[House Report 118-311]
[From the U.S. Government Publishing Office]


118th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                     {      118-311

======================================================================



 
 RETIREMENT FAIRNESS FOR CHARITIES AND EDUCATIONAL INSTITUTIONS ACT OF 
                                  2023

                                _______
                                

 December 12, 2023.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. McHenry, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 3063]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 3063) to amend the Federal securities laws to 
enhance 403(b) plans, and for other purposes, having considered 
the same, reports favorably thereon with an amendment and 
recommends that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Retirement Fairness for Charities and 
Educational Institutions Act of 2023''.

SEC. 2. ENHANCEMENT OF 403(B) PLANS.

  (a) Amendments to the Investment Company Act of 1940.--Section 
3(c)(11) of the Investment Company Act of 1940 (15 U.S.C. 80a-3(c)(11)) 
is amended to read as follows:
          ``(11) Any--
                  ``(A) employee's stock bonus, pension, or profit-
                sharing trust which meets the requirements for 
                qualification under section 401 of the Internal Revenue 
                Code of 1986;
                  ``(B) custodial account meeting the requirements of 
                section 403(b)(7) of such Code;
                  ``(C) governmental plan described in section 
                3(a)(2)(C) of the Securities Act of 1933;
                  ``(D) collective trust fund maintained by a bank 
                consisting solely of assets of one or more--
                          ``(i) trusts described in subparagraph (A);
                          ``(ii) government plans described in 
                        subparagraph (C);
                          ``(iii) church plans, companies, or accounts 
                        that are excluded from the definition of an 
                        investment company under paragraph (14) of this 
                        subsection; or
                          ``(iv) plans which meet the requirements of 
                        section 403(b) of the Internal Revenue Code of 
                        1986--
                                  ``(I) if--
                                          ``(aa) such plan is subject 
                                        to title I of the Employee 
                                        Retirement Income Security Act 
                                        of 1974 (29 U.S.C. 1001 et 
                                        seq.);
                                          ``(bb) any employer making 
                                        such plan available agrees to 
                                        serve as a fiduciary for the 
                                        plan with respect to the 
                                        selection of the plan's 
                                        investments among which 
                                        participants can choose; or
                                          ``(cc) such plan is a 
                                        governmental plan (as defined 
                                        in section 414(d) of such 
                                        Code); and
                                  ``(II) if the employer, a fiduciary 
                                of the plan, or another person acting 
                                on behalf of the employer reviews and 
                                approves each investment described 
                                under subclause (I)(bb) prior to the 
                                investment being offered to 
                                participants in the plan; or
                  ``(E) separate account the assets of which are 
                derived solely from--
                          ``(i) contributions under pension or profit-
                        sharing plans which meet the requirements of 
                        section 401 of the Internal Revenue Code of 
                        1986 or the requirements for deduction of the 
                        employer's contribution under section 404(a)(2) 
                        of such Code;
                          ``(ii) contributions under governmental plans 
                        in connection with which interests, 
                        participations, or securities are exempted from 
                        the registration provisions of section 5 of the 
                        Securities Act of 1933 by section 3(a)(2)(C) of 
                        such Act;
                          ``(iii) advances made by an insurance company 
                        in connection with the operation of such 
                        separate account; and
                          ``(iv) contributions to a plan described in 
                        subparagraph (D)(iv).''.
  (b) Amendments to the Securities Act of 1933.--Section 3(a)(2) of the 
Securities Act of 1933 (15 U.S.C. 77c(a)(2)) is amended--
          (1) by striking ``or (D)'' and inserting ``(D) a plan which 
        meets the requirements of section 403(b) of such Code (i) if 
        (I) such plan is subject to title I of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1001 et seq.), (II) any 
        employer making such plan available agrees to serve as a 
        fiduciary for the plan with respect to the selection of the 
        plan's investments among which participants can choose, or 
        (III) such plan is a governmental plan (as defined in section 
        414(d) of such Code), and (ii) if the employer, a fiduciary of 
        the plan, or another person acting on behalf of the employer 
        reviews and approves each investment described under clause 
        (i)(II) prior to the investment being offered to participants 
        in the plan, or (E)'';
          (2) by striking ``(C), or (D)'' and inserting ``(C), (D), or 
        (E)''; and
          (3) by striking ``(iii) which is a plan funded'' and 
        inserting ``(iii) in the case of a plan not described in 
        subparagraph (D), which is a plan funded''.
  (c) Amendments to the Securities Exchange Act of 1934.--Section 
3(a)(12)(C) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(12)(C)) is amended--
          (1) by striking ``or (iv)'' and inserting ``(iv) a plan which 
        meets the requirements of section 403(b) of such Code (I) if 
        (aa) such plan is subject to title I of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1001 et seq.), (bb) any 
        employer making such plan available agrees to serve as a 
        fiduciary for the plan with respect to the selection of the 
        plan's investments among which participants can choose, or (cc) 
        such plan is a governmental plan (as defined in section 414(d) 
        of such Code), and (II) if the employer, a fiduciary of the 
        plan, or another person acting on behalf of the employer 
        reviews and approves each investment described under subclause 
        (I)(bb) prior to the investment being offered to participants 
        in the plan, or (v)'';
          (2) by striking ``(ii), or (iii)'' and inserting ``(ii), 
        (iii), or (iv)''; and
          (3) by striking ``(II) is a plan funded'' and inserting 
        ``(II) in the case of a plan not described in clause (iv), is a 
        plan funded''.

                          Purpose and Summary

    Introduced on May 2, 2023, by Representative Frank Lucas, 
H.R. 3063, the Retirement Fairness for Charities and 
Educational Institutions Act, would amend the Exchange Act to 
allow 403(b) retirement plans to invest in unregistered 
insurance contracts and collective investment trusts (CITs) 
that currently may be invested in by comparable retirement 
plans, such as 401(k) plans.

                  Background and Need for Legislation

    H.R. 3063 would allow employees of non-profit charities and 
public educational institutions in 403(b) plans to have access 
to the same low-cost investments available to employees of for-
profit companies and other employers in 401(k) plans. Under 
current law, Americans participating in 401(k) plans through 
their employer may invest their retirement accounts in CITs and 
insurance company separate accounts that are exempt from the 
SEC's registration requirements. Because employers screen 
investments made available to employees in a 401(k) plan, 
401(k) investment options are treated as institutional products 
for which registration is not needed under the law. This 
exemption from SEC registration allows these products to be 
offered at lower costs than other similar investments.
    There are close similarities between 403(b) plans and 
401(k) plans, except for the fact that 403(b) plans may only be 
maintained by non-profit charities or public educational 
institutions. While 403(b) plans were historically considered 
retail arrangements directly marketed to individual employees, 
these plans have shifted to employer-provided arrangements 
comparable to 401(k) plans. Unfortunately, outdated 
restrictions in the Internal Revenue Code and federal 
securities laws prohibit 403(b) plans from having access to the 
same low-cost investments as 401(k) plans.
    The Investment Company Act of 1940, the Securities Act of 
1933, and the Securities Exchange Act of 1934 contain 
exemptions from registration for CITs and insurance company 
separate accounts solely for certain retirement plan assets, 
such as 401(k) plans. Such registration exemptions are of 
limited application to 403(b) plans, creating an arbitrarily 
uneven playing field. H.R. 3063 levels the playing field and 
creates investment parity for employees of non-profit charities 
and public educational institutions in 403(b) plans.

                                Hearing

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 3063: The Subcommittee on 
Capital Markets of the Committee on Financial Services held a 
hearing on April 19, 2023, titled ``A Roadmap for Growth: 
Reforms to Encourage Capital Formation and Investment 
Opportunities for All Americans.''

                        Committee Consideration

    The Committee on Financial Services met in open session on 
May 24, 2023, and ordered H.R. 3063 to be reported favorably to 
the House as amended by a recorded vote of 35 ayes to 12 nays 
(Record vote no. FC-74), a quorum being present. Before the 
question was called to order the bill favorably reported, the 
Committee adopted an amendment in the nature of a substitute 
offered by Mr. Lucas by voice vote.

                            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 order to report legislation and amendments thereto. H.R. 
3063 was ordered reported favorably to the House as amended by 
a recorded vote of 35 ayes to 12 nays (Record vote no. FC-74), 
a quorum being present.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      Committee Oversight Findings

    Pursuant to clause 3(c) 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 goal of H.R. 3063 is to amend the 
Exchange Act to allow 403(b) retirement plans to invest in 
unregistered insurance contracts and CITs that currently may be 
invested in by comparable retirement plans, such as 401(k) 
plans.

                 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:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    Pursuant to 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 
1973.

                       Federal Mandates Statement

    Pursuant to section 423 of the Unfunded Mandates Reform 
Act, the Committee adopts as its own the estimate of the 
Federal mandates prepared by the Director of the Congressional 
Budget Office.

                      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 section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    Pursuant to clause 9 of rule XXI of the Rules of the House 
of Representatives, the Committee has carefully reviewed the 
provisions of the bill and states that the provisions of the 
bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 3063 as the ``Retirement Fairness 
for Charities and Educational Institutions Act of 2023''.

Section 2. Enhancement of 403(b) plans

    This section amends the Investment Company Act of 1940, the 
Securities Act of 1933, and the Securities Exchange Act of 1934 
to allow 403(b) retirement plans to invest in unregistered 
insurance contracts and collective investment trusts (CITs).

         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, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                     INVESTMENT COMPANY ACT OF 1940

TITLE I--INVESTMENT COMPANIES

           *       *       *       *       *       *       *


                    definition of investment company

  Sec. 3. (a)(1) When used in this title, ``investment 
company'' means any issuer which--
          (A) is or holds itself out as being engaged 
        primarily, or proposes to engage primarily, in the 
        business of investing, reinvesting, or trading in 
        securities;
          (B) is engaged or proposes to engage in the business 
        of issuing face-amount certificates of the installment 
        type, or has been engaged in such business and has any 
        such certificate outstanding; or
          (C) is engaged or proposes to engage in the business 
        of investing, reinvesting, owning, holding, or trading 
        in securities, and owns or proposes to acquire 
        investment securities having a value exceeding 40 per 
        centum of the value of such issuer's total assets 
        (exclusive of Government securities and cash items) on 
        an unconsolidated basis.
  (2) As used in this section, ``investment securities'' 
includes all securities except (A) Government securities, (B) 
securities issued by employees' securities companies, and (C) 
securities issued by majority-owned subsidiaries of the owner 
which (i) are not investment companies, and (ii) are not 
relying on the exception from the definition of investment 
company in paragraph (1) or (7) of subsection (c).
  (b) Notwithstanding paragraph (1)(C) of subsection (a), none 
of the following persons is an investment company within the 
meaning of this title:
          (1) Any issuer primarily engaged, directly or through 
        a wholly-owned subsidiary or subsidiaries, in a 
        business or businesses other than that of investing, 
        reinvesting, owning, holding, or trading in securities.
          (2) Any issuer which the Commission, upon application 
        by such issuer, finds and by order declares to be 
        primarily engaged in a business or businesses other 
        than that of investing, reinvesting, owning, holding, 
        or trading in securities either directly or (A) through 
        majority-owned subsidiaries or (B) through controlled 
        companies conducting similar types of businesses. The 
        filing of an application under this paragraph in good 
        faith by an issuer other than a registered investment 
        company shall exempt the applicant for a period of 
        sixty days from all provisions of this title applicable 
        to investment companies as such. For cause shown, the 
        Commission by order may extend such period of exemption 
        for an additional period or periods. Whenever the 
        Commission, upon its own motion or upon application, 
        finds that the circumstances which gave rise to the 
        issuance of an order granting an application under this 
        paragraph no longer exist, the Commission shall by 
        order revoke such order.
          (3) Any issuer all the outstanding securities of 
        which (other than short-term paper and directors' 
        qualifying shares) are directly or indirectly owned by 
        a company excepted from the definition of investment 
        company by paragraph (1) or (2) of this subsection.
  (c) Notwithstanding subsection (a), none of the following 
persons is an investment company within the meaning of this 
title:
          (1) Any issuer whose outstanding securities (other 
        than short-term paper) are beneficially owned by not 
        more than one hundred persons (or, in the case of a 
        qualifying venture capital fund, 250 persons) and which 
        is not making and does not presently propose to make a 
        public offering of its securities. Such issuer shall be 
        deemed to be an investment company for purposes of the 
        limitations set forth in subparagraphs (A)(i) and 
        (B)(i) of section 12(d)(1) governing the purchase or 
        other acquisition by such issuer of any security issued 
        by any registered investment company and the sale of 
        any security issued by any registered open-end 
        investment company to any such issuer. For purposes of 
        this paragraph:
                  (A) Beneficial ownership by a company shall 
                be deemed to be beneficial ownership by one 
                person, except that, if the company owns 10 per 
                centum or more of the outstanding voting 
                securities of the issuer, and is or, but for 
                the exception provided for in this paragraph or 
                paragraph (7), would be an investment company, 
                the beneficial ownership shall be deemed to be 
                that of the holders of such company's 
                outstanding securities (other than short-term 
                paper).
                  (B) Beneficial ownership by any person who 
                acquires securities or interests in securities 
                of an issuer described in the first sentence of 
                this paragraph shall be deemed to be beneficial 
                ownership by the person from whom such transfer 
                was made, pursuant to such rules and 
                regulations as the Commission shall prescribe 
                as necessary or appropriate in the public 
                interest and consistent with the protection of 
                investors and the purposes fairly intended by 
                the policy and provisions of this title, where 
                the transfer was caused by legal separation, 
                divorce, death, or other involuntary event.
                  (C)(i) The term ``qualifying venture capital 
                fund'' means a venture capital fund that has 
                not more than $10,000,000 in aggregate capital 
                contributions and uncalled committed capital, 
                with such dollar amount to be indexed for 
                inflation once every 5 years by the Commission, 
                beginning from a measurement made by the 
                Commission on a date selected by the 
                Commission, rounded to the nearest $1,000,000.
                  (ii) The term ``venture capital fund'' has 
                the meaning given the term in section 
                275.203(l)-1 of title 17, Code of Federal 
                Regulations, or any successor regulation.
          (2)(A) Any person primarily engaged in the business 
        of underwriting and distributing securities issued by 
        other persons, selling securities to customers, acting 
        as broker, and acting as market intermediary, or any 
        one or more of such activities, whose gross income 
        normally is derived principally from such business and 
        related activities.
          (B) For purposes of this paragraph--
                  (i) the term ``market intermediary'' means 
                any person that regularly holds itself out as 
                being willing contemporaneously to engage in, 
                and that is regularly engaged in, the business 
                of entering into transactions on both sides of 
                the market for a financial contract or one or 
                more such financial contracts; and
                  (ii) the term ``financial contract'' means 
                any arrangement that--
                          (I) takes the form of an individually 
                        negotiated contract, agreement, or 
                        option to buy, sell, lend, swap, or 
                        repurchase, or other similar 
                        individually negotiated transaction 
                        commonly entered into by participants 
                        in the financial markets;
                          (II) is in respect of securities, 
                        commodities, currencies, interest or 
                        other rates, other measures of value, 
                        or any other financial or economic 
                        interest similar in purpose or function 
                        to any of the foregoing; and
                          (III) is entered into in response to 
                        a request from a counter party for a 
                        quotation, or is otherwise entered into 
                        and structured to accommodate the 
                        objectives of the counter party to such 
                        arrangement.
          (3) Any bank or insurance company; any savings and 
        loan association, building and loan association, 
        cooperative bank, homestead association, or similar 
        institution, or any receiver, conservator, liquidator, 
        liquidating agent, or similar official or person 
        thereof or therefor; or any common trust fund or 
        similar fund maintained by a bank exclusively for the 
        collective investment and reinvestment of moneys 
        contributed thereto by the bank in its capacity as a 
        trustee, executor, administrator, or guardian, if--
                  (A) such fund is employed by the bank solely 
                as an aid to the administration of trusts, 
                estates, or other accounts created and 
                maintained for a fiduciary purpose;
                  (B) except in connection with the ordinary 
                advertising of the bank's fiduciary services, 
                interests in such fund are not--
                          (i) advertised; or
                          (ii) offered for sale to the general 
                        public; and
                  (C) fees and expenses charged by such fund 
                are not in contravention of fiduciary 
                principles established under applicable Federal 
                or State law.
          (4) Any person substantially all of whose business is 
        confined to making small loans, industrial banking, or 
        similar businesses.
          (5) Any person who is not engaged in the business of 
        issuing redeemable securities, face-amount certificates 
        of the installment type or periodic payment plan 
        certificates, and who is primarily engaged in one or 
        more of the following businesses: (A) Purchasing or 
        otherwise acquiring notes, drafts, acceptances, open 
        accounts receivable, and other obligations representing 
        part or all of the sales price of merchandise, 
        insurance, and services; (B) making loans to 
        manufacturers, wholesalers, and retailers of, and to 
        prospective purchasers of, specified merchandise, 
        insurance, and services; and (C) purchasing or 
        otherwise acquiring mortgages and other liens on and 
        interests in real estate.
          (6) Any company primarily engaged, directly or 
        through majority-owned subsidiaries, in one or more of 
        the businesses described in paragraphs (3), (4), and 
        (5), or in one or more of such businesses (from which 
        not less than 25 centum of such company's gross income 
        during its last fiscal year was derived) together with 
        an additional business or businesses other than 
        investing, reinvesting, owning, holding, or trading in 
        securities.
          (7)(A) Any issuer, the outstanding securities of 
        which are owned exclusively by persons who, at the time 
        of acquisition of such securities, are qualified 
        purchasers, and which is not making and does not at 
        that time propose to make a public offering of such 
        securities. Securities that are owned by persons who 
        received the securities from a qualified purchaser as a 
        gift or bequest, or in a case in which the transfer was 
        caused by legal separation, divorce, death, or other 
        involuntary event, shall be deemed to be owned by a 
        qualified purchaser, subject to such rules, 
        regulations, and orders as the Commission may prescribe 
        as necessary or appropriate in the public interest or 
        for the protection of investors.
          (B) Notwithstanding subparagraph (A), an issuer is 
        within the exception provided by this paragraph if--
                  (i) in addition to qualified purchasers, 
                outstanding securities of that issuer are 
                beneficially owned by not more than 100 persons 
                who are not qualified purchasers, if--
                          (I) such persons acquired any portion 
                        of the securities of such issuer on or 
                        before September 1, 1996; and
                          (II) at the time at which such 
                        persons initially acquired the 
                        securities of such issuer, the issuer 
                        was excepted by paragraph (1); and
                  (ii) prior to availing itself of the 
                exception provided by this paragraph--
                          (I) such issuer has disclosed to each 
                        beneficial owner, as determined under 
                        paragraph (1), that future investors 
                        will be limited to qualified 
                        purchasers, and that ownership in such 
                        issuer is no longer limited to not more 
                        than 100 persons; and
                          (II) concurrently with or after such 
                        disclosure, such issuer has provided 
                        each beneficial owner, as determined 
                        under paragraph (1), with a reasonable 
                        opportunity to redeem any part or all 
                        of their interests in the issuer, 
                        notwithstanding any agreement to the 
                        contrary between the issuer and such 
                        persons, for that person's 
                        proportionate share of the issuer's net 
                        assets.
          (C) Each person that elects to redeem under 
        subparagraph (B)(ii)(II) shall receive an amount in 
        cash equal to that person's proportionate share of the 
        issuer's net assets, unless the issuer elects to 
        provide such person with the option of receiving, and 
        such person agrees to receive, all or a portion of such 
        person's share in assets of the issuer. If the issuer 
        elects to provide such persons with such an 
        opportunity, disclosure concerning such opportunity 
        shall be made in the disclosure required by 
        subparagraph (B)(ii)(I).
          (D) An issuer that is excepted under this paragraph 
        shall nonetheless be deemed to be an investment company 
        for purposes of the limitations set forth in 
        subparagraphs (A)(i) and (B)(i) of section 12(d)(1) 
        relating to the purchase or other acquisition by such 
        issuer of any security issued by any registered 
        investment company and the sale of any security issued 
        by any registered open-end investment company to any 
        such issuer.
          (E) For purposes of determining compliance with this 
        paragraph and paragraph (1), an issuer that is 
        otherwise excepted under this paragraph and an issuer 
        that is otherwise excepted under paragraph (1) shall 
        not be treated by the Commission as being a single 
        issuer for purposes of determining whether the 
        outstanding securities of the issuer excepted under 
        paragraph (1) are beneficially owned by not more than 
        100 persons or whether the outstanding securities of 
        the issuer excepted under this paragraph are owned by 
        persons that are not qualified purchasers. Nothing in 
        this subparagraph shall be construed to establish that 
        a person is a bona fide qualified purchaser for 
        purposes of this paragraph or a bona fide beneficial 
        owner for purposes of paragraph (1).
          (8)
          (9) Any person substantially all of whose business 
        consists of owning or holding oil, gas, or other 
        mineral royalties or leases, or fractional interests 
        therein, or certificates of interest or participation 
        in or investment contracts relative to such royalties, 
        leases, or fractional interests.
          (10)(A) Any company organized and operated 
        exclusively for religious, educational, benevolent, 
        fraternal, charitable, or reformatory purposes--
                  (i) no part of the net earnings of which 
                inures to the benefit of any private 
                shareholder or individual; or
                  (ii) which is or maintains a fund described 
                in subparagraph (B).
          (B) For the purposes of subparagraph (A)(ii), a fund 
        is described in this subparagraph if such fund is a 
        pooled income fund, collective trust fund, collective 
        investment fund, or similar fund maintained by a 
        charitable organization exclusively for the collective 
        investment and reinvestment of one or more of the 
        following:
                  (i) assets of the general endowment fund or 
                other funds of one or more charitable 
                organizations;
                  (ii) assets of a pooled income fund;
                  (iii) assets contributed to a charitable 
                organization in exchange for the issuance of 
                charitable gift annuities;
                  (iv) assets of a charitable remainder trust 
                or of any other trust, the remainder interests 
                of which are irrevocably dedicated to any 
                charitable organization;
                  (v) assets of a charitable lead trust;
                  (vi) assets of a trust, the remainder 
                interests of which are revocably dedicated to 
                or for the benefit of 1 or more charitable 
                organizations, if the ability to revoke the 
                dedication is limited to circumstances 
                involving--
                          (I) an adverse change in the 
                        financial circumstances of a settlor or 
                        an income beneficiary of the trust;
                          (II) a change in the identity of the 
                        charitable organization or 
                        organizations having the remainder 
                        interest, provided that the new 
                        beneficiary is also a charitable 
                        organization; or
                          (III) both the changes described in 
                        subclauses (I) and (II);
                  (vii) assets of a trust not described in 
                clauses (i) through (v), the remainder 
                interests of which are revocably dedicated to a 
                charitable organization, subject to 
                subparagraph (C); or
                  (viii) such assets as the Commission may 
                prescribe by rule, regulation, or order in 
                accordance with section 6(c).
          (C) A fund that contains assets described in clause 
        (vii) of subparagraph (B) shall be excluded from the 
        definition of an investment company for a period of 3 
        years after the date of enactment of this subparagraph, 
        but only if--
                  (i) such assets were contributed before the 
                date which is 60 days after the date of 
                enactment of this subparagraph; and
                  (ii) such assets are commingled in the fund 
                with assets described in one or more of clauses 
                (i) through (vi) and (viii) of subparagraph 
                (B).
          (D) For purposes of this paragraph--
                  (i) a trust or fund is ``maintained'' by a 
                charitable organization if the organization 
                serves as a trustee or administrator of the 
                trust or fund or has the power to remove the 
                trustees or administrators of the trust or fund 
                and to designate new trustees or 
                administrators;
                  (ii) the term ``pooled income fund'' has the 
                same meaning as in section 642(c)(5) of the 
                Internal Revenue Code of 1986;
                  (iii) the term ``charitable organization'' 
                means an organization described in paragraphs 
                (1) through (5) of section 170(c) or section 
                501(c)(3) of the Internal Revenue Code of 1986;
                  (iv) the term ``charitable lead trust'' means 
                a trust described in section 170(f)(2)(B), 
                2055(e)(2)(B), or 2522(c)(2)(B) of the Internal 
                Revenue Code of 1986;
                  (v) the term ``charitable remainder trust'' 
                means a charitable remainder annuity trust or a 
                charitable remainder unitrust, as those terms 
                are defined in section 664(d) of the Internal 
                Revenue Code of 1986; and
                  (vi) the term ``charitable gift annuity'' 
                means an annuity issued by a charitable 
                organization that is described in section 
                501(m)(5) of the Internal Revenue Code of 1986.
          [(11) Any employee's stock bonus, pension, or profit-
        sharing trust which meets the requirements for 
        qualification under section 401 of the Internal Revenue 
        Code of 1986; or any governmental plan described in 
        section 3(a)(2)(C) of the Securities Act of 1933; or 
        any collective trust fund maintained by a bank 
        consisting solely of assets of one or more of such 
        trusts, government plans, or church plans, companies or 
        accounts that are excluded from the definition of an 
        investment company under paragraph (14) of this 
        subsection; or any separate account the assets of which 
        are derived solely from (A) contributions under pension 
        or profit-sharing plans which meet the requirements of 
        section 401 of the Internal Revenue Code of 1986 or the 
        requirements for deduction of the employer's 
        contribution under section 404(a)(2) of such Code, (B) 
        contributions under governmental plans in connection 
        with which interests, participations, or securities are 
        exempted from the registration provisions of section 5 
        of the Securities Act of 1933 by section 3(a)(2)(C) of 
        such Act, and (C) advances made by an insurance company 
        in connection with the operation of such separate 
        account.]
          (11) Any--
                  (A) employee's stock bonus, pension, or 
                profit-sharing trust which meets the 
                requirements for qualification under section 
                401 of the Internal Revenue Code of 1986;
                  (B) custodial account meeting the 
                requirements of section 403(b)(7) of such Code;
                  (C) governmental plan described in section 
                3(a)(2)(C) of the Securities Act of 1933;
                  (D) collective trust fund maintained by a 
                bank consisting solely of assets of one or 
                more--
                          (i) trusts described in subparagraph 
                        (A);
                          (ii) government plans described in 
                        subparagraph (C);
                          (iii) church plans, companies, or 
                        accounts that are excluded from the 
                        definition of an investment company 
                        under paragraph (14) of this 
                        subsection; or
                          (iv) plans which meet the 
                        requirements of section 403(b) of the 
                        Internal Revenue Code of 1986--
                                  (I) if--
                                          (aa) such plan is 
                                        subject to title I of 
                                        the Employee Retirement 
                                        Income Security Act of 
                                        1974 (29 U.S.C. 1001 et 
                                        seq.);
                                          (bb) any employer 
                                        making such plan 
                                        available agrees to 
                                        serve as a fiduciary 
                                        for the plan with 
                                        respect to the 
                                        selection of the plan's 
                                        investments among which 
                                        participants can 
                                        choose; or
                                          (cc) such plan is a 
                                        governmental plan (as 
                                        defined in section 
                                        414(d) of such Code); 
                                        and
                                  (II) if the employer, a 
                                fiduciary of the plan, or 
                                another person acting on behalf 
                                of the employer reviews and 
                                approves each investment 
                                described under subclause 
                                (I)(bb) prior to the investment 
                                being offered to participants 
                                in the plan; or
                  (E) separate account the assets of which are 
                derived solely from--
                          (i) contributions under pension or 
                        profit-sharing plans which meet the 
                        requirements of section 401 of the 
                        Internal Revenue Code of 1986 or the 
                        requirements for deduction of the 
                        employer's contribution under section 
                        404(a)(2) of such Code;
                          (ii) contributions under governmental 
                        plans in connection with which 
                        interests, participations, or 
                        securities are exempted from the 
                        registration provisions of section 5 of 
                        the Securities Act of 1933 by section 
                        3(a)(2)(C) of such Act;
                          (iii) advances made by an insurance 
                        company in connection with the 
                        operation of such separate account; and
                          (iv) contributions to a plan 
                        described in subparagraph (D)(iv).
          (12) Any voting trust the assets of which consist 
        exclusively of securities of a single issuer which is 
        not an investment company.
          (13) Any security holders' protective committee or 
        similar issuer having outstanding and issuing no 
        securities other than certificates of deposit and 
        short-term paper.
          (14) Any church plan described in section 414(e) of 
        the Internal Revenue Code of 1986, if, under any such 
        plan, no part of the assets may be used for, or 
        diverted to, purposes other than the exclusive benefit 
        of plan participants or beneficiaries, or any company 
        or account that is--
                  (A) established by a person that is eligible 
                to establish and maintain such a plan under 
                section 414(e) of the Internal Revenue Code of 
                1986; and
                  (B) substantially all of the activities of 
                which consist of--
                          (i) managing or holding assets 
                        contributed to such church plans or 
                        other assets which are permitted to be 
                        commingled with the assets of church 
                        plans under the Internal Revenue Code 
                        of 1986; or
                          (ii) administering or providing 
                        benefits pursuant to church plans.

           *       *       *       *       *       *       *

                              ----------                              


                         SECURITIES ACT OF 1933

TITLE I--

           *       *       *       *       *       *       *


                          exempted securities

  Sec. 3. (a) Except as hereinafter expressly provided, the 
provisions of this title shall not apply to any of the 
following classes of securities:
          (1) Reserved.
          (2) Any security issued or guaranteed by the United 
        States or any Territory thereof, or by the District of 
        Columbia, or by any State of the United States, or by 
        any political subdivision of a State or Territory, or 
        by any public instrumentality of one or more States or 
        Territories, or by any person controlled or supervised 
        by and acting as an instrumentality of the Government 
        of the United States pursuant to authority granted by 
        the Congress of the United States; or any certificate 
        of deposit for any of the foregoing; or any security 
        issued or guaranteed by any bank; or any security 
        issued by or representing an interest in or a direct 
        obligation of a Federal Reserve bank; or any interest 
        or participation in any common trust fund or similar 
        fund that is excluded from the definition of the term 
        ``investment company'' under section 3(c)(3) of the 
        Investment Company Act of 1940; or any security which 
        is an industrial development bond (as defined in 
        section 103(c)(2) of the Internal Revenue Code of 1954) 
        the interest on which is excludable from gross income 
        under section 103(a)(1) of such Code if, by reason of 
        the application of paragraph (4) or (6) of section 
        103(c) of such Code (determined as if paragraphs 
        (4)(A), (5), and (7) were not included in such section 
        103(c)), paragraph (1) of such section 103(c) does not 
        apply to such security; or any interest or 
        participation in a single trust fund, or in a 
        collective trust fund maintained by a bank, or any 
        security arising out of a contract issued by an 
        insurance company, which interest, participation, or 
        security is issued in connection with (A) a stock 
        bonus, pension, or profit-sharing plan which meets the 
        requirements for qualification under section 401 of the 
        Internal Revenue Code of 1954, (B) an annuity plan 
        which meets the requirements for the deduction of the 
        employer's contributions under section 404(a)(2) of 
        such Code, (C) a governmental plan as defined in 
        section 414(d) of such Code which has been established 
        by an employer for the exclusive benefit of its 
        employees or their beneficiaries for the purpose of 
        distributing to such employees or their beneficiaries 
        the corpus and income of the funds accumulated under 
        such plan, if under such plan it is impossible, prior 
        to the satisfaction of all liabilities with respect to 
        such employees and their beneficiaries, for any part of 
        the corpus or income to be used for, or diverted to, 
        purposes other than the exclusive benefit of such 
        employees or their beneficiaries, [or (D)](D) a plan 
        which meets the requirements of section 403(b) of such 
        Code (i) if (I) such plan is subject to title I of the 
        Employee Retirement Income Security Act of 1974 (29 
        U.S.C. 1001 et seq.), (II) any employer making such 
        plan available agrees to serve as a fiduciary for the 
        plan with respect to the selection of the plan's 
        investments among which participants can choose, or 
        (III) such plan is a governmental plan (as defined in 
        section 414(d) of such Code), and (ii) if the employer, 
        a fiduciary of the plan, or another person acting on 
        behalf of the employer reviews and approves each 
        investment described under clause (i)(II) prior to the 
        investment being offered to participants in the plan, 
        or (E)  a church plan, company, or account that is 
        excluded from the definition of an investment company 
        under section 3(c)(14) of the Investment Company Act of 
        1940, other than any plan described in subparagraph 
        (A), (B), [(C), or (D)] (C), (D), or (E) of this 
        paragraph (i) the contributions under which are held in 
        a single trust fund or in a separate account maintained 
        by an insurance company for a single employer and under 
        which an amount in excess of the employer's 
        contribution is allocated to the purchase of securities 
        (other than interests or participations in the trust or 
        separate account itself) issued by the employer or any 
        company directly or indirectly controlling, controlled 
        by, or under common control with the employer, (ii) 
        which covers employees some or all of whom are 
        employees within the meaning of section 401(c)(1) of 
        such Code (other than a person participating in a 
        church plan who is described in section 414(e)(3)(B) of 
        the Internal Revenue Code of 1986), or (iii)[which is a 
        plan funded] in the case of a plan not described in 
        subparagraph (D), which is a plan funded by an annuity 
        contract described in section 403(b) of such Code 
        (other than a retirement income account described in 
        section 403(b)(9) of the Internal Revenue Code of 1986, 
        to the extent that the interest or participation in 
        such single trust fund or collective trust fund is 
        issued to a church, a convention or association of 
        churches, or an organization described in section 
        414(e)(3)(A) of such Code establishing or maintaining 
        the retirement income account or to a trust established 
        by any such entity in connection with the retirement 
        income account). The Commission, by rules and 
        regulations or order, shall exempt from the provisions 
        of section 5 of this title any interest or 
        participation issued in connection with a stock bonus, 
        pension, profit-sharing, or annuity plan which covers 
        employees some or all of whom are employees within the 
        meaning of section 401(c)(1) of the Internal Revenue 
        Code of 1954, if and to the extent that the Commission 
        determines this to be necessary or appropriate in the 
        public interest and consistent with the protection of 
        investors and the purposes fairly intended by the 
        policy and provisions of this title. For purposes of 
        this paragraph, a security issued or guaranteed by a 
        bank shall not include any interest or participation in 
        any collective trust fund maintained by a bank; and the 
        term ``bank'' means any national bank, or any banking 
        institution organized under the laws of any State, 
        territory, or the District of Columbia, the business of 
        which is substantially confined to banking and is 
        supervised by the State or territorial banking 
        commission or similar official; except that in the case 
        of a common trust fund or similar fund, or a collective 
        trust fund, the term ``bank'' has the same meaning as 
        in the Investment Company Act of 1940;
          (3) Any note, draft, bill of exchange, or banker's 
        acceptance which arises out of a current transaction or 
        the proceeds of which have been or are to be used for 
        current transactions, and which has a maturity at the 
        time of issuance of not exceeding nine months, 
        exclusive of days of grace, or any renewal thereof the 
        maturity of which is likewise limited;
          (4) Any security issued by a person organized and 
        operated exclusively for religious, educational, 
        benevolent, fraternal, charitable, or reformatory 
        purposes and not for pecuniary profit, and no part of 
        the net earnings of which inures to the benefit of any 
        person, private stockholder, or individual, or any 
        security of a fund that is excluded from the definition 
        of an investment company under section 3(c)(10)(B) of 
        the Investment Company Act of 1940;
          (5) Any security issued (A) by a savings and loan 
        association, building and loan association, cooperative 
        bank, homestead association, or similar institution, 
        which is supervised and examined by State or Federal 
        authority having supervision over any such institution; 
        or (B) by (i) a farmer's cooperative organization 
        exempt from tax under section 521 of the Internal 
        Revenue Code of 1954, (ii) a corporation described in 
        section 501(c)(16) of such Code and exempt from tax 
        under section 501(a) of such Code, or (iii) a 
        corporation described in section 501(c)(2) of such Code 
        which is exempt from tax under section 501(a) of such 
        Code and is organized for the exclusive purpose of 
        holding title to property, collecting income therefrom, 
        and turning over the entire amount thereof, less 
        expenses, to an organization or corporation described 
        in clause (i) or (ii);
          (6) Any interest in a railroad equipment trust. For 
        purposes of this paragraph ``interest in a railroad 
        equipment trust'' means any interest in an equipment 
        trust, lease, conditional sales contract, or other 
        similar arrangement entered into, issued, assumed, 
        guaranteed by, or for the benefit of, a common carrier 
        to finance the acquisition of rolling stock, including 
        motive power;
          (7) Certificates issued by a receiver or by a trustee 
        in bankruptcy, with the approval of the court;
          (8) Any insurance or endowment policy or annuity 
        contract or optional annuity contract, issued by a 
        corporation subject to the supervision of the insurance 
        commissioner, bank commissioner, or any agency or 
        officer performing like functions, of any State or 
        Territory of the United States or the District of 
        Columbia;
          (9) Except with respect to a security exchanged in a 
        case under title 11, any security exchanged by the 
        issuer with its existing security holders exclusively 
        where no commission or other remuneration is paid or 
        given directly or indirectly for soliciting such 
        exchange;
          (10) Except with respect to a security exchanged in a 
        case under title 11, any security which is issued in 
        exchange for one or more bona fide outstanding 
        securities, claims or property interests, or partly in 
        such exchange and partly for cash, where the terms and 
        conditions of such issuance and exchange are approved, 
        after a hearing upon the fairness of such terms and 
        conditions at which all persons to whom it is proposed 
        to issue securities in such exchange shall have the 
        right to appear, by any court, or by any official or 
        agency of the United States, or by any State or 
        Territorial banking or insurance commission or other 
        governmental authority expressly authorized by law to 
        grant such approval;
          (11) Any security which is a part of an issue offered 
        and sold only to persons resident within a single State 
        or Territory, where the issuer of such security is a 
        person resident and doing business within or, if a 
        corporation, incorporated by and doing business within, 
        such State or Territory.
          (12) Any equity security issued in connection with 
        the acquisition by a holding company of a bank under 
        section 3(a) of the Bank Holding Company Act of 1956 or 
        a savings association under section 10(e) of the Home 
        Owners' Loan Act, if--
                  (A) the acquisition occurs solely as part of 
                a reorganization in which security holders 
                exchange their shares of a bank or savings 
                association for shares of a newly formed 
                holding company with no significant assets 
                other than securities of the bank or savings 
                association and the existing subsidiaries of 
                the bank or savings association;
                  (B) the security holders receive, after that 
                reorganization, substantially the same 
                proportional share interests in the holding 
                company as they held in the bank or savings 
                association, except for nominal changes in 
                shareholders' interests resulting from lawful 
                elimination of fractional interests and the 
                exercise of dissenting shareholders' rights 
                under State or Federal law;
                  (C) the rights and interests of security 
                holders in the holding company are 
                substantially the same as those in the bank or 
                savings association prior to the transaction, 
                other than as may be required by law; and
                  (D) the holding company has substantially the 
                same assets and liabilities, on a consolidated 
                basis, as the bank or savings association had 
                prior to the transaction.
        For purposes of this paragraph, the term ``savings 
        association'' means a savings association (as defined 
        in section 3(b) of the Federal Deposit Insurance Act) 
        the deposits of which are insured by the Federal 
        Deposit Insurance Corporation.
          (13) Any security issued by or any interest or 
        participation in any church plan, company or account 
        that is excluded from the definition of an investment 
        company under section 3(c)(14) of the Investment 
        Company Act of 1940.
          (14) Any security futures product that is--
                  (A) cleared by a clearing agency registered 
                under section 17A of the Securities Exchange 
                Act of 1934 or exempt from registration under 
                subsection (b)(7) of such section 17A; and
                  (B) traded on a national securities exchange 
                or a national securities association registered 
                pursuant to section 15A(a) of the Securities 
                Exchange Act of 1934.
  (b) Additional Exemptions.--
          (1) Small issues exemptive authority.--The Commission 
        may from time to time by its rules and regulations, and 
        subject to such terms and conditions as may be 
        prescribed therein, add any class of securities to the 
        securities exempted as provided in this section, if it 
        finds that the enforcement of this title with respect 
        to such securities is not necessary in the public 
        interest and for the protection of investors by reason 
        of the small amount involved or the limited character 
        of the public offering; but no issue of securities 
        shall be exempted under this subsection where the 
        aggregate amount at which such issue is offered to the 
        public exceeds $5,000,000.
          (2) Additional issues.--The Commission shall by rule 
        or regulation add a class of securities to the 
        securities exempted pursuant to this section in 
        accordance with the following terms and conditions:
                  (A) The aggregate offering amount of all 
                securities offered and sold within the prior 
                12-month period in reliance on the exemption 
                added in accordance with this paragraph shall 
                not exceed $50,000,000.
                  (B) The securities may be offered and sold 
                publicly.
                  (C) The securities shall not be restricted 
                securities within the meaning of the Federal 
                securities laws and the regulations promulgated 
                thereunder.
                  (D) The civil liability provision in section 
                12(a)(2) shall apply to any person offering or 
                selling such securities.
                  (E) The issuer may solicit interest in the 
                offering prior to filing any offering 
                statement, on such terms and conditions as the 
                Commission may prescribe in the public interest 
                or for the protection of investors.
                  (F) The Commission shall require the issuer 
                to file audited financial statements with the 
                Commission annually.
                  (G) Such other terms, conditions, or 
                requirements as the Commission may determine 
                necessary in the public interest and for the 
                protection of investors, which may include--
                          (i) a requirement that the issuer 
                        prepare and electronically file with 
                        the Commission and distribute to 
                        prospective investors an offering 
                        statement, and any related documents, 
                        in such form and with such content as 
                        prescribed by the Commission, including 
                        audited financial statements, a 
                        description of the issuer's business 
                        operations, its financial condition, 
                        its corporate governance principles, 
                        its use of investor funds, and other 
                        appropriate matters; and
                          (ii) disqualification provisions 
                        under which the exemption shall not be 
                        available to the issuer or its 
                        predecessors, affiliates, officers, 
                        directors, underwriters, or other 
                        related persons, which shall be 
                        substantially similar to the 
                        disqualification provisions contained 
                        in the regulations adopted in 
                        accordance with section 926 of the 
                        Dodd-Frank Wall Street Reform and 
                        Consumer Protection Act (15 U.S.C. 77d 
                        note).
          (3) Limitation.--Only the following types of 
        securities may be exempted under a rule or regulation 
        adopted pursuant to paragraph (2): equity securities, 
        debt securities, and debt securities convertible or 
        exchangeable to equity interests, including any 
        guarantees of such securities.
          (4) Periodic disclosures.--Upon such terms and 
        conditions as the Commission determines necessary in 
        the public interest and for the protection of 
        investors, the Commission by rule or regulation may 
        require an issuer of a class of securities exempted 
        under paragraph (2) to make available to investors and 
        file with the Commission periodic disclosures regarding 
        the issuer, its business operations, its financial 
        condition, its corporate governance principles, its use 
        of investor funds, and other appropriate matters, and 
        also may provide for the suspension and termination of 
        such a requirement with respect to that issuer.
          (5) Adjustment.--Not later than 2 years after the 
        date of enactment of the Small Company Capital 
        Formation Act of 2011 and every 2 years thereafter, the 
        Commission shall review the offering amount limitation 
        described in paragraph (2)(A) and shall increase such 
        amount as the Commission determines appropriate. If the 
        Commission determines not to increase such amount, it 
        shall report to the Committee on Financial Services of 
        the House of Representatives and the Committee on 
        Banking, Housing, and Urban Affairs of the Senate on 
        its reasons for not increasing the amount.
  (c) The Commission may from time to time by its rules and 
regulations and subject to such terms and conditions as may be 
prescribed therein, add to the securities exempted as provided 
in this section any class of securities issued by a small 
business investment company under the Small Business Investment 
Act of 1958 if it finds, having regard to the purposes of that 
Act, that the enforcement of this Act with respect to such 
securities is not necessary in the public interest and for the 
protection of investors.

           *       *       *       *       *       *       *

                              ----------                              


                    SECURITIES EXCHANGE ACT OF 1934

TITLE I--REGULATION OF SECURITIES EXCHANGES

           *       *       *       *       *       *       *


                  definitions and application of title

  Sec. 3. (a) When used in this title, unless the context 
otherwise requires--
          (1) The term ``exchange'' means any organization, 
        association, or group of persons, whether incorporated 
        or unincorporated, which constitutes, maintains, or 
        provides a market place or facilities for bringing 
        together purchasers and sellers of securities or for 
        otherwise performing with respect to securities the 
        functions commonly performed by a stock exchange as 
        that term is generally understood, and includes the 
        market place and the market facilities maintained by 
        such exchange.
          (2) The term ``facility'' when used with respect to 
        an exchange includes its premises, tangible or 
        intangible property whether on the premises or not, any 
        right to the use of such premises or property or any 
        service thereof for the purpose of effecting or 
        reporting a transaction on an exchange (including, 
        among other things, any system of communication to or 
        from the exchange, by ticker or otherwise, maintained 
        by or with the consent of the exchange), and any right 
        of the exchange to the use of any property or service.
          (3)(A) The term ``member'' when used with respect to 
        a national securities exchange means (i) any natural 
        person permitted to effect transactions on the floor of 
        the exchange without the services of another person 
        acting as broker, (ii) any registered broker or dealer 
        with which such a natural person is associated, (iii) 
        any registered broker or dealer permitted to designate 
        as a representative such a natural person, and (iv) any 
        other registered broker or dealer which agrees to be 
        regulated by such exchange and with respect to which 
        the exchange undertakes to enforce compliance with the 
        provisions of this title, the rules and regulations 
        thereunder, and its own rules. For purposes of sections 
        6(b)(1), 6(b)(4), 6(b)(6), 6(b)(7), 6(d), 17(d), 19(d), 
        19(e), 19(g), 19(h), and 21 of this title, the term 
        ``member'' when used with respect to a national 
        securities exchange also means, to the extent of the 
        rules of the exchange specified by the Commission, any 
        person required by the Commission to comply with such 
        rules pursuant to section 6(f) of this title.
          (B) The term ``member'' when used with respect to a 
        registered securities association means any broker or 
        dealer who agrees to be regulated by such association 
        and with respect to whom the association undertakes to 
        enforce compliance with the provisions of this title, 
        the rules and regulations thereunder, and its own 
        rules.
          (4) Broker.--
                  (A) In general.--The term ``broker'' means 
                any person engaged in the business of effecting 
                transactions in securities for the account of 
                others.
                  (B) Exception for certain bank activities.--A 
                bank shall not be considered to be a broker 
                because the bank engages in any one or more of 
                the following activities under the conditions 
                described:
                          (i) Third party brokerage 
                        arrangements.--The bank enters into a 
                        contractual or other written 
                        arrangement with a broker or dealer 
                        registered under this title under which 
                        the broker or dealer offers brokerage 
                        services on or off the premises of the 
                        bank if--
                                  (I) such broker or dealer is 
                                clearly identified as the 
                                person performing the brokerage 
                                services;
                                  (II) the broker or dealer 
                                performs brokerage services in 
                                an area that is clearly marked 
                                and, to the extent practicable, 
                                physically separate from the 
                                routine deposit-taking 
                                activities of the bank;
                                  (III) any materials used by 
                                the bank to advertise or 
                                promote generally the 
                                availability of brokerage 
                                services under the arrangement 
                                clearly indicate that the 
                                brokerage services are being 
                                provided by the broker or 
                                dealer and not by the bank;
                                  (IV) any materials used by 
                                the bank to advertise or 
                                promote generally the 
                                availability of brokerage 
                                services under the arrangement 
                                are in compliance with the 
                                Federal securities laws before 
                                distribution;
                                  (V) bank employees (other 
                                than associated persons of a 
                                broker or dealer who are 
                                qualified pursuant to the rules 
                                of a self-regulatory 
                                organization) perform only 
                                clerical or ministerial 
                                functions in connection with 
                                brokerage transactions 
                                including scheduling 
                                appointments with the 
                                associated persons of a broker 
                                or dealer, except that bank 
                                employees may forward customer 
                                funds or securities and may 
                                describe in general terms the 
                                types of investment vehicles 
                                available from the bank and the 
                                broker or dealer under the 
                                arrangement;
                                  (VI) bank employees do not 
                                receive incentive compensation 
                                for any brokerage transaction 
                                unless such employees are 
                                associated persons of a broker 
                                or dealer and are qualified 
                                pursuant to the rules of a 
                                self-regulatory organization, 
                                except that the bank employees 
                                may receive compensation for 
                                the referral of any customer if 
                                the compensation is a nominal 
                                one-time cash fee of a fixed 
                                dollar amount and the payment 
                                of the fee is not contingent on 
                                whether the referral results in 
                                a transaction;
                                  (VII) such services are 
                                provided by the broker or 
                                dealer on a basis in which all 
                                customers that receive any 
                                services are fully disclosed to 
                                the broker or dealer;
                                  (VIII) the bank does not 
                                carry a securities account of 
                                the customer except as 
                                permitted under clause (ii) or 
                                (viii) of this subparagraph; 
                                and
                                  (IX) the bank, broker, or 
                                dealer informs each customer 
                                that the brokerage services are 
                                provided by the broker or 
                                dealer and not by the bank and 
                                that the securities are not 
                                deposits or other obligations 
                                of the bank, are not guaranteed 
                                by the bank, and are not 
                                insured by the Federal Deposit 
                                Insurance Corporation.
                          (ii) Trust activities.--The bank 
                        effects transactions in a trustee 
                        capacity, or effects transactions in a 
                        fiduciary capacity in its trust 
                        department or other department that is 
                        regularly examined by bank examiners 
                        for compliance with fiduciary 
                        principles and standards, and--
                                  (I) is chiefly compensated 
                                for such transactions, 
                                consistent with fiduciary 
                                principles and standards, on 
                                the basis of an administration 
                                or annual fee (payable on a 
                                monthly, quarterly, or other 
                                basis), a percentage of assets 
                                under management, or a flat or 
                                capped per order processing fee 
                                equal to not more than the cost 
                                incurred by the bank in 
                                connection with executing 
                                securities transactions for 
                                trustee and fiduciary 
                                customers, or any combination 
                                of such fees; and
                                  (II) does not publicly 
                                solicit brokerage business, 
                                other than by advertising that 
                                it effects transactions in 
                                securities in conjunction with 
                                advertising its other trust 
                                activities.
                          (iii) Permissible securities 
                        transactions.--The bank effects 
                        transactions in--
                                  (I) commercial paper, bankers 
                                acceptances, or commercial 
                                bills;
                                  (II) exempted securities;
                                  (III) qualified Canadian 
                                government obligations as 
                                defined in section 5136 of the 
                                Revised Statutes, in conformity 
                                with section 15C of this title 
                                and the rules and regulations 
                                thereunder, or obligations of 
                                the North American Development 
                                Bank; or
                                  (IV) any standardized, credit 
                                enhanced debt security issued 
                                by a foreign government 
                                pursuant to the March 1989 plan 
                                of then Secretary of the 
                                Treasury Brady, used by such 
                                foreign government to retire 
                                outstanding commercial bank 
                                loans.
                          (iv) Certain stock purchase plans.--
                                  (I) Employee benefit plans.--
                                The bank effects transactions, 
                                as part of its transfer agency 
                                activities, in the securities 
                                of an issuer as part of any 
                                pension, retirement, profit-
                                sharing, bonus, thrift, 
                                savings, incentive, or other 
                                similar benefit plan for the 
                                employees of that issuer or its 
                                affiliates (as defined in 
                                section 2 of the Bank Holding 
                                Company Act of 1956), if the 
                                bank does not solicit 
                                transactions or provide 
                                investment advice with respect 
                                to the purchase or sale of 
                                securities in connection with 
                                the plan.
                                  (II) Dividend reinvestment 
                                plans.--The bank effects 
                                transactions, as part of its 
                                transfer agency activities, in 
                                the securities of an issuer as 
                                part of that issuer's dividend 
                                reinvestment plan, if--
                                          (aa) the bank does 
                                        not solicit 
                                        transactions or provide 
                                        investment advice with 
                                        respect to the purchase 
                                        or sale of securities 
                                        in connection with the 
                                        plan; and
                                          (bb) the bank does 
                                        not net shareholders' 
                                        buy and sell orders, 
                                        other than for programs 
                                        for odd-lot holders or 
                                        plans registered with 
                                        the Commission.
                                  (III) Issuer plans.--The bank 
                                effects transactions, as part 
                                of its transfer agency 
                                activities, in the securities 
                                of an issuer as part of a plan 
                                or program for the purchase or 
                                sale of that issuer's shares, 
                                if--
                                          (aa) the bank does 
                                        not solicit 
                                        transactions or provide 
                                        investment advice with 
                                        respect to the purchase 
                                        or sale of securities 
                                        in connection with the 
                                        plan or program; and
                                          (bb) the bank does 
                                        not net shareholders' 
                                        buy and sell orders, 
                                        other than for programs 
                                        for odd-lot holders or 
                                        plans registered with 
                                        the Commission.
                                  (IV) Permissible delivery of 
                                materials.--The exception to 
                                being considered a broker for a 
                                bank engaged in activities 
                                described in subclauses (I), 
                                (II), and (III) will not be 
                                affected by delivery of written 
                                or electronic plan materials by 
                                a bank to employees of the 
                                issuer, shareholders of the 
                                issuer, or members of affinity 
                                groups of the issuer, so long 
                                as such materials are--
                                          (aa) comparable in 
                                        scope or nature to that 
                                        permitted by the 
                                        Commission as of the 
                                        date of the enactment 
                                        of the Gramm-Leach-
                                        Bliley Act; or
                                          (bb) otherwise 
                                        permitted by the 
                                        Commission.
                          (v) Sweep accounts.--The bank effects 
                        transactions as part of a program for 
                        the investment or reinvestment of 
                        deposit funds into any no-load, open-
                        end management investment company 
                        registered under the Investment Company 
                        Act of 1940 that holds itself out as a 
                        money market fund.
                          (vi) Affiliate transactions.--The 
                        bank effects transactions for the 
                        account of any affiliate of the bank 
                        (as defined in section 2 of the Bank 
                        Holding Company Act of 1956) other 
                        than--
                                  (I) a registered broker or 
                                dealer; or
                                  (II) an affiliate that is 
                                engaged in merchant banking, as 
                                described in section 4(k)(4)(H) 
                                of the Bank Holding Company Act 
                                of 1956.
                          (vii) Private securities offerings.--
                        The bank--
                                  (I) effects sales as part of 
                                a primary offering of 
                                securities not involving a 
                                public offering, pursuant to 
                                section 3(b), 4(2), or 4(5) of 
                                the Securities Act of 1933 or 
                                the rules and regulations 
                                issued thereunder;
                                  (II) at any time after the 
                                date that is 1 year after the 
                                date of the enactment of the 
                                Gramm-Leach-Bliley Act, is not 
                                affiliated with a broker or 
                                dealer that has been registered 
                                for more than 1 year in 
                                accordance with this Act, and 
                                engages in dealing, market 
                                making, or underwriting 
                                activities, other than with 
                                respect to exempted securities; 
                                and
                                  (III) if the bank is not 
                                affiliated with a broker or 
                                dealer, does not effect any 
                                primary offering described in 
                                subclause (I) the aggregate 
                                amount of which exceeds 25 
                                percent of the capital of the 
                                bank, except that the 
                                limitation of this subclause 
                                shall not apply with respect to 
                                any sale of government 
                                securities or municipal 
                                securities.
                          (viii) Safekeeping and custody 
                        activities.--
                                  (I) In general.--The bank, as 
                                part of customary banking 
                                activities--
                                          (aa) provides 
                                        safekeeping or custody 
                                        services with respect 
                                        to securities, 
                                        including the exercise 
                                        of warrants and other 
                                        rights on behalf of 
                                        customers;
                                          (bb) facilitates the 
                                        transfer of funds or 
                                        securities, as a 
                                        custodian or a clearing 
                                        agency, in connection 
                                        with the clearance and 
                                        settlement of its 
                                        customers' transactions 
                                        in securities;
                                          (cc) effects 
                                        securities lending or 
                                        borrowing transactions 
                                        with or on behalf of 
                                        customers as part of 
                                        services provided to 
                                        customers pursuant to 
                                        division (aa) or (bb) 
                                        or invests cash 
                                        collateral pledged in 
                                        connection with such 
                                        transactions;
                                          (dd) holds securities 
                                        pledged by a customer 
                                        to another person or 
                                        securities subject to 
                                        purchase or resale 
                                        agreements involving a 
                                        customer, or 
                                        facilitates the 
                                        pledging or transfer of 
                                        such securities by book 
                                        entry or as otherwise 
                                        provided under 
                                        applicable law, if the 
                                        bank maintains records 
                                        separately identifying 
                                        the securities and the 
                                        customer; or
                                          (ee) serves as a 
                                        custodian or provider 
                                        of other related 
                                        administrative services 
                                        to any individual 
                                        retirement account, 
                                        pension, retirement, 
                                        profit sharing, bonus, 
                                        thrift savings, 
                                        incentive, or other 
                                        similar benefit plan.
                                  (II) Exception for carrying 
                                broker activities.--The 
                                exception to being considered a 
                                broker for a bank engaged in 
                                activities described in 
                                subclause (I) shall not apply 
                                if the bank, in connection with 
                                such activities, acts in the 
                                United States as a carrying 
                                broker (as such term, and 
                                different formulations thereof, 
                                are used in section 15(c)(3) of 
                                this title and the rules and 
                                regulations thereunder) for any 
                                broker or dealer, unless such 
                                carrying broker activities are 
                                engaged in with respect to 
                                government securities (as 
                                defined in paragraph (42) of 
                                this subsection).
                          (ix) Identified banking products.--
                        The bank effects transactions in 
                        identified banking products as defined 
                        in section 206 of the Gramm-Leach-
                        Bliley Act.
                          (x) Municipal securities.--The bank 
                        effects transactions in municipal 
                        securities.
                          (xi) De minimis exception.--The bank 
                        effects, other than in transactions 
                        referred to in clauses (i) through (x), 
                        not more than 500 transactions in 
                        securities in any calendar year, and 
                        such transactions are not effected by 
                        an employee of the bank who is also an 
                        employee of a broker or dealer.
                  (C) Execution by broker or dealer.--The 
                exception to being considered a broker for a 
                bank engaged in activities described in clauses 
                (ii), (iv), and (viii) of subparagraph (B) 
                shall not apply if the activities described in 
                such provisions result in the trade in the 
                United States of any security that is a 
                publicly traded security in the United States, 
                unless--
                          (i) the bank directs such trade to a 
                        registered broker or dealer for 
                        execution;
                          (ii) the trade is a cross trade or 
                        other substantially similar trade of a 
                        security that--
                                  (I) is made by the bank or 
                                between the bank and an 
                                affiliated fiduciary; and
                                  (II) is not in contravention 
                                of fiduciary principles 
                                established under applicable 
                                Federal or State law; or
                          (iii) the trade is conducted in some 
                        other manner permitted under rules, 
                        regulations, or orders as the 
                        Commission may prescribe or issue.
                  (D) Fiduciary capacity.--For purposes of 
                subparagraph (B)(ii), the term ``fiduciary 
                capacity'' means--
                          (i) in the capacity as trustee, 
                        executor, administrator, registrar of 
                        stocks and bonds, transfer agent, 
                        guardian, assignee, receiver, or 
                        custodian under a uniform gift to minor 
                        act, or as an investment adviser if the 
                        bank receives a fee for its investment 
                        advice;
                          (ii) in any capacity in which the 
                        bank possesses investment discretion on 
                        behalf of another; or
                          (iii) in any other similar capacity.
                  (E) Exception for entities subject to section 
                15(e).--The term ``broker'' does not include a 
                bank that--
                          (i) was, on the day before the date 
                        of enactment of the Gramm-Leach-Bliley 
                        Act, subject to section 15(e); and
                          (ii) is subject to such restrictions 
                        and requirements as the Commission 
                        considers appropriate.
                  (F) Joint rulemaking required.--The 
                Commission and the Board of Governors of the 
                Federal Reserve System shall jointly adopt a 
                single set of rules or regulations to implement 
                the exceptions in subparagraph (B).
          (5) Dealer.--
                  (A) In general.--The term ``dealer'' means 
                any person engaged in the business of buying 
                and selling securities (not including security-
                based swaps, other than security-based swaps 
                with or for persons that are not eligible 
                contract participants) for such person's own 
                account through a broker or otherwise.
                  (B) Exception for person not engaged in the 
                business of dealing.--The term ``dealer'' does 
                not include a person that buys or sells 
                securities (not including security-based swaps, 
                other than security-based swaps with or for 
                persons that are not eligible contract 
                participants) for such person's own account, 
                either individually or in a fiduciary capacity, 
                but not as a part of a regular business.
                  (C) Exception for certain bank activities.--A 
                bank shall not be considered to be a dealer 
                because the bank engages in any of the 
                following activities under the conditions 
                described:
                          (i) Permissible securities 
                        transactions.--The bank buys or sells--
                                  (I) commercial paper, bankers 
                                acceptances, or commercial 
                                bills;
                                  (II) exempted securities;
                                  (III) qualified Canadian 
                                government obligations as 
                                defined in section 5136 of the 
                                Revised Statutes of the United 
                                States, in conformity with 
                                section 15C of this title and 
                                the rules and regulations 
                                thereunder, or obligations of 
                                the North American Development 
                                Bank; or
                                  (IV) any standardized, credit 
                                enhanced debt security issued 
                                by a foreign government 
                                pursuant to the March 1989 plan 
                                of then Secretary of the 
                                Treasury Brady, used by such 
                                foreign government to retire 
                                outstanding commercial bank 
                                loans.
                          (ii) Investment, trustee, and 
                        fiduciary transactions.--The bank buys 
                        or sells securities for investment 
                        purposes--
                                  (I) for the bank; or
                                  (II) for accounts for which 
                                the bank acts as a trustee or 
                                fiduciary.
                          (iii) Asset-backed transactions.--The 
                        bank engages in the issuance or sale to 
                        qualified investors, through a grantor 
                        trust or other separate entity, of 
                        securities backed by or representing an 
                        interest in notes, drafts, acceptances, 
                        loans, leases, receivables, other 
                        obligations (other than securities of 
                        which the bank is not the issuer), or 
                        pools of any such obligations 
                        predominantly originated by--
                                  (I) the bank;
                                  (II) an affiliate of any such 
                                bank other than a broker or 
                                dealer; or
                                  (III) a syndicate of banks of 
                                which the bank is a member, if 
                                the obligations or pool of 
                                obligations consists of 
                                mortgage obligations or 
                                consumer-related receivables.
                          (iv) Identified banking products.--
                        The bank buys or sells identified 
                        banking products, as defined in section 
                        206 of the Gramm-Leach-Bliley Act.
          (6) The term ``bank'' means (A) a banking institution 
        organized under the laws of the United States or a 
        Federal savings association, as defined in section 2(5) 
        of the Home Owners' Loan Act, (B) a member bank of the 
        Federal Reserve System, (C) any other banking 
        institution or savings association, as defined in 
        section 2(4) of the Home Owners' Loan Act, whether 
        incorporated or not, doing business under the laws of 
        any State or of the United States, a substantial 
        portion of the business of which consists of receiving 
        deposits or exercising fiduciary powers similar to 
        those permitted to national banks under the authority 
        of the Comptroller of the Currency pursuant to the 
        first section of Public Law 87-722 (12 U.S.C. 92a), and 
        which is supervised and examined by State or Federal 
        authority having supervision over banks or savings 
        associations, and which is not operated for the purpose 
        of evading the provisions of this title, and (D) a 
        receiver, conservator, or other liquidating agent of 
        any institution or firm included in clauses (A), (B), 
        or (C) of this paragraph.
          (7) The term ``director'' means any director of a 
        corporation or any person performing similar functions 
        with respect to any organization, whether incorporated 
        or unincorporated.
          (8) The term ``issuer'' means any person who issues 
        or proposes to issue any security; except that with 
        respect to certificates of deposit for securities, 
        voting-trust certificates, or collateral-trust 
        certificates, or with respect to certificates of 
        interest or shares in an unincorporated investment 
        trust not having a board of directors or of the fixed, 
        restricted management, or unit type, the term 
        ``issuer'' means the person or persons performing the 
        acts and assuming the duties of depositor or manager 
        pursuant to the provisions of the trust or other 
        agreement or instrument under which such securities are 
        issued; and except that with respect to equipment-trust 
        certificates or like securities, the term ``issuer'' 
        means the person by whom the equipment or property is, 
        or is to be, used.
          (9) The term ``person'' means a natural person, 
        company, government, or political subdivision, agency, 
        or instrumentality of a government.
          (10) The term ``security'' means any note, stock, 
        treasury stock, security future, security-based 
        swap,bond, debenture, certificate of interest or 
        participation in any profit-sharing agreement or in any 
        oil, gas, or other mineral royalty or lease, any 
        collateral-trust certificate, preorganization 
        certificate or subscription, transferable share, 
        investment contract, voting-trust certificate, 
        certificate of deposit for a security, any put, call, 
        straddle, option, or privilege on any security, 
        certificate of deposit, or group or index of securities 
        (including any interest therein or based on the value 
        thereof), or any put, call, straddle, option, or 
        privilege entered into on a national securities 
        exchange relating to foreign currency, or in general, 
        any instrument commonly known as a ``security''; or any 
        certificate of interest or participation in, temporary 
        or interim certificate for, receipt for, or warrant or 
        right to subscribe to or purchase, any of the 
        foregoing; but shall not include currency or any note, 
        draft, bill of exchange, or banker's acceptance which 
        has a maturity at the time of issuance of not exceeding 
        nine months, exclusive of days of grace, or any renewal 
        thereof the maturity of which is likewise limited.
          (11) The term ``equity security'' means any stock or 
        similar security; or any security future on any such 
        security; or any security convertible, with or without 
        consideration, into such a security, or carrying any 
        warrant or right to subscribe to or purchase such a 
        security; or any such warrant or right; or any other 
        security which the Commission shall deem to be of 
        similar nature and consider necessary or appropriate, 
        by such rules and regulations as it may prescribe in 
        the public interest or for the protection of investors, 
        to treat as an equity security.
          (12)(A) The term ``exempted security'' or ``exempted 
        securities'' includes--
                  (i) government securities, as defined in 
                paragraph (42) of this subsection;
                  (ii) municipal securities, as defined in 
                paragraph (29) of this subsection;
                  (iii) any interest or participation in any 
                common trust fund or similar fund that is 
                excluded from the definition of the term 
                ``investment company'' under section 3(c)(3) of 
                the Investment Company Act of 1940;
                  (iv) any interest or participation in a 
                single trust fund, or a collective trust fund 
                maintained by a bank, or any security arising 
                out of a contract issued by an insurance 
                company, which interest, participation, or 
                security is issued in connection with a 
                qualified plan as defined in subparagraph (C) 
                of this paragraph;
                  (v) any security issued by or any interest or 
                participation in any pooled income fund, 
                collective trust fund, collective investment 
                fund, or similar fund that is excluded from the 
                definition of an investment company under 
                section 3(c)(10)(B) of the Investment Company 
                Act of 1940;
                  (vi) solely for purposes of sections 12, 13, 
                14, and 16 of this title, any security issued 
                by or any interest or participation in any 
                church plan, company, or account that is 
                excluded from the definition of an investment 
                company under section 3(c)(14) of the 
                Investment Company Act of 1940; and
                  (vii) such other securities (which may 
                include, among others, unregistered securities, 
                the market in which is predominantly 
                intrastate) as the Commission may, by such 
                rules and regulations as it deems consistent 
                with the public interest and the protection of 
                investors, either unconditionally or upon 
                specified terms and conditions or for stated 
                periods, exempt from the operation of any one 
                or more provisions of this title which by their 
                terms do not apply to an ``exempted security'' 
                or to ``exempted securities''.
          (B)(i) Notwithstanding subparagraph (A)(i) of this 
        paragraph, government securities shall not be deemed to 
        be ``exempted securities'' for the purposes of section 
        17A of this title.
          (ii) Notwithstanding subparagraph (A)(ii) of this 
        paragraph, municipal securities shall not be deemed to 
        be ``exempted securities'' for the purposes of sections 
        15 and 17A of this title.
          (C) For purposes of subparagraph (A)(iv) of this 
        paragraph, the term ``qualified plan'' means (i) a 
        stock bonus, pension, or profit-sharing plan which 
        meets the requirements for qualification under section 
        401 of the Internal Revenue Code of 1954, (ii) an 
        annuity plan which meets the requirements for the 
        deduction of the employer's contribution under section 
        404(a)(2) of such Code, (iii) a governmental plan as 
        defined in section 414(d) of such Code which has been 
        established by an employer for the exclusive benefit of 
        its employees or their beneficiaries for the purpose of 
        distributing to such employees or their beneficiaries 
        the corpus and income of the funds accumulated under 
        such plan, if under such plan it is impossible, prior 
        to the satisfaction of all liabilities with respect to 
        such employees and their beneficiaries, for any part of 
        the corpus or income to be used for, or diverted to, 
        purposes other than the exclusive benefit of such 
        employees or their beneficiaries, [or (iv)](iv) a plan 
        which meets the requirements of section 403(b) of such 
        Code (I) if (aa) such plan is subject to title I of the 
        Employee Retirement Income Security Act of 1974 (29 
        U.S.C. 1001 et seq.), (bb) any employer making such 
        plan available agrees to serve as a fiduciary for the 
        plan with respect to the selection of the plan's 
        investments among which participants can choose, or 
        (cc) such plan is a governmental plan (as defined in 
        section 414(d) of such Code), and (II) if the employer, 
        a fiduciary of the plan, or another person acting on 
        behalf of the employer reviews and approves each 
        investment described under subclause (I)(bb) prior to 
        the investment being offered to participants in the 
        plan, or (v)  a church plan, company, or account that 
        is excluded from the definition of an investment 
        company under section 3(c)(14) of the Investment 
        Company Act of 1940, other than any plan described in 
        clause (i), [(ii), or (iii)] (ii), (iii), or (iv) of 
        this subparagraph which (I) covers employees some or 
        all of whom are employees within the meaning of section 
        401(c) of such Code, or (II)[is a plan funded] in the 
        case of a plan not described in clause (iv), is a plan 
        funded by an annuity contract described in section 
        403(b) of such Code.
          (13) The terms ``buy'' and ``purchase'' each include 
        any contract to buy, purchase, or otherwise acquire. 
        For security futures products, such term includes any 
        contract, agreement, or transaction for future 
        delivery. For security-based swaps, such terms include 
        the execution, termination (prior to its scheduled 
        maturity date), assignment, exchange, or similar 
        transfer or conveyance of, or extinguishing of rights 
        or obligations under, a security-based swap, as the 
        context may require.
          (14) The terms ``sale'' and ``sell'' each include any 
        contract to sell or otherwise dispose of. For security 
        futures products, such term includes any contract, 
        agreement, or transaction for future delivery. For 
        security-based swaps, such terms include the execution, 
        termination (prior to its scheduled maturity date), 
        assignment, exchange, or similar transfer or conveyance 
        of, or extinguishing of rights or obligations under, a 
        security-based swap, as the context may require.
          (15) The term ``Commission'' means the Securities and 
        Exchange Commission established by section 4 of this 
        title.
          (16) The term ``State'' means any State of the United 
        States, the District of Columbia, Puerto Rico, the 
        Virgin Islands, or any other possession of the United 
        States.
          (17) The term ``interstate commerce'' means trade, 
        commerce, transportation, or communication among the 
        several States, or between any foreign country and any 
        State, or between any State and any place or ship 
        outside thereof. The term also includes intrastate use 
        of (A) any facility of a national securities exchange 
        or of a telephone or other interstate means of 
        communication, or (B) any other interstate 
        instrumentality.
          (18) The term ``person associated with a broker or 
        dealer'' or ``associated person of a broker or dealer'' 
        means any partner, officer, director, or branch manager 
        of such broker or dealer (or any person occupying a 
        similar status or performing similar functions), any 
        person directly or indirectly controlling, controlled 
        by, or under common control with such broker or dealer, 
        or any employee of such broker or dealer, except that 
        any person associated with a broker or dealer whose 
        functions are solely clerical or ministerial shall not 
        be included in the meaning of such term for purposes of 
        section 15(b) of this title (other than paragraph (6) 
        thereof).
          (19) The terms ``investment company,''``affiliated 
        person,''``insurance company,''``separate account,'' 
        and ``company'' have the same meanings as in the 
        Investment Company Act of 1940.
          (20) The terms ``investment adviser'' and 
        ``underwriter'' have the same meanings as in the 
        Investment Advisers Act of 1940.
          (21) The term ``persons associated with a member'' or 
        ``associated person of a member'' when used with 
        respect to a member of a national securities exchange 
        or registered securities association means any partner, 
        officer, director, or branch manager of such member (or 
        any person occupying a similar status or performing 
        similar functions), any person directly or indirectly 
        controlling, controlled by, or under common control 
        with such member, or any employee of such member.
          (22)(A) The term ``securities information processor'' 
        means any person engaged in the business of (i) 
        collecting, processing, or preparing for distribution 
        or publication, or assisting, participating in, or 
        coordinating the distribution or publication of, 
        information with respect to transactions in or 
        quotations for any security (other than an exempted 
        security) or (ii) distributing or publishing (whether 
        by means of a ticker tape, a communications network, a 
        terminal display device, or otherwise) on a current and 
        continuing basis, information with respect to such 
        transactions or quotations. The term ``securities 
        information processor'' does not include any bona fide 
        newspaper, news magazine, or business or financial 
        publication of general and regular circulation, any 
        self-regulatory organization, any bank, broker, dealer, 
        building and loan, savings and loan, or homestead 
        association, or cooperative bank, if such bank, broker, 
        dealer, association, or cooperative bank would be 
        deemed to be a securities information processor solely 
        by reason of functions performed by such institutions 
        as part of customary banking, brokerage, dealing, 
        association, or cooperative bank activities, or any 
        common carrier, as defined in section 3 of the 
        Communications Act of 1934, subject to the jurisdiction 
        of the Federal Communications Commission or a State 
        commission, as defined in section 3 of that Act, unless 
        the Commission determines that such carrier is engaged 
        in the business of collecting, processing, or preparing 
        for distribution or publication, information with 
        respect to transactions in or quotations for any 
        security.
          (B) The term ``exclusive processor'' means any 
        securities information processor or self-regulatory 
        organization which, directly or indirectly, engages on 
        an exclusive basis on behalf of any national securities 
        exchange or registered securities association, or any 
        national securities exchange or registered securities 
        association which engages on an exclusive basis on its 
        own behalf, in collecting, processing, or preparing for 
        distribution or publication any information with 
        respect to (i) transactions or quotations on or 
        effected or made by means of any facility of such 
        exchange or (ii) quotations distributed or published by 
        means of any electronic system operated or controlled 
        by such association.
          (23)(A) The term ``clearing agency'' means any person 
        who acts as an intermediary in making payments or 
        deliveries or both in connection with transactions in 
        securities or who provides facilities for comparison of 
        data respecting the terms of settlement of securities 
        transactions, to reduce the number of settlements of 
        securities transactions, or for the allocation of 
        securities settlement responsibilities. Such term also 
        means any person, such as a securities depository, who 
        (i) acts as a custodian of securities in connection 
        with a system for the central handling of securities 
        whereby all securities of a particular class or series 
        of any issuer deposited within the system are treated 
        as fungible and may be transferred, loaned, or pledged 
        by bookkeeping entry without physical delivery of 
        securities certificates, or (ii) otherwise permits or 
        facilitates the settlement of securities transactions 
        or the hypothecation or lending of securities without 
        physical delivery of securities certificates.
          (B) The term ``clearing agency'' does not include (i) 
        any Federal Reserve bank, Federal home loan bank, or 
        Federal land bank; (ii) any national securities 
        exchange or registered securities association solely by 
        reason of its providing facilities for comparison of 
        data respecting the terms of settlement of securities 
        transactions effected on such exchange or by means of 
        any electronic system operated or controlled by such 
        association; (iii) any bank, broker, dealer, building 
        and loan, savings and loan, or homestead association, 
        or cooperative bank if such bank, broker, dealer, 
        association, or cooperative bank would be deemed to be 
        a clearing agency solely by reason of functions 
        performed by such institution as part of customary 
        banking, brokerage, dealing, association, or 
        cooperative banking activities, or solely by reason of 
        acting on behalf of a clearing agency or a participant 
        therein in connection with the furnishing by the 
        clearing agency of services to its participants or the 
        use of services of the clearing agency by its 
        participants, unless the Commission, by rule, otherwise 
        provides as necessary or appropriate to assure the 
        prompt and accurate clearance and settlement of 
        securities transactions or to prevent evasion of this 
        title; (iv) any life insurance company, its registered 
        separate accounts, or a subsidiary of such insurance 
        company solely by reason of functions commonly 
        performed by such entities in connection with variable 
        annuity contracts or variable life policies issued by 
        such insurance company or its separate accounts; (v) 
        any registered open-end investment company or unit 
        investment trust solely by reason of functions commonly 
        performed by it in connection with shares in such 
        registered open-end investment company or unit 
        investment trust, or (vi) any person solely by reason 
        of its performing functions described in paragraph 
        25(E) of this subsection.
          (24) The term ``participant'' when used with respect 
        to a clearing agency means any person who uses a 
        clearing agency to clear or settle securities 
        transactions or to transfer, pledge, lend, or 
        hypothecate securities. Such term does not include a 
        person whose only use of a clearing agency is (A) 
        through another person who is a participant or (B) as a 
        pledgee of securities.
          (25) The term ``transfer agent'' means any person who 
        engages on behalf of an issuer of securities or on 
        behalf of itself as an issuer of securities in (A) 
        countersigning such securities upon issuance; (B) 
        monitoring the issuance of such securities with a view 
        to preventing unauthorized issuance, a function 
        commonly performed by a person called a registrar; (C) 
        registering the transfer of such securities; (D) 
        exchanging or converting such securities; or (E) 
        transferring record ownership of securities by 
        bookkeeping entry without physical issuance of 
        securities certificates. The term ``transfer agent'' 
        does not include any insurance company or separate 
        account which performs such functions solely with 
        respect to variable annuity contracts or variable life 
        policies which it issues or any registered clearing 
        agency which performs such functions solely with 
        respect to options contracts which it issues.
          (26) The term ``self-regulatory organization'' means 
        any national securities exchange, registered securities 
        association, or registered clearing agency, or (solely 
        for purposes of sections 19(b), 19(c), and 23(b) of 
        this title) the Municipal Securities Rulemaking Board 
        established by section 15B of this title.
          (27) The term ``rules of an exchange'', ``rules of an 
        association'', or ``rules of a clearing agency'' means 
        the constitution, articles of incorporation, bylaws, 
        and rules, or instruments corresponding to the 
        foregoing, of an exchange, association of brokers and 
        dealers, or clearing agency, respectively, and such of 
        the stated policies, practices, and interpretations of 
        such exchange, association, or clearing agency as the 
        Commission, by rule, may determine to be necessary or 
        appropriate in the public interest or for the 
        protection of investors to be deemed to be rules of 
        such exchange, association, or clearing agency.
          (28) The term ``rules of a self-regulatory 
        organization'' means the rules of an exchange which is 
        a national securities exchange, the rules of an 
        association of brokers and dealers which is a 
        registered securities association, the rules of a 
        clearing agency which is a registered clearing agency, 
        or the rules of the Municipal Securities Rulemaking 
        Board.
          (29) The term ``municipal securities'' means 
        securities which are direct obligations of, or 
        obligations guaranteed as to principal or interest by, 
        a State or any political subdivision thereof, or any 
        agency or instrumentality of a State or any political 
        subdivision thereof, or any municipal corporate 
        instrumentality of one or more States, or any security 
        which is an industrial development bond (as defined in 
        section 103(c)(2) of the Internal Revenue Code of 1954) 
        the interest on which is excludable from gross income 
        under section 103(a)(1) of such Code if, by reason of 
        the application of paragraph (4) or (6) of section 
        103(c) of such Code (determined as if paragraphs 
        (4)(A), (5), and (7) were not included in such section 
        103(c)), paragraph (1) of such section 103(c) does not 
        apply to such security.
          (30) The term ``municipal securities dealer'' means 
        any person (including a separately identifiable 
        department or division of a bank) engaged in the 
        business of buying and selling municipal securities for 
        his own account, through a broker or otherwise, but 
        does not include--
                  (A) any person insofar as he buys or sells 
                such securities for his own account, either 
                individually or in some fiduciary capacity, but 
                not as a part of a regular business; or
                  (B) a bank, unless the bank is engaged in the 
                business of buying and selling municipal 
                securities for its own account other than in a 
                fiduciary capacity, through a broker or 
                otherwise; Provided, however, That if the bank 
                is engaged in such business through a 
                separately identifiable department or division 
                (as defined by the Municipal Securities 
                Rulemaking Board in accordance with section 
                15B(b)(2)(H) of this title), the department or 
                division and not the bank itself shall be 
                deemed to be the municipal securities dealer.
          (31) The term ``municipal securities broker'' means a 
        broker engaged in the business of effecting 
        transactions in municipal securities for the account of 
        others.
          (32) The term ``person associated with a municipal 
        securities dealer'' when used with respect to a 
        municipal securities dealer which is a bank or a 
        division or department of a bank means any person 
        directly engaged in the management, direction, 
        supervision, or performance of any of the municipal 
        securities dealer's activities with respect to 
        municipal securities, and any person directly or 
        indirectly controlling such activities or controlled by 
        the municipal securities dealer in connection with such 
        activities.
          (33) The term ``municipal securities investment 
        portfolio'' means all municipal securities held for 
        investment and not for sale as part of a regular 
        business by a municipal securities dealer or by a 
        person, directly or indirectly, controlling, controlled 
        by, or under common control with a municipal securities 
        dealer.
          (34) The term ``appropriate regulatory agency'' 
        means--
                  (A) When used with respect to a municipal 
                securities dealer:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank, a 
                        subsidiary or a department or division 
                        of any such bank, a Federal savings 
                        association (as defined in section 
                        3(b)(2) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(2))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation, or a subsidiary or 
                        department or division of any such 
                        Federal savings association;
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        a State member bank of the Federal 
                        Reserve System, a subsidiary or a 
                        department or division thereof, a bank 
                        holding company, a subsidiary of a bank 
                        holding company which is a bank other 
                        than a bank specified in clause (i), 
                        (iii), or (iv) of this subparagraph, a 
                        subsidiary or a department or division 
                        of such subsidiary, or a savings and 
                        loan holding company;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System), 
                        a subsidiary or department or division 
                        of any such bank, a State savings 
                        association (as defined in section 
                        3(b)(3) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(3))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation, or a subsidiary or a 
                        department or division of any such 
                        State savings association; and
                          (iv) the Commission in the case of 
                        all other municipal securities dealers.
                  (B) When used with respect to a clearing 
                agency or transfer agent:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank, a 
                        subsidiary of any such bank, a Federal 
                        savings association (as defined in 
                        section 3(b)(2) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(2))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation, or a subsidiary of any 
                        such Federal savings association;
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        a State member bank of the Federal 
                        Reserve System, a subsidiary thereof, a 
                        bank holding company, a subsidiary of a 
                        bank holding company that is a bank 
                        other than a bank specified in clause 
                        (i) or (iii) of this subparagraph, or a 
                        savings and loan holding company;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System), 
                        a subsidiary of any such bank, a State 
                        savings association (as defined in 
                        section 3(b)(3) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(3))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation, or a subsidiary of any 
                        such State savings association; and
                          (iv) the Commission in the case of 
                        all other clearing agencies and 
                        transfer agents.
                  (C) When used with respect to a participant 
                or applicant to become a participant in a 
                clearing agency or a person requesting or 
                having access to services offered by a clearing 
                agency:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank or a 
                        Federal savings association (as defined 
                        in section 3(b)(2) of the Federal 
                        Deposit Insurance Act (12 U.S.C. 
                        1813(b)(2))), the deposits of which are 
                        insured by the Federal Deposit 
                        Insurance Corporation when the 
                        appropriate regulatory agency for such 
                        clearing agency is not the Commission;
                          (ii) the Board of Governors of the 
                        Federal Reserve System in the case of a 
                        State member bank of the Federal 
                        Reserve System, a bank holding company, 
                        or a subsidiary of a bank holding 
                        company, a subsidiary of a bank holding 
                        company that is a bank other than a 
                        bank specified in clause (i) or (iii) 
                        of this subparagraph, or a savings and 
                        loan holding company when the 
                        appropriate regulatory agency for such 
                        clearing agency is not the Commission;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System) 
                        or a State savings association (as 
                        defined in section 3(b)(3) of the 
                        Federal Deposit Insurance Act (12 
                        U.S.C. 1813(b)(3))), the deposits of 
                        which are insured by the Federal 
                        Deposit Insurance Corporation; and when 
                        the appropriate regulatory agency for 
                        such clearing agency is not the 
                        Commission;
                          (iv) the Commission in all other 
                        cases.
                  (D) When used with respect to an 
                institutional investment manager which is a 
                bank the deposits of which are insured in 
                accordance with the Federal Deposit Insurance 
                Act:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank or a 
                        Federal savings association (as defined 
                        in section 3(b)(2) of the Federal 
                        Deposit Insurance Act (12 U.S.C. 
                        1813(b)(2))), the deposits of which are 
                        insured by the Federal Deposit 
                        Insurance Corporation;
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        any other member bank of the Federal 
                        Reserve System; and
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of any other 
                        insured bank or a State savings 
                        association (as defined in section 
                        3(b)(3) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(3))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation.
                  (E) When used with respect to a national 
                securities exchange or registered securities 
                association, member thereof, person associated 
                with a member thereof, applicant to become a 
                member thereof or to become associated with a 
                member thereof, or person requesting or having 
                access to services offered by such exchange or 
                association or member thereof, or the Municipal 
                Securities Rulemaking Board, the Commission.
                  (F) When used with respect to a person 
                exercising investment discretion with respect 
                to an account:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank or a 
                        Federal savings association (as defined 
                        in section 3(b)(2) of the Federal 
                        Deposit Insurance Act (12 U.S.C. 
                        1813(b)(2))), the deposits of which are 
                        insured by the Federal Deposit 
                        Insurance Corporation;
                          (ii) the Board of Governors of the 
                        Federal Reserve System in the case of 
                        any other member bank of the Federal 
                        Reserve System;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of any other 
                        bank the deposits of which are insured 
                        in accordance with the Federal Deposit 
                        Insurance Act or a State savings 
                        association (as defined in section 
                        3(b)(3) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(3))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation; and
                          (iv) the Commission in the case of 
                        all other such persons.
                  (G) When used with respect to a government 
                securities broker or government securities 
                dealer, or person associated with a government 
                securities broker or government securities 
                dealer:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank, a 
                        Federal savings association (as defined 
                        in section 3(b)(2) of the Federal 
                        Deposit Insurance Act), the deposits of 
                        which are insured by the Federal 
                        Deposit Insurance Corporation, or a 
                        Federal branch or Federal agency of a 
                        foreign bank (as such terms are used in 
                        the International Banking Act of 1978);
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        a State member bank of the Federal 
                        Reserve System, a foreign bank, an 
                        uninsured State branch or State agency 
                        of a foreign bank, a commercial lending 
                        company owned or controlled by a 
                        foreign bank (as such terms are used in 
                        the International Banking Act of 1978), 
                        or a corporation organized or having an 
                        agreement with the Board of Governors 
                        of the Federal Reserve System pursuant 
                        to section 25 or section 25A of the 
                        Federal Reserve Act;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System or 
                        a Federal savings bank), a State 
                        savings association (as defined in 
                        section 3(b)(3) of the Federal Deposit 
                        Insurance Act), the deposits of which 
                        are insured by the Federal Deposit 
                        Insurance Corporation, or an insured 
                        State branch of a foreign bank (as such 
                        terms are used in the International 
                        Banking Act of 1978); and
                          (iv) the Commission, in the case of 
                        all other government securities brokers 
                        and government securities dealers.
                  (H) When used with respect to an institution 
                described in subparagraph (D), (F), or (G) of 
                section 2(c)(2), or held under section 4(f), of 
                the Bank Holding Company Act of 1956--
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank;
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        a State member bank of the Federal 
                        Reserve System or any corporation 
                        chartered under section 25A of the 
                        Federal Reserve Act;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of any other 
                        bank the deposits of which are insured 
                        in accordance with the Federal Deposit 
                        Insurance Act; or
                          (iv) the Commission in the case of 
                        all other such institutions.
        As used in this paragraph, the terms ``bank holding 
        company'' and ``subsidiary of a bank holding company'' 
        have the meanings given them in section 2 of the Bank 
        Holding Company Act of 1956. As used in this paragraph, 
        the term ``savings and loan holding company'' has the 
        same meaning as in section 10(a) of the Home Owners' 
        Loan Act (12 U.S.C. 1467a(a)).
          (35) A person exercises ``investment discretion'' 
        with respect to an account if, directly or indirectly, 
        such person (A) is authorized to determine what 
        securities or other property shall be purchased or sold 
        by or for the account, (B) makes decisions as to what 
        securities or other property shall be purchased or sold 
        by or for the account even though some other person may 
        have responsibility for such investment decisions, or 
        (C) otherwise exercises such influence with respect to 
        the purchase and sale of securities or other property 
        by or for the account as the Commission, by rule, 
        determines, in the public interest or for the 
        protection of investors, should be subject to the 
        operation of the provisions of this title and rules and 
        regulations thereunder.
          (36) A class of persons or markets is subject to 
        ``equal regulation'' if no member of the class has a 
        competitive advantage over any other member thereof 
        resulting from a disparity in their regulation under 
        this title which the Commission determines is unfair 
        and not necessary or appropriate in furtherance of the 
        purposes of this title.
          (37) The term ``records'' means accounts, 
        correspondence, memorandums, tapes, discs, papers, 
        books, and other documents or transcribed information 
        of any type, whether expressed in ordinary or machine 
        language.
          (38) The term ``market maker'' means any specialist 
        permitted to act as a dealer, any dealer acting in the 
        capacity of block positioner, and any dealer who, with 
        respect to a security, holds himself out (by entering 
        quotations in an inter-dealer communications system or 
        otherwise) as being willing to buy and sell such 
        security for his own account on a regular or continuous 
        basis.
          (39) A person is subject to a ``statutory 
        disqualification'' with respect to membership or 
        participation in, or association with a member of, a 
        self-regulatory organization, if such person--
                  (A) has been and is expelled or suspended 
                from membership or participation in, or barred 
                or suspended from being associated with a 
                member of, any self-regulatory organization, 
                foreign equivalent of a self-regulatory 
                organization, foreign or international 
                securities exchange, contract market designated 
                pursuant to section 5 of the Commodity Exchange 
                Act (7 U.S.C. 7), or any substantially 
                equivalent foreign statute or regulation, or 
                futures association registered under section 17 
                of such Act (7 U.S.C. 21), or any substantially 
                equivalent foreign statute or regulation, or 
                has been and is denied trading privileges on 
                any such contract market or foreign equivalent;
          (B) is subject to--
                  (i) an order of the Commission, other 
                appropriate regulatory agency, or foreign 
                financial regulatory authority--
                          (I) denying, suspending for a period 
                        not exceeding 12 months, or revoking 
                        his registration as a broker, dealer, 
                        municipal securities dealer, government 
                        securities broker, government 
                        securities dealer, security-based swap 
                        dealer, or major security-based swap 
                        participant or limiting his activities 
                        as a foreign person performing a 
                        function substantially equivalent to 
                        any of the above; or
                          (II) barring or suspending for a 
                        period not exceeding 12 months his 
                        being associated with a broker, dealer, 
                        municipal securities dealer, government 
                        securities broker, government 
                        securities dealer, security-based swap 
                        dealer, major security-based swap 
                        participant, or foreign person 
                        performing a function substantially 
                        equivalent to any of the above;
                  (ii) an order of the Commodity Futures 
                Trading Commission denying, suspending, or 
                revoking his registration under the Commodity 
                Exchange Act (7 U.S.C. 1 et seq.); or
                  (iii) an order by a foreign financial 
                regulatory authority denying, suspending, or 
                revoking the person's authority to engage in 
                transactions in contracts of sale of a 
                commodity for future delivery or other 
                instruments traded on or subject to the rules 
                of a contract market, board of trade, or 
                foreign equivalent thereof;
                  (C) by his conduct while associated with a 
                broker, dealer, municipal securities dealer, 
                government securities broker, government 
                securities dealer, security-based swap dealer, 
                or major security-based swap participant, or 
                while associated with an entity or person 
                required to be registered under the Commodity 
                Exchange Act, has been found to be a cause of 
                any effective suspension, expulsion, or order 
                of the character described in subparagraph (A) 
                or (B) of this paragraph, and in entering such 
                a suspension, expulsion, or order, the 
                Commission, an appropriate regulatory agency, 
                or any such self-regulatory organization shall 
                have jurisdiction to find whether or not any 
                person was a cause thereof;
                  (D) by his conduct while associated with any 
                broker, dealer, municipal securities dealer, 
                government securities broker, government 
                securities dealer, security-based swap dealer, 
                major security-based swap participant, or any 
                other entity engaged in transactions in 
                securities, or while associated with an entity 
                engaged in transactions in contracts of sale of 
                a commodity for future delivery or other 
                instruments traded on or subject to the rules 
                of a contract market, board of trade, or 
                foreign equivalent thereof, has been found to 
                be a cause of any effective suspension, 
                expulsion, or order by a foreign or 
                international securities exchange or foreign 
                financial regulatory authority empowered by a 
                foreign government to administer or enforce its 
                laws relating to financial transactions as 
                described in subparagraph (A) or (B) of this 
                paragraph;
                  (E) has associated with him any person who is 
                known, or in the exercise of reasonable care 
                should be known, to him to be a person 
                described by subparagraph (A), (B), (C), or (D) 
                of this paragraph; or
                  (F) has committed or omitted any act, or is 
                subject to an order or finding, enumerated in 
                subparagraph (D), (E), (H), or (G) of paragraph 
                (4) of section 15(b) of this title, has been 
                convicted of any offense specified in 
                subparagraph (B) of such paragraph (4) or any 
                other felony within ten years of the date of 
                the filing of an application for membership or 
                participation in, or to become associated with 
                a member of, such self-regulatory organization, 
                is enjoined from any action, conduct, or 
                practice specified in subparagraph (C) of such 
                paragraph (4), has willfully made or caused to 
                be made in any application for membership or 
                participation in, or to become associated with 
                a member of, a self-regulatory organization, 
                report required to be filed with a self-
                regulatory organization, or proceeding before a 
                self-regulatory organization, any statement 
                which was at the time, and in the light of the 
                circumstances under which it was made, false or 
                misleading with respect to any material fact, 
                or has omitted to state in any such 
                application, report, or proceeding any material 
                fact which is required to be stated therein.
          (40) The term ``financial responsibility rules'' 
        means the rules and regulations of the Commission or 
        the rules and regulations prescribed by any self-
        regulatory organization relating to financial 
        responsibility and related practices which are 
        designated by the Commission, by rule or regulation, to 
        be financial responsibility rules.
          (41) The term ``mortgage related security'' means a 
        security that meets standards of credit-worthiness as 
        established by the Commission, and either:
                  (A) represents ownership of one or more 
                promissory notes or certificates of interest or 
                participation in such notes (including any 
                rights designed to assure servicing of, or the 
                receipt or timeliness of receipt by the holders 
                of such notes, certificates, or participations 
                of amounts payable under, such notes, 
                certificates, or participations), which notes:
                          (i) are directly secured by a first 
                        lien on a single parcel of real estate, 
                        including stock allocated to a dwelling 
                        unit in a residential cooperative 
                        housing corporation, upon which is 
                        located a dwelling or mixed residential 
                        and commercial structure, on a 
                        residential manufactured home as 
                        defined in section 603(6) of the 
                        National Manufactured Housing 
                        Construction and Safety Standards Act 
                        of 1974, whether such manufactured home 
                        is considered real or personal property 
                        under the laws of the State in which it 
                        is to be located, or on one or more 
                        parcels of real estate upon which is 
                        located one or more commercial 
                        structures; and
                          (ii) were originated by a savings and 
                        loan association, savings bank, 
                        commercial bank, credit union, 
                        insurance company, or similar 
                        institution which is supervised and 
                        examined by a Federal or State 
                        authority, or by a mortgage approved by 
                        the Secretary of Housing and Urban 
                        Development pursuant to sections 203 
                        and 211 of the National Housing Act, 
                        or, where such notes involve a lien on 
                        the manufactured home, by any such 
                        institution or by any financial 
                        institution approved for insurance by 
                        the Secretary of Housing and Urban 
                        Development pursuant to section 2 of 
                        the National Housing Act; or
                  (B) is secured by one or more promissory 
                notes or certificates of interest or 
                participations in such notes (with or without 
                recourse to the issuer thereof) and, by its 
                terms, provides for payments of principal in 
                relation to payments, or reasonable projections 
                of payments, on notes meeting the requirements 
                of subparagraphs (A) (i) and (ii) or 
                certificates of interest or participations in 
                promissory notes meeting such requirements.
        For the purpose of this paragraph, the term 
        ``promissory note'', when used in connection with a 
        manufactured home, shall also include a loan, advance, 
        or credit sale as evidence by a retail installment 
        sales contract or other instrument.
          (42) The term ``government securities'' means--
                  (A) securities which are direct obligations 
                of, or obligations guaranteed as to principal 
                or interest by, the United States;
                  (B) securities which are issued or guaranteed 
                by the Tennessee Valley Authority or by 
                corporations in which the United States has a 
                direct or indirect interest and which are 
                designated by the Secretary of the Treasury for 
                exemption as necessary or appropriate in the 
                public interest or for the protection of 
                investors;
                  (C) securities issued or guaranteed as to 
                principal or interest by any corporation the 
                securities of which are designated, by statute 
                specifically naming such corporation, to 
                constitute exempt securities within the meaning 
                of the laws administered by the Commission;
                  (D) for purposes of sections 15C and 17A, any 
                put, call, straddle, option, or privilege on a 
                security described in subparagraph (A), (B), or 
                (C) other than a put, call, straddle, option, 
                or privilege--
                          (i) that is traded on one or more 
                        national securities exchanges; or
                          (ii) for which quotations are 
                        disseminated through an automated 
                        quotation system operated by a 
                        registered securities association; or
                  (E) for purposes of sections 15, 15C, and 17A 
                as applied to a bank, a qualified Canadian 
                government obligation as defined in section 
                5136 of the Revised Statutes of the United 
                States.
          (43) The term ``government securities broker'' means 
        any person regularly engaged in the business of 
        effecting transactions in government securities for the 
        account of others, but does not include--
                  (A) any corporation the securities of which 
                are government securities under subparagraph 
                (B) or (C) of paragraph (42) of this 
                subsection; or
                  (B) any person registered with the Commodity 
                Futures Trading Commission, any contract market 
                designated by the Commodity Futures Trading 
                Commission, such contract market's affiliated 
                clearing organization, or any floor trader on 
                such contract market, solely because such 
                person effects transactions in government 
                securities that the Commission, after 
                consultation with the Commodity Futures Trading 
                Commission, has determined by rule or order to 
                be incidental to such person's futures-related 
                business.
          (44) The term ``government securities dealer'' means 
        any person engaged in the business of buying and 
        selling government securities for his own account, 
        through a broker or otherwise, but does not include--
                  (A) any person insofar as he buys or sells 
                such securities for his own account, either 
                individually or in some fiduciary capacity, but 
                not as a part of a regular business;
                  (B) any corporation the securities of which 
                are government securities under subparagraph 
                (B) or (C) of paragraph (42) of this 
                subsection;
                  (C) any bank, unless the bank is engaged in 
                the business of buying and selling government 
                securities for its own account other than in a 
                fiduciary capacity, through a broker or 
                otherwise; or
                  (D) any person registered with the Commodity 
                Futures Trading Commission, any contract market 
                designated by the Commodity Futures Trading 
                Commission, such contract market's affiliated 
                clearing organization, or any floor trader on 
                such contract market, solely because such 
                person effects transactions in government 
                securities that the Commission, after 
                consultation with the Commodity Futures Trading 
                Commission, has determined by rule or order to 
                be incidental to such person's futures-related 
                business.
          (45) The term ``person associated with a government 
        securities broker or government securities dealer'' 
        means any partner, officer, director, or branch manager 
        of such government securities broker or government 
        securities dealer (or any person occupying a similar 
        status or performing similar functions), and any other 
        employee of such government securities broker or 
        government securities dealer who is engaged in the 
        management, direction, supervision, or performance of 
        any activities relating to government securities, and 
        any person directly or indirectly controlling, 
        controlled by, or under common control with such 
        government securities broker or government securities 
        dealer.
          (46) The term ``financial institution'' means--
                  (A) a bank (as defined in paragraph (6) of 
                this subsection);
                  (B) a foreign bank (as such term is used in 
                the International Banking Act of 1978); and
                  (C) a savings association (as defined in 
                section 3(b) of the Federal Deposit Insurance 
                Act) the deposits of which are insured by the 
                Federal Deposit Insurance Corporation.
          (47) The term ``securities laws'' means the 
        Securities Act of 1933 (15 U.S.C. 77a et seq.), the 
        Securities Exchange Act of 1934 (15 U.S.C. 78a et 
        seq.), the Sarbanes-Oxley Act of 2002, the Trust 
        Indenture Act of 1939 (15 U.S.C. 77aaa et seq.), the 
        Investment Company Act of 1940 (15 U.S.C. 80a-1 et 
        seq.), the Investment Advisers Act of 1940 (15 U.S.C. 
        80b et seq.), and the Securities Investor Protection 
        Act of 1970 (15 U.S.C. 78aaa et seq.).
          (48) The term ``registered broker or dealer'' means a 
        broker or dealer registered or required to register 
        pursuant to section 15 or 15B of this title, except 
        that in paragraph (3) of this subsection and sections 6 
        and 15A the term means such a broker or dealer and a 
        government securities broker or government securities 
        dealer registered or required to register pursuant to 
        section 15C(a)(1)(A) of this title.
          (49) The terms ``person associated with a transfer 
        agent'' and ``associated person of a transfer agent'' 
        mean any person (except an employee whose functions are 
        solely clerical or ministerial) directly engaged in the 
        management, direction, supervision, or performance of 
        any of the transfer agent's activities with respect to 
        transfer agent functions, and any person directly or 
        indirectly controlling such activities or controlled by 
        the transfer agent in connection with such activities.
          (50) The term ``foreign securities authority'' means 
        any foreign government, or any governmental body or 
        regulatory organization empowered by a foreign 
        government to administer or enforce its laws as they 
        relate to securities matters.
          (51)(A) The term ``penny stock'' means any equity 
        security other than a security that is--
                  (i) registered or approved for registration 
                and traded on a national securities exchange 
                that meets such criteria as the Commission 
                shall prescribe by rule or regulation for 
                purposes of this paragraph;
                  (ii) authorized for quotation on an automated 
                quotation system sponsored by a registered 
                securities association, if such system (I) was 
                established and in operation before January 1, 
                1990, and (II) meets such criteria as the 
                Commission shall prescribe by rule or 
                regulation for purposes of this paragraph;
                  (iii) issued by an investment company 
                registered under the Investment Company Act of 
                1940;
                  (iv) excluded, on the basis of exceeding a 
                minimum price, net tangible assets of the 
                issuer, or other relevant criteria, from the 
                definition of such term by rule or regulation 
                which the Commission shall prescribe for 
                purposes of this paragraph; or
                  (v) exempted, in whole or in part, 
                conditionally or unconditionally, from the 
                definition of such term by rule, regulation, or 
                order prescribed by the Commission.
          (B) The Commission may, by rule, regulation, or 
        order, designate any equity security or class of equity 
        securities described in clause (i) or (ii) of 
        subparagraph (A) as within the meaning of the term 
        ``penny stock'' if such security or class of securities 
        is traded other than on a national securities exchange 
        or through an automated quotation system described in 
        clause (ii) of subparagraph (A).
          (C) In exercising its authority under this paragraph 
        to prescribe rules, regulations, and orders, the 
        Commission shall determine that such rule, regulation, 
        or order is consistent with the public interest and the 
        protection of investors.
          (52) The term ``foreign financial regulatory 
        authority'' means any (A) foreign securities authority, 
        (B) other governmental body or foreign equivalent of a 
        self-regulatory organization empowered by a foreign 
        government to administer or enforce its laws relating 
        to the regulation of fiduciaries, trusts, commercial 
        lending, insurance, trading in contracts of sale of a 
        commodity for future delivery, or other instruments 
        traded on or subject to the rules of a contract market, 
        board of trade, or foreign equivalent, or other 
        financial activities, or (C) membership organization a 
        function of which is to regulate participation of its 
        members in activities listed above.
          (53)(A) The term ``small business related security'' 
        means a security that meets standards of credit-
        worthiness as established by the Commission, and 
        either--
                  (i) represents an interest in 1 or more 
                promissory notes or leases of personal property 
                evidencing the obligation of a small business 
                concern and originated by an insured depository 
                institution, insured credit union, insurance 
                company, or similar institution which is 
                supervised and examined by a Federal or State 
                authority, or a finance company or leasing 
                company; or
                  (ii) is secured by an interest in 1 or more 
                promissory notes or leases of personal property 
                (with or without recourse to the issuer or 
                lessee) and provides for payments of principal 
                in relation to payments, or reasonable 
                projections of payments, on notes or leases 
                described in clause (i).
          (B) For purposes of this paragraph--
                  (i) an ``interest in a promissory note or a 
                lease of personal property'' includes ownership 
                rights, certificates of interest or 
                participation in such notes or leases, and 
                rights designed to assure servicing of such 
                notes or leases, or the receipt or timely 
                receipt of amounts payable under such notes or 
                leases;
                  (ii) the term ``small business concern'' 
                means a business that meets the criteria for a 
                small business concern established by the Small 
                Business Administration under section 3(a) of 
                the Small Business Act;
                  (iii) the term ``insured depository 
                institution'' has the same meaning as in 
                section 3 of the Federal Deposit Insurance Act; 
                and
                  (iv) the term ``insured credit union'' has 
                the same meaning as in section 101 of the 
                Federal Credit Union Act.
          (54) Qualified investor.--
                  (A) Definition.--Except as provided in 
                subparagraph (B), for purposes of this title, 
                the term ``qualified investor'' means--
                          (i) any investment company registered 
                        with the Commission under section 8 of 
                        the Investment Company Act of 1940;
                          (ii) any issuer eligible for an 
                        exclusion from the definition of 
                        investment company pursuant to section 
                        3(c)(7) of the Investment Company Act 
                        of 1940;
                          (iii) any bank (as defined in 
                        paragraph (6) of this subsection), 
                        savings association (as defined in 
                        section 3(b) of the Federal Deposit 
                        Insurance Act), broker, dealer, 
                        insurance company (as defined in 
                        section 2(a)(13) of the Securities Act 
                        of 1933), or business development 
                        company (as defined in section 2(a)(48) 
                        of the Investment Company Act of 1940);
                          (iv) any small business investment 
                        company licensed by the United States 
                        Small Business Administration under 
                        section 301 (c) or (d) of the Small 
                        Business Investment Act of 1958;
                          (v) any State sponsored employee 
                        benefit plan, or any other employee 
                        benefit plan, within the meaning of the 
                        Employee Retirement Income Security Act 
                        of 1974, other than an individual 
                        retirement account, if the investment 
                        decisions are made by a plan fiduciary, 
                        as defined in section 3(21) of that 
                        Act, which is either a bank, savings 
                        and loan association, insurance 
                        company, or registered investment 
                        adviser;
                          (vi) any trust whose purchases of 
                        securities are directed by a person 
                        described in clauses (i) through (v) of 
                        this subparagraph;
                          (vii) any market intermediary exempt 
                        under section 3(c)(2) of the Investment 
                        Company Act of 1940;
                          (viii) any associated person of a 
                        broker or dealer other than a natural 
                        person;
                          (ix) any foreign bank (as defined in 
                        section 1(b)(7) of the International 
                        Banking Act of 1978);
                          (x) the government of any foreign 
                        country;
                          (xi) any corporation, company, or 
                        partnership that owns and invests on a 
                        discretionary basis, not less than 
                        $25,000,000 in investments;
                          (xii) any natural person who owns and 
                        invests on a discretionary basis, not 
                        less than $25,000,000 in investments;
                          (xiii) any government or political 
                        subdivision, agency, or instrumentality 
                        of a government who owns and invests on 
                        a discretionary basis not less than 
                        $50,000,000 in investments; or
                          (xiv) any multinational or 
                        supranational entity or any agency or 
                        instrumentality thereof.
                  (B) Altered thresholds for asset-backed 
                securities and loan participations.--For 
                purposes of section 3(a)(5)(C)(iii) of this 
                title and section 206(a)(5) of the Gramm-Leach-
                Bliley Act, the term ``qualified investor'' has 
                the meaning given such term by subparagraph (A) 
                of this paragraph except that clauses (xi) and 
                (xii) shall be applied by substituting 
                ``$10,000,000'' for ``$25,000,000''.
                  (C) Additional authority.--The Commission 
                may, by rule or order, define a ``qualified 
                investor'' as any other person, taking into 
                consideration such factors as the financial 
                sophistication of the person, net worth, and 
                knowledge and experience in financial matters.
          (55)(A) The term ``security future'' means a contract 
        of sale for future delivery of a single security or of 
        a narrow-based security index, including any interest 
        therein or based on the value thereof, except an 
        exempted security under section 3(a)(12) of this title 
        as in effect on the date of the enactment of the 
        Futures Trading Act of 1982 (other than any municipal 
        security as defined in section 3(a)(29) as in effect on 
        the date of the enactment of the Futures Trading Act of 
        1982). The term ``security future'' does not include 
        any agreement, contract, or transaction excluded from 
        the Commodity Exchange Act under section 2(c), 2(d), 
        2(f), or 2(g) of the Commodity Exchange Act (as in 
        effect on the date of the enactment of the Commodity 
        Futures Modernization Act of 2000) or title IV of the 
        Commodity Futures Modernization Act of 2000.
          (B) The term ``narrow-based security index'' means an 
        index--
                  (i) that has 9 or fewer component securities;
                  (ii) in which a component security comprises 
                more than 30 percent of the index's weighting;
                  (iii) in which the five highest weighted 
                component securities in the aggregate comprise 
                more than 60 percent of the index's weighting; 
                or
                  (iv) in which the lowest weighted component 
                securities comprising, in the aggregate, 25 
                percent of the index's weighting have an 
                aggregate dollar value of average daily trading 
                volume of less than $50,000,000 (or in the case 
                of an index with 15 or more component 
                securities, $30,000,000), except that if there 
                are two or more securities with equal weighting 
                that could be included in the calculation of 
                the lowest weighted component securities 
                comprising, in the aggregate, 25 percent of the 
                index's weighting, such securities shall be 
                ranked from lowest to highest dollar value of 
                average daily trading volume and shall be 
                included in the calculation based on their 
                ranking starting with the lowest ranked 
                security.
          (C) Notwithstanding subparagraph (B), an index is not 
        a narrow-based security index if--
                  (i)(I) it has at least nine component 
                securities;
                  (II) no component security comprises more 
                than 30 percent of the index's weighting; and
                  (III) each component security is--
                          (aa) registered pursuant to section 
                        12 of the Securities Exchange Act of 
                        1934;
                          (bb) one of 750 securities with the 
                        largest market capitalization; and
                          (cc) one of 675 securities with the 
                        largest dollar value of average daily 
                        trading volume;
                  (ii) a board of trade was designated as a 
                contract market by the Commodity Futures 
                Trading Commission with respect to a contract 
                of sale for future delivery on the index, 
                before the date of the enactment of the 
                Commodity Futures Modernization Act of 2000;
                  (iii)(I) a contract of sale for future 
                delivery on the index traded on a designated 
                contract market or registered derivatives 
                transaction execution facility for at least 30 
                days as a contract of sale for future delivery 
                on an index that was not a narrow-based 
                security index; and
                  (II) it has been a narrow-based security 
                index for no more than 45 business days over 3 
                consecutive calendar months;
                  (iv) a contract of sale for future delivery 
                on the index is traded on or subject to the 
                rules of a foreign board of trade and meets 
                such requirements as are jointly established by 
                rule or regulation by the Commission and the 
                Commodity Futures Trading Commission;
                  (v) no more than 18 months have passed since 
                the date of the enactment of the Commodity 
                Futures Modernization Act of 2000 and--
                          (I) it is traded on or subject to the 
                        rules of a foreign board of trade;
                          (II) the offer and sale in the United 
                        States of a contract of sale for future 
                        delivery on the index was authorized 
                        before the date of the enactment of the 
                        Commodity Futures Modernization Act of 
                        2000; and
                          (III) the conditions of such 
                        authorization continue to be met; or
                  (vi) a contract of sale for future delivery 
                on the index is traded on or subject to the 
                rules of a board of trade and meets such 
                requirements as are jointly established by 
                rule, regulation, or order by the Commission 
                and the Commodity Futures Trading Commission.
          (D) Within 1 year after the enactment of the 
        Commodity Futures Modernization Act of 2000, the 
        Commission and the Commodity Futures Trading Commission 
        jointly shall adopt rules or regulations that set forth 
        the requirements under clause (iv) of subparagraph (C).
          (E) An index that is a narrow-based security index 
        solely because it was a narrow-based security index for 
        more than 45 business days over 3 consecutive calendar 
        months pursuant to clause (iii) of subparagraph (C) 
        shall not be a narrow-based security index for the 3 
        following calendar months.
          (F) For purposes of subparagraphs (B) and (C) of this 
        paragraph--
                  (i) the dollar value of average daily trading 
                volume and the market capitalization shall be 
                calculated as of the preceding 6 full calendar 
                months; and
                  (ii) the Commission and the Commodity Futures 
                Trading Commission shall, by rule or 
                regulation, jointly specify the method to be 
                used to determine market capitalization and 
                dollar value of average daily trading volume.
          (56) The term ``security futures product'' means a 
        security future or any put, call, straddle, option, or 
        privilege on any security future.
          (57)(A) The term ``margin'', when used with respect 
        to a security futures product, means the amount, type, 
        and form of collateral required to secure any extension 
        or maintenance of credit, or the amount, type, and form 
        of collateral required as a performance bond related to 
        the purchase, sale, or carrying of a security futures 
        product.
          (B) The terms ``margin level'' and ``level of 
        margin'', when used with respect to a security futures 
        product, mean the amount of margin required to secure 
        any extension or maintenance of credit, or the amount 
        of margin required as a performance bond related to the 
        purchase, sale, or carrying of a security futures 
        product.
          (C) The terms ``higher margin level'' and ``higher 
        level of margin'', when used with respect to a security 
        futures product, mean a margin level established by a 
        national securities exchange registered pursuant to 
        section 6(g) that is higher than the minimum amount 
        established and in effect pursuant to section 
        7(c)(2)(B).
          (58) Audit committee.--The term ``audit committee'' 
        means--
                  (A) a committee (or equivalent body) 
                established by and amongst the board of 
                directors of an issuer for the purpose of 
                overseeing the accounting and financial 
                reporting processes of the issuer and audits of 
                the financial statements of the issuer; and
                  (B) if no such committee exists with respect 
                to an issuer, the entire board of directors of 
                the issuer.
          (59) Registered public accounting firm.--The term 
        ``registered public accounting firm'' has the same 
        meaning as in section 2 of the Sarbanes-Oxley Act of 
        2002.
          (60) Credit rating.--The term ``credit rating'' means 
        an assessment of the creditworthiness of an obligor as 
        an entity or with respect to specific securities or 
        money market instruments.
          (61) Credit rating agency.--The term ``credit rating 
        agency'' means any person--
                  (A) engaged in the business of issuing credit 
                ratings on the Internet or through another 
                readily accessible means, for free or for a 
                reasonable fee, but does not include a 
                commercial credit reporting company;
                  (B) employing either a quantitative or 
                qualitative model, or both, to determine credit 
                ratings; and
                  (C) receiving fees from either issuers, 
                investors, or other market participants, or a 
                combination thereof.
          (62) Nationally recognized statistical rating 
        organization.--The term ``nationally recognized 
        statistical rating organization'' means a credit rating 
        agency that--
                  (A) issues credit ratings certified by 
                qualified institutional buyers, in accordance 
                with section 15E(a)(1)(B)(ix), with respect 
                to--
                          (i) financial institutions, brokers, 
                        or dealers;
                          (ii) insurance companies;
                          (iii) corporate issuers;
                          (iv) issuers of asset-backed 
                        securities (as that term is defined in 
                        section 1101(c) of part 229 of title 
                        17, Code of Federal Regulations, as in 
                        effect on the date of enactment of this 
                        paragraph);
                          (v) issuers of government securities, 
                        municipal securities, or securities 
                        issued by a foreign government; or
                          (vi) a combination of one or more 
                        categories of obligors described in any 
                        of clauses (i) through (v); and
                  (B) is registered under section 15E.
          (63) Person associated with a nationally recognized 
        statistical rating organization.--The term ``person 
        associated with'' a nationally recognized statistical 
        rating organization means any partner, officer, 
        director, or branch manager of a nationally recognized 
        statistical rating organization (or any person 
        occupying a similar status or performing similar 
        functions), any person directly or indirectly 
        controlling, controlled by, or under common control 
        with a nationally recognized statistical rating 
        organization, or any employee of a nationally 
        recognized statistical rating organization.
          (64) Qualified institutional buyer.--The term 
        ``qualified institutional buyer'' has the meaning given 
        such term in section 230.144A(a) of title 17, Code of 
        Federal Regulations, or any successor thereto.
           (79) Asset-backed security.--The term ``asset-backed 
        security''--
                  (A) means a fixed-income or other security 
                collateralized by any type of self-liquidating 
                financial asset (including a loan, a lease, a 
                mortgage, or a secured or unsecured receivable) 
                that allows the holder of the security to 
                receive payments that depend primarily on cash 
                flow from the asset, including--
                          (i) a collateralized mortgage 
                        obligation;
                          (ii) a collateralized debt 
                        obligation;
                          (iii) a collateralized bond 
                        obligation;
                          (iv) a collateralized debt obligation 
                        of asset-backed securities;
                          (v) a collateralized debt obligation 
                        of collateralized debt obligations; and
                          (vi) a security that the Commission, 
                        by rule, determines to be an asset-
                        backed security for purposes of this 
                        section; and
                  (B) does not include a security issued by a 
                finance subsidiary held by the parent company 
                or a company controlled by the parent company, 
                if none of the securities issued by the finance 
                subsidiary are held by an entity that is not 
                controlled by the parent company.
          (65) Eligible contract participant.--The term 
        ``eligible contract participant'' has the same meaning 
        as in section 1a of the Commodity Exchange Act (7 
        U.S.C. 1a).
          (66) Major swap participant.--The term ``major swap 
        participant'' has the same meaning as in section 1a of 
        the Commodity Exchange Act (7 U.S.C. 1a).
          (67) Major security-based swap participant.--
                  (A) In general.--The term ``major security-
                based swap participant'' means any person--
                          (i) who is not a security-based swap 
                        dealer; and
                          (ii)(I) who maintains a substantial 
                        position in security-based swaps for 
                        any of the major security-based swap 
                        categories, as such categories are 
                        determined by the Commission, excluding 
                        both positions held for hedging or 
                        mitigating commercial risk and 
                        positions maintained by any employee 
                        benefit plan (or any contract held by 
                        such a plan) as defined in paragraphs 
                        (3) and (32) of section 3 of the 
                        Employee Retirement Income Security Act 
                        of 1974 (29 U.S.C. 1002) for the 
                        primary purpose of hedging or 
                        mitigating any risk directly associated 
                        with the operation of the plan;
                          (II) whose outstanding security-based 
                        swaps create substantial counterparty 
                        exposure that could have serious 
                        adverse effects on the financial 
                        stability of the United States banking 
                        system or financial markets; or
                          (III) that is a financial entity 
                        that--
                                  (aa) is highly leveraged 
                                relative to the amount of 
                                capital such entity holds and 
                                that is not subject to capital 
                                requirements established by an 
                                appropriate Federal banking 
                                agency; and
                                  (bb) maintains a substantial 
                                position in outstanding 
                                security-based swaps in any 
                                major security-based swap 
                                category, as such categories 
                                are determined by the 
                                Commission.
                  (B) Definition of substantial position.--For 
                purposes of subparagraph (A), the Commission 
                shall define, by rule or regulation, the term 
                ``substantial position'' at the threshold that 
                the Commission determines to be prudent for the 
                effective monitoring, management, and oversight 
                of entities that are systemically important or 
                can significantly impact the financial system 
                of the United States. In setting the definition 
                under this subparagraph, the Commission shall 
                consider the person's relative position in 
                uncleared as opposed to cleared security-based 
                swaps and may take into consideration the value 
                and quality of collateral held against 
                counterparty exposures.
                  (C) Scope of designation.--For purposes of 
                subparagraph (A), a person may be designated as 
                a major security-based swap participant for 1 
                or more categories of security-based swaps 
                without being classified as a major security-
                based swap participant for all classes of 
                security-based swaps.
          (68) Security-based swap.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``security-based 
                swap'' means any agreement, contract, or 
                transaction that--
                          (i) is a swap, as that term is 
                        defined under section 1a of the 
                        Commodity Exchange Act (without regard 
                        to paragraph (47)(B)(x) of such 
                        section); and
                          (ii) is based on--
                                  (I) an index that is a 
                                narrow-based security index, 
                                including any interest therein 
                                or on the value thereof;
                                  (II) a single security or 
                                loan, including any interest 
                                therein or on the value 
                                thereof; or
                                  (III) the occurrence, 
                                nonoccurrence, or extent of the 
                                occurrence of an event relating 
                                to a single issuer of a 
                                security or the issuers of 
                                securities in a narrow-based 
                                security index, provided that 
                                such event directly affects the 
                                financial statements, financial 
                                condition, or financial 
                                obligations of the issuer.
                  (B) Rule of construction regarding master 
                agreements.--The term ``security-based swap'' 
                shall be construed to include a master 
                agreement that provides for an agreement, 
                contract, or transaction that is a security-
                based swap pursuant to subparagraph (A), 
                together with all supplements to any such 
                master agreement, without regard to whether the 
                master agreement contains an agreement, 
                contract, or transaction that is not a 
                security-based swap pursuant to subparagraph 
                (A), except that the master agreement shall be 
                considered to be a security-based swap only 
                with respect to each agreement, contract, or 
                transaction under the master agreement that is 
                a security-based swap pursuant to subparagraph 
                (A).
                  (C) Exclusions.--The term ``security-based 
                swap'' does not include any agreement, 
                contract, or transaction that meets the 
                definition of a security-based swap only 
                because such agreement, contract, or 
                transaction references, is based upon, or 
                settles through the transfer, delivery, or 
                receipt of an exempted security under paragraph 
                (12), as in effect on the date of enactment of 
                the Futures Trading Act of 1982 (other than any 
                municipal security as defined in paragraph (29) 
                as in effect on the date of enactment of the 
                Futures Trading Act of 1982), unless such 
                agreement, contract, or transaction is of the 
                character of, or is commonly known in the trade 
                as, a put, call, or other option.
                  (D) Mixed swap.--The term ``security-based 
                swap'' includes any agreement, contract, or 
                transaction that is as described in 
                subparagraph (A) and also is based on the value 
                of 1 or more interest or other rates, 
                currencies, commodities, instruments of 
                indebtedness, indices, quantitative measures, 
                other financial or economic interest or 
                property of any kind (other than a single 
                security or a narrow-based security index), or 
                the occurrence, non-occurrence, or the extent 
                of the occurrence of an event or contingency 
                associated with a potential financial, 
                economic, or commercial consequence (other than 
                an event described in subparagraph 
                (A)(ii)(III)).
                  (E) Rule of construction regarding use of the 
                term index.--The term ``index'' means an index 
                or group of securities, including any interest 
                therein or based on the value thereof.
          (69) Swap.--The term ``swap'' has the same meaning as 
        in section 1a of the Commodity Exchange Act (7 U.S.C. 
        1a).
          (70) Person associated with a security-based swap 
        dealer or major security-based swap participant.--
                  (A) In general.--The term ``person associated 
                with a security-based swap dealer or major 
                security-based swap participant'' or 
                ``associated person of a security-based swap 
                dealer or major security-based swap 
                participant'' means--
                          (i) any partner, officer, director, 
                        or branch manager of such security-
                        based swap dealer or major security-
                        based swap participant (or any person 
                        occupying a similar status or 
                        performing similar functions);
                          (ii) any person directly or 
                        indirectly controlling, controlled by, 
                        or under common control with such 
                        security-based swap dealer or major 
                        security-based swap participant; or
                          (iii) any employee of such security-
                        based swap dealer or major security-
                        based swap participant.
                  (B) Exclusion.--Other than for purposes of 
                section 15F(l)(2), the term ``person associated 
                with a security-based swap dealer or major 
                security-based swap participant'' or 
                ``associated person of a security-based swap 
                dealer or major security-based swap 
                participant'' does not include any person 
                associated with a security-based swap dealer or 
                major security-based swap participant whose 
                functions are solely clerical or ministerial.
          (71) Security-based swap dealer.--
                  (A) In general.--The term ``security-based 
                swap dealer'' means any person who--
                          (i) holds themself out as a dealer in 
                        security-based swaps;
                          (ii) makes a market in security-based 
                        swaps;
                          (iii) regularly enters into security-
                        based swaps with counterparties as an 
                        ordinary course of business for its own 
                        account; or
                          (iv) engages in any activity causing 
                        it to be commonly known in the trade as 
                        a dealer or market maker in security-
                        based swaps.
                  (B) Designation by type or class.--A person 
                may be designated as a security-based swap 
                dealer for a single type or single class or 
                category of security-based swap or activities 
                and considered not to be a security-based swap 
                dealer for other types, classes, or categories 
                of security-based swaps or activities.
                  (C) Exception.--The term ``security-based 
                swap dealer'' does not include a person that 
                enters into security-based swaps for such 
                person's own account, either individually or in 
                a fiduciary capacity, but not as a part of 
                regular business.
                  (D) De minimis exception.--The Commission 
                shall exempt from designation as a security-
                based swap dealer an entity that engages in a 
                de minimis quantity of security-based swap 
                dealing in connection with transactions with or 
                on behalf of its customers. The Commission 
                shall promulgate regulations to establish 
                factors with respect to the making of any 
                determination to exempt.
          (72) Appropriate federal banking agency.--The term 
        ``appropriate Federal banking agency'' has the same 
        meaning as in section 3(q) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1813(q)).
          (73) Board.--The term ``Board'' means the Board of 
        Governors of the Federal Reserve System.
          (74) Prudential regulator.--The term ``prudential 
        regulator'' has the same meaning as in section 1a of 
        the Commodity Exchange Act (7 U.S.C. 1a).
          (75) Security-based swap data repository.--The term 
        ``security-based swap data repository'' means any 
        person that collects and maintains information or 
        records with respect to transactions or positions in, 
        or the terms and conditions of, security-based swaps 
        entered into by third parties for the purpose of 
        providing a centralized recordkeeping facility for 
        security-based swaps.
          (76) Swap dealer.--The term ``swap dealer'' has the 
        same meaning as in section 1a of the Commodity Exchange 
        Act (7 U.S.C. 1a).
          (77) Security-based swap execution facility.--The 
        term ``security-based swap execution facility'' means a 
        trading system or platform in which multiple 
        participants have the ability to execute or trade 
        security-based swaps by accepting bids and offers made 
        by multiple participants in the facility or system, 
        through any means of interstate commerce, including any 
        trading facility, that--
                  (A) facilitates the execution of security-
                based swaps between persons; and
                  (B) is not a national securities exchange.
          (78) Security-based swap agreement.--
                  (A) In general.--For purposes of sections 9, 
                10, 16, 20, and 21A of this Act, and section 17 
                of the Securities Act of 1933 (15 U.S.C. 77q), 
                the term ``security-based swap agreement'' 
                means a swap agreement as defined in section 
                206A of the Gramm-Leach-Bliley Act (15 U.S.C. 
                78c note) of which a material term is based on 
                the price, yield, value, or volatility of any 
                security or any group or index of securities, 
                or any interest therein.
                  (B) Exclusions.--The term ``security-based 
                swap agreement'' does not include any security-
                based swap.
          (80) Emerging growth company.--The term ``emerging 
        growth company'' means an issuer that had total annual 
        gross revenues of less than $1,000,000,000 (as such 
        amount is indexed for inflation every 5 years by the 
        Commission to reflect the change in the Consumer Price 
        Index for All Urban Consumers published by the Bureau 
        of Labor Statistics, setting the threshold to the 
        nearest 1,000,000) during its most recently completed 
        fiscal year. An issuer that is an emerging growth 
        company as of the first day of that fiscal year shall 
        continue to be deemed an emerging growth company until 
        the earliest of--
                  (A) the last day of the fiscal year of the 
                issuer during which it had total annual gross 
                revenues of $1,000,000,000 (as such amount is 
                indexed for inflation every 5 years by the 
                Commission to reflect the change in the 
                Consumer Price Index for All Urban Consumers 
                published by the Bureau of Labor Statistics, 
                setting the threshold to the nearest 1,000,000) 
                or more;
                  (B) the last day of the fiscal year of the 
                issuer following the fifth anniversary of the 
                date of the first sale of common equity 
                securities of the issuer pursuant to an 
                effective registration statement under the 
                Securities Act of 1933;
                  (C) the date on which such issuer has, during 
                the previous 3-year period, issued more than 
                $1,000,000,000 in non-convertible debt; or
                  (D) the date on which such issuer is deemed 
                to be a ``large accelerated filer'', as defined 
                in section 240.12b-2 of title 17, Code of 
                Federal Regulations, or any successor thereto.
          (80) Funding portal.--The term ``funding portal'' 
        means any person acting as an intermediary in a 
        transaction involving the offer or sale of securities 
        for the account of others, solely pursuant to section 
        4(6) of the Securities Act of 1933 (15 U.S.C. 77d(6)), 
        that does not--
                  (A) offer investment advice or 
                recommendations;
                  (B) solicit purchases, sales, or offers to 
                buy the securities offered or displayed on its 
                website or portal;
                  (C) compensate employees, agents, or other 
                persons for such solicitation or based on the 
                sale of securities displayed or referenced on 
                its website or portal;
                  (D) hold, manage, possess, or otherwise 
                handle investor funds or securities; or
                  (E) engage in such other activities as the 
                Commission, by rule, determines appropriate.
  (b) The Commission and the Board of Governors of the Federal 
Reserve System, as to matters within their respective 
jurisdictions, shall have power by rules and regulations to 
define technical, trade, accounting, and other terms used in 
this title, consistently with the provisions and purposes of 
this title.
  (c) No provision of this title shall apply to, or be deemed 
to include, any executive department or independent 
establishment of the United States, or any lending agency which 
is wholly owned, directly or indirectly, by the United States, 
or any officer, agent, or employee of any such department, 
establishment, or agency, acting in the course of his official 
duty as such, unless such provision makes specific reference to 
such department, establishment, or agency.
  (d) No issuer of municipal securities or officer or employee 
thereof acting in the course of his official duties as such 
shall be deemed to be a ``broker'', ``dealer'', or ``municipal 
securities dealer'' solely by reason of buying, selling, or 
effecting transactions in the issuer's securities.
  (e) Charitable Organizations.--
          (1) Exemption.--Notwithstanding any other provision 
        of this title, but subject to paragraph (2) of this 
        subsection, a charitable organization, as defined in 
        section 3(c)(10)(D) of the Investment Company Act of 
        1940, or any trustee, director, officer, employee, or 
        volunteer of such a charitable organization acting 
        within the scope of such person's employment or duties 
        with such organization, shall not be deemed to be a 
        ``broker'', ``dealer'', ``municipal securities 
        broker'', ``municipal securities dealer'', ``government 
        securities broker'', or ``government securities 
        dealer'' for purposes of this title solely because such 
        organization or person buys, holds, sells, or trades in 
        securities for its own account in its capacity as 
        trustee or administrator of, or otherwise on behalf of 
        or for the account of--
                  (A) such a charitable organization;
                  (B) a fund that is excluded from the 
                definition of an investment company under 
                section 3(c)(10)(B) of the Investment Company 
                Act of 1940; or
                  (C) a trust or other donative instrument 
                described in section 3(c)(10)(B) of the 
                Investment Company Act of 1940, or the settlors 
                (or potential settlors) or beneficiaries of any 
                such trust or other instrument.
          (2) Limitation on compensation.--The exemption 
        provided under paragraph (1) shall not be available to 
        any charitable organization, or any trustee, director, 
        officer, employee, or volunteer of such a charitable 
        organization, unless each person who, on or after 90 
        days after the date of enactment of this subsection, 
        solicits donations on behalf of such charitable 
        organization from any donor to a fund that is excluded 
        from the definition of an investment company under 
        section 3(c)(10)(B) of the Investment Company Act of 
        1940, is either a volunteer or is engaged in the 
        overall fund raising activities of a charitable 
        organization and receives no commission or other 
        special compensation based on the number or the value 
        of donations collected for the fund.
  (f) Consideration of Promotion of Efficiency, Competition, 
and Capital Formation.--Whenever pursuant to this title the 
Commission is engaged in rulemaking, or in the review of a rule 
of a self-regulatory organization, and is required to consider 
or determine whether an action is necessary or appropriate in 
the public interest, the Commission shall also consider, in 
addition to the protection of investors, whether the action 
will promote efficiency, competition, and capital formation.
  (g) Church Plans.--No church plan described in section 414(e) 
of the Internal Revenue Code of 1986, no person or entity 
eligible to establish and maintain such a plan under the 
Internal Revenue Code of 1986, no company or account that is 
excluded from the definition of an investment company under 
section 3(c)(14) of the Investment Company Act of 1940, and no 
trustee, director, officer or employee of or volunteer for such 
plan, company, account, person, or entity, acting within the 
scope of that person's employment or activities with respect to 
such plan, shall be deemed to be a ``broker'', ``dealer'', 
``municipal securities broker'', ``municipal securities 
dealer'', ``government securities broker'', ``government 
securities dealer'', ``clearing agency'', or ``transfer agent'' 
for purposes of this title--
          (1) solely because such plan, company, person, or 
        entity buys, holds, sells, trades in, or transfers 
        securities or acts as an intermediary in making 
        payments in connection with transactions in securities 
        for its own account in its capacity as trustee or 
        administrator of, or otherwise on behalf of, or for the 
        account of, any church plan, company, or account that 
        is excluded from the definition of an investment 
        company under section 3(c)(14) of the Investment 
        Company Act of 1940; and
          (2) if no such person or entity receives a commission 
        or other transaction-related sales compensation in 
        connection with any activities conducted in reliance on 
        the exemption provided by this subsection.
  (h) Limited Exemption for Funding Portals.--
          (1) In general.--The Commission shall, by rule, 
        exempt, conditionally or unconditionally, a registered 
        funding portal from the requirement to register as a 
        broker or dealer under section 15(a)(1), provided that 
        such funding portal--
                  (A) remains subject to the examination, 
                enforcement, and other rulemaking authority of 
                the Commission;
                  (B) is a member of a national securities 
                association registered under section 15A; and
                  (C) is subject to such other requirements 
                under this title as the Commission determines 
                appropriate under such rule.
          (2) National securities association membership.--For 
        purposes of sections 15(b)(8) and 15A, the term 
        ``broker or dealer'' includes a funding portal and the 
        term ``registered broker or dealer'' includes a 
        registered funding portal, except to the extent that 
        the Commission, by rule, determines otherwise, provided 
        that a national securities association shall only 
        examine for and enforce against a registered funding 
        portal rules of such national securities association 
        written specifically for registered funding portals.

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