[House Report 114-337]
[From the U.S. Government Publishing Office]
114th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 114-337
======================================================================
SECURITIES AND EXCHANGE COMMISSION REPORTING MODERNIZATION ACT
_______
November 16, 2015.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Hensarling, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 3032]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 3032) to amend the Securities Exchange Act of
1934 to repeal a certain reporting requirement of the
Securities and Exchange Commission, having considered the same,
report favorably thereon without amendment and recommend that
the bill do pass.
Purpose and Summary
Introduced by Representative Sinema, H.R. 3032, the
``Securities and Exchange Commission Reporting Modernization
Act,'' eliminates a reporting requirement applicable only to
the Securities and Exchange Commission and previously repealed
for all other federal agencies.
Background and Need for Legislation
Section 1121(b) of the Right to Financial Privacy Act
(RFPA) required federal agencies to report the number of times
they requested that a financial institution provide their
customer's financial records (1) pursuant to a customer's
consent, (2) an administrative or judicial subpoena for which
the RFPA required prior notice to the customer, or (3) pursuant
to the RFPA's procedures for delaying notice of such records
request to the customer. When the SEC became subject to the
RFPA in 1981, Congress added Section 21(h) to the Securities
Exchange Act of 1934. Section 21(h)(6) requires the SEC to
report annually on requests under the RFPA as well as the
number of times the agency sought judicial orders delaying
customer notice of its investigative subpoenas under Section
21(h) of the Securities Exchange Act.
In 1995, the Federal Reports Elimination and Sunset Act
repealed Section 1121 of the RFPA in its entirety. However, the
corresponding report provision of Section 21(h)(6) of the
Securities Exchange Act was left intact. As a result, while all
other agencies previously subject to the reporting requirement
have ceased making RFPA reports, the SEC is now the only
federal agency that has continued to compile and publish these
reports.
By letter, SEC Chair Mary Jo White has requested that the
Financial Services Committee seek the repeal of the RFPA
reporting requirement. Chair White's request is supported by
all five SEC Commissioners.
Hearings
The Committee on Financial Services held no hearings on
H.R. 3032 in the 114th Congress.
Committee Consideration
The Committee on Financial Services met in open session on
July 28, 2015 and July 29, 2015, and ordered H.R. 3032 to be
reported favorably to the House without amendment by a recorded
vote of 58 yeas to 0 nays (Record vote no. FC-52), a quorum
being present.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
sole vote in committee was a motion by Chairman Hensarling to
report the bill favorably to the House without amendment. The
motion was agreed to by a recorded vote of 58 yeas to 0 nays
(Record vote no. FC-52), a quorum being present.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the committee based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives,
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee states that H.R. 3032
will eliminate a reporting requirement that is no longer
necessary and has been repealed for all other federal agencies
in order to ensure that the SEC may more efficiently direct
resources toward fulfilling its mission of protecting
investors, maintaining fair, orderly, and efficient markets,
and facilitating capital formation.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimates
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 20, 2015.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3032, the
Securities and Exchange Commission Reporting Modernization Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Keith Hall.
Enclosure.
H.R. 3032--Securities and Exchange Commission Reporting Modernization
Act
H.R. 3032 would repeal a requirement that the Securities
and Exchange Commission (SEC) include in its annual report to
the Congress a list of each instance when the agency used
certain provisions of law to obtain access to the financial
records of a customer of a financial institution.
Based on information from the SEC, CBO expects that
repealing the reporting requirement under H.R. 3032 would not
significantly change the workload of the agency. CBO estimates
that implementing the bill would not have a significant effect
on the agency's discretionary costs. Under current law, the SEC
is authorized to collect fees to offset its annual
appropriation; therefore, assuming appropriation action
consistent with that authority, CBO estimates that implementing
the bill would have a negligible effect on net discretionary
spending. Enacting H.R. 3032 would not affect direct spending
or revenues; therefore, pay-as-you-go procedures do not apply.
H.R. 3032 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is Susan Willie.
The estimate was approved by H. Samuel Papenfuss, Deputy
Assistant Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
H.R. 3032 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Duplication of Federal Programs
Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015),
the Committee states that no provision of H.R. 3032 establishes
or reauthorizes a program of the Federal Government known to be
duplicative of another Federal program, a program that was
included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most
recent Catalog of Federal Domestic Assistance.
Disclosure of Directed Rulemaking
Pursuant to section 3(k) of H. Res. 5, 114th Cong. (2015),
the Committee states that H.R. 3032 contains no directed
rulemaking.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section: cites H.R. 3032 as the ``Securities and
Exchange Commission Reporting Modernization Act.''
Section 2. Elimination of reporting requirement
This section eliminates the reporting requirement contained
in Section 21(h) of the Securities Exchange Act of 1934.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets and
existing law in which no change is proposed is shown in roman):
SECURITIES EXCHANGE ACT OF 1934
TITLE I--REGULATION OF SECURITIES EXCHANGES
* * * * * * *
investigations; injunctions and prosecution of offenses
Sec. 21. (a)(1) The Commission may, in its discretion, make
such investigations as it deems necessary to determine whether
any person has violated, is violating, or is about to violate
any provision of this title, the rules or regulations
thereunder, the rules of a national securities exchange or
registered securities association of which such person is a
member or a person associated, or, as to any act or practice,
or omission to act, while associated with a member, formerly
associated with a member, the rules of a registered clearing
agency in which such person is a participant, or, as to any act
or practice, or omission to act, while a participant, was a
participant, the rules of the Public Company Accounting
Oversight Board, of which such person is a registered public
accounting firm, 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, or
the rules of the Municipal Securities Rulemaking Board, and may
require or permit any person to file with it a statement in
writing, under oath or otherwise as the Commission shall
determine, as to all the facts and circumstances concerning the
matter to be investigated. The Commission is authorized in its
discretion, to publish information concerning any such
violations, and to investigate any facts, conditions,
practices, or matters which it may deem necessary or proper to
aid in the enforcement of such provisions, in the prescribing
of rules and regulations under this title, or in securing
information to serve as a basis for recommending further
legislation concerning the matters to which this title relates.
(2) On request from a foreign securities authority, the
Commission may provide assistance in accordance with this
paragraph if the requesting authority states that the
requesting authority is conducting an investigation which it
deems necessary to determine whether any person has violated,
is violating, or is about to violate any laws or rules relating
to securities matters that the requesting authority administers
or enforces. The Commission may, in its discretion, conduct
such investigation as the Commission deems necessary to collect
information and evidence pertinent to the request for
assistance. Such assistance may be provided without regard to
whether the facts stated in the request would also constitute a
violation of the laws of the United States. In deciding whether
to provide such assistance, the Commission shall consider
whether (A) the requesting authority has agreed to provide
reciprocal assistance in securities matters to the Commission;
and (B) compliance with the request would prejudice the public
interest of the United States.
(b) For the purpose of any such investigation, or any other
proceeding under this title, any member of the Commission or
any officer designated by it is empowered to administer oaths
and affirmations, subpoena witnesses, compel their attendance,
take evidence, and require the production of any books, papers,
correspondence, memoranda, or other records which the
Commission deems relevant or material to the inquiry. Such
attendance of witnesses and the production of any such records
may be required from any place in the United States or any
State at any designated place of hearing.
(c) In case of contumacy by, or refusal to obey a subpoena
issued to, any person, the Commission may invoke the aid of any
court of the United States within the jurisdiction of which
such investigation or proceeding is carried on, or where such
person resides or carries on business, in requiring the
attendance and testimony of witnesses and the production of
books, papers, correspondence, memoranda, and other records.
And such court may issue an order requiring such person to
appear before the Commission or member or officer designated by
the Commission, there to produce records, if so ordered, or to
give testimony touching the matter under investigation or in
question; and any failure to obey such order of the court may
be punished by such court as a contempt thereof. All process in
any such case may be served in the judicial district whereof
such person is an inhabitant or wherever he may be found. Any
person who shall, without just cause, fail or refuse to attend
and testify or to answer any lawful inquiry or to produce
books, papers, correspondence, memoranda, and other records, if
in his power so to do, in obedience to the subpoena of the
Commission, shall be guilty of a misdemeanor and, upon
conviction, shall be subject to a fine of not more than $1,000
or to imprisonment for a term of not more than one year, or
both.
(d)(1) Whenever it shall appear to the Commission that any
person is engaged or is about to engage in acts or practices
constituting a violation of any provision of this title, the
rules or regulations thereunder, the rules of a national
securities exchange or registered securities association of
which such person is a member or a person associated with a
member, the rules of a registered clearing agency in which such
person is a participant, the rules of the Public Company
Accounting Oversight Board, of which such person is a
registered public accounting firm or a person associated with
such a firm, or the rules of the Municipal Securities
Rulemaking Board, it may in its discretion bring an action in
the proper district court of the United States, the United
States District Court for the District of Columbia, or the
United States courts of any territory or other place subject to
the jurisdiction of the United States, to enjoin such acts or
practices, and upon a proper showing a permanent or temporary
injunction or restraining order shall be granted without bond.
The Commission may transmit such evidence as may be available
concerning such acts or practices as may constitute a violation
of any provision of this title or the rules or regulations
thereunder to the Attorney General, who may, in his discretion,
institute the necessary criminal proceedings under this title.
(2) Authority of a Court To Prohibit Persons From Serving as
Officers and Directors.--In any proceeding under paragraph (1)
of this subsection, the court may prohibit, conditionally or
unconditionally, and permanently or for such period of time as
it shall determine, any person who violated section 10(b) of
this title or the rules or regulations thereunder from acting
as an officer or director of any issuer that has a class of
securities registered pursuant to section 12 of this title or
that is required to file reports pursuant to section 15(d) of
this title if the person's conduct demonstrates unfitness to
serve as an officer or director of any such issuer.
(3) Money Penalties in Civil Actions.--
(A) Authority of commission.--Whenever it shall
appear to the Commission that any person has violated
any provision of this title, the rules or regulations
thereunder, or a cease-and-desist order entered by the
Commission pursuant to section 21C of this title, other
than by committing a violation subject to a penalty
pursuant to section 21A, the Commission may bring an
action in a United States district court to seek, and
the court shall have jurisdiction to impose, upon a
proper showing, a civil penalty to be paid by the
person who committed such violation.
(B) Amount of penalty.--
(i) First tier.--The amount of the penalty
shall be determined by the court in light of
the facts and circumstances. For each
violation, the amount of the penalty shall not
exceed the greater of (I) $5,000 for a natural
person or $50,000 for any other person, or (II)
the gross amount of pecuniary gain to such
defendant as a result of the violation.
(ii) Second tier.--Notwithstanding clause
(i), the amount of penalty for each such
violation shall not exceed the greater of (I)
$50,000 for a natural person or $250,000 for
any other person, or (II) the gross amount of
pecuniary gain to such defendant as a result of
the violation, if the violation described in
subparagraph (A) involved fraud, deceit,
manipulation, or deliberate or reckless
disregard of a regulatory requirement.
(iii) Third tier.--Notwithstanding clauses
(i) and (ii), the amount of penalty for each
such violation shall not exceed the greater of
(I) $100,000 for a natural person or $500,000
for any other person, or (II) the gross amount
of pecuniary gain to such defendant as a result
of the violation, if--
(aa) the violation described in
subparagraph (A) involved fraud,
deceit, manipulation, or deliberate or
reckless disregard of a regulatory
requirement; and
(bb) such violation directly or
indirectly resulted in substantial
losses or created a significant risk of
substantial losses to other persons.
(C) Procedures for collection.--
(i) Payment of penalty to treasury.--A
penalty imposed under this section shall be
payable into the Treasury of the United States,
except as otherwise provided in section 308 of
the Sarbanes-Oxley Act of 2002 and section 21F
of this title.
(ii) Collection of penalties.--If a person
upon whom such a penalty is imposed shall fail
to pay such penalty within the time prescribed
in the court's order, the Commission may refer
the matter to the Attorney General who shall
recover such penalty by action in the
appropriate United States district court.
(iii) Remedy not exclusive.--The actions
authorized by this paragraph may be brought in
addition to any other action that the
Commission or the Attorney General is entitled
to bring.
(iv) Jurisdiction and venue.--For purposes of
section 27 of this title, actions under this
paragraph shall be actions to enforce a
liability or a duty created by this title.
(D) Special provisions relating to a violation of a
cease-and-desist order.--In an action to enforce a
cease-and-desist order entered by the Commission
pursuant to section 21C, each separate violation of
such order shall be a separate offense, except that in
the case of a violation through a continuing failure to
comply with the order, each day of the failure to
comply shall be deemed a separate offense.
(4) Prohibition of attorneys' fees paid from
commission disgorgement funds.--Except as otherwise
ordered by the court upon motion by the Commission, or,
in the case of an administrative action, as otherwise
ordered by the Commission, funds disgorged as the
result of an action brought by the Commission in
Federal court, or as a result of any Commission
administrative action, shall not be distributed as
payment for attorneys' fees or expenses incurred by
private parties seeking distribution of the disgorged
funds.
(5) Equitable Relief.--In any action or proceeding brought or
instituted by the Commission under any provision of the
securities laws, the Commission may seek, and any Federal court
may grant, any equitable relief that may be appropriate or
necessary for the benefit of investors.
(6) Authority of a court to prohibit persons from
participating in an offering of penny stock.--
(A) In general.--In any proceeding under paragraph
(1) against any person participating in, or, at the
time of the alleged misconduct who was participating
in, an offering of penny stock, the court may prohibit
that person from participating in an offering of penny
stock, conditionally or unconditionally, and
permanently or for such period of time as the court
shall determine.
(B) Definition.--For purposes of this paragraph, the
term ``person participating in an offering of penny
stock'' includes any person engaging in activities with
a broker, dealer, or issuer for purposes of issuing,
trading, or inducing or attempting to induce the
purchase or sale of, any penny stock. The Commission
may, by rule or regulation, define such term to include
other activities, and may, by rule, regulation, or
order, exempt any person or class of persons, in whole
or in part, conditionally or unconditionally, from
inclusion in such term.
(e) Upon application of the Commission 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
shall have jurisdiction to issue writs of mandamus,
injunctions, and orders commanding (1) any person to comply
with the provisions of this title, the rules, regulations, and
orders thereunder, the rules of a national securities exchange
or registered securities association of which such person is a
member or person associated with a member, the rules of a
registered clearing agency in which such person is a
participant, the rules of the Public Company Accounting
Oversight Board, of which such person is a registered public
accounting firm or a person associated with such a firm, the
rules of the Municipal Securities Rulemaking Board, or any
undertaking contained in a registration statement as provided
in subsection (d) of section 15 of this title, (2) any national
securities exchange or registered securities association to
enforce compliance by its members and persons associated with
its members with the provisions of this title, the rules,
regulations, and orders thereunder, and the rules of such
exchange or association, or (3) any registered clearing agency
to enforce compliance by its participants with the provisions
of the rules of such clearing agency.
(f) Notwithstanding any other provision of this title, the
Commission shall not bring any action pursuant to subsection
(d) or (e) of this section against any person for violation of,
or to command compliance with, the rules of a self-regulatory
organization or the Public Company Accounting Oversight Board
unless it appears to the Commission that (1) such self-
regulatory organization or the Public Company Accounting
Oversight Board is unable or unwilling to take appropriate
action against such person in the public interest and for the
protection of investors, or (2) such action is otherwise
necessary or appropriate in the public interest or for the
protection of investors.
(g) Notwithstanding the provisions of section 1407(a) of
title 28, United States Code, or any other provision of law, no
action for equitable relief instituted by the Commission
pursuant to the securities laws shall be consolidated or
coordinated with other actions not brought by the Commission,
even though such other actions may involve common questions of
fact, unless such consolidation is consented to by the
Commission.
(h)(1) The Right to Financial Privacy Act of 1978 shall apply
with respect to the Commission, except as otherwise provided in
this subsection.
(2) Notwithstanding section 1105 or 1107 of the Right to
Financial Privacy Act of 1978, the Commission may have access
to and obtain copies of, or the information contained in
financial records of a customer from a financial institution
without prior notice to the customer upon an ex parte showing
to an appropriate United States district court that the
Commission seeks such financial records pursuant to a subpoena
issued in conformity with the requirements of section 19(b) of
the Securities Act of 1933, section 21(b) of the Securities
Exchange Act of 1934, section 42(b) of the Investment Company
Act of 1940, or section 209(b) of the Investment Advisers Act
of 1940, and that the Commission has reason to believe that--
(A) delay in obtaining access to such financial
records, or the required notice, will result in--
(i) flight from prosecution;
(ii) destruction of or tampering with
evidence;
(iii) transfer of assets or records outside
the territorial limits of the United States;
(iv) improper conversion of investor assets;
or
(v) impeding the ability of the Commission to
identify or trace the source or disposition of
funds involved in any securities transaction;
(B) such financial records are necessary to identify
or trace the record or beneficial ownership interest in
any security;
(C) the acts, practices or course of conduct under
investigation involve--
(i) the dissemination of materially false or
misleading information concerning any security,
issuer, or market, or the failure to make
disclosures required under the securities laws,
which remain uncorrected; or
(ii) a financial loss to investors or other
persons protected under the securities laws
which remains substantially uncompensated; or
(D) the acts, practices or course of conduct under
investigation--
(i) involve significant financial speculation
in securities; or
(ii) endanger the stability of any financial
or investment intermediary.
(3) Any application under paragraph (2) for a delay in notice
shall be made with reasonable specificity.
(4)(A) Upon a showing described in paragraph (2), the
presiding judge or magistrate shall enter an ex parte order
granting the requested delay for a period not to exceed ninety
days and an order prohibiting the financial institution
involved from disclosing that records have been obtained or
that a request for records has been made.
(B) Extensions of the period of delay of notice provided in
subparagraph (A) of up to ninety days each may be granted by
the court upon application, but only in accordance with this
subsection or section 1109(a), (b)(1), or (b)(2) of the Right
to Financial Privacy Act of 1978.
(C) Upon expiration of the period of delay of notification
ordered under subparagraph (A) or (B), the customer shall be
served with or mailed a copy of the subpena insofar as it
applies to the customer together with the following notice
which shall describe with reasonable specificity the nature of
the investigation for which the Commission sought the financial
records:``Records or information concerning your transactions
which are held by the financial institution named in the
attached subpena were supplied to the Securities and Exchange
Commission on (date). Notification was withheld pursuant to a
determination by the (title of court so ordering) under section
21(h) of the Securities Exchange Act of 1934 that (state
reason). The purpose of the investigation or official
proceeding was (state purpose).''
(5) Upon application by the Commission, all proceedings
pursuant to paragraphs (2) and (4) shall be held in camera and
the records thereof sealed until expiration of the period of
delay or such other date as the presiding judge or magistrate
may permit.
[(6) The Commission shall compile an annual tabulation of the
occasions on which the Commission used each separate
subparagraph or clause of paragraph (2) of this subsection or
the provisions of the Right to Financial Privacy Act of 1978 to
obtain access to financial records of a customer and include it
in its annual report to the Congress. Section 1121(b) of the
Right to Financial Privacy Act of 1978 shall not apply with
respect to the Commission.]
(7)(A) Following the expiration of the period of delay of
notification ordered by the court pursuant to paragraph (4) of
this subsection, the customer may, upon motion, reopen the
proceeding in the district court which issued the order. If the
presiding judge or magistrate finds that the movant is the
customer to whom the records obtained by the Commission
pertain, and that the Commission has obtained financial records
or information contained therein in violation of this
subsection, other than paragraph (1), it may order that the
customer be granted civil penalties against the Commission in
an amount equal to the sum of--
(i) $100 without regard to the volume of records
involved;
(ii) any out-of-pocket damages sustained by the
customer as a direct result of the disclosure; and
(iii) if the violation is found to have been willful,
intentional, and without good faith, such punitive
damages as the court may allow, together with the costs
of the action and reasonable attorney's fees as
determined by the court.
(B) Upon a finding that the Commission has obtained financial
records or information contained therein in violation of this
subsection, other than paragraph (1), the court, in its
discretion, may also or in the alternative issue injunctive
relief to require the Commission to comply with this subsection
with respect to any subpena which the Commission issues in the
future for financial records of such customer for purposes of
the same investigation.
(C) Whenever the court determines that the Commission has
failed to comply with this subsection, other than paragraph
(1), and the court finds that the circumstances raise questions
of whether an officer or employee of the Commission acted in a
willful and intentional manner and without good faith with
respect to the violation, the Office of Personnel Management
shall promptly initiate a proceeding to determine whether
disciplinary action is warranted against the agent or employee
who was primarily responsible for the violation. After
investigating and considering the evidence submitted, the
Office of Personnel Management shall submit its findings and
recommendations to the Commission and shall send copies of the
findings and recommendations to the officer or employee or his
representative. The Commission shall take the corrective action
that the Office of Personnel Management recommends.
(8) The relief described in paragraphs (7) and (10) shall be
the only remedies or sanctions available to a customer for a
violation of this subsection, other than paragraph (1), and
nothing herein or in the Right to Financial Privacy Act of 1978
shall be deemed to prohibit the use in any investigation or
proceeding of financial records, or the information contained
therein, obtained by a subpena issued by the Commission. In the
case of an unsuccessful action under paragraph (7), the court
shall award the costs of the action and attorney's fees to the
Commission if the presiding judge or magistrate finds that the
customer's claims were made in bad faith.
(9)(A) The Commission may transfer financial records or the
information contained therein to any government authority if
the Commission proceeds as a transferring agency in accordance
with section 1112 of the Right to Financial Privacy Act of
1978, except that the customer notice required under section
1112(b) or (c) of such Act may be delayed upon a showing by the
Commission, in accordance with the procedure set forth in
paragraphs (4) and (5), that one or more of subparagraphs (A)
through (D) of paragraph (2) apply.
(B) The Commission may, without notice to the customer
pursuant to section 1112 of the Right to Financial Privacy Act
of 1978, transfer financial records or the information
contained therein to a State securities agency or to the
Department of Justice. Financial records or information
transferred by the Commission to the Department of Justice or
to a State securities agency pursuant to the provisions of this
subparagraph may be disclosed or used only in an
administrative, civil, or criminal action or investigation by
the Department of Justice or the State securities agency which
arises out of or relates to the acts, practices, or courses of
conduct investigated by the Commission, except that if the
Department of Justice or the State securities agency determines
that the information should be disclosed or used for any other
purpose, it may do so if it notifies the customer, except as
otherwise provided in the Right to Financial Privacy Act of
1978, within 30 days of its determination, or complies with the
requirements of section 1109 of such Act regarding delay of
notice.
(10) Any government authority violating paragraph (9) shall
be subject to the procedures and penalties applicable to the
Commission under paragraph (7)(A) with respect to a violation
by the Commission in obtaining financial records.
(11) Notwithstanding the provisions of this subsection, the
Commission may obtain financial records from a financial
institution or transfer such records in accordance with
provisions of the Right to Financial Privacy Act of 1978.
(12) Nothing in this subsection shall enlarge or restrict any
rights of a financial institution to challenge requests for
records made by the Commission under existing law. Nothing in
this subsection shall entitle a customer to assert any rights
of a financial institution.
(13) Unless the context otherwise requires, all terms defined
in the Right to Financial Privacy Act of 1978 which are common
to this subsection shall have the same meaning as in such Act.
(i) Information to CFTC.--The Commission shall provide the
Commodity Futures Trading Commission with notice of the
commencement of any proceeding and a copy of any order entered
by the Commission against any broker or dealer registered
pursuant to section 15(b)(11), any exchange registered pursuant
to section 6(g), or any national securities association
registered pursuant to section 15A(k).
* * * * * * *
[all]