[107th Congress Public Law 100]
[From the U.S. Government Printing Office]


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[DOCID: f:publ100.107]


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        SMALL BUSINESS INVESTMENT COMPANY AMENDMENTS ACT OF 2001

[[Page 115 STAT. 966]]

Public Law 107-100
107th Congress

                                 An Act


 
   To amend the Small Business Investment Act of 1958, and for other 
                                purposes.

<<NOTE: Dec. 21, 2001 -  [S. 1196]>>     Be it enacted by the Senate and 
House of Representatives of the United States of America in 
Congress <<NOTE: Small Business Investment Company Amendments Act of 
2001. 15 USC 661 note.>> assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Investment Company 
Amendments Act of 2001''.

SEC. 2. SUBSIDY FEES.

    (a) In General.--Section 303 of the Small Business Investment Act of 
1958 (15 U.S.C. 683) is amended--
            (1) in subsection (b)--
                    (A) by striking ``of not more than 1 percent per 
                year'';
                    (B) by inserting ``which amount may not exceed 1.38 
                percent per year, and'' before ``which shall be paid''; 
                and
                    (C) by striking ``September 30, 2000'' and inserting 
                ``September 30, 2001''; and
            (2) in subsection (g)(2)--
                    (A) by striking ``of not more than 1 percent per 
                year'';
                    (B) by inserting ``which amount may not exceed 1.38 
                percent per year, and'' before ``which shall be paid''; 
                and
                    (C) by striking ``September 30, 2000'' and inserting 
                ``September 30, 2001''.

    (b) <<NOTE: 15 USC 683 note.>> Effective Date.--The amendments made 
by this section shall become effective on October 1, 2001.

SEC. 3. CONFLICTS OF INTEREST.

    Section 312 of the Small Business Investment Act of 1958 (15 U.S.C. 
687d) is amended by striking ``(including disclosure in the locality 
most directly affected by the transaction)''.

SEC. 4. PENALTIES FOR FALSE STATEMENTS.

    (a) Criminal Penalties.--Section 1014 of title 18, United States 
Code, is amended by inserting ``, as defined in section 103 of the Small 
Business Investment Act of 1958 (15 U.S.C. 662), or the Small Business 
Administration in connection with any provision of that Act'' after 
``small business investment company''.
    (b) Civil Penalties.--Section 951 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833a) is 
amended--
            (1) by redesignating subsections (d) through (g) as 
        subsections (e) through (h), respectively; and
            (2) in subsection (c)--
                    (A) in paragraph (1), by striking ``or'' at the end;

[[Page 115 STAT. 967]]

                    (B) in paragraph (2)--
                          (i) by striking ``1341;'' and inserting 
                      ``1341''; and
                          (ii) by striking ``institution.'' and 
                      inserting ``institution; or'';
                    (C) by inserting immediately after paragraph (2) the 
                following:
            ``(3) section 16(a) of the Small Business Act (15 U.S.C. 
        645(a)).''; and
                    (D) by striking ``This section shall'' and inserting 
                the following:

    ``(d) Effective Date.--This section shall''.

SEC. 5. REMOVAL OR SUSPENSION OF MANAGEMENT OFFICIALS.

    Section 313 of the Small Business Investment Act of 1958 (15 U.S.C. 
687e) is amended to read as follows:

``SEC. 313. REMOVAL OR SUSPENSION OF MANAGEMENT OFFICIALS.

    ``(a) Definition of `Management Official'.--In this section, the 
term `management official' means an officer, director, general partner, 
manager, employee, agent, or other participant in the management or 
conduct of the affairs of a licensee.
    ``(b) Removal of Management Officials.--
            ``(1) Notice of removal.--The Administrator may serve upon 
        any management official a written notice of its intention to 
        remove that management official whenever, in the opinion of the 
        Administrator--
                    ``(A) such management official--
                          ``(i) has willfully and knowingly committed 
                      any substantial violation of--
                                    ``(I) this Act;
                                    ``(II) any regulation issued under 
                                this Act; or
                                    ``(III) a cease-and-desist order 
                                which has become final; or
                          ``(ii) has willfully and knowingly committed 
                      or engaged in any act, omission, or practice which 
                      constitutes a substantial breach of a fiduciary 
                      duty of that person as a management official; and
                    ``(B) the violation or breach of fiduciary duty is 
                one involving personal dishonesty on the part of such 
                management official.
            ``(2) Contents of notice.--A notice of intention to remove a 
        management official, as provided in paragraph (1), shall contain 
        a statement of the facts constituting grounds therefor, and 
        shall fix a time and place at which a hearing will be held 
        thereon.
            ``(3) Hearings.--
                    ``(A) Timing.--A hearing described in paragraph (2) 
                shall be fixed for a date not earlier than 30 days nor 
                later than 60 days after the date of service of notice 
                of the hearing, unless an earlier or a later date is set 
                by the Administrator at the request of--
                          ``(i) the management official, and for good 
                      cause shown; or
                          ``(ii) the Attorney General of the United 
                      States.
                    ``(B) Consent.--Unless the management official shall 
                appear at a hearing described in this paragraph in 
                person or by a duly authorized representative, that 
                management

[[Page 115 STAT. 968]]

                official shall be deemed to have consented to the 
                issuance of an order of removal under paragraph (1).
            ``(4) Issuance of order of removal.--
                    ``(A) In general.--In the event of consent under 
                paragraph (3)(B), or if upon the record made at a 
                hearing described in this subsection, the Administrator 
                finds that any of the grounds specified in the notice of 
                removal has been established, the Administrator may 
                issue such orders of removal from office as the 
                Administrator deems appropriate.
                    ``(B) Effectiveness.--An order under subparagraph 
                (A) shall--
                          ``(i) become effective at the expiration of 30 
                      days after the date of service upon the subject 
                      licensee and the management official concerned 
                      (except in the case of an order issued upon 
                      consent as described in paragraph (3)(B), which 
                      shall become effective at the time specified in 
                      such order); and
                          ``(ii) remain effective and enforceable, 
                      except to such extent as it is stayed, modified, 
                      terminated, or set aside by action of the 
                      Administrator or a reviewing court in accordance 
                      with this section.

    ``(c) Authority to Suspend or Prohibit Participation.--
            ``(1) In general.--The Administrator may, if the 
        Administrator deems it necessary for the protection of the 
        licensee or the interests of the Administration, suspend from 
        office or prohibit from further participation in any manner in 
        the management or conduct of the affairs of the licensee, or 
        both, any management official referred to in subsection (b)(1), 
        by written notice to such effect served upon the management 
        official.
            ``(2) Effectiveness.--A suspension or prohibition under 
        paragraph (1)--
                    ``(A) shall become effective upon service of notice 
                under paragraph (1); and
                    ``(B) unless stayed by a court in proceedings 
                authorized by paragraph (3), shall remain in effect--
                          ``(i) pending the completion of the 
                      administrative proceedings pursuant to a notice of 
                      intention to remove served under subsection (b); 
                      and
                          ``(ii) until such time as the Administrator 
                      shall dismiss the charges specified in the notice, 
                      or, if an order of removal or prohibition is 
                      issued against the management official, until the 
                      effective date of any such order.
            ``(3) Judicial <<NOTE: Deadline.>> review.--Not later than 
        10 days after any management official has been suspended from 
        office or prohibited from participation in the management or 
        conduct of the affairs of a licensee, or both, under paragraph 
        (1), that management official may apply to the United States 
        district court for the judicial district in which the home 
        office of the licensee is located, or the United States District 
        Court for the District of Columbia, for a stay of the suspension 
        or prohibition pending the completion of the administrative 
        proceedings pursuant to a notice of intent to remove served upon 
        the management official under subsection (b), and such court 
        shall have jurisdiction to stay such action.

[[Page 115 STAT. 969]]

    ``(d) Authority To Suspend on Criminal Charges.--
                    ``(1) In general.--Whenever a management official is 
                charged in any information, indictment, or complaint 
                authorized by a United States attorney, with the 
                commission of or participation in a felony involving 
                dishonesty or breach of trust, the Administrator may, by 
                written notice served upon that management official, 
                suspend that management official from office or prohibit 
                that management official from further participation in 
                any manner in the management or conduct of the affairs 
                of the licensee, or both.
                    ``(2) Effectiveness.--A suspension or prohibition 
                under paragraph (1) shall remain in effect until the 
                subject information, indictment, or complaint is finally 
                disposed of, or until terminated by the Administrator.
                    ``(3) Authority upon conviction.--If a judgment of 
                conviction with respect to an offense described in 
                paragraph (1) is entered against a management official, 
                then at such time as the judgment is not subject to 
                further appellate review, the Administrator may issue 
                and serve upon the management official an order removing 
                that management official, which removal shall become 
                effective upon service of a copy of the order upon the 
                licensee.
                    ``(4) Authority upon dismissal or other 
                disposition.--A finding of not guilty or other 
                disposition of charges described in paragraph (1) shall 
                not preclude the Administrator from thereafter 
                instituting proceedings to suspend or remove the 
                management official from office, or to prohibit the 
                management official from participation in the management 
                or conduct of the affairs of the licensee, or both, 
                pursuant to subsection (b) or (c).

    ``(e) Notification to Licensees.--Copies of each notice required to 
be served on a management official under this section shall also be 
served upon the interested licensee.
    ``(f) Procedural Provisions; Judicial Review.--
            ``(1) Hearing venue.--Any hearing provided for in this 
        section shall be--
                    ``(A) held in the Federal judicial district or in 
                the territory in which the principal office of the 
                licensee is located, unless the party afforded the 
                hearing consents to another place; and
                    ``(B) conducted in accordance with the provisions of 
                chapter 5 of title 5, United States Code.
            ``(2) Issuance <<NOTE: Deadline.>> of orders.--After a 
        hearing provided for in this section, and not later than 90 days 
        after the Administrator has notified the parties that the case 
        has been submitted for final decision, the Administrator shall 
        render a decision in the matter (which shall include findings of 
        fact upon which its decision is predicated), and shall issue and 
        cause to be served upon each party to the proceeding an order or 
        orders consistent with the provisions of this section.
            ``(3) Authority to modify orders.--The Administrator may 
        modify, terminate, or set aside any order issued under this 
        section--
                    ``(A) at any time, upon such notice, and in such 
                manner as the Administrator deems proper, unless a 
                petition for review is timely filed in a court of 
                appeals of the United

[[Page 115 STAT. 970]]

                States, as provided in paragraph (4)(B), and thereafter 
                until the record in the proceeding has been filed in 
                accordance with paragraph (4)(C); and
                    ``(B) upon such filing of the record, with 
                permission of the court.
            ``(4) Judicial review.--
                    ``(A) In general.--Judicial review of an order 
                issued under this section shall be exclusively as 
                provided in this subsection.
                    ``(B) Petition <<NOTE: Deadline.>> for review.--Any 
                party to a hearing provided for in this section may 
                obtain a review of any order issued pursuant to 
                paragraph (2) (other than an order issued with the 
                consent of the management official concerned, or an 
                order issued under subsection (d)), by filing in the 
                court of appeals of the United States for the circuit in 
                which the principal office of the licensee is located, 
                or in the United States Court of Appeals for the 
                District of Columbia Circuit, not later than 30 days 
                after the date of service of such order, a written 
                petition praying that the order of the Administrator be 
                modified, terminated, or set aside.
                    ``(C) Notification to administration.--A copy of a 
                petition filed under subparagraph (B) shall be forthwith 
                transmitted by the clerk of the court to the 
                Administrator, and thereupon the Administrator shall 
                file in the court the record in the proceeding, as 
                provided in section 2112 of title 28, United States 
                Code.
                    ``(D) Court jurisdiction.--Upon the filing of a 
                petition under subparagraph (A)--
                          ``(i) the court shall have jurisdiction, 
                      which, upon the filing of the record under 
                      subparagraph (C), shall be exclusive, to affirm, 
                      modify, terminate, or set aside, in whole or in 
                      part, the order of the Administrator, except as 
                      provided in the last sentence of paragraph (3)(B);
                          ``(ii) review of such proceedings shall be had 
                      as provided in chapter 7 of title 5, United States 
                      Code; and
                          ``(iii) the judgment and decree of the court 
                      shall be final, except that the judgment and 
                      decree shall be subject to review by the Supreme 
                      Court of the United States upon certiorari, as 
                      provided in section 1254 of title 28, United 
                      States Code.
                    ``(E) Judicial review not a stay.--The commencement 
                of proceedings for judicial review under this paragraph 
                shall not, unless specifically ordered by the court, 
                operate as a stay of any order issued by the 
                Administrator under this section.''.

SEC. 6. REDUCTION OF FEES.

    (a) Two-Year Reduction of Section 7(a) Fees.--
            (1) Guarantee fees.--Section 7(a)(18) of the Small Business 
        Act (15 U.S.C. 636(a)(18)) is amended by adding at the end the 
        following:

[[Page 115 STAT. 971]]

                    ``(C) Two-year reduction in fees.--With respect to 
                loans approved during the 2-year period beginning on 
                October 1, 2002, the guarantee fee under subparagraph 
                (A) shall be as follows:
                          ``(i) A guarantee fee equal to 1 percent of 
                      the deferred participation share of a total loan 
                      amount that is not more than $150,000.
                          ``(ii) A guarantee fee equal to 2.5 percent of 
                      the deferred participation share of a total loan 
                      amount that is more than $150,000, but not more 
                      than $700,000.
                          ``(iii) A guarantee fee equal to 3.5 percent 
                      of the deferred participation share of a total 
                      loan amount that is more than $700,000.''.
            (2) Annual fees.--Section 7(a)(23)(A) of the Small Business 
        Act (15 U.S.C. 636(a)(23)(A)) is amended by adding at the end 
        the following: ``With respect to loans approved during the 2-
        year period beginning on October 1, 2002, the annual fee 
        assessed and collected under the preceding sentence shall be in 
        an amount equal to 0.25 percent of the outstanding balance of 
        the deferred participation share of the loan.''.

    (b) Reduction of Section 504 Fees.--Section 503 of the Small 
Business Investment Act of 1958 (15 U.S.C. 697) is amended--
            (1) in subsection (b)(7)(A)--
                    (A) by redesignating clauses (i) and (ii) as 
                subclauses (I) and (II), respectively, and moving the 
                margins 2 ems to the right;
                    (B) by striking ``not exceed the lesser'' and 
                inserting ``not exceed--
                          ``(i) the lesser''; and
                    (C) by adding at the end the following:
                          ``(ii) 50 percent of the amount established 
                      under clause (i) in the case of a loan made during 
                      the 2-year period beginning on October 1, 2002, 
                      for the life of the loan; and''; and
            (2) by adding at the end the following:

    ``(i) Two-Year Waiver of Fees.--The Administration may not assess or 
collect any up front guarantee fee with respect to loans made under this 
title during the 2-year period beginning on October 1, 2002.''.
    (c) Budgetary <<NOTE: 15 USC 636 note.>> Treatment of Loans and 
Financings.--Assistance made available under any loan made or approved 
by the Small Business Administration under section 7(a) of the Small 
Business Act (15 U.S.C. 636(a)) or financings made under title V of the 
Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.), during 
the 2-year period beginning on October 1, 2002, shall be treated as 
separate programs of the Small Business Administration for purposes of 
the Federal Credit Reform Act of 1990 only.

[[Page 115 STAT. 972]]

    (d) Use <<NOTE: 15 USC 697 note.>> of Funds.--The amendments made by 
this section to section 503 of the Small Business Investment Act of 
1958, shall be effective only to the extent that funds are made 
available under appropriations Acts, which funds shall be utilized by 
the Administrator to offset the cost (as such term is defined in section 
502 of the Federal Credit Reform Act of 1990) of such amendments.

    (e) Effective <<NOTE: 15 USC 697 note.>> Date.--The amendments made 
by this section shall become effective on October 1, 2002.

    Approved December 21, 2001.

LEGISLATIVE HISTORY--S. 1196:
---------------------------------------------------------------------------

SENATE REPORTS: No. 107-55 (Comm. on Small Business and 
Entrepreneurship).
CONGRESSIONAL RECORD, Vol. 147 (2001):
            Nov. 15, considered and passed Senate.
            Nov. 16, considered and passed House, amended.
            Dec. 7, Senate concurred in House amendment with an 
                amendment.
            Dec. 11, House concurred in Senate amendment.

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