[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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