[House Report 119-121]
[From the U.S. Government Publishing Office]
119th Congress } { REPORT
HOUSE OF REPRESENTATIVES
1st Session } { 119-121
======================================================================
ENCOURAGING LOCAL EMERGING VENTURES AND ECONOMIC GROWTH ACT OF 2025
_______
June 3, 2025.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hill of Arkansas, from the Committee on Financial Services,
submitted the following
R E P O R T
[To accompany H.R. 3301]
The Committee on Financial Services, to whom was referred
the bill (H.R. 3301) to amend the Securities Exchange Act of
1934 to specify certain registration statement contents for
emerging growth companies, to permit issuers to file draft
registration statements with the Securities and Exchange
Commission for confidential review, and for other purposes,
having considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Committee Consideration.......................................... 3
Related Hearings................................................. 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 6
Performance Goals and Objectives................................. 6
Committee Cost Estimate.......................................... 6
New Budget Authority and CBO Cost Estimate....................... 6
Unfunded Mandates Statement...................................... 6
Earmark Statement................................................ 6
Federal Advisory Committee Act Statement......................... 6
Applicability to the Legislative Branch.......................... 7
Duplication of Federal Programs.................................. 7
Section-by-Section Analysis of the Legislation................... 7
Changes in Existing Law Made by the Bill, as Reported............ 7
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Encouraging Local Emerging Ventures
and Economic Growth Act of 2025'' or the ``ELEVATE Act of 2025''.
SEC. 2. REGISTRATION STATEMENTS.
Section 12(b) of the Securities Exchange Act of 1934 (15 U.S.C.
78l(b)) is amended--
(1) in paragraph (1)(K), by striking ``years,'' and inserting
``years (or, in the case of an emerging growth company, not
more than the two preceding years),''; and
(2) by adding at the end the following:
``Any issuer may confidentially submit to the Commission a draft
registration statement for confidential nonpublic review by the staff
of the Commission prior to public filing, provided that the initial
confidential submission and all amendments thereto shall be publicly
filed with the Commission not later than 10 days before listing on a
national securities exchange. Notwithstanding any other provision of
this title, the Commission shall not be compelled to disclose any
information provided to or obtained by the Commission pursuant to this
subsection. For purposes of section 552 of title 5, this subsection
shall be considered a statute described in subsection (b)(3)(B) of such
section 552. Information described in or obtained pursuant to this
subsection shall be deemed to constitute confidential information for
purposes of section 24.''.
Purpose and Summary
H.R. 3301, the ``Encouraging Local Emerging Ventures and
Economic Growth Act of 2025'' or the ``ELEVATE Act of 2025,''
was introduced on May 8, 2025, by Representative Zachary Nunn
(IA-03). H.R. 3301 updates the emerging growth company (EGC)
financial statement requirements to clarify that an EGC may
present two years, rather than three years, of audited
financial statements in both IPOs and spin-off transactions.
The bill allows a spin-off of an EGC to benefit from the two-
year financial statement accommodation, which is currently only
available during an IPO.
Background and Need for Legislation
To address the decades-long decline of small IPOs in U.S.
public markets, Title I of the JOBS Act established a new
category of issuers known as ``Emerging Growth Companies.''
These companies are given an ``on ramp'' of up to five years to
comply with certain regulatory requirements prior to,
throughout, and immediately after the company's IPO.\1\ One of
these accommodations defined in Title I provides to EGCs is the
ability to go public with scaled financial disclosure
requirements, specifically providing two years of audited
financial statements rather than three years. Within the first
two years of enactment, 65 percent of EGCs used Title I's
scaled financial statement obligations when going public.\2\
From 2012-2024, more than 80 percent of all U.S. IPO pricings
were by companies that qualify as EGCs.\3\
---------------------------------------------------------------------------
\1\Jumpstart Our Business Startups Act, Pub. L. No. 113-233,
Sec. 101, 127 Stat. 2896, 2896 (2013) (codified as amended at 26 U.S.C.
Sec. 41).
\2\Latham & Watkins LLP, The JOBS Act, Two Years Later: An Updated
Look at the IPO Landscape (Apr. 5, 2014), at 4, https://www.lw.com/
thoughtleadership/lw-jobs-act-ipos-second-year.
\3\WilmerHale 2024 IPO Report (Mar. 2024), https://
www.wilmerhale.com/en/insights/publica
tions/2024-ipo-report.
---------------------------------------------------------------------------
Currently, the spinoff of an EGC does not benefit from the
two-year financial statement accommodation, which applies only
to IPO registration. The EGC financial statement requirements
should be comparable for both an IPO and a spin-off. Equalizing
the requirements in both scenarios as this bill does, promotes
efficiency and capital formation by reducing regulatory
compliance costs for companies engaging in spin-offs without
sacrificing significant investor protections.
Committee Consideration
117TH CONGRESS
On December 2, 2022, Representative Patrick McHenry (R-NC)
introduced H.R. 9411, a bill to amend the Federal securities
laws to specify the periods for which financial statements are
required to be provided by an emerging growth company, and for
other purposes. The bill is an earlier iteration of H.R. 3301.
The bill was referred solely to the Committee on Financial
Services.
118TH CONGRESS
On April 13, 2023, then Chairman McHenry introduced H.R.
2610, a bill to amend the Securities Exchange Act of 1934 to
specify certain registration statement contents for emerging
growth companies, to permit issuers to file draft registration
statements with the Securities and Exchange Commission for
confidential review, and for other purposes. The bill is an
earlier iteration of H.R. 3301. The bill was referred solely to
the Committee on Financial Services. The Subcommittee on
Capital Markets of the Committee on Financial Services held a
hearing examining matter relating to H.R. 2610 on March 9,
2023. On April 26, 2023, the Committee on Financial Services
ordered H.R. 2610 to be favorably reported to the House of
Representatives by a vote of 42-0. On June 5, 2023, the House
passed the bill under suspension of the rules by voice vote. It
was received in the Senate and referred to the Committee on
Banking, Housing, and Urban Affairs.
119TH CONGRESS
On May 8, 2025, Representative Zachary Nunn (R-IA)
introduced H.R. 3301, a bill to amend the Securities Exchange
Act of 1934 to specify certain registration statement contents
for emerging growth companies, to permit issuers to file draft
registration statements with the Securities and Exchange
Commission for confidential review, and for other purposes,
with Representative Janelle Bynum (D-OR) as an original
cosponsor. The bill was referred solely to the Committee on
Financial Services. The bill was attached to the February 26,
2025, hearing titled ``The Future of American Capital:
Strengthening Public and Private Markets by Increasing Investor
Access and Facilitating Capital Formation'' and the March 25,
2025, hearing titled, ``Beyond Silicon Valley: Expanding Access
to Capital Across America.''
On May 20, 2025, the Committee met in open session to
consider, among others, H.R. 3301. The Committee ordered H.R.
3301, as amended, to be favorably reported to the House of
Representatives.
Related Hearings
Pursuant to clause 3(c)(6) of rule XIII of the Rules of the
House of Representatives, the following hearings were used to
develop H.R. 3301:
The Capital Markets Subcommittee of the Committee on
Financial Services held a February 26, 2025, hearing titled
``The Future of American Capital: Strengthening Public and
Private Markets by Increasing Investor Access and Facilitating
Capital Formation'' and the Full Committee held a March 25,
2025, hearing titled, ``Beyond Silicon Valley: Expanding Access
to Capital Across America.'' A discussion draft version of the
bill was attached to both hearings. The following witnesses
testified at the February 26, 2025, hearing: Mr. Andrew
Barnell, CEO and Co-Founder, Geneoscopy; Mr. McKeever Conwell,
Founder and Managing Partner, RareBreed Ventures; Ms. Rebecca
Kacaba, CEO and Co-Founder, DealMaker; Ms. Anna Pinedo,
Partner, Mayer Brown; and Ms. Alexandra Thornton, Senior
Director, Financial Regulation, Center for American Progress.
The following witnesses testified at the March 25, 2025,
hearing: Mr. Steve Case, Chairman and CEO, Revolution LLC; Mr.
Bill Newell, Senior Business Advisor & Former CEO, Sutro
Biopharma; Ms. Candice Matthews Brackeen, General Partner,
Lightship Capital; Mr. Joel Trotter, Partner, Latham & Watkins
LLP; and Ms. Amanda Senn, Director of the Alabama Securities
Commission.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include for
each record vote on a motion to report the measure or matter
and on any amendments offered to the measure or matter the
total number of votes for and against and the names of the
Members voting for and against.
On May 21, 2025, the Committee ordered H.R. 3301, as
amended, to be reported favorably to the House by a recorded
vote of 50 yeas and 1 nay, a quorum being present. (Record Vote
No. FC-110). Before the question to report was called, the
Committee adopted an amendment in the nature of a substitute,
designated NUNN_073, which made minor edits and technical
changes and added a short title ``Encouraging Local Emerging
Ventures and Economic Growth Act of 2025'' or the ``ELEVATE Act
of 2025'', offered by Representative Nunn. The amendment was
adopted by voice vote, a quorum being present.
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. 3301 is to allow a
spin-off of an EGC to benefit from the two-year financial
statement accommodation, which is currently only available
during an IPO.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 3301. 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 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 and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII and section 402
of the Congressional Budget Act of 1974, a cost estimate was
not made available to the Committee in time for the filing of
this report. The Chairman of the Committee shall cause such
estimate to be printed in the Congressional Record upon its
receipt by the Committee.
Unfunded 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.
Earmark Statement
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 resolution 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.
Federal Advisory Committee Act Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to the 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.
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
Section 1 provides the Act may be cited as the
``Encouraging Local Emerging Ventures and Economic Growth Act
of 2025'' or the ``ELEVATE Act of 2025.''
Section 2. Registration statements
Section 2 amends the Securities Exchange Act of 1934 to
allow EGCs to present two years of audited financial statements
in both an initial public offering and spin-off transactions
and permits issuers to file draft registration statements with
the Securities and Exchange Commission for confidential review
provided that the initial confidential submission and all
amendments are publicly filed with the Commission not later
than 10 days before the issuer's requested date of
effectiveness of the registration statement.
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 EXCHANGE ACT OF 1934
TITLE I--REGULATION OF SECURITIES EXCHANGES
* * * * * * *
registration requirements for securities
Sec. 12. (a) It shall be unlawful for any member, broker, or
dealer to effect any transaction in any security (other than an
exempted security) on a national securities exchange unless a
registration is effective as to such security for such exchange
in accordance with the provisions of this title and the rules
and regulations thereunder. The provisions of this subsection
shall not apply in respect of a security futures product traded
on a national securities exchange.
(b) A security may be registered on a national securities
exchange by the issuer filing an application with the exchange
(and filing with the Commission such duplicate originals
thereof as the Commission may require), which application shall
contain--
(1) Such information, in such detail, as to the
issuer and any person directly or indirectly
controlling or controlled by, or under direct or
indirect common control with, the issuer, and any
guarantor of the security as to principal or interest
or both, as the Commission may by rules and regulations
require, as necessary or appropriate in the public
interest or for the protection of investors, in respect
of the following:
(A) the organization, financial structures,
and nature of the business;
(B) the terms, position, rights, and
privileges of the different classes of
securities outstanding;
(C) the terms on which their securities are
to be, and during the preceding three years
have been, offered to the public or otherwise;
(D) the directors, officers, and
underwriters, and each security holder of
record holding more than 10 per centum of any
class of any equity security of the issuer
(other than an exempted security), their
remuneration and their interests in the
securities of, and their material contracts
with, the issuer and any person directly or
indirectly controlling or controlled by, or
under direct or indirect common control with,
the issuer;
(E) remuneration to others than directors and
officers exceeding $20,000 per annum;
(F) bonus and profit-sharing arrangements;
(G) management and service contracts;
(H) options existing or to be created in
respect of their securities;
(I) material contracts, not made in the
ordinary course of business, which are to be
executed in whole or in part at or after the
filing of the application or which were made
not more than two years before such filing, and
every material patent or contract for a
material patent right shall be deemed a
material contract;
(J) balance sheets for not more than the
three preceding fiscal years, certified if
required by the rules and regulations of the
Commission by a registered public accounting
firm;
(K) profit and loss statements for not more
than the three preceding fiscal [years,] years
(or, in the case of an emerging growth company,
not more than the two preceding years),
certified if required by the rules and
regulations of the Commission by a registered
public accounting firm; and
(L) any further financial statements which
the Commission may deem necessary or
appropriate for the protection of investors.
(2) Such copies of articles of incorporation, bylaws,
trust indentures, or corresponding documents by
whatever name known, underwriting arrangements, and
other similar documents of, and voting trust agreements
with respect to, the issuer and any person directly or
indirectly controlling or controlled by, or under
direct or indirect common control with, the issuer as
the Commission may require as necessary or appropriate
for the proper protection of investors and to insure
fair dealing in the security.
(3) Such copies of material contracts, referred to in
paragraph (1)(I) above, as the Commission may require
as necessary or appropriate for the proper protection
of investors and to insure fair dealing in the
security.
Any issuer may confidentially submit to the Commission a draft
registration statement for confidential nonpublic review by the
staff of the Commission prior to public filing, provided that
the initial confidential submission and all amendments thereto
shall be publicly filed with the Commission not later than 10
days before listing on a national securities exchange.
Notwithstanding any other provision of this title, the
Commission shall not be compelled to disclose any information
provided to or obtained by the Commission pursuant to this
subsection. For purposes of section 552 of title 5, this
subsection shall be considered a statute described in
subsection (b)(3)(B) of such section 552. Information described
in or obtained pursuant to this subsection shall be deemed to
constitute confidential information for purposes of section 24.
(c) If in the judgment of the Commission any information
required under subsection (b) of this section is inapplicable
to any specified class or classes of issuers, the Commission
shall require in lieu thereof the submission of such other
information of comparable character as it may deem applicable
to such class of issuers.
(d) If the exchange authorities certify to the Commission
that the security has been approved by the exchange for listing
and registration, the registration shall become effective
thirty days after the receipt of such certification by the
Commission or within such shorter period of time as the
Commission may determine. A security registered with a national
securities exchange may be withdrawn or stricken from listing
and registration in accordance with the rules of the exchange
and, upon such terms as the Commission may deem necessary to
impose for the protection of investors, upon application by the
issuer or the exchange to the Commission; whereupon the issuer
shall be relieved from further compliance with the provisions
of this section and section 13 of this title and any rules or
regulations under such sections as to the securities so
withdrawn or stricken. An unissued security may be registered
only in accordance with such rules and regulations as the
Commission may prescribe as necessary or appropriate in the
public interest or for the protection of investors.
(e) Notwithstanding the foregoing provisions of this section,
the Commission may by such rules and regulations as it deems
necessary or appropriate in the public interest or for the
protection of investors permit securities listed on any
exchange at the time the registration of such exchange as a
national securities exchange becomes effective, to be
registered for a period ending not later than July 1, 1935,
without complying with the provisions of this section.
(f)(1)(A) Notwithstanding the preceding subsections of this
section, any national securities exchange, in accordance with
the requirements of this subsection and the rules hereunder,
may extend unlisted trading privileges to--
(i) any security that is listed and registered on a
national securities exchange, subject to subparagraph
(B); and
(ii) any security that is otherwise registered
pursuant to this section, or that would be required to
be so registered except for the exemption from
registration provided in subparagraph (B) or (G) of
subsection (g)(2), subject to subparagraph (E) of this
paragraph.
(B) A national securities exchange may not extend unlisted
trading privileges to a security described in subparagraph
(A)(i) during such interval, if any, after the commencement of
an initial public offering of such security, as is or may be
required pursuant to subparagraph (C).
(C) Not later than 180 days after the date of enactment of
the Unlisted Trading Privileges Act of 1994, the Commission
shall prescribe, by rule or regulation, the duration of the
interval referred to in subparagraph (B), if any, as the
Commission determines to be necessary or appropriate for the
maintenance of fair and orderly markets, the protection of
investors and the public interest, or otherwise in furtherance
of the purposes of this title. Until the earlier of the
effective date of such rule or regulation or 240 days after
such date of enactment, such interval shall begin at the
opening of trading on the day on which such security commences
trading on the national securities exchange with which such
security is registered and end at the conclusion of the next
day of trading.
(D) The Commission may prescribe, by rule or regulation such
additional procedures or requirements for extending unlisted
trading privileges to any security as the Commission deems
necessary or appropriate for the maintenance of fair and
orderly markets, the protection of investors and the public
interest, or otherwise in furtherance of the purposes of this
title.
(E) No extension of unlisted trading privileges to securities
described in subparagraph (A)(ii) may occur except pursuant to
a rule, regulation, or order of the Commission approving such
extension or extensions. In promulgating such rule or
regulation or in issuing such order, the Commission--
(i) shall find that such extension or extensions of
unlisted trading privileges is consistent with the
maintenance of fair and orderly markets, the protection
of investors and the public interest, and otherwise in
furtherance of the purposes of this title;
(ii) shall take account of the public trading
activity in such securities, the character of such
trading, the impact of such extension on the existing
markets for such securities, and the desirability of
removing impediments to and the progress that has been
made toward the development of a national market
system; and
(iii) shall not permit a national securities exchange
to extend unlisted trading privileges to such
securities if any rule of such national securities
exchange would unreasonably impair the ability of a
dealer to solicit or effect transactions in such
securities for its own account, or would unreasonably
restrict competition among dealers in such securities
or between such dealers acting in the capacity of
market makers who are specialists and such dealers who
are not specialists.
(F) An exchange may continue to extend unlisted trading
privileges in accordance with this paragraph only if the
exchange and the subject security continue to satisfy the
requirements for eligibility under this paragraph, including
any rules and regulations issued by the Commission pursuant to
this paragraph, except that unlisted trading privileges may
continue with regard to securities which had been admitted on
such exchange prior to July 1, 1964, notwithstanding the
failure to satisfy such requirements. If unlisted trading
privileges in a security are discontinued pursuant to this
subparagraph, the exchange shall cease trading in that
security, unless the exchange and the subject security
thereafter satisfy the requirements of this paragraph and the
rules issued hereunder.
(G) For purposes of this paragraph--
(i) a security is the subject of an initial public
offering if--
(I) the offering of the subject security is
registered under the Securities Act of 1933;
and
(II) the issuer of the security, immediately
prior to filing the registration statement with
respect to the offering, was not subject to the
reporting requirements of section 13 or 15(d)
of this title; and
(ii) an initial public offering of such security
commences at the opening of trading on the day on which
such security commences trading on the national
securities exchange with which such security is
registered.
(2)(A) At any time within 60 days of commencement of trading
on an exchange of a security pursuant to unlisted trading
privileges, the Commission may summarily suspend such unlisted
trading privileges on the exchange. Such suspension shall not
be reviewable under section 25 of this title and shall not be
deemed to be a final agency action for purposes of section 704
of title 5, United States Code. Upon such suspension--
(i) the exchange shall cease trading in the security
by the close of business on the date of such
suspension, or at such time as the Commission may
prescribe by rule or order for the maintenance of fair
and orderly markets, the protection of investors and
the public interest, or otherwise in furtherance of the
purposes of this title; and
(ii) if the exchange seeks to extend unlisted trading
privileges to the security, the exchange shall file an
application to reinstate its ability to do so with the
Commission pursuant to such procedures as the
Commission may prescribe by rule or order for the
maintenance of fair and orderly markets, the protection
of investors and the public interest, or otherwise in
furtherance of the purposes of this title.
(B) A suspension under subparagraph (A) shall remain in
effect until the Commission, by order, grants approval of an
application to reinstate, as described in subparagraph (A)(ii).
(C) A suspension under subparagraph (A) shall not affect the
validity or force of an extension of unlisted trading
privileges in effect prior to such suspension.
(D) The Commission shall not approve an application by a
national securities exchange to reinstate its ability to extend
unlisted trading privileges to a security unless the Commission
finds, after notice and opportunity for hearing, that the
extension of unlisted trading privileges pursuant to such
application is consistent with the maintenance of fair and
orderly markets, the protection of investors and the public
interest, and otherwise in furtherance of the purposes of this
title. If the application is made to reinstate unlisted trading
privileges to a security described in paragraph (1)(A)(ii), the
Commission--
(i) shall take account of the public trading activity
in such security, the character of such trading, the
impact of such extension on the existing markets for
such a security, and the desirability of removing
impediments to and the progress that has been made
toward the development of a national market system; and
(ii) shall not grant any such application if any rule
of the national securities exchange making application
under this subsection would unreasonably impair the
ability of a dealer to solicit or effect transactions
in such security for its own account, or would
unreasonably restrict competition among dealers in such
security or between such dealers acting in the capacity
of marketmakers who are specialists and such dealers
who are not specialists.
(3) Notwithstanding paragraph (2), the Commission shall by
rules and regulations suspend unlisted trading privileges in
whole or in part for any or all classes of securities for a
period not exceeding twelve months, if it deems such suspension
necessary or appropriate in the public interest or for the
protection of investors or to prevent evasion of the purposes
of this title.
(4) On the application of the issuer of any security for
which unlisted trading privileges on any exchange have been
continued or extended pursuant to this subsection, or of any
broker or dealer who makes or creates a market for such
security, or of any other person having a bona fide interest in
the question of termination or suspension of such unlisted
trading privileges, or on its own motion, the Commission shall
by order terminate, or suspend for a period not exceeding
twelve months, such unlisted trading privileges for such
security if the Commission finds, after appropriate notice and
opportunity for hearing, that such termination or suspension is
necessary or appropriate in the public interest or for the
protection of investors.
(5) In any proceeding under this subsection in which
appropriate notice and opportunity for hearing are required,
notice of not less than ten days to the applicant in such
proceeding, to the issuer of the security involved, to the
exchange which is seeking to continue or extend or has
continued or extended unlisted trading privileges for such
security, and to the exchange, if any, on which such security
is listed and registered, shall be deemed adequate notice, and
any broker or dealer who makes or creates a market for such
security, and any other person having a bona fide interest in
such proceeding, shall upon application be entitled to be
heard.
(6) Any security for which unlisted trading privileges are
continued or extended pursuant to this subsection shall be
deemed to be registered on a national securities exchange
within the meaning of this title. The powers and duties of the
Commission under this title shall be applicable to the rules of
an exchange in respect to any such security. The Commission
may, by such rules and regulations as it deems necessary or
appropriate in the public interest or for the protection of
investors, either unconditionally or upon specified terms and
conditions, or for stated periods, exempt such securities from
the operation of any provision of section 13, 14, or 16 of this
title.
(g)(1) Every issuer which is engaged in interstate commerce,
or in a business affecting interstate commerce, or whose
securities are traded by use of the mails or any means or
instrumentality of interstate commerce shall--
(A) within 120 days after the last day of its first
fiscal year ended on which the issuer has total assets
exceeding $10,000,000 and a class of equity security
(other than an exempted security) held of record by
either--
(i) 2,000 persons, or
(ii) 500 persons who are not accredited investors (as
such term is defined by the Commission), and
(B) in the case of an issuer that is a bank, a
savings and loan holding company (as defined in section
10 of the Home Owners' Loan Act), or a bank holding
company, as such term is defined in section 2 of the
Bank Holding Company Act of 1956 (12 U.S.C. 1841), not
later than 120 days after the last day of its first
fiscal year ended after the effective date of this
subsection, on which the issuer has total assets
exceeding $10,000,000 and a class of equity security
(other than an exempted security) held of record by
2,000 or more persons,
register such security by filing with the Commission a
registration statement (and such copies thereof as the
Commission may require) with respect to such security
containing such information and documents as the Commission may
specify comparable to that which is required in an application
to register a security pursuant to subsection (b) of this
section. Each such registration statement shall become
effective sixty days after filing with the Commission or within
such shorter period as the Commission may direct. Until such
registration statement becomes effective it shall not be deemed
filed for the purposes of section 18 of this title. Any issuer
may register any class of equity security not required to be
registered by filing a registration statement pursuant to the
provisions of this paragraph. The Commission is authorized to
extend the date upon which any issuer or class of issuers is
required to register a security pursuant to the provisions of
this paragraph.
(2) The provisions of this subsection shall not apply in
respect of--
(A) any security listed and registered on a national
securities exchange.
(B) any security issued by an investment company
registered pursuant to section 8 of the Investment
Company Act of 1940.
(C) any security, other than permanent stock,
guaranty stock, permanent reserve stock, or any similar
certificate evidencing nonwithdrawable capital, issued
by a savings and loan association, building and loan
association, cooperative bank, homestead association,
or similar institution, which is supervised and
examined by State or Federal authority having
supervision over any such institution.
(D) any security of an issuer organized and operated
exclusively for religious, educational, benevolent,
fraternal, charitable, or reformatory purposes and not
for pecuniary profit, and no part of the net earnings
of which inures to the benefit of any private
shareholder or individual; or any security of a fund
that is excluded from the definition of an investment
company under section 3(c)(10)(B) of the Investment
Company Act of 1940.
(E) any security of an issuer which is a
``cooperative association'' as defined in the
Agricultural Marketing Act, approved June 15, 1929, as
amended, or a federation of such cooperative
associations, if such federation possesses no greater
powers or purposes than cooperative associations so
defined.
(F) any security issued by a mutual or cooperative
organization which supplies a commodity or service
primarily for the benefit of its members and operates
not for pecuniary profit, but only if the security is
part of a class issuable only to persons who purchase
commodities or services from the issuer, the security
is transferable only to a successor in interest or
occupancy of premises serviced or to be served by the
issuer, and no dividends are payable to the holder of
the security.
(G) any security issued by an insurance company if
all of the following conditions are met:
(i) Such insurance company is required to and
does file an annual statement with the
Commissioner of Insurance (or other officer or
agency performing a similar function) of its
domiciliary State, and such annual statement
conforms to that prescribed by the National
Association of Insurance Commissioners or in
the determination of such State commissioner,
officer or agency substantially conforms to
that so prescribed.
(ii) Such insurance company is subject to
regulation by its domiciliary State of proxies,
consents, or authorizations in respect of
securities issued by such company and such
regulation conforms to that prescribed by the
National Association of Insurance
Commissioners.
(iii) After July 1, 1966, the purchase and
sales of securities issued by such insurance
company by beneficial owners, directors, or
officers of such company are subject to
regulation (including reporting) by its
domiciliary State substantially in the manner
provided in section 16 of this title.
(H) any interest or participation in any collective
trust funds maintained by a bank or in a separate
account maintained by an insurance company which
interest or participation is issued in connection with
(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
deduction of the employer's contribution under section
404(a)(2) of such Code, or (iii) 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.
(3) The Commission may by rules or regulations or, on its own
motion, after notice and opportunity for hearing, by order,
exempt from this subsection any security of a foreign issuer,
including any certificate of deposit for such a security, if
the Commission finds that such exemption is in the public
interest and is consistent with the protection of investors.
(4) Registration of any class of security pursuant to this
subsection shall be terminated ninety days, or such shorter
period as the Commission may determine, after the issuer files
a certification with the Commission that the number of holders
of record of such class of security is reduced to less than 300
persons, or, in the case of a bank, a savings and loan holding
company (as defined in section 10 of the Home Owners' Loan
Act), or a bank holding company, as such term is defined in
section 2 of the Bank Holding Company Act of 1956 (12 U.S.C.
1841), 1,200 persons persons. The Commission shall after notice
and opportunity for hearing deny termination of registration if
it finds that the certification is untrue. Termination of
registration shall be deferred pending final determination on
the question of denial.
(5) For the purposes of this subsection the term ``class''
shall include all securities of an issuer which are of
substantially similar character and the holders of which enjoy
substantially similar rights and privileges. The Commission may
for the purpose of this subsection define by rules and
regulations the terms ``total assets'' and ``held of record''
as it deems necessary or appropriate in the public interest or
for the protection of investors in order to prevent
circumvention of the provisions of this subsection. For
purposes of this subsection, a security futures product shall
not be considered a class of equity security of the issuer of
the securities underlying the security futures product. For
purposes of determining whether an issuer is required to
register a security with the Commission pursuant to paragraph
(1), the definition of ``held of record'' shall not include
securities held by persons who received the securities pursuant
to an employee compensation plan in transactions exempted from
the registration requirements of section 5 of the Securities
Act of 1933.
(6) Exclusion for persons holding certain
securities.--The Commission shall, by rule, exempt,
conditionally or unconditionally, securities acquired
pursuant to an offering made under section 4(6) of the
Securities Act of 1933 from the provisions of this
subsection.
(h) The Commission may by rules and regulations, or upon
application of an interested person, by order, after notice and
opportunity for hearing, exempt in whole or in part any issuer
or class of issuers from the provisions of subsection (g) of
this section or from section 13, 14, or 15(d) or may exempt
from section 16 any officer, director, or beneficial owner of
securities of any issuer, any security of which is required to
be registered pursuant to subsection (g) hereof, upon such
terms and conditions and for such period as it deems necessary
or appropriate, if the Commission finds, by reason of the
number of public investors, amount of trading interest in the
securities, the nature and extent of the activities of the
issuer, income or assets of the issuer, or otherwise, that such
action is not inconsistent with the public interest or the
protection of investors. The Commission may, for the purposes
of any of the above-mentioned sections or subsections of this
title, classify issuers and prescribe requirements appropriate
for each such class.
(i) In respect of any securities issued by banks and savings
associations the deposits of which are insured in accordance
with the Federal Deposit Insurance Act, the powers, functions,
and duties vested in the Commission to administer and enforce
sections 10A(m), 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of
this Act, and sections 302, 303, 304, 306, 401(b), 404, 406,
and 407 of the Sarbanes-Oxley Act of 2002, (1) with respect to
national banks and Federal savings associations, the accounts
of which are insured by the Federal Deposit Insurance
Corporation are vested in the Comptroller of the Currency, (2)
with respect to all other member banks of the Federal Reserve
System are vested in the Board of Governors of the Federal
Reserve System, and (3) with respect to all other insured banks
and State savings associations, the accounts of which are
insured by the Federal Deposit Insurance Corporation, are
vested in the Federal Deposit Insurance Corporation. The
Comptroller of the Currency, the Board of Governors of the
Federal Reserve System, and the Federal Deposit Insurance
Corporation shall have the power to make such rules and
regulations as may be necessary for the execution of the
functions vested in them as provided in this subsection. In
carrying out their responsibilities under this subsection, the
agencies named in the first sentence of this subsection shall
issue substantially similar regulations to regulations and
rules issued by the Commission under sections 10A(m), 12, 13,
14(a), 14(c), 14(d), 14(f) and 16 of this Act, and sections
302, 303, 304, 306, 401(b), 404, 406, and 407 of the Sarbanes-
Oxley Act of 2002, unless they find that implementation of
substantially similar regulations with respect to insured banks
and insured institutions are not necessary or appropriate in
the public interest or for protection of investors, and publish
such findings, and the detailed reasons therefor, in the
Federal Register. Such regulations of the above-named agencies,
or the reasons for failure to publish such substantially
similar regulations to those of the Commission, shall be
published in the Federal Register within 120 days of the date
of enactment of this subsection, and, thereafter, within 60
days of any changes made by the Commission in its relevant
regulations and rules.
(j) The Commission is authorized, by order, as it deems
necessary or appropriate for the protection of investors to
deny, to suspend the effective date of, to suspend for a period
not exceeding twelve months, or to revoke the registration of a
security, if the Commission finds, on the record after notice
and opportunity for hearing, that the issuer of such security
has failed to comply with any provision of this title or the
rules and regulations thereunder. No member of a national
securities exchange, broker, or dealer shall make use of the
mails or any means or instrumentality of interstate commerce to
effect any transaction in, or to induce the purchase or sale
of, any security the registration of which has been and is
suspended or revoked pursuant to the preceding sentence.
(k) Trading Suspensions; Emergency Authority.--
(1) Trading suspensions.--If in its opinion the
public interest and the protection of investors so
require, the Commission is authorized by order--
(A) summarily to suspend trading in any
security (other than an exempted security) for
a period not exceeding 10 business days, and
(B) summarily to suspend all trading on any
national securities exchange or otherwise, in
securities other than exempted securities, for
a period not exceeding 90 calendar days.
The action described in subparagraph (B) shall not take
effect unless the Commission notifies the President of
its decision and the President notifies the Commission
that the President does not disapprove of such
decision. If the actions described in subparagraph (A)
or (B) involve a security futures product, the
Commission shall consult with and consider the views of
the Commodity Futures Trading Commission.
(2) Emergency orders.--
(A) In general.--The Commission, in an
emergency, may by order summarily take such
action to alter, supplement, suspend, or impose
requirements or restrictions with respect to
any matter or action subject to regulation by
the Commission or a self-regulatory
organization under the securities laws, as the
Commission determines is necessary in the
public interest and for the protection of
investors--
(i) to maintain or restore fair and
orderly securities markets (other than
markets in exempted securities);
(ii) to ensure prompt, accurate, and
safe clearance and settlement of
transactions in securities (other than
exempted securities); or
(iii) to reduce, eliminate, or
prevent the substantial disruption by
the emergency of--
(I) securities markets (other
than markets in exempted
securities), investment
companies, or any other
significant portion or segment
of such markets; or
(II) the transmission or
processing of securities
transactions (other than
transactions in exempted
securities).
(B) Effective period.--An order of the
Commission under this paragraph shall continue
in effect for the period specified by the
Commission, and may be extended. Except as
provided in subparagraph (C), an order of the
Commission under this paragraph may not
continue in effect for more than 10 business
days, including extensions.
(C) Extension.--An order of the Commission
under this paragraph may be extended to
continue in effect for more than 10 business
days if, at the time of the extension, the
Commission finds that the emergency still
exists and determines that the continuation of
the order beyond 10 business days is necessary
in the public interest and for the protection
of investors to attain an objective described
in clause (i), (ii), or (iii) of subparagraph
(A). In no event shall an order of the
Commission under this paragraph continue in
effect for more than 30 calendar days.
(D) Security futures.--If the actions
described in subparagraph (A) involve a
security futures product, the Commission shall
consult with and consider the views of the
Commodity Futures Trading Commission.
(E) Exemption.--In exercising its authority
under this paragraph, the Commission shall not
be required to comply with the provisions of--
(i) section 19(c); or
(ii) section 553 of title 5, United
States Code.
(3) Termination of emergency actions by president.--
The President may direct that action taken by the
Commission under paragraph (1)(B) or paragraph (2) of
this subsection shall not continue in effect.
(4) Compliance with orders.--No member of a national
securities exchange, broker, or dealer shall make use
of the mails or any means or instrumentality of
interstate commerce to effect any transaction in, or to
induce the purchase or sale of, any security in
contravention of an order of the Commission under this
subsection unless such order has been stayed, modified,
or set aside as provided in paragraph (5) of this
subsection or has ceased to be effective upon direction
of the President as provided in paragraph (3).
(5) Limitations on review of orders.--An order of the
Commission pursuant to this subsection shall be subject
to review only as provided in section 25(a) of this
title. Review shall be based on an examination of all
the information before the Commission at the time such
order was issued. The reviewing court shall not enter a
stay, writ of mandamus, or similar relief unless the
court finds, after notice and hearing before a panel of
the court, that the Commission's action is arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law.
(6) Consultation.--Prior to taking any action
described in paragraph (1)(B), the Commission shall
consult with and consider the views of the Secretary of
the Treasury, the Board of Governors of the Federal
Reserve System, and the Commodity Futures Trading
Commission, unless such consultation is impracticable
in light of the emergency.
(7) Definition.--For purposes of this subsection, the
term ``emergency'' means--
(A) a major market disturbance characterized
by or constituting--
(i) sudden and excessive fluctuations
of securities prices generally, or a
substantial threat thereof, that
threaten fair and orderly markets; or
(ii) a substantial disruption of the
safe or efficient operation of the
national system for clearance and
settlement of transactions in
securities, or a substantial threat
thereof; or
(B) a major disturbance that substantially
disrupts, or threatens to substantially
disrupt--
(i) the functioning of securities
markets, investment companies, or any
other significant portion or segment of
the securities markets; or
(ii) the transmission or processing
of securities transactions.
(l) It shall be unlawful for an issuer, any class of whose
securities is registered pursuant to this section or would be
required to be so registered except for the exemption from
registration provided by subsection (g)(2)(B) or (g)(2)(G) of
this section, by the use of any means or instrumentality of
interstate commerce, or of the mails, to issue, either
originally or upon transfer, any of such securities in a form
or with a format which contravenes such rules and regulations
as the Commission may prescribe as necessary or appropriate for
the prompt and accurate clearance and settlement of
transactions in securities. The provisions of this subsection
shall not apply to variable annuity contracts or variable life
policies issued by an insurance company or its separate
accounts.
* * * * * * *
[all]