[House Report 118-336]
[From the U.S. Government Publishing Office]


118th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                     {      118-336

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



 
GUIDING UNIFORM AND RESPONSIBLE DISCLOSURE REQUIREMENTS AND INFORMATION 
                           LIMITS ACT OF 2023

                                _______
                                

 December 22, 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

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 4790]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 4790) to amend the Federal securities laws with 
respect to the materiality of disclosure requirements, to 
establish the Public Company Advisory Committee, 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; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Guiding Uniform and 
Responsible Disclosure Requirements and Information Limits Act of 
2023'' or the ``GUARDRAIL Act of 2023''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

               TITLE I--MANDATORY MATERIALITY REQUIREMENT

Sec. 101. Limitation on disclosure requirements.

    TITLE II--SEC JUSTIFICATION OF NON-MATERIAL DISCLOSURE MANDATES

Sec. 201. SEC justification of non-material disclosure mandates.

              TITLE III--PUBLIC COMPANY ADVISORY COMMITTEE

Sec. 301. Public Company Advisory Committee.

             TITLE IV--PROTECTING U.S. BUSINESS SOVEREIGNTY

Sec. 401. Study on detrimental impact of the Directive on Corporate 
Sustainability Due Diligence and Corporate Sustainability Reporting 
Directive.

               TITLE I--MANDATORY MATERIALITY REQUIREMENT

SEC. 101. LIMITATION ON DISCLOSURE REQUIREMENTS.

  (a) Securities Act of 1933.--Section 2(b) of the Securities Act of 
1933 (15 U.S.C. 77b(b)) is amended--
          (1) in the subsection heading, by inserting ``; Limitation on 
        Disclosure Requirements'' after ``Formation'';
          (2) by striking ``Whenever'' and inserting the following:
          ``(1) In general.--Whenever''; and
          (3) by adding at the end the following:
          ``(2) Limitation.--
                  ``(A) In general.--Whenever pursuant to this title 
                the Commission is engaged in rulemaking regarding 
                disclosure obligations of issuers, the Commission shall 
                expressly provide that an issuer is only required to 
                disclose information in response to such disclosure 
                obligations to the extent the issuer has determined 
                that such information is material with respect to a 
                voting or investment decision regarding the securities 
                of such issuer.
                  ``(B) Applicability.--Subparagraph (A) shall not 
                apply with respect to the removal of any disclosure 
                requirement with respect to an issuer.
                  ``(C) Rule of construction.--For the purposes of this 
                paragraph, information is considered material with 
                respect to a voting or investment decision regarding 
                the securities of an issuer if there is a substantial 
                likelihood that a reasonable investor would view the 
                failure to disclose that information as having 
                significantly altered the total mix of information made 
                available to the investor.''.
  (b) Securities Exchange Act of 1934.--Section 3(f) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(f)) is amended--
          (1) in the subsection heading, by inserting ``; Limitation on 
        Disclosure Requirements'' after ``Formation'';
          (2) by striking ``Whenever'' and inserting the following:
          ``(1) In general.--Whenever''; and
          (3) by adding at the end the following:
          ``(2) Limitation.--
                  ``(A) In general.--Whenever pursuant to this title 
                the Commission is engaged in rulemaking regarding 
                disclosure obligations of issuers, the Commission shall 
                expressly provide that an issuer is only required to 
                disclose information in response to such disclosure 
                obligations to the extent the issuer has determined 
                that such information is material with respect to a 
                voting or investment decision regarding the securities 
                of such issuer.
                  ``(B) Applicability.--Subparagraph (A) shall not 
                apply with respect to the removal of any disclosure 
                requirement with respect to an issuer.
                  ``(C) Rule of construction.--For the purposes of this 
                paragraph, information is considered material with 
                respect to a voting or investment decision regarding 
                the securities of an issuer if there is a substantial 
                likelihood that a reasonable investor would view the 
                failure to disclose that information as having 
                significantly altered the total mix of information made 
                available to the investor.''.

    TITLE II--SEC JUSTIFICATION OF NON-MATERIAL DISCLOSURE MANDATES

SEC. 201. SEC JUSTIFICATION OF NON-MATERIAL DISCLOSURE MANDATES.

  Section 23 of the Securities Exchange Act of 1934 (15 U.S.C. 78w) is 
amended by adding at the end the following:
  ``(e) Non-material Disclosure Mandates.--
          ``(1) Disclosure.--The Commission shall maintain a list on 
        the website of the Commission that contains--
                  ``(A) each mandate under the Federal securities laws 
                and regulations that requires the disclosure of non-
                material information; and
                  ``(B) for each such disclosure mandate, an 
                explanation of why the mandate is required.
          ``(2) Study and report.--The Commission shall, every 5 years, 
        issue a report to the Congress justifying each disclosure 
        contained on the list required under paragraph (1).
          ``(3) No private liability for failing to make a non-material 
        disclosure.--A person who fails to disclose non-material 
        information required to be disclosed under the Federal 
        securities laws or regulations shall not be liable for such 
        failure in any private action.''.

              TITLE III--PUBLIC COMPANY ADVISORY COMMITTEE

SEC. 301. PUBLIC COMPANY ADVISORY COMMITTEE.

  The Securities Exchange Act of 1934 is amended by inserting after 
section 40 (15 U.S.C. 78qq) the following:

``SEC. 40A. PUBLIC COMPANY ADVISORY COMMITTEE.

  ``(a) Establishment and Purpose.--
          ``(1) Establishment.--There is established within the 
        Commission the Public Company Advisory Committee (referred to 
        in this section as the `Committee').
          ``(2) Purpose.--The Committee shall--
                  ``(A) provide the Commission with advice on its 
                rules, regulations, and policies with regard to its 
                mission of protecting investors, maintaining fair, 
                orderly, and efficient markets, and facilitating 
                capital formation, as they relate to--
                          ``(i) existing and emerging regulatory 
                        priorities of the Commission;
                          ``(ii) issues relating to the public 
                        reporting and corporate governance of public 
                        companies;
                          ``(iii) issues relating to the proxy process 
                        for shareholder meetings held by public 
                        companies;
                          ``(iv) issues relating to trading in the 
                        securities of public companies; and
                          ``(v) issues relating to capital formation; 
                        and
                  ``(B) submit to the Commission such findings and 
                recommendations as the Committee determines are 
                appropriate, including recommendations for proposed 
                regulatory and legislative changes.
  ``(b) Membership.--
          ``(1) In general.--The membership of the Committee shall be 
        not fewer than 10, and not more than 20, members appointed by 
        the Commission from among individuals who--
                  ``(A) are officers, directors, or senior officials of 
                public companies registered with the Commission under 
                the Securities Act or 1933 and this Act, except for 
                those public companies that own asset management, fixed 
                income, investment advisory, broker-dealer, or proxy 
                services businesses;
                  ``(B) are executives or other individuals with senior 
                managerial responsibility in business, professional, 
                trade, and industry associations that represent the 
                interests of such public companies; or
                  ``(C) are professional advisers and service providers 
                to such public companies (including attorneys, 
                accountants, investment bankers, and financial 
                advisers).
          ``(2) Qualifications.--At least 50 percent of the Committee 
        membership shall be drawn from individuals who would qualify 
        for membership under paragraph (1)(A).
          ``(3) Term.--
                  ``(A) In general.--Each member of the Committee 
                appointed under paragraph (1) shall serve for a term of 
                4 years.
                  ``(B) Vacancies.--Vacancies among the members, 
                whether caused by the resignation, death, removal, 
                expiration of a term, or otherwise, will be filled 
                consistent with the Commission's procedures then in 
                effect.
                  ``(C) Staggered terms.--The members of the Committee 
                shall serve staggered terms, with one-third of the 
                initial members of the Committee each serving for 1, 2, 
                or 3 years.
          ``(4) Members not on other advisory committees.--Public 
        companies and other organizations that are currently 
        represented on any other Commission Advisory Committee are not 
        eligible to have representatives also serve on the Public 
        Company Advisory Committee.
          ``(5) Members not commission employees.-- Members appointed 
        under paragraph (1) shall not be considered to be employees or 
        agents of the Commission solely because of membership on the 
        Committee.
  ``(c) Chair; Vice Chair; Secretary; Assistant Secretary.--
          ``(1) In general.--The members of the Committee shall elect, 
        from among the members of the Committee--
                  ``(A) a Chair;
                  ``(B) a Vice Chair;
                  ``(C) a Secretary; and
                  ``(D) an Assistant Secretary.
          ``(2) Term.--Each member elected under paragraph (1) shall 
        serve for a term of two years in the capacity the member was 
        elected under paragraph (1).
          ``(3) Subcommittees.--The Chair may create subcommittees that 
        hold public or non-public meetings and provide recommendations 
        to the full Committee.
  ``(d) Meetings.--
          ``(1) Frequency of meetings.--The Committee shall meet--
                  ``(A) not less frequently than twice annually, at the 
                call of the Chair of the Committee; and
                  ``(B) from time to time, at the call of the 
                Commission.
          ``(2) Notice.--The Chair of the Committee shall give the 
        members of the Committee written notice of each meeting, not 
        later than two weeks before the date of the meeting.
  ``(e) Compensation and Travel Expenses.--Each member of the Committee 
who is not a full-time employee of the United States shall--
          ``(1) be entitled to receive compensation at a rate not to 
        exceed the daily equivalent of the annual rate of basic pay in 
        effect for a position at level V of the Executive Schedule 
        under section 5316 of title 5, United States Code, for each day 
        during which the members is engaged in the actual performance 
        of the duties of the Committee; and
          ``(2) while away from the home or regular place of business 
        of the member in the performance of services for the Committee, 
        be allowed travel expenses, including per diem in lieu of 
        subsistence, in the same manner as persons employed 
        intermittently in the Government service are allowed expenses 
        under section 5703(b) of title 5, United States Code.
  ``(f) Staff.--The Commission shall make available to the Committee 
such staff as the Chair of the Committee determines are necessary to 
carry out this section.
  ``(g) Review by Commission.--The Commission shall--
          ``(1) review the findings and recommendations of the 
        Committee; and
          ``(2) each time the Committee submits a finding or 
        recommendation to the Commission, promptly issue a public 
        statement--
                  ``(A) assessing the finding or recommendation of the 
                Committee; and
                  ``(B) disclosing the action, if any, the Commission 
                intends to take with respect to the finding or 
                recommendation.
  ``(h) Committee Findings.--Nothing in this section shall require the 
Commission to agree to or act upon any finding or recommendation of the 
Committee.
  ``(i) Nonapplicability of FACA.--Chapter 10 of part I of title 5, 
United States Code, shall not apply to the Committee and its 
activities.''.

             TITLE IV--PROTECTING U.S. BUSINESS SOVEREIGNTY

SEC. 401. STUDY ON DETRIMENTAL IMPACT OF THE DIRECTIVE ON CORPORATE 
                    SUSTAINABILITY DUE DILIGENCE AND CORPORATE 
                    SUSTAINABILITY REPORTING DIRECTIVE.

  (a) Study.--The Securities and Exchange Commission shall conduct a 
study to examine and evaluate--
          (1) the detrimental impact and potential detrimental impact 
        of each of the Directives on--
                  (A) United States companies, consumers, and 
                investors; and
                  (B) the economy of the United States;
          (2) the extent to which each of the Directives aligns with 
        international conventions and declarations on human rights and 
        environmental obligations; and
          (3) the legal basis for the extraterritorial reach of each of 
        the Directives.
  (b) Report.--Not later than 1 year after the date of the enactment of 
this Act, the Securities and Exchange Commission shall submit to the 
Committee on Banking, Housing, and Urban Affairs of the Senate, the 
Committee on Financial Services of the House of Representatives, the 
Secretary of State, the Secretary of Commerce, and the United States 
Trade Representative a report that includes--
          (1) the results of the study conducted under this section; 
        and
          (2) recommendations for policymakers and relevant 
        stakeholders on potential mitigating measures, alternative 
        approaches, or modifications to each of the Directives that 
        would address any concerns identified in the study.
  (c) Access to Information.--The Securities and Exchange Commission 
may request from private entities such relevant data and information as 
the Securities and Exchange Commission determines necessary to carry 
out the study required under this section and such private entities 
shall provide such requested data and information to the Securities and 
Exchange Commission.
  (d) Directives Defined.--In this section the term ``Directives'' 
means--
          (1) the proposed directive entitled ``Corporate 
        Sustainability Due Diligence'' adopted by the European 
        Commission on February 23, 2022; and
          (2) the Corporate Sustainability Reporting Directive of the 
        European Commission effective January 5, 2023.

                          Purpose and Summary

    Introduced on July 20, 2023, by Representative Bill 
Huizenga, H.R. 4790, the Guiding Uniform and Responsible 
Disclosure Requirements and Information Limits (GUARDRAIL) Act 
of 2023, would (1) amend the Securities Act of 1933 and the 
Securities Exchange Act of 1934, mandating that issuers 
disclose information to the Securities and Exchange Commission 
(SEC) only if the issuer deems it material for voting or 
investment decisions; (2) amend the Securities and Exchange Act 
of 1934 to require the SEC to maintain a public list of 
mandates that require the disclosure of non-material 
information and issue a report every five years justifying 
these disclosures to Congress. Additionally, it specifies that 
failing to disclose non-material information under Federal 
securities laws will not incur private liability in any legal 
action. Further, H.R. 4790 establishes a Public Company 
Advisory Committee within the Securities Exchange Act of 1934 
to provide guidance to the SEC on matters concerning public 
reporting, corporate governance, proxy process, trading in 
securities, and capital formation; and directs the SEC to 
conduct a study on the detrimental impact of the Directive on 
Corporate Sustainability Due Diligence (CSDD) and the Corporate 
Sustainability Reporting Directive (CSRD) on United States 
companies, consumers, investors, and the U.S. economy.

                  Background and Need for Legislation

    H.R. 4790 is a compilation of four previously introduced 
bills, including:
          H.R. 4168, the Mandatory Materiality Requirement Act
          H.R. 4628, a bill to amend the Securities Exchange 
        Act of 1934 to require the Securities and Exchange 
        Commission to disclose and report on non-material 
        disclosure mandates, and for other purposes
          H.R. 4652, the Public Company Advisory Committee Act
          H.R. 4653, the Protecting U.S. Business Sovereignty 
        Act

Title I--H.R. 4168, the Mandatory Materiality Requirement Act, was 
        introduced on June 15, 2023, by Representative Bill Huizenga

    Title I would reinforce the foundational principles of the 
Securities Act of 1933 and the Securities Exchange Act of 1934 
by mandating that disclosures made by issuers to the SEC must 
hold material significance concerning voting or investment 
decisions.

                               BACKGROUND

    The SEC's pursuit of environmental, social and governance 
(ESG) disclosure initiatives threatens to alter the long-
standing materiality standard of the Commission. This standard 
has been the touchstone of our public company disclosure regime 
since the concept of materiality was first included in the 
Securities Act of 1933 and the Securities and Exchange Act of 
1934. Under the principles-based materiality standard, a 
company must disclose information to prospective investors and 
shareholders so that they can make informed investment and 
proxy voting decisions.
    Currently, public companies are already required to make 
disclosures concerning ESG information when such information is 
material. Furthermore, the SEC has previously emphasized that 
mandatory disclosures relating to environmental and social 
matters should only be mandated if legally required or if such 
information is material to investors.
    This title reaffirms the concept of materiality and ensures 
that the SEC can only mandate disclosures for information 
material to voting or investment decisions.

Title II--H.R. 4628, a bill to amend the Securities Exchange Act of 
        1934 to require the Securities and Exchange Commission to 
        disclose and report on non-material disclosure mandates, and 
        for other purposes, was introduced on July 13, 2023, by 
        Representative Alexander Mooney

    Title II would amend the Securities Exchange Act of 1934 to 
require the SEC to disclose and report on non-material 
disclosure mandates. It would require the SEC to maintain a 
comprehensive list of these mandates and provide justifications 
for them at five-year intervals. Moreover, it establishes that 
any issuer failing to disclose non-material information under 
Federal securities laws will not be subject to private 
liability.

                               BACKGROUND

    The Biden Administration's prioritization of non-material 
environmental, social, and political issues over sound 
financial regulation has troubling consequences. By 
prioritizing these issues, they drive up costs and 
administrative hurdles for companies in the U.S. public 
markets. This deters potential companies from going public or 
staying public, hindering their global competitiveness and the 
attractiveness of U.S. markets. These increased expenses also 
burden retail investors by increasing costs, which reduces 
their ability to save for the future.
    This title will boost transparency, minimize legal risk, 
and provide clearer guidelines on the SEC's demands for non-
material information. Under this title, the SEC will publicly 
list all non-material disclosure requirements, along with 
explanations for their necessity. Furthermore, the SEC will 
conduct a comprehensive review every five years, reporting to 
Congress on the justification for each non-material disclosure 
requirement on the list. Finally, this title safeguards 
individuals from liability for not disclosing non-material 
information.

Title III--H.R. 4652, the Public Company Advisory Committee Act, was 
        introduced on July 14, 2023, by Representative Frank Lucas

    Title III would amend the Securities Exchange Act of 1934 
to establish the Public Company Advisory Committee within the 
SEC.

                               BACKGROUND

    Presently, the SEC has four advisory committees, including 
the SEC Small Business Advisory Committee, which was 
established by the SEC Small Business Advocate Act of 2016. The 
Small Business Advisory Committee serves as a formal conduit 
for advising the SEC on rules, regulations, and policies 
impacting small businesses. The SEC lacks an advisory body 
dedicated to addressing concerns across all public companies.
    This title will address the existing void by establishing 
the Public Company Advisory Committee. This committee will be 
responsible for advising the SEC on rules and policies 
pertaining to its mission, which includes safeguarding 
investors, ensuring fair and efficient markets, and 
facilitating capital formation, all within the context of 
public companies. Comprising appointed members from public 
companies, business associations, and professional advisors, 
the committee will play a pivotal role in shaping regulatory 
decisions in alignment with the SEC's core objectives.

Title IV--H.R. 4653, the Protecting U.S. Business Sovereignty Act, was 
        introduced on July 14, 2023, by Representative Daniel Meuser

    Title IV would require the SEC to conduct a study on the 
detrimental impact of the Directive on Corporate Sustainability 
Due Diligence (CSDD) and the Corporate Sustainability Reporting 
Directive (CSRD) on American companies.

                               BACKGROUND

    The CSDD, a European Union (EU) directive, compels certain 
EU and non-EU companies to identify and mitigate their 
activities' environmental and human rights impacts. This 
extends beyond their operations to encompass subsidiaries and 
entities in their value chains, demanding prevention plans, 
contractual assurances, and compliance verification. Similarly, 
the EU's CSRD mandates detailed disclosures from U.S. companies 
with EU subsidiaries, covering diverse environmental, social, 
and governance facets, including external business 
relationships. These reporting requirements, reliant on 
external information sources often outside of a company's 
direct control, pose considerable challenges for American 
companies.
    This title mandates a comprehensive study into the 
potential adverse effects of the CSDD and CSRD on U.S. 
companies, consumers, investors, and the economy. The study 
will offer critical insights, empowering policymakers and 
regulators to make well-informed decisions concerning these EU 
directives.

                                Hearing

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 4790: The Subcommittee on 
Capital Markets of the Committee on Financial Services held a 
hearing on July 13, 2023, titled ``Reforming the Proxy Process 
to Safeguard Investor Interests.''

                        Committee Consideration

    The Committee on Financial Services met in open session on 
July 27, 2023, and ordered H.R. 4790 to be reported favorably 
to the House as amended by a recorded vote of 29 ayes to 21 
nays (Record vote no. FC-89), 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. Huizenga 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. 
4790 was ordered reported favorably to the House as amended by 
a recorded vote of 29 ayes to 21 nays (Record vote no. FC-89), 
a quorum being present.
    An amendment offered by Ms. Beatty, no. 7, was not agreed 
to by an en bloc recorded vote of 21 ayes to 29 nays (Record 
vote no. FC-88).
    An amendment offered by Mr. Meeks, no. 8, was not agreed to 
by an en bloc recorded vote of 21 ayes to 29 nays (Record vote 
no. FC-88).
    An amendment offered by Mr. Vargas, no. 9, was not agreed 
to by an en bloc recorded vote of 21 ayes to 29 nays (Record 
vote no. FC-88).
    An amendment offered by Mr. Casten, no. 10, was not agreed 
to by an en bloc recorded vote of 21 ayes to 29 nays (Record 
vote no. FC-88).
    An amendment offered by Ms. Garcia, no. 11, was not agreed 
to by an en bloc recorded vote of 21 ayes to 29 nays (Record 
vote no. FC-88).
    An amendment offered by Ms. Tlaib, no. 12, was not agreed 
to by an en bloc recorded vote of 21 ayes to 29 nays (Record 
vote no. FC-88).

[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. 4790 is to refine 
issuer disclosure requirements, establish a Public Company 
Advisory Committee, and study the potential adverse effects of 
EU sustainability directives on U.S. entities and the economy.

                 Congressional Budget Office Estimates

    The Committee has requested but not received a cost 
estimate from the Director of the Congressional Budget Office. 
However, pursuant to clause 3(d)(1) of House rule XIII, the 
Committee will adopt as its own the cost estimate by the 
Director of the Congressional Budget Office once it has been 
prepared.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    The Committee has requested but not received an estimate 
from the Director of the Congressional Budget Office. However, 
pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, once an estimate has been prepared by 
the Director of the Congressional Budget Office, as required by 
section 402 of the Congressional Budget Act of 1973, the 
Committee will adopt as its own the estimate of new budget 
authority, entitlement authority, or tax expenditures or 
revenues.

                       Federal Mandates Statement

    The Committee has requested but not received from the 
Director of the Congressional Budget Office an estimate of the 
Federal mandates pursuant to section 423 of the Unfunded 
Mandates Reform Act. The Committee will adopt the estimate once 
it has been prepared by the Director.

                      Advisory Committee Statement

    Pursuant to section 5(b) of the Federal Advisory Committee 
Act, Title III would amend the Securities Exchange Act of 1934 
to establish the Public Company Advisory Committee within the 
SEC.

                  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

    With respect 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; table of contents

    This section cites H.R. 4790 as the ``Guiding Uniform and 
Responsible Disclosure Requirements and Information Limits Act 
of 2023'' or the ``GUARDRAIL Act of 2023.'' This section also 
provides the table of contents for the separate bills that make 
up H.R. 4790.

Section 101. Mandatory materiality requirement

    This section amends the Securities Act of 1933 and the 
Securities Exchange Act of 1934 to mandate that the SEC specify 
that issuers are only obligated to disclose information that 
they consider material for making voting or investment 
decisions about their securities.

Section 201. SEC justification of non-material disclosure mandates

    This section requires the SEC to maintain and publicly list 
disclosure mandates that require non-material information. It 
forces the SEC to provide explanations for why these mandates 
are necessary. Additionally, the section mandates the SEC to 
issue a report every five years justifying each disclosure on 
this list to Congress. It also shields issuers from private 
liability for not disclosing information that is deemed non-
material under federal securities laws or regulations.

Section 301. Public Company Advisory Committee

    This section amends the Securities Exchange Act of 1934 to 
establish the Public Company Advisory Committee within the SEC. 
The Committee's purpose is to provide advice to the SEC on 
regulatory priorities, public reporting, corporate governance, 
trading securities, and capital formation. Membership comprises 
individuals from public companies, associations representing 
these companies, and professional advisors to these entities. 
The Committee periodically reports to Congress, with members 
serving staggered four-year terms, and permits the formation of 
subcommittees. The section requires the SEC to review the 
Committee's findings and publicly disclose actions regarding 
their recommendations.

Section 401. Study on detrimental impact of the directive on Corporate 
        Sustainability Due Diligence and Corporate Sustainability 
        Reporting Directive

    This section instructs the SEC to conduct a study on the 
potential negative impacts of two EU directives--specifically, 
their effects on U.S. companies, consumers, investors, and the 
national economy. The study also evaluates how these directives 
align with international human rights and environmental 
conventions and examines the legal basis for their 
extraterritorial reach. Within a year, the SEC must submit a 
report to various committees and government bodies, outlining 
the study's findings and providing recommendations to address 
concerns identified. The SEC can request relevant data from 
private entities to aid in the study. The directives under 
scrutiny are the proposed ``Corporate Sustainability Due 
Diligence'' directive adopted by the European Commission and 
the ``Corporate Sustainability Reporting Directive'' effective 
from January 5, 2023.

         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):

                         SECURITIES ACT OF 1933


TITLE I--

           *       *       *       *       *       *       *



                              definitions

  Sec. 2. (a) Definitions.--When used in this title, unless the 
context otherwise requires--
          (1) The term ``security'' means any note, stock, 
        treasury stock, security future, security-based swap, 
        bond, debenture, evidence of indebtedness, certificate 
        of interest or participation in any profit-sharing 
        agreement, collateral-trust certificate, 
        preorganization certificate or subscription, 
        transferable share, investment contract, voting-trust 
        certificate, certificate of deposit for a security, 
        fractional undivided interest in oil, gas, or other 
        mineral rights, 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 interest or instrument 
        commonly known as a ``security'', or any certificate of 
        interest or participation in, temporary or interim 
        certificate for, receipt for, guarantee of, or warrant 
        or right to subscribe to or purchase, any of the 
        foregoing.
          (2) The term ``person'' means an individual, a 
        corporation, a partnership, an association, a joint-
        stock company, a trust, any unincorporated 
        organization, or a government or political subdivision 
        thereof. As used in this paragraph the term ``trust'' 
        shall include only a trust where the interest or 
        interests of the beneficiary or beneficiaries are 
        evidenced by a security.
          (3) The term ``sale'' or ``sell'' shall include every 
        contract of sale or disposition of a security or 
        interest in a security, for value. The term ``offer to 
        sell'', ``offer for sale'', or ``offer'' shall include 
        every attempt or offer to dispose of, or solicitation 
        of an offer to buy, a security or interest in a 
        security, for value. The terms defined in this 
        paragraph and the term ``offer to buy'' as used in 
        subsection (c) of section 5 shall not include 
        preliminary negotiations or agreements between an 
        issuer (or any person directly or indirectly 
        controlling or controlled by an issuer, or under direct 
        or indirect common control with an issuer) and any 
        underwriter or among underwriters who are or are to be 
        in privity of contract with an issuer (or any person 
        directly or indirectly controlling or controlled by an 
        issuer, or under direct or indirect common control with 
        an issuer). Any security given or delivered with, or as 
        a bonus on account of, any purchase of securities or 
        any other thing, shall be conclusively presumed to 
        constitute a part of the subject of such purchase and 
        to have been offered and sold for value. The issue or 
        transfer of a right or privilege, when originally 
        issued or transferred with a security, giving the 
        holder of such security the right to convert such 
        security into another security of the same issuer or of 
        another person, or giving a right to subscribe to 
        another security of the same issuer or of another 
        person, which right cannot be exercised until some 
        future date, shall not be deemed to be an offer or sale 
        of such other security; but the issue or transfer of 
        such other security upon the exercise of such right of 
        conversion or subscription shall be deemed a sale of 
        such other security. Any offer or sale of a security 
        futures product by or on behalf of the issuer of the 
        securities underlying the security futures product, an 
        affiliate of the issuer, or an underwriter, shall 
        constitute a contract for sale of, sale of, offer for 
        sale, or offer to sell the underlying securities. Any 
        offer or sale of a security-based swap by or on behalf 
        of the issuer of the securities upon which such 
        security-based swap is based or is referenced, an 
        affiliate of the issuer, or an underwriter, shall 
        constitute a contract for sale of, sale of, offer for 
        sale, or offer to sell such securities. The publication 
        or distribution by a broker or dealer of a research 
        report about an emerging growth company that is the 
        subject of a proposed public offering of the common 
        equity securities of such emerging growth company 
        pursuant to a registration statement that the issuer 
        proposes to file, or has filed, or that is effective 
        shall be deemed for purposes of paragraph (10) of this 
        subsection and section 5(c) not to constitute an offer 
        for sale or offer to sell a security, even if the 
        broker or dealer is participating or will participate 
        in the registered offering of the securities of the 
        issuer. As used in this paragraph, the term ``research 
        report'' means a written, electronic, or oral 
        communication that includes information, opinions, or 
        recommendations with respect to securities of an issuer 
        or an analysis of a security or an issuer, whether or 
        not it provides information reasonably sufficient upon 
        which to base an investment decision.
          (4) The term ``issuer'' means every person who issues 
        or proposes to issue any security; except that with 
        respect to certificates of deposit, 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 persons performing similar functions) 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; except that in the case of an 
        unincorporated association which provides by its 
        articles for limited liability of any or all of its 
        members, or in the case of a trust, committee, or other 
        legal entity, the trustees or members thereof shall not 
        be individually liable as issuers of any security 
        issued by the association, trust, committee, or other 
        legal entity; 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; and except that with 
        respect to fractional undivided interests in oil, gas, 
        or other mineral rights, the term ``issuer'' means the 
        owner of any such right or of any interest in such 
        right (whether whole or fractional) who creates 
        fractional interests therein for the purpose of public 
        offering.
          (5) The term ``Commission'' means the Securities and 
        Exchange Commission.
          (6) The term ``Territory'' means Puerto Rico, the 
        Virgin Islands, and the insular possessions of the 
        United States.
          (7) The term ``interstate commerce'' means trade or 
        commerce in securities or any transportation or 
        communication relating thereto among the several States 
        or between the District of Columbia or any Territory of 
        the United States and any State or other Territory, or 
        between any foreign country and any State, Territory, 
        or the District of Columbia, or within the District of 
        Columbia.
          (8) The term ``registration statement'' means the 
        statement provided for in section 6, and includes any 
        amendment thereto and any report, document, or 
        memorandum filed as part of such statement or 
        incorporated therein by reference.
          (9) The term ``write'' or ``written'' shall include 
        printed, lithographed, or any means of graphic 
        communication.
          (10) The term ``prospectus'' means any prospectus, 
        notice, circular, advertisement, letter, or 
        communication, written or by radio or television, which 
        offers any security for sale or confirms the sale of 
        any security; except that (a) a communication sent or 
        given after the effective date of the registration 
        statement (other than a prospectus permitted under 
        subsection (b) of section 10) shall not be deemed a 
        prospectus if it is proved that prior to or at the same 
        time with such communication a written prospectus 
        meeting the requirements of subsection (a) of section 
        10 at the time of such communication was sent or given 
        to the person to whom the communication was made, and 
        (b) a notice, circular, advertisement, letter, or 
        communication in respect of a security shall not be 
        deemed to be a prospectus if it states from whom a 
        written prospectus meeting the requirements of section 
        10 may be obtained and, in addition, does no more than 
        identify the security, state the price thereof, state 
        by whom orders will be executed, and contain such other 
        information as the Commission, by rules or regulations 
        deemed necessary or appropriate in the public interest 
        and for the protection of investors, and subject to 
        such terms and conditions as may be prescribed therein, 
        may permit.
          (11) The term ``underwriter'' means any person who 
        has purchased from an issuer with a view to, or offers 
        or sells for an issuer in connection with, the 
        distribution of any security, or participates or has a 
        direct or indirect participation in any such 
        undertaking, or participates or has a participation in 
        the direct or indirect underwriting of any such 
        undertaking; but such term shall not include a person 
        whose interest is limited to a commission from an 
        underwriter or dealer not in excess of the usual and 
        customary distributors' or sellers' commission. As used 
        in this paragraph the term ``issuer'' shall include, in 
        addition to an issuer, any person directly or 
        indirectly controlling or controlled by the issuer, or 
        any person under direct or indirect common control with 
        the issuer.
          (12) The term ``dealer'' means any person who engages 
        either for all or part of his time, directly or 
        indirectly, as agent, broker, or principal, in the 
        business of offering, buying, selling, or otherwise 
        dealing or trading in securities issued by another 
        person.
          (13) The term ``insurance company'' means a company 
        which is organized as an insurance company, whose 
        primary and predominant business activity is the 
        writing of insurance or the reinsuring of risks 
        underwritten by insurance companies, and which is 
        subject to supervision by the insurance commissioner, 
        or a similar official or agency, of a State or 
        territory or the District of Columbia; or any receiver 
        or similar official or any liquidating agent for such 
        company, in his capacity as such.
          (14) The term ``separate account'' means an account 
        established and maintained by an insurance company 
        pursuant to the laws of any State or territory of the 
        United States, the District of Columbia, or of Canada 
        or any province thereof, under which income, gains and 
        losses, whether or not realized, from assets allocated 
        to such account, are, in accordance with the applicable 
        contract, credited to or charged against such account 
        without regard to other income, gains, or losses of the 
        insurance company.
          (15) The term ``accredited investor'' shall mean--
                  
                  (i) a bank as defined in section 3(a)(2) 
                whether acting in its individual or fiduciary 
                capacity; an insurance company as defined in 
                paragraph (13) of this subsection; an 
                investment company registered under the 
                Investment Company Act of 1940 or a business 
                development company as defined in section 
                2(a)(48) of that Act; a Small Business 
                Investment Company licensed by the Small 
                Business Administration; or an employee benefit 
                plan, including an individual retirement 
                account, which is subject to the provisions of 
                the Employee Retirement Income Security Act of 
                1974, if the investment decision is made by a 
                plan fiduciary, as defined in section 3(21) of 
                such Act, which is either a bank, insurance 
                company, or registered investment adviser; or
                  (ii) any person who, on the basis of such 
                factors as financial sophistication, net worth, 
                knowledge, and experience in financial matters, 
                or amount of assets under management qualifies 
                as an accredited investor under rules and 
                regulations which the Commission shall 
                prescribe.
          (16) The terms ``security future'', ``narrow-based 
        security index'', and ``security futures product'' have 
        the same meanings as provided in section 3(a)(55) of 
        the Securities Exchange Act of 1934.
          (17) The terms ``swap'' and ``security-based swap'' 
        have the same meanings as in section 1a of the 
        Commodity Exchange Act (7 U.S.C. 1a).
          (18) The terms ``purchase'' or ``sale'' of a 
        security-based swap shall be deemed to mean 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.
          (19) 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 this 
                title;
                  (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.
  (b) Consideration of Promotion of Efficiency, Competition, 
and Capital Formation; Limitation on Disclosure Requirements.--
[Whenever]
          (1) In general._Whenever  pursuant to this title the 
        Commission is engaged in rulemaking 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.
          (2) Limitation.--
                  (A) In general.--Whenever pursuant to this 
                title the Commission is engaged in rulemaking 
                regarding disclosure obligations of issuers, 
                the Commission shall expressly provide that an 
                issuer is only required to disclose information 
                in response to such disclosure obligations to 
                the extent the issuer has determined that such 
                information is material with respect to a 
                voting or investment decision regarding the 
                securities of such issuer.
                  (B) Applicability.--Subparagraph (A) shall 
                not apply with respect to the removal of any 
                disclosure requirement with respect to an 
                issuer.
                  (C) Rule of construction.--For the purposes 
                of this paragraph, information is considered 
                material with respect to a voting or investment 
                decision regarding the securities of an issuer 
                if there is a substantial likelihood that a 
                reasonable investor would view the failure to 
                disclose that information as having 
                significantly altered the total mix of 
                information made available to the investor.

           *       *       *       *       *       *       *

                              ----------                              


                    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) 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) 
        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 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; Limitation on Disclosure Requirements.--
[Whenever]
          (1) In general._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.
          (2) Limitation.--
                  (A) In general.--Whenever pursuant to this 
                title the Commission is engaged in rulemaking 
                regarding disclosure obligations of issuers, 
                the Commission shall expressly provide that an 
                issuer is only required to disclose information 
                in response to such disclosure obligations to 
                the extent the issuer has determined that such 
                information is material with respect to a 
                voting or investment decision regarding the 
                securities of such issuer.
                  (B) Applicability.--Subparagraph (A) shall 
                not apply with respect to the removal of any 
                disclosure requirement with respect to an 
                issuer.
                  (C) Rule of construction.--For the purposes 
                of this paragraph, information is considered 
                material with respect to a voting or investment 
                decision regarding the securities of an issuer 
                if there is a substantial likelihood that a 
                reasonable investor would view the failure to 
                disclose that information as having 
                significantly altered the total mix of 
                information made available to the investor.
  (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.

           *       *       *       *       *       *       *


             rules, regulations, and orders; annual reports

  Sec. 23. (a)(1) The Commission, the Board of Governors of the 
Federal Reserve System, and the other agencies enumerated in 
section 3(a)(34) of this title shall each have power to make 
such rules and regulations as may be necessary or appropriate 
to implement the provisions of this title for which they are 
responsible or for the execution of the functions vested in 
them by this title, and may for such purposes classify persons, 
securities, transactions, statements, applications, reports, 
and other matters within their respective jurisdictions, and 
prescribe greater, lesser, or different requirements for 
different classes thereof. No provision of this title imposing 
any liability shall apply to any act done or omitted in good 
faith in conformity with a rule, regulation, or order of the 
Commission, the Board of Governors of the Federal Reserve 
System, other agency enumerated in section 3(a)(34) of this 
title, or any self-regulatory organization, notwithstanding 
that such rule, regulation, or order may thereafter be amended 
or rescinded or determined by judicial or other authority to be 
invalid for any reason.
  (2) The Commission and the Secretary of the Treasury, in 
making rules and regulations pursuant to any provisions of this 
title, shall consider among other matters the impact any such 
rule or regulation would have on competition. The Commission 
and the Secretary of the Treasury shall not adopt any such rule 
or regulation which would impose a burden on competition not 
necessary or appropriate in furtherance of the purposes of this 
title. The Commission and the Secretary of the Treasury shall 
include in the statement of basis and purpose incorporated in 
any rule or regulation adopted under this title, the reasons 
for the Commission's or the Secretary's determination that any 
burden on competition imposed by such rule or regulation is 
necessary or appropriate in furtherance of the purposes of this 
title.
  (3) The Commission and the Secretary, in making rules and 
regulations pursuant to any provision of this title, 
considering any application for registration in accordance with 
section 19(a) of this title, or reviewing any proposed rule 
change of a self-regulatory organization in accordance with 
section 19(b) of this title, shall keep in a public file and 
make available for copying all written statements filed with 
the Commission and the Secretary and all written communications 
between the Commission or the Secretary and any person relating 
to the proposed rule, regulation, application, or proposed rule 
change: Provided, however, That the Commission and the 
Secretary shall not be required to keep in a public file or 
make available for copying any such statement or communication 
which it may withhold from the public in accordance with the 
provisions of section 552 of title 5, United States Code.
  (b)(1) The Commission, the Board of Governors of the Federal 
Reserve System, and the other agencies enumerated in section 
3(a)(34) of this title shall each make an annual report to the 
Congress on its work for the preceding year, and shall include 
in each such report whatever information, data, and 
recommendations for further legislation it considers advisable 
with regard to matters within its respective jurisdiction under 
this title.
  (2) The appropriate regulatory agency for a self-regulatory 
organization shall include in its annual report to the Congress 
for each fiscal year, a summary of its oversight activities 
under this title with respect to such self-regulatory 
organization, including a description of any examination 
conducted as part of such activities of any organization, any 
material recommendation presented as part of such activities to 
such organization for changes in its organization or rules, and 
any such action by such organization in response to any such 
recommendation.
  (3) The appropriate regulatory agency for any class of 
municipal securities dealers shall include in its annual report 
to the Congress for each fiscal year a summary of its 
regulatory activities pursuant to this title with respect to 
such municipal securities dealers, including the nature of and 
reason for any sanction imposed pursuant to this title against 
any such municipal securities dealer.
  (4) The Commission shall also include in its annual report to 
the Congress for each fiscal year--
          (A) a summary of the Commission's oversight 
        activities with respect to self-regulatory 
        organizations for which it is not the appropriate 
        regulatory agency, including a description of any 
        examination of any such organization, any material 
        recommendation presented to any such organization for 
        changes in its organization or rules, and any action by 
        any such organization in response to any such 
        recommendations;
          (B) a statement and analysis of the expenses and 
        operations of each self-regulatory organization in 
        connection with the performance of its responsibilities 
        under this title, for which purpose data pertaining to 
        such expenses and operations shall be made available by 
        such organization to the Commission at its request;
          (C) the steps the Commission has taken and the 
        progress it has made toward ending the physical 
        movement of the securities certificate in connection 
        with the settlement of securities transactions, and its 
        recommendations, if any, for legislation to eliminate 
        the securities certificate;
          (D) the number of requests for exemptions from 
        provisions of this title received, the number granted, 
        and the basis upon which any such exemption was 
        granted;
          (E) a summary of the Commission's regulatory 
        activities with respect to municipal securities dealers 
        for which it is not the appropriate regulatory agency, 
        including the nature of, and reason for, any sanction 
        imposed in proceedings against such municipal 
        securities dealers;
          (F) a statement of the time elapsed between the 
        filing of reports pursuant to section 13(f) of this 
        title and the public availability of the information 
        contained therein, the costs involved in the 
        Commission's processing of such reports and tabulating 
        such information, the manner in which the Commission 
        uses such information, and the steps the Commission has 
        taken and the progress it has made toward requiring 
        such reports to be filed and such information to be 
        made available to the public in machine language;
          (G) information concerning (i) the effects its rules 
        and regulations are having on the viability of small 
        brokers and dealers; (ii) its attempts to reduce any 
        unnecessary reporting burden on such brokers and 
        dealers; and (iii) its efforts to help to assure the 
        continued participation of small brokers and dealers in 
        the United States securities markets;
          (H) a statement detailing its administration of the 
        Freedom of Information Act, section 552 of title 5, 
        United States Code, including a copy of the report 
        filed pursuant to subsection (d) of such section; and
          (I) the steps that have been taken and the progress 
        that has been made in promoting the timely public 
        dissemination and availability for analytical purposes 
        (on a fair, reasonable, and nondiscriminatory basis) of 
        information concerning government securities 
        transactions and quotations, and its recommendations, 
        if any, for legislation to assure timely dissemination 
        of (i) information on transactions in regularly traded 
        government securities sufficient to permit the 
        determination of the prevailing market price for such 
        securities, and (ii) reports of the highest published 
        bids and lowest published offers for government 
        securities (including the size at which persons are 
        willing to trade with respect to such bids and offers).
  (c) The Commission, by rule, shall prescribe the procedure 
applicable to every case pursuant to this title of adjudication 
(as defined in section 551 of title 5, United States Code) not 
required to be determined on the record after notice and 
opportunity for hearing. Such rules shall, as a minimum, 
provide that prompt notice shall be given of any adverse action 
or final disposition and that such notice and the entry of any 
order shall be accompanied by a statement of written reasons.
  (d) Cease-and-Desist Procedures.--Within 1 year after the 
date of enactment of this subsection, the Commission shall 
establish regulations providing for the expeditious conduct of 
hearings and rendering of decisions under section 21C of this 
title, section 8A of the Securities Act of 1933, section 9(f) 
of the Investment Company Act of 1940, and section 203(k) of 
the Investment Advisers Act of 1940.
  (e) Non-material Disclosure Mandates.--
          (1) Disclosure.--The Commission shall maintain a list 
        on the website of the Commission that contains--
                  (A) each mandate under the Federal securities 
                laws and regulations that requires the 
                disclosure of non-material information; and
                  (B) for each such disclosure mandate, an 
                explanation of why the mandate is required.
          (2) Study and report.--The Commission shall, every 5 
        years, issue a report to the Congress justifying each 
        disclosure contained on the list required under 
        paragraph (1).
          (3) No private liability for failing to make a non-
        material disclosure.--A person who fails to disclose 
        non-material information required to be disclosed under 
        the Federal securities laws or regulations shall not be 
        liable for such failure in any private action.

           *       *       *       *       *       *       *


SEC. 40A. PUBLIC COMPANY ADVISORY COMMITTEE.

  (a) Establishment and Purpose.--
          (1) Establishment.--There is established within the 
        Commission the Public Company Advisory Committee 
        (referred to in this section as the `Committee').
          (2) Purpose.--The Committee shall--
                  (A) provide the Commission with advice on its 
                rules, regulations, and policies with regard to 
                its mission of protecting investors, 
                maintaining fair, orderly, and efficient 
                markets, and facilitating capital formation, as 
                they relate to--
                          (i) existing and emerging regulatory 
                        priorities of the Commission;
                          (ii) issues relating to the public 
                        reporting and corporate governance of 
                        public companies;
                          (iii) issues relating to the proxy 
                        process for shareholder meetings held 
                        by public companies;
                          (iv) issues relating to trading in 
                        the securities of public companies; and
                          (v) issues relating to capital 
                        formation; and
                  (B) submit to the Commission such findings 
                and recommendations as the Committee determines 
                are appropriate, including recommendations for 
                proposed regulatory and legislative changes.
  (b) Membership.--
          (1) In general.--The membership of the Committee 
        shall be not fewer than 10, and not more than 20, 
        members appointed by the Commission from among 
        individuals who--
                  (A) are officers, directors, or senior 
                officials of public companies registered with 
                the Commission under the Securities Act or 1933 
                and this Act, except for those public companies 
                that own asset management, fixed income, 
                investment advisory, broker-dealer, or proxy 
                services businesses;
                  (B) are executives or other individuals with 
                senior managerial responsibility in business, 
                professional, trade, and industry associations 
                that represent the interests of such public 
                companies; or
                  (C) are professional advisers and service 
                providers to such public companies (including 
                attorneys, accountants, investment bankers, and 
                financial advisers).
          (2) Qualifications.--At least 50 percent of the 
        Committee membership shall be drawn from individuals 
        who would qualify for membership under paragraph 
        (1)(A).
          (3) Term.--
                  (A) In general.--Each member of the Committee 
                appointed under paragraph (1) shall serve for a 
                term of 4 years.
                  (B) Vacancies.--Vacancies among the members, 
                whether caused by the resignation, death, 
                removal, expiration of a term, or otherwise, 
                will be filled consistent with the Commission's 
                procedures then in effect.
                  (C) Staggered terms.--The members of the 
                Committee shall serve staggered terms, with 
                one-third of the initial members of the 
                Committee each serving for 1, 2, or 3 years.
          (4) Members not on other advisory committees.--Public 
        companies and other organizations that are currently 
        represented on any other Commission Advisory Committee 
        are not eligible to have representatives also serve on 
        the Public Company Advisory Committee.
          (5) Members not commission employees.-- Members 
        appointed under paragraph (1) shall not be considered 
        to be employees or agents of the Commission solely 
        because of membership on the Committee.
  (c) Chair; Vice Chair; Secretary; Assistant Secretary.--
          (1) In general.--The members of the Committee shall 
        elect, from among the members of the Committee--
                  (A) a Chair;
                  (B) a Vice Chair;
                  (C) a Secretary; and
                  (D) an Assistant Secretary.
          (2) Term.--Each member elected under paragraph (1) 
        shall serve for a term of two years in the capacity the 
        member was elected under paragraph (1).
          (3) Subcommittees.--The Chair may create 
        subcommittees that hold public or non-public meetings 
        and provide recommendations to the full Committee.
  (d) Meetings.--
          (1) Frequency of meetings.--The Committee shall 
        meet--
                  (A) not less frequently than twice annually, 
                at the call of the Chair of the Committee; and
                  (B) from time to time, at the call of the 
                Commission.
          (2) Notice.--The Chair of the Committee shall give 
        the members of the Committee written notice of each 
        meeting, not later than two weeks before the date of 
        the meeting.
  (e) Compensation and Travel Expenses.--Each member of the 
Committee who is not a full-time employee of the United States 
shall--
          (1) be entitled to receive compensation at a rate not 
        to exceed the daily equivalent of the annual rate of 
        basic pay in effect for a position at level V of the 
        Executive Schedule under section 5316 of title 5, 
        United States Code, for each day during which the 
        members is engaged in the actual performance of the 
        duties of the Committee; and
          (2) while away from the home or regular place of 
        business of the member in the performance of services 
        for the Committee, be allowed travel expenses, 
        including per diem in lieu of subsistence, in the same 
        manner as persons employed intermittently in the 
        Government service are allowed expenses under section 
        5703(b) of title 5, United States Code.
  (f) Staff.--The Commission shall make available to the 
Committee such staff as the Chair of the Committee determines 
are necessary to carry out this section.
  (g) Review by Commission.--The Commission shall--
          (1) review the findings and recommendations of the 
        Committee; and
          (2) each time the Committee submits a finding or 
        recommendation to the Commission, promptly issue a 
        public statement--
                  (A) assessing the finding or recommendation 
                of the Committee; and
                  (B) disclosing the action, if any, the 
                Commission intends to take with respect to the 
                finding or recommendation.
  (h) Committee Findings.--Nothing in this section shall 
require the Commission to agree to or act upon any finding or 
recommendation of the Committee.
  (i) Nonapplicability of FACA.--Chapter 10 of part I of title 
5, United States Code, shall not apply to the Committee and its 
activities.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    This bill is part of the Republican attacks on ``woke'' 
policies that actually help everyday investors make informed 
decisions with their money. In general, this bill restricts the 
Securities and Exchange Commission's (SEC) authority to require 
disclosures and enforce compliance with such requirements, 
thereby giving public companies the ability to hide risks about 
themselves that investors would otherwise want to know. The 
bill is comprised of four titles, each briefly addressed below.
           Title I cripples the ability of the SEC to 
        require material disclosures and instead allows public 
        companies to make their own rules. Under our federal 
        securities laws, public companies are required to 
        disclose financial and other information to investors 
        when it is ``material.'' The Supreme Court has held 
        that a fact is material if there is: ``a substantial 
        likelihood that the . . . fact would have been viewed 
        by the reasonable investor as having significantly 
        altered the `total mix' of information made 
        available.'' This Title would overhaul the legal 
        precedent behind the materiality standard and instead 
        state that a public company is only required to 
        disclose information that they determine material.
           Title II fundamentally misunderstands the 
        current securities law framework. Under current 
        securities law, only material information is required 
        to be disclosed. This Title would require the SEC to 
        maintain a list of disclosure mandates of non-material 
        information, which by definition doesn't exist. The SEC 
        has NO authority to mandate non-material disclosures. 
        The Title would further require the SEC to study and 
        justify any non-material disclosure mandates, which 
        again do not exist, every 5 years and provides that 
        there will be no private liability for failing to 
        comply with non-material disclosure mandates.
           Title III gives large corporations an 
        outsized voice within the SEC, allowing them to 
        improperly influence the oversight and creation of 
        investor-friendly disclosure obligations and 
        shareholder voting rules to the detriment of ordinary 
        shareholders and investors. Specifically, Title III 
        would create a public company advisory committee made 
        up exclusively of industry representatives, who would 
        be entitled to compensation for travel related to their 
        advisory committee responsibilities and access to any 
        SEC staff that they deem necessary to carry out their 
        responsibilities. The SEC would be required under this 
        title to promptly respond to any finding or 
        recommendation of the advisory committee, including 
        what actions the SEC will take in response. No investor 
        perspectives would be included in this advisory 
        committee.
           Title IV requires an inherently biased study 
        on the EU's proposal on corporate sustainability, 
        focusing exclusively on the costs of compliance from an 
        industry perspective and none of the benefits to 
        society. Specifically, Title IV requires the SEC to 
        conduct a study on the ``detrimental impact'' of 
        implementing the ``Corporate Sustainability Due 
        Diligence'' adopted by the European Commission on 
        February 23, 2022 (hereinafter ``Directive''). This 
        Directive, which does not apply in the U.S., but could 
        impact multinational companies, requires covered 
        companies to identify and mitigate the negative human 
        rights and environmental impacts in the company's 
        operations. According to Americans for Financial 
        Reform, ``[t]his [title] takes aim at the idea that 
        companies should be accountable to social and 
        environmental issues more broadly[; however] 
        [o]pposition to the targeted directives is not in line 
        with what voters want: most voters (76%) feel companies 
        play a vital role in society and should be held 
        accountable to make a positive impact on the 
        communities in which they operate[--] [a] finding 
        [that] is consistent across political lines, with both 
        the majority of Republicans (69%) and Democrats (82%) 
        in agreement--reflecting bipartisan common ground.''\1\
---------------------------------------------------------------------------
    \1\Id. (citing Lindsay Singleton, ``We asked 1,261 voters about the 
crackdown on ESG investing. You'll never guess which party's voters are 
most opposed to it,'' Fortune, Jan. 2, 2023, available at https://
fortune.com/2023/01/02/).
---------------------------------------------------------------------------
    Democratic members offered six amendments to this bill, 
none of which were passed. They are described in further detail 
below:
          1. An amendment offered by Rep. Beatty ensuring that 
        nothing within the act can limit the SEC's ability to 
        conduct rulemakings pertaining to human capital 
        management and diversity, equity, and inclusion (DEI) 
        disclosures.
          2. An amendment offered by Rep. Meeks putting forth a 
        sense of Congress about the benefits of companies 
        incorporating diversity, equity, and inclusion into 
        their business.
          3. An amendment offered by Rep. Vargas ensuring that 
        nothing within the act can limit the SEC's ability to 
        conduct rulemakings pertaining to standardizing climate 
        related disclosures.
          4. An amendment offered by Rep. Casten requiring the 
        SEC to conduct a study on 1) the economic impact on 
        investors if the United States fails to adopt 
        mandatory, comparable, and comprehensive climate 
        disclosure standards and 2) the economic impact on 
        United States companies that operate globally if 
        reporting standards for publicly traded companies with 
        respect to climate impacts are not harmonized.
          5. An amendment offered by Rep. Garcia putting forth 
        a sense of Congress that sound research indicates 
        climate change is a real and material risk to American 
        businesses and the global economy.
          6. An amendment offered by Rep. Tlaib defining the 
        term ``woke'' as consisting of (but not limited to) 
        initiatives designed to highlight climate risk, bolster 
        diversity, strengthen corporate accountability, and 
        invest in employee development.
    Finally, H.R. 4790 is opposed by several groups, including 
(but not limited to): Americans for Financial Reform, Better 
Markets, US SIF, the Interfaith Center on Corporate 
Responsibility, Ceres, OUT Leadership, the US Impact Investing 
Alliance, the Shareholder Rights Group, Green America, PRI, the 
Family Farm Defenders, Food and Water Watch, the Institute for 
Agriculture and Trade Policy, and the Union for Concerned 
Scientists.
    For these reasons, we oppose H.R. 4790.
            Sincerely,
                                   Maxine Waters,
                                           Ranking Member, Committee on 
                                               Financial Services.
                                   Nydia M. Velazquez,
                                   Gregory W. Meeks,
                                   Stephen F. Lynch,
                                   Emanuel Cleaver II,
                                   Brad Sherman,
                                    David Scott,
                                   Al Green,
                                   Jim Hines,
                                   Bill Foster,
                                   Juan Vargas,
                                   Sean Casten,
                                   Rashida Tlaib,
                                   Nikema Williams,
                                   Joyce Beatty,
                                   Vicente Gonzalez,
                                   Ayanna Pressley,
                                   Sylvia R. Garcia,
                                   Brittany Pettersen,
                                           Members of Congress.

                                  [all]