[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 5140 Introduced in Senate (IS)]

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119th CONGRESS
  2d Session
                                S. 5140

To ensure the fairness, transparency, and consistency of disqualifying 
provisions administered by the Commodity Futures Trading Commission and 
    the Securities and Exchange Commission, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 27, 2026

  Mr. Justice introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
To ensure the fairness, transparency, and consistency of disqualifying 
provisions administered by the Commodity Futures Trading Commission and 
    the Securities and Exchange Commission, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Digital Equities and No Automatic 
Disqualifications Act''.

SEC. 2. RULEMAKING ON DISQUALIFICATIONS.

    (a) No Automatic Effect.--No provision of any statute, rule, or 
regulation described in subsection (c) that provides, upon the 
occurrence of a specified event, for the automatic disqualification 
from, or ineligibility for, any registration, right, or privilege, 
service in any capacity, or membership in a self-regulatory 
organization (referred to in this section as a ``disqualifying 
provision'') shall have effect with respect to any person (other than a 
natural person) unless the Federal agency or self-regulatory 
organization responsible for administering such disqualifying provision 
(referred to in this section as a ``regulatory authority'') makes a 
determination to apply the disqualifying provision with respect to the 
particular matter in accordance with the process established under 
subsection (b).
    (b) Joint Agency Rulemaking.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, the Commodity Futures Trading Commission 
        and the Securities and Exchange Commission shall engage in a 
        joint rulemaking regarding the disqualifying provisions to 
        establish a process for each regulatory authority to determine, 
        prior to the disposition of any applicable matter, whether to 
        apply the relevant disqualifying provision.
            (2) Requirements.--The rules or regulations issued under 
        paragraph (1) shall--
                    (A) provide for consistency across regulatory 
                authorities in the administration of disqualifying 
                provisions;
                    (B) require the party subject to a disqualifying 
                provision to provide to the relevant regulatory 
                authority written notice that the party is subject to 
                the disqualifying provision not later than 30 calendar 
                days after the occurrence of the event specified in the 
                disqualifying provision;
                    (C) provide for a nonpublic process, as appropriate 
                to protect confidentiality, in cases in which a 
                regulatory action that would trigger a disqualifying 
                provision has not yet been made public;
                    (D) provide that an event may not result in the 
                application of a disqualifying provision to a person 
                (other than a natural person) unless that application, 
                in whole or in part, to that person is necessary and 
                appropriate in the public interest and for the 
                protection of investors;
                    (E) take into consideration applicable mitigating 
                factors;
                    (F) provide that a disqualifying provision may be 
                determined to apply only if the event triggering the 
                disqualifying provision occurred in the same legal 
                entity that would become subject to the application of 
                the disqualifying provision and relates to the conduct 
                of the business line that is directly affected by the 
                disqualifying provision; and
                    (G) balance the scope of the rules or regulations 
                with ensuring adequate investor protections and 
                safeguards.
    (c) Provisions Described.--The provisions referred to in subsection 
(a) are--
            (1) the Commodity Exchange Act (7 U.S.C. 1 et seq.);
            (2) the Securities Act of 1933 (15 U.S.C. 77a et seq.);
            (3) the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
        seq.);
            (4) the Investment Company Act of 1940 (15 U.S.C. 80a-1 et 
        seq.);
            (5) the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et 
        seq.);
            (6) any rule or regulation issued under any provision of 
        law described in paragraphs (1) through (5); and
            (7) any rule of a self-regulatory organization issued under 
        the authority of a provision, rule, or regulation described in 
        paragraphs (1) through (6).
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