[Congressional Record (Bound Edition), Volume 154 (2008), Part 13]
[House]
[Pages 18188-18195]
[From the U.S. Government Publishing Office, www.gpo.gov]




                         SECURITIES ACT OF 2008

  Mr. KANJORSKI. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 6513) to amend the Federal securities laws to enhance the 
effectiveness of the Securities and Exchange Commission's enforcement, 
corporation finance, trading and markets, investment management, and 
examination programs, and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 6513

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Securities 
     Act of 2008''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

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

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

       (a) Under the Securities Act of 1933.--Section 8A of the 
     Securities Act of 1933 (15 U.S.C. 77h-1) is amended by adding 
     at the end the following new subsection:
       ``(g) Authority to Impose Money Penalties.--
       ``(1) Grounds for imposing.--In any cease-and-desist 
     proceeding under subsection (a), the Commission may impose a 
     civil penalty on a person if it finds, on the record after 
     notice and opportunity for hearing, that--
       ``(A) such person--
       ``(i) is violating or has violated any provision of this 
     title, or any rule or regulation thereunder; or
       ``(ii) is or was a cause of the violation of any provision 
     of this title, or any rule or regulation thereunder; and

[[Page 18189]]

       ``(B) such penalty is in the public interest.
       ``(2) Maximum amount of penalty.--
       ``(A) First tier.--The maximum amount of penalty for each 
     act or omission described in paragraph (1) shall be $6,500 
     for a natural person or $65,000 for any other person.
       ``(B) Second tier.--Notwithstanding paragraph (A), the 
     maximum amount of penalty for each such act or omission shall 
     be $65,000 for a natural person or $325,000 for any other 
     person if the act or omission described in paragraph (1) 
     involved fraud, deceit, manipulation, or deliberate or 
     reckless disregard of a regulatory requirement.
       ``(C) Third tier.--Notwithstanding paragraphs (A) and (B), 
     the maximum amount of penalty for each such act or omission 
     shall be $130,000 for a natural person or $650,000 for any 
     other person if--
       ``(i) the act or omission described in paragraph (1) 
     involved fraud, deceit, manipulation, or deliberate or 
     reckless disregard of a regulatory requirement; and
       ``(ii) such act or omission directly or indirectly resulted 
     in substantial losses or created a significant risk of 
     substantial losses to other persons or resulted in 
     substantial pecuniary gain to the person who committed the 
     act or omission.
       ``(3) Evidence concerning ability to pay.--In any 
     proceeding in which the Commission may impose a penalty under 
     this section, a respondent may present evidence of the 
     respondent's ability to pay such penalty. The Commission may, 
     in its discretion, consider such evidence in determining 
     whether such penalty is in the public interest. Such evidence 
     may relate to the extent of such person's ability to continue 
     in business and the collectability of a penalty, taking into 
     account any other claims of the United States or third 
     parties upon such person's assets and the amount of such 
     person's assets.''.
       (b) Under the Securities Exchange Act of 1934.--Subsection 
     (a) of section 21B of the Securities Exchange Act of 1934 (15 
     U.S.C. 78u-2(a)) is amended--
       (1) by striking ``(a) Commission Authority to Assess Money 
     Penalties.--In any proceeding'' and inserting the following:
       ``(a) Commission Authority to Assess Money Penalties.--
       ``(1) In general.--In any proceeding'';
       (2) by redesignating paragraphs (1) through (4) of such 
     subsection as subparagraphs (A) through (D), respectively and 
     moving such redesignated subparagraphs and the matter 
     following such subparagraphs 2 ems to the right; and
       (3) by adding at the end of such subsection the following 
     new paragraph:
       ``(2) Cease-and-desist proceedings.--In any proceeding 
     instituted pursuant to section 21C of this title against any 
     person, the Commission may impose a civil penalty if it 
     finds, on the record after notice and opportunity for 
     hearing, that such person--
       ``(A) is violating or has violated any provision of this 
     title, or any rule or regulation thereunder; or
       ``(B) is or was a cause of the violation of any provision 
     of this title, or any rule or regulation thereunder.''.
       (c) Under the Investment Company Act of 1940.--Paragraph 
     (1) of section 9(d) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-9(d)(1))) is amended--
       (1) by striking ``(1) Authority of commission.--In any 
     proceeding'' and inserting the following:
       ``(1) Authority of commission.--
       ``(A) In general.--In any proceeding'';
       (2) by redesignating subparagraphs (A) through (C) of such 
     paragraph as clauses (i) through (iii), respectively and by 
     moving such redesignated clauses and the matter following 
     such subparagraphs 2 ems to the right; and
       (3) by adding at the end of such paragraph the following 
     new subparagraph:
       ``(B) Cease-and-desist proceedings.--In any proceeding 
     instituted pursuant to subsection (f) against any person, the 
     Commission may impose a civil penalty if it finds, on the 
     record after notice and opportunity for hearing, that such 
     person--
       ``(i) is violating or has violated any provision of this 
     title, or any rule or regulation thereunder; or
       ``(ii) is or was a cause of the violation of any provision 
     of this title, or any rule or regulation thereunder.''.
       (d) Under the Investment Advisers Act of 1940.--Paragraph 
     (1) of section 203(i) of the Investment Advisers Act of 1940 
     (15 U.S.C. 80b-3(i)(1)) is amended
       (1) by striking ``(1) Authority of commission.--In any 
     proceeding'' and inserting the following:
       ``(1) Authority of commission.--
       ``(A) In general.--In any proceeding'';
       (2) by redesignating subparagraphs (A) through (D) of such 
     paragraph as clauses (i) through (iv), respectively and 
     moving such redesignated clauses and the matter following 
     such subparagraphs 2 ems to the right; and
       (3) by adding at the end of such paragraph the following 
     new subparagraph:
       ``(B) Cease-and-desist proceedings.--In any proceeding 
     instituted pursuant to subsection (k) against any person, the 
     Commission may impose a civil penalty if it finds, on the 
     record after notice and opportunity for hearing, that such 
     person--
       ``(i) is violating or has violated any provision of this 
     title, or any rule or regulation thereunder; or
       ``(ii) is or was a cause of the violation of any provision 
     of this title, or any rule or regulation thereunder.''.

     SEC. 3. FORMERLY ASSOCIATED PERSONS.

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

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

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

     SEC. 5. COVERED SECURITIES.

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

     SEC. 6. COLLATERAL BARS.

       (a) Section 15(b)(6)(A) of the Securities Exchange Act of 
     1934.--Section 15(b)(6)(A) of

[[Page 18190]]

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

     SEC. 7. UNLAWFUL MARGIN LENDING.

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

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

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

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

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

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

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

     SEC. 11. LOST AND STOLEN SECURITIES.

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

     SEC. 12. FINGERPRINTING.

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

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

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

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

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

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

       (a) Securities Exchange Act of 1934.--Section 17(j) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78q(j)) is amended 
     to read as follows:
       ``(j) Authority to Limit Disclosure of Information.--
     Notwithstanding any other provision of law, the Commission 
     shall not be compelled to disclose any information, 
     documents, records, or reports that relate to an

[[Page 18191]]

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

     SEC. 16. SHARING PRIVILEGED INFORMATION WITH OTHER 
                   AUTHORITIES.

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

     SEC. 17. TECHNICAL CORRECTIONS.

       (a) Securities Act of 1933.--The Securities Act of 1933 (15 
     U.S.C. 77a et seq.) is amended--
       (1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by striking 
     ``individual;'' and inserting ``individual,'';
       (2) in section 18(b)(1)(C) (15 U.S.C. 77r(b)(1)(C)), by 
     striking ``is a security'' and inserting ``a security'';
       (3) in section 18(c)(2)(B)(i) (15 U.S.C. 77r(c)(2)(B)(i)), 
     by striking ``State, or'' and inserting ``State or'';
       (4) in section 19(d)(6)(A) (15 U.S.C. 77s(d)(6)(A)), by 
     striking ``in paragraph (1) of (3)'' and inserting ``in 
     paragraph (1) or (3)''; and
       (5) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z-
     2(c)(1)(B)(ii)), by striking ``business entity;'' and 
     inserting ``business entity,''.
       (b) Securities Exchange Act of 1934.--The Securities 
     Exchange Act of 1934 (15 U.S.C. 78 et seq.) is amended--
       (1) in section 2(1)(a) (15 U.S.C. 78b(1)(a)), by striking 
     ``affected'' and inserting ``effected'';
       (2) in section 3(a)(55)(A) (15 U.S.C. 78c(a)(55)(A)), by 
     striking ``section 3(a)(12) of the Securities Exchange Act of 
     1934'' and inserting ``section 3(a)(12) of this Act'';
       (3) in section 3(g) (15 U.S.C. 78c(g)), by striking 
     ``company, account person, or entity'' and inserting 
     ``company, account, person, or entity'';
       (4) in section 10A(i)(1)(B)(i) (15 U.S.C. 78j-
     1(i)(1)(B)(i)), by striking ``nonaudit'' and inserting ``non-
     audit'';
       (5) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by striking 
     ``earning statement'' and inserting ``earnings statement'';
       (6) in section 15(b)(1) (15 U.S.C. 78o(b)(1))--
       (A) by striking the sentence beginning ``The order 
     granting'' and ending ``from such membership.'' in 
     subparagraph (B); and
       (B) by inserting such sentence in the matter following such 
     subparagraph after ``are satisfied.'';
       (7) in section 15 (15 U.S.C. 78o), by redesignating 
     subsection (i), as added by section 303(f) of the Commodity 
     Futures Modernization Act of 2000 (114 Stat. 2763A-455), as 
     subsection (j);
       (8) in section 15C(a)(2) (15 U.S.C. 78o-5(a)(2))--
       (A) by redesignating clauses (i) and (ii) as subparagraphs 
     (A) and (B), respectively;
       (B) by striking the sentence beginning ``The order 
     granting'' and ending ``from such membership.'' in such 
     subparagraph (B), as redesignated; and
       (C) by inserting such sentence in the matter following such 
     redesignated subparagraph after ``are satisfied.'';
       (9) in section 16(a)(2)(C) (15 U.S.C. 78p(a)(2)(C)), by 
     striking ``section 206(b)'' and inserting ``section 206B'';
       (10) in section 17(b)(1)(B) (15 U.S.C. 78q(b)(1)(B)), by 
     striking ``15A(k) gives'' and inserting ``15A(k), give''; and
       (11) in section 21C(c)(2) (15 U.S.C. 78u-3(c)(2)), by 
     striking ``paragraph (1) subsection'' and inserting 
     ``Paragraph (1)''.
       (c) Trust Indenture Act of 1939.--The Trust Indenture Act 
     of 1939 (15 U.S.C. 77aaa et seq.) is amended--
       (1) in section 304(b) (15 U.S.C. 77ddd(b)), by striking 
     ``section 2 of such Act'' and inserting ``section 2(a) of 
     such Act'';
       (2) in section 313(a)(4) (15 U.S.C. 77mmm(a)(4)) by 
     striking ``subsection 311'' and inserting ``section 311(b)''; 
     and
       (3) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), by 
     striking ``(1),'' and inserting ``(1)''.
       (d) Investment Company Act of 1940.--The Investment Company 
     Act of 1940 (15 U.S.C. 80a-1 et seq.) is amended--
       (1) in section 2(a)(19) (15 U.S.C. 80a-2(a)(19)) by 
     striking ``clause (vi)'' both places it appears in the last 
     two sentences and inserting ``clause (vii)'';

[[Page 18192]]

       (2) in section 9(b)(4)(B) (15 U.S.C. 80a-9(b)(4)(B)), by 
     inserting ``or'' after the semicolon at the end;
       (3) in section 12(d)(1)(J) (15 U.S.C. 80a-12(d)(1)(J)), by 
     striking ``any provision of this subsection'' and inserting 
     ``any provision of this paragraph'';
       (4) in section 13(a)(3) (15 U.S.C. 80a-13(a)(3)), by 
     inserting ``or'' after the semicolon at the end;
       (5) in section 17(f)(4) (15 U.S.C. 80a-17(f)(4)), by 
     striking ``No such member'' and inserting ``No member of a 
     national securities exchange'';
       (6) in section 17(f)(6) (15 U.S.C. 80a-17(f)(6)), by 
     striking ``company may serve'' and inserting ``company, may 
     serve''; and
       (7) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a-
     60(a)(3)(B)(iii))--
       (A) by striking ``paragraph (1) of section 205'' and 
     inserting ``section 205(a)(1)''; and
       (B) by striking ``clause (A) or (B) of that section'' and 
     inserting ``section 205(b)(1) or (2)''.
       (e) Investment Advisers Act of 1940.--The Investment 
     Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is amended--
       (1) in each of the following sections, by striking 
     ``principal business office'' or ``principal place of 
     business'' (whichever and wherever it appears) and inserting 
     ``principal office and place of business'': sections 
     203(c)(1)(A), 203(k)(4)(B), 213(a), 222(b), and 222(c) (15 
     U.S.C. 80b-3(c)(1)(A), 80b-3(k)(4)(B), 80b-13(a), 80b-18a(b), 
     and 80b-18a(c)); and
       (2) in section 206(3) (15 U.S.C. 80b-6(3)), by inserting 
     ``or'' after the semicolon at the end.

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

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

     SEC. 19. NATIONWIDE SERVICE OF SUBPOENAS.

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

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Pennsylvania (Mr. Kanjorski) and the gentlewoman from Ohio (Ms. Pryce) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Pennsylvania.


                             General Leave

  Mr. KANJORSKI. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks on this legislation and insert extraneous material thereon.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Pennsylvania?
  There was no objection.
  Mr. KANJORSKI. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise today in support of H.R. 6513, the Securities Act 
of 2008.
  This commonsense legislation enjoys broad bipartisan support. H.R. 
6513 will also better protect investors, promote greater confidence in 
our capital markets at a crucial time, as investor anxieties persist 
because of this ongoing financial turmoil.
  Additionally, H.R. 6513 increases the effectiveness of the Securities 
and Exchange Commission by strengthening its enforcement authority.
  The current economic woes have once again highlighted the need for 
the Congress to vest regulators with the authority they need to keep 
markets balanced and their participants honest. The Securities Act of 
2008 thus provides the commission with many of the important regulatory 
tools that it has sought as part of its annual authorization requests 
in recent years.
  In particular, the commission's enforcement program will benefit 
greatly from the provisions authorizing the nationwide service of 
subpoenas and the imposition of collateral bars. These provisions 
respectively will allow the commission to allocate its funds more 
efficiently and prevent bad actors from re-entering other parts of the 
industry.

[[Page 18193]]

  Securities Exchange Chairman Cox has expressed a letter of his 
support for this legislation to implement the commission's 
recommendations. Chairman Cox has also commended the Financial Services 
Committee's bipartisan leadership in developing this bill. The North 
American Securities Administrators Association has also endorsed this 
bill by noting that now is the time to strengthen securities 
regulation, given what has happened on Wall Street in recent years.
  In addition to updating the Federal securities laws by making 
numerous technical corrections, this bill improves investor protection 
in at least three other ways.
  First, it provides greater clarity about the commission's authority 
to impose sanctions on and seek remedies from individuals who violated 
the law but who are no longer associated with a regulated entity.
  Second, the bill conforms the language of the law to existing 
interpretations about when unlawful margin lending occurs.
  Third, this bill helps investors by extending the insurance provided 
by the Securities Investor Protection Corporation to securities futures 
held within their portfolio. As a result, this bill enhances the 
competitiveness of the U.S. markets by advancing portfolio-based 
margining for the customers of broker-dealers.
  Capital flows to the most efficient markets, and because most 
financially developed countries allow this risk-based, investor 
protection hedging practice, the U.S. equity markets simply must keep 
pace to compete in today's global economy by allowing it as well.
  As per my earlier unanimous consent request, I am inserting in the 
Congressional Record a more detailed statement about these three 
important investor protection measures in order to provide greater 
legislative history on them.
  Before closing, I should note that previously the House has 
unanimously passed during the 110th Congress several of the provisions 
contained in this larger reform package. Moreover, this bill has strong 
bipartisan support, and my colleagues on both sides of the aisle 
therefore deserve tremendous credit for working together on this 
legislation. In particular, the gentleman from New York (Mr. Meeks), 
the gentleman from Illinois (Mr. Roskam), the gentleman from Kentucky 
(Mr. Davis), and the gentleman from California (Mr. Campbell) have 
worked diligently on many of these provisions in this bill. I 
appreciate their prior efforts and their support as cosponsors of this 
larger legislative package.
  The chairman, Mr. Frank, and the ranking member, Mr. Bachus, of the 
Financial Services Committee, in addition to my ranking member (Ms. 
Pryce) on the Capital Markets Subcommittee all support this bill.

                              {time}  1430

  Our cooperative effort on this bill illustrates that good policy can 
emerge from this body when ideology and partisanship yield to 
practicality and the common good.
  I would just like to comment that that sentence represents the 
career, to some extent, of Ms. Pryce. Ms. Pryce is joining us on the 
floor today, possibly for the last time in her congressional career. 
She has been my chairman and my ranking member as my career through 
Congress has occurred. Deborah knows that when I first heard of her 
intentions to retire, I was greatly saddened, because this body will be 
losing an individual on either side of the aisle who has been most 
cooperative, most nonpartisan, and most productive as a legislator of 
anyone I can remember in my years here in this body.
  I wish her well in her retirement. I know it will only be a 
retirement in terms of leaving the Congress, not leaving active, 
productive, and contributing life in another form in Ohio or somewhere 
else. But we will miss you on the committee, on the subcommittee, and 
in this Congress, Ms. Pryce.
  In sum, I urge all my colleagues to vote ``yes'' on H.R. 6513.
  Mr. Speaker, I rise today to express further support for the 
Securities Act of 2008, to explain why this legislation confirms 
certain existing authorities of the Securities and Exchange Commission, 
and to provide for the legislative history some background on the facts 
that informed the drafting of this bill.
  In regard to section 3 on Formerly Associated Persons in H.R. 6513, 
many provisions of the Federal securities laws that authorize the 
sanctioning of a person who engages in misconduct while associated with 
a regulated or supervised entity explicitly provide that such authority 
exists even if the person is no longer associated with that entity.
  Several provisions, however, do not explicitly address this issue, 
although the intent of earlier Congresses appears to have been that the 
Securities and Exchange Commission had such authority, and no contrary 
statutory language or legislative history exists. In fact, the Congress 
has earlier amended several statutory provisions to ratify and confirm 
the authority of the Commission to discipline a person formerly 
associated with a regulated entity for conduct while an associated 
person, but it did not express intent to provide such authority only 
for those provisions being amended.
  To build on these previous efforts, section 3 of H.R. 6513 amends 
additional provisions of the securities laws that do not explicitly 
address this issue. These changes confirm that the Commission may 
sanction or discipline persons who engage in misconduct while 
associated with a regulated or supervised entity, even if they are no 
longer associated with that entity. Accordingly, the amendments would 
not alter or expand the Commission's current authority. They would only 
ratify and confirm it.
  As a general rule, it is the intent of the Congress that the 
securities laws, including but not limited to those provisions amended 
by this section, apply to and provide meaningful remedies for 
sanctioning persons who engage in misconduct while associated with a 
regulated or supervised entity, even if the person is no longer 
associated with that entity.
  Also, the Capital Markets Efficiency Act of 1996 inter alia exempted 
from Federal margin requirements, adopted under section 7 of the 
Securities Exchange Act of 1934, credit extended, maintained, or 
arranged to or for a member of a national securities exchange or 
registered broker-dealer under certain circumstances. In the portion of 
section 7 that was not substantively amended by the Capital Markets 
Efficiency Act, the word ``and'' was inserted, which could be read to 
mean that margin lending would be unlawful only if both elements of the 
pre-existing prohibitions were violated, when prior to the Capital 
Markets Efficiency Act violation of either prong was sufficient to make 
such margin lending unlawful.
  Specifically, the first prong, section 7(c)(1)(A), states that margin 
lending is unlawful if done in contravention of the Federal Reserve 
Board's rules, and the second prong, section 7(c)(1)(B), states that 
margin lending is unlawful without collateral or on any collateral 
other than securities, except in accordance with the Federal Reserve 
Board's rules. The proposed change would clarify that a violation of 
either prong remains sufficient to establish a cause of action for 
improper margin lending. This technical drafting amendment contained in 
section 7 of H.R. 6513 conforms the statutory language of section 7 of 
the Exchange Act to existing interpretations that provide that the two 
clauses represent independent requirements.
  Additionally, section 8 of H.R. 6513 would amend the Securities 
Investor Protection Act of 1970 to extend Securities Investor 
Protection Corporation insurance to futures positions held in a 
portfolio margining account under a program approved by the Commission. 
In paragraph (b)(2)(B)(iii) of this section, the word ``such'' refers 
to those securities positions described in paragraphs (b)(2)(A) and 
(b)(2)(B)(ii). The purpose of paragraph (b)(2)(B)(iii) is to extend 
protection to any person who has a claim against the debtor arising out 
of sales or conversions of securities described in either paragraph. 
Any claims for security futures under this section are claims for cash 
and not for a ``security.'' In addition, ``security futures contract'' 
as used in this section has the same meaning as ``security future'' as 
defined in 15 USC 78111 (14).
  With this additional legislative history in mind, I will vote for 
this bill. I urge my colleagues to do the same.
  I reserve the balance of my time.
  Ms. PRYCE of Ohio. I yield myself such time as I may consume.
  Please let me begin by thanking my chairman for those very, very 
kind, overly kind remarks. I will miss working with him and on this 
committee. It has been a wonderful experience for me, and working in a 
bipartisan, nonpartisan way with Chairman Kanjorski and others on the 
committee has been an experience that I will always value. So, thank 
you, sir.

[[Page 18194]]

  Mr. Speaker, I rise in support of H.R. 6513, the Securities Act of 
2008. This legislation before us today is a commonsense, bipartisan 
bill developed by Chairman Kanjorski, Chairman Frank, Ranking Member 
Bachus, and myself.
  The bill enhances investor protection, capital market 
competitiveness, makes the SEC a more effective agency, and the 
legislation makes our regulation and standards setter, the SEC, more 
accountable to the capital markets.
  H.R. 6513 would enact components of the Securities and Exchange 
Commission's legislative requests submitted to Congress in both 2007 
and 2008. The bill also amends the Securities Investor Protection Act, 
or SIPA, to allow investors to hold all equity-related positions in a 
single portfolio margin account. The SIPA amendment creates a clear 
pathway for regulators to follow in order to realize the state-of-the-
art portfolio-based margining system for customers of broker-dealers.
  The SIPA amendment would enhance the competitiveness of U.S. markets 
and eliminate inefficiencies in our current regulatory regime that put 
U.S. firms and customers at a competitive disadvantage internationally.
  Mr. Speaker, this bill also includes bills passed by the House last 
year under suspension, including H.R. 755, introduced by Representative 
Geoff Davis, benefiting investors by increasing the usability of 
financial reports and ensuring that financial regulators are committed 
to meaningful and clear disclosures; H.R. 2868, by Representatives 
Meeks and Fossella, allowing U.S. exchanges to create listing tiers for 
smaller companies. This is a welcome tool to promote our capital 
markets as well as attract and retain investment capital in the United 
States. And H.R. 3505, by Representative Peter Roskam, which makes 
technical corrections to the Federal securities laws, making sure our 
securities laws are unambiguous, grammatically correct, and current.
  The SEC endorsed this legislation, as did the North American 
Securities Administrators Association and a large coalition of U.S. 
exchanges. In this time of tumult in our marketplaces in this country 
and elsewhere, it is appropriate legislation.
  In closing, Mr. Speaker, I want to thank Kevin Edgar, Todd Harper, 
and Jason Pitcock from the Capital Market Subcommittee staff; Peter 
Roberson, Deborah Silberman, and Lawranne Stewart from Chairman Frank's 
staff for all their hard work on this legislation, as well as Peter 
Freeman from my staff.
  I urge my colleagues to support the Securities Act of 2008. I thank 
the chairman once again for his kind words.
  I yield back the balance of my time.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in support of H.R. 
6513, the Securities Act of 2008 by my colleague from Pennsylvania, 
Congressman Paul Kanjorski and the Financial Services for their work in 
this important area.
  Ensuring our markets are functioning properly at a time when we are 
approaching a recession should be a priority for us all. Many of the 
provisions in H.R. 6513, were recommended to the committee by the 
Securities and Exchange Commission (SEC) and that the act has the 
support of the SEC and State securities regulators.
  The unanimous and bipartisan passage of H.R. 6513 in committee 
acknowledges that we must act now to protect our Nation's financial 
future.


                  BACKGROUND AND BREAKDOWN ON THE BILL

  This act would amend numerous provisions within the Securities Act of 
1933, the Securities Exchange Act of 1934, the Investment Company Act 
of 1940, and the Investment Advisers Act of 1940. The changes 
potentially affect not only securities firms, but also public companies 
and anyone else subject to the Federal securities laws.

Penalties in cease and desist proceedings

  Section 8A of the Securities Act would be amended by adding a new 
provision that would provide the SEC with the authority to impose civil 
money penalties in cease and desist proceedings before an SEC 
administrative law judge, against anyone alleged to have violated the 
act.
  It also sets out a method by which a respondent subject to the 
penalty provisions may offer evidence on his or her ability to pay such 
fines and the impact of such fines on his or her ability to continue in 
business. The proposed provision contains tiers for the penalties as 
follows:
  First Tier: Establishes a maximum penalty of $6,500 for each 
violative act or omission committed by any natural period, and a 
$65,000 cap for each violative act or omission committed by any other 
person, that constitutes a violation of the Securities Act or any 
regulation.
  Second Tier: increases the maximum penalties to $65,000 for natural 
persons and $325,000 for all other persons for each act or omission 
that involves fraud, deceit, manipulation, or deliberate or reckless 
disregard of a regulatory requirement.
  Third Tier: Sets a maximum penalty of $130,000 for a natural person 
or $650,000 for all other persons if the act or omission involves 
fraud, deceit, manipulation, or deliberate or reckless disregard of a 
regulatory requirement and such act or omission directly or indirectly 
resulted in substantial losses or created a significant risk of 
substantial losses to other persons.
  With the many issues that come under the Securities Act--amendments 
to the sections dealing with fraud and reckless disregard of other 
people's money is a serious but necessary step in the right direction. 
This act would authorize the SEC to impose civil penalties in cease and 
desist proceedings against any defendant before administrative law 
judges.
  The expansion of the SEC's civil money penalty authority in 
administrative proceedings to include all potential defendants, not 
just securities industry firms and professionals, will likely be the 
most controversial aspect of the bill. Since the Federal Rules of 
Evidence do not apply in administrative proceedings, the SEC may use 
evidence that would not be admissible in Federal district court.

SEC authority over formerly associated persons

  H.R. 6513 empowers the SEC to remove from office or censure any 
person who is, or at time of the alleged misconduct was, a member of 
the Municipal Securities Rulemaking Board.
  It would also provide the SEC and other regulatory agencies the 
authority to institute disciplinary proceedings against persons 
associated with or seeking to become associated, or who at the time of 
the alleged misconduct were associated or seeking to become associated 
with, registered or unregistered government securities brokers and 
dealers.
  H.R. 6513 would also provide the SEC with the authority to conduct 
investigations into alleged violations committed by individuals who 
were formerly associated with members of national securities exchanges 
and national securities associations, as well as former participants of 
registered clearing agencies.
  It would expand the disciplinary authority of the regulatory agencies 
of the self-regulatory organizations by providing the regulatory 
agencies with the authority to remove from office or censure persons 
who, at the time of the alleged misconduct, either are or were officers 
of self-regulatory organizations.

Scope of exemption from State securities registration

  This section allows the NYSE, AMEX, or Nasdaq to establish tiers on 
which stocks can be listed and traded, even if those stocks would not 
otherwise qualify as covered securities exempt from state registration 
requirements.

Collateral bars

  The act would amend provisions of the Exchange Act and Advisers Act 
to prevent associated persons who violate the Federal securities laws 
in one capacity (e.g., as an associated person of a broker or dealer) 
from being associated with other securities businesses in a different 
capacity (e.g., as an associated person of an investment adviser).
  Currently, the law does not permit the SEC to bar someone whose 
misconduct occurred while associated with a broker-dealer from 
associating with an investment adviser (or vice-versa), although the 
SEC often seeks such a collateral bar in settlements.

Exempt offerings

  This amendment would clarify that States can require that notice 
filings for exempt securities contain all of the information required 
by Form D including the appendix to Form D.

Unlawful margin lending

  This section of the act would add clarification to the current 
problematic reading of the section.

SIPA

  This section amends certain provisions of the Securities Investor 
Protection Act of 1970 (``SIPA'') to add securities futures and options

[[Page 18195]]

on securities futures to the list of covered claims a customer can make 
against a broker-dealer that the Securities Investor Protection 
Corporation (``SIPC'') will cover. These amendments are a positive step 
toward removing regulatory road blocks to effective portfolio margining 
that can fully realize the benefits of hedging securities positions 
with futures positions.

Application of Advisers Act to State-registered advisers

  This amendment will clarify that certain hedge fund and private 
equity advisers, who may be subject to State (but not SEC) 
registration, may charge performance fees that would not be permitted 
for most SEC registrants.

Sharing privileged information with other authorities

  The act would add a new subsection to Section 24 of the Exchange Act. 
The new subsection would provide that the SEC shall not be deemed to 
have waived any privilege by sharing information with another agency of 
the U.S. Government, any foreign securities authority, any foreign law 
enforcement authority, or any State securities or law enforcement 
authority.

Nationwide service of subpoenas

  Under the act, when the SEC institutes a proceeding in U.S. district 
court in any district, subpoenas issued by the court to compel 
attendance of witnesses or production of documents may be served in any 
other district. Such subpoenas could be served and enforced without 
application to the court or a showing of cause, notwithstanding 
applicable provisions of the Federal Rules of Civil Procedure.


                               CONCLUSION

  We are facing rising food, gas, and energy costs. Our housing markets 
are still reeling and we are at high levels of unemployment. We must 
ensure that the Securities markets are secure and able to withstand our 
current economic climate. Mr. Speaker, I urge my colleagues to support 
this important legislation.
  Mr. KANJORSKI. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Pennsylvania (Mr. Kanjorski) that the House suspend the 
rules and pass the bill, H.R. 6513, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Ms. PRYCE of Ohio. Mr. Speaker, I object to the vote on the ground 
that a quorum is not present and make the point of order that a quorum 
is not present.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.
  The point of no quorum is considered withdrawn.

                          ____________________