Section
214 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–14) is
amended—</text>
<paragraph display-inline="no-display-inline" id="H1090B71B0DBD4FC5B8ED4DEFA033091B"><enum>(1)</enum><text>by striking <quote>The
district</quote> and inserting the following:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HC26C7787843240FC80F66749F3A8DDBA" reported-display-style="italic" style="OLC">
<subsection id="H7D78D267F8BB4D8D845C745B9B8F688E"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">The
district</text>
</subsection><after-quoted-block>;
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="H87B4D3655F264D86A96F5AE91EAF4121"><enum>(2)</enum><text>by inserting at the end
the following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H71FF64CEBD164AB89AD6BFE5FA0FE9E2" reported-display-style="italic" style="OLC">
<subsection id="HD6485A28724244E9BDF9ABF5E25DDE3D"><enum>(b)</enum><header>Extraterritorial
jurisdiction</header><text display-inline="yes-display-inline">The jurisdiction
of the district courts of the United States and the United States courts of any
Territory or other place subject to the jurisdiction of the United States
described under subsection (a) includes violations of section 206, and all
suits in equity and actions at law under that section, involving—</text>
<paragraph id="H5656477E7722421A8B4FDE7D1819013F"><enum>(1)</enum><text>conduct within the United
States that constitutes significant steps in furtherance of the violation, even
if the violation is committed by a foreign adviser and involves only foreign
investors; or</text>
</paragraph><paragraph id="H02C909E25A14495CAD54D9BA3635F831"><enum>(2)</enum><text>conduct occurring outside
the United States that has a foreseeable substantial effect within the United
States.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection></section><section id="HE07C7EA887504A6585082CAB2E785607"><enum>217.</enum><header>Fidelity
bonding</header><text display-inline="no-display-inline">Section 17(g) of the
Investment Company Act of 1940 (15 U.S.C. 80a–17(g)) is amended to read as
follows:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HCD8F29B523594235AE4AB9EDFF544FE2" reported-display-style="italic" style="OLC">
<subsection id="H6C448067443544E18EC25F9FCF2899BF"><enum>(g)</enum><header>Fidelity
bonding</header>
<paragraph id="H9398E7E88EA64815A1C62296F71FE6F1"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The Commission is
authorized to require that a registered management company provide and maintain
a fidelity bond against loss as to any officer or employee who has access to
securities or funds of the company, either directly or through authority to
draw upon such funds or to direct generally the disposition of such securities
(unless the officer or employee has such access solely through his position as
an officer or employee of a bank), in such form and amount as the Commission
may prescribe by rule, regulation, or order for the protection of
investors.</text>
</paragraph><paragraph id="HA859CDC250DC4701836CF4E4CB10FA17"><enum>(2)</enum><header>Definitions</header><text>For
purposes of this subsection:</text>
<subparagraph id="HCA53F23A93E44F30B1330E97A6297BE5"><enum>(A)</enum><header>Management
company</header><text display-inline="yes-display-inline">The term
<quote>management company</quote> has the meaning given such term under section
4 of the Investment Company Act of 1940.</text>
</subparagraph><subparagraph id="H4C7B41F59BFD45C8B2C977E61AFA0BF9"><enum>(B)</enum><header>Officer or
employee</header><text>The term <term>officer or employee</term> means—</text>
<clause id="HF635610091904E72B5662B61383C822E"><enum>(i)</enum><text>any officer or employee
of the management company; and;</text>
</clause><clause id="HC7B4190AC8874FC99B16319CA7B9AC3D"><enum>(ii)</enum><text display-inline="yes-display-inline">any officer or employee of any investment
adviser to the management company, or of any affiliated company of any such
investment adviser, as the Commission may prescribe by rule, regulation, or
order for the protection of investors.</text>
</clause></subparagraph><subparagraph id="HFC3A8AA8357E409D9C71C6D448A3C0A6"><enum>(C)</enum><header>Other
definitions</header><text display-inline="yes-display-inline">The terms
<quote>affiliated company</quote> and <quote>investment adviser</quote> shall
have the meaning given such terms under section 2 of the Investment Company Act
of
1940.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H9756C6503EA04BC3A15E008E9EDF113F"><enum>218.</enum><header>Enhanced SEC authority
to conduct surveillance and risk assessment</header>
<subsection id="H4B956267EA5D4D99B04BA12BADD8E112"><enum>(a)</enum><header>Securities Exchange Act
of 1934 amendments</header><text display-inline="yes-display-inline">Section
17(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78q(b)) is amended by
adding at the end the following new paragraph:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H5E0A082F448E4A9892F16ABF33DBBCC4" reported-display-style="italic" style="OLC">
<paragraph id="H8407E9CB81594F41870CBD308327B6C7"><enum>(5)</enum><header>Surveillance and risk
assessment</header><text display-inline="yes-display-inline">All persons
described in subsection (a) of this section are subject at any time, or from
time to time, to such reasonable periodic, special, or other information and
document requests by representatives of the Commission as the Commission by
rule or order deems necessary or appropriate to conduct surveillance or risk
assessments of the securities markets, persons registered with the Commission
under this title, or otherwise in furtherance of the purposes of this
title.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H7EFB279E68684B69B682D7CA7BDDCC46"><enum>(b)</enum><header>Investment Company Act
of 1940 amendments</header><text display-inline="yes-display-inline">Section
31(b) of the Investment Company Act of 1940 (15 U.S.C. 80a–30(b)), as amended
by section 106(a)(2), is further amended by adding at the end the following new
paragraph:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H443DABCAAA64418F83A5F65B179447D3" reported-display-style="italic" style="OLC">
<paragraph id="H8699FA75739E4AF39212C9A2C839D227"><enum>(5)</enum><header>Surveillance and risk
assessment</header><text display-inline="yes-display-inline">All persons
described in paragraph (1) are subject at any time, or from time to time, to
such reasonable periodic, special, or other information and document requests
by representatives of the Commission as the Commission by rule or order deems
necessary or appropriate to conduct surveillance or risk assessments of the
securities markets, persons registered with the Commission under this title, or
otherwise in furtherance of the purposes of this
title.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H255AD24FE6C24FAF8156E55884510379"><enum>(c)</enum><header>Investment Advisers Act
of 1940 amendments</header><text>Section 204 of the Investment Advisers Act of
1940 (15 U.S.C. 80b–4), as amended by section 106(b), is further amended by
adding at the end the following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HB1990BD4454640EB9AAF40DEDB4527A2" reported-display-style="italic" style="OLC">
<subsection id="H4FCE94073EE04DDF880F8060D4099F68"><enum>(e)</enum><header>Surveillance and risk
assessment</header><text display-inline="yes-display-inline">All persons
described in subsection (a) are subject at any time, or from time to time, to
such reasonable periodic, special, or other information and document requests
by representatives of the Commission as the Commission by rule or order deems
necessary or appropriate to conduct surveillance or risk assessments of the
securities markets, persons registered with the Commission under this title, or
otherwise in furtherance of the purposes of this
title.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="H8F0D75DA87B94B2FAE17FEA8B75F5733"><enum>219.</enum><header>Investment company
examinations</header><text display-inline="no-display-inline">Section 31(b)(1)
of the Investment Company Act of 1940 (15 U.S.C. 80a–30) is amended to read as
follows:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HB6C6B83685C54AD89765B8C798E92950" reported-display-style="italic" style="OLC">
<paragraph id="HC96F408B0EDE45589AB6361EAE7E7C57"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">All records of each
registered investment company, and each underwriter, broker, dealer, or
investment adviser that is a majority-owned subsidiary of such a company, shall
be subject at any time, or from time to time, to such reasonable periodic,
special, or other examinations by representatives of the Commission as the
Commission deems necessary or appropriate in the public interest or for the
protection of
investors.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="HD00C3B4EDFFB4F5DB6B9B11BA2E60470"><enum>220.</enum><header>Control person
liability under the Securities Exchange Act</header><text display-inline="no-display-inline">Section 20(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78t(a)) is amended by inserting after <quote>controlled
person is liable,</quote> the following: <quote>including to the Commission in
any action brought under paragraph (1) or (3) of section 21(d),</quote>.</text>
</section><section id="H0EA4B76665C647EF9F5E2C4668D325DC"><enum>221.</enum><header>Enhanced application
of anti-fraud provisions</header><text display-inline="no-display-inline">The
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended—</text>
<paragraph id="H0A2F3ED883404148BD53A7036A8C0554"><enum>(1)</enum><text>in section 9—</text>
<subparagraph id="HAB4CD3DB0490459BAD841D96FA57083E"><enum>(A)</enum><text>by striking
<quote>registered on a national securities exchange</quote> each place it
appears and inserting <quote>other than a government security</quote>;</text>
</subparagraph><subparagraph id="HD1C17F902555466CB7845BD5F00FB302"><enum>(B)</enum><text>in subsection (b), by
striking <quote>by use of any facility of a national securities
exchange,</quote>; and</text>
</subparagraph><subparagraph id="H2F7E5523BAC6470AB1EEB10F44694212"><enum>(C)</enum><text>in subsection (c), by
inserting after <quote>unlawful for any</quote> the following: <quote>broker,
dealer, or</quote>;</text>
</subparagraph></paragraph><paragraph id="HEDA6551259D3415783E831B49CA9A57B"><enum>(2)</enum><text display-inline="yes-display-inline">in section 10(a)(1), by striking
<quote>registered on a national securities exchange</quote> and inserting
<quote>other than a government security</quote>; and</text>
</paragraph><paragraph id="HA89260919F284D02B03D08EAA162F91F"><enum>(3)</enum><text>in section 15(c)(1)(A),
by striking <quote>otherwise than on a national securities exchange of which it
is a member</quote>.</text>
</paragraph></section><section id="H21062BCB02994E8EAECD22F75E783B53"><enum>222.</enum><header>SEC Authority to Issue
Rules on Proxy Access</header><text display-inline="no-display-inline">Section
14(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78n(a)) is
amended—</text>
<paragraph id="HC8E0D797F5E04D6398289ABE0B678A5D"><enum>(1)</enum><text>by inserting
<quote>(1)</quote> after <quote>(a)</quote>; and</text>
</paragraph><paragraph id="HEA7DC8FDDA234B7591111E1AE878788C"><enum>(2)</enum><text>by adding at the end the
following:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H23EC00E0C5434F5E986A376B1744175C" reported-display-style="italic" style="traditional">
<paragraph id="HCD55D89AA1934E2398754598F21193C0" indent="up1"><enum>(2)</enum><text display-inline="yes-display-inline">The authority of the Commission to
prescribe rules and regulations under paragraph (1) includes rules and
regulations that require the inclusion and set procedures relating to the
inclusion, in a solicitation of a proxy or consent or authorization by or on
behalf of an issuer, of a nominee or nominees submitted by shareholders to
serve on the issuer’s board of
directors.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><enum>III</enum><header>Commission funding and
organization</header>
<section commented="no" id="H1C04661AA18442A39A2B238147827160"><enum>301.</enum><header>Authorization of
appropriations</header><text display-inline="no-display-inline">Section 35 of
the Securities Exchange Act of 1934 (15 U.S.C. 78kk) is amended to read as
follows:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H481DDF899BC54E5B94386B7EEDA90C69" reported-display-style="italic" style="OLC">
<section commented="no" id="HE6DB9411BD794E2D8BB5E868D2EFF128"><enum>35.</enum><header>Authorization of
appropriations</header><text display-inline="no-display-inline">In addition to
any other funds authorized to be appropriated to the Commission, there are
authorized to be appropriated to carry out the functions, powers, and duties of
the Commission—</text>
<paragraph commented="no" id="H0F87BE8447154DE88E5C2712EF46A133"><enum>(1)</enum><text>for fiscal year 2010,
$1,115,000,000;</text>
</paragraph><paragraph commented="no" id="HA36FEBE84A144B7BB99A167950CC7971"><enum>(2)</enum><text>for fiscal year 2011,
$1,300,000,000;</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HC885F33D1FBD49E4B307D73D2AC7EBC2"><enum>(3)</enum><text>for fiscal year 2012,
$1,500,000,000;</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H09382486432240159B5F721FA26A2302"><enum>(4)</enum><text>for fiscal year 2013,
$1,750,000,000;</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H43C5693D9BF34F49AD0E3ED538ABF528"><enum>(5)</enum><text>for fiscal year 2014,
$2,000,000,000; and</text>
</paragraph><paragraph id="HD1BD944BC98F4D58903DE0DA18B2A23E"><enum>(6)</enum><text>for fiscal year 2015,
$2,250,000,000.</text>
</paragraph></section><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section commented="no" id="HBE9F0D629D614A7390E9664674B51725"><enum>302.</enum><header>Investment adviser
regulation funding</header><text display-inline="no-display-inline">Section 203
of the Investment Advisers Act of 1940 (15 U.S.C. 80b–3) is amended by adding
at the end the following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HA6132A68D30346DF91DFBE4CF489ABE0" reported-display-style="italic" style="OLC">
<subsection id="H5D88DBFD0293464DB3743CCF573D70C5"><enum>(l)</enum><header>Annual
assessment</header>
<paragraph id="H83DE0D9650E545F58D2FBF27BBEF33FB"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The Commission shall,
in accordance with this subsection, promulgate rules pursuant to which it may
collect from investment advisers required to register with the Commission under
this title, fees designed to help recover the cost of inspections and
examinations of registered investment advisers conducted by the Commission
pursuant to this title.</text>
</paragraph><paragraph id="H00FFC3AFBC454D32874CEE5FE3785A9D"><enum>(2)</enum><header>Fee payment
required</header><text>An investment adviser shall, at the time of registration
with the Commission, and each fiscal year thereafter during which such adviser
is so registered, pay to the Commission a fair and reasonable fee determined by
the Commission. In determining such fee, the Commission shall consider
objective factors such as—</text>
<subparagraph id="H67AF46FC299649A989E9CA8832EB7C2A"><enum>(A)</enum><text>the investment adviser’s
size;</text>
</subparagraph><subparagraph id="H334B7449C6C143DCBA9967B15B40F09B"><enum>(B)</enum><text>the number of clients of
the investment adviser;</text>
</subparagraph><subparagraph id="HC4B791C7BE474383ADFEDA539F8D9EC6"><enum>(C)</enum><text>the types of clients of
the investment adviser; and</text>
</subparagraph><subparagraph id="HBA6B29E8E487456A8254B98D8C7E378E"><enum>(D)</enum><text>such other relevant
factors as the Commission determines to be appropriate.</text>
</subparagraph></paragraph><paragraph commented="no" id="HFA6C2FB863014C44BC5FDB75F2FB5F3F"><enum>(3)</enum><header>Amount and use of
fees</header>
<subparagraph commented="no" id="HF56C6436A734402B84FE3A4D69BB741D"><enum>(A)</enum><header>Minimum aggregate
amount</header><text display-inline="yes-display-inline">The aggregate amount
of fees determined by the Commission under this subsection for any fiscal year
shall be greater than the amount the Commission spent on inspections and
examinations of registered investment advisers during the 2009 fiscal
year.</text>
</subparagraph><subparagraph commented="no" id="HEEC9BCF48928427AB41616F1801F38E6"><enum>(B)</enum><header>Excess
fees</header><text>The Commission may retain any excess fees collected under
this subsection during a fiscal year for application towards the costs of
inspections and examinations of investment advisers in future fiscal
years.</text>
</subparagraph></paragraph><paragraph id="HF674A6DE8FA44CD08FFF04D0CF244B16"><enum>(4)</enum><header>Review and adjustment
of fees</header><text>The Commission may review fee rates established pursuant
to this section before the end of any fiscal year and make any appropriate
adjustments prior to collecting any such fee in the following fiscal
year.</text>
</paragraph><paragraph id="H6D4AEAC8FF0A4A7D9A54ABE676822BCE"><enum>(5)</enum><header>Penalty
fee</header><text display-inline="yes-display-inline">The Commission shall
prescribe by rule or regulation an additional fee to be assessed as a penalty
for late payment of fees required by this subsection.</text>
</paragraph><paragraph id="H681A7CAAC0784077886DDC3554053670"><enum>(6)</enum><header>Judicial
review</header><text>Increases or decreases in fees made pursuant to this
section shall not be subject to judicial
review.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H24EACA7EB26B499881B5733DC08C27D4"><enum>303.</enum><header>Amendments to section
31 of the Securities Exchange Act of 1934</header><text display-inline="no-display-inline">Section 31 of the Securities Exchange Act of
1934 (15 U.S.C. 78ee) is amended—</text>
<paragraph id="H323F67DBDC2346CDA68A38B2F9ED638F"><enum>(1)</enum><text>in subsection (e)(2), by
striking <quote>September 30</quote> and inserting <quote>September
25</quote>;</text>
</paragraph><paragraph id="H22F9F1C568EA45FD8179F603B2FE450A"><enum>(2)</enum><text>in subsection (g), by
striking <quote>April 30</quote> and inserting <quote>August 31</quote>;
and</text>
</paragraph><paragraph id="HD180E895085846539EFA45F39F569B5F"><enum>(3)</enum><text>in subsection
(j)(2)—</text>
<subparagraph id="HCFC3DB45B425415781737ABD8900FEBE"><enum>(A)</enum><text>by striking <quote>5
months</quote> and inserting <quote>4 months</quote>; and</text>
</subparagraph><subparagraph id="H97B2ACDDD7AA42A18E521C25B7FE10D1"><enum>(B)</enum><text>by striking
<quote>(including fees collected during such 5-month period and assessments
collected under subsection (d))</quote> and inserting <quote>(including fees
estimated to be collected under subsections (b) and (c) prior to the effective
date of the uniform adjusted rate and assessments estimated to be collected
under subsection (d))</quote>.</text>
</subparagraph></paragraph></section><section id="H78A6137380304CC185982687AF020A8C"><enum>304.</enum><header>Commission
organizational study and reform</header>
<subsection id="H521D072EC72C4C09B1BC2C26533275E1"><enum>(a)</enum><header>Study required</header>
<paragraph id="HAC49089AF9974E10B169D71C45027733"><enum>(1)</enum><header>In
general</header><text>Not later than the end of the 90-day period beginning on
the date of the enactment of this Act, the Securities and Exchange Commission
(hereinafter in this section referred to as the <quote>SEC</quote>) shall hire
an independent consultant of high caliber and with expertise in organizational
restructuring and the operations of capital markets to examine the internal
operations, structure, funding, and the need for comprehensive reform of the
SEC, as well as the SEC’s relationship with the reliance on self-regulatory
organizations and other entities relevant to the regulation of securities and
the protection of securities investors that are under the SEC’s
oversight.</text>
</paragraph><paragraph id="H6991EFA6665743BBB600304911E8FAF2"><enum>(2)</enum><header>Specific areas for
study</header><text>The study required under paragraph (1) shall, at a minimum,
include the study of—</text>
<subparagraph id="H2908E914F8B64970804267AE64EFE7DB"><enum>(A)</enum><text display-inline="yes-display-inline">the possible elimination of unnecessary or
redundant units at the SEC;</text>
</subparagraph><subparagraph id="HC2A0FC9211FB4E49B7861ADB4C978060"><enum>(B)</enum><text>improving communications
between SEC offices and divisions;</text>
</subparagraph><subparagraph id="H184016A733C242E7A84FED7FDC1BDB20"><enum>(C)</enum><text display-inline="yes-display-inline">the need to put in place a clear
chain-of-command structure, particularly for enforcement examinations and
compliance inspections;</text>
</subparagraph><subparagraph id="H1D789A5FCE314B1BAED4EF2442A97912"><enum>(D)</enum><text display-inline="yes-display-inline">the effect of high-frequency trading and
other technological advances on the market and what the SEC requires to monitor
the effect of such trading and advances on the market;</text>
</subparagraph><subparagraph id="H360B92086C2C4656955439A686593489"><enum>(E)</enum><text>the SEC’s hiring
authorities, workplace policies, and personal practices, including—</text>
<clause id="HE4D666DA04014115BA7D2D0C647741B1"><enum>(i)</enum><text>whether there is a need
to further streamline hiring authorities for those who are not lawyers,
accountants, compliance examiners, or economists;</text>
</clause><clause id="H1A82D1149CC84F1C862CEBF4EFBEA888"><enum>(ii)</enum><text>whether there is a need
for further pay reforms;</text>
</clause><clause id="H6343619DFB6A4F0B9267AD6D4F4D7C51"><enum>(iii)</enum><text display-inline="yes-display-inline">the diversity of skill sets of SEC
employees and whether the present skill set diversity efficiently and
effectively fosters the SEC’s mission of investor protection; and</text>
</clause><clause id="H22C26A9D59054284A8DBFA2382D9B99D"><enum>(iv)</enum><text>the application of civil
service laws by the SEC;</text>
</clause></subparagraph><subparagraph id="H37C93C41446A4DF8BDB1084810CA76C4"><enum>(F)</enum><text>whether the SEC’s
oversight and reliance on self-regulatory organizations promotes efficient and
effective governance for the securities markets; and</text>
</subparagraph><subparagraph id="HBAEF0916024E4316BB01FF0BF891F64B"><enum>(G)</enum><text display-inline="yes-display-inline">whether adjusting the SEC’s reliance on
self-regulatory organizations is necessary to promote more efficient and
effective governance for the securities markets.</text>
</subparagraph></paragraph></subsection><subsection id="H197C8CB3A9424F0F98E5A0E3E31C8B53"><enum>(b)</enum><header>Consultant
report</header><text>Not later than the end of the 150-day period after being
retained, the independent consultant hired pursuant to subsection (a)(1) shall
issue a report to the SEC and the Congress containing—</text>
<paragraph id="HA8575EC72C894C4BADEAEE5323D0F995"><enum>(1)</enum><text display-inline="yes-display-inline">a detailed description of any findings and
conclusions made while carrying out the study required under subsection
(a)(1);</text>
</paragraph><paragraph id="H46373096DD1A45D1A37498083AC39546"><enum>(2)</enum><text>recommendations for
legislative, regulatory, or administrative action that the consultant
determines appropriate to enable the SEC and other entities on which it reports
to perform their statutorily or otherwise mandated missions.</text>
</paragraph></subsection><subsection id="HE808C76A378342AF8EBE772ED3787E79"><enum>(c)</enum><header>SEC
report</header><text>Not later than the end of the 6-month period beginning on
the date the consultant issues the report under subsection (b), and every
6-months thereafter during the 2-year period following the date on which the
consultant issues such report, the SEC shall issue a report to the Committee on
Financial Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate describing the SEC’s
implementation of the regulatory and administrative recommendations contained
in the consultant’s report.</text>
</subsection></section><section id="H96CA7FE31857455D932289F6FB887F8D"><enum>305.</enum><header>Capital Markets Safety
Board</header><text display-inline="no-display-inline">There is established
within the Securities and Exchange Commission an office to be known as the
Capital Markets Safety Board whose purpose shall be to conduct investigations,
at the direction of the Commission, of failed institutions registered with the
Commission, to determine what caused such institutions to fail. Upon the
conclusion of an investigation, the Board shall make available on the
Commission’s website a report of its findings, including recommendations
regarding how others can avoid similar mistakes. No information that may
compromise an ongoing Federal investigation shall be made available in any such
report.</text>
</section><section id="H439D865BD6CD424AB1EF617E60977F61"><enum>306.</enum><header>Report on
implementation of <quote>post-Madoff reforms</quote></header>
<subsection id="H428BFDCA4EB345AEA7D1115745686DB9"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Not later than 6
months after the date of the enactment of this Act, the Securities and Exchange
Commission shall provide to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban Affairs of the
Senate a report describing the implementation of reforms outlined by the
Commission in the wake of the discovery of fraud by Bernie Madoff.</text>
</subsection><subsection id="HD90DA1FC8702487A8A1D15564303B96B"><enum>(b)</enum><header>Contents of
report</header><text>The report required by subsection (a) shall include an
analysis of—</text>
<paragraph id="HE0B584951D1942F7A287FD6B295BEEC1"><enum>(1)</enum><text>how many of the
post-Madoff reforms have been implemented and to what extent; and</text>
</paragraph><paragraph id="H246226F3F7D64A19AC57C2546B8A7637"><enum>(2)</enum><text>whether there is overlap
between any of the Commission’s reform proposals and those recommended by the
Inspector General of the Commission.</text>
</paragraph></subsection><subsection id="H51C98356985344A7B25F0C0514D418DE"><enum>(c)</enum><header>Publication of
report</header><text>The Commission and the Committees referred to in
subsection (a) shall publish the report required by such subsection on their
Web sites.</text>
</subsection></section><section id="H26D2588F2EB049D7939FAE9931B09C5C"><enum>307.</enum><header>Joint Advisory
Committee</header><text display-inline="no-display-inline">The Securities and
Exchange Commission and the Commodities Futures Trading Commission may jointly
form and operate a joint advisory committee composed of members of each
Commission and industry experts and participants. The purposes of such an
advisory committee include—</text>
<paragraph id="H32F1CD10146C4C549340729322473C3A"><enum>(1)</enum><text>considering and
developing solutions to emerging and ongoing issues of common interest in the
futures and securities markets;</text>
</paragraph><paragraph id="HBFEFF4B4BBF8435CADF21E2AADA8B1B2"><enum>(2)</enum><text>identifying emerging
regulatory risks and assess and quantify their implications for investors and
other market participants, and provide recommendations for solutions;</text>
</paragraph><paragraph id="H06A83797F4024503BE15A00FB16E8C87"><enum>(3)</enum><text>serving as a vehicle for
discussion and communication on regulatory issues of mutual concerns affecting
each Commission, the regulated markets, and the industry generally; and</text>
</paragraph><paragraph id="H8E3478BFED1F4FBB9E5D1BBB4126E4EA"><enum>(4)</enum><text>reporting regularly to
each Commission and to Congress on its activities.</text>
</paragraph></section><enum>IV</enum><header>Additional Commission
reforms</header>
<section id="H90708A21CE6C4EF0A119A81B6286671A"><enum>401.</enum><header>Regulation of
securities lending</header><text display-inline="no-display-inline">Section 10
of the Securities Exchange Act of 1934 (15 U.S.C. 78j) is amended by adding at
the end the following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HB0F9D5AFC01741FC9A062BC6A2F029B5" reported-display-style="italic" style="OLC">
<subsection id="HEFB46B0B805243C79DAACCD802A80A1B"><enum>(c)</enum><paragraph commented="no" display-inline="yes-display-inline" id="H2C232FC562CA440DAE5C712B0E0B741A"><enum>(1)</enum><text>To effect, accept, or
facilitate a transaction involving the loan or borrowing of securities in
contravention of such rules and regulations as the Commission may prescribe as
necessary or appropriate in the public interest or for the protection of
investors.</text>
</paragraph><paragraph changed="added" committee-id="HBA00" id="H73669F2477E441C48C96CC8826E6C5E3" indent="up1" reported-display-style="italic"><enum>(2)</enum><text display-inline="yes-display-inline">Nothing in paragraph (1) shall be construed
to limit the authority of an appropriate Federal banking agency (as defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), the
National Credit Union Administration, or any other Federal department or agency
identified under law as having a systemic risk responsibility from prescribing
rules or regulations to impose restrictions on transactions involving the loan
or borrowing of securities in order to protect the safety and soundness of a
financial institution or to protect the financial system from systemic
risk.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H7272CEB6035E4A9B8C319F7F695D7DAB"><enum>402.</enum><header>Lost and stolen
securities</header><text display-inline="no-display-inline">Section 17(f)(1) of
the Securities Exchange Act of 1934 (15 U.S.C. 78q(f)(1)) is amended—</text>
<paragraph id="H22175E9787374D2E9B83CD58C4BEF3E0"><enum>(1)</enum><text display-inline="yes-display-inline">in subparagraph (A), by striking
<quote>missing, lost, counterfeit, or stolen securities</quote> and inserting
<quote>securities that are missing, lost, counterfeit, stolen, cancelled, or
any other category of securities as the Commission, by rule, may
prescribe</quote>; and</text>
</paragraph><paragraph id="H3A5C7A3A4ABB4EC48599A7E5D4941C34"><enum>(2)</enum><text>in subparagraph (B), by
striking <quote>or stolen</quote> and inserting <quote>stolen, cancelled, or
reported in such other manner as the Commission, by rule, may
prescribe</quote>.</text>
</paragraph></section><section id="HD1176DF3A17D4176A835333F38A01A1E"><enum>403.</enum><header>Fingerprinting</header><text display-inline="no-display-inline">Section 17(f)(2) of the Securities Exchange
Act of 1934 (15 U.S.C. 78q(f)(2)) is amended—</text>
<paragraph id="H8115F90FFEFB485A88DA1A132BF7079B"><enum>(1)</enum><text>by striking <quote>and
registered clearing agency,</quote> and inserting <quote>registered clearing
agency, registered securities information processor, national securities
exchange, and national securities association</quote>; and</text>
</paragraph><paragraph commented="no" id="HA7F5F903BF6944ACB9135D30462FC123"><enum>(2)</enum><text>by striking <quote>or
clearing agency,</quote> and inserting <quote>clearing agency, securities
information processor, national securities exchange, or national securities
association,</quote>.</text>
</paragraph></section><section id="HBAEE737CDC094A6DA959BD6AEC075DF1"><enum>404.</enum><header>Equal treatment of
self-regulatory organization rules</header><text display-inline="no-display-inline">Section 29(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78cc(a)) is amended by striking <quote>an exchange required
thereby</quote> and inserting <quote>a self-regulatory
organization,</quote>.</text>
</section><section id="HC9F1668B52FB4C058FFB7C04FD4C28CF"><enum>405.</enum><header>Clarification that
section 205 of the Investment Advisers Act of 1940 does not apply to
State-registered advisers</header><text display-inline="no-display-inline">Section 205(a) of the Investment Advisers
Act of 1940 (15 U.S.C. 80b–5(a)) is amended—</text>
<paragraph id="H1E58EA60121941D9BE8BFFB3EF5E1E68"><enum>(1)</enum><text>by striking <quote>,
unless exempt from registration pursuant to section 203(b),</quote> and
inserting <quote>registered or required to be registered with the
Commission</quote>;</text>
</paragraph><paragraph id="H36400ABFEF38473D99357AE08F13D325"><enum>(2)</enum><text>by striking <quote>make
use of the mails or any means or instrumentality of interstate commerce,
directly or indirectly, to</quote>; and</text>
</paragraph><paragraph id="H1A7757ABB5364E5C8FFAB7EF2560EA1C"><enum>(3)</enum><text>by striking
<quote>to</quote> after <quote>in any way</quote>.</text>
</paragraph></section><section id="H830A5A81C6E64224B046498DC08ADA65"><enum>406.</enum><header>Conforming amendments
for the repeal of the Public Utility Holding Company Act of 1935</header>
<subsection id="H6F5C051B75E5455599234A0AC13B19CC"><enum>(a)</enum><header>Securities Exchange Act
of 1934</header><text display-inline="yes-display-inline">The Securities
Exchange Act of 1934 (15 U.S.C. 78 et seq.) is amended—</text>
<paragraph id="H81FCA07B0745475A9EDB06FA97104D84"><enum>(1)</enum><text>in section 3(a)(47) (15
U.S.C. 78c(a)(47)), by striking <quote>the Public Utility Holding Company Act
of 1935 (15 U.S.C. 79a et seq.),</quote>; and</text>
</paragraph><paragraph id="H518C96F9B2C64A31BD7E126BC69B82AE"><enum>(2)</enum><text>in section 12(k) (15
U.S.C. 78l(k)), by amending paragraph (7) to read as follows: </text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HB2CE158F4F0E4A599F4FEE568C386F79" reported-display-style="italic" style="OLC">
<paragraph id="H38DC747463DF44FBB0C685EE4ACD09D4"><enum>(7)</enum><header>Definition</header><text>For
purposes of this subsection, the term <term>emergency</term> means—</text>
<subparagraph id="H5CFF5CFCEE1A4E73BE0B28953487188B"><enum>(A)</enum><text>a major market
disturbance characterized by or constituting—</text>
<clause id="H141920EF6F0D482180D5727E39F027FF"><enum>(i)</enum><text>sudden and excessive
fluctuations of securities prices generally, or a substantial threat thereof,
that threaten fair and orderly markets; or</text>
</clause><clause id="HC9DA5B5CBBD3413885FCC46D8F5DBA00"><enum>(ii)</enum><text>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</text>
</clause></subparagraph><subparagraph id="H7EDA49269DFA426B96359C20223F5727"><enum>(B)</enum><text>a major disturbance that
substantially disrupts, or threatens to substantially disrupt—</text>
<clause id="H7443306A2E9C4183B3A9D475206C5C16"><enum>(i)</enum><text>the functioning of
securities markets, investment companies, or any other significant portion or
segment of the securities markets; or</text>
</clause><clause id="H627D2AEC0F684697ABE8BA8EEA0D47B4"><enum>(ii)</enum><text>the transmission or
processing of securities
transactions.</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H870CADF68A9E4DF1BB2B28005D9D25F1"><enum>(3)</enum><text>in section 21(h)(2) (15
U.S.C. 78u(h)(2)), by striking <quote>section 18(c) of the Public Utility
Holding Company Act of 1935,</quote>.</text>
</paragraph></subsection><subsection id="HD460148397A14A9F8639E63CA7831C50"><enum>(b)</enum><header>Trust Indenture Act of
1939</header><text display-inline="yes-display-inline">The Trust Indenture Act
of 1939 (15 U.S.C. 77aaa et seq.) is amended—</text>
<paragraph id="H06738260100E4EF9AB40AEC29457766A"><enum>(1)</enum><text display-inline="yes-display-inline">in section 303 (15 U.S.C. 77ccc), by
amending paragraph (17) to read as follows:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H98F35CCD39574668A97BA9BE60381097" reported-display-style="italic" style="OLC">
<paragraph id="HF11CDD0A1A7347988064DD94F8F1799E"><enum>(17)</enum><text>The terms
<term>Securities Act of 1933</term> and <term>Securities Exchange Act of
1934</term> shall be deemed to refer, respectively, to such Acts, as amended,
whether amended prior to or after the enactment of this
title.</text>
</paragraph><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph id="H5249EE35778440BCA33B1AD48DEE3E51"><enum>(2)</enum><text display-inline="yes-display-inline">in section 308 (15 U.S.C. 77hhh), by
striking <quote>Securities Act of 1933, the Securities Exchange Act of 1934, or
the Public Utility Holding Company Act of 1935</quote> each place it appears
and inserting <quote>Securities Act of 1933 or the Securities Exchange Act of
1934</quote>;</text>
</paragraph><paragraph id="HD9D7868E3184441899D5697CF693EA52"><enum>(3)</enum><text display-inline="yes-display-inline">in section 310 (15 U.S.C. 77jjj), by
striking subsection (c);</text>
</paragraph><paragraph id="HED0B01BB9B33432FA5FA2358575178D6"><enum>(4)</enum><text display-inline="yes-display-inline">in section 311 (15 U.S.C. 77kkk) by
striking subsection (c);</text>
</paragraph><paragraph id="H5239CDA092E942EA98731F0315D64500"><enum>(5)</enum><text display-inline="yes-display-inline">in section 323(b) (15 U.S.C. 77www(b)), by
striking <quote>Securities Act of 1933, or the Securities Exchange Act of 1934,
or the Public Utility Holding Company Act of 1935</quote> and inserting
<quote>Securities Act of 1933 or the Securities Exchange Act of 1934</quote>;
and</text>
</paragraph><paragraph id="H2099D1EA95BF4434AD8F84B7304E6CD9"><enum>(6)</enum><text display-inline="yes-display-inline">in section 326 (15 U.S.C. 77zzz), by
striking <quote>Securities Act of 1933, or the Securities Exchange Act of 1934,
or the Public Utility Holding Company Act of 1935,</quote> and inserting
<quote>Securities Act of 1933 or the Securities Exchange Act of
1934</quote>.</text>
</paragraph></subsection><subsection id="HE99E215BA5FA4C0D8CC275BF15661121"><enum>(c)</enum><header>Investment Company Act
of 1940</header><text display-inline="yes-display-inline">The Investment
Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is amended—</text>
<paragraph id="H711AD1AFF0704A7EB2087DB36C787AD2"><enum>(1)</enum><text display-inline="yes-display-inline">in section 2(a)(44) (15 U.S.C.
80a–2(a)(44)), by striking <quote><quote>Public Utility Holding Company Act of
1935</quote>,</quote>;</text>
</paragraph><paragraph id="H0F3613F77EFD4C1DBE65C32D49F80D81"><enum>(2)</enum><text display-inline="yes-display-inline">in section 3(c) (15 U.S.C. 80a–3(c)), by
amending paragraph (8) to read as follows:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HFEBB777A0F6D40F8BB0D6A2D019ABC4A" reported-display-style="italic" style="OLC">
<paragraph id="H8201D63451634605B6AB5F32E441BD60"><enum>(8)</enum><text>[Repealed]</text>
</paragraph><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph id="HCB9973B702EE424F922B24A8E27B0427"><enum>(3)</enum><text display-inline="yes-display-inline">in section 38(b) (15 U.S.C. 80a–37(b)), by
striking <quote>the Public Utility Holding Company Act of 1935,</quote>;
and</text>
</paragraph><paragraph id="H1A5BBF1222A34C938B8A718860126507"><enum>(4)</enum><text display-inline="yes-display-inline">in section 50 (15 U.S.C. 80a–49), by
striking <quote>the Public Utility Holding Company Act of 1935,</quote>.</text>
</paragraph></subsection><subsection id="H829B3F462B374B0FB3644E2B084CC002"><enum>(d)</enum><header>Investment Advisers Act
of 1940</header><text display-inline="yes-display-inline">Section 202(a)(21) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)(21)) is amended by
striking <quote><quote>Public Utility Holding Company Act of
1935</quote>,</quote>.</text>
</subsection></section><section id="H88059FCC4219418E9B5D65E0ECD950D4"><enum>407.</enum><header>Promoting transparency
in financial reporting</header>
<subsection id="H61F981706E604CE8B00B95A9BF3B8E48"><enum>(a)</enum><header>Findings</header><text>Congress
finds the following:</text>
<paragraph id="HA2E97A571207430187E1E8F80A6C016C"><enum>(1)</enum><text>Transparent and clear
financial reporting is integral to the continued growth and strength of our
capital markets and the confidence of investors.</text>
</paragraph><paragraph id="HC1B9ACFB3B534C18A183CF37344B7A66"><enum>(2)</enum><text>The increasing detail and
volume of accounting, auditing, and reporting guidance pose a major
challenge.</text>
</paragraph><paragraph id="HCB4AD40B63B14BB18A5F0D8110218A2C"><enum>(3)</enum><text>The complexity of
accounting and auditing standards in the United States has added to the costs
and effort involved in financial reporting.</text>
</paragraph></subsection><subsection id="H96718E8C062941EBB8751608301003A6"><enum>(b)</enum><header>Testimony required on
reducing complexity in financial reporting</header><text>The Securities and
Exchange Commission, the Public Company Accounting Oversight Board, and the
standard setting body designated pursuant to section 19(b) of the Securities
Act of 1933 shall annually provide oral testimony by their respective
Chairpersons or a designee of the Chairperson, beginning in 2010, 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—</text>
<paragraph id="H34FF9436A2C34085ACDD7955E5B2DC62"><enum>(1)</enum><text>reassessing complex and
outdated accounting standards;</text>
</paragraph><paragraph id="H0B7A2310926847AFB1D8E7C62DCEFB75"><enum>(2)</enum><text>improving the
understandability, consistency, and overall usability of the existing
accounting and auditing literature;</text>
</paragraph><paragraph id="HC89FFECDEBAF48C9945CC4E3534E4739"><enum>(3)</enum><text>developing
principles-based accounting standards;</text>
</paragraph><paragraph id="H7E171D6732BE42899794BCC05479B9B2"><enum>(4)</enum><text>encouraging the use and
acceptance of interactive data; and</text>
</paragraph><paragraph id="HAB1BADB4100049EA94D8F3E8E959FB8A"><enum>(5)</enum><text>promoting disclosures in
<quote>plain English</quote>.</text>
</paragraph></subsection></section><section id="HBCEDD0D34BB642CCABF9F850A6624EB9"><enum>408.</enum><header>Unlawful margin
lending</header><text display-inline="no-display-inline">Section 7(c)(1)(A) of
the Securities Exchange Act of 1934 (15 U.S.C. 78g(c)(1)(A)) is amended by
striking <quote>; and</quote> and inserting <quote>; or</quote>.</text>
</section><section id="HD980BC5773BD480CA91E36D601FB5107"><enum>409.</enum><header>Protecting
confidentiality of materials submitted to the Commission</header>
<subsection id="H1972BCD62D62406DAB1644715A470E18"><enum>(a)</enum><header>Securities Exchange Act
of 1934</header><text>Section 17(j) of the Securities Exchange Act of 1934 (15
U.S.C. 78q(j)) is amended to read as follows:</text>
<quoted-block changed="added" committee-id="HBA00" id="HF15AB15D858B480E8727E416088090DA" reported-display-style="italic" style="OLC">
<subsection id="H3680D94053964FEB8C88D12480AC3A85"><enum>(j)</enum><header>Authority To limit
disclosure of information</header>
<paragraph id="H97CBC64DB7D943578C6086258AAC6B68"><enum>(1)</enum><header>In
general</header><text>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, surveillance, or risk
assessment 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 or self-regulatory organization 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.</text>
</paragraph><paragraph id="H05EF2A2E2A6A48C9AA9114A7B592A2AE"><enum>(2)</enum><header>Certain
exceptions</header><text display-inline="yes-display-inline">Nothing in this
subsection shall authorize the Commission to withhold information from the
Congress, prevent the Commission from complying with a request for information
from any other Federal department or agency, the Public Company Accounting
Oversight Board, or any self-regulatory organization requesting the information
for purposes within the scope of its jurisdiction, or 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 a person subject to or
described in this section to produce information, documents, records, or
reports relating directly to the examination, surveillance, or risk assessment
of that person or the financial or operational condition of that person or an
associated or affiliated person of that person.</text>
</paragraph><paragraph id="HD8952511D6CB42D19BDD6EBAE182FB15"><enum>(3)</enum><header>Treatment under section
552 of title 5, United States Code</header><text>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 that section.</text>
</paragraph><paragraph id="H962A9C234F0C447BA7E0E0353A9E6829"><enum>(4)</enum><header>Certain information to
be confidential</header><text>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.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H5FA0C137A03E443C8D3F142E30792095"><enum>(b)</enum><header>Investment Company Act
of 1940</header><text>Section 31(b) of the Investment Company Act of 1940 (15
U.S.C. 80a–30(b)), as amended by sections 106(a)(2) and 218(b)(4), is further
amended by adding at the end the following new paragraph:</text>
<quoted-block changed="added" committee-id="HBA00" id="HB53FA2CB63774F06BA8875616A91E2D1" reported-display-style="italic" style="OLC">
<paragraph id="HA2168743C23541BF837EA23793F403E2"><enum>(6)</enum><header>Confidentiality</header>
<subparagraph id="HCE18085B34C84AFA93B42A4C17030D85"><enum>(A)</enum><header>In
general</header><text>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, surveillance, or risk
assessment of a person subject to or described in this section.</text>
</subparagraph><subparagraph id="H84EE8DDA7DCD43AC832C9E8542F1FFE6"><enum>(B)</enum><header>Certain
exceptions</header><text display-inline="yes-display-inline">Nothing in this
subsection shall authorize the Commission to withhold information from the
Congress, prevent the Commission from complying with a request for information
from any other Federal department or agency, or the Public Company Accounting
Oversight Board requesting the information for purposes within the scope of its
jurisdiction, or 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 a person subject to or described in this section 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.</text>
</subparagraph><subparagraph id="H6A31BB68011A4FAFABA5304B2E8622EE"><enum>(C)</enum><header>Treatment under section
552 of title 5, United States Code</header><text>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 that
section.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H8924E1D6985C4188AE7A13EB78575097"><enum>(c)</enum><header>Investment Advisers Act
of 1940</header><text>Section 204 of the Investment Advisers Act of 1940 (15
U.S.C. 80b–4), as amended by sections 106(b) and 218(c), is further amended by
adding at the end the following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" id="HF71DD272CB4848BC813D687DF07FC6AF" reported-display-style="italic" style="OLC">
<subsection commented="no" id="H8F69FB187168409EAC65CA8249F1423E"><enum>(f)</enum><header>Confidentiality</header>
<paragraph id="H88D480898F064801993A70BE5EA98809"><enum>(1)</enum><header>In
general</header><text>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.</text>
</paragraph><paragraph id="H1FA39E5D7A6A4688A3C36B24A2C5DA39"><enum>(2)</enum><header>Certain
exceptions</header><text display-inline="yes-display-inline">Nothing in this
subsection shall authorize the Commission to withhold information from
Congress, prevent the Commission from complying with a request for information
from any other Federal department or agency, the Public Company Accounting
Oversight Board, or a self-regulatory organization requesting the information
for purposes within the scope of its jurisdiction, or 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 a person subject to or
described in this section 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.</text>
</paragraph><paragraph id="H676964A121E4410D9FEFA9DAE6290394"><enum>(3)</enum><header>Treatment under section
552 of title 5, United States Code</header><text>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 that
section.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="H9ACB2CCC22424A12BA3DC695DACF4923"><enum>410.</enum><header>Technical
corrections</header>
<subsection id="H258940B6BB974084B2D845B673A87746"><enum>(a)</enum><header>Securities Act of
1933</header><text display-inline="yes-display-inline">The Securities Act of
1933 (15 U.S.C. 77a et seq.) is amended—</text>
<paragraph id="HD84AA156709B471AA3D72076030A86A5"><enum>(1)</enum><text>in section 3(a)(4) (15
U.S.C. 77c(a)(4)), by striking <quote>individual;</quote> and inserting
<quote>individual,</quote>;</text>
</paragraph><paragraph id="H67F8470FAD26415497DE5163172B5988"><enum>(2)</enum><text display-inline="yes-display-inline">in the matter following paragraph (5) of
section 11(a), by striking <quote>earning statement</quote> and inserting
<quote>earnings statement</quote>.</text>
</paragraph><paragraph id="H00C23206DD184B1A8E4A5A248FEBC7CA"><enum>(3)</enum><text display-inline="yes-display-inline">in section 18(b)(1)(C) (15 U.S.C.
77r(b)(1)(C)), by striking <quote>is a security</quote> and inserting <quote>a
security</quote>;</text>
</paragraph><paragraph id="H68146548EA034EC1A9D739B093372F49"><enum>(4)</enum><text display-inline="yes-display-inline">in section 18(c)(2)(B)(i) (15 U.S.C.
77r(c)(2)(B)(i)), by striking <quote>State, or</quote> and inserting
<quote>State or</quote>;</text>
</paragraph><paragraph id="HCADE1C2FC15B47ECA08F86ED693DE2E3"><enum>(5)</enum><text display-inline="yes-display-inline">in section 19(d)(6)(A) (15 U.S.C.
77s(d)(6)(A)), by striking <quote>in paragraph (1) of (3)</quote> and inserting
<quote>in paragraph (1) or (3)</quote>; and</text>
</paragraph><paragraph id="HEE5C9B368C544587969F91B12FDD9C5F"><enum>(6)</enum><text display-inline="yes-display-inline">in section 27A(c)(1)(B)(ii) (15 U.S.C.
77z–2(c)(1)(B)(ii)), by striking <quote>business entity;</quote> and inserting
<quote>business entity,</quote>.</text>
</paragraph></subsection><subsection id="HA6D82933658646C1856010D60EF92193"><enum>(b)</enum><header>Securities Exchange Act
of 1934</header><text display-inline="yes-display-inline">The Securities
Exchange Act of 1934 (15 U.S.C. 78 et seq.) is amended—</text>
<paragraph id="HFE354BC6C7FF46DFA82285A88FE7A248"><enum>(1)</enum><text>in section 2(1)(a) (15
U.S.C. 78b(1)(a)), by striking <quote>affected</quote> and inserting
<quote>effected</quote>;</text>
</paragraph><paragraph id="H1B2DE844A2144DAF988583909E98AF62"><enum>(2)</enum><text display-inline="yes-display-inline">in section 3(a)(55)(A) (15 U.S.C.
78c(a)(55)(A)), by striking <quote>section 3(a)(12) of the Securities Exchange
Act of 1934</quote> and inserting <quote>section 3(a)(12) of this
Act</quote>;</text>
</paragraph><paragraph id="H988838DC36F14A7EB029E2AF4751EAF2"><enum>(3)</enum><text display-inline="yes-display-inline">in section 3(g) (15 U.S.C. 78c(g)), by
striking <quote>company, account person, or entity</quote> and inserting
<quote>company, account, person, or entity</quote>;</text>
</paragraph><paragraph id="H064E9203D7004ADF9844DC94D5E653B9"><enum>(4)</enum><text display-inline="yes-display-inline">in section 10A(i)(1)(B)(i) (15 U.S.C.
78j–1(i)(1)(B)(i)), by striking <quote>nonaudit</quote> and inserting
<quote>non-audit</quote>;</text>
</paragraph><paragraph id="HD16D35AC16244B998A8B0D0D478874CE"><enum>(5)</enum><text display-inline="yes-display-inline">in section 13(b)(1) (15 U.S.C. 78m(b)(1)),
by striking <quote>earning statement</quote> and inserting <quote>earnings
statement</quote>;</text>
</paragraph><paragraph id="H5CE636FF816741F898C9AAB13239ADF1"><enum>(6)</enum><text display-inline="yes-display-inline">in section 15(b)(1) (15 U.S.C.
78o(b)(1))—</text>
<subparagraph id="HA876311B43F94704B15396B9BDF34F84"><enum>(A)</enum><text>by striking the sentence
beginning <quote>The order granting</quote> and ending <quote>from such
membership.</quote> in subparagraph (B); and</text>
</subparagraph><subparagraph id="H52255D447F45494B8F465D53D16ADD10"><enum>(B)</enum><text>by inserting such
sentence in the matter following such subparagraph after <quote>are
satisfied.</quote>;</text>
</subparagraph></paragraph><paragraph id="HF1981E8816F543A182203BF476CD81DE"><enum>(7)</enum><text display-inline="yes-display-inline">in section 15C(a)(2) (15 U.S.C.
78o–5(a)(2))—</text>
<subparagraph commented="no" id="H7B6E1C230AA54C27B8D0FEBFCB03470D"><enum>(A)</enum><text>by redesignating clauses
(i) and (ii) as subparagraphs (A) and (B), respectively;</text>
</subparagraph><subparagraph id="H790EAA44CA774F3DA1027274E6C42590"><enum>(B)</enum><text>by striking the sentence
beginning <quote>The order granting</quote> and ending <quote>from such
membership.</quote> in such subparagraph (B), as redesignated; and</text>
</subparagraph><subparagraph id="HEFDBBC2D7DF54B6591E1866606436A6C"><enum>(C)</enum><text>by inserting such
sentence in the matter following such redesignated subparagraph after
<quote>are satisfied.</quote>;</text>
</subparagraph></paragraph><paragraph id="HD718EBF9AA8144329529F3F7021D358A"><enum>(8)</enum><text display-inline="yes-display-inline">in section 16(a)(2)(C) (15 U.S.C.
78p(a)(2)(C)), by striking <quote>section 206(b)</quote> and inserting
<quote>section 206B</quote>;</text>
</paragraph><paragraph id="HE903499367DB4DF08014ECA9C6EA8B65"><enum>(9)</enum><text display-inline="yes-display-inline">in section 17(b)(1)(B) (15 U.S.C.
78q(b)(1)(B)), by striking <quote>15A(k) gives</quote> and inserting
<quote>15A(k), give</quote>; and</text>
</paragraph><paragraph id="HEB93333738EE466C8B2D6AA52BA3E091"><enum>(10)</enum><text display-inline="yes-display-inline">in section 21C(c)(2) (15 U.S.C.
78u–3(c)(2)), by striking <quote>paragraph (1) subsection</quote> and inserting
<quote>Paragraph (1)</quote>.</text>
</paragraph></subsection><subsection id="HFDB835A847A54072A3CF3157058CB9E9"><enum>(c)</enum><header>Trust Indenture Act of
1939</header><text display-inline="yes-display-inline">The Trust Indenture Act
of 1939 (15 U.S.C. 77aaa et seq.) is amended—</text>
<paragraph id="H25EE249689D14959914206C4B37CF21D"><enum>(1)</enum><text display-inline="yes-display-inline">in section 304(b) (15 U.S.C. 77ddd(b)), by
striking <quote>section 2 of such Act</quote> and inserting <quote>section 2(a)
of such Act</quote>;</text>
</paragraph><paragraph id="H18D7D80550FF493CBD3B3E70FBC5D777"><enum>(2)</enum><text display-inline="yes-display-inline">in section 313(a)(4) (15 U.S.C.
77mmm(a)(4)) by striking <quote>subsection (b) of section 311</quote> and
inserting <quote>section 311(b)</quote>; and</text>
</paragraph><paragraph id="HC24C9B07E71C4E91B52FD5C54016CE74"><enum>(3)</enum><text display-inline="yes-display-inline">in section 317(a)(1) (15 U.S.C.
77qqq(a)(1)), by striking <quote>(1),</quote> and inserting
<quote>(1)</quote>.</text>
</paragraph></subsection><subsection id="H25ACEEDDF88048C1AC42E02A7059A53E"><enum>(d)</enum><header>Investment Company Act
of 1940</header><text display-inline="yes-display-inline">The Investment
Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is amended—</text>
<paragraph id="H35A6287ECE0042BB937A96510782ADB9"><enum>(1)</enum><text display-inline="yes-display-inline">in section 2(a)(19)(B) (15 U.S.C.
80a–2(a)(19)(B)) by striking <quote>clause (vi)</quote> both places it appears
in the last two sentences and inserting <quote>clause (vii)</quote>;</text>
</paragraph><paragraph id="HA89857F2A0AE4557A4A1C8578A38EA61"><enum>(2)</enum><text display-inline="yes-display-inline">in section 9(b)(4)(B) (15 U.S.C.
80a–9(b)(4)(B)), by inserting <quote>or</quote> after the semicolon at the
end;</text>
</paragraph><paragraph id="H9C39A94D79194AA0B2B30CE3F9A22F6A"><enum>(3)</enum><text display-inline="yes-display-inline">in section 12(d)(1)(J) (15 U.S.C.
80a–12(d)(1)(J)), by striking <quote>any provision of this subsection</quote>
and inserting <quote>any provision of this paragraph</quote>;</text>
</paragraph><paragraph id="H36D4548505EF4098B035724BC440ECEE"><enum>(4)</enum><text display-inline="yes-display-inline">in section 13(a)(3) (15 U.S.C.
80a–13(a)(3)), by inserting <quote>or</quote> after the semicolon at the
end;</text>
</paragraph><paragraph id="H88189C3C9CC64F44AE577AD6D31A2D4B"><enum>(5)</enum><text display-inline="yes-display-inline">in section 17(f)(4) (15 U.S.C.
80a–17(f)(4)), by striking <quote>No such member</quote> and inserting
<quote>No member of a national securities exchange</quote>;</text>
</paragraph><paragraph id="H5300B213EE1D4448B87E877FC803C925"><enum>(6)</enum><text display-inline="yes-display-inline">in section 17(f)(6) (15 U.S.C.
80a–17(f)(6)), by striking <quote>company may serve</quote> and inserting
<quote>company, may serve</quote>; and</text>
</paragraph><paragraph id="HAAD06840F24541BEADCC2F490EE8080C"><enum>(7)</enum><text display-inline="yes-display-inline">in section 61(a)(3)(B)(iii) (15 U.S.C.
80a–60(a)(3)(B)(iii))—</text>
<subparagraph id="H60E3FBC33DE14E5EAE2DF23D94A95AEF"><enum>(A)</enum><text>by striking
<quote>paragraph (1) of section 205</quote> and inserting <quote>section
205(a)(1)</quote>; and</text>
</subparagraph><subparagraph id="HFA8C9B4F780743C780FFA21A42EB5B35"><enum>(B)</enum><text>by striking <quote>clause
(A) or (B) of that section</quote> and inserting <quote>section 205(b)(1) or
(2)</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="H3BAD2E1D83B6414AB702B57EF759C57D"><enum>(e)</enum><header>Investment Advisers Act
of 1940</header><text display-inline="yes-display-inline">The Investment
Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) is amended—</text>
<paragraph id="HC252BA8C9D794E32B9D3F0033F7D1990"><enum>(1)</enum><text display-inline="yes-display-inline">in each of the following sections, by
striking <quote>principal business office</quote> or <quote>principal place of
business</quote> (whichever and wherever it appears) and inserting
<quote>principal office and place of business</quote>: 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</text>
</paragraph><paragraph id="H489798466E724037B049F06B05868114"><enum>(2)</enum><text display-inline="yes-display-inline">in section 206(3) (15 U.S.C. 80b–6(3)), by
inserting <quote>or</quote> after the semicolon at the end.</text>
</paragraph></subsection></section><section id="HCCD5D045753E4540A5499ABD9DA6D1AF"><enum>411.</enum><header>Municipal
securities</header><text display-inline="no-display-inline">Section 15B(b) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o–4(b)) is amended—</text>
<paragraph id="HBE55A20E9DFA413786B234C504FB9826"><enum>(1)</enum><text>by amending paragraph (1)
to read as follows:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H9B293BB79BE941AE99A9135DFCC5D287" reported-display-style="italic" style="OLC">
<paragraph display-inline="yes-display-inline" id="HD673C156F174402D86D51125751EB0DA"><enum>(1)</enum><text display-inline="yes-display-inline">Not later than October 1, 2010, the
Municipal Securities Rulemaking Board (hereinafter in this section referred to
as the <quote>Board</quote>), shall be composed of members which shall perform
the duties set forth in this section and shall consist of—</text>
<subparagraph id="H87DFD5BDF9324E65A08DE022EB50753E"><enum>(A)</enum><text>a majority of independent
public representatives, at least one of whom shall be representative of
investors in municipal securities and at least one of whom shall be
representative of issuers of municipal securities (which members are
hereinafter referred to as <quote>public representatives</quote>);</text>
</subparagraph><subparagraph id="H338E70F5B8F34966897CAFABA7C94482"><enum>(B)</enum><text>at least one individual
who is representative of municipal securities brokers and municipal securities
dealers which are not banks or subsidiaries or departments or divisions of
banks (which members are hereinafter referred to as <quote>broker-dealer
representatives</quote>); and</text>
</subparagraph><subparagraph id="H7F1757F3ED87447FA9AA8BC3FDABC002"><enum>(C)</enum><text>at least one individual
who is representative of municipal securities dealers which are banks or
subsidiaries or departments or divisions of banks (which members are
hereinafter referred to as <quote>bank
representatives</quote>).</text>
</subparagraph></paragraph><after-quoted-block>;
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="HA22DB4F4562E4EE89F7CD2D048048B69"><enum>(2)</enum><text>by amending paragraph
(2)(B) to read as follows:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HBE1C13C3DEC741568591AAD68FA21572" reported-display-style="italic" style="OLC">
<subparagraph id="H1BD6CEA547ED4D68963D98BD04507408" indent="up1"><enum>(B)</enum><text display-inline="yes-display-inline">Establish fair procedures for the
nomination and election of members of the Board and assure fair representation
in such nominations and elections of municipal securities brokers and municipal
securities dealers. Such rules—</text>
<clause id="HD0DD2AEB48544E95A1E04E2679DC9553"><enum>(i)</enum><text>shall establish
requirements regarding the independence of public representatives;</text>
</clause><clause id="H355A9969BE704E5FB2F34D2349C11DBD"><enum>(ii)</enum><text>shall provide that the
number of public representatives of the Board shall at all times exceed the
total number of broker-dealer representatives and bank representatives;</text>
</clause><clause id="HE45964289A7E40D5AA594F8A6CBA9253"><enum>(iii)</enum><text display-inline="yes-display-inline">shall establish minimum knowledge,
experience, and other appropriate qualifications for individuals to serve as
public representatives, which may include, among other things, prior work
experience in the securities, municipal finance, or municipal securities
industries;</text>
</clause><clause id="H4C9C885DB76149798EC44D8C016B2463"><enum>(iv)</enum><text>shall specify the term
members shall serve; and</text>
</clause><clause id="HAB819CEFFC494C5F8D0073646D72413B"><enum>(v)</enum><text>may increase or decrease
the number of members which shall constitute the whole Board, but in no case
may such number be an even
number.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><section id="H6F105CF4FA3C4BB095DFD7A2E087F9D3"><enum>412.</enum><header>Interested person
definition</header><text display-inline="no-display-inline">Section 2(a)(19)(A)
of the Investment Company Act of 1940 (15 U.S.C. 80a–2(a)(19)(A)) is
amended—</text>
<paragraph id="H03FDF3B9258B4ADD8A10563D29283547"><enum>(1)</enum><text display-inline="yes-display-inline">by striking clauses (v) and (vi);</text>
</paragraph><paragraph id="H3ADCD6E7BA8F4A7B95C750A231DFB1FE"><enum>(2)</enum><text>by inserting after clause
(iv) the following new clause:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H0AED3ADC99754B36B217320828DE8A1B" reported-display-style="italic" style="OLC">
<clause id="H7074A2A0116645C3839BBB04318AFCAC"><enum>(v)</enum><text display-inline="yes-display-inline">any natural person who is a member of a
class of persons who the Commission, by rule or regulation, determines are
unlikely to exercise an appropriate degree of independence as a result
of—</text>
<subclause id="H55BA447CC7194DF7A619E8E4A3FBFBCE"><enum>(I)</enum><text>a material business or
professional relationship with such company or any affiliated person of such
company; or</text>
</subclause><subclause id="H3CB05E7C907C43FCA62BCD539CBD1FB9"><enum>(II)</enum><text>a close familial
relationship with any natural person who is an affiliated person of such
company;</text>
</subclause></clause><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph id="HEF760930131B4F82B64B3B97E632B705"><enum>(3)</enum><text>by redesignating clause
(vii) as clause (vi); and</text>
</paragraph><paragraph id="H6976B5DA279542C2ACA8452850FAAD2C"><enum>(4)</enum><text>in clause (vi), as
redesignated, by striking <quote>two completed fiscal years</quote> and
inserting <quote>five completed fiscal years</quote>.</text>
</paragraph></section><section id="H18CE9451533843AEB01F26CF129A8BF7"><enum>413.</enum><header>Rulemaking authority
to protect redeeming investors</header><text display-inline="no-display-inline">Section 22(e) of the Investment Company Act
of 1940 (15 U.S.C. 80a–22(e)) is amended by adding at the end the following:
<quote>The Commission may, by rules and regulations, limit the extent to which
a registered open-end investment company may own, hold, or invest in illiquid
securities or other illiquid property.</quote>.</text>
</section><section id="HF86CD2FD47054CE3858F08B86C71EB79"><enum>414.</enum><header>Study on SEC revolving
door</header>
<subsection id="H6FC1B11AB754440EA9854A6C10590D1A"><enum>(a)</enum><header>Government
Accountability Office study</header><text display-inline="yes-display-inline">The Comptroller General of the United
States shall conduct a study that will—</text>
<paragraph id="H0B98469B3FB440B5BBC051027432E4AF"><enum>(1)</enum><text display-inline="yes-display-inline">review the number of employees who leave
the Securities and Exchange Commission to work for financial institutions
regulated by such Commission;</text>
</paragraph><paragraph id="HAF621645847B4DDFB9F84245A4577192"><enum>(2)</enum><text>determine how many
employees who leave the Securities and Exchange Commission worked on cases that
involved financial institutions regulated by such Commission;</text>
</paragraph><paragraph id="H9CA6C0114DDC47D4B1371A0A1867674D"><enum>(3)</enum><text display-inline="yes-display-inline">review the length of time employees work
for the Securities and Exchange Commission before leaving to be employed by
financial institutions regulated by such Commission;</text>
</paragraph><paragraph id="H544AE34B1E1F485E831C49EDAD3E4314"><enum>(4)</enum><text display-inline="yes-display-inline">review existing internal controls and make
recommendations on strengthening such controls to ensure that employees of the
Securities and Exchange Commission who are later employed by financial
institutions did not assist such institutions in violating any rules or
regulations of the Commission during the course of their employment with such
Commission;</text>
</paragraph><paragraph id="H1EF9FFE97A1D4F39A509A8DF53DEC95E"><enum>(5)</enum><text display-inline="yes-display-inline">determine if greater post-employment
restrictions are necessary to prevent employees of the Securities and Exchange
Commission from being employed by financial institutions after employment with
such Commission;</text>
</paragraph><paragraph id="HBDFEE477D58446C29A2C8B6C1C83B3BD"><enum>(6)</enum><text display-inline="yes-display-inline">determine if the volume of employees of the
Securities and Exchange Commission who are later employed by financial
institutions has led to inefficiencies in enforcement;</text>
</paragraph><paragraph id="HAA54C1F8514C49F49C1D3BC3BAEF8329"><enum>(7)</enum><text display-inline="yes-display-inline">determine if employees of the Securities
and Exchange Commission who are later employed by financial institutions have
engaged in information sharing or assisted such institutions in circumventing
Federal rules and regulations while employed by such Commission;</text>
</paragraph><paragraph id="H71DC8E8F30F54E848512D6C08FD18752"><enum>(8)</enum><text display-inline="yes-display-inline">review any information that may address the
volume of employees of the Securities and Exchange Commission who are later
employed by financial institutions, and make recommendations to Congress;
and</text>
</paragraph><paragraph id="HA55A712645194BEA937A68B1BBCDF62A"><enum>(9)</enum><text>review other additional
issues as may be raised during the course of the study conducted under this
subsection.</text>
</paragraph></subsection><subsection id="H50F466DD0DCB41149AB61C876EE81254"><enum>(b)</enum><header>Report</header><text display-inline="yes-display-inline">Not later than 1 year after the date of the
enactment of this Act, the Comptroller General of the United States shall
submit to the Committee on Financial Services of the House of Representatives
and the Committee on Banking, Housing, and Urban Affairs of the Senate a report
on the results of the study required by subsection (a).</text>
</subsection></section><section id="H6178A3A6208949C3B1EDE45D29D0B166"><enum>415.</enum><header>Study on internal
control evaluation and reporting cost burdens on smaller issuers</header>
<subsection id="H0E870CF289654E7E8979164FD82C0895"><enum>(a)</enum><header>Study
required</header><text display-inline="yes-display-inline">The Government
Accountability Office and the Securities and Exchange Commission shall each
conduct a study evaluating the costs and benefits of complying with section
404(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. § 7262(b)) on issuers who
are not accelerated or large accelerated filers as defined by Commission Rule
12b-2. The study shall—</text>
<paragraph id="H003CBAF12BCB4D088F98995A0E456E5D"><enum>(1)</enum><text>include recommendations,
administrative reforms, and legislative proposals on implementation steps that
could be taken to reduce compliance burdens on these issuers; and</text>
</paragraph><paragraph id="H79A009F42EA0406BB9655FDFFB205843"><enum>(2)</enum><text>determine the efficacy of
the Securities and Exchange Commission’s measures to limit the cost of
compliance on smaller issuers.</text>
</paragraph></subsection><subsection id="H0283D5464E634C1DA85602A00BC3AB11"><enum>(b)</enum><header>Reports
required</header><text display-inline="yes-display-inline">On or before June 1,
2010, the Government Accountability Office and the Securities and Exchange
Commission shall submit separate reports to Congress containing the findings
and conclusions of the studies required under subsection (a), together with
such recommendations for regulatory, legislative, or administrative action as
may be appropriate.</text>
</subsection><subsection id="H63B88922BDCC4DEA892442D52DE263AD"><enum>(c)</enum><header>Effective date
contingent on reports</header><text display-inline="yes-display-inline">Requirements under section 404(b) of the
Sarbanes-Oxley Act of 2002 on issuers described under subsection (a) shall not
become effective until the results of the report are delivered, but in no case
before June 1, 2011.</text>
</subsection></section><section commented="no" id="H1C865216B49246408F02D081E35CCF73" section-type="section-one"><enum>416.</enum><header>Analysis of rule regarding
smaller reporting companies</header>
<subsection commented="no" id="HAB166A9F4C8847BF973696F06A89B078"><enum>(a)</enum><header>Findings</header><text display-inline="yes-display-inline">Congress finds the following:</text>
<paragraph commented="no" id="HBF8C1687A17541429A7EB150D16D74BC"><enum>(1)</enum><text>Many small businesses in
cutting-edge technology sectors require significant capital investment to
develop new technologies related to clean energy, drug treatments for terminal
diseases and food production in hunger-stricken areas of the World.</text>
</paragraph><paragraph commented="no" id="HCF64837894CC4829AF47E16031E7BD09"><enum>(2)</enum><text>Many technology companies
conducting research do not meet the definition of <quote>smaller reporting
company</quote> under the Securities and Exchange Commission’s Rule 12b–2 due
to unusually high public floats despite low or zero revenue.</text>
</paragraph><paragraph commented="no" id="H06AFBAD2FB0A4F18ADA32C7A8E7656A3"><enum>(3)</enum><text>The Final Report of the
Advisory Committee on Smaller Public Companies to the Securities and Exchange
Commission recommended that a company with a market capitalization of less than
about $787,000,000 be considered a smallcap company and that the Commission
provide exemptions from section 404(b) of the Sarbanes-Oxley Act to companies
with less than $250,000,000 in annual revenues.</text>
</paragraph></subsection><subsection commented="no" id="H7F6EBDC855734BBFA9789B9A90E027E4"><enum>(b)</enum><header>Study of using revenue
as criteria to define smaller reporting company</header><text display-inline="yes-display-inline">The Securities and Exchange Commission
shall conduct a study of the inclusion of revenue as a criteria used in
defining smaller reporting company as defined under the Commission’s Rule 12b-2
to account for smaller public companies with public floats less than
$700,000,000 and revenues less than $250,000,000. Not later than 180 days after
the date of enactment of this Act, the Commission shall provide the Committee
on Financial Services of the House of Representatives and the Committee on
Banking, Housing and Urban Affairs of the Senate a report of the findings of
the study.</text>
</subsection></section><section id="HB9E49362137C4D69A798C3464187CFC8"><enum>417.</enum><header>Financial Reporting
Forum</header>
<subsection id="HA7457AF3D4C742CEBEBC6D67461777BC"><enum>(a)</enum><header>Establishment</header><text display-inline="yes-display-inline">There is hereby established a Financial
Reporting Forum (hereinafter referred to as the <quote>Forum</quote>), which
shall consist of—</text>
<paragraph id="HE9DD0FE24F454DC1A77EA40F918B0240"><enum>(1)</enum><text display-inline="yes-display-inline">the Chairman of the Securities Exchange
Commission (hereinafter referred to as the <quote>SEC</quote>);</text>
</paragraph><paragraph id="HE3359C883E664170B39CB8EA0EC86C15"><enum>(2)</enum><text display-inline="yes-display-inline">the head of the Financial Accounting
Standards Board;</text>
</paragraph><paragraph id="HB55930BE84284D9DB5698E0C0EB39661"><enum>(3)</enum><text display-inline="yes-display-inline">the Chairman of the Public Company
Accounting Oversight Board;</text>
</paragraph><paragraph id="HCECA558B07D74921A2A261F1391E4A70"><enum>(4)</enum><text display-inline="yes-display-inline">the head of each appropriate Federal
banking agency, as such term is defined under section 3(q) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(q));</text>
</paragraph><paragraph id="H3A7ECC030F604DCF92B8F483503346A6"><enum>(5)</enum><text display-inline="yes-display-inline">the Administrator of the National Credit
Union Administration;</text>
</paragraph><paragraph id="HF43AA18ABA2C46B9B446330E46D0B523"><enum>(6)</enum><text>the Secretary of the
Treasury;</text>
</paragraph><paragraph id="H0F17112983E54FAEBDD2551EDB5A59BE"><enum>(7)</enum><text display-inline="yes-display-inline">a representative of a non-financial
institution, appointed by the SEC;</text>
</paragraph><paragraph id="HC90AE0B2D5474B7DA3F65EB8739101CC"><enum>(8)</enum><text>a representative of a
financial institution, appointed by the SEC;</text>
</paragraph><paragraph display-inline="no-display-inline" id="HEB7C813FFC714423AB926F50CA3C917B"><enum>(9)</enum><text display-inline="yes-display-inline">a representative of auditors, appointed by
the SEC; and</text>
</paragraph><paragraph display-inline="no-display-inline" id="HBEF66EFF93D5444A9AAF13C970A49A76"><enum>(10)</enum><text display-inline="yes-display-inline">a representative of investors, appointed by
the SEC.</text>
</paragraph></subsection><subsection id="HC39CBB0BC6E849E39C9DD80EA86795DD"><enum>(b)</enum><header>Meetings</header><text>The
Forum shall meet no less often than quarterly.</text>
</subsection><subsection id="HA233CC6FF8B548B0820BE9CC9CA48E08"><enum>(c)</enum><header>Duties</header><text display-inline="yes-display-inline">The Forum shall meet to discuss immediate
and long-term issues critical to financial reporting.</text>
</subsection><subsection id="HA4EDDF36A2B44D80805134FB4638EBD2"><enum>(d)</enum><header>Reporting</header><text>The
Forum shall issue an annual report to the Congress detailing any determinations
or findings made by the Forum during the previous year, including any
legislative recommendations the Forum may have related to financial reporting
matters.</text>
</subsection></section><section id="H80FB24263D7B4ED3B9159BE65C2EC7EE"><enum>418.</enum><header>Investment advisers
subject to State authorities</header><text display-inline="no-display-inline">Section 203A(a) of the Investment Advisers
Act of 1940 (15 U.S.C. 80b–3a(a)) is amended—</text>
<paragraph id="H5DCF837B0DAE4F4E87625E8448B11C22"><enum>(1)</enum><text>by redesignating
paragraph (2) as paragraph (3); and</text>
</paragraph><paragraph id="HD3D3569614434CBFBC2AB7BF86726479"><enum>(2)</enum><text>by inserting after
paragraph (1) the following new paragraph:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H95901709067D4377A6958AAC49A5D772" reported-display-style="italic" style="OLC">
<paragraph id="H0B5E405B1B7B4317BE567252C1FBF47E"><enum>(2)</enum><header>Treatment of certain
mid-sized investment advisers</header><text display-inline="yes-display-inline">Notwithstanding paragraph (1), an
investment adviser that—</text>
<subparagraph id="HA0E96BFF629D4861B7BFCD94A73BAE8E"><enum>(A)</enum><text>is regulated and
examined, or required to be regulated and examined, by a State; and</text>
</subparagraph><subparagraph id="H8FC0A6E08F914B97896AD3BFDA2387D5"><enum>(B)</enum><text>has assets under
management between—</text>
<clause id="H2A1F28A083F8422BBF008CB912492F55"><enum>(i)</enum><text display-inline="yes-display-inline">the amount specified under subparagraph (A)
of paragraph (1), as such amount may have been adjusted by the Commission
pursuant to that subparagraph, and</text>
</clause><clause id="H8E38B37B3B1E42C28782A72298AA2C65"><enum>(ii)</enum><text display-inline="yes-display-inline">$100,000,000, or such higher amount as the
Commission may, by rule, deem appropriate in accordance with the purposes of
this title,</text>
</clause><continuation-text continuation-text-level="subparagraph">shall register with, and be subject to
examination by, such State. The Commission shall publish a list of the States
that regulate and examine, or require regulation and examination of, investment
advisers to which the requirements of this paragraph
apply.</continuation-text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><section id="HA1CE91305609445685040985B599E8E7"><enum>419.</enum><header>Custodial
requirements</header><text display-inline="no-display-inline">Not later than
180 days after the date of the enactment of this Act, the Securities and
Exchange Commission shall adopt a rule pursuant to its authority under section
211(a) of the Investment Advisers Act of 1940 making it unlawful under section
206(4) of such Act for an investment adviser registered under the Act to have
custody of funds or securities of a client the value of which exceeds
$10,000,000, subject to such exception the Commission determines in such rule
are in the public interest and consistent with the protection of investors,
unless—</text>
<paragraph id="HB5574C1E0F2E43E5A2BF015B886FA74F"><enum>(1)</enum><text>the funds and securities
are maintained with a qualified custodian either in a separate account for each
client under the client’s name, or in accounts that contain only client funds
and securities under the name of the investment adviser as agent or trustee for
the client; and</text>
</paragraph><paragraph id="H9FA0B45894C14D81B6F276B089A4FDB6"><enum>(2)</enum><text>the qualified custodian
does not directly or indirectly provide investment advice with respect to such
funds or securities.</text>
</paragraph></section><section id="H2623B2BBE9D64DC8BA87EAB2EB55D04F"><enum>420.</enum><header>Ombudsman</header>
<subsection id="HD838B3ACDF6C4453B19E5C284678C800"><enum>(a)</enum><header>Appointment</header><text display-inline="yes-display-inline">Not later than 180 days after the date of
the enactment of this Act, the Chairman of the Securities and Exchange
Commission shall appoint an Ombudsman who shall report directly to the
Chairman.</text>
</subsection><subsection id="HA9468BB46F144649901DCB46755B555E"><enum>(b)</enum><header>Duties</header><text>The
Ombudsman appointed under subsection (a) shall—</text>
<paragraph id="HE7FD10F722984207A7EEAB58930EF8BB"><enum>(1)</enum><text>act as a liaison between
the Commission and any affected person with respect to any problem such person
may have in dealing with the Commission resulting from the regulatory
activities of the Commission;</text>
</paragraph><paragraph id="H96F5A29590C041FC9D1C65B1B3B53088"><enum>(2)</enum><text>review and make
recommendations regarding Commission policies and procedures to encourage
persons to present questions to the Commission regarding compliance with
Federal securities laws; and</text>
</paragraph><paragraph id="HFC48E2143F704DBFAC28EAA32A082AC2"><enum>(3)</enum><text>maintain confidentiality
of communications between such persons and the Ombudsman.</text>
</paragraph></subsection><subsection id="H57B84FF724E04A6EBD1F30F1D3D06B61"><enum>(c)</enum><header>Limitation</header><text>In
carrying out the duties under subsection (b), the Ombudsman shall utilize
personnel of the Commission to the extent practicable. Nothing in this section
shall be construed as replacing, altering, or diminishing the activities of any
ombudsman or similar office in any other agency.</text>
</subsection><subsection id="H4E3F2A22B9104209AA6CE81EA57CF27B"><enum>(d)</enum><header>Report</header><text>Each
year, the Ombudsman shall submit a report to the Commission for inclusion in
the annual report that describes the activities and evaluates the effectiveness
of the Ombudsman during the preceding year. In that report, the Ombudsman shall
include solicited comments and evaluations from registrants in regards to the
effectiveness of the Ombudsman.</text>
</subsection></section><enum>V</enum><header>Securities Investor
Protection Act amendments</header>
<section commented="no" id="HA1CC8F4790EB4DCB977D87CEE3CEE25B"><enum>501.</enum><header>Increasing the minimum
assessment paid by SIPC members</header><text display-inline="no-display-inline">Section 4(d)(1)(C) of the Securities
Investor Protection Act of 1970 (15 U.S.C. 78ddd(d)(1)(C)) is amended by
striking <quote>$150 per annum</quote> and inserting the following: <quote>0.02
percent of the gross revenues from the securities business of such member of
SIPC</quote>.</text>
</section><section id="H3797C5A3A25F43CFB1D44EE993F82F6A"><enum>502.</enum><header>Increasing the
borrowing limit on treasury loans</header><text display-inline="no-display-inline">Section 4(h) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78ddd(h)) is amended by striking <quote>of
not to exceed $1,000,000,000</quote> and inserting <quote>the lesser of
$2,500,000,000 or the target amount of the SIPC Fund specified in the bylaws of
SIPC</quote>.</text>
</section><section id="H46151D4B088E4531A57859591914C600"><enum>503.</enum><header>Increasing the cash
limit of protection</header><text display-inline="no-display-inline">Section 9
of the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff–3) is
amended—</text>
<paragraph id="H1853C944DB524E93BBB1A461D3E180A7"><enum>(1)</enum><text>in subsection (a)(1), by
striking <quote>$100,000 for each such customer</quote> and inserting
<quote>the standard maximum cash advance amount for each such customer, as
determined in accordance with subsection (d)</quote>; and</text>
</paragraph><paragraph id="H3836D5B7326145F39DE097C5BB791181"><enum>(2)</enum><text>by adding the following
new subsections:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H90D9ED1786384999948C3E3520A2639D" reported-display-style="italic" style="OLC">
<subsection id="H00ED04C5BF864370B28BBD1B4EFBA2FD"><enum>(d)</enum><header>Standard maximum cash
advance amount defined</header><text display-inline="yes-display-inline">For
purposes of this section, the term <quote>standard maximum cash advance
amount</quote> means $250,000, as such amount may be adjusted after March 31,
2010, as provided under subsection (e).</text>
</subsection><subsection id="H07D962C0A2944B78A61AE465E7A65BB1"><enum>(e)</enum><header>Inflation
adjustment</header>
<paragraph id="H33C9E6C31F444375BAA1575A6415E6B2"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">No later than April
1, 2010, and every 5 years thereafter, and subject to the approval of the
Commission as provided under section 3(e)(2), the Board of Directors of SIPC
shall determine whether an inflation adjustment to the standard maximum cash
advance amount is appropriate. If the Board of Directors of SIPC determines
such an adjustment is appropriate, then the standard maximum cash advance
amount shall be an amount equal to—</text>
<subparagraph id="H6C6CEB77C2C54D868E4491ACF8B24393"><enum>(A)</enum><text>$250,000 multiplied
by,</text>
</subparagraph><subparagraph id="H525A25F861B94A9FADA9B2FABF026FB5"><enum>(B)</enum><text>the ratio of the annual
value of the Personal Consumption Expenditures Chain-Type Price Index (or any
successor index thereto), published by the Department of Commerce, for the
calendar year preceding the year in which such determination is made, to the
published annual value of such index for the calendar year preceding the year
in which this subsection was enacted.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">The
index values used in calculations under this paragraph shall be, as of the date
of the calculation, the values most recently published by the Department of
Commerce.</continuation-text></paragraph><paragraph id="HA99F6ABE8E2040648F9F0AA90746F728"><enum>(2)</enum><header>Rounding</header><text display-inline="yes-display-inline">If the standard maximum cash advance amount
determined under paragraph (1) for any period is not a multiple of $10,000, the
amount so determined shall be rounded down to the nearest $10,000.</text>
</paragraph><paragraph id="H065D6562EE324B328B7C13D301BEB33A"><enum>(3)</enum><header>Publication and report
to the Congress</header><text display-inline="yes-display-inline">Not later
than April 5 of any calendar year in which a determination is required to be
made under paragraph (1)—</text>
<subparagraph id="HB67EA162881E406D839B926AF9C74157"><enum>(A)</enum><text>the Commission shall
publish in the Federal Register the standard maximum cash advance amount;
and</text>
</subparagraph><subparagraph id="H7D1A233EAC5847A3AA69665B2C27A4D8"><enum>(B)</enum><text display-inline="yes-display-inline">the Board of Directors of SIPC shall submit
a report to the Congress containing stating the standard maximum cash advance
amount.</text>
</subparagraph></paragraph><paragraph id="HBEDE778F4993422E821FD80EF04E35BF"><enum>(4)</enum><header>Implementation
period</header><text display-inline="yes-display-inline">Any adjustment to the
standard maximum cash advance amount shall take effect on January 1 of the year
immediately succeeding the calendar year in which such adjustment is
made.</text>
</paragraph><paragraph id="HA91717384FBF491E993E02567EE788ED"><enum>(5)</enum><header>Inflation adjustment
considerations</header><text display-inline="yes-display-inline">In making any
determination under paragraph (1) to increase the standard maximum cash advance
amount, the Board of Directors of SIPC shall consider—</text>
<subparagraph id="H351696C431764F008E5002DFD7029443"><enum>(A)</enum><text>the overall state of the
fund and the economic conditions affecting members of SIPC;</text>
</subparagraph><subparagraph id="HD97FC4D2F4F644258EA05B9A1DD18C0B"><enum>(B)</enum><text>the potential problems
affecting members of SIPC; and</text>
</subparagraph><subparagraph id="H00A9EACB820C4343B950064FF693C967"><enum>(C)</enum><text>such other factors as the
Board of Directors of SIPC may determine
appropriate.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><section id="H0CB18978CA3F4D05BB8F0DFAC9142BC1"><enum>504.</enum><header>SIPC as trustee in
SIPA liquidation proceedings</header><text display-inline="no-display-inline">Section 5(b)(3) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78eee(b)(3)) is amended—</text>
<paragraph id="H2AFA2AF6C62949A7AF65BCF79F95C6AB"><enum>(1)</enum><text>by striking <quote>SIPC
has determined that the liabilities of the debtor to unsecured general
creditors and to subordinated lenders appear to aggregate less than $750,000
and that</quote>; and</text>
</paragraph><paragraph id="H157EA1FD4E8641D28796B6A2FD9A5696"><enum>(2)</enum><text>by striking <quote>five
hundred</quote> and inserting <quote>five thousand</quote>.</text>
</paragraph></section><section id="H2FCFB70F78B0455D9D1C682418BF79F3"><enum>505.</enum><header>Insiders ineligible
for SIPC advances</header><text display-inline="no-display-inline">Section
9(a)(4) of the Securities Investor Protection Act of 1970 (15 U.S.C.
78fff–3(a)(4)) is amended by inserting <quote>an insider,</quote> after
<quote>or net profits of the debtor,</quote>.</text>
</section><section id="HA5A52C20AD8D4B9EB4877B795773C408"><enum>506.</enum><header>Eligibility for direct
payment procedure</header><text display-inline="no-display-inline">Section
10(a)(4) of the Securities Investor Protection Act of 1970 (15 U.S.C.
78fff–4(a)(4)) is amended by striking <quote>$250,000</quote> and inserting
<quote>$850,000</quote>.</text>
</section><section id="H529F138DBCAE4B25AA1094FAD3F47A18"><enum>507.</enum><header>Increasing the fine
for prohibited acts under SIPA</header><text display-inline="no-display-inline">Section 14(c) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78jjj(c)) is amended—</text>
<paragraph id="HD090D1E872064111B1B65ED7A5328CD3"><enum>(1)</enum><text>in paragraph (1), by
striking <quote>$50,000</quote> and inserting <quote>$250,000</quote>;
and</text>
</paragraph><paragraph id="HB065FDA0C8D1424BBB1399D46B5CE2B5"><enum>(2)</enum><text>in paragraph (2), by
striking <quote>$50,000</quote> and inserting <quote>$250,000</quote>.</text>
</paragraph></section><section id="HC614AE8B1AD940228F1FE4F83CBA6749"><enum>508.</enum><header>Penalty for
misrepresentation of SIPC membership or protection</header><text display-inline="no-display-inline">Section
14 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78jjj) is
amended by adding at the end the following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H5284725DA3214C8F9D90E4E75DFE5664" reported-display-style="italic" style="OLC">
<subsection id="H289087AA34F04F259D786D1DAE2C2DFC"><enum>(d)</enum><header>Misrepresentation of
SIPC membership or protection</header>
<paragraph id="H14AF0F4E4D804222B725CB5C21673B6A"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Any person who
falsely represents by any means (including, without limitation, through the
Internet or any other medium of mass communication), with actual knowledge of
the falsity of the representation and with an intent to deceive or cause injury
to another, that such person, or another person, is a member of SIPC or that
any person or account is protected or is eligible for protection under this Act
or by SIPC, shall be liable for any damages caused thereby and shall be fined
not more than $250,000 or imprisoned for not more than five years.</text>
</paragraph><paragraph id="H67FDDA26051348C09453E7900981042E"><enum>(2)</enum><header>Internet service
providers</header><text>Any Internet service provider that, on or through a
system or network controlled or operated by the Internet service provider,
transmits, routes, provides connections for, or stores any material containing
any misrepresentation of the kind prohibited in paragraph (1) shall be liable
for any damages caused thereby, including damages suffered by SIPC, if the
Internet service provider—</text>
<subparagraph id="HED15EDE0AB2F4136B1C88FE204CB6176"><enum>(A)</enum><text>has actual knowledge that
the material contains a misrepresentation of the kind prohibited in paragraph
(1), or</text>
</subparagraph><subparagraph id="HB65B4DD7067245D7A96523AD5C6DB2DA"><enum>(B)</enum><text>in the absence of actual
knowledge, is aware of facts or circumstances from which it is apparent that
the material contains a misrepresentation of the kind prohibited in paragraph
(1), and</text>
</subparagraph><continuation-text continuation-text-level="paragraph">upon
obtaining such knowledge or awareness, fails to act expeditiously to remove, or
disable access to, the material.</continuation-text></paragraph><paragraph id="HB6B3A9CBA79349A4B4FDB79AE2648FD8"><enum>(3)</enum><header>Injunctions</header><text>Any
court having jurisdiction of a civil action arising under this Act may grant
temporary injunctions and final injunctions on such terms as the court deems
reasonable to prevent or restrain any violation of paragraph (1) or (2). Any
such injunction may be served anywhere in the United States on the person
enjoined, shall be operative throughout the United States, and shall be
enforceable, by proceedings in contempt or otherwise, by any United States
court having jurisdiction over that person. The clerk of the court granting the
injunction shall, when requested by any other court in which enforcement of the
injunction is sought, transmit promptly to the other court a certified copy of
all papers in the case on file in such clerk’s
office.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H92CCC07ECFBA4DA595FD86DA8DC87774"><enum>509.</enum><header>Futures held in a
portfolio margin securities account protection</header>
<subsection id="HBCD9F2A879844783AC1CCC6B373F96D9"><enum>(a)</enum><header>SIPC
Advances</header><text display-inline="yes-display-inline">Section 9(a)(1) of
the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff–3(a)(1)) is
amended by inserting <quote>or options on futures contracts</quote> after
<quote>claim for securities</quote>.</text>
</subsection><subsection id="H824927E8DED04F28AC7D54E3151AD5F2"><enum>(b)</enum><header>Definitions</header><text>Section
16 of such Act (15 U.S.C. 78lll) is amended—</text>
<paragraph id="H6423ECB5D3174CACA546F5EDC8F46111"><enum>(1)</enum><text>by amending paragraph (2)
to read as follows:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HD7E5E04C03604D77B46E1A82C4CE03DF" reported-display-style="italic" style="OLC">
<paragraph id="HC4F696B76AC147E98CF97A8A54EC5982"><enum>(2)</enum><header>Customer</header>
<subparagraph id="H7B55E28AB13D402BA452E3234F2CB0B5"><enum>(A)</enum><header>In
general</header><text>The term <term>customer</term> 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. The term <quote>customer</quote> includes any
person who has a claim against the debtor arising out of sales or conversions
of such securities.</text>
</subparagraph><subparagraph id="H6E31BF5B62F14FC19C049AF7F6AE26F5"><enum>(B)</enum><header>Included
persons</header><text>The term <term>customer</term> includes—</text>
<clause id="H91D50838A0AC46DE9DB74002E8225723"><enum>(i)</enum><text>any person who has
deposited cash with the debtor for the purpose of purchasing securities;
and</text>
</clause><clause id="H4D8BA46BCFEC4D7ABF386F92E84D5CD9"><enum>(ii)</enum><text display-inline="yes-display-inline">any person who has a claim against the
debtor for, or a claim against the debtor arising out of sales or conversions
of, 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.</text>
</clause></subparagraph><subparagraph id="H5A2B52FFDCBC4993B80DC752B6FAFEAB"><enum>(C)</enum><header>Excluded
persons</header><text>The term <term>customer</term> does not include—</text>
<clause id="H441407CDB70641B6A027D53828548C40"><enum>(i)</enum><text>any person to the extent
that the claim of such person arises out of transactions with a foreign
subsidiary of a member of SIPC;</text>
</clause><clause id="H86BCD01DBB1B48F98F635EEE454BCFC4"><enum>(ii)</enum><text>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; or</text>
</clause><clause id="H80A5B724AF904FB99D82F505C6429B3E"><enum>(iii)</enum><text display-inline="yes-display-inline">any person to the extent such person has a
claim relating to any open repurchase or open reverse repurchase
agreement.</text>
</clause><continuation-text continuation-text-level="subparagraph">For purposes of this paragraph, the term
<quote>repurchase agreement</quote> means the sale of a security at a specified
price with a simultaneous agreement or obligation to repurchase the security at
a specified price on a specified future
date.</continuation-text></subparagraph></paragraph><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph id="H3F856322A1784D4DA2BB0B7ED5572662"><enum>(2)</enum><text>in paragraph (4), by
inserting after the first sentence the following new sentence: <quote>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.</quote>;</text>
</paragraph><paragraph id="H80DCDD41C61947058371E48D220022C8"><enum>(3)</enum><text>in paragraph (9), by
inserting before <quote>Such term</quote> in the matter following subparagraph
(L) the following: <quote>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.</quote>; and</text>
</paragraph><paragraph id="H79F4AA07E8DE473894B853E5D9F6AE70"><enum>(4)</enum><text>in paragraph (11)—</text>
<subparagraph id="H71D0E4B004CC4755B6F334D11DCC3BBB"><enum>(A)</enum><text>by amending subparagraph
(A) to read as follows:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H14C3FCCD9B2F41BDA97AF4642384A184" reported-display-style="italic" style="OLC">
<subparagraph id="H6F8776FCC6614E41A3725FD321CC1969"><enum>(A)</enum><text display-inline="yes-display-inline">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—</text>
<clause id="H72D621288EC94133B3DD46D0BF925FFA"><enum>(i)</enum><text>all securities positions
of such customer (other than customer name securities reclaimed by such
customer); and</text>
</clause><clause id="H6656490494884505B3D2F2C4A2ABAA60"><enum>(ii)</enum><text>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</text>
</clause></subparagraph><after-quoted-block>;
and</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="H7CDFF2CA347041B6978EDFE131BC149A"><enum>(B)</enum><text>by inserting before
<quote>In determining</quote> in the matter following subparagraph (C) the
following: <quote>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.</quote>.</text>
</subparagraph></paragraph></subsection></section><section id="HC8E77D5701E7452B902A0EA9C26061EB"><enum>510.</enum><header>Study and report on
the feasibility of risk-based assessments for sipc members</header>
<subsection id="HFC698251F27F498C9389418398DF391D"><enum>(a)</enum><header>Study
required</header><text>The Comptroller General of the United States shall
conduct a study on whether the Securities Investor Protection Corporation
(hereafter in this section referred to as <quote>SIPC</quote>) should be
required to impose assessments, on its member brokers and dealers, based on
risk for the purpose of adequately maintaining the SIPC Fund.</text>
</subsection><subsection id="H969E6C6D1946431E9143D270E4EA8845"><enum>(b)</enum><header>Content</header><text>The
Comptroller General in conducting this study shall—</text>
<paragraph id="H41934A0EB9F54BD8B67185B2493507CF"><enum>(1)</enum><text>identify and examine
available approaches, including modeling, to measure broker and dealer
operational risk;</text>
</paragraph><paragraph id="H2365AD213E1F453CB7A0F354F9EF4E33"><enum>(2)</enum><text>analyze whether the
available approaches to measure broker and dealer operational risk can be used
in managing the aggregate risk to the SIPC Fund;</text>
</paragraph><paragraph id="HB49D9CB6E04F41938CF31ED4E12B0374"><enum>(3)</enum><text>explore whether objective
measures like the volume of assets of the SIPC member, previous enforcement and
compliance actions taken by regulatory bodies against the SIPC member, or the
number of years the SIPC member has been in operation, among other factors, can
be used to assess the probability the fund will incur a loss with respect to
the SIPC member;</text>
</paragraph><paragraph id="HD7FE1488E87840209E9EA9DD4FBC0848"><enum>(4)</enum><text>examine the impact that
risk-based assessments could have on large and small brokers and dealers;
and</text>
</paragraph><paragraph id="H43989A0B41A5448B9ED2C29CFC6AE40B"><enum>(5)</enum><text>examine the impact that
risk-based assessments could have on institutional and retail brokers and
dealers.</text>
</paragraph></subsection><subsection id="H81ED47FA567549AC8F1DEEA5526634E8"><enum>(c)</enum><header>Consultation</header><text>The
Comptroller General in planning and conducting this study shall consult with
the Securities and Exchange Commission, the Federal Deposit Insurance
Corporation, SIPC, the Financial Industry Regulatory Authority, and any other
public or private sector organization that the Comptroller General considers
appropriate.</text>
</subsection><subsection id="H2997746269A141E4A3B5EB5D7D29782E"><enum>(d)</enum><header>Report
required</header><text>Not later than one year after the date of enactment of
this Act, the Comptroller general shall submit a report of the results of the
study required by this section to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the House of
Representatives.</text>
</subsection></section><section commented="no" id="HE86545A4555D4792A3B61A14C216DA60"><enum>511.</enum><header>Budgetary treatment of
Commission loans to SIPC</header><text display-inline="no-display-inline">Section 4(g) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78ddd(g)) is amended by adding at the end the
following: <quote>Any loan made by the Commission to SIPC under this subsection
shall not be considered to result in a new direct loan obligation or a new loan
guarantee commitment for purposes of section 504 of the Federal Credit Reform
Act of 1990.</quote>.</text>
</section><enum>VI</enum><header>Sarbanes-Oxley Act
Amendments</header>
<section id="H485D40F59C56499882AA1F09E30B0FA1"><enum>601.</enum><header>Public Company
Accounting Oversight Board oversight of auditors of brokers and
dealers</header>
<subsection id="HC3A2F41B99AA49F4919677095573F2D8"><enum>(a)</enum><header>Definitions</header><paragraph commented="no" display-inline="yes-display-inline" id="HD9C477CA212C4C20879178EFF882DF3B"><enum>(1)</enum><text>Title I of the
Sarbanes-Oxley Act of 2002 is amended by adding at the end the following new
section:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HEDDB61D50BD04C61B97707D51C1FE08D" reported-display-style="italic" style="OLC">
<section id="H5C7DC680E78E4FC2B3747224F53A68F7"><enum>110.</enum><header>Definitions</header><text display-inline="no-display-inline">For the purposes of this title, and
notwithstanding section 2:</text>
<paragraph id="H112F78E3CAAC4956B36258170F844031"><enum>(1)</enum><header>Audit</header><text display-inline="yes-display-inline">The term <quote>audit</quote> means an
examination of the financial statements, reports, documents, procedures or
controls, or notices, of any issuer, broker, or dealer by an independent public
accounting firm in accordance with the rules of the Board or the Commission
(or, for the period preceding the adoption of applicable rules of the Board
under section 103, in accordance with then-applicable generally accepted
auditing and related standards for such purposes), for the purpose of
expressing an opinion on such financial statements, reports, documents,
procedures or controls, or notices.</text>
</paragraph><paragraph id="H041A44AA9C044652B147CEE39E1F37F0"><enum>(2)</enum><header>Audit
report</header><text display-inline="yes-display-inline">The term <quote>audit
report</quote> means a document, report, notice, or other record—</text>
<subparagraph id="H35A07C8A99B249248F529BDDA3B30D4F"><enum>(A)</enum><text>prepared following an
audit performed for purposes of compliance by an issuer, broker, or dealer with
the requirements of the securities laws; and</text>
</subparagraph><subparagraph id="HEAE4BE49F94D43EABCB03A14D098C1E0"><enum>(B)</enum><text>in which a public
accounting firm either—</text>
<clause id="H8E3C6F9336F24D10B6155BDCC406F890"><enum>(i)</enum><text>sets forth the opinion of
that firm regarding a financial statement, report, notice, other document,
procedures, or controls; or</text>
</clause><clause id="H9C32C267A2DE4EA097CCB8857FF3D579"><enum>(ii)</enum><text>asserts that no such
opinion can be expressed.</text>
</clause></subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H3D3C04D9238944F1ABF9275F3D35562A"><enum>(3)</enum><header>Professional
standards</header><text>The term <quote>professional standards</quote>
means—</text>
<subparagraph id="HE34D7EE629F24DC799E8289FEFD54D42"><enum>(A)</enum><text>accounting principles
that are—</text>
<clause id="H3967D14758784DAABDF044143B49B187"><enum>(i)</enum><text>established by the
standard setting body described in section 19(b) of the Securities Act of 1933,
as amended by this Act, or prescribed by the Commission under section 19(a) of
that Act (15 U.S.C. 17a(s)) or section 13(b) of the Securities Exchange Act of
1934 (15 U.S.C. 78a(m)); and</text>
</clause><clause id="H41018FEE3A794E60AE88BD5DEAB6E28B"><enum>(ii)</enum><text>relevant to audit
reports for particular issuers, brokers, or dealers, or dealt with in the
quality control system of a particular registered public accounting firm;
and</text>
</clause></subparagraph><subparagraph id="HEC9D45B63B7843AE990712A1E9FA7741"><enum>(B)</enum><text>auditing standards,
standards for attestation engagements, quality control policies and procedures,
ethical and competency standards, and independence standards (including rules
implementing title II) that the Board or the Commission determines—</text>
<clause id="H9BDB3908BE7246D99C49C1B4A129A622"><enum>(i)</enum><text>relate to the preparation
or issuance of audit reports for issuers, brokers, or dealers; and</text>
</clause><clause id="H885EBDBBB94043A190208CE0622AE065"><enum>(ii)</enum><text>are established or
adopted by the Board under section 103(a), or are promulgated as rules of the
Commission.</text>
</clause></subparagraph></paragraph><paragraph id="HCE3C53136E5646A7A07CE8B8857A6A44"><enum>(4)</enum><header>Broker</header><text display-inline="yes-display-inline">The term <quote>broker</quote> means a
broker (as such term is defined in section 3(a)(4) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(4))) that is required to file a balance sheet,
income statement, or other financial statement under section 17(e)(1)(A) of
such Act (15 U.S.C. 78q(e)(1)(A)), where such balance sheet, income statement,
or financial statement is required to be certified by a registered public
accounting firm.</text>
</paragraph><paragraph id="H6595E17159D64225B1808FF2F09DED52"><enum>(5)</enum><header>Dealer</header><text display-inline="yes-display-inline">The term <quote>dealer</quote> means a
dealer (as such term is defined in section 3(a)(5) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(5))) that is required to file a balance sheet,
income statement, or other financial statement under section 17(e)(1)(A) of
such Act (15 U.S.C. 78q(e)(1)(A)), where such balance sheet, income statement,
or financial statement is required to be certified by a registered public
accounting firm.</text>
</paragraph><paragraph id="HEF2320F1487D4E53BDACB69032C4669B"><enum>(6)</enum><header>Self-regulatory
organization</header><text display-inline="yes-display-inline">The term
<quote>self-regulatory organization</quote> has the same meaning as in section
3(a)(26) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(26)).</text>
</paragraph></section><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph changed="added" committee-id="HBA00" id="H75AC1FC879BD440D82D5680C40729680" indent="up1" reported-display-style="italic"><enum>(2)</enum><text>The table of sections in
section 1(b) of such Act is amended, by inserting after the item relating to
section 109 the following new item:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H4DE66BD4C0DA47F982F15486515B38A0" reported-display-style="italic" style="OLC">
<toc changed="added" committee-id="HBA00" regeneration="no-regeneration" reported-display-style="italic">
<toc-entry level="section">Sec. 110.
Definitions.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H001F9220B296480E89A1E0548BF7B034"><enum>(b)</enum><header>Establishment and
Administration of the Public Company Accounting Oversight
Board</header><text>Section 101 of such Act is amended—</text>
<paragraph id="H93EE97DEA4FB4A2B8424BDB8EACAD682"><enum>(1)</enum><text>by striking
<quote>issuers</quote> each place it appears and inserting <quote>issuers,
brokers, and dealers</quote>;</text>
</paragraph><paragraph id="HD24A800DC2C44E56B01AF25EEFED6832"><enum>(2)</enum><text>in subsection (a), by
striking <quote>public companies</quote> and inserting
<quote>companies</quote>; and</text>
</paragraph><paragraph id="H8BA3E7D55A6E4620BF6A0FF32B00D617"><enum>(3)</enum><text>in subsection (a), by
striking <quote>for companies the securities of which are sold to, and held by
and for, public investors</quote>.</text>
</paragraph></subsection><subsection id="H45FAD58B93C54DE881BFBFDB1B3093E4"><enum>(c)</enum><header>Registration with the
Board</header><text display-inline="yes-display-inline">Section 102 of such Act
is amended—</text>
<paragraph id="HB03B813F441442988D838EC5D96867EF"><enum>(1)</enum><text>in subsection (a), by
striking <quote>Beginning 180 days after the date of the determination of the
Commission under section 101(d), it</quote> and inserting
<quote>It</quote>;</text>
</paragraph><paragraph id="H8F5690559F7A4B72B84E1E0781098F9F"><enum>(2)</enum><text>in subsections (a) and
(b)(2)(G), by striking <quote>issuer</quote> each place it appears and
inserting <quote>issuer, broker, or dealer</quote>; and</text>
</paragraph><paragraph id="H644FEAD3E70A42239666EF6449DC18BC"><enum>(3)</enum><text>in subsection (b)(2)(A),
by striking <quote>issuers</quote> and inserting <quote>issuers, brokers, and
dealers</quote>.</text>
</paragraph></subsection><subsection id="HEC70AE6BF59F422894E5CB0D55D7D3F2"><enum>(d)</enum><header>Auditing and
independence</header><text>Section 103(a) of such Act is amended—</text>
<paragraph id="H11AC76DE79E24DCDA63228C93753D7D9"><enum>(1)</enum><text>in paragraph (1), by
striking <quote>and such ethics standards</quote> and inserting <quote>such
ethics standards, and such independence standards</quote>;</text>
</paragraph><paragraph id="H9B2D94F8E8CB4F04B415CB038BB7693C"><enum>(2)</enum><text>in paragraph (2)(A)(iii),
by striking <quote>describe in each audit report</quote> and inserting
<quote>in each audit report for an issuer, describe</quote>; and</text>
</paragraph><paragraph id="H980040ADADCC42719F0D744341CA5F87"><enum>(3)</enum><text>in paragraph (2)(B)(i),
by striking <quote>issuers</quote> and inserting <quote>issuers, brokers, and
dealers</quote>.</text>
</paragraph></subsection><subsection id="H416BF170BAD342098987F170D6CD295F"><enum>(e)</enum><header>Inspections of
registered public accounting firms</header><text>Section 104 of such Act is
amended—</text>
<paragraph id="H33A38305370940B98A31CCB913908FF5"><enum>(1)</enum><text>in subsection (a), by
striking <quote>issuers</quote> and inserting <quote>issuers, brokers, and
dealers</quote>;</text>
</paragraph><paragraph id="HE79B0B7F982340A99C2B91DD7DB56DBB"><enum>(2)</enum><text>in subsection
(b)(1)(A)—</text>
<subparagraph id="HD41DFC81042647C582C4EF406AED6541"><enum>(A)</enum><text>by striking <quote>audit
reports</quote> and inserting <quote>audit reports on annual financial
statements</quote>; and</text>
</subparagraph><subparagraph id="H1603956135604984A75133A654C275FF"><enum>(B)</enum><text>by striking
<quote>and</quote>;</text>
</subparagraph></paragraph><paragraph id="H929240550AC44218BD961BBD564B1A16"><enum>(3)</enum><text>in subsection
(b)(1)(B)—</text>
<subparagraph id="H3E4ACF912BD34F788FE7F469BE995359"><enum>(A)</enum><text display-inline="yes-display-inline">by striking <quote>audit reports</quote>
and inserting <quote>audit reports on annual financial statements</quote>;
and</text>
</subparagraph><subparagraph id="H40094768CDC442DBB347DF9F47D79A95"><enum>(B)</enum><text>by striking the period at
the end and inserting <quote>; and</quote>; and</text>
</subparagraph></paragraph><paragraph id="HE9895EC392FC40E38A3525BA3AE67768"><enum>(4)</enum><text>by adding at the end of
subsection (b)(1) the following new subparagraph:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HC7929E07956744288FD04260D8A55936" reported-display-style="italic" style="OLC">
<subparagraph id="H2D7C4286121C47C38DF60C5D5269E83A"><enum>(C)</enum><text display-inline="yes-display-inline">with respect to each registered public
accounting firm that regularly provides audit reports and is not described
under subparagraph (A) or (B), on a basis to be determined by the Board, by
rule, consistent with the public interest and protection of
investors.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H59C8AD6CC5334DF19C2AA79F8CF1DDB5"><enum>(f)</enum><header>Investigations and
disciplinary proceedings</header><text>Section 105(c)(7)(B) of such Act is
amended—</text>
<paragraph id="H912C88C98ACB43EF8D573AEDD9A2AB19"><enum>(1)</enum><text>in the subparagraph
heading, by inserting <quote><header-in-text level="subparagraph" style="OLC">,
broker, or dealer</header-in-text></quote> after <quote><header-in-text level="subparagraph" style="OLC">issuer</header-in-text></quote>;</text>
</paragraph><paragraph id="H43BC5AF198854AD195AE4E7C56B213B6"><enum>(2)</enum><text>by striking <quote>any
issuer</quote> each place it appears and inserting <quote>any issuer, broker,
or dealer</quote>; and</text>
</paragraph><paragraph id="H79AEBA255723429FAE19CB38A08412FB"><enum>(3)</enum><text>by striking <quote>an
issuer under this subsection</quote> and inserting <quote>a registered public
accounting firm under this subsection</quote>.</text>
</paragraph></subsection><subsection id="H609C63B82F5C4137AC4BC6CC948128E3"><enum>(g)</enum><header>Foreign public
accounting firms</header><text>Section 106 of such Act is amended—</text>
<paragraph id="HA9C14DD6A2E546C3B8DA6276BBF96ABE"><enum>(1)</enum><text>in subsection (a)(1), by
striking <quote>issuer</quote> and inserting <quote>issuer, broker, or
dealer</quote>; and</text>
</paragraph><paragraph id="H5B5BD7EAD69045DFB0FAEF33881E9F5C"><enum>(2)</enum><text>in subsection (a)(2), by
striking <quote>issuers</quote> and inserting <quote>issuers, brokers, or
dealers</quote>.</text>
</paragraph></subsection><subsection id="H9B4B1D1281FB42D5B7B54C2ED39878CC"><enum>(h)</enum><header>Funding</header><text display-inline="yes-display-inline">Section 109 of such Act is amended—</text>
<paragraph display-inline="no-display-inline" id="HBE06D0C65B7B41689E0544784005F084"><enum>(1)</enum><text>in subsection (c)(2), by
striking <quote>subsection (i)</quote> and inserting <quote>subsection
(j)</quote>;</text>
</paragraph><paragraph id="H7994FB59E4F146738A07D917ACB2E64D"><enum>(2)</enum><text>in subsection (d)(2), by
striking <quote>allowing for differentiation among classes of issuers, as
appropriate</quote> and inserting <quote>and among brokers and dealers in
accordance with subsection (h), and allowing for differentiation among classes
of issuers and brokers and dealers, as appropriate</quote>;</text>
</paragraph><paragraph id="HCDA30D75A60D42F5B637F9C5FF0F84EA"><enum>(3)</enum><text display-inline="yes-display-inline">in subsection (d), by inserting at the end
the following new paragraph:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H9257839664454173ACCECD05A7912D70" reported-display-style="italic" style="OLC">
<paragraph id="HF5BDA2EC16B9412EAE52457DF0C6252C"><enum>(3)</enum><header>Brokers and
dealers</header><text display-inline="yes-display-inline">The rules of the
Board under paragraph (1) shall provide that the allocation, assessment, and
collection by the Board (or an agent appointed by the Board) of the fee
established under paragraph (1) with respect to brokers and dealers shall not
begin until the first day of the first full fiscal year beginning after the
date of the enactment of this
paragraph.</text>
</paragraph><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph id="HA87A354A420640429C8D61B7CB2501B8"><enum>(4)</enum><text>by redesignating
subsections (h), (i), and (j) as subsections (i), (j), and (k), respectively;
and</text>
</paragraph><paragraph id="HA70FD621AA2A4A99A36CC6CB522FDE58"><enum>(5)</enum><text>by inserting after
subsection (g) the following new subsection:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H334B9AF83B124B02B9113AF3534FF9C3" reported-display-style="italic" style="OLC">
<subsection id="H6420A49AC0ED4B4DA67F273B0612192D"><enum>(h)</enum><header>Allocation of
accounting support fees among brokers and dealers</header>
<paragraph id="HBF39975900064DF5AA883D632B66BABE"><enum>(1)</enum><header>In
general</header><text>Any amount due from brokers and dealers (or a particular
class of such brokers and dealers) under this section to fund the budget of the
Board shall be allocated among and payable by such brokers and dealers (or such
brokers and dealers in a particular class, as applicable). A broker or dealer’s
allocation shall be in proportion to the broker or dealer’s net capital
compared to the total net capital of all brokers and dealer, in accordance with
the rules of the Board.</text>
</paragraph><paragraph id="H0E35F81A094C437F8BBC10C6632EB3CE"><enum>(2)</enum><header>Obligation to
pay</header><text display-inline="yes-display-inline">Every broker or dealer
shall pay the share of a reasonable annual accounting support fee or fees
allocated to such broker or dealer under this
section.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HC08ED89458944B6C9BECB2959C99737D"><enum>(i)</enum><header>Referral of
investigations to a self-regulatory organization</header><text>Section
105(b)(4)(B) of the Sarbanes-Oxley Act of 2002 is amended—</text>
<paragraph id="H151E8EF476D149D0BBE9F730AF806EF0"><enum>(1)</enum><text>by redesignating clauses
(ii) and (iii) as clauses (iii) and (iv), respectively; and</text>
</paragraph><paragraph id="H08A69E3C38B44E2B81B26E557C7E108B"><enum>(2)</enum><text>by inserting after clause
(i) the following new clause:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HAB467EB173DC4E05933D8F93B5DAFF4B" reported-display-style="italic" style="OLC">
<clause id="HC539900E5A014E3CAD13CE9A42DA15A0"><enum>(ii)</enum><text display-inline="yes-display-inline">to a self-regulatory organization, in the
case of an investigation that concerns an audit report for a broker or dealer
that is subject to the jurisdiction of such self-regulatory
organization;</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HCE87E2C22DC047EB961F24CC0F794CEB"><enum>(j)</enum><header>Use of documents
related to an inspection or investigation</header><text>Section
105(b)(5)(B)(ii) of such Act is amended—</text>
<paragraph id="H7C03122C53CE4901B7C7AF6E482FB10C"><enum>(1)</enum><text>in subclause (III), by
striking <quote>and</quote>;</text>
</paragraph><paragraph id="HF8882808A6EB478F9C9ABF938DDD6E4C"><enum>(2)</enum><text>in subclause (IV), by
striking the comma and inserting <quote>; and</quote>; and</text>
</paragraph><paragraph id="H938ED31105524BFDA5B5FEED0CBC283D"><enum>(3)</enum><text>by inserting after
subclause (IV) the following new subclause:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HAD0BC011490A451DA38F50859E66E7B2" reported-display-style="italic" style="OLC">
<subclause id="HB43486A22C234E20A7522E85ECD0B9ED"><enum>(V)</enum><text display-inline="yes-display-inline">a self-regulatory organization, with
respect to an audit report for a broker or dealer that is subject to the
jurisdiction of such self-regulatory
organization,</text>
</subclause><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection></section><section id="H4469D8D3C45F45038115F922F7D523C7"><enum>602.</enum><header>Foreign regulatory
information sharing</header>
<subsection id="H42AE40A5F9F04542993F531D7E1C0BD9"><enum>(a)</enum><header>Definition</header><text display-inline="yes-display-inline">Section 2(a) of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7201(a)) is amended by inserting after paragraph (16) the
following:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H2CCAC2872AF54AFBA388381933DE7D99" reported-display-style="italic" style="OLC">
<paragraph id="H9D25DBCAA05C461DAEDEAFED15303943"><enum>(17)</enum><header>Foreign auditor
oversight authority</header><text display-inline="yes-display-inline">The term
<term>foreign auditor oversight authority</term> means any governmental body or
other entity empowered by a foreign government to conduct inspections of public
accounting firms or otherwise to administer or enforce laws related to the
regulation of public accounting
firms.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HC9B3FFF39CDA4AC38283CCFA7A6CD434"><enum>(b)</enum><header>Availability To Share
information</header><text>Section 105(b)(5) of the Sarbanes-Oxley Act of 2002
(15 U.S.C. 7215(b)(5)) is amended by adding at the end the following:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HFE845FCDE73F41AE807E72FF3C25D2C4" reported-display-style="italic" style="OLC">
<subparagraph id="H8B6626F90EF64BCCAF9CA52E03BF44F2"><enum>(C)</enum><header>Availability to foreign
oversight authorities</header><text display-inline="yes-display-inline">When in
the Board’s discretion it is necessary to accomplish the purposes of this Act
or to protect investors, and without the loss of its status as confidential and
privileged in the hands of the Board, all information referred to in
subparagraph (A) that relates to a public accounting firm within the inspection
authority, or other regulatory or law enforcement jurisdiction, of a foreign
auditor oversight authority may be made available to the foreign auditor
oversight authority if the foreign auditor oversight authority provides such
assurances of confidentiality as the Board determines
appropriate.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HB97CD244C27E407F9E760110E0B17A23"><enum>(c)</enum><header>Conforming
amendment</header><text display-inline="yes-display-inline">Section
105(b)(5)(A) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(A)) is
amended by striking <quote>subparagraph (B)</quote> and inserting
<quote>subparagraphs (B) and (C)</quote>.</text>
</subsection></section><section id="HC8C2D54301F14F2CB290268D20D043EF"><enum>603.</enum><header>Expansion of audit
information to be produced and exchanged with foreign
counterparts</header><text display-inline="no-display-inline">Section 106 of
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216) is amended—</text>
<paragraph id="HE89917DA53D947F2B5770F6F660218BA"><enum>(1)</enum><text>by amending subsection
(b) to read as follows:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H37E4BA7416F24F5EAE2B056BB004FCCD" reported-display-style="italic" style="OLC">
<subsection id="H58EBF860513C441E8838C6861BDDC2EC"><enum>(b)</enum><header>Production of
documents</header>
<paragraph id="H6FB109A9ABC442BBB1C9055312160589"><enum>(1)</enum><header>Production by foreign
firms</header><text display-inline="yes-display-inline">If a foreign public
accounting firm issues an audit report, performs audit work, conducts interim
reviews, or performs material services upon which a registered public
accounting firm relies in the conduct of an audit or interim review, the
foreign public accounting firm shall produce its audit work papers and all
other documents related to any such audit work or interim review to the
Commission or the Board when requested by the Commission or the Board and the
foreign public accounting firm shall be subject to the jurisdiction of the
courts of the United States for purposes of enforcement of any request of such
documents.</text>
</paragraph><paragraph id="H49D71D23983B4C23B2FB9DE2FF2A025D"><enum>(2)</enum><header>Other
production</header><text display-inline="yes-display-inline">Any registered
public accounting firm that relies, in whole or in part, on the work of a
foreign public accounting firm in issuing an audit report, performing audit
work, or conducting an interim review, shall—</text>
<subparagraph id="HA9500322087A4FEABBCF3625BA780DF5"><enum>(A)</enum><text>produce the foreign
public accounting firm’s audit work papers and all other documents related to
any such work in response to a request for production by the Commission or the
Board; and</text>
</subparagraph><subparagraph id="HF05F52F307CE4D0FA2433735016EBB1B"><enum>(B)</enum><text>secure the agreement of
any foreign public accounting firm to such production, as a condition of its
reliance on the work of that foreign public accounting
firm.</text>
</subparagraph></paragraph></subsection><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph id="H7B0123EB49634BF0B09B8F4AFC489095"><enum>(2)</enum><text display-inline="yes-display-inline">by redesignating subsection (d) as
subsection (g); and</text>
</paragraph><paragraph id="H87BD089CE2C14B06BE33387F872FEA2C"><enum>(3)</enum><text>by inserting after
subsection (c) the following new subsections:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HD6286C40C0CF46D0BF78ABAA93A02ED3" reported-display-style="italic" style="OLC">
<subsection id="H30389B87DAFC467D997B68FE0A061C14"><enum>(d)</enum><header>Service of requests or
process</header><text display-inline="yes-display-inline">Any foreign public
accounting firm that performs work for a domestic registered public accounting
firm shall furnish to the domestic firm a written irrevocable consent and power
of attorney that designates the domestic firm as an agent upon whom may be
served any process, pleadings, or other papers in any action brought to enforce
this section. Any foreign public accounting firm that issues an audit report,
performs audit work, performs interim reviews, or performs other material
services upon which a registered public accounting firm relies in the conduct
of an audit or interim review, shall designate to the Commission or the Board
an agent in the United States upon whom may be served any process, pleading, or
other papers in any action brought to enforce this section or any request by
the Commission or the Board under this section.</text>
</subsection><subsection id="HA4EB436ABAF846199E34C6F88A554CBF"><enum>(e)</enum><header>Sanctions</header><text>A
willful refusal to comply, in whole in or in part, with any request by the
Commission or the Board under this section, shall be a violation of this
Act.</text>
</subsection><subsection id="H93CEEBE6BFB246FF8EDBEAF0927B5600"><enum>(f)</enum><header>Other means of
satisfying production obligations</header><text display-inline="yes-display-inline">Notwithstanding any other provision of this
section, the staff of the Commission or Board may allow foreign public
accounting firms subject to this section to meet production obligations under
this section though alternate means, such as through foreign counterparts of
the Commission or
Board.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><section id="HF7C99E35EF3A45CB8B635DDD6D6D26BB"><enum>604.</enum><header>Conforming amendment
related to registration</header><text display-inline="no-display-inline">Section 102(b)(3)(A) of the Sarbanes-Oxley
Act of 2002 (15 U.S. Code 7212(b)(3)(A)) is amended by striking <quote>by the
Board</quote> and inserting <quote>by the Commission or the
Board</quote>.</text>
</section><section id="H76C23ACD02634CD5BCB212107BE8AA9F"><enum>605.</enum><header>Fair fund
amendments</header><text display-inline="no-display-inline">Section 308 of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(a)) is amended—</text>
<paragraph id="H2D2587C2F2D14636BA51476EAD65B5DB"><enum>(1)</enum><text>by amending subsection
(a) to read as follows:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HC82B3A2F05264211B3748983EB455B78" reported-display-style="italic" style="OLC">
<subsection id="H34F17F78E4684C229E302D1F035A983D"><enum>(a)</enum><header>Civil penalties to be
used for the relief of victims</header><text display-inline="yes-display-inline">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 a civil penalty against any person for a violation of
such laws or the rules and regulations thereunder, or such person agrees in
settlement of any such action to such civil penalty, the amount of such civil
penalty or settlement shall, on the motion or at the direction of the
Commission, be added to and become part of a disgorgement fund or other fund
established for the benefit of the victims of such
violation.</text>
</subsection><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph id="HCB4AC21828E44A0199FFC0084328DA5A"><enum>(2)</enum><text>in subsection (b),
by—</text>
<subparagraph id="HE7F1F49005084E0AAECFC50645BF5839"><enum>(A)</enum><text>striking <quote>for a
disgorgement fund described in subsection (a)</quote> and inserting <quote>for
a disgorgement fund or other fund described in subsection (a)</quote>;
and</text>
</subparagraph><subparagraph id="H7300EDC6B9A346A18F9DA3DCE2870B3E"><enum>(B)</enum><text>striking <quote>in the
disgorgement fund</quote> and inserting <quote>in such fund</quote>; and</text>
</subparagraph></paragraph><paragraph id="H268B77B2D3A84325988C2155C9C57E34"><enum>(3)</enum><text>by striking subsection
(e).</text>
</paragraph></section><section id="H5FC93D2931434C25A521DB04771E44DB"><enum>606.</enum><header>Exemption for
nonaccelerated filers</header>
<subsection id="HC2F3B0E678334A4F94544289C6AB02C7"><enum>(a)</enum><header>Exemption</header><text display-inline="yes-display-inline">Section 404 of the Sarbanes-Oxley Act of
2002 is amended by adding at the end the following:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H73D45F2D239D44508490C84F1AB6F5E5" reported-display-style="italic" style="OLC">
<subsection id="HA0229BDF38C94AE682B21638C3F553CD"><enum>(c)</enum><header>Exemption for smaller
issuers</header><text display-inline="yes-display-inline">Subsection (b) shall
not apply with respect to any audit report prepared for an issuer that is not
an accelerated filer within the meaning Rule 12b–2 of the Commission (17 C.F.R.
240.12b–2).</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HAC48FB8851EA4053873FEF962F509B20"><enum>(b)</enum><header>Study</header><text display-inline="yes-display-inline">The Securities and Exchange Commission and
the Comptroller General shall jointly conduct a study to determine how the
Commission could reduce the burden of complying with section 404(b) of the
Sarbanes-Oxley Act of 2002 for companies whose market capitalization is between
$75,000,000 and $250,000,000 for the relevant reporting period while
maintaining investor protections for such companies. The study shall also
consider whether any such methods of reducing the compliance burden or a
complete exemption for such companies from compliance with such section would
encourage companies to list on exchanges in the United States in their initial
public offerings. Not later than 180 days after the date of the enactment of
this Act, the Commission and the Comptroller General shall transmit a report of
such study to Congress.</text>
</subsection></section><section id="HAE8DF5E345D84996A6E4F91BFB9B06E6"><enum>607.</enum><header>Whistleblower
protection against retaliation by a subsidiary of an issuer</header><text display-inline="no-display-inline">Section 1514A(a) of title 18, United States
Code, is amended by inserting <quote>including any subsidiary or affiliate
whose financial information is included in the consolidated financial
statements of such company,</quote> after <quote>(15 U.S.C.
78o(d)),</quote>.</text>
</section><section id="HB081D2EA1AD24085BD02D72B7B0C6C20"><enum>608.</enum><header>Congressional access
to information</header><text display-inline="no-display-inline">Section 101 of
the Sarbanes-Oxley Act of 2002 is amended by adding at the end the
following:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H1BE05D2816F74433A13895A149BC4162" reported-display-style="italic" style="OLC">
<subsection id="HA5344703CB034EF885CA6BA2F14162B8"><enum>(i)</enum><header>Congressional access to
information</header><text display-inline="yes-display-inline">Nothing in this
section shall—</text>
<paragraph id="HA958373546B64B13AB828CAD3486F1A4"><enum>(1)</enum><text>affect the Boards
obligations, if any, to provide access to records under the Right to Financial
Privacy Act; or</text>
</paragraph><paragraph id="H5E91278D557B4F359AD4D4DAD541B94D"><enum>(2)</enum><text display-inline="yes-display-inline">authorize the Board to withhold information
from Congress or prevent the Board from complying with an order of a court of
the United States in an action commenced by the United States or the
Board.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H553C5CDF0D534DDABD8C54B7C76D4454"><enum>609.</enum><header>Creation of ombudsman
for the PCAOB</header>
<subsection id="HD51DD6EC2E9D4E0DAFDA8CCE74CE79F0"><enum>(a)</enum><header>Ombudsman</header><text display-inline="yes-display-inline">Title I of the Sarbanes-Oxley Act of 2002
(15 U.S.C. 7211 et seq.), as amended by section 601(a)(1), is further amended
by adding at the end the following new section:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H7E4BCC6763B84D8893DF885A5A847DCA" reported-display-style="italic" style="OLC">
<section id="HCB873BEA60FB4801A7CB748A242D6A77"><enum>111.</enum><header>Ombudsman</header>
<subsection id="H09208F58E69949119778295D9D2A3C2D"><enum>(a)</enum><header>Establishment
Required</header><text display-inline="yes-display-inline">Not later than 180
days after the date of enactment of the Investor Protection Act, the Board
shall appoint an ombudsman for the Board. The Ombudsman shall report directly
to the Chairman.</text>
</subsection><subsection id="HA2F9291E2D7D407D996D6514D862499A"><enum>(b)</enum><header>Duties of
Ombudsman</header><text>The ombudsman appointed in accordance with subsection
(a) for the Board shall—</text>
<paragraph id="H318FE880CEE94BA69839B7011D177375"><enum>(1)</enum><text>act as a liaison between
the Board and—</text>
<subparagraph id="HE6DFF43ADE5442D9B39E410C22C371AC"><enum>(A)</enum><text>any registered public
accounting firm or issuer with respect to issues or disputes concerning the
preparation or issuance of any audit report with respect to that issuer;
and</text>
</subparagraph><subparagraph id="HB8B389654BEC49ACBF11D1EB8DC506F4"><enum>(B)</enum><text>any affected registered
public accounting firm or issuer with respect to—</text>
<clause id="HDE2DCB282DE54407808AEEF95798C1D7"><enum>(i)</enum><text>any problem such firm or
issuer may have in dealing with the Board resulting from the regulatory
activities of the Board, particularly with regard to the implementation of
section 404; and</text>
</clause><clause id="H0A85CCB6FAE44C0B80A59CB44DF9996E"><enum>(ii)</enum><text>issues caused by the
relationships of registered public accounting firms and issuers generally;
and</text>
</clause></subparagraph></paragraph><paragraph id="H8010A2E1B02B4B558FC85FB82B838C53"><enum>(2)</enum><text>assure that safeguards
exist to encourage complainants to come forward and to preserve
confidentiality; and</text>
</paragraph><paragraph id="HF9536D175EA247859B4C5F3719B7092B"><enum>(3)</enum><text>carry out such
activities, and any other activities assigned by the Board, in accordance with
guidelines prescribed by the
Board.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H9807D4119DB04E5EB73CB46699924AEF"><enum>(b)</enum><header>Conforming
amendment</header><text>The table of sections in section 1(b) of such Act is
amended, by inserting after the item relating to section 110 (as added by
section 601(a)(2)) the following new item:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="H15398415EBC646B7B1F77374E4912165" reported-display-style="italic" style="OLC">
<toc changed="added" committee-id="HBA00" regeneration="no-regeneration" reported-display-style="italic">
<toc-entry level="section">Sec. 111.
Ombudsman.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="H3E05B14E91364D7E83296AEAC6116321"><enum>610.</enum><header>Auditing Oversight
Board</header><text display-inline="no-display-inline">The Sarbanes-Oxley Act
of 2002 is amended—</text>
<paragraph id="H9DB34325F1784BE8AA660210A8175D55"><enum>(1)</enum><text>in section 2(a)(5), by
striking <quote>Public Company Accounting Oversight Board</quote> and inserting
<quote>Auditing Oversight Board</quote>;</text>
</paragraph><paragraph id="H2F09CFD6F56343228278F80D77D3E388"><enum>(2)</enum><text display-inline="yes-display-inline">in section 101(a), by striking
<quote>Public Company Accounting Oversight Board</quote> and inserting
<quote>Auditing Oversight Board</quote>; and</text>
</paragraph><paragraph id="HB09FE62418894F289D85597362CEAA14"><enum>(3)</enum><text display-inline="yes-display-inline">in the heading of title I, by striking
<quote><header-in-text level="title" style="OLC">Public Company Accounting
Oversight Board</header-in-text></quote> and inserting <quote><header-in-text level="title" style="OLC">Auditing Oversight
Board</header-in-text></quote>.</text>
</paragraph></section><enum>VII</enum><header>Senior Investment
Protection</header>
<section id="HA4F52CE9266B4049835ACFDAE257FEB2"><enum>701.</enum><header>Findings</header><text display-inline="no-display-inline">Congress finds that—</text>
<paragraph id="HC10174CF7B4E4EC99F9E3B3C57FE16A3"><enum>(1)</enum><text>many seniors are targeted
by salespersons and advisers using misleading certifications and professional
designations;</text>
</paragraph><paragraph id="H5700369E8B3A488889CCBE5983431104"><enum>(2)</enum><text>many certifications and
professional designations used by salespersons and advisers represent limited
training or expertise, and may in fact be of no value with respect to advising
seniors on financial and estate planning matters, and far too often, such
designations are obtained simply by attending a weekend seminar and passing an
open book, multiple choice test;</text>
</paragraph><paragraph id="H6E4CD083F15F4C98BEF1E614D59F5568"><enum>(3)</enum><text>many seniors have lost
their life savings because salespersons and advisers holding a misleading
designation have steered them toward products that were unsuitable for them,
given their retirement needs and life expectancies;</text>
</paragraph><paragraph id="H217CA6E6C64A4CA6B83A1D8641D60590"><enum>(4)</enum><text>seniors have a right to
clearly know whether they are working with a qualified adviser who understands
the products and is working in their best interest or a self-interested
salesperson or adviser advocating particular products; and</text>
</paragraph><paragraph id="H2E93E31AC0D541A280015B1DA4141C22"><enum>(5)</enum><text>many existing State laws
and enforcement measures addressing the use of certifications, professional
designations, and suitability standards in selling financial products to
seniors are inadequate to protect senior investors from salespersons and
advisers using such designations.</text>
</paragraph></section><section id="H3016EC23366541DCA4E7C020FD29619F"><enum>702.</enum><header>Definitions</header><text display-inline="no-display-inline">For purposes of this title:</text>
<paragraph id="H063A2BAA6AFA4EF290D4E59F1F046519"><enum>(1)</enum><header>Misleading
designation</header><text>The term <term>misleading designation</term>—</text>
<subparagraph id="H199F6331237C4498B177193C40EB8B09"><enum>(A)</enum><text>means the use of a
purported certification, professional designation, or other credential, that
indicates or implies that a salesperson or adviser has special certification or
training in advising or servicing seniors; and</text>
</subparagraph><subparagraph id="H3C3C87A7B04D4BDB84B50FCA31B5DAD0"><enum>(B)</enum><text>does not include any
legitimate certification, professional designation, license, or other
credential, if—</text>
<clause id="H2CD1D3C308194F1AA73FF0D0D4038E05"><enum>(i)</enum><text>it has been offered by an
academic institution having regional accreditation; or</text>
</clause><clause id="HB69BFEB645A24A01B7210EFB103EFF72"><enum>(ii)</enum><text display-inline="yes-display-inline">it meets the standards for certifications,
licenses, and professional designations outlined by the North American
Securities Administrators Association (in this title referred to as the
<quote>NASAA</quote>) Model Rule on the Use of Senior-Specific Certifications
and Professional Designations, as in effect on the date of the enactment of
this Act, or any successor thereto, or it was issued by or obtained from any
State.</text>
</clause></subparagraph></paragraph><paragraph id="H5C46204BEE2F447B9AC107D51A6AF058"><enum>(2)</enum><header>Financial
product</header><text>The term <term>financial product</term> means securities,
insurance products (including insurance products which pay a return, whether
fixed or variable), and bank and loan products.</text>
</paragraph><paragraph id="H590F2280B57B43BDB0F365861C7C5BFC"><enum>(3)</enum><header>Misleading or
fraudulent marketing</header><text>The term <term>misleading or fraudulent
marketing</term> means the use of a misleading designation when selling to or
advising a senior about the sale of a financial product.</text>
</paragraph><paragraph id="H633CF1FC5F15497DA00E804EA25A894C"><enum>(4)</enum><header>Senior</header><text>The
term <term>senior</term> means any individual who has attained the age of 62
years or more.</text>
</paragraph><paragraph id="HF83F334405734A5493DE8F96791E551A"><enum>(5)</enum><header>State</header><text>The
term <term>State</term> means each of the 50 States, the District of Columbia,
and the unincorporated territories of Puerto Rico and the U.S. Virgin
Islands.</text>
</paragraph></section><section id="HCF1B04E7C15E4DEF9E7DC5848131AAC0"><enum>703.</enum><header>Grants to States for
enhanced protection of seniors from being mislead by false
designations</header>
<subsection id="HB2D8B60AE09E414FAE2D8E0C155852B2"><enum>(a)</enum><header>Grant
program</header><text>The Securities and Exchange Commission (in this title
referred to as the <term>Commission</term>)—</text>
<paragraph id="H4A9406EDBEFA4DFFBB8FADDAFB29F79D"><enum>(1)</enum><text>shall establish a program
in accordance with this title to provide grants to States—</text>
<subparagraph id="H62CB28EC51C74B4AACD73E20C70B33AD"><enum>(A)</enum><text>to investigate and
prosecute misleading and fraudulent marketing practices; or</text>
</subparagraph><subparagraph id="H4CC3FD34A89C447A96DAE9366D9FEB71"><enum>(B)</enum><text>to develop educational
materials and training aimed at reducing misleading and fraudulent marketing of
financial products toward seniors; and</text>
</subparagraph></paragraph><paragraph id="H94BB9454D7BF47888E68564C0CB7A4ED"><enum>(2)</enum><text>may establish such
performance objectives, reporting requirements, and application procedures for
States and State agencies receiving grants under this title as the Commission
determines are necessary to carry out and assess the effectiveness of the
program under this title.</text>
</paragraph></subsection><subsection id="H5A85DAA8555B4345800E996CDFC25A60"><enum>(b)</enum><header>Use of grant
amounts</header><text>A grant under this title may be used (including through
subgrants) by the State or the appropriate State agency designated by the
State—</text>
<paragraph id="H0F529378573546C8921BEEF13618C495"><enum>(1)</enum><text>to fund additional staff
to identify, investigate, and prosecute (through civil, administrative, or
criminal enforcement actions) cases involving misleading or fraudulent
marketing of financial products to seniors;</text>
</paragraph><paragraph id="H7842CFDA357A4F65ACD0A456016568F0"><enum>(2)</enum><text>to fund technology,
equipment, and training for regulators, prosecutors, and law enforcement in
order to identify salespersons and advisers who target seniors through the use
of misleading designations;</text>
</paragraph><paragraph id="HBBCD2D35C32A4E92AE153BB2CDEC2D01"><enum>(3)</enum><text>to fund technology,
equipment, and training for prosecutors to increase the successful prosecution
of those targeting seniors with the use of misleading designations;</text>
</paragraph><paragraph id="H7C06A1969D774A0D9F01526D0BE22865"><enum>(4)</enum><text>to provide educational
materials and training to regulators on the appropriateness of the use of
designations by salespersons and advisers of financial products;</text>
</paragraph><paragraph id="H6C0EB4496CB540038DE824E89394FC49"><enum>(5)</enum><text>to provide educational
materials and training to seniors to increase their awareness and understanding
of designations; and</text>
</paragraph><paragraph id="H3F411C7651BC44D5B854211DE9F5B0FE"><enum>(6)</enum><text>to develop comprehensive
plans to combat misleading or fraudulent marketing of financial products to
seniors.</text>
</paragraph></subsection><subsection id="HD934B4A3A76A428CBA023CBBA53D39A4"><enum>(c)</enum><header>Grant
requirements</header>
<paragraph id="HD5B0B911062D4DF18BA0F3A9E19ABB9F"><enum>(1)</enum><header>Maximum</header><text>The
amount of a grant under this title may not exceed $500,000 per fiscal year per
State, if all requirements of paragraphs (2), (3), (4), and (5) are met. Such
amount shall be limited to $100,000 per fiscal year per State in any case in
which the State meets the requirements of—</text>
<subparagraph id="HDACEF61409934A2A83871F1CAFE83C74"><enum>(A)</enum><text>paragraphs (2) and (3),
but not each of paragraphs (4) and (5); or</text>
</subparagraph><subparagraph id="H5BE38FA29F294ABE9050CCA3C23B35D3"><enum>(B)</enum><text>paragraphs (4) and (5),
but not each of paragraphs (2) and (3).</text>
</subparagraph></paragraph><paragraph id="H0C31BCBB71F74EFE81B4CEC1ACE9B5C4"><enum>(2)</enum><header>Standard designation
rules for securities</header><text>A State shall have adopted rules on the
appropriate use of designations in the offer or sale of securities or
investment advice, which shall meet or exceed the minimum requirements of the
NASAA Model Rule on the Use of Senior-Specific Certifications and Professional
Designations, as in effect on the date of the enactment of this Act, or any
successor thereto.</text>
</paragraph><paragraph id="H391DF5F97DDF4CBBA0E4E571284B5AF7"><enum>(3)</enum><header>Suitability rules for
securities</header><text>A State shall have adopted standard rules on the
suitability requirements in the sale of securities, which shall, to the extent
practicable, conform to the minimum requirements on suitability imposed by
self-regulatory organization rules under the securities laws (as defined in
section 3 of the Securities Exchange Act of 1934).</text>
</paragraph><paragraph id="H74970BA0537E485C95665401A022BD33"><enum>(4)</enum><header>Standard designation
rules for insurance products</header><text>A State shall have adopted standard
rules on the appropriate use of designations in the sale of insurance products,
which shall, to the extent practicable, conform to the minimum requirements of
the National Association of Insurance Commissioners Model Regulation on the Use
of Senior-Specific Certifications and Professional Designations in the Sale of
Life Insurance and Annuities, as in effect on the date of the enactment of this
Act, or any successor thereto.</text>
</paragraph><paragraph id="H925FBEBC63534C1F8B17F726B4A41E28"><enum>(5)</enum><header>Suitability and
supervision rules for annuity products</header>
<subparagraph id="HC80AD2493C124CC5A794E9C6815B292B"><enum>(A)</enum><header>In
general</header><text>A State shall have adopted rules governing insurer
supervision of, suitability of, and insurer and insurance producer conduct
relating to, the sale of annuity products, including fixed and index
annuities.</text>
</subparagraph><subparagraph id="H76C5B8576E634DC19283F7902FA3FC74"><enum>(B)</enum><header>Annuity products
criteria</header><text>The rules required by subparagraph (A) shall, to the
extent practicable, provide—</text>
<clause id="H310AF856FC2A42709CDAD950EDE28A35"><enum>(i)</enum><text>that insurers, and
insurance producers are responsible for, and liable for penalties for, the
suitability of each recommended annuity transaction;</text>
</clause><clause id="H7CB8A5A26E4B4C2EBA048FF32B322E1D"><enum>(ii)</enum><text>that insurers and
insurance producers are required to apply a standard for determining the
suitability of each recommended annuity transaction, including fixed and index
annuities, that is at least as protective of the interests of the consumer as
rule 2821(b) of the Financial Industry Regulatory Authority (in this paragraph
referred to as <quote>FINRA</quote>), as in effect on the date of the enactment
of this Act, or any successor to such rule;</text>
</clause><clause id="H46BE965007D14A09A9C089E063AA87C0"><enum>(iii)</enum><text>that insurers and
insurance producers are required to maintain a process for review of the
suitability, and approval or disapproval, of each recommended annuity
transaction that is at least as protective of the interests of the consumer as
the principal review required under rule 2821(c) of FINRA, as in effect on the
date of the enactment of this Act, or any successor to such rule;</text>
</clause><clause id="H16F67DC50AFF45708126AB3A65F0BDB8"><enum>(iv)</enum><text>that insurers and
insurance producers are required to maintain processes for the supervision of
direct annuity sales and insurance producer-recommended annuity sales
(including procedures for the insurer to obtain and confirm consumer
suitability information and for the insurer to confirm consumer understanding
of the annuity transaction) that are at least as protective of the interests of
the consumer as member broker and dealer supervision requirements of FINRA, as
in effect on the date of the enactment of this Act, or any successor to such
requirements;</text>
</clause><clause id="H5929142D82AF4EC6BD855C1A5026BC5D"><enum>(v)</enum><text>that insurers are
required to verify that each insurance producer successfully completes, and
each insurance producer is required to receive, training designed to ensure
that the insurance producer is competent to recommend each class of
annuity;</text>
</clause><clause id="HA4632319955C4DC082D744B0F921754A"><enum>(vi)</enum><text>that insurers are
required to verify that insurance producers receive, and insurance producers
are required to receive, training regarding the features of each offered
annuity product, to an extent that is at least as protective of the interests
of the consumer as the FINRA firm element training requirements, as in effect
on the date of the enactment of this Act, or any successor to such
requirements;</text>
</clause><clause id="HB829EB854AB742989C265FA8E9AD4CEE"><enum>(vii)</enum><text>for coordination of
such rules with the rules of FINRA governing member brokers, dealers, and
security representatives, to the extent appropriate, consistent with protecting
the interests of consumers, for State insurance regulators to rely on, or to
avoid duplication of FINRA rules; and</text>
</clause><clause id="HBC024CC13B774672944A739E693EB8EC"><enum>(viii)</enum><text>for exemption from
such rules only if such exemption is consistent with the protection of
consumers.</text>
</clause></subparagraph></paragraph></subsection></section><section id="HD5431A9A6A924C249EB591C2450B4579"><enum>704.</enum><header>Applications</header><text display-inline="no-display-inline">To be eligible for a grant under this title,
the State or appropriate State agency shall submit to the Commission a proposal
to use the grant money to protect seniors from misleading or fraudulent
marketing techniques in the offer and sale of financial products, which
application shall—</text>
<paragraph id="H03B3618D21FA4866891120C93D20CE85"><enum>(1)</enum><text>identify the scope of the
problem;</text>
</paragraph><paragraph id="H2F7BCAFE44FA4E89A6427408CCFE8C93"><enum>(2)</enum><text>describe how the proposed
program will help to protect seniors from misleading or fraudulent marketing in
the sale of financial products, including, at a minimum—</text>
<subparagraph id="HB6FA439C21804D0A97F24CAE8C8A341A"><enum>(A)</enum><text>by proactively
identifying senior victims of misleading and fraudulent marketing in the offer
and sale of financial products;</text>
</subparagraph><subparagraph id="H3173459EA6354ED4B51A2164EF1F85A2"><enum>(B)</enum><text>how the proposed program
can assist in the investigation and prosecution of those using misleading or
fraudulent marketing in the offer and sale of financial products to seniors;
and</text>
</subparagraph><subparagraph id="H6A1CFF6D74394FBCBC3A4B0F816FB8B8"><enum>(C)</enum><text>how the proposed program
can help discourage and reduce future cases of misleading or fraudulent
marketing in the offer and sale of financial products to seniors; and</text>
</subparagraph></paragraph><paragraph id="H768E306E66AF43809B94806895D0632C"><enum>(3)</enum><text>describe how the proposed
program is to be integrated with other existing State efforts.</text>
</paragraph></section><section id="H4928B8C4EA724C2A939163C6252C0549"><enum>705.</enum><header>Length of
participation</header><text display-inline="no-display-inline">A State
receiving a grant under this title shall be provided assistance funds for a
period of 3 years, after which the State may reapply for additional
funding.</text>
</section><section id="H413FD15C2BF4401B90BB6E78D776B688"><enum>706.</enum><header>Authorization of
appropriations</header><text display-inline="no-display-inline">There are
authorized to be appropriated to carry out this title, $8,000,000 for each of
the fiscal years 2011 through 2015.</text>
</section><enum>VIII</enum><header>Registration of
Municipal Financial Advisors</header>
<section id="HEDFB0F32A4484572AEB0E9E4C104573C"><enum>801.</enum><header>Municipal financial
adviser registration requirement</header>
<subsection id="H2B7B31DDF7F6431B9927EBCBBC565FE4"><enum>(a)</enum><header>In
general</header><text>The Securities Exchange Act of 1934 is amended by
inserting after section 15E (15 U.S.C. 78o–7) the following new section:</text>
<quoted-block changed="added" committee-id="HBA00" id="H2F15619D462E4C5EBD729A2F2140AC8D" reported-display-style="italic" style="OLC">
<section id="HC97A8076FE48461A91508C2EDEF77DAD"><enum>15F.</enum><header>Municipal financial
adviser registration requirement</header>
<subsection id="H3AAED90088C144C7ACDF19911B8D009D"><enum>(a)</enum><paragraph commented="no" display-inline="yes-display-inline" id="H0D91C7492C074893913D9AD74D503BB6"><enum>(1)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="H2D34E23EF5C14C458CD4971199873995"><enum>(A)</enum><text display-inline="yes-display-inline">It shall be unlawful for any person to make
use of the mails or any means or instrumentality of interstate commerce to act
as a municipal financial adviser unless such person is registered as a
municipal financial adviser in accordance with subsection (b).</text>
</subparagraph><subparagraph changed="added" committee-id="HBA00" id="H7A58243F72564C54ACA1EBAB8B7D8C06" indent="up2" reported-display-style="italic"><enum>(B)</enum><text display-inline="yes-display-inline">Subparagraph (A) shall not apply to a
natural person associated with a municipal financial adviser, as long as such
adviser is registered in accordance with subsection (b) and is not a natural
person.</text>
</subparagraph></paragraph><paragraph changed="added" committee-id="HBA00" id="H67C6B92440174269AE25316D8FC4F96C" indent="up1" reported-display-style="italic"><enum>(2)</enum><text>The Commission, by rule
or order, as it deems consistent with the public interest and the protection of
investors, may conditionally or unconditionally exempt from paragraph (1) of
this section any municipal financial adviser or class of municipal financial
advisers specified in such rule or order.</text>
</paragraph></subsection><subsection id="HE67D1BA5DDD54DAB82E5F2F65223E54B"><enum>(b)</enum><paragraph commented="no" display-inline="yes-display-inline" id="H412E071368C04CDFA9E0505786FD8118"><enum>(1)</enum><text>A municipal financial
adviser may be registered by filing with the Commission an application for
registration in such form and containing such information and documents
concerning such municipal financial adviser and any persons associated with
such municipal financial adviser as the Commission, by rule, may prescribe as
necessary or appropriate in the public interest or for the protection of
investors. Within 45 days of the date of the filing of such application (or
within such longer period as to which the applicant consents), the Commission
shall—</text>
<subparagraph changed="added" committee-id="HBA00" id="H1F5205D905DD48549DE53561061E711D" indent="up1" reported-display-style="italic"><enum>(A)</enum><text>by order grant
registration, or</text>
</subparagraph><subparagraph changed="added" committee-id="HBA00" id="H799B13F6FF5F44E0988C912B489C724F" indent="up1" reported-display-style="italic"><enum>(B)</enum><text>institute proceedings to
determine whether registration should be denied. Such proceedings shall include
notice of the grounds for denial under consideration and opportunity for
hearing and shall be concluded within 120 days of the date of the filing of the
application for registration. At the conclusion of such proceedings, the
Commission, by order, shall grant or deny such registration. The Commission may
extend the time for conclusion of such proceedings for up to 90 days if it
finds good cause for such extension and publishes its reasons for so finding or
for such longer period as to which the applicant consents.</text>
</subparagraph><continuation-text changed="added" committee-id="HBA00" continuation-text-level="paragraph" reported-display-style="italic">The
Commission shall grant such registration if the Commission finds that the
requirements of this section are satisfied. The Commission shall deny such
registration if it does not make such a finding or if it finds that if the
applicant were so registered, its registration would be subject to suspension
or revocation under paragraph (4).</continuation-text></paragraph><paragraph changed="added" committee-id="HBA00" id="HBAAF9B34380348BAB8569D35C0CB0803" indent="up1" reported-display-style="italic"><enum>(2)</enum><text>An application for
registration of a municipal financial adviser to be formed or organized may be
made by a municipal financial adviser to which the municipal financial adviser
to be formed or organized is to be the successor. Such application, in such
form as the Commission, by rule, may prescribe, shall contain such information
and documents concerning the applicant, the successor, and any persons
associated with the applicant or the successor, as the Commission, by rule, may
prescribe as necessary or appropriate in the public interest or for the
protection of investors. The grant or denial of registration to such an
applicant shall be in accordance with the procedures set forth in paragraph (1)
of this subsection. If the Commission grants such registration, the
registration shall terminate on the 45th day after the effective date thereof,
unless prior thereto the successor shall, in accordance with such rules and
regulations as the Commission may prescribe, adopt the application for
registration as its own.</text>
</paragraph><paragraph changed="added" committee-id="HBA00" id="HA8EE81943EE7400D951BD3211B77E926" indent="up1" reported-display-style="italic"><enum>(3)</enum><text>Any provision of this
title (other than section 5 and subsection (a) of this section) which prohibits
any act, practice, or course of business if the mails or any means or
instrumentality of interstate commerce is used in connection therewith shall
also prohibit any such act, practice, or course of business by any registered
municipal financial adviser or any person acting on behalf of such a municipal
financial adviser, irrespective of any use of the mails or any means or
instrumentality of interstate commerce in connection therewith.</text>
</paragraph><paragraph changed="added" committee-id="HBA00" id="HDF7144C6646B401E8A04CF8004557F72" indent="up1" reported-display-style="italic"><enum>(4)</enum><text>The Commission, by order,
shall censure, place limitations on the activities, functions, or operations
of, suspend for a period not exceeding 12 months, or revoke the registration of
any municipal financial adviser if it finds, on the record after notice and
opportunity for hearing, that such censure, placing of limitations, suspension,
or revocation is in the public interest and that such municipal financial
adviser, whether prior or subsequent to becoming such, or any person associated
with such municipal financial adviser, whether prior or subsequent to becoming
so associated—</text>
<subparagraph id="H4479592B2EF44E91AE7F5EFA717A7417"><enum>(A)</enum><text>has willfully made or
caused to be made in any application for registration or report required to be
filed with the Commission or with any other appropriate regulatory agency under
this title, or in any proceeding before the Commission with respect to
registration, any statement which was at the time and in the light of the
circumstances under which it was made false or misleading with respect to any
material fact, or has omitted to state in any such application or report any
material fact which is required to be stated therein;</text>
</subparagraph><subparagraph id="H15AEE3F83A354A80848A4C63CE4DFF43"><enum>(B)</enum><text>has been convicted within
10 years preceding the filing of any application for registration or at any
time thereafter of any felony or misdemeanor or of a substantially equivalent
crime by a foreign court of competent jurisdiction which the Commission
finds—</text>
<clause id="HEC53ED1657044D489D31F1F22E19CF55"><enum>(i)</enum><text>involves the purchase or
sale of any security, the taking of a false oath, the making of a false report,
bribery, perjury, burglary, any substantially equivalent activity however
denominated by the laws of the relevant foreign government, or conspiracy to
commit any such offense;</text>
</clause><clause id="HCFF769989D424DD990DDC78F4A535150"><enum>(ii)</enum><text>arises out of the
conduct of the business of a municipal financial adviser, broker, dealer,
municipal securities dealer, government securities broker, government
securities dealer, investment adviser, bank, insurance company, fiduciary,
transfer agent, nationally recognized statistical rating organization, foreign
person performing a function substantially equivalent to any of the above, or
entity or person required to be registered under the Commodity Exchange Act (7
U.S.C. 1 et seq.) or any substantially equivalent foreign statute or
regulation;</text>
</clause><clause id="HE1E457E38A8D475B99DB2E1D9CAD874A"><enum>(iii)</enum><text>involves the larceny,
theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment,
embezzlement, fraudulent conversion, or misappropriation of funds, or
securities, or substantially equivalent activity however denominated by the
laws of the relevant foreign government; or</text>
</clause><clause id="HB02F9FA14B7F4889BA5CF67F1DFFFC7E"><enum>(iv)</enum><text>involves the violation
of section 152, 1341, 1342, or 1343 or chapter 25 or 47 of title 18, or a
violation of a substantially equivalent foreign statute;</text>
</clause></subparagraph><subparagraph id="H27C3DE6B1F7C4D5AAA93CBF33C42D64E"><enum>(C)</enum><text>is permanently or
temporarily enjoined by order, judgment, or decree of any court of competent
jurisdiction from acting as a municipal financial adviser, investment adviser,
underwriter, broker, dealer, municipal securities dealer, government securities
broker, government securities dealer, transfer agent, nationally recognized
statistical rating organization, foreign person performing a function
substantially equivalent to any of the above, or entity or person required to
be registered under the Commodity Exchange Act or any substantially equivalent
foreign statute or regulation, or as an affiliated person or employee of any
investment company, bank, insurance company, foreign entity substantially
equivalent to any of the above, or entity or person required to be registered
under the Commodity Exchange Act or any substantially equivalent foreign
statute or regulation or from engaging in or continuing any conduct or practice
in connection with any such activity, or in connection with the purchase or
sale of any security;</text>
</subparagraph><subparagraph id="H2B2A3F6B1FB147B183E949FD991AE508"><enum>(D)</enum><text>has willfully violated
any provision of the Securities Act of 1933, the Investment Advisers Act of
1940, the Investment Company Act of 1940, the Commodity Exchange Act, this
title, the rules or regulations under any of such statutes, or is unable to
comply with any such provision;</text>
</subparagraph><subparagraph id="H175DF9F69BE54DA9B3380643A13D19D0"><enum>(E)</enum><text>has willfully aided,
abetted, counseled, commanded, induced, or procured the violation by any other
person of any provision of the Securities Act of 1933, the Investment Advisers
Act of 1940, the Investment Company Act of 1940, the Commodity Exchange Act,
this title, the rules or regulations under any of such statutes, or has failed
reasonably to supervise, with a view to preventing violations of the provisions
of such statutes, rules, and regulations, another person who commits such a
violation, if such other person is subject to his supervision. For the purposes
of this subparagraph, no person shall be deemed to have failed reasonably to
supervise any other person, if—</text>
<clause id="H7E72B9DAA7654814B6397B3E33B28AC4"><enum>(i)</enum><text>there have been
established procedures, and a system for applying such procedures, which would
reasonably be expected to prevent and detect, insofar as practicable, any such
violation by such other person, and</text>
</clause><clause id="H742F9729ABB84DC4931E492A473804DA"><enum>(ii)</enum><text>such person has
reasonably discharged the duties and obligations incumbent upon him by reason
of such procedures and system without reasonable cause to believe that such
procedures and system were not being complied with;</text>
</clause></subparagraph><subparagraph id="H81DAD44B51074F54B2774FF0D4558853"><enum>(F)</enum><text>is subject to any order
of the Commission barring or suspending the right of the person to be
associated with a municipal financial adviser;</text>
</subparagraph><subparagraph id="HDEEA0FCFD62A4807B25E407C15D57647"><enum>(G)</enum><text>has been found by a
foreign financial regulatory authority to have—</text>
<clause id="H0A067C5FF46444FD8AA24CB96924C88A"><enum>(i)</enum><text>made or caused to be made
in any application for registration or report required to be filed with a
foreign financial regulatory authority, or in any proceeding before a foreign
financial regulatory authority with respect to registration, any statement that
was at the time and in the light of the circumstances under which it was made
false or misleading with respect to any material fact, or has omitted to state
in any application or report to the foreign financial regulatory authority any
material fact that is required to be stated therein;</text>
</clause><clause id="H50A558B9270A4796A90FC4003B8F4962"><enum>(ii)</enum><text>violated any foreign
statute or regulation regarding transactions in securities, or contracts of
sale of a commodity for future delivery, traded on or subject to the rules of a
contract market or any board of trade; or</text>
</clause><clause id="HB0C6EFFBA9634D74B98033B7D7DF7BC1"><enum>(iii)</enum><text>aided, abetted,
counseled, commanded, induced, or procured the violation by any person of any
provision of any statutory provisions enacted by a foreign government, or rules
or regulations thereunder, empowering a foreign financial regulatory authority
regarding transactions in securities, or contracts of sale of a commodity for
future delivery, traded on or subject to the rules of a contract market or any
board of trade, or has been found, by a foreign financial regulatory authority,
to have failed reasonably to supervise, with a view to preventing violations of
such statutory provisions, rules, and regulations, another person who commits
such a violation, if such other person is subject to his supervision; or</text>
</clause></subparagraph><subparagraph id="H77E574A8178A492D87771187B706B17E"><enum>(H)</enum><text>is subject to any final
order of a State securities commission (or any agency or officer performing
like functions), State authority that supervises or examines banks, savings
associations, or credit unions, State insurance commission (or any agency or
office performing like functions), an appropriate Federal banking agency (as
defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))),
or the National Credit Union Administration, that—</text>
<clause id="HC0B9505FBC414859850925D60C5B9FA5"><enum>(i)</enum><text>bars such person from
association with an entity regulated by such commission, authority, agency, or
officer, or from engaging in the business of securities, insurance, banking,
savings association activities, or credit union activities; or</text>
</clause><clause id="HD382ACEA978D447C9AC69FCC451B5165"><enum>(ii)</enum><text>constitutes a final
order based on violations of any laws or regulations that prohibit fraudulent,
manipulative, or deceptive conduct.</text>
</clause></subparagraph></paragraph><paragraph changed="added" committee-id="HBA00" id="H569107F700C6459D919461B352768352" indent="up1" reported-display-style="italic"><enum>(5)</enum><text>Pending final
determination whether any registration under this subsection shall be revoked,
the Commission, by order, may suspend such registration, if such suspension
appears to the Commission, after notice and opportunity for hearing, to be
necessary or appropriate in the public interest or for the protection of
investors. Any registered municipal financial adviser may, upon such terms and
conditions as the Commission deems necessary or appropriate in the public
interest or for the protection of investors, withdraw from registration by
filing a written notice of withdrawal with the Commission. If the Commission
finds that any registered municipal financial adviser is no longer in existence
or has ceased to do business as a municipal financial adviser, the Commission,
by order, shall cancel the registration of such municipal financial
adviser.</text>
</paragraph><paragraph changed="added" committee-id="HBA00" id="H466B92E0E30A4B11968D955E37BF24A0" indent="up1" reported-display-style="italic"><enum>(6)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="HF79E14504B8541AAA44DD17F2F823534"><enum>(A)</enum><text>With respect to any
person who is associated, who is seeking to become associated, or, at the time
of the alleged misconduct, who was associated or was seeking to become
associated with a municipal financial adviser, the Commission, by order, shall
censure, place limitations on the activities or functions of such person, or
suspend for a period not exceeding 12 months, or bar such person from being
associated with a municipal financial adviser, if the Commission finds, on the
record after notice and opportunity for a hearing, that such censure, placing
of limitations, suspension, or bar is in the public interest and that such
person—</text>
<clause changed="added" committee-id="HBA00" id="H7EB62E80B754461B800A634EEA615FB7" indent="up1" reported-display-style="italic"><enum>(i)</enum><text>has committed or omitted
any act, or is subject to an order or finding, enumerated in subparagraph (A),
(D), or (E) of paragraph (4) of this subsection;</text>
</clause><clause changed="added" committee-id="HBA00" id="H17303DD7591240598EE314D84133D323" indent="up1" reported-display-style="italic"><enum>(ii)</enum><text>has been convicted of
any offense specified in subparagraph (B) of such paragraph (4) within 10 years
of the commencement of the proceedings under this paragraph; or</text>
</clause><clause changed="added" committee-id="HBA00" id="H065D9E993441463598B88B31A346F672" indent="up1" reported-display-style="italic"><enum>(iii)</enum><text>is enjoined from any
action, conduct, or practice specified in subparagraph (C) of such paragraph
(4).</text>
</clause></subparagraph><subparagraph changed="added" committee-id="HBA00" id="HB039864A0D074D1EA240378DE076B1A9" indent="up1" reported-display-style="italic"><enum>(B)</enum><text>It shall be
unlawful—</text>
<clause id="H32EC6B096A2B4545AEEFBC9E7DF28F66"><enum>(i)</enum><text>for any person as to whom
an order under subparagraph (A) is in effect, without the consent of the
Commission, willfully to become, or to be, associated with a municipal
financial adviser in contravention of such order; or</text>
</clause><clause id="HD96FB35116E64028A58E3925C969C18C"><enum>(ii)</enum><text>for any municipal
financial adviser to permit such a person, without the consent of the
Commission, to become or remain, a person associated with the municipal
financial adviser in contravention of such order, if such municipal financial
adviser knew, or in the exercise of reasonable care should have known, of such
order.</text>
</clause></subparagraph></paragraph><paragraph changed="added" committee-id="HBA00" id="H6A0252AE2C1E4395A7FF575F9CDB0DBF" indent="up1" reported-display-style="italic"><enum>(7)</enum><text>No registered municipal
financial adviser shall act as such unless it meets such standards of
operational capability and such municipal financial adviser and all natural
persons associated with such municipal financial adviser meet such standards of
training, experience, competence, and such other qualifications as the
Commission finds necessary or appropriate in the public interest or for the
protection of investors. The Commission shall establish such standards by rules
and regulations, which may—</text>
<subparagraph id="H118431B46E354750BD3A32F5800933D0"><enum>(A)</enum><text>specify that all or any
portion of such standards shall be applicable to any class of municipal
financial advisers and persons associated with municipal financial
advisers;</text>
</subparagraph><subparagraph id="H37AA7DA63B6C4419ACA1AD5475AAC676"><enum>(B)</enum><text>require persons in any
such class to pass tests prescribed in accordance with such rules and
regulations, which tests shall, with respect to any class of partners,
officers, or supervisory employees (which latter term may be defined by the
Commission’s rules and regulations) engaged in the management of the municipal
financial adviser, include questions relating to bookkeeping, accounting,
supervision of employees, maintenance of records, and other appropriate
matters; and</text>
</subparagraph><subparagraph id="H08FE06170DAE4EB5BEA6627CE8CB6495"><enum>(C)</enum><text>provide that persons in
any such class other than municipal financial advisers and partners, officers,
and supervisory employees of municipal financial advisers, may be qualified
solely on the basis of compliance with such standards of training and such
other qualifications as the Commission finds appropriate.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">The
Commission, by rule, may prescribe reasonable fees and charges to defray its
costs in carrying out this paragraph, including, but not limited to, fees for
any test administered by it or under its direction.</continuation-text></paragraph></subsection><subsection id="H024367DED8C24EC8B4DE3D96D91FB179"><enum>(c)</enum><paragraph commented="no" display-inline="yes-display-inline" id="H5ECA634AB748491D9FCF000EE4C7FBBE"><enum>(1)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="H3A52F7EF959D4D82AA8F92EC801F04C5"><enum>(A)</enum><text>No municipal financial
adviser shall make use of the mails or any means or instrumentality of
interstate commerce in connection with which such municipal financial adviser
engages in any fraudulent, deceptive, or manipulative act or practice or
violates such rules and regulations regarding conflicts of interest or fair
practices, including but not limited to rules and regulations related to
political contributions, as the Commission shall prescribe in the public
interest or for the protection of investors or to maintain fair and orderly
markets.</text>
</subparagraph><subparagraph changed="added" committee-id="HBA00" id="HE55B1A6E9DF340A89F3ECBBF2DE9C711" indent="up2" reported-display-style="italic"><enum>(B)</enum><text>The Commission shall, for
the purposes of this paragraph as the Commission finds necessary or appropriate
in the public interest or for the protection of investors, by rules and
regulations define, and prescribe means reasonably designed to prevent, such
acts and practices as are fraudulent, deceptive, or manipulative.</text>
</subparagraph></paragraph><paragraph changed="added" committee-id="HBA00" id="HBEDB45DD44D840AEB4D970C879C963C4" indent="up1" reported-display-style="italic"><enum>(2)</enum><text>If the Commission finds,
after notice and opportunity for a hearing, that any person subject to the
provisions of this section or any rule or regulation thereunder has failed to
comply with any such provision, rule, or regulation in any material respect,
the Commission may publish its findings and issue an order requiring such
person, and any person who was a cause of the failure to comply due to an act
or omission the person knew or should have known would contribute to the
failure to comply, to comply, or to take steps to effect compliance, with such
provision or such rule or regulation thereunder upon such terms and conditions
and within such time as the Commission may specify in such order.</text>
</paragraph></subsection><subsection id="H441DCA1F704345A982356770DF0F8DCA"><enum>(d)</enum><text>Every registered
municipal financial adviser shall establish, maintain, and enforce written
policies and procedures reasonably designed, taking into consideration the
nature of such municipal financial adviser’s business, to prevent the misuse in
violation of this title, or the rules or regulations thereunder, of material,
nonpublic information by such municipal financial adviser or any person
associated with such municipal financial adviser. The Commission, as it deems
necessary or appropriate in the public interest or for the protection of
investors, shall adopt rules or regulations to require specific policies or
procedures reasonably designed to prevent misuse in violation of this title (or
the rules or regulations thereunder) of material, nonpublic information.</text>
</subsection><subsection id="HBB38781C111242419635DEC13EAB6ADC"><enum>(e)</enum><text>A municipal financial
adviser and any person associated with such municipal financial adviser shall
be deemed to have a fiduciary duty to any municipal securities issuer for whom
such municipal financial adviser acts as a municipal financial adviser. A
municipal financial adviser may not engage in any act, practice, or course of
business which is not consistent with a municipal financial adviser’s fiduciary
duty. The Commission shall, for the purposes of this paragraph, by rules and
regulations define, and prescribe means reasonably designed to prevent, such
acts, practices, and courses of business as are not consistent with a municipal
financial adviser’s fiduciary duty to its
clients.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H326D549FC1F244F78E36E52E4AC4064E"><enum>(b)</enum><header>Definition</header><text>Section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by
adding at the end the following new paragraphs:</text>
<quoted-block changed="added" committee-id="HBA00" id="H8FA99FA55981477286DB6EA6A3E6A4F9" reported-display-style="italic" style="OLC">
<paragraph id="HD6951F6E3EC9473483205A53902E1E16"><enum>(65)</enum><header>Municipal financial
adviser</header>
<subparagraph id="HA315BFAC156F4389B05CEED0316E366E"><enum>(A)</enum><text>The term <quote>municipal
financial adviser</quote> means a person who, for compensation, engages in the
business of—</text>
<clause id="HA33DA6D8A327465AB9BD383EB1283254"><enum>(i)</enum><text>providing advice to a
municipal securities issuer with respect to—</text>
<subclause id="HED3EDF1F7151473A87DD4767BE0C2272"><enum>(I)</enum><text>the issuance or proposed
issuance of securities, including any remarketing of municipal securities
directly or indirectly by or on behalf of a municipal securities issuer;</text>
</subclause><subclause id="HB60822D818774835A0F40F7F24E9A91D"><enum>(II)</enum><text>the investment of
proceeds from securities issued by such municipal securities issuer;</text>
</subclause><subclause id="H20E28A429C944138910311D875AAB2BD"><enum>(III)</enum><text>the hedging of any
risks associated with subclauses (I) or (II), including advice as to swap
agreements (as defined in section 206A of the Gramm-Leach-Bliley Act regardless
of whether the counterparties constitute eligible contract participants);
or</text>
</subclause><subclause id="H17D7166B8AC8490E8329D6D6AA1CA6E8"><enum>(IV)</enum><text display-inline="yes-display-inline">preparation of disclosure documents in
connection with the issuance, proposed issuance, or previous issuance of
securities issued by a municipal securities issuer, including, without
limitation, official statements and documents prepared in connection with a
written agreement or contract for the benefit of holders of such securities
described in section 240.15c2–12 of title 17, Code of Federal
Regulations;</text>
</subclause></clause><clause id="HDD6E5103F87F4660B0CFD37B158F55F7"><enum>(ii)</enum><text>assisting a municipal
securities issuer in selecting or negotiating guaranteed investment contracts
or other investment products; or</text>
</clause><clause id="HF2F38B34943543DB94EC2EDDF8A37E8C"><enum>(iii)</enum><text>assisting any municipal
securities issuer in the primary offering of securities not involving a public
offering.</text>
</clause></subparagraph><subparagraph id="H6A9F898C9AF04271AE94DDA4C1413D6E"><enum>(B)</enum><text>Such term does not
include—</text>
<clause id="H2B9BC38131194681A486485EA497B45D"><enum>(i)</enum><text>an attorney, if the
attorney is offering advice or providing services that are of a traditional
legal nature;</text>
</clause><clause id="H48327ABC52664BBBAEC8031A6D65E1DE"><enum>(ii)</enum><text>a nationally recognized
statistical rating organization to the extent it is involved in the process of
developing credit ratings;</text>
</clause><clause id="H355FC7F744F74A1690784B2563C7C894"><enum>(iii)</enum><text>a registered
broker-dealer when acting as an underwriter, as such term is defined in section
2(a)(11) of the Securities Act of 1933 (15 U.S.C. section 77b(a)(11));
or</text>
</clause><clause id="H6F701E761C4E4F048B5285192A6B5D19"><enum>(iv)</enum><text>a State or any political
subdivision thereof.</text>
</clause></subparagraph></paragraph><paragraph id="H9DCF1D1B004A469F9BC1CC230F484738"><enum>(66)</enum><header>Municipal securities
issuer</header><text>The term <quote>municipal securities issuer</quote>
means—</text>
<subparagraph id="H26E70D7D14D94E2EAC4692D93D582301"><enum>(A)</enum><text>any entity that has the
ability to issue a security the interest on which is excludable from gross
income under section 103 of the Internal Revenue Code of 1986 and the
regulations thereunder; or</text>
</subparagraph><subparagraph id="H1EACC01E007E4995A916FD7CBD58B1E8"><enum>(B)</enum><text>any person who receives
the proceeds generated from the issuance of municipal securities.</text>
</subparagraph></paragraph><paragraph id="H62E572D7C9F2419891DFD16C3D1E7DDA"><enum>(67)</enum><header>Person associated with
a municipal financial adviser; associated person of a municipal financial
adviser</header><text>The term <quote>person associated with a municipal
financial adviser</quote> or <quote>associated person of a municipal financial
adviser</quote> means any partner, officer, director, or branch manager of such
municipal financial adviser (or any person occupying a similar status or
performing similar functions), any person directly or indirectly controlling,
controlled by, or under common control with such municipal financial adviser,
or any employee of such municipal financial adviser, except that any person
associated with a municipal financial adviser whose functions are solely
clerical or ministerial shall not be included in the meaning of such term for
purposes of section 15F(b) (other than paragraph (6)
thereof).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section commented="no" id="H2A8D32B553744D76AEBD098D98B96540"><enum>802.</enum><header>Conforming
amendments</header>
<subsection id="HC27646A3E1C3476A99E12D91374B2E33"><enum>(a)</enum><header>Securities Exchange Act
of 1934 </header><text>The Securities Exchange Act of 1934 is amended—</text>
<paragraph id="HD6C05F549F6542BFBAF75EDF6DEAA8BB"><enum>(1)</enum><text>in section
15(b)(4)(B)(ii) (15 U.S.C. 78o(b)(4)(B)(ii)), by inserting <quote>municipal
finance adviser,</quote> after <quote>nationally recognized statistical rating
organization,</quote>;</text>
</paragraph><paragraph id="H5F5410F007C245ED91085AB2975F2340"><enum>(2)</enum><text>in section 15(b)(4)(C)
(15 U.S.C. 78o(b)(4)(C)), by inserting <quote>municipal finance
adviser,</quote> after <quote>nationally recognized statistical rating
organization,</quote>; and</text>
</paragraph><paragraph id="H2B565BE0070945E4936AF3E1F28F742A"><enum>(3)</enum><text>in section 17(a)(1) (15
U.S.C. 78q(a)(1)), by inserting <quote>registered municipal financial
adviser,</quote> after <quote>nationally recognized statistical rating
organization,</quote>.</text>
</paragraph></subsection><subsection commented="no" id="H2EA07AC677954A5099BCFE1685C82DBA"><enum>(b)</enum><header>Investment Company Act
of 1940</header><text display-inline="yes-display-inline">The Investment
Company Act of 1940 is amended—</text>
<paragraph commented="no" id="HFC8CAA7170204CD4B90BC6F9F8E38EBF"><enum>(1)</enum><text>in section 2(a) (15
U.S.C. 80a–2(a)), by inserting at the end the following new paragraph:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HE32336244E6F48039765DD551DE4FE13" reported-display-style="italic" style="OLC">
<paragraph commented="no" id="HE7C94B8199C04E26B392A30C30919313"><enum>(54)</enum><text display-inline="yes-display-inline">The term <quote>municipal finance
adviser</quote> has the same meaning as in section 3 of the Securities Exchange
Act of
1934.</text>
</paragraph><after-quoted-block>;</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" id="H7D6C9688E770469D9F65935DCC296904"><enum>(2)</enum><text>in section 9(a)(1) (15
U.S.C. 80a–9(a)(1)), by inserting <quote>municipal finance adviser,</quote>
after <quote>credit rating agency,</quote>; and</text>
</paragraph><paragraph commented="no" id="H24B8199D38DE4133A1A0C583F569D1DF"><enum>(3)</enum><text>in section 9(a)(2) (15
U.S.C. 80a–9(a)(2)), by inserting <quote>municipal finance adviser,</quote>
after <quote>credit rating agency,</quote>.</text>
</paragraph></subsection><subsection commented="no" id="HD11CB5C453A94C89A6B8949A04DD92E9"><enum>(c)</enum><header>Investment Advisers Act
of 1940</header><text display-inline="yes-display-inline">The Investment
Advisers Act of 1940 is amended—</text>
<paragraph id="HA518B7F1B9004891966EE3659D124BD7"><enum>(1)</enum><text>in section 202(a) (15
U.S.C. 80b–2(a)), by inserting at the end the following new paragraph:</text>
<quoted-block changed="added" committee-id="HBA00" display-inline="no-display-inline" id="HE8AD20778B474A56AFCB33E49D58B83A" reported-display-style="italic" style="OLC">
<paragraph commented="no" id="HEF31B1FCE71340A8A088A06CE5C50010"><enum>(29)</enum><text display-inline="yes-display-inline">The term <quote>municipal finance
adviser</quote> has the same meaning as in section 3 of the Securities Exchange
Act of 1934.</text>
</paragraph><after-quoted-block>;
</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" id="HC08D368FAEC9479D993DDADD92AF0942"><enum>(2)</enum><text>in section 203(e)(2)(B)
(15 U.S.C. 80b–3(e)(2)(B)), by inserting <quote>municipal finance
adviser,</quote> after <quote>credit rating agency,</quote>; and</text>
</paragraph><paragraph commented="no" id="HCE7C6105FCA045AA8268FA6F75471FE1"><enum>(3)</enum><text>in section 203(e)(4) (15
U.S.C. 80b–3(e)(4)) is amended by inserting <quote>municipal finance
adviser,</quote> after <quote>credit rating agency,</quote>.</text>
</paragraph></subsection></section><section id="H4B94D352B69C4EA5AB4636028F75F29C"><enum>803.</enum><header>Effective
dates</header>
<subsection id="H2E5519673AB14A54B0CE9A08C25067B8"><enum>(a)</enum><header>In
general</header><text>The amendments made by this title shall take effect 30
days after the date of the enactment of this Act.</text>
</subsection><subsection id="H40063E84CA504C618242761D4F80FEBD"><enum>(b)</enum><header>Effective date and
requirements for regulations</header><text>Notwithstanding subsection (a), the
Securities and Exchange Commission shall, within 120 days after the date of the
enactment of this Act, publish for notice and public comment such regulations
as are initially required to implement this title, and shall take final action
with respect to such regulations not later than 270 days after the date of
enactment of this Act.</text>
</subsection><subsection id="H23928884EE384126B3957A38F7CC98BC"><enum>(c)</enum><header>Registration
date</header><text>No person may continue to act as a municipal financial
adviser, as such term is defined in section 3(a)(65) of the Securities Exchange
Act of 1934 (as added by this title), after 30 days after the date the
regulations described in subsection (b) become effective unless such person has
been registered as required by the amendment made by section 701 of this
title.</text>
</subsection></section>
December 17, 2010
Committee on the
Judiciary discharged; committed to the Committee of the Whole
House on the State of the Union and ordered to be printed