-CITE-
    15 USC CHAPTER 2B - SECURITIES EXCHANGES                    01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
                     CHAPTER 2B - SECURITIES EXCHANGES                 

-MISC1-
    Sec.                                                     
    78a.        Short title.                                          
    78b.        Necessity for regulation.                             
    78c.        Definitions and application.                          
    78c-1.      Swap agreements.                                      
    78d.        Securities and Exchange Commission.                   
    78d-1.      Delegation of functions by Commission.                
    78d-2.      Transfer of functions with respect to assignment of
                 personnel to chairman.                               
    78d-3.      Appearance and practice before the Commission.        
    78e.        Transactions on unregistered exchanges.               
    78f.        National securities exchanges.                        
    78g.        Margin requirements.                                  
    78h.        Restrictions on borrowing and lending by members,
                 brokers, and dealers.                                
    78i.        Manipulation of security prices.                      
    78j.        Manipulative and deceptive devices.                   
    78j-1.      Audit requirements.                                   
    78k.        Trading by members of exchanges, brokers, and dealers.
    78k-1.      National market system for securities; securities
                 information processors.                              
    78l.        Registration requirements for securities.             
    78l-1.      Applications for unlisted trading privileges deemed
                 filed under section 78l of this title.               
    78m.        Periodical and other reports.                         
    78n.        Proxies.                                              
    78o.        Registration and regulation of brokers and dealers.   
    78o-1.      Brokers deemed to be registered.                      
    78o-2.      Liabilities arising prior to amendment unaffected.    
    78o-3.      Registered securities associations.                   
    78o-4.      Municipal securities.                                 
    78o-5.      Government securities brokers and dealers.            
    78o-6.      Securities analysts and research reports.             
    78o-7.      Registration of nationally recognized statistical
                 rating organizations.                                
    78p.        Directors, officers, and principal stockholders.      
    78q.        Records and reports.                                  
    78q-1.      National system for clearance and settlement of
                 securities transactions.                             
    78q-2.      Automated quotation systems for penny stocks.         
    78r.        Liability for misleading statements.                  
    78s.        Registration, responsibilities, and oversight of
                 self-regulatory organizations.                       
    78t.        Liability of controlling persons and persons who aid
                 and abet violations.                                 
    78t-1.      Liability to contemporaneous traders for insider
                 trading.                                             
    78u.        Investigations and actions.                           
    78u-1.      Civil penalties for insider trading.                  
    78u-2.      Civil remedies in administrative proceedings.         
    78u-3.      Cease-and-desist proceedings.                         
    78u-4.      Private securities litigation.                        
    78u-5.      Application of safe harbor for forward-looking
                 statements.                                          
    78v.        Hearings by Commission.                               
    78w.        Rules, regulations, and orders; annual reports.       
    78x.        Public availability of information.                   
    78y.        Court review of orders and rules.                     
    78z.        Unlawful representations.                             
    78aa.       Jurisdiction of offenses and suits.                   
    78aa-1.     Special provision relating to statute of limitations
                 on private causes of action.                         
    78bb.       Effect on existing law.                               
    78cc.       Validity of contracts.                                
    78dd.       Foreign securities exchanges.                         
    78dd-1.     Prohibited foreign trade practices by issuers.        
    78dd-2.     Prohibited foreign trade practices by domestic
                 concerns.                                            
    78dd-3.     Prohibited foreign trade practices by persons other
                 than issuers or domestic concerns.                   
    78ee.       Transaction fees.                                     
    78ff.       Penalties.                                            
    78gg.       Separability.                                         
    78hh.       Effective date.                                       
    78hh-1.     Effective date of certain sections.                   
    78ii, 78jj. Omitted or Repealed.                                  
    78kk.       Authorization of appropriations.                      
    78ll.       Requirements for the EDGAR system.                    
    78mm.       General exemptive authority.                          
    78nn.       Tennessee Valley Authority.                           

-End-



-CITE-
    15 USC Sec. 78a                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78a. Short title

-STATUTE-
      This chapter may be cited as the "Securities Exchange Act of
    1934."

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 1, 48 Stat. 881.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in text, was in the original "This Act"
    meaning the Securities Exchange Act of 1934, act June 6, 1934, ch.
    404. The act was divided into two titles as follows: "Title I -
    Regulation of Securities Exchanges" and "Title II - Amendments to
    Securities Act of 1933." This section was section 1 of title I of
    the Act, which title, as amended, is set out as sections 78a to
    78l, 78m to 78o, 78o-3 to 78dd-1, 78ee to 78hh, and 78mm of this
    title. Sections 78kk, 78ll, and 78nn of this title, which were
    directed to be added at the end of the Securities Exchange Act of
    1934, have been treated in the Code as added to title I of the Act
    to reflect the probable intent of Congress. See Codification notes
    set out under those sections. Title II of the act amended or
    repealed sections 77b to 77e, 77j, 77k, 77m, 77o, and 77s, and
    added former sections 78ii and 78jj of this title. For complete
    classification of this Act to the Code, see Tables.


-MISC1-
                       SHORT TITLE OF 2006 AMENDMENT                   
      Pub. L. 109-291, Sec. 1, Sept. 29, 2006, 120 Stat. 1327, provided
    that: "This Act [enacting section 78o-7 of this title, amending
    sections 78c, 78o, 78q, 78u-2, 80a-2, 80a-9, 80b-2, and 80b-3 of
    this title, section 4519 of Title 12, Banks and Banking, section
    1087-2 of Title 20, Education, and section 181 of Title 23,
    Highways, and enacting provisions set out as notes under section
    78o-7 of this title] may be cited as the 'Credit Rating Agency
    Reform Act of 2006'."

                       SHORT TITLE OF 2004 AMENDMENT                   
      Pub. L. 108-458, title VII, Sec. 7803(a), Dec. 17, 2004, 118
    Stat. 3861, provided that: "This section [amending sections 78l and
    78o-5 of this title] may be cited as the 'Emergency Securities
    Response Act of 2004'."

                      SHORT TITLE OF 2002 AMENDMENTS                  
      Pub. L. 107-204, title XI, Sec. 1101, July 30, 2002, 116 Stat.
    807, provided that: "This title [amending sections 77h-1, 78u-3,
    and 78ff of this title and sections 1512 and 1513 of Title 18,
    Crimes and Criminal Procedure, and enacting provisions set out as a
    note under section 994 of Title 28, Judiciary and Judicial
    Procedure] may be cited as the 'Corporate Fraud Accountability Act
    of 2002'."
      Pub. L. 107-123, Sec. 1, Jan. 16, 2002, 115 Stat. 2390, provided
    that: "This Act [enacting chapter 48 of Title 5, Government
    Organization and Employees, amending sections 77f, 77ggg, 78d, 78m,
    78n, and 78ee of this title, sections 3132 and 5373 of Title 5, and
    section 1833b of Title 12, Banks and Banking, and enacting
    provisions set out as notes under section 78ee of this title and
    section 4802 of Title 5] may be cited as the 'Investor and Capital
    Markets Fee Relief Act'."

                      SHORT TITLE OF 1998 AMENDMENTS                  
      Pub. L. 105-366, Sec. 1, Nov. 10, 1998, 112 Stat. 3302, provided
    that: "This Act [enacting section 78dd-3 of this title, amending
    sections 78dd-1, 78dd-2, and 78ff of this title, and enacting
    provisions set out as notes under section 78dd-1 of this title] may
    be cited as the 'International Anti-Bribery and Fair Competition
    Act of 1998'."
      Pub. L. 105-353, Sec. 1, Nov. 3, 1998, 112 Stat. 3227, provided
    that: "This Act [amending sections 77b, 77k, 77m, 77p, 77r, 77v,
    77z-1 to 77z-3, 77aa, 77ccc, 77ddd, 77mmm, 77sss, 78c, 78d, 78g,
    78n, 78o, 78o-4, 78o-5, 78q, 78s, 78t, 78u-4, 78z, 78bb, 78ee,
    78kk, 78ll, 80a-2, 80a-3, 80a-12, 80a-18, 80a-29, 80a-30, 80b-3,
    and 80b-18a of this title and enacting provisions set out as notes
    under this section and sections 77p and 78u of this title] may be
    cited as the 'Securities Litigation Uniform Standards Act of
    1998'."

                       SHORT TITLE OF 1996 AMENDMENT                   
      Pub. L. 104-290, Sec. 1(a), Oct. 11, 1996, 110 Stat. 3416,
    provided that: "This Act [enacting sections 77z-3, 78mm, and 80b-3a
    of this title, amending sections 77b, 77c, 77f, 77r, 77ddd, 78c,
    78d, 78g, 78h, 78o, 78q, 78bb, 78ee, 78kk, 80a-2, 80a-3, 80a-6, 80a-
    12, 80a-24, 80a-26, 80a-27, 80a-29, 80a-30, 80a-34, 80a-54, 80a-
    60, 80a-63, 80b-2, 80b-3, 80b-5, and 80b-18a of this title and
    section 1002 of Title 29, Labor, and enacting provisions set out as
    notes under this section, sections 77e, 77r, 78b, 78n, 78o, 78ee,
    80a-2, 80a-3, 80a-24, 80a-51, 80b-2, 80b-3a, 80b-10, and 80b-20 of
    this title, and section 1002 of Title 29] may be cited as the
    'National Securities Markets Improvement Act of 1996'."
      Pub. L. 104-290, title I, Sec. 101, Oct. 11, 1996, 110 Stat.
    3417, provided that: "This title [enacting sections 77z-3 and 78mm
    of this title, amending sections 77b, 77r, 78c, 78g, 78h, 78o, 78q,
    78bb, and 80a-2 of this title, and enacting provisions set out as
    notes under sections 77e and 77r of this title] may be cited as the
    'Capital Markets Efficiency Act of 1996'."
      Pub. L. 104-290, title IV, Sec. 401, Oct. 11, 1996, 110 Stat.
    3441, provided that: "This title [amending sections 77f, 78d, 78ee,
    and 78kk of this title and enacting provisions set out as notes
    under this section and section 78ee of this title] may be cited as
    the 'Securities and Exchange Commission Authorization Act of
    1996'."

                       SHORT TITLE OF 1995 AMENDMENT                   
      Pub. L. 104-67, Sec. 1(a), Dec. 22, 1995, 109 Stat. 737, provided
    that: "This Act [enacting sections 77z-1, 77z-2, 78j-1, 78u-4, and
    78u-5 of this title, amending sections 77k, 77l, 77t, 78o, 78t,
    78u, and 78u-4 of this title and section 1964 of Title 18, Crimes
    and Criminal Procedure, and enacting provisions set out as notes
    under sections 77k, 77l, and 78j-1 of this title] may be cited as
    the 'Private Securities Litigation Reform Act of 1995'."

                      SHORT TITLE OF 1994 AMENDMENTS                  
      Pub. L. 103-389, Sec. 1, Oct. 22, 1994, 108 Stat. 4081, provided
    that: "This Act [amending section 78l of this title] may be cited
    as the 'Unlisted Trading Privileges Act of 1994'."
      Pub. L. 103-325, title II, Sec. 201, Sept. 23, 1994, 108 Stat.
    2198, provided that: "This subtitle [subtitle A (Secs. 201-210) of
    title II of Pub. L. 103-325 enacting section 1835 of Title 12,
    Banks and Banking, amending sections 77r-1, 78c, 78g, 78h, and 78k
    of this title and sections 24, 1464, and 1757 of Title 12, and
    enacting provisions set out as notes under section 78b of this
    title and section 3305 of Title 12] may be cited as the 'Small
    Business Loan Securitization and Secondary Market Enhancement Act
    of 1994'."

                       SHORT TITLE OF 1993 AMENDMENT                   
      Pub. L. 103-202, Sec. 1(a), Dec. 17, 1993, 107 Stat. 2344,
    provided that: "This Act [enacting section 3130 of Title 31, Money
    and Finance, amending sections 78c, 78f, 78n, 78o, 78o-3, 78o-5,
    78s, and 78w of this title, and enacting provisions set out as
    notes under this section, sections 78f, 78n, and 78o-5 of this
    title, and section 3121 of Title 31] may be cited as the
    'Government Securities Act Amendments of 1993'."
      Pub. L. 103-202, title III, Sec. 301, Dec. 17, 1993, 107 Stat.
    2359, provided that: "This title [amending sections 78f, 78n, and
    78o-3 of this title and enacting provisions set out as notes under
    sections 78f and 78n of this title] may be cited as the 'Limited
    Partnership Rollup Reform Act of 1993'."

                      SHORT TITLE OF 1990 AMENDMENTS                  
      Pub. L. 101-550, Sec. 1, Nov. 15, 1990, 104 Stat. 2713, provided
    that: "This Act [amending sections 77ccc to 77eee, 77iii to 77rrr,
    77uuu, 77vvv, 78c, 78d, 78n, 78o, 78o-4, 78o-5, 78q-1, 78x, 78kk,
    79z-5, 80a-2, 80a-9, 80a-44, 80a-45, 80b-2, 80b-3, 80b-10, and 80b-
    18 of this title and enacting provisions set out as notes under
    this section and sections 77aaa and 78n of this title] may be cited
    as the 'Securities Acts Amendments of 1990'."
      Pub. L. 101-550, title I, Sec. 101, Nov. 15, 1990, 104 Stat.
    2713, provided that: "This title [amending sections 77uuu, 78d,
    78kk, 79z-5, 80a-45, and 80b-18 of this title] may be cited as the
    'Securities and Exchange Commission Authorization Act of 1990'."
      Pub. L. 101-550, title II, Sec. 201, Nov. 15, 1990, 104 Stat.
    2714, provided that: "This title [amending sections 78c, 78d, 78o,
    78o-4, 78o-5, 78q-1, 78x, 80a-2, 80a-9, 80a-44, 80b-2, 80b-3, and
    80b-10 of this title] may be cited as the 'International Securities
    Enforcement Cooperation Act of 1990'."
      Pub. L. 101-550, title III, Sec. 301, Nov. 15, 1990, 104 Stat.
    2721, provided that: "This title [amending section 78n of this
    title and enacting provisions set out as a note under section 78n
    of this title] may be cited as the 'Shareholder Communications
    Improvement Act of 1990'."
      Pub. L. 101-432, Sec. 1, Oct. 16, 1990, 104 Stat. 963, provided
    that: "This Act [enacting section 1831l of Title 12, Banks and
    Banking, amending sections 78i, 78l, 78m, 78o-5, 78q, 78q-1, and
    78y of this title, and enacting provisions set out as notes under
    sections 78b and 78q-1 of this title] may be cited as the 'Market
    Reform Act of 1990'."
      Pub. L. 101-429, Sec. 1(a), Oct. 15, 1990, 104 Stat. 931,
    provided that: "This Act [enacting sections 77h-1, 78q-2, 78u-2,
    and 78u-3 of this title, amending sections 77g, 77t, 78c, 78o, 78o-
    3, 78o-4, 78q-1, 78u, 78u-1, 78w, 78cc, 80a-9, 80a-41, 80b-3, 80b-
    9, and 80b-14 of this title, and enacting provisions set out as
    notes under this section and sections 77g, 78o, and 78s of this
    title] may be cited as the 'Securities Enforcement Remedies and
    Penny Stock Reform Act of 1990'."
      Pub. L. 101-429, title V, Sec. 501, Oct. 15, 1990, 104 Stat. 951,
    provided that: "This title [enacting section 78q-2 of this title,
    amending sections 77g, 78c, 78o, 78o-3, and 78cc of this title, and
    enacting provisions set out as notes under sections 78o and 78s of
    this title] may be cited as the 'Penny Stock Reform Act of 1990'."

                      SHORT TITLE OF 1988 AMENDMENTS                  
      Pub. L. 100-704, Sec. 1, Nov. 19, 1988, 102 Stat. 4677, provided
    that: "This Act [enacting sections 78t-1, 78u-1, and 80b-4a of this
    title, amending sections 78c, 78o, 78u, 78ff, and 78kk of this
    title, and enacting provisions set out as notes under sections 78b,
    78o, and 78u-1 of this title] may be cited as the 'Insider Trading
    and Securities Fraud Enforcement Act of 1988'."
      Pub. L. 100-418, title V, Sec. 5001, Aug. 23, 1988, 102 Stat.
    1415, provided that: "This part [part I (Secs. 5001-5003) of
    subtitle A of title I of Pub. L. 100-418, amending sections 78m,
    78dd-1, 78dd-2, and 78ff of this title and enacting provisions set
    out as a note under section 78dd-1 of this title] may be cited as
    the 'Foreign Corrupt Practices Act Amendments of 1988'."

                       SHORT TITLE OF 1987 AMENDMENT                   
      Pub. L. 100-181, Sec. 1, Dec. 4, 1987, 101 Stat. 1249, provided
    that: "This Act [enacting sections 78d-1, 78d-2, and 78ll of this
    title, amending sections 77b, 77c, 77f, 77i, 77s, 77t, 77v, 77ccc,
    78c, 78d, 78f, 78k-1, 78l, 78m, 78o, 78o-4, 78o-5, 78q, 78q-1, 78u,
    78w, 78aa, 78bb, 78kk, 78lll, 79h, 79r, 79x, 79y, 79z-4, 80a-2, 80a-
    3, 80a-5, 80a-6, 80a-9, 80a-12, 80a-15, 80a-17, 80a-18, 80a-20,
    80a-21, 80a-22, 80a-24, 80a-26, 80a-28, 80a-35, 80a-41, 80a-52, 80a-
    53, 80a-54, 80a-56, 80b-2, 80b-3, 80b-5, 80b-9, 80b-11, 80b-13,
    and 80b-14 of this title, and repealing sections 78d-1, 78d-2, and
    78jj of this title] may be cited as the 'Securities and Exchange
    Commission Authorization Act of 1987'."

                       SHORT TITLE OF 1986 AMENDMENT                   
      Pub. L. 99-571, Sec. 1(a), Oct. 28, 1986, 100 Stat. 3208,
    provided that: "This Act [enacting section 78o-5 of this title and
    section 9110 of Title 31, Money and Finance, amending sections 78c,
    78o, 78o-3, 78q, 78w, 78y, 80a-9, and 80b-3 of this title and
    section 3121 of Title 31, and enacting provisions set out as notes
    under section 78o-5 of this title] may be cited as the 'Government
    Securities Act of 1986'."

                       SHORT TITLE OF 1985 AMENDMENT                   
      Pub. L. 99-222, Sec. 1, Dec. 28, 1985, 99 Stat. 1737, provided
    that: "This Act [amending section 78n of this title and enacting a
    provision set out as a note under section 78n of this title] may be
    cited as the 'Shareholder Communications Act of 1985'."

                       SHORT TITLE OF 1984 AMENDMENT                   
      Pub. L. 98-376, Sec. 1, Aug. 10, 1984, 98 Stat. 1264, provided
    that: "This Act [amending sections 78c, 78o, 78t, 78u, and 78ff of
    this title and enacting provisions set out as a note under section
    78c of this title] may be cited as the 'Insider Trading Sanctions
    Act of 1984'."

                       SHORT TITLE OF 1977 AMENDMENT                   
      Pub. L. 95-213, title I, Sec. 101, Dec. 19, 1977, 91 Stat. 1494,
    provided that: "This title [enacting sections 78dd-1 and 78dd-2 of
    this title and amending sections 78m and 78ff of this title] may be
    cited as the 'Foreign Corrupt Practices Act of 1977'."
      Pub. L. 95-213, title II, Sec. 201, Dec. 19, 1977, 91 Stat. 1498,
    provided that: "This title [amending sections 78m and 78o of this
    title] may be cited as the 'Domestic and Foreign Investment
    Improved Disclosure Act of 1977'."

                       SHORT TITLE OF 1975 AMENDMENT                   
      Section 1 of Pub. L. 94-29, June 4, 1975, 89 Stat. 97, provided:
    "That this Act [enacting sections 78k-1, 78o-4, 78q-1, and 78kk of
    this title, amending sections 77d, 77x, 77yyy, 78b, 78c, 78d-1,
    78f, 78h, 78k, 78l, 78m, 78o, 78o-3, 78q, 78s, 78u, 78w, 78x, 78y,
    78bb, 78ee, 78ff, 78iii, 79z-3, 80a-9, 80a-10, 80a-13, 80a-15, 80a-
    16, 80a-18, 80a-31, 80a-35, 80a-48, 80b-3, 80b-4, and 80b-17 of
    this title, and enacting provisions set out as notes under sections
    78b and 78f of this title] may be cited as the 'Securities Acts
    Amendments of 1975'."

                       SHORT TITLE OF 1964 AMENDMENT                   
      Section 1 of Pub. L. 88-467, Aug. 20, 1964, 78 Stat. 565,
    provided: "That this Act [amending sections 77d, 78c, 78l to 78o,
    78o-3, 78p, 78t, 78w, and 78ff of this title and enacting
    provisions set out as a note under section 78c of this title] may
    be cited as the 'Securities Acts Amendments of 1964'."

                       SHORT TITLE OF 1936 AMENDMENT                   
      Act May 27, 1936, ch. 462, 49 Stat. 1375, enacting sections 78l-
    1, 78o-1, 78o-2, and 78hh-1 of this title, and amending sections
    78l, 78o, 78q, 78r, 78t, 78u, 78w, and 78ff of this title, is
    popularly known as the Unlisted Securities Trading Act.

                               SEVERABILITY                           
      Pub. L. 104-290, Sec. 3, Oct. 11, 1996, 110 Stat. 3417, provided:
    "If any provision of this Act [see Short Title of 1996 Amendment
    note above], an amendment made by this Act, or the application of
    such provision or amendment to any person or circumstance is held
    to be unconstitutional, the remainder of this Act, the amendments
    made by this Act, and the application of the provisions of such to
    any person or circumstance shall not be affected thereby."

                 CONGRESSIONAL FINDINGS OF 1998 AMENDMENT             
      Pub. L. 105-353, Sec. 2, Nov. 3, 1998, 112 Stat. 3227, provided
    that: "The Congress finds that - 
        "(1) the Private Securities Litigation Reform Act of 1995 [see
      Short Title of 1995 Amendment note above] sought to prevent
      abuses in private securities fraud lawsuits;
        "(2) since enactment of that legislation, considerable evidence
      has been presented to Congress that a number of securities class
      action lawsuits have shifted from Federal to State courts;
        "(3) this shift has prevented that Act from fully achieving its
      objectives;
        "(4) State securities regulation is of continuing importance,
      together with Federal regulation of securities, to protect
      investors and promote strong financial markets; and
        "(5) in order to prevent certain State private securities class
      action lawsuits alleging fraud from being used to frustrate the
      objectives of the Private Securities Litigation Reform Act of
      1995, it is appropriate to enact national standards for
      securities class action lawsuits involving nationally traded
      securities, while preserving the appropriate enforcement powers
      of State securities regulators and not changing the current
      treatment of individual lawsuits."

                        PURPOSES OF 1996 AMENDMENT                    
      Pub. L. 104-290, title IV, Sec. 402, Oct. 11, 1996, 110 Stat.
    3441, provided: "The purposes of this title [see Short Title of
    1996 Amendment note above] are - 
        "(1) to authorize appropriations for the Commission for fiscal
      year 1997; and
        "(2) to reduce over time the rates of fees charged under the
      Federal securities laws."

-CROSS-
                                DEFINITIONS                            
      Pub. L. 104-290, Sec. 2, Oct. 11, 1996, 110 Stat. 3417, provided:
    "For purposes of this Act [see Short Title of 1996 Amendment note
    above] - 
        "(1) the term 'Commission' means the Securities and Exchange
      Commission; and
        "(2) the term 'State' has the same meaning as in section 3 of
      the Securities Exchange Act of 1934 [15 U.S.C. 78c]."

-End-



-CITE-
    15 USC Sec. 78b                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78b. Necessity for regulation

-STATUTE-
      For the reasons hereinafter enumerated, transactions in
    securities as commonly conducted upon securities exchanges and over-
    the-counter markets are affected with a national public interest
    which makes it necessary to provide for regulation and control of
    such transactions and of practices and matters related thereto,
    including transactions by officers, directors, and principal
    security holders, to require appropriate reports to remove
    impediments to and perfect the mechanisms of a national market
    system for securities and a national system for the clearance and
    settlement of securities transactions and the safeguarding of
    securities and funds related thereto, and to impose requirements
    necessary to make such regulation and control reasonably complete
    and effective, in order to protect interstate commerce, the
    national credit, the Federal taxing power, to protect and make more
    effective the national banking system and Federal Reserve System,
    and to insure the maintenance of fair and honest markets in such
    transactions:
        (1) Such transactions (a) are carried on in large volume by the
      public generally and in large part originate outside the States
      in which the exchanges and over-the-counter markets are located
      and/or are effected by means of the mails and instrumentalities
      of interstate commerce; (b) constitute an important part of the
      current of interstate commerce; (c) involve in large part the
      securities of issuers engaged in interstate commerce; (d) involve
      the use of credit, directly affect the financing of trade,
      industry, and transportation in interstate commerce, and directly
      affect and influence the volume of interstate commerce; and
      affect the national credit.
        (2) The prices established and offered in such transactions are
      generally disseminated and quoted throughout the United States
      and foreign countries and constitute a basis for determining and
      establishing the prices at which securities are bought and sold,
      the amount of certain taxes owing to the United States and to the
      several States by owners, buyers, and sellers of securities, and
      the value of collateral for bank loans.
        (3) Frequently the prices of securities on such exchanges and
      markets are susceptible to manipulation and control, and the
      dissemination of such prices gives rise to excessive speculation,
      resulting in sudden and unreasonable fluctuations in the prices
      of securities which (a) cause alternately unreasonable expansion
      and unreasonable contraction of the volume of credit available
      for trade, transportation, and industry in interstate commerce,
      (b) hinder the proper appraisal of the value of securities and
      thus prevent a fair calculation of taxes owing to the United
      States and to the several States by owners, buyers, and sellers
      of securities, and (c) prevent the fair valuation of collateral
      for bank loans and/or obstruct the effective operation of the
      national banking system and Federal Reserve System.
        (4) National emergencies, which produce widespread unemployment
      and the dislocation of trade, transportation, and industry, and
      which burden interstate commerce and adversely affect the general
      welfare, are precipitated, intensified, and prolonged by
      manipulation and sudden and unreasonable fluctuations of security
      prices and by excessive speculation on such exchanges and
      markets, and to meet such emergencies the Federal Government is
      put to such great expense as to burden the national credit.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 2, 48 Stat. 881; Pub. L. 94-
    29, Sec. 2, June 4, 1975, 89 Stat. 97.)


-MISC1-
                                AMENDMENTS                            
      1975 - Pub. L. 94-29 inserted "to remove impediments to and
    perfect the mechanisms of a national market system for securities
    and a national system for the clearance and settlement of
    securities transactions and the safeguarding of securities and
    funds related thereto," after "require appropriate reports," in
    introductory provisions preceding par. (1).

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Section 31(a) of Pub. L. 94-29 provided that: "This Act [enacting
    sections 78k-1, 78o-4, 78q-1, and 78kk of this title, amending this
    section and sections 77d, 77x, 77yyy, 78c, 78d-1, 78f, 78h, 78k,
    78l, 78m, 78o, 78o-3, 78q, 78s, 78u, 78w, 78x, 78y, 78bb, 78ee,
    78ff, 78iii, 79z-3, 80a-9, 80a-10, 80a-13, 80a-15, 80a-16, 80a-18,
    80a-31, 80a-35, 80a-48, 80b-3, 80b-4, and 80b-17 of this title, and
    enacting provisions set out as notes under sections 78a and 78f of
    this title] shall become effective on the date of its enactment
    [June 4, 1975] except as hereinafter provided. The amendments made
    by this Act to sections 3(a)(12), 6(a) through (d), 11A(b), 15(a),
    15A, 15B(a), 17A(b), and (c), and 19(g) of the Securities Exchange
    Act of 1934 [sections 78c(a)(12), 78f(a) through (d), 78k-1(b),
    78o(a), 78o-3, 78o-4(a), 78q-1(b) and (c), and 78s(g) of this
    title] shall become effective one hundred eighty days after the
    date of enactment of this Act [June 4, 1975], and the amendments
    made by this Act to section 31 of the Securities Exchange Act of
    1934 [section 78ee of this title] shall become effective on January
    1, 1976. Neither the provisions of section 3(a)(3), 6(b)(2), or
    6(c)(1) of the Securities Exchange Act of 1934 (as amended by this
    Act) [section 78c(a)(3), 78f(b)(2), or 78f(c)(1) of this title] nor
    any rule or regulation thereunder shall apply so as to deprive any
    person of membership in any national securities exchange (or its
    successor) of which such person was, on the date of enactment of
    this Act [June 4, 1975], a member or a member firm as defined in
    the constitution of such exchange or so as to deny membership in
    any such exchange (or its successor) to any natural person who is
    or becomes associated with such member or member firm."

    STUDY AND REPORT ON IMPACT OF TECHNOLOGICAL ADVANCES ON SECURITIES
                                  MARKETS
      Pub. L. 104-290, title V, Sec. 510(a), Oct. 11, 1996, 110 Stat.
    3450, provided that:
      "(1) Study. - 
        "(A) In general. - The Commission shall conduct a study of - 
          "(i) the impact of technological advances and the use of on-
        line information systems on the securities markets, including
        steps that the Commission has taken to facilitate the
        electronic delivery of prospectuses to institutional and other
        investors;
          "(ii) how such technologies have changed the way in which the
        securities markets operate; and
          "(iii) any steps taken by the Commission to address such
        changes.
        "(B) Considerations. - In conducting the study under
      subparagraph (A), the Commission shall consider how the
      Commission has adapted its enforcement policies and practices in
      response to technological developments with regard to - 
          "(i) disclosure, prospectus delivery, and other customer
        protection regulations;
          "(ii) intermediaries and exchanges in the domestic and
        international financial services industry;
          "(iii) reporting by issuers, including communications with
        holders of securities;
          "(iv) the relationship of the Commission with other national
        regulatory authorities and organizations to improve
        coordination and cooperation; and
          "(v) the relationship of the Commission with State regulatory
        authorities and organizations to improve coordination and
        cooperation.
      "(2) Report. - Not later than 1 year after the date of enactment
    of this Act [Oct. 11, 1996], the Commission shall submit a report
    to the Congress on the results of the study conducted under
    paragraph (1)."

      JOINT STUDY ON IMPACT OF ADDITIONAL SECURITIES BASED ON POOLED
                                OBLIGATIONS
      Pub. L. 103-325, title II, Sec. 209, Sept. 23, 1994, 108 Stat.
    2202, provided that:
      "(a) Joint Study Required. - The Board and the Commission shall
    conduct a joint study of the impact of the provisions of this
    subtitle [subtitle A [Secs. 201-210 of title II of Pub. L. 103-
    325], see Short Title of 1994 Amendment note set out under section
    78a of this title] (including the amendments made by this subtitle)
    on the credit and securities markets. Such study shall evaluate - 
        "(1) the impact of the provisions of this subtitle on the
      availability of credit for business and commercial enterprises in
      general, and the availability of credit in particular for - 
          "(A) businesses in low- and moderate-income areas;
          "(B) businesses owned by women and minorities;
          "(C) community development efforts;
          "(D) community development financial institutions;
          "(E) businesses in different geographical regions; and
          "(F) a diversity of types of businesses;
        "(2) the structure and operation of the markets that develop
      for small business related securities and commercial mortgage
      related securities, including the types of entities (such as
      pension funds and insurance companies) that are significant
      purchasers of such securities, the extent to which such entities
      are sophisticated investors, the use of credit enhancements in
      obtaining investment-grade ratings, any conflicts of interest
      that arise in such markets, and any adverse effects of such
      markets on commercial real estate ventures, pension funds, or
      pension fund beneficiaries;
        "(3) the extent to which the provisions of this subtitle with
      regard to margin requirements, the number of eligible investment
      rating categories, preemption of State law, and the treatment of
      such securities as government securities for the purpose of State
      investment limitations, affect the structure and operation of
      such markets; and
        "(4) in view of the findings made pursuant to paragraphs (2)
      and (3), any additional suitability or disclosure requirements or
      other investor protections that should be required.
      "(b) Reports. - 
        "(1) In general. - The Board and the Commission shall submit to
      the Congress a report on the results of the study required by
      subsection (a) before the end of - 
          "(A) the 2-year period beginning on the date of enactment of
        this Act [Sept. 23, 1994];
          "(B) the 4-year period beginning on such date of enactment;
        and
          "(C) the 6-year period beginning on such date of enactment.
        "(2) Contents of report. - Each report required under paragraph
      (1) shall contain or be accompanied by such recommendations for
      administrative or legislative action as the Board and the
      Commission consider appropriate and may include recommendations
      regarding the need to develop a system for reporting additional
      information concerning investments by the entities described in
      subsection (a)(2).
      "(c) Definitions. - As used in this section - 
        "(1) the term 'Board' means the Board of Governors of the
      Federal Reserve System; and
        "(2) the term 'Commission' means the Securities and Exchange
      Commission."

               INTERMARKET COORDINATION; REPORTS TO CONGRESS           
      Pub. L. 101-432, Sec. 8(a), Oct. 16, 1990, 104 Stat. 976,
    provided that: "The Secretary of the Treasury, the Chairman of the
    Board of Governors of the Federal Reserve System, the Chairman of
    the Securities and Exchange Commission, and the Chairman of the
    Commodity Futures Trading Commission, shall report to the Congress
    not later than May 31, 1991, and annually thereafter until May 31,
    1995, on the following:
        "(1) the efforts their respective agencies have made relating
      to the coordination of regulatory activities to ensure the
      integrity and competitiveness of United States financial markets;
        "(2) the efforts their respective agencies have made to
      formulate coordinated mechanisms across marketplaces to protect
      the payments and market systems during market emergencies;
        "(3) the views of their respective agencies with respect to the
      adequacy of margin levels and use of leverage by market
      participants; and
        "(4) such other issues and concerns relating to the soundness,
      stability, and integrity of domestic and international capital
      markets as may be appropriate.
    The agencies shall cooperate in the development of their reports,
    and prior to submitting its report to Congress, each agency shall
    provide copies to the other agencies."

                           SECURITIES LAWS STUDY                       
      Pub. L. 100-704, Sec. 7, Nov. 19, 1988, 102 Stat. 4682, directed
    Securities and Exchange Commission to study and investigate
    adequacy of Federal securities laws and regulations for protection
    of the public interest and interests of investors, specified
    subjects for the study and investigation and authority of
    Commission in conducting the study and investigation, directed
    Commission to supply interim information to Congress on the
    progress of, and any impediments to completing, the study and
    investigation, directed Commission to report to Congress on results
    of the study and investigation within 18 months after the date
    funds are appropriated for the study and investigation, including
    in such report the Commission's recommendations.

                         FOREIGN INVESTMENT STUDY                     
      Pub. L. 93-479, Oct. 26, 1974, 88 Stat. 1450, directed Secretary
    of the Treasury and Secretary of Commerce to conduct a
    comprehensive, overall study of foreign direct and portfolio
    investments in the United States and submit to Congress an interim
    report twelve months after Oct. 26, 1974, and not later than one
    and one-half years after Oct. 26, 1974, a full and complete report
    of the findings made under the study authorized, together with such
    recommendations as they considered appropriate.


-EXEC-
        EX. ORD. NO. 11858. FOREIGN INVESTMENT IN THE UNITED STATES    
      Ex. Ord. No. 11858, May 7, 1975, 40 F.R. 20263, as amended by Ex.
    Ord. No. 12188, Jan. 2, 1980, 45 F.R. 989; Ex. Ord. No. 12661, Dec.
    27, 1988, 54 F.R. 779; Ex. Ord. No. 12860, Sept. 3, 1993, 58 F.R.
    47201; Ex. Ord. No. 13286, Sec. 57, Feb. 28, 2003, 68 F.R. 10629,
    provided:
      By virtue of the authority vested in me by the Constitution and
    statutes of the United States of America, including the Act of
    February 14, 1903, as amended (15 U.S.C. 1501 et seq.), section 10
    of the Gold Reserve Act of 1934, as amended (31 U.S.C. 822a), and
    section 301 of title 3 of the United States Code, and as President
    of the United States of America, it is hereby ordered as follows:
      Section 1. (a) There is hereby established the Committee on
    Foreign Investment in the United States (hereinafter referred to as
    the Committee). The Committee shall be composed of the following:
      (1) The Secretary of State.
      (2) The Secretary of the Treasury.
      (3) The Secretary of Defense.
      (4) The Secretary of Commerce.
      (5) The United States Trade Representative.
      (6) The Chairman of the Council of Economic Advisers.
      (7) The Attorney General.
      (8) The Secretary of Homeland Security.
      (9) The Director of the Office of Management and Budget.
      (9)[sic] the Director of the Office of Science and Technology
    Policy.
      (10) the Assistant to the President for National Security
    Affairs.
      (11) the Assistant to the President for Economic Policy.
      The Secretary of the Treasury shall be the chairman of the
    Committee. The chairman, as he deems appropriate, may invite
    representatives of other departments and agencies to participate
    from time to time in activities of the Committee.
      (b) The Committee shall have primary continuing responsibility
    within the Executive Branch for monitoring the impact of foreign
    investment in the United States, both direct and portfolio, and for
    coordinating the implementation of United States policy on such
    investment. In fulfillment of this responsibility, the Committee
    shall:
      (1) arrange for the preparation of analyses of trends and
    significant developments in foreign investments in the United
    States;
      (2) provide guidance on arrangements with foreign governments for
    advance consultations on prospective major foreign governmental
    investments in the United States;
      (3) review investments in the United States which, in the
    judgment of the Committee, might have major implications for United
    States national interests;
      (4) consider proposals for new legislation or regulations
    relating to foreign investment as may appear necessary; and
      (5) coordinate the views of the Executive Branch and discharge
    the responsibilities with respect to Section 721(a) and (e) of the
    Defense Production Act of 1950 [50 U.S.C. App. 2170(a), (e)], as
    amended (50 U.S.C. App. 2061 et seq.) ("Defense Production Act").
      (c) As the need arises, the Committee shall submit
    recommendations and analyses to the National Security Council and
    to the Economic Policy Board. It shall also arrange for the
    preparation and publication of periodic reports.
      Sec. 2. The Secretary of Commerce, with respect to the collection
    and use of data on foreign investment in the United States, shall
    provide, in particular, for the performance of the following
    activities:
      (a) The obtainment, consolidation, and analysis of information on
    foreign investment in the United States;
      (b) the improvement of procedures for the collection and
    dissemination of information on such foreign investment;
      (c) the close observation of foreign investment in the United
    States;
      (d) the preparation of reports and analyses of trends and of
    significant developments in appropriate categories of such
    investment;
      (e) the compilation of data and preparation of evaluations of
    significant investment transactions; and
      (f) the submission to the Committee of appropriate reports,
    analyses, data and recommendations relating to foreign investment
    in the United States, including recommendations as to how
    information on foreign investment can be kept current.
      Sec. 3. The Secretary of the Treasury is authorized, without
    further approval of the President, to make reasonable use of the
    resources of the Exchange Stabilization Fund, in accordance with
    section 10 of the Gold Reserve Act of 1934, as amended (31 U.S.C.
    822a) [31 U.S.C. 5302], to pay any of the expenses directly
    incurred by the Secretary of Commerce in the performance of the
    functions and activities provided by this order. This authority
    shall be in effect for one year, unless revoked prior thereto.
      Sec. 4. All departments and agencies are directed to provide, to
    the extent permitted by law, such information and assistance as may
    be requested by the Committee or the Secretary of Commerce in
    carrying out their functions and activities under this order.
      Sec. 5. Information which has been submitted or received in
    confidence shall not be publicly disclosed, except to the extent
    required by law; and such information shall be used by the
    Committee only for the purpose of carrying out the functions and
    activities prescribed by this order. Information or documentary
    material filed pursuant to Section 1(b)(5) or Section 7 of this
    Order shall be treated in accordance with paragraph (b) of Section
    721 of the Defense Production Act [50 U.S.C. App. 2170(b)].
      Sec. 6. Nothing in this order shall affect the data-gathering,
    regulatory, or enforcement authority of any existing department or
    agency over foreign investment, and the review of individual
    investments provided by this order shall not in any way supersede
    or prejudice any other process provided by law.
      Sec. 7. (1) Investigations. (a) The Committee is designated to
    receive notices and other information, to determine whether
    investigations should be undertaken, and to make investigations,
    pursuant to Section 721(a) of the Defense Production Act [50 U.S.C.
    App. 2170(a)]. (b) If the Committee determines that an
    investigation should be undertaken, such investigation shall
    commence no later than 30 days after receipt by the Committee of
    written notification of the proposed or pending merger,
    acquisition, or takeover. Such investigation shall be completed no
    later than 45 days after such determination. (c) If one or more
    Committee members differ with a Committee decision not to undertake
    an investigation, the Chairman shall submit a report of the
    Committee to the President setting forth the differing views and
    presenting the issues for his decision within 25 days after receipt
    by the Committee of written notification of the proposed or pending
    merger, acquisition, or takeover. (d) A unanimous decision by the
    Committee not to undertake an investigation with regard to a notice
    shall conclude action under this section on such notice. The
    Chairman shall advise the President of said decision.
      (2) Report to the President. Upon completion or termination of
    any investigation, the Committee shall report to the President and
    present a recommendation. Any such report shall include information
    relevant to subparagraphs (1) and (2) of Section 721(d) of the
    Defense Production Act. If the Committee is unable to reach a
    unanimous recommendation, the Chairman shall submit a report of the
    Committee to the President setting forth the differing views and
    presenting the issues for his decision.
      Sec. 8. The Chairman of the Committee, in consultation with other
    members of the Committee, is hereby delegated the authority to
    issue regulations to implement Section 721 of the Defense
    Production Act [50 U.S.C. App. 2170].

          EX. ORD. NO. 12631. WORKING GROUP ON FINANCIAL MARKETS      
      Ex. Ord. No. 12631, Mar. 18, 1988, 53 F.R. 9421, provided:
      By virtue of the authority vested in me as President by the
    Constitution and laws of the United States of America, and in order
    to establish a Working Group on Financial Markets, it is hereby
    ordered as follows:
      Section 1. Establishment. (a) There is hereby established a
    Working Group on Financial Markets (Working Group). The Working
    Group shall be composed of:
      (1) the Secretary of the Treasury, or his designee;
      (2) the Chairman of the Board of Governors of the Federal Reserve
    System, or his designee;
      (3) the Chairman of the Securities and Exchange Commission, or
    his designee; and
      (4) the Chairman of the Commodity Futures Trading Commission, or
    her designee.
      (b) The Secretary of the Treasury, or his designee, shall be the
    Chairman of the Working Group.
      Sec. 2. Purposes and Functions. (a) Recognizing the goals of
    enhancing the integrity, efficiency, orderliness, and
    competitiveness of our Nation's financial markets and maintaining
    investor confidence, the Working Group shall identify and consider:
      (1) the major issues raised by the numerous studies on the events
    in the financial markets surrounding October 19, 1987, and any of
    those recommendations that have the potential to achieve the goals
    noted above; and
      (2) the actions, including governmental actions under existing
    laws and regulations (such as policy coordination and contingency
    planning), that are appropriate to carry out these recommendations.
      (b) The Working Group shall consult, as appropriate, with
    representatives of the various exchanges, clearinghouses, self-
    regulatory bodies, and with major market participants to determine
    private sector solutions wherever possible.
      (c) The Working Group shall report to the President initially
    within 60 days (and periodically thereafter) on its progress and,
    if appropriate, its views on any recommended legislative changes.
      Sec. 3. Administration. (a) The heads of Executive departments,
    agencies, and independent instrumentalities shall, to the extent
    permitted by law, provide the Working Group such information as it
    may require for the purpose of carrying out this Order.
      (b) Members of the Working Group shall serve without additional
    compensation for their work on the Working Group.
      (c) To the extent permitted by law and subject to the
    availability of funds therefor, the Department of the Treasury
    shall provide the Working Group with such administrative and
    support services as may be necessary for the performance of its
    functions.
                                                          Ronald Reagan.

-End-



-CITE-
    15 USC Sec. 78c                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78c. Definitions and application

-STATUTE-
    (a) Definitions
      When used in this chapter, 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 chapter, the rules
      and regulations thereunder, and its own rules. For purposes of
      sections 78f(b)(1), 78f(b)(4), 78f(b)(6), 78f(b)(7), 78f(d),
      78q(d), 78s(d), 78s(e), 78s(g), 78s(h), and 78u 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 78f(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 chapter, 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 chapter 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 24 of title 12, in conformity with
            section 78o-5 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
            1841 of title 12), 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 November 12, 1999; 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
          [15 U.S.C. 80a-1 et seq.] 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 1841 of title 12) other than - 
              (I) a registered broker or dealer; or
              (II) an affiliate that is engaged in merchant banking, as
            described in section 1843(k)(4)(H) of title 12.

            (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(6) of the Securities Act of 1933
            [15 U.S.C. 77c(b), 77d(2), 77d(6)] or the rules and
            regulations issued thereunder;
              (II) at any time after the date that is 1 year after
            November 12, 1999, is not affiliated with a broker or
            dealer that has been registered for more than 1 year in
            accordance with this chapter, 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
            78o(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 78o(e). - The
        term "broker" does not include a bank that - 
            (i) was, on the day before November 12, 1999, subject to
          section 78o(e) of this title; 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 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 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 24 of title 12, in conformity with
            section 78o-5 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 1462(5) of title 12, (B) a
      member bank of the Federal Reserve System, (C) any other banking
      institution or savings association, as defined in section 1462(4)
      of title 12, 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 section 92a of title 12, 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
      chapter, 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, 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 [15 U.S.C. 80a-3(c)(3)];
          (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 [15 U.S.C. 80a-
        3(c)(10)(B)];
          (vi) solely for purposes of sections 78l, 78m, 78n, and 78p
        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 [15
        U.S.C. 80a-3(c)(14)]; 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
        chapter 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 78q-1 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 78o and 78q-1 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 title 26, (ii) an annuity plan which meets
      the requirements for the deduction of the employer's contribution
      under section 404(a)(2) of title 26, (iii) a governmental plan as
      defined in section 414(d) of title 26 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 [15 U.S.C.
      80a-3(c)(14)], 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
      title 26, or (II) is a plan funded by an annuity contract
      described in section 403(b) of title 26.
        (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.
        (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.
        (15) The term "Commission" means the Securities and Exchange
      Commission established by section 78d 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 78o(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 [15 U.S.C.
      80a-1 et seq.].
        (20) The terms "investment adviser" and "underwriter" have the
      same meanings as in the Investment Advisers Act of 1940 [15
      U.S.C. 80b-1 et seq.].
        (21) The term "person 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 organizations, 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 153 of title 47,
      subject to the jurisdiction of the Federal Communications
      Commission or a State commission, as defined in section 153 of
      title 47, 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 chapter; (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
      78s(b), 78s(c), and 78w(b) (!1) of this title) the Municipal
      Securities Rulemaking Board established by section 78o-4 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) (!1) of title
      26) the interest on which is excludable from gross income under
      section 103(a)(1) (!1) of title 26 if, by reason of the
      application of paragraph (4) or (6) of section 103(c) (!1) of
      title 26 (determined as if paragraphs (4)(A), (5), and (7) were
      not included in such section 103(c)),(!1) paragraph (1) of such
      section 103(c) (!1) 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 78o-4(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, or a subsidiary or a department or division of
          any such bank;
            (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, or a subsidiary or a
          department or division of such subsidiary;
            (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 subsidiary or department or division thereof;
            (iv) the Director of the Office of Thrift Supervision, in
          the case of a savings association (as defined in section 3(b)
          of the Federal Deposit Insurance Act (12 U.S.C. 1813(b))),
          the deposits of which are insured by the Federal Deposit
          Insurance Corporation, a subsidiary or a department or
          division of any such savings association, or a savings and
          loan holding company; and
            (v) 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, or a subsidiary of any such bank;
            (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, or 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;
            (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 subsidiary thereof;
            (iv) the Director of the Office of Thrift Supervision, in
          the case of a savings association (as defined in section 3(b)
          of the Federal Deposit Insurance Act (12 U.S.C. 1813(b))),
          the deposits of which are insured by the Federal Deposit
          Insurance Corporation, or a subsidiary of any such savings
          association, or a savings and loan holding company; and
            (v) 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 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, or 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 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) when the appropriate regulatory agency for such
          clearing agency is not the Commission;
            (iv) the Director of the Office of Thrift Supervision, in
          the case of a savings association (as defined in section 3(b)
          of the Federal Deposit Insurance Act (12 U.S.C. 1813(b))),
          the deposits of which are insured by the Federal Deposit
          Insurance Corporation, a savings and loan holding company, or
          a subsidiary of a savings and loan holding company when the
          appropriate regulatory agency for such clearing agency is not
          the Commission; and
            (v) 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 [12 U.S.C.
        1811 et seq.]:
            (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 any other member bank of the Federal Reserve
          System;
            (iii) the Director of the Office of Thrift Supervision, in
          the case of a savings association (as defined in section 3(b)
          of the Federal Deposit Insurance Act (12 U.S.C. 1813(b))) the
          deposits of which are insured by the Federal Deposit
          Insurance Corporation; and
            (iv) the Federal Deposit Insurance Corporation, in the case
          of any other insured bank.

          (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;
            (ii) the Director of the Office of Thrift Supervision, in
          the case of a savings association (as defined in section 3(b)
          of the Federal Deposit Insurance Act (12 U.S.C. 1813(b))),
          the deposits of which are insured by the Federal Deposit
          Insurance Corporation; and
            (iii) the Board of Governors of the Federal Reserve System
          in the case of any other member bank of the Federal Reserve
          System;
            (iv) 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 [12 U.S.C.
          1811 et seq.]; and
            (v) 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 or a Federal branch or Federal agency of a
          foreign bank (as such terms are used in the International
          Banking Act of 1978 [12 U.S.C. 3101 et seq.]);
            (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 [12 U.S.C. 601 et
          seq., 611 et seq.];
            (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) or an insured State branch
          of a foreign bank (as such terms are used in the
          International Banking Act of 1978);
            (iv) the Director of the Office of Thrift Supervision, in
          the case of a savings association (as defined in section 3(b)
          of the Federal Deposit Insurance Act [12 U.S.C. 1813(b)]) the
          deposits of which are insured by the Federal Deposit
          Insurance Corporation; (!2)

            (v) 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 1841(c)(2), or held
        under section 1843(f) of title 12 - 
            (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 [12 U.S.C. 611 et seq.];
            (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 [12 U.S.C.
          1811 et seq.]; 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 1841 of title 12, and the term "District of
      Columbia savings and loan association" means any association
      subject to examination and supervision by the Office of Thrift
      Supervision under section 1466a of title 12. As used in this
      paragraph, the term "savings and loan holding company" has the
      same meaning as in section 1467a(a) of title 12.
        (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 chapter and the 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 chapter which the Commission determines is
      unfair and not necessary or appropriate in furtherance of the
      purposes of this chapter.
        (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,
            or government securities dealer 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, 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, or
        government securities dealer, 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, 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 78o(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
      is rated in one of the two highest rating categories by at least
      one nationally recognized statistical rating organization, 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 5402(6) of title 42, 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 mortgagee
          approved by the Secretary of Housing and Urban Development
          pursuant to sections 1709 and 1715b of title 12, 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 1703 of title 12; 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 (!3) 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 78o-5 and 78q-1 of this title,
        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 78o, 78o-5, and 78q-1 of this
        title as applied to a bank, a qualified Canadian government
        obligation as defined in section 24 of title 12.

        (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 [12 U.S.C. 1813(b)]) 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 [15
      U.S.C. 7201 et seq.], the Public Utility Holding Company Act of
      1935,(!4) 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.) [15 U.S.C. 80b-1 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 78o
      or 78o-4 of this title, except that in paragraph (3) of this
      subsection and sections 78f and 78o-3 of this title 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 78o-5(a)(1)(A) of this title.
        (49) The term "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 [15 U.S.C. 80a-1 et seq.];
          (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 is rated in 1 of the 4 highest rating categories by
      at least 1 nationally recognized statistical rating organization,
      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 632(a) of this
        title;
          (iii) the term "insured depository institution" has the same
        meaning as in section 3 of the Federal Deposit Insurance Act
        [12 U.S.C. 1813]; and
          (iv) the term "insured credit union" has the same meaning as
        in section 1752 of title 12.

        (54) Qualified investor. - 
          (A) Definition. - Except as provided in subparagraph (B), for
        purposes of this chapter, the term "qualified investor" means -
        
            (i) any investment company registered with the Commission
          under section 8 of the Investment Company Act of 1940 [15
          U.S.C. 80a-8];
            (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 [15 U.S.C. 80a-
          3(c)(7)];
            (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 [12 U.S.C. 1813(b)]),
          broker, dealer, insurance company (as defined in section
          2(a)(13) of the Securities Act of 1933 [15 U.S.C.
          77b(a)(13)]), or business development company (as defined in
          section 2(a)(48) of the Investment Company Act of 1940 [15
          U.S.C. 80a-2(a)(48)]);
            (iv) any small business investment company licensed by the
          United States Small Business Administration under section
          301(c) [15 U.S.C. 681(c)] or (d) (!5) 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 [29 U.S.C. 1001 et
          seq.], 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 [29 U.S.C. 1002(21)], 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 [15 U.S.C. 80a-
          3(c)(2)];
            (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 [12 U.S.C. 3101(7)]);
            (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 subsection (a)(5)(C)(iii) of
        this section 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 paragraph (12)
      of this subsection as in effect on January 11, 1983 (other than
      any municipal security as defined in paragraph (29) of this
      subsection as in effect on January 11, 1983). The term "security
      future" does not include any agreement, contract, or transaction
      excluded from the Commodity Exchange Act [7 U.S.C. 1 et seq.]
      under section 2(c), 2(d), 2(f), or 2(g) of the Commodity Exchange
      Act [7 U.S.C. 2(c), (d), (f), (g)] (as in effect on December 21,
      2000) or sections 27 to 27f of title 7.
        (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 78l of this title;
            (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
        December 21, 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 December 21,
        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 December 21, 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 December 21, 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 78f(g) of this title that is
      higher than the minimum amount established and in effect pursuant
      to section 78g(c)(2)(B) of this title.
        (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 [15 U.S.C. 7201].
        (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) has been in business as a credit rating agency for at
        least the 3 consecutive years immediately preceding the date of
        its application for registration under section 78o-7 of this
        title;
          (B) issues credit ratings certified by qualified
        institutional buyers, in accordance with section 78o-
        7(a)(1)(B)(ix) of this title, 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 September 29, 2006);
            (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

          (C) is registered under section 78o-7 of this title.

        (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.
    (b) Power to define technical, trade, accounting, and other terms
      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 chapter, consistently with
    the provisions and purposes of this chapter.
    (c) Application to governmental departments or agencies
      No provision of this chapter 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) Issuers of municipal securities
      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 chapter, 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 [15 U.S.C. 80a-3(c)(10)(D)], 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 chapter
      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 [15 U.S.C. 80a-3(c)(10)(B)]; or
          (C) a trust or other donative instrument described in section
        3(c)(10)(B) of the Investment Company Act of 1940 [15 U.S.C.
        80a-3(c)(10)(B)], 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
      December 8, 1995, 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 [15 U.S.C. 80a-3(c)(10)(B)],
      is either a volunteer or is engaged in the overall fund raising
      activities of a charitable organization and receives no
      commission or other special compensation based on the number or
      the value of donations collected for the fund.
    (f) Consideration of promotion of efficiency, competition, and
      capital formation
      Whenever pursuant to this chapter the Commission is engaged in
    rulemaking, or in the review of a rule of a self-regulatory
    organization, and is required to consider or determine whether an
    action is necessary or appropriate in the public interest, the
    Commission shall also consider, in addition to the protection of
    investors, whether the action will promote efficiency, competition,
    and capital formation.
    (g) Church plans
      No church plan described in section 414(e) of title 26, no person
    or entity eligible to establish and maintain such a plan under
    title 26, 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 [15 U.S.C. 80a-3(c)(14)], 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 chapter - 
        (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 [15 U.S.C. 80a-3(c)(14)]; 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.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 3, 48 Stat. 882; Aug. 23,
    1935, ch. 614, Sec. 203(a), 49 Stat. 704; Proc. No. 2695, eff. July
    4, 1946, 11 F.R. 7517, 60 Stat. 1352; Pub. L. 86-70, Sec. 12(b),
    June 25, 1959, 73 Stat. 143; Pub. L. 86-624, Sec. 7(b), July 12,
    1960, 74 Stat. 412; Pub. L. 88-467, Sec. 2, Aug. 20, 1964, 78 Stat.
    565; Pub. L. 91-373, title IV, Sec. 401(b), Aug. 10, 1970, 84 Stat.
    718; Pub. L. 91-547, Sec. 28(a), (b), Dec. 14, 1970, 84 Stat. 1435;
    Pub. L. 91-567, Sec. 6(b), Dec. 22, 1970, 84 Stat. 1499; Pub. L. 94-
    29, Sec. 3, June 4, 1975, 89 Stat. 97; Pub. L. 95-283, Sec. 16,
    May 21, 1978, 92 Stat. 274; Pub. L. 96-477, title VII, Sec. 702,
    Oct. 21, 1980, 94 Stat. 2295; Pub. L. 97-303, Sec. 2, Oct. 13,
    1982, 96 Stat. 1409; Pub. L. 98-376, Sec. 6(a), Aug. 10, 1984, 98
    Stat. 1265; Pub. L. 98-440, title I, Sec. 101, Oct. 3, 1984, 98
    Stat. 1689; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095;
    Pub. L. 99-571, title I, Sec. 102(a)-(d), Oct. 28, 1986, 100 Stat.
    3214-3216; Pub. L. 100-181, title III, Secs. 301-306, Dec. 4, 1987,
    101 Stat. 1253, 1254; Pub. L. 100-704, Sec. 6(a), Nov. 19, 1988,
    102 Stat. 4681; Pub. L. 101-73, title VII, Sec. 744(u)(1), Aug. 9,
    1989, 103 Stat. 441; Pub. L. 101-429, title V, Sec. 503, Oct. 15,
    1990, 104 Stat. 952; Pub. L. 101-550, title II, Secs. 203(b), 204,
    Nov. 15, 1990, 104 Stat. 2717, 2718; Pub. L. 103-202, title I,
    Secs. 106(b)(2)(A), 109(a), Dec. 17, 1993, 107 Stat. 2350, 2352;
    Pub. L. 103-325, title II, Sec. 202, title III, Sec. 347(a), Sept.
    23, 1994, 108 Stat. 2198, 2241; Pub. L. 104-62, Sec. 4(a), (b),
    Dec. 8, 1995, 109 Stat. 684; Pub. L. 104-290, title I, Sec. 106(b),
    title V, Sec. 508(c), Oct. 11, 1996, 110 Stat. 3424, 3447; Pub. L.
    105-353, title III, Sec. 301(b)(1)-(4), Nov. 3, 1998, 112 Stat.
    3235, 3236; Pub. L. 106-102, title II, Secs. 201, 202, 207, 208,
    221(b), 231(b)(1), Nov. 12, 1999, 113 Stat. 1385, 1390, 1394, 1395,
    1401, 1406; Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec. 201],
    Dec. 21, 2000, 114 Stat. 2763, 2763A-413; Pub. L. 107-204, Sec.
    2(b), title II, Sec. 205(a), title VI, Sec. 604(c)(1)(A), July 30,
    2002, 116 Stat. 749, 773, 796; Pub. L. 108-359, Sec. 1(c)(1), Oct.
    25, 2004, 118 Stat. 1666; Pub. L. 108-386, Sec. 8(f)(1)-(3), Oct.
    30, 2004, 118 Stat. 2232; Pub. L. 108-447, div. H, title V, Sec.
    520(1), Dec. 8, 2004, 118 Stat. 3267; Pub. L. 109-291, Sec. 3(a),
    Sept. 29, 2006, 120 Stat. 1328; Pub. L. 109-351, title I, Sec.
    101(a)(1), title IV, Sec. 401(a)(1), (2), Oct. 13, 2006, 120 Stat.
    1968, 1971, 1972.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a), (b), (c), (e)(1), (f),
    and (g), was in the original "this title". See References in Text
    note set out under section 78a of this title.
      The Investment Company Act of 1940, referred to in subsec.
    (a)(4)(B)(v), (19), (47), (51)(A)(iii), is title I of act Aug. 20,
    1940, ch. 686, 54 Stat. 789, as amended, which is classified
    generally to subchapter I (Sec. 80a-1 et seq.) of chapter 2D of
    this title. For complete classification of this Act to the Code,
    see section 80a-51 of this title and Tables.
      This chapter, referred to in subsec. (a)(4)(B)(vii)(II), was in
    the original "this Act". See References in Text note set out under
    section 78a of this title.
      Section 206 of the Gramm-Leach-Bliley Act, referred to in subsec.
    (a)(4)(B)(ix), (5)(C)(iv), (54)(B), is section 206 of Pub. L. 106-
    102, which is set out as a note below.
      The Investment Advisers Act of 1940, referred to in subsec.
    (a)(20), (47), is title II of act Aug. 20, 1940, ch. 686, 54 Stat.
    847, as amended, which is classified generally to subchapter II
    (Sec. 80b-1 et seq.) of chapter 2D of this title. For complete
    classification of this Act to the Code, see section 80b-20 of this
    title and Tables.
      Section 78w(b) of this title, referred to in subsec. (a)(26), was
    omitted from the Code.
      Section 103 of title 26, referred to in subsec. (a)(29), which
    related to interest on certain governmental obligations, was
    amended generally by Pub. L. 99-514, title XIII, Sec. 1301(a), Oct.
    22, 1986, 100 Stat. 2602, and, as so amended, relates to interest
    on State and local bonds. Section 103(b)(2) (formerly section
    103(c)(2)), which prior to the general amendment defined industrial
    development bond, relates to the applicability of the interest
    exclusion to arbitrage bonds.
      The Federal Deposit Insurance Act, referred to in subsec.
    (a)(34)(D), (F)(iii), (H)(iii), is act Sept. 21, 1950, ch. 967,
    Sec. 2, 64 Stat. 873, as amended, which is classified generally to
    chapter 16 (Sec. 1811 et seq.) of Title 12, Banks and Banking. For
    complete classification of this Act to the Code, see Short Title
    note set out under section 1811 of Title 12 and Tables.
      The International Banking Act of 1978, referred to in subsec.
    (a)(34)(G)(i) to (iii), (46)(B), is Pub. L. 95-369, Sept. 17, 1978,
    92 Stat. 607, which enacted sections 347d, 611a, and 3101 to 3111
    of Title 12, amended sections 72, 378, 614, 615, 618, 619, 1813,
    1815, 1817, 1818, 1820, 1821, 1822, 1823, 1828, 1829b, 1831b, and
    1841 of Title 12, and enacted provisions set out as notes under
    sections 36, 247, 601, 611a, and 3101 of Title 12. For complete
    classification of this Act to the Code, see Short Title note set
    out under section 3101 of Title 12 and Tables.
      Section 25 of the Federal Reserve Act, referred to in subsec.
    (a)(34)(G)(ii), is classified to subchapter I (Sec. 601 et seq.) of
    chapter 6 of Title 12, Banks and Banking. Section 25A of the
    Federal Reserve Act, referred to in subsec. (a)(34)(G)(ii),
    (H)(ii), is classified to subchapter II (Sec. 611 et seq.) of
    chapter 6 of Title 12.
      The Commodity Exchange Act, referred to in subsec.
    (a)(39)(B)(ii), (C), (55)(A), is act Sept. 21, 1922, ch. 369, 42
    Stat. 998, as amended, which is classified generally to chapter 1
    (Sec. 1 et seq.) of Title 7, Agriculture. For complete
    classification of this Act to the Code, see section 1 of Title 7
    and Tables.
      The Securities Act of 1933, referred to in subsec. (a)(47), is
    act May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended, which
    is classified generally to subchapter I (Sec. 77a et seq.) of
    chapter 2A of this title. For complete classification of this Act
    to the Code, see section 77a of this title and Tables.
      The Securities Exchange Act of 1934, referred to in subsec.
    (a)(47), is act June 6, 1934, ch. 404, 48 Stat. 881, as amended,
    which is classified generally to this chapter (Sec. 78a et seq.).
    For complete classification of this Act to the Code, see section
    78a of this title and Tables.
      The Sarbanes-Oxley Act of 2002, referred to in subsec. (a)(47),
    is Pub. L. 107-204, July 30, 2002, 1974, 116 Stat. 745, which is
    classified principally to chapter 98 (Sec. 7201 et seq.) of this
    title. Section 2 of the Act enacted section 7201 of this title and
    amended this section. For complete classification of this Act to
    the Code, see Tables.
      The Public Utility Holding Company Act of 1935, referred to in
    subsec. (a)(47), is title I of act Aug. 26, 1935, ch. 687, 49 Stat.
    803, as amended, which was classified generally to chapter 2C (Sec.
    79 et seq.) of this title, prior to repeal by Pub. L. 109-58, title
    XII, Sec. 1263, Aug. 8, 2005, 119 Stat. 974. For complete
    classification of this Act to the Code, see Tables.
      The Trust Indenture Act of 1939, referred to in subsec. (a)(47),
    is title III of act May 27, 1933, ch. 38, as added Aug. 3, 1939,
    ch. 411, 53 Stat. 1149, as amended, which is classified generally
    to subchapter III (Sec. 77aaa et seq.) of chapter 2A of this title.
    For complete classification of this Act to the Code, see section
    77aaa of this title and Tables.
      The Securities Investor Protection Act of 1970, referred to in
    subsec. (a)(47), is Pub. L. 91-598, Dec. 30, 1970, 84 Stat. 1636,
    as amended, which is classified generally to chapter 2B-1 (Sec.
    78aaa et seq.) of this title. For complete classification of this
    Act to the Code, see section 78aaa of this title and Tables.
      Section 301(d) of the Small Business Investment Act of 1958,
    referred to in subsec. (a)(54)(A)(iv), was classified to section
    681(d) of this title and was repealed by Pub. L. 104-208, div. D,
    title II, Sec. 208(b)(3)(A), Sept. 30, 1996, 110 Stat. 3009-742.
      The Employee Retirement Income Security Act of 1974, referred to
    in subsec. (a)(54)(A)(v), is Pub. L. 93-406, Sept. 2, 1974, 88
    Stat. 832, as amended, which is classified principally to chapter
    18 (Sec. 1001 et seq.) of Title 29, Labor. For complete
    classification of this Act to the Code, see Short Title note set
    out under section 1001 of Title 29 and Tables.

-COD-
                               CODIFICATION                           
      Words "Philippine Islands" deleted from definition of term
    "State" in subsec. (a)(16) under authority of Proc. No. 2695, which
    granted independence to the Philippine Islands. Proc. No. 2695 was
    issued pursuant to section 1394 of Title 22, Foreign Relations and
    Intercourse, and is set out as a note under that section.


-MISC1-
                                AMENDMENTS                            
      2006 - Subsec. (a)(4)(F). Pub. L. 109-351, Sec. 101(a)(1), added
    subpar. (F).
      Subsec. (a)(6)(A). Pub. L. 109-351, Sec. 401(a)(1)(A), inserted
    "or a Federal savings association, as defined in section 1462(5) of
    title 12" after "a banking institution organized under the laws of
    the United States".
      Subsec. (a)(6)(C). Pub. L. 109-351, Sec. 401(a)(1)(B), inserted
    "or savings association, as defined in section 1462(4) of title 12"
    after "other banking institution" and "or savings associations"
    after "having supervision over banks".
      Subsec. (a)(34). Pub. L. 109-351, Sec. 401(a)(2)(G), inserted at
    end of concluding provisions "As used in this paragraph, the term
    'savings and loan holding company' has the same meaning as in
    section 1467a(a) of title 12."
      Subsec. (a)(34)(A)(ii). Pub. L. 109-351, Sec. 401(a)(2)(A)(i),
    substituted "clause (i), (iii), or (iv)" for "clause (i) or (iii)".
      Subsec. (a)(34)(A)(iv), (v). Pub. L. 109-351, Sec.
    401(a)(2)(A)(ii)-(iv), added cl. (iv) and redesignated former cl.
    (iv) as (v).
      Subsec. (a)(34)(B)(ii). Pub. L. 109-351, Sec. 401(a)(2)(B)(i),
    substituted "clause (i), (iii), or (iv)" for "clause (i) or (iii)".
      Subsec. (a)(34)(B)(iv), (v). Pub. L. 109-351, Sec.
    401(a)(2)(B)(ii)-(iv), added cl. (iv) and redesignated former cl.
    (iv) as (v).
      Subsec. (a)(34)(C)(ii). Pub. L. 109-351, Sec. 401(a)(2)(C)(i),
    substituted "clause (i), (iii), or (iv)" for "clause (i) or (iii)".
      Subsec. (a)(34)(C)(iv), (v). Pub. L. 109-351, Sec.
    401(a)(2)(C)(ii)-(iv), added cl. (iv) and redesignated former cl.
    (iv) as (v).
      Subsec. (a)(34)(D)(iii), (iv). Pub. L. 109-351, Sec.
    401(a)(2)(D), added cl. (iii) and redesignated former cl. (iii) as
    (iv).
      Subsec. (a)(34)(F)(ii) to (v). Pub. L. 109-351, Sec.
    401(a)(2)(E), added cl. (ii) and redesignated former cls. (ii) to
    (iv) as (iii) to (v), respectively.
      Subsec. (a)(34)(H). Pub. L. 109-351, Sec. 401(a)(2)(F), moved
    subpar. (H) and inserted it immediately after subpar. (G).
      Subsec. (a)(60) to (64). Pub. L. 109-291 added pars. (60) to
    (64).
      2004 - Subsec. (a)(12)(C)(iv). Pub. L. 108-359 added cl. (iv).
      Subsec. (a)(34)(A)(i), (B)(i), (C)(i), (D)(i), (F)(i). Pub. L.
    108-386, Sec. 8(f)(1), struck out "or a bank operating under the
    Code of Law for the District of Columbia" after "national bank".
      Subsec. (a)(34)(G)(i). Pub. L. 108-386, Sec. 8(f)(2), struck out
    ", a bank in the District of Columbia examined by the Comptroller
    of the Currency," after "national bank".
      Subsec. (a)(34)(H)(i). Pub. L. 108-386, Sec. 8(f)(3), struck out
    "or a bank in the District of Columbia examined by the Comptroller
    of the Currency" after "national bank".
      Subsec. (a)(42)(B). Pub. L. 108-447 inserted "by the Tennessee
    Valley Authority or" after "issued or guaranteed".
      2002 - Subsec. (a)(39)(F). Pub. L. 107-204, Sec. 604(c)(1)(A),
    inserted ", or is subject to an order or finding," before
    "enumerated" and substituted "(H), or (G)" for "or (G)".
      Subsec. (a)(47). Pub. L. 107-204, Sec. 2(b), inserted "the
    Sarbanes-Oxley Act of 2002," before "the Public Utility Holding
    Company Act of 1935".
      Subsec. (a)(58), (59). Pub. L. 107-204, Sec. 205(a), added pars.
    (58) and (59).
      2000 - Subsec. (a)(10). Pub. L. 106-554, Sec. 1(a)(5) [title II,
    Sec. 201(1)], inserted "security future," after "treasury stock,".
      Subsec. (a)(11). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    201(2)], added par. (11) and struck out former par. (11) which read
    as follows: "The term 'equity security' means any stock or similar
    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."
      Subsec. (a)(13), (14). Pub. L. 106-554, Sec. 1(a)(5) [title II,
    Sec. 201(3), (4)], inserted at end "For security futures products,
    such term includes any contract, agreement, or transaction for
    future delivery."
      Subsec. (a)(55) to (57). Pub. L. 106-554, Sec. 1(a)(5) [title II,
    Sec. 201(5)], added pars. (55) to (57).
      1999 - Subsec. (a)(4). Pub. L. 106-102, Sec. 201, inserted
    heading and amended text of par. (4) generally. Prior to amendment,
    text read as follows: "The term 'broker' means any person engaged
    in the business of effecting transactions in securities for the
    account of others, but does not include a bank."
      Subsec. (a)(5). Pub. L. 106-102, Sec. 202, inserted heading and
    amended text of par. (5) generally. Prior to amendment, text read
    as follows: "The term 'dealer' means any person engaged in the
    business of buying and selling securities for his own account,
    through a broker or otherwise, but does not include a bank, or any
    person insofar as he buys or sells securities for his own account,
    either individually or in some fiduciary capacity, but not as a
    part of a regular business."
      Subsec. (a)(12)(A)(iii). Pub. L. 106-102, Sec. 221(b), amended
    cl. (iii) generally. Prior to amendment, cl. (iii) read as follows:
    "any interest or participation in any common trust fund or similar
    fund maintained by a bank exclusively for the collective investment
    and reinvestment of assets contributed thereto by such bank in its
    capacity as trustee, executor, administrator, or guardian;".
      Subsec. (a)(34)(H). Pub. L. 106-102, Sec. 231(b)(1), added
    subpar. (H) at end of par. (34).
      Subsec. (a)(42)(E). Pub. L. 106-102, Sec. 208, added subpar. (E).
      Subsec. (a)(54). Pub. L. 106-102, Sec. 207, added par. (54).
      1998 - Subsec. (a)(10). Pub. L. 105-353, Sec. 301(b)(1),
    substituted "deposit for" for "deposit, for".
      Subsec. (a)(12)(A)(vi). Pub. L. 105-353, Sec. 301(b)(2),
    realigned margins.
      Subsec. (a)(22)(A). Pub. L. 105-353, Sec. 301(b)(3), substituted
    "section 153" for "section 153(h)" and for "section 153(t)".
      Subsec. (a)(39)(B)(i). Pub. L. 105-353, Sec. 301(b)(4),
    substituted "of the Commission" for "to the Commission" in
    introductory provisions.
      1996 - Subsec. (a)(12)(A)(vi), (vii). Pub. L. 104-290, Sec.
    508(c)(1), added cl. (vi) and redesignated former cl. (vi) as
    (vii).
      Subsecs. (f), (g). Pub. L. 104-290, Secs. 106(b), 508(c)(2),
    added subsecs. (f) and (g), respectively.
      1995 - Subsec. (a)(12)(A)(iv) to (vi). Pub. L. 104-62, Sec. 4(a),
    struck out "and" at end of cl. (iv), added cl. (v), and
    redesignated former cl. (v) as (vi).
      Subsec. (e). Pub. L. 104-62, Sec. 4(b), added subsec. (e).
      1994 - Subsec. (a)(41)(A)(i). Pub. L. 103-325, Sec. 347(a),
    substituted "on a residential" for "or on a residential" and
    inserted before semicolon ", or on one or more parcels of real
    estate upon which is located one or more commercial structures".
      Subsec. (a)(53). Pub. L. 103-325, Sec. 202, added par. (53).
      1993 - Subsec. (a)(12)(B)(ii). Pub. L. 103-202, Sec.
    106(b)(2)(A), substituted "sections 78o and 78q-1" for "sections
    78o, 78o-3 (other than subsection (g)(3)), and 78q-1".
      Subsec. (a)(34)(G)(ii) to (iv). Pub. L. 103-202, Sec. 109(a)(1),
    amended cls. (ii) to (iv) generally. Prior to amendment, cls. (ii)
    to (iv) read as follows:
      "(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, a State branch or a State agency of a foreign bank,
    or a commercial lending company owned or controlled by a foreign
    bank (as such terms are used in the International Banking Act of
    1978);
      "(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);
      "(iv) the Director of the Office of Thrift Supervision, in the
    case of a savings association the deposits of which are insured by
    the Federal Deposit Insurance Corporation;".
      Subsec. (a)(46). Pub. L. 103-202, Sec. 109(a)(2), amended par.
    (46) generally. Prior to amendment, par. (46) read as follows: "The
    term 'financial institution' means (A) a bank (as such term is
    defined in paragraph (6) of this subsection), (B) a foreign bank,
    and (C) an insured institution (as such term is defined in section
    1724 of title 12)."
      Subsec. (a)(52). Pub. L. 103-202, Sec. 109(a)(3), redesignated
    par. (51) defining "foreign financial regulatory authority" as
    (52).
      1990 - Subsec. (a)(39)(A). Pub. L. 101-550, Sec. 203(b)(1),
    inserted "foreign equivalent of a self-regulatory organization,
    foreign or international securities exchange," after "self-
    regulatory organization,", "or any substantially equivalent
    foreign statute or regulation," after "(7 U.S.C. 7)," and "(7
    U.S.C. 21),", and "or foreign equivalent" after "contract market".
      Subsec. (a)(39)(B). Pub. L. 101-550, Sec. 203(b)(2), added
    subpar. (B) and struck out former subpar. (B) which read as
    follows: "is subject to an order of the Commission or other
    appropriate regulatory agency denying, suspending for a period not
    exceeding twelve months, or revoking his registration as a broker,
    dealer, municipal securities dealer, government securities broker,
    or government securities dealer, or barring or suspending for a
    period not exceeding 12 months his being associated with a broker,
    dealer, municipal securities dealer, government securities broker,
    or government securities dealer, or is subject to 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.);".
      Subsec. (a)(39)(D). Pub. L. 101-550, Sec. 203(b)(4), added
    subpar. (D). Former subpar. (D) redesignated (E).
      Subsec. (a)(39)(E). Pub. L. 101-550, Sec. 203(b)(3), (5),
    redesignated subpar. (D) as (E) and substituted "(A), (B), (C), or
    (D)" for "(A), (B), or (C)". Former subpar. (E) redesignated (F).
      Subsec. (a)(39)(F). Pub. L. 101-550, Sec. 203(b)(3), (6),
    redesignated subpar. (E) as (F), substituted "(D), (E), or (G)" for
    "(D) or (E)", and inserted "or any other felony" before "within ten
    years".
      Subsec. (a)(51). Pub. L. 101-550, Sec. 204, added par. (51)
    defining "foreign financial regulatory authority".
      Pub. L. 101-429 added par. (51) defining "penny stock".
      1989 - Subsec. (a)(34). Pub. L. 101-73, Sec. 744(u)(1)(B),
    substituted "Office of Thrift Supervision" for "Federal Home Loan
    Bank Board" in concluding provisions.
      Subsec. (a)(34)(G)(iv) to (vi). Pub. L. 101-73, Sec.
    744(u)(1)(A), added cl. (iv), redesignated cl. (vi) as (v), and
    struck out former cls. (iv) and (v) which read as follows:
      "(iv) the Federal Home Loan Bank Board, in the case of a Federal
    savings and loan association, Federal savings bank, or District of
    Columbia savings and loan association;
      "(v) the Federal Savings and Loan Insurance Corporation, in the
    case of an institution insured by the Federal Savings and Loan
    Insurance Corporation (other than a Federal savings and loan
    association, Federal savings bank, or District of Columbia savings
    and loan association);".
      1988 - Subsec. (a)(50). Pub. L. 100-704 added par. (50).
      1987 - Subsec. (a)(6)(C). Pub. L. 100-181, Sec. 301, substituted
    "under the authority of the Comptroller of the Currency pursuant to
    section 92a of title 12" for "under section 11(k) of the Federal
    Reserve Act, as amended".
      Subsec. (a)(16). Pub. L. 100-181, Sec. 302, struck out reference
    to Canal Zone.
      Subsec. (a)(22)(B). Pub. L. 100-181, Sec. 303, substituted
    "association, or any" and "own behalf, in" for "association or any"
    and "own behalf in", respectively.
      Subsec. (a)(34)(C)(ii). Pub. L. 100-181, Sec. 304, substituted
    "State" for "state".
      Subsec. (a)(39)(B). Pub. L. 100-181, Sec. 305, substituted
    "months, or revoking" for "months, revoking" and "barring or
    suspending for a period not exceeding 12 months his" for "barring
    his".
      Subsec. (a)(47). Pub. L. 100-181, Sec. 306(1), added par. (47).
      Subsec. (a)(49). Pub. L. 100-181, Sec. 306(2), added par. (49).
      1986 - Subsec. (a)(12). Pub. L. 99-571, Sec. 102(a), in amending
    par. (12) generally, expanded definition of "exempted security" or
    "exempted securities" to include government securities as defined
    in par. (42) of this subsection, provided that such securities not
    be deemed exempt for purposes of section 78q-1 of this title,
    substituted section 78o-3(g)(3) of this title for section 78o-
    3(b)(6), (11), and (g)(2) of this title in provision relating to
    municipal securities as not being "exempted securities" and defined
    "qualified plan" to mean qualified stock bonus, pension, or profit-
    sharing plan, qualified annuity plan, or governmental plan.
      Pub. L. 99-514 substituted "Internal Revenue Code of 1986" for
    "Internal Revenue Code of 1954", which for purposes of codification
    was translated as "title 26" thus requiring no change in text.
      Subsec. (a)(29). Pub. L. 99-514 substituted "Internal Revenue
    Code of 1986" for "Internal Revenue Code of 1954", which for
    purposes of codification was translated as "title 26" thus
    requiring no change in text.
      Subsec. (a)(34). Pub. L. 99-571, Sec. 102(b)(2), inserted ", and
    the term 'District of Columbia savings and loan association' means
    any association subject to examination and supervision by the
    Federal Home Loan Bank Board under section 1466a of title 12" in
    concluding provisions.
      Subsec. (a)(34)(G). Pub. L. 99-571, Sec. 102(b)(1), added subpar.
    (G).
      Subsec. (a)(39)(B). Pub. L. 99-571, Sec. 102(c)(1)(A), which
    directed insertion of "or other appropriate regulatory agency"
    after "Commission" was executed by making the insertion after
    "Commission" the first place appearing as the probable intent of
    Congress.
      Pub. L. 99-571, Sec. 102(c)(1)(B), substituted "municipal
    securities dealer, government securities broker, or government
    securities dealer" for "or municipal securities dealer" in two
    places.
      Subsec. (a)(39)(C). Pub. L. 99-571, Sec. 102(c)(2), substituted
    "municipal securities dealer, government securities broker, or
    government securities dealer" for "or municipal securities dealer"
    and inserted ", an appropriate regulatory agency," after "the
    Commission".
      Subsec. (a)(42) to (46), (48). Pub. L. 99-571, Sec. 102(d), added
    pars. (42) to (46) and (48).
      1984 - Subsec. (a)(39)(A). Pub. L. 98-376, Sec. 6(a)(1), inserted
    ", contract market designated pursuant to section 5 of the
    Commodity Exchange Act (7 U.S.C. 7), or futures association
    registered under section 17 of such Act (7 U.S.C. 21), or has been
    and is denied trading privileges on any such contract market".
      Subsec. (a)(39)(B). Pub. L. 98-376, Sec. 6(a)(2), inserted ", or
    is subject to 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.)".
      Subsec. (a)(39)(C). Pub. L. 98-376, Sec. 6(a)(3), inserted "or
    while associated with an entity or person required to be registered
    under the Commodity Exchange Act,".
      Subsec. (a)(41). Pub. L. 98-440 added par. (41).
      1982 - Subsec. (a)(10). Pub. L. 97-303 inserted "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," after "for a security,".
      1980 - Subsec. (a)(12). Pub. L. 96-477 included within definition
    of "exempted security" interests or participation in single trust
    funds, provided that qualifying interests, participation, or
    securities could be issued in connection with certain governmental
    plans as defined in section 414(d) of title 26, substituted
    provisions relating to securities arising out of contracts issued
    by insurance companies for provisions relating to separate accounts
    maintained by insurance companies, and excluded from definition of
    "exempted security" any plans described in cls. (A), (B), or (C) of
    par. (12) which were funded by annuity contracts described in
    section 403(b) of title 26.
      1978 - Subsec. (a)(40). Pub. L. 95-283 added par. (40).
      1975 - Subsec. (a)(3). Pub. L. 94-29, Sec. 3(1), redefined term
    "member" to recognize the elimination of fixed commission rates in
    the case of exchanges, inserted definition of term when used in the
    case of registered securities associations, expanded definition of
    term when used with respect to an exchange to include any natural
    person permitted to effect transactions on the floor of an exchange
    without the services of another person acting as broker, any
    registered broker or dealer with which such natural person is
    associated, any registered broker or dealer permitted to designate
    a natural person as its representative on the floor of an exchange,
    and any other registered broker or dealer which agrees to be
    regulated by an exchange and with respect to whom the exchange has
    undertaken to enforce compliance with its rules, this chapter, and
    the rules and regulations thereunder, introduced the concept of
    including among members any person required to comply with the
    rules of an exchange to the extent specified by the Commission in
    accordance with section 78f(f) of this title, and expanded
    definition of term when used with respect to a registered
    securities association to include any broker or dealer who has
    agreed to be regulated and with respect to whom the association
    undertakes to enforce compliance with its own rules, this chapter,
    and the rules and regulations thereunder.
      Subsec. (a)(9). Pub. L. 94-29, Sec. 3(2), substituted "a natural
    person, company, government, or political subdivision, agency, or
    instrumentality of a government" for "an individual, a corporation,
    a partnership, an association, a joint-stock company, a business
    trust, or an unincorporated organization".
      Subsec. (a)(12). Pub. L. 94-29, Sec. 3(3), brought brokers and
    dealers engaged exclusively in municipal securities business within
    the registration provisions of this chapter by transferring the
    existing description of municipal securities to subsec. (a)(29) and
    by inserting in its place provisions revoking the exempt status of
    municipal securities for purposes of sections 78o, 78o-3 (except
    subsections (b)(6), (b)(11), and (g)(2) thereof) and 78q-1 of this
    title.
      Subsec. (a)(17). Pub. L. 94-29, Sec. 3(4), expanded definition of
    "interstate commerce" to establish that the intrastate use of any
    facility of an exchange, any telephones or other interstate means
    of communication, or any other interstate instrumentality
    constitutes a use of the jurisdictional means for purposes of this
    chapter.
      Subsec. (a)(18). Pub. L. 94-29, Sec. 3(4), expanded definition to
    include persons under common control with the broker or dealer and
    struck out references to the classification of the persons,
    including employees, controlled by a broker or a dealer.
      Subsec. (a)(19). Pub. L. 94-29, Sec. 3(4), substituted "
    'separate account', and 'company' " for "and 'separate account'."
      Subsec. (a)(21). Pub. L. 94-29, Sec. 3(5), broadened definition
    of term "person associated with a member" to encompass a person
    associated with a broker or dealer which is a member of an exchange
    by restating directly the definition of a "person associated with a
    broker or dealer" in subsec. (a)(18).
      Subsec. (a)(22) to (39). Pub. L. 94-29, Sec. 3(6), added pars.
    (22) to (39).
      Subsec. (b). Pub. L. 94-29, Sec. 3(7), substituted "accounting,
    and other terms used in this chapter, consistently with the
    provisions and purposes of this chapter" for "and accounting terms
    used in this chapter insofar as such definitions are not
    inconsistent with the provisions of this chapter".
      Subsec. (d). Pub. L. 94-29, Sec. 3(8), added subsec. (d).
      1970 - Subsec. (a)(12). Pub. L. 91-567 inserted provisions which
    brought within definition of "exempted security" any security which
    is an industrial development bond the interest on which is
    excludable from gross income under section 103(a)(1) of title 26
    if, by reason of the application of section 103(c)(4) or (6) of
    title 26, section 103(c)(1) does not apply to such security. Such
    amendment was also made by Pub. L. 91-373.
      Pub. L. 91-547, Sec. 28(a), struck out reference to industrial
    development bonds the interest on which is excludable from gross
    income under section 103(a)(1) of title 26; and included as
    exempted securities interests or participations in common trust
    funds maintained by a bank for collective investment of assets held
    by it in a fiduciary capacity; interests or participations in bank
    collective trust funds maintained for funding of employees' stock-
    bonus, pension, or profit-sharing plans; interests or
    participations in separate accounts maintained by insurance
    companies for funding certain stock-bonus, pension, or profit-
    sharing plans which meet the requirements for qualification under
    section 401 of title 26; and such other securities as the
    Commission by rules and regulations deems necessary in the public
    interest.
      Pub. L. 91-373 inserted provisions which brought within
    definition of "exempted security" any security which is an
    industrial development bond the interest on which is excludable
    from gross income under section 103(a)(1) of title 26 if, by reason
    of the application of section 103(c)(4) or (6) of title 26, section
    103(c)(1) does not apply to such security. Such amendment was also
    made by Pub. L. 91-567.
      Subsec. (a)(19). Pub. L. 91-547, Sec. 28(b), provided for term
    "separate account" the same meaning as in the Investment Company
    Act of 1940.
      1964 - Subsec. (a)(18) to (21). Pub. L. 88-467 added pars. (18)
    to (21).
      1960 - Subsec. (a)(16). Pub. L. 86-624 struck out reference to
    Hawaii.
      1959 - Subsec. (a)(16). Pub. L. 86-70 struck out reference to
    Alaska.

-CHANGE-
                              CHANGE OF NAME                          
      Act Aug. 23, 1935, substituted "Board of Governors of the Federal
    Reserve System" for "Federal Reserve Board".


-MISC2-
                     EFFECTIVE DATE OF 2004 AMENDMENT                 
      Amendment by Pub. L. 108-386 effective Oct. 30, 2004, and, except
    as otherwise provided, applicable with respect to fiscal year 2005
    and each succeeding fiscal year, see sections 8(i) and 9 of Pub. L.
    108-386, set out as notes under section 321 of Title 12, Banks and
    Banking.

                     EFFECTIVE DATE OF 1999 AMENDMENT                 
      Amendment by sections 201, 202, 207, and 208 of Pub. L. 106-102
    effective at the end of the 18-month period beginning on Nov. 12,
    1999, see section 209 of Pub. L. 106-102, set out as a note under
    section 1828 of Title 12, Banks and Banking.
      Amendment by section 221(b) of Pub. L. 106-102 effective 18
    months after Nov. 12, 1999, see section 225 of Pub. L. 106-102, set
    out as a note under section 77c of this title.

                     EFFECTIVE DATE OF 1995 AMENDMENT                 
      Amendment by Pub. L. 104-62 applicable as defense to any claim in
    administrative and judicial actions pending on or commenced after
    Dec. 8, 1995, that any person, security, interest, or participation
    of type described in Pub. L. 104-62 is subject to the Securities
    Act of 1933, the Securities Exchange Act of 1934, the Investment
    Company Act of 1940, the Investment Advisers Act of 1940, or any
    State statute or regulation preempted as provided in section 80a-3a
    of this title, except as specifically provided in such statutes,
    see section 7 of Pub. L. 104-62, set out as a note under section
    77c of this title.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by section 347(a) of Pub. L. 103-325 effective upon
    date of promulgation of final regulations under section 347(c) of
    Pub. L. 103-325, see section 347(d) of Pub. L. 103-325, set out as
    an Effective Date of 1994 Amendment note under section 24 of Title
    12, Banks and Banking.

                     EFFECTIVE DATE OF 1990 AMENDMENT                 
      Amendment by Pub. L. 101-429 effective 12 months after Oct. 15,
    1990, or upon issuance of final regulations initially implementing
    such amendment, whichever is earlier, with provision to commence
    rulemaking proceedings to implement such amendment note later than
    180 days after Oct. 15, 1990, and with provisions relating to civil
    penalties and accounting and disgorgement, see section 1(c)(2),
    (3)(A), (C) of Pub. L. 101-429, set out in a note under section 77g
    of this title.

                     EFFECTIVE DATE OF 1988 AMENDMENT                 
      Amendment by Pub. L. 100-704, except for amendment by section 6,
    not applicable to actions occurring before Nov. 19, 1988, see
    section 9 of Pub. L. 100-704, set out as a note under section 78o
    of this title.

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Amendment by Pub. L. 99-571 effective 270 days after Oct. 28,
    1986, see section 401 of Pub. L. 99-571, set out as an Effective
    Date note under section 78o-5 of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Section 7 of Pub. L. 98-376 provided that: "The amendments made
    by this Act [amending this section and sections 78o, 78t, 78u, and
    78ff of this title] shall become effective immediately upon
    enactment of this Act [Aug. 10, 1984]."

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, except for
    amendment of subsec. (a)(12) by Pub. L. 94-29 to be effective 180
    days after June 4, 1975, with provisions of subsec. (a)(3), as
    amended by Pub. L. 94-29, or rules or regulations thereunder, not
    to apply in a way so as to deprive any person of membership in any
    national securities exchange (or its successor) of which such
    person was, on June 4, 1975, a member or a member firm as defined
    in the constitution of such exchange, or so as to deny membership
    in any such exchange (or its successor) to any natural person who
    is or becomes associated with such member or member firm, see
    section 31(a) of Pub. L. 94-29, set out as a note under section 78b
    of this title.

                     EFFECTIVE DATE OF 1970 AMENDMENTS                 
      For effective date of amendment by Pub. L. 91-567, see section
    6(d) of Pub. L. 91-567, set out as a note under section 77c of this
    title.
      Amendment by Pub. L. 91-547 effective Dec. 14, 1970, see section
    30 of Pub L. 91-547, set out as a note under section 80a-52 of this
    title.
      For effective date of amendment by Pub. L. 91-373, see section
    401(c) of Pub. L. 91-373, set out as a note under section 77c of
    this title.

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      Section 13 of Pub. L. 88-467 provided that: "The amendments made
    by this Act shall take effect as follows:
      "(1) The effective date of section 12(g)(1) of the Securities
    Exchange Act of 1934, as added by section 3(c) of this Act [section
    78l(g)(1) of this title], shall be July 1, 1964.
      "(2) The effective date of the amendments to sections 12(b) and
    15(a) of the Securities Exchange Act of 1934 [sections 78l(b) and
    78o(a) of this title], contained in sections 3(a) and 6(a),
    respectively, of this Act shall be July 1, 1964.
      "(3) All other amendments contained in this Act [amending this
    section and sections 77d, 78l, 78m, 78n, 78o, 78o-3, 78p, 78t, 78w,
    and 78ff of this title] shall take effect on the date of its
    enactment [Aug. 20, 1964]."

                                REGULATIONS                            
      Pub. L. 109-351, title I, Sec. 101(a)(2)-(c), Oct. 13, 2006, 120
    Stat. 1968, provided that:
        "(2) Timing. - Not later than 180 days after the date of the
      enactment of this Act [Oct. 13, 2006], the Securities and
      Exchange Commission (in this section [enacting this note and
      amending 15 U.S.C. 78c] referred to as the 'Commission') and the
      Board of Governors of the Federal Reserve System (hereafter in
      this section referred to as the 'Board') shall jointly issue a
      proposed single set of rules or regulations to define the term
      'broker' in accordance with section 3(a)(4) of the Securities
      Exchange Act of 1934 [15 U.S.C. 78c(a)(4)], as amended by this
      subsection.
        "(3) Rulemaking supersedes previous rulemaking. - A final
      single set of rules or regulations jointly adopted in accordance
      with this section shall supersede any other proposed or final
      rule issued by the Commission on or after the date of enactment
      of section 201 of the Gramm-Leach-Bliley Act [Nov. 12, 1999] with
      regard to the exceptions to the definition of a broker under
      section 3(a)(4)(B) of the Securities Exchange Act of 1934. No
      such other rule, whether or not issued in final form, shall have
      any force or effect on or after that date of enactment.
      "(b) Consultation. - Prior to jointly adopting the single set of
    final rules or regulations required by this section, the Commission
    and the Board shall consult with and seek the concurrence of the
    Federal banking agencies concerning the content of such rulemaking
    in implementing section 3(a)(4)(B) of the Securities Exchange Act
    of 1934 [15 U.S.C. 78c(a)(4)(B)], as amended by this section and
    section 201 of the Gramm-Leach-Bliley Act [Pub. L. 106-102].
      "(c) Definition. - For purposes of this section, the term
    'Federal banking agencies' means the Office of the Comptroller of
    the Currency, the Office of Thrift Supervision, and the Federal
    Deposit Insurance Corporation."

                      CONSTRUCTION OF 1993 AMENDMENT                  
      Amendment by Pub. L. 103-202 not to be construed to govern
    initial issuance of any public debt obligation or to grant any
    authority to (or extend any authority of) the Securities and
    Exchange Commission, any appropriate regulatory agency, or a self-
    regulatory organization to prescribe any procedure, term, or
    condition of such initial issuance, to promulgate any rule or
    regulation governing such initial issuance, or to otherwise
    regulate in any manner such initial issuance, see section 111 of
    Pub. L. 103-202, set out as a note under section 78o-5 of this
    title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.


-MISC3-
                               STATE OPT OUT                           
      Section 347(e) of Pub. L. 103-325 provided that: "Notwithstanding
    the amendments made by this section [amending this section and
    section 24 of Title 12, Banks and Banking], a note that is directly
    secured by a first lien on one or more parcels of real estate upon
    which is located one or more commercial structures shall not be
    considered to be a mortgage related security under section 3(a)(41)
    of the Securities Exchange Act of 1934 [15 U.S.C. 78c(a)(41)] in
    any State that, prior to the expiration of 7 years after the date
    of enactment of this Act [Sept. 23, 1994], enacts a statute that
    specifically refers to this section and either prohibits or
    provides for a more limited authority to purchase, hold, or invest
    in such securities by any person, trust, corporation, partnership,
    association, business trust, or business entity or class thereof
    than is provided by the amendments made by this subsection. The
    enactment by any State of any statute of the type described in the
    preceding sentence shall not affect the validity of any contractual
    commitment to purchase, hold, or invest that was made prior
    thereto, and shall not require the sale or other disposition of any
    securities acquired prior thereto."

-CROSS-
                                DEFINITIONS                            
      Pub. L. 106-554, Sec. 1(a)(5) [title III, Sec. 301(b)], Dec. 21,
    2000, 114 Stat. 2763, 2763A-451, provided that: "As used in the
    amendment made by subsection (a) [enacting sections 206A to 206C of
    Pub. L. 106 - 102, set out below], the term 'security' has the same
    meaning as in section 2(a)(1) of the Securities Act of 1933 [15
    U.S.C. 77b(a)(1)] or section 3(a)(10) of the Securities Exchange
    Act of 1934 [15 U.S.C. 78c(a)(10)]."
      Pub. L. 106-102, title II, Sec. 206, Nov. 12, 1999, 113 Stat.
    1393, provided that:
      "(a) Definition of Identified Banking Product. - For purposes of
    paragraphs (4) and (5) of section 3(a) of the Securities Exchange
    Act of 1934 (15 U.S.C. 78c(a)(4), (5)), the term 'identified
    banking product' means - 
        "(1) a deposit account, savings account, certificate of
      deposit, or other deposit instrument issued by a bank;
        "(2) a banker's acceptance;
        "(3) a letter of credit issued or loan made by a bank;
        "(4) a debit account at a bank arising from a credit card or
      similar arrangement;
        "(5) a participation in a loan which the bank or an affiliate
      of the bank (other than a broker or dealer) funds, participates
      in, or owns that is sold - 
          "(A) to qualified investors; or
          "(B) to other persons that - 
            "(i) have the opportunity to review and assess any material
          information, including information regarding the borrower's
          creditworthiness; and
            "(ii) based on such factors as financial sophistication,
          net worth, and knowledge and experience in financial matters,
          have the capability to evaluate the information available, as
          determined under generally applicable banking standards or
          guidelines; or
        "(6) any swap agreement, including credit and equity swaps,
      except that an equity swap that is sold directly to any person
      other than a qualified investor (as defined in section 3(a)(54)
      of the Securities Act of 1934 [15 U.S.C. 78c(a)(54)]) shall not
      be treated as an identified banking product.
      "(b) Definition of Swap Agreement. - For purposes of subsection
    (a)(6), the term 'swap agreement' means any individually negotiated
    contract, agreement, warrant, note, or option that is based, in
    whole or in part, on the value of, any interest in, or any
    quantitative measure or the occurrence of any event relating to,
    one or more commodities, securities, currencies, interest or other
    rates, indices, or other assets, but does not include any other
    identified banking product, as defined in paragraphs (1) through
    (5) of subsection (a).
      "(c) Classification Limited. - Classification of a particular
    product as an identified banking product pursuant to this section
    shall not be construed as finding or implying that such product is
    or is not a security for any purpose under the securities laws, or
    is or is not an account, agreement, contract, or transaction for
    any purpose under the Commodity Exchange Act [7 U.S.C. 1 et seq.].
      "(d) Incorporated Definitions. - For purposes of this section,
    the terms 'bank' and 'qualified investor' have the same meanings as
    given in section 3(a) of the Securities Exchange Act of 1934 [15
    U.S.C. 78c(a)], as amended by this Act."
      Pub. L. 106-102, title II, Secs. 206A - 206C, as added by Pub. L.
    106-554, Sec. 1(a)(5) [title III, Sec. 301(a)], Dec. 21, 2000, 114
    Stat. 2763, 2763A-449, provided that:

      "SEC. 206A. SWAP AGREEMENT.
      "(a) In General. - Except as provided in subsection (b), as used
    in this section, the term 'swap agreement' means any agreement,
    contract, or transaction between eligible contract participants (as
    defined in section 1a(12) of the Commodity Exchange Act [7 U.S.C.
    1a(12)] as in effect on the date of the enactment of this section
    [Dec. 21, 2000]), other than a person that is an eligible contract
    participant under section 1a(12)(C) of the Commodity Exchange Act,
    the material terms of which (other than price and quantity) are
    subject to individual negotiation, and that - 
        "(1) is a put, call, cap, floor, collar, or similar option of
      any kind for the purchase or sale of, or based on the value of,
      one or more interest or other rates, currencies, commodities,
      indices, quantitative measures, or other financial or economic
      interests or property of any kind;
        "(2) provides for any purchase, sale, payment or delivery
      (other than a dividend on an equity security) that is dependent
      on the occurrence, non-occurrence, or the extent of the
      occurrence of an event or contingency associated with a potential
      financial, economic, or commercial consequence;
        "(3) provides on an executory basis for the exchange, on a
      fixed or contingent basis, of one or more payments based on the
      value or level of one or more interest or other rates,
      currencies, commodities, securities, instruments of indebtedness,
      indices, quantitative measures, or other financial or economic
      interests or property of any kind, or any interest therein or
      based on the value thereof, and that transfers, as between the
      parties to the transaction, in whole or in part, the financial
      risk associated with a future change in any such value or level
      without also conveying a current or future direct or indirect
      ownership interest in an asset (including any enterprise or
      investment pool) or liability that incorporates the financial
      risk so transferred, including any such agreement, contract, or
      transaction commonly known as an interest rate swap, including a
      rate floor, rate cap, rate collar, cross-currency rate swap,
      basis swap, currency swap, equity index swap, equity swap, debt
      index swap, debt swap, credit spread, credit default swap, credit
      swap, weather swap, or commodity swap;
        "(4) provides for the purchase or sale, on a fixed or
      contingent basis, of any commodity, currency, instrument,
      interest, right, service, good, article, or property of any kind;
      or
        "(5) is any combination or permutation of, or option on, any
      agreement, contract, or transaction described in any of
      paragraphs (1) through (4).
      "(b) Exclusions. - The term 'swap agreement' does not include - 
        "(1) 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;
        "(2) any put, call, straddle, option, or privilege entered into
      on a national securities exchange registered pursuant to section
      6(a) of the Securities Exchange Act of 1934 [15 U.S.C. 78f(a)]
      relating to foreign currency;
        "(3) any agreement, contract, or transaction providing for the
      purchase or sale of one or more securities on a fixed basis;
        "(4) any agreement, contract, or transaction providing for the
      purchase or sale of one or more securities on a contingent basis,
      unless such agreement, contract, or transaction predicates such
      purchase or sale on the occurrence of a bona fide contingency
      that might reasonably be expected to affect or be affected by the
      creditworthiness of a party other than a party to the agreement,
      contract, or transaction;
        "(5) any note, bond, or evidence of indebtedness that is a
      security as defined in section 2(a)(1) of the Securities Act of
      1933 [15 U.S.C. 77b(a)(1)] or section 3(a)(10) of the Securities
      Exchange Act of 1934 [15 U.S.C. 78c(a)(10)]; or
        "(6) any agreement, contract, or transaction that is - 
          "(A) based on a security; and
          "(B) entered into directly or through an underwriter (as
        defined in section 2(a) of the Securities Act of 1933 [15
        U.S.C. 77b(a)]) by the issuer of such security for the purposes
        of raising capital, unless such agreement, contract, or
        transaction is entered into to manage a risk associated with
        capital raising.
      "(c) Rule of Construction Regarding Master Agreements. - As used
    in this section, the term 'swap agreement' shall be construed to
    include a master agreement that provides for an agreement,
    contract, or transaction that is a swap agreement pursuant to
    subsections (a) and (b), 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 swap
    agreement pursuant to subsections (a) and (b), except that the
    master agreement shall be considered to be a swap agreement only
    with respect to each agreement, contract, or transaction under the
    master agreement that is a swap agreement pursuant to subsections
    (a) and (b).

      "SEC. 206B. SECURITY-BASED SWAP AGREEMENT.
      "As used in this section, the term 'security-based swap
    agreement' means a swap agreement (as defined in section 206A) 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.

      "SEC. 206C. NON-SECURITY-BASED SWAP AGREEMENT.
      "As used in this section, the term 'non-security-based swap
    agreement' means any swap agreement (as defined in section 206A)
    that is not a security-based swap agreement (as defined in section
    206B)."

-FOOTNOTE-
    (!1) See References in Text note below.

               

    (!2) So in original. Probably should be followed by "and".

    (!3) So in original. Probably should be "evidenced".

    (!4) See References in Text note below.

    (!5) See References in Text note below.


-End-



-CITE-
    15 USC Sec. 78c-1                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78c-1. Swap agreements

-STATUTE-
    (a) Non-security-based swap agreements
      The definition of "security" in section 78c(a)(10) of this title
    does not include any non-security-based swap agreement (as defined
    in section 206C of the Gramm-Leach-Bliley Act).
    (b) Security-based swap agreements
      (1) The definition of "security" in section 78c(a)(10) of this
    title does not include any security-based swap agreement (as
    defined in section 206B of the Gramm-Leach-Bliley Act).
      (2) The Commission is prohibited from registering, or requiring,
    recommending, or suggesting, the registration under this chapter of
    any security-based swap agreement (as defined in section 206B of
    the Gramm-Leach-Bliley Act). If the Commission becomes aware that a
    registrant has filed a registration application with respect to
    such a swap agreement, the Commission shall promptly so notify the
    registrant. Any such registration with respect to such a swap
    agreement shall be void and of no force or effect.
      (3) Except as provided in section 78p(a) of this title with
    respect to reporting requirements, the Commission is prohibited
    from - 
        (A) promulgating, interpreting, or enforcing rules; or
        (B) issuing orders of general applicability;

    under this chapter in a manner that imposes or specifies reporting
    or recordkeeping requirements, procedures, or standards as
    prophylactic measures against fraud, manipulation, or insider
    trading with respect to any security-based swap agreement (as
    defined in section 206B of the Gramm-Leach-Bliley Act).
      (4) References in this chapter to the "purchase" or "sale" of a
    security-based swap agreement (as defined in section 206B of the
    Gramm-Leach-Bliley Act) 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 agreement, as
    the context may require.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 3A, as added Pub. L. 106-554,
    Sec. 1(a)(5) [title III, Sec. 303(a)], Dec. 21, 2000, 114 Stat.
    2763, 2763A-452.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      Sections 206B and 206C of the Gramm-Leach-Bliley Act, referred to
    in text, are sections 206B and 206C of Pub. L. 106-102, which are
    set out in a note under section 78c of this title.
      This chapter, referred to in subsec. (b)(2) to (4), was in the
    original "this title". See References in Text note set out under
    section 78a of this title.

-End-



-CITE-
    15 USC Sec. 78d                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78d. Securities and Exchange Commission

-STATUTE-
    (a) Establishment; composition; limitations on commissioners; terms
      of office
      There is hereby established a Securities and Exchange Commission
    (hereinafter referred to as the "Commission") to be composed of
    five commissioners to be appointed by the President by and with the
    advice and consent of the Senate. Not more than three of such
    commissioners shall be members of the same political party, and in
    making appointments members of different political parties shall be
    appointed alternately as nearly as may be practicable. No
    commissioner shall engage in any other business, vocation, or
    employment than that of serving as commissioner, nor shall any
    commissioner participate, directly or indirectly, in any stock-
    market operations or transactions of a character subject to
    regulation by the Commission pursuant to this chapter. Each
    commissioner shall hold office for a term of five years and until
    his successor is appointed and has qualified, except that he shall
    not so continue to serve beyond the expiration of the next session
    of Congress subsequent to the expiration of said fixed term of
    office, and except (1) any commissioner appointed to fill a vacancy
    occurring prior to the expiration of the term for which his
    predecessor was appointed shall be appointed for the remainder of
    such term, and (2) the terms of office of the commissioners first
    taking office after June 6, 1934, shall expire as designated by the
    President at the time of nomination, one at the end of one year,
    one at the end of two years, one at the end of three years, one at
    the end of four years, and one at the end of five years, after June
    6, 1934.
    (b) Appointment and compensation of staff and leasing authority
      (1) Appointment and compensation
        The Commission shall appoint and compensate officers,
      attorneys, economists, examiners, and other employees in
      accordance with section 4802 of title 5.
      (2) Reporting of information
        In establishing and adjusting schedules of compensation and
      benefits for officers, attorneys, economists, examiners, and
      other employees of the Commission under applicable provisions of
      law, the Commission shall inform the heads of the agencies
      referred to under section 1833b of title 12 and Congress of such
      compensation and benefits and shall seek to maintain
      comparability with such agencies regarding compensation and
      benefits.
      (3) Leasing authority
        Nothwithstanding (!1) any other provision of law, the
      Commission is authorized to enter directly into leases for real
      property for office, meeting, storage, and such other space as is
      necessary to carry out its functions, and shall be exempt from
      any General Services Administration space management regulations
      or directives.

    (c) Acceptance of travel support for Commission activities from non-
      Federal sources; regulations
      Notwithstanding any other provision of law, in accordance with
    regulations which the Commission shall prescribe to prevent
    conflicts of interest, the Commission may accept payment and
    reimbursement, in cash or in kind, from non-Federal agencies,
    organizations, and individuals for travel, subsistence, and other
    necessary expenses incurred by Commission members and employees in
    attending meetings and conferences concerning the functions or
    activities of the Commission. Any payment or reimbursement accepted
    shall be credited to the appropriated funds of the Commission. The
    amount of travel, subsistence, and other necessary expenses for
    members and employees paid or reimbursed under this subsection may
    exceed per diem amounts established in official travel regulations,
    but the Commission may include in its regulations under this
    subsection a limitation on such amounts.
    (d) Acceptance of relocation expenses from former employers by
      professional fellows program participants
      Notwithstanding any other provision of law, former employers of
    participants in the Commission's professional fellows programs may
    pay such participants their actual expenses for relocation to
    Washington, District of Columbia, to facilitate their participation
    in such programs, and program participants may accept such
    payments.
    (e) Fee payments
      Notwithstanding any other provision of law, whenever any fee is
    required to be paid to the Commission pursuant to any provision of
    the securities laws or any other law, the Commission may provide by
    rule that such fee shall be paid in a manner other than in cash and
    the Commission may also specify the time that such fee shall be
    determined and paid relative to the filing of any statement or
    document with the Commission.
    (f) Reimbursement of expenses for assisting foreign securities
      authorities
      Notwithstanding any other provision of law, the Commission may
    accept payment and reimbursement, in cash or in kind, from a
    foreign securities authority, or made on behalf of such authority,
    for necessary expenses incurred by the Commission, its members, and
    employees in carrying out any investigation pursuant to section
    78u(a)(2) of this title or in providing any other assistance to a
    foreign securities authority. Any payment or reimbursement accepted
    shall be considered a reimbursement to the appropriated funds of
    the Commission.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 4, 48 Stat. 885; Oct. 28,
    1949, ch. 782, title XI, Sec. 1106(a), 63 Stat. 972; Pub. L. 86-
    619, Sec. 3, July 12, 1960, 74 Stat. 408; Pub. L. 86-771, Sept.
    13, 1960, 74 Stat. 913; Pub. L. 88-426, title III, Sec. 305(20),
    Aug. 14, 1964, 78 Stat. 425; Pub. L. 98-38, Sec. 1, June 6, 1983,
    97 Stat. 205; Pub. L. 100-181, title III, Sec. 307, Dec. 4, 1987,
    101 Stat. 1254; Pub. L. 101-550, title I, Sec. 103, title II, Sec.
    207, Nov. 15, 1990, 104 Stat. 2713, 2721; Pub. L. 104-290, title
    IV, Sec. 406, Oct. 11, 1996, 110 Stat. 3444; Pub. L. 105-353, title
    II, Sec. 203, Nov. 3, 1998, 112 Stat. 3234; Pub. L. 107-123, Sec.
    8(d)(2), Jan. 16, 2002, 115 Stat. 2399.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsec. (a), was in the original
    "this title" and "this Act", respectively. See References in Text
    note set out under section 78a of this title.


-MISC1-
                                AMENDMENTS                            
      2002 - Subsec. (b)(1), (2). Pub. L. 107-123 added pars. (1) and
    (2) and struck out former pars. (1) and (2), which authorized the
    Commission to appoint and compensate officers, attorneys,
    examiners, and other experts as needed, and to select, appoint, and
    compensate professional economists.
      1998 - Subsec. (b)(2), (3). Pub. L. 105-353 added par. (2) and
    redesignated former par. (2) as (3).
      1996 - Subsec. (e). Pub. L. 104-290 inserted before period at end
    "and the Commission may also specify the time that such fee shall
    be determined and paid relative to the filing of any statement or
    document with the Commission".
      1990 - Subsec. (b). Pub. L. 101-550, Sec. 103, inserted heading,
    designated existing provision as par. (1) and inserted heading, and
    added par. (2).
      Subsec. (f). Pub. L. 101-550, Sec. 207, added subsec. (f).
      1987 - Subsec. (e). Pub. L. 100-181 added subsec. (e).
      1983 - Subsecs. (c), (d). Pub. L. 98-38 added subsecs. (c) and
    (d).
      1964 - Subsec. (a). Pub. L. 88-426 repealed provisions which
    prescribed the compensation of the Chairman and the Commissioners.
      1960 - Subsec. (a). Pub. L. 86-771 authorized the chairman to
    receive an additional $500 a year.
      Pub. L. 86-619 increased the salary of each commissioner from
    $15,000 to $20,000 a year, and provided for continuation in office
    of a commissioner upon termination of his term until a successor is
    appointed and has qualified, not beyond expiration of next session
    of Congress subsequent to the expiration of said fixed term of
    office.
      1949 - Subsec. (b). Act Oct. 28, 1949, substituted
    "Classification Act of 1949" for "Classification Act of 1923".

                     EFFECTIVE DATE OF 2002 AMENDMENT                 
      Amendment by Pub. L. 107-123 effective Oct. 1, 2001, see section
    11 of Pub. L. 107-123, set out as a note under section 78ee of this
    title.

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      For effective date of amendment by Pub. L. 88-426, see section
    501 of Pub. L. 88-426.

                                  REPEALS                              
      Act Oct. 28, 1949, ch. 782, set out in the credit of this
    section, was repealed (subject to a savings clause) by Pub. L. 89-
    554, Sept. 6, 1966, Sec. 8, 80 Stat. 632, 655.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out below.


-MISC2-
                COMPENSATION OF CHAIRMAN AND COMMISSIONERS            
      Compensation of Chairman and Commissioners, see sections 5314 and
    5315 of Title 5, Government Organization and Employees.

                      1950 REORGANIZATION PLAN NO. 10                  

                        15 F.R. 3175, 64 STAT. 1265                    
    Prepared by the President and transmitted to the Senate and the
      House of Representatives in Congress assembled, March 13, 1950,
      pursuant to the provisions of the Reorganization Act of 1949,
      approved June 20, 1949 [see 5 U.S.C. 901 et seq.].

                    SECURITIES AND EXCHANGE COMMISSION                

             SECTION 1. TRANSFER OF FUNCTIONS TO THE CHAIRMAN         
      (a) Subject to the provisions of subsection (b) of this section
    there are hereby transferred from the Securities and Exchange
    Commission, hereinafter referred to as the Commission, to the
    Chairman of the Commission, hereinafter referred to as the
    Chairman, the executive and administrative functions of the
    Commission, including functions of the Commission with respect to
    (1) the appointment and supervision of personnel employed under the
    Commission, (2) the distribution of business among such personnel
    and among administrative units of the Commission, and (3) the use
    and expenditure of funds.
      (b)(1) In carrying out any of his functions under the provisions
    of this section the Chairman shall be governed by general policies
    of the Commission and by such regulatory decisions, findings, and
    determinations as the Commission may by law be authorized to make.
      (2) The appointment by the Chairman of the heads of major
    administrative units under the Commission shall be subject to the
    approval of the Commission.
      (3) Personnel employed regularly and full time in the immediate
    offices of Commissioners other than the Chairman shall not be
    affected by the provisions of this reorganization plan.
      (4) There are hereby reserved to the Commission its functions
    with respect to revising budget estimates and with respect to
    determining upon the distribution of appropriated funds according
    to major programs and purposes.

               SEC. 2. PERFORMANCE OF TRANSFERRED FUNCTIONS           
      The Chairman may from time to time make such provisions as he
    shall deem appropriate authorizing the performance by any officer,
    employee, or administrative unit under his jurisdiction of any
    function transferred to the Chairman by the provisions of section 1
    of this reorganization plan.

                      SEC. 3. DESIGNATION OF CHAIRMAN                  
      The functions of the Commission with respect to choosing a
    Chairman from among the Commissioners composing the Commission are
    hereby transferred to the President.

                         MESSAGE OF THE PRESIDENT                     
    To the Congress of the United States:
      I transmit herewith Reorganization Plan No. 10 of 1950, prepared
    in accordance with the Reorganization Act of 1949 and providing for
    reorganizations in the Securities and Exchange Commission. My
    reasons for transmitting this plan are stated in an accompanying
    general message.
      After investigation I have found and hereby declare that each
    reorganization included in Reorganization Plan No. 10 of 1950 is
    necessary to accomplish one or more of the purposes set forth in
    section 2(a) of the Reorganization Act of 1949.
      The taking effect of the reorganizations included in this plan
    may not in itself result in substantial immediate savings. However,
    many benefits in improved operations are probable during the next
    years which will result in a reduction in expenditures as compared
    with those that would be otherwise necessary. An itemization of
    these reductions in advance of actual experience under this plan is
    not practicable.
                                                        Harry S. Truman.

-FOOTNOTE-
    (!1) So in original. Probably should be "Notwithstanding".


-End-



-CITE-
    15 USC Sec. 78d-1                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78d-1. Delegation of functions by Commission

-STATUTE-
    (a) Authorization; functions delegable; eligible persons;
      application of other laws
      In addition to its existing authority, the Securities and
    Exchange Commission shall have the authority to delegate, by
    published order or rule, any of its functions to a division of the
    Commission, an individual Commissioner, an administrative law
    judge, or an employee or employee board, including functions with
    respect to hearing, determining, ordering, certifying, reporting,
    or otherwise acting as to any work, business, or matter. Nothing in
    this section shall be deemed to supersede the provisions of section
    556(b) of title 5, or to authorize the delegation of the function
    of rulemaking as defined in subchapter II of chapter 5 of title 5,
    with reference to general rules as distinguished from rules of
    particular applicability, or of the making of any rule pursuant to
    section 78s(c) of this title.
    (b) Right of review; procedure
      With respect to the delegation of any of its functions, as
    provided in subsection (a) of this section, the Commission shall
    retain a discretionary right to review the action of any such
    division of the Commission, individual Commissioner, administrative
    law judge, employee, or employee board, upon its own initiative or
    upon petition of a party to or intervenor in such action, within
    such time and in such manner as the Commission by rule shall
    prescribe. The vote of one member of the Commission shall be
    sufficient to bring any such action before the Commission for
    review. A person or party shall be entitled to review by the
    Commission if he or it is adversely affected by action at a
    delegated level which (1) denies any request for action pursuant to
    section 77h(a) or section 77h(c) of this title or the first
    sentence of section 78l(d) of this title; (2) suspends trading in a
    security pursuant to section 78l(k) of this title; or (3) is
    pursuant to any provision of this chapter in a case of
    adjudication, as defined in section 551 of title 5, not required by
    this chapter to be determined on the record after notice and
    opportunity for hearing (except to the extent there is involved a
    matter described in section 554(a)(1) through (6) of such title 5).
    (c) Finality of delegated action
      If the right to exercise such review is declined, or if no such
    review is sought within the time stated in the rules promulgated by
    the Commission, then the action of any such division of the
    Commission, individual Commissioner, administrative law judge,
    employee, or employee board, shall, for all purposes, including
    appeal or review thereof, be deemed the action of the Commission.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 4A, as added Pub. L. 100-181,
    title III, Sec. 308(a), Dec. 4, 1987, 101 Stat. 1254.)


-MISC1-
                             PRIOR PROVISIONS                         
      A prior section 78d-1, Pub. L. 87-592, Sec. 1, Aug. 20, 1962, 76
    Stat. 394; Pub. L. 94-29, Sec. 25, June 4, 1975, 89 Stat. 163; Pub.
    L. 95-251, Sec. 2(a)(4), Mar. 27, 1978, 92 Stat. 183, provided for
    subject matter similar to the provisions comprising this section,
    prior to repeal by section 308(b) of Pub. L. 100-181.

-End-



-CITE-
    15 USC Sec. 78d-2                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78d-2. Transfer of functions with respect to assignment of
      personnel to chairman

-STATUTE-
      In addition to the functions transferred by the provisions of
    Reorganization Plan Numbered 10 of 1950 (64 Stat. 1265), there are
    hereby transferred from the Commission to the Chairman of the
    Commission the functions of the Commission with respect to the
    assignment of Commission personnel, including Commissioners, to
    perform such functions as may have been delegated by the Commission
    to the Commission personnel, including Commissioners, pursuant to
    section 78d-1 of this title.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 4B, as added Pub. L. 100-181,
    title III, Sec. 308(a), Dec. 4, 1987, 101 Stat. 1255.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      Reorganization Plan Numbered 10 of 1950 (64 Stat. 1265), referred
    to in text, is set out as a note under section 78d of this title.


-MISC1-
                             PRIOR PROVISIONS                         
      A prior section 78d-2, Pub. L. 87-592, Sec. 2, Aug. 20, 1962, 76
    Stat. 395, provided for subject matter similar to the provisions
    comprising this section, prior to repeal by section 308(b) of Pub.
    L. 100-181.

-End-



-CITE-
    15 USC Sec. 78d-3                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78d-3. Appearance and practice before the Commission

-STATUTE-
    (a) Authority to censure
      The Commission may censure any person, or deny, temporarily or
    permanently, to any person the privilege of appearing or practicing
    before the Commission in any way, if that person is found by the
    Commission, after notice and opportunity for hearing in the matter -
     
        (1) not to possess the requisite qualifications to represent
      others;
        (2) to be lacking in character or integrity, or to have engaged
      in unethical or improper professional conduct; or
        (3) to have willfully violated, or willfully aided and abetted
      the violation of, any provision of the securities laws or the
      rules and regulations issued thereunder.
    (b) Definition
      With respect to any registered public accounting firm or
    associated person, for purposes of this section, the term "improper
    professional conduct" means - 
        (1) intentional or knowing conduct, including reckless conduct,
      that results in a violation of applicable professional standards;
      and
        (2) negligent conduct in the form of - 
          (A) a single instance of highly unreasonable conduct that
        results in a violation of applicable professional standards in
        circumstances in which the registered public accounting firm or
        associated person knows, or should know, that heightened
        scrutiny is warranted; or
          (B) repeated instances of unreasonable conduct, each
        resulting in a violation of applicable professional standards,
        that indicate a lack of competence to practice before the
        Commission.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 4C, as added Pub. L. 107-204,
    title VI, Sec. 602, July 30, 2002, 116 Stat. 794.)

-End-



-CITE-
    15 USC Sec. 78e                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78e. Transactions on unregistered exchanges

-STATUTE-
      It shall be unlawful for any broker, dealer, or exchange,
    directly or indirectly, to make use of the mails or any means or
    instrumentality of interstate commerce for the purpose of using any
    facility of an exchange within or subject to the jurisdiction of
    the United States to effect any transaction in a security, or to
    report any such transaction, unless such exchange (1) is registered
    as national securities exchange under section 78f of this title, or
    (2) is exempted from such registration upon application by the
    exchange because, in the opinion of the Commission, by reason of
    the limited volume of transactions effected on such exchange, it is
    not practicable and not necessary or appropriate in the public
    interest or for the protection of investors to require such
    registration.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 5, 48 Stat. 885.)


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78f                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78f. National securities exchanges

-STATUTE-
    (a) Registration; application
      An exchange may be registered as a national securities exchange
    under the terms and conditions hereinafter provided in this section
    and in accordance with the provisions of section 78s(a) of this
    title, by filing with the Commission an application for
    registration in such form as the Commission, by rule, may prescribe
    containing the rules of the exchange and such other information and
    documents as the Commission, by rule, may prescribe as necessary or
    appropriate in the public interest or for the protection of
    investors.
    (b) Determination by Commission requisite to registration of
      applicant as a national securities exchange
      An exchange shall not be registered as a national securities
    exchange unless the Commission determines that - 
        (1) Such exchange is so organized and has the capacity to be
      able to carry out the purposes of this chapter and to comply, and
      (subject to any rule or order of the Commission pursuant to
      section 78q(d) or 78s(g)(2) of this title) to enforce compliance
      by its members and persons associated with its members, with the
      provisions of this chapter, the rules and regulations thereunder,
      and the rules of the exchange.
        (2) Subject to the provisions of subsection (c) of this
      section, the rules of the exchange provide that any registered
      broker or dealer or natural person associated with a registered
      broker or dealer may become a member of such exchange and any
      person may become associated with a member thereof.
        (3) The rules of the exchange assure a fair representation of
      its members in the selection of its directors and administration
      of its affairs and provide that one or more directors shall be
      representative of issuers and investors and not be associated
      with a member of the exchange, broker, or dealer.
        (4) The rules of the exchange provide for the equitable
      allocation of reasonable dues, fees, and other charges among its
      members and issuers and other persons using its facilities.
        (5) The rules of the exchange are designed to prevent
      fraudulent and manipulative acts and practices, to promote just
      and equitable principles of trade, to foster cooperation and
      coordination with persons engaged in regulating, clearing,
      settling, processing information with respect to, and
      facilitating transactions in securities, to remove impediments to
      and perfect the mechanism of a free and open market and a
      national market system, and, in general, to protect investors and
      the public interest; and are not designed to permit unfair
      discrimination between customers, issuers, brokers, or dealers,
      or to regulate by virtue of any authority conferred by this
      chapter matters not related to the purposes of this chapter or
      the administration of the exchange.
        (6) The rules of the exchange provide that (subject to any rule
      or order of the Commission pursuant to section 78q(d) or
      78s(g)(2) of this title) its members and persons associated with
      its members shall be appropriately disciplined for violation of
      the provisions of this chapter, the rules or regulations
      thereunder, or the rules of the exchange, by expulsion,
      suspension, limitation of activities, functions, and operations,
      fine, censure, being suspended or barred from being associated
      with a member, or any other fitting sanction.
        (7) The rules of the exchange are in accordance with the
      provisions of subsection (d) of this section, and in general,
      provide a fair procedure for the disciplining of members and
      persons associated with members, the denial of membership to any
      person seeking membership therein, the barring of any person from
      becoming associated with a member thereof, and the prohibition or
      limitation by the exchange of any person with respect to access
      to services offered by the exchange or a member thereof.
        (8) The rules of the exchange do not impose any burden on
      competition not necessary or appropriate in furtherance of the
      purposes of this chapter.
        (9) The rules of the exchange prohibit the listing of any
      security issued in a limited partnership rollup transaction (as
      such term is defined in paragraphs (4) and (5) of section 78n(h)
      of this title), unless such transaction was conducted in
      accordance with procedures designed to protect the rights of
      limited partners, including - 
          (A) the right of dissenting limited partners to one of the
        following:
            (i) an appraisal and compensation;
            (ii) retention of a security under substantially the same
          terms and conditions as the original issue;
            (iii) approval of the limited partnership rollup
          transaction by not less than 75 percent of the outstanding
          securities of each of the participating limited partnerships;
            (iv) the use of a committee of limited partners that is
          independent, as determined in accordance with rules
          prescribed by the exchange, of the general partner or
          sponsor, that has been approved by a majority of the
          outstanding units of each of the participating limited
          partnerships, and that has such authority as is necessary to
          protect the interest of limited partners, including the
          authority to hire independent advisors, to negotiate with the
          general partner or sponsor on behalf of the limited partners,
          and to make a recommendation to the limited partners with
          respect to the proposed transaction; or
            (v) other comparable rights that are prescribed by rule by
          the exchange and that are designed to protect dissenting
          limited partners;

          (B) the right not to have their voting power unfairly reduced
        or abridged;
          (C) the right not to bear an unfair portion of the costs of a
        proposed limited partnership rollup transaction that is
        rejected; and
          (D) restrictions on the conversion of contingent interests or
        fees into non-contingent interests or fees and restrictions on
        the receipt of a non-contingent equity interest in exchange for
        fees for services which have not yet been provided.

      As used in this paragraph, the term "dissenting limited partner"
      means a person who, on the date on which soliciting material is
      mailed to investors, is a holder of a beneficial interest in a
      limited partnership that is the subject of a limited partnership
      rollup transaction, and who casts a vote against the transaction
      and complies with procedures established by the exchange, except
      that for purposes of an exchange or tender offer, such person
      shall file an objection in writing under the rules of the
      exchange during the period during which the offer is outstanding.
    (c) Denial of membership in national exchanges; denial of
      association with member; conditions; limitation of membership
      (1) A national securities exchange shall deny membership to (A)
    any person, other than a natural person, which is not a registered
    broker or dealer or (B) any natural person who is not, or is not
    associated with, a registered broker or dealer.
      (2) A national securities exchange may, and in cases in which the
    Commission, by order, directs as necessary or appropriate in the
    public interest or for the protection of investors shall, deny
    membership to any registered broker or dealer or natural person
    associated with a registered broker or dealer, and bar from
    becoming associated with a member any person, who is subject to a
    statutory disqualification. A national securities exchange shall
    file notice with the Commission not less than thirty days prior to
    admitting any person to membership or permitting any person to
    become associated with a member, if the exchange knew, or in the
    exercise of reasonable care should have known, that such person was
    subject to a statutory disqualification. The notice shall be in
    such form and contain such information as the Commission, by rule,
    may prescribe as necessary or appropriate in the public interest or
    for the protection of investors.
      (3)(A) A national securities exchange may deny membership to, or
    condition the membership of, a registered broker or dealer if (i)
    such broker or dealer does not meet such standards of financial
    responsibility or operational capability or such broker or dealer
    or any natural person associated with such broker or dealer does
    not meet such standards of training, experience, and competence as
    are prescribed by the rules of the exchange or (ii) such broker or
    dealer or person associated with such broker or dealer has engaged
    and there is a reasonable likelihood he may again engage in acts or
    practices inconsistent with just and equitable principles of trade.
    A national securities exchange may examine and verify the
    qualifications of an applicant to become a member and the natural
    persons associated with such an applicant in accordance with
    procedures established by the rules of the exchange.
      (B) A national securities exchange may bar a natural person from
    becoming a member or associated with a member, or condition the
    membership of a natural person or association of a natural person
    with a member, if such natural person (i) does not meet such
    standards of training, experience, and competence as are prescribed
    by the rules of the exchange or (ii) has engaged and there is a
    reasonable likelihood he may again engage in acts or practices
    inconsistent with just and equitable principles of trade. A
    national securities exchange may examine and verify the
    qualifications of an applicant to become a person associated with a
    member in accordance with procedures established by the rules of
    the exchange and require any person associated with a member, or
    any class of such persons, to be registered with the exchange in
    accordance with procedures so established.
      (C) A national securities exchange may bar any person from
    becoming associated with a member if such person does not agree (i)
    to supply the exchange with such information with respect to its
    relationship and dealings with the member as may be specified in
    the rules of the exchange and (ii) to permit the examination of its
    books and records to verify the accuracy of any information so
    supplied.
      (4) A national securities exchange may limit (A) the number of
    members of the exchange and (B) the number of members and
    designated representatives of members permitted to effect
    transactions on the floor of the exchange without the services of
    another person acting as broker: Provided, however, That no
    national securities exchange shall have the authority to decrease
    the number of memberships in such exchange, or the number of
    members and designated representatives of members permitted to
    effect transactions on the floor of such exchange without the
    services of another person acting as broker, below such number in
    effect on May 1, 1975, or the date such exchange was registered
    with the Commission, whichever is later: And provided further, That
    the Commission, in accordance with the provisions of section 78s(c)
    of this title, may amend the rules of any national securities
    exchange to increase (but not to decrease) or to remove any
    limitation on the number of memberships in such exchange or the
    number of members or designated representatives of members
    permitted to effect transactions on the floor of the exchange
    without the services of another person acting as broker, if the
    Commission finds that such limitation imposes a burden on
    competition not necessary or appropriate in furtherance of the
    purposes of this chapter.
    (d) Discipline of national securities exchange members and persons
      associated with members; summary proceedings
      (1) In any proceeding by a national securities exchange to
    determine whether a member or person associated with a member
    should be disciplined (other than a summary proceeding pursuant to
    paragraph (3) of this subsection), the exchange shall bring
    specific charges, notify such member or person of, and give him an
    opportunity to defend against, such charges, and keep a record. A
    determination by the exchange to impose a disciplinary sanction
    shall be supported by a statement setting forth - 
        (A) any act or practice in which such member or person
      associated with a member has been found to have engaged, or which
      such member or person has been found to have omitted;
        (B) the specific provision of this chapter, the rules or
      regulations thereunder, or the rules of the exchange which any
      such act or practice, or omission to act, is deemed to violate;
      and
        (C) the sanction imposed and the reasons therefor.

      (2) In any proceeding by a national securities exchange to
    determine whether a person shall be denied membership, barred from
    becoming associated with a member, or prohibited or limited with
    respect to access to services offered by the exchange or a member
    thereof (other than a summary proceeding pursuant to paragraph (3)
    of this subsection), the exchange shall notify such person of, and
    give him an opportunity to be heard upon, the specific grounds for
    denial, bar, or prohibition or limitation under consideration and
    keep a record. A determination by the exchange to deny membership,
    bar a person from becoming associated with a member, or prohibit or
    limit a person with respect to access to services offered by the
    exchange or a member thereof shall be supported by a statement
    setting forth the specific grounds on which the denial, bar, or
    prohibition or limitation is based.
      (3) A national securities exchange may summarily (A) suspend a
    member or person associated with a member who has been and is
    expelled or suspended from any self-regulatory organization or
    barred or suspended from being associated with a member of any self-
    regulatory organization, (B) suspend a member who is in such
    financial or operating difficulty that the exchange determines and
    so notifies the Commission that the member cannot be permitted to
    continue to do business as a member with safety to investors,
    creditors, other members, or the exchange, or (C) limit or prohibit
    any person with respect to access to services offered by the
    exchange if subparagraph (A) or (B) of this paragraph is applicable
    to such person or, in the case of a person who is not a member, if
    the exchange determines that such person does not meet the
    qualification requirements or other prerequisites for such access
    and such person cannot be permitted to continue to have such access
    with safety to investors, creditors, members, or the exchange. Any
    person aggrieved by any such summary action shall be promptly
    afforded an opportunity for a hearing by the exchange in accordance
    with the provisions of paragraph (1) or (2) of this subsection. The
    Commission, by order, may stay any such summary action on its own
    motion or upon application by any person aggrieved thereby, if the
    Commission determines summarily or after notice and opportunity for
    hearing (which hearing may consist solely of the submission of
    affidavits or presentation of oral arguments) that such stay is
    consistent with the public interest and the protection of
    investors.
    (e) Commissions, allowances, discounts, and other fees
      (1) On and after June 4, 1975, no national securities exchange
    may impose any schedule or fix rates of commissions, allowances,
    discounts, or other fees to be charged by its members: Provided,
    however, That until May 1, 1976, the preceding provisions of this
    paragraph shall not prohibit any such exchange from imposing or
    fixing any schedule of commissions, allowances, discounts, or other
    fees to be charged by its members for acting as broker on the floor
    of the exchange or as odd-lot dealer: And provided further, That
    the Commission, in accordance with the provisions of section 78s(b)
    of this title as modified by the provisions of paragraph (3) of
    this subsection, may - 
        (A) permit a national securities exchange, by rule, to impose a
      reasonable schedule or fix reasonable rates of commissions,
      allowances, discounts, or other fees to be charged by its members
      for effecting transactions on such exchange prior to November 1,
      1976, if the Commission finds that such schedule or fixed rates
      of commissions, allowances, discounts, or other fees are in the
      public interest; and
        (B) permit a national securities exchange, by rule, to impose a
      schedule or fix rates of commissions, allowances, discounts, or
      other fees to be charged by its members for effecting
      transactions on such exchange after November 1, 1976, if the
      Commission finds that such schedule or fixed rates of
      commissions, allowances, discounts, or other fees (i) are
      reasonable in relation to the costs of providing the service for
      which such fees are charged (and the Commission publishes the
      standards employed in adjudging reasonableness) and (ii) do not
      impose any burden on competition not necessary or appropriate in
      furtherance of the purposes of this chapter, taking into
      consideration the competitive effects of permitting such schedule
      or fixed rates weighed against the competitive effects of other
      lawful actions which the Commission is authorized to take under
      this chapter.

      (2) Notwithstanding the provisions of section 78s(c) of this
    title, the Commission, by rule, may abrogate any exchange rule
    which imposes a schedule or fixes rates of commissions, allowances,
    discounts, or other fees, if the Commission determines that such
    schedule or fixed rates are no longer reasonable, in the public
    interest, or necessary to accomplish the purposes of this chapter.
      (3)(A) Before approving or disapproving any proposed rule change
    submitted by a national securities exchange which would impose a
    schedule or fix rates of commissions, allowances, discounts, or
    other fees to be charged by its members for effecting transactions
    on such exchange, the Commission shall afford interested persons
    (i) an opportunity for oral presentation of data, views, and
    arguments and (ii) with respect to any such rule concerning
    transactions effected after November 1, 1976, if the Commission
    determines there are disputed issues of material fact, to present
    such rebuttal submissions and to conduct (or have conducted under
    subparagraph (B) of this paragraph) such cross-examination as the
    Commission determines to be appropriate and required for full
    disclosure and proper resolution of such disputed issues of
    material fact.
      (B) The Commission shall prescribe rules and make rulings
    concerning any proceeding in accordance with subparagraph (A) of
    this paragraph designed to avoid unnecessary costs or delay. Such
    rules or rulings may (i) impose reasonable time limits on each
    interested person's oral presentations, and (ii) require any cross-
    examination to which a person may be entitled under subparagraph
    (A) of this paragraph to be conducted by the Commission on behalf
    of that person in such manner as the Commission determines to be
    appropriate and required for full disclosure and proper resolution
    of disputed issues of material fact.
      (C)(i) If any class of persons, the members of which are entitled
    to conduct (or have conducted) cross-examination under
    subparagraphs (A) and (B) of this paragraph and which have, in the
    view of the Commission, the same or similar interests in the
    proceeding, cannot agree upon a single representative of such
    interests for purposes of cross-examination, the Commission may
    make rules and rulings specifying the manner in which such
    interests shall be represented and such cross-examination
    conducted.
      (ii) No member of any class of persons with respect to which the
    Commission has specified the manner in which its interests shall be
    represented pursuant to clause (i) of this subparagraph shall be
    denied, pursuant to such clause (i), the opportunity to conduct (or
    have conducted) cross-examination as to issues affecting his
    particular interests if he satisfies the Commission that he has
    made a reasonable and good faith effort to reach agreement upon
    group representation and there are substantial and relevant issues
    which would not be presented adequately by group representation.
      (D) A transcript shall be kept of any oral presentation and cross-
    examination.
      (E) In addition to the bases specified in section 78y(a) of this
    title, a reviewing Court may set aside an order of the Commission
    under section 78s(b) of this title approving an exchange rule
    imposing a schedule or fixing rates of commissions, allowances,
    discounts, or other fees, if the Court finds - 
        (1) a Commission determination under subparagraph (A) of this
      paragraph that an interested person is not entitled to conduct
      cross-examination or make rebuttal submissions, or
        (2) a Commission rule or ruling under subparagraph (B) of this
      paragraph limiting the petitioner's cross-examination or rebuttal
      submissions,

    has precluded full disclosure and proper resolution of disputed
    issues of material fact which were necessary for fair determination
    by the Commission.
    (f) Compliance of non-members with exchange rules
      The Commission, by rule or order, as it deems necessary or
    appropriate in the public interest and for the protection of
    investors, to maintain fair and orderly markets, or to assure equal
    regulation, may require - 
        (1) any person not a member or a designated representative of a
      member of a national securities exchange effecting transactions
      on such exchange without the services of another person acting as
      a broker, or
        (2) any broker or dealer not a member of a national securities
      exchange effecting transactions on such exchange on a regular
      basis,

    to comply with such rules of such exchange as the Commission may
    specify.
    (g) Notice registration of security futures product exchanges
      (1) Registration required
        An exchange that lists or trades security futures products may
      register as a national securities exchange solely for the
      purposes of trading security futures products if - 
          (A) the exchange is a board of trade, as that term is defined
        by the Commodity Exchange Act (7 U.S.C. 1a(2)) [7 U.S.C. 1 et
        seq.], that - 
            (i) has been designated a contract market by the Commodity
          Futures Trading Commission and such designation is not
          suspended by order of the Commodity Futures Trading
          Commission; or
            (ii) is registered as a derivative transaction execution
          facility under section 5a of the Commodity Exchange Act [7
          U.S.C. 7a] and such registration is not suspended by the
          Commodity Futures Trading Commission; and

          (B) such exchange does not serve as a market place for
        transactions in securities other than - 
            (i) security futures products; or
            (ii) futures on exempted securities or groups or indexes of
          securities or options thereon that have been authorized under
          section 2(a)(1)(C) of the Commodity Exchange Act [7 U.S.C.
          2(a)(1)(C)].
      (2) Registration by notice filing
        (A) Form and content
          An exchange required to register only because such exchange
        lists or trades security futures products may register for
        purposes of this section by filing with the Commission a
        written notice in such form as the Commission, by rule, may
        prescribe containing the rules of the exchange and such other
        information and documents concerning such exchange, comparable
        to the information and documents required for national
        securities exchanges under subsection (a) of this section, as
        the Commission, by rule, may prescribe as necessary or
        appropriate in the public interest or for the protection of
        investors. If such exchange has filed documents with the
        Commodity Futures Trading Commission, to the extent that such
        documents contain information satisfying the Commission's
        informational requirements, copies of such documents may be
        filed with the Commission in lieu of the required written
        notice.
        (B) Immediate effectiveness
          Such registration shall be effective contemporaneously with
        the submission of notice, in written or electronic form, to the
        Commission, except that such registration shall not be
        effective if such registration would be subject to suspension
        or revocation.
        (C) Termination
          Such registration shall be terminated immediately if any of
        the conditions for registration set forth in this subsection
        are no longer satisfied.
      (3) Public availability
        The Commission shall promptly publish in the Federal Register
      an acknowledgment of receipt of all notices the Commission
      receives under this subsection and shall make all such notices
      available to the public.
      (4) Exemption of exchanges from specified provisions
        (A) Transaction exemptions
          An exchange that is registered under paragraph (1) of this
        subsection shall be exempt from, and shall not be required to
        enforce compliance by its members with, and its members shall
        not, solely with respect to those transactions effected on such
        exchange in security futures products, be required to comply
        with, the following provisions of this chapter and the rules
        thereunder:
            (i) Subsections (b)(2), (b)(3), (b)(4), (b)(7), (b)(9),
          (c), (d), and (e) of this section.
            (ii) Section 78h of this title.
            (iii) Section 78k of this title.
            (iv) Subsections (d), (f), and (k) of section 78q of this
          title.
            (v) Subsections (a), (f), and (h) of section 78s of this
          title.
        (B) Rule change exemptions
          An exchange that registered under paragraph (1) of this
        subsection shall also be exempt from submitting proposed rule
        changes pursuant to section 78s(b) of this title, except that -
        
            (i) such exchange shall file proposed rule changes related
          to higher margin levels, fraud or manipulation,
          recordkeeping, reporting, listing standards, or decimal
          pricing for security futures products, sales practices for
          security futures products for persons who effect transactions
          in security futures products, or rules effectuating such
          exchange's obligation to enforce the securities laws pursuant
          to section 78s(b)(7) of this title;
            (ii) such exchange shall file pursuant to sections
          78s(b)(1) and 78s(b)(2) of this title proposed rule changes
          related to margin, except for changes resulting in higher
          margin levels; and
            (iii) such exchange shall file pursuant to section
          78s(b)(1) of this title proposed rule changes that have been
          abrogated by the Commission pursuant to section 78s(b)(7)(C)
          of this title.
      (5) Trading in security futures products
        (A) In general
          Subject to subparagraph (B), it shall be unlawful for any
        person to execute or trade a security futures product until the
        later of - 
            (i) 1 year after December 21, 2000; or
            (ii) such date that a futures association registered under
          section 17 of the Commodity Exchange Act [7 U.S.C. 21] has
          met the requirements set forth in section 78o-3(k)(2) of this
          title.
        (B) Principal-to-principal transactions
          Notwithstanding subparagraph (A), a person may execute or
        trade a security futures product transaction if - 
            (i) the transaction is entered into - 
              (I) on a principal-to-principal basis between parties
            trading for their own accounts or as described in section
            1a(12)(B)(ii) of the Commodity Exchange Act [7 U.S.C.
            1a(12)(B)(ii)]; and
              (II) only between eligible contract participants (as
            defined in subparagraphs (A), (B)(ii), and (C) of such
            section 1a(12) [7 U.S.C. 1a(12)(A), (B)(ii), (C)]) at the
            time at which the persons enter into the agreement,
            contract, or transaction; and

            (ii) the transaction is entered into on or after the later
          of - 
              (I) 8 months after December 21, 2000; or
              (II) such date that a futures association registered
            under section 17 of the Commodity Exchange Act [7 U.S.C.
            21] has met the requirements set forth in section 78o-
            3(k)(2) of this title.
    (h) Trading in security futures products
      (1) Trading on exchange or association required
        It shall be unlawful for any person to effect transactions in
      security futures products that are not listed on a national
      securities exchange or a national securities association
      registered pursuant to section 78o-3(a) of this title.
      (2) Listing standards required
        Except as otherwise provided in paragraph (7), a national
      securities exchange or a national securities association
      registered pursuant to section 78o-3(a) of this title may trade
      only security futures products that (A) conform with listing
      standards that such exchange or association files with the
      Commission under section 78s(b) of this title and (B) meet the
      criteria specified in section 2(a)(1)(D)(i) of the Commodity
      Exchange Act [7 U.S.C. 2(a)(1)(D)(i)].
      (3) Requirements for listing standards and conditions for trading
        Such listing standards shall - 
          (A) except as otherwise provided in a rule, regulation, or
        order issued pursuant to paragraph (4), require that any
        security underlying the security future, including each
        component security of a narrow-based security index, be
        registered pursuant to section 78l of this title;
          (B) require that if the security futures product is not cash
        settled, the market on which the security futures product is
        traded have arrangements in place with a registered clearing
        agency for the payment and delivery of the securities
        underlying the security futures product;
          (C) be no less restrictive than comparable listing standards
        for options traded on a national securities exchange or
        national securities association registered pursuant to section
        78o-3(a) of this title;
          (D) except as otherwise provided in a rule, regulation, or
        order issued pursuant to paragraph (4), require that the
        security future be based upon common stock and such other
        equity securities as the Commission and the Commodity Futures
        Trading Commission jointly determine appropriate;
          (E) require that the security futures product is cleared by a
        clearing agency that has in place provisions for linked and
        coordinated clearing with other clearing agencies that clear
        security futures products, which permits the security futures
        product to be purchased on one market and offset on another
        market that trades such product;
          (F) require that only a broker or dealer subject to
        suitability rules comparable to those of a national securities
        association registered pursuant to section 78o-3(a) of this
        title effect transactions in the security futures product;
          (G) require that the security futures product be subject to
        the prohibition against dual trading in section 4j of the
        Commodity Exchange Act (7 U.S.C. 6j) and the rules and
        regulations thereunder or the provisions of section 78k(a) of
        this title and the rules and regulations thereunder, except to
        the extent otherwise permitted under this chapter and the rules
        and regulations thereunder;
          (H) require that trading in the security futures product not
        be readily susceptible to manipulation of the price of such
        security futures product, nor to causing or being used in the
        manipulation of the price of any underlying security, option on
        such security, or option on a group or index including such
        securities;
          (I) require that procedures be in place for coordinated
        surveillance among the market on which the security futures
        product is traded, any market on which any security underlying
        the security futures product is traded, and other markets on
        which any related security is traded to detect manipulation and
        insider trading;
          (J) require that the market on which the security futures
        product is traded has in place audit trails necessary or
        appropriate to facilitate the coordinated surveillance required
        in subparagraph (I);
          (K) require that the market on which the security futures
        product is traded has in place procedures to coordinate trading
        halts between such market and any market on which any security
        underlying the security futures product is traded and other
        markets on which any related security is traded; and
          (L) require that the margin requirements for a security
        futures product comply with the regulations prescribed pursuant
        to section 78g(c)(2)(B) of this title, except that nothing in
        this subparagraph shall be construed to prevent a national
        securities exchange or national securities association from
        requiring higher margin levels for a security futures product
        when it deems such action to be necessary or appropriate.
      (4) Authority to modify certain listing standard requirements
        (A) Authority to modify
          The Commission and the Commodity Futures Trading Commission,
        by rule, regulation, or order, may jointly modify the listing
        standard requirements specified in subparagraph (A) or (D) of
        paragraph (3) to the extent such modification fosters the
        development of fair and orderly markets in security futures
        products, is necessary or appropriate in the public interest,
        and is consistent with the protection of investors.
        (B) Authority to grant exemptions
          The Commission and the Commodity Futures Trading Commission,
        by order, may jointly exempt any person from compliance with
        the listing standard requirement specified in subparagraph (E)
        of paragraph (3) to the extent such exemption fosters the
        development of fair and orderly markets in security futures
        products, is necessary or appropriate in the public interest,
        and is consistent with the protection of investors.
      (5) Requirements for other persons trading security future
        products
        It shall be unlawful for any person (other than a national
      securities exchange or a national securities association
      registered pursuant to section 78o-3(a) of this title) to
      constitute, maintain, or provide a marketplace or facilities for
      bringing together purchasers and sellers of security future
      products or to otherwise perform with respect to security future
      products the functions commonly performed by a stock exchange as
      that term is generally understood, unless a national securities
      association registered pursuant to section 78o-3(a) of this title
      or a national securities exchange of which such person is a
      member - 
          (A) has in place procedures for coordinated surveillance
        among such person, the market trading the securities underlying
        the security future products, and other markets trading related
        securities to detect manipulation and insider trading;
          (B) has rules to require audit trails necessary or
        appropriate to facilitate the coordinated surveillance required
        in subparagraph (A); and
          (C) has rules to require such person to coordinate trading
        halts with markets trading the securities underlying the
        security future products and other markets trading related
        securities.
      (6) Deferral of options on security futures trading
        No person shall offer to enter into, enter into, or confirm the
      execution of any put, call, straddle, option, or privilege on a
      security future, except that, after 3 years after December 21,
      2000, the Commission and the Commodity Futures Trading Commission
      may by order jointly determine to permit trading of puts, calls,
      straddles, options, or privileges on any security future
      authorized to be traded under the provisions of this chapter and
      the Commodity Exchange Act [7 U.S.C. 1 et seq.].
      (7) Deferral of linked and coordinated clearing
        (A) Notwithstanding paragraph (2), until the compliance date, a
      national securities exchange or national securities association
      registered pursuant to section 78o-3(a) of this title may trade a
      security futures product that does not - 
          (i) conform with any listing standard promulgated to meet the
        requirement specified in subparagraph (E) of paragraph (3); or
          (ii) meet the criterion specified in section
        2(a)(1)(D)(i)(IV) of the Commodity Exchange Act [7 U.S.C.
        2(a)(1)(D)(i)(IV)].

        (B) The Commission and the Commodity Futures Trading Commission
      shall jointly publish in the Federal Register a notice of the
      compliance date no later than 165 days before the compliance
      date.
        (C) For purposes of this paragraph, the term "compliance date"
      means the later of - 
          (i) 180 days after the end of the first full calendar month
        period in which the average aggregate comparable share volume
        for all security futures products based on single equity
        securities traded on all national securities exchanges, any
        national securities associations registered pursuant to section
        78o-3(a) of this title, and all other persons equals or exceeds
        10 percent of the average aggregate comparable share volume of
        options on single equity securities traded on all national
        securities exchanges and any national securities associations
        registered pursuant to section 78o-3(a) of this title; or
          (ii) 2 years after the date on which trading in any security
        futures product commences under this chapter.
    (i) Rules to avoid duplicative regulation of dual registrants
      Consistent with this chapter, each national securities exchange
    registered pursuant to subsection (a) of this section shall issue
    such rules as are necessary to avoid duplicative or conflicting
    rules applicable to any broker or dealer registered with the
    Commission pursuant to section 78o(b) of this title (except
    paragraph (11) thereof), that is also registered with the Commodity
    Futures Trading Commission pursuant to section 4f(a) of the
    Commodity Exchange Act [7 U.S.C. 6f(a)] (except paragraph (2)
    thereof), with respect to the application of - 
        (1) rules of such national securities exchange of the type
      specified in section 78o(c)(3)(B) of this title involving
      security futures products; and
        (2) similar rules of national securities exchanges registered
      pursuant to subsection (g) of this section and national
      securities associations registered pursuant to section 78o-3(k)
      of this title involving security futures products.
    (j) Procedures and rules for security future products
      A national securities exchange registered pursuant to subsection
    (a) of this section shall implement the procedures specified in
    subsection (h)(5)(A) of this section and adopt the rules specified
    in subparagraphs (B) and (C) of subsection (h)(5) of this section
    not later than 8 months after the date of receipt of a request from
    an alternative trading system for such implementation and rules.
    (k) Rules relating to security futures products traded on foreign
      boards of trade
      (1) To the extent necessary or appropriate in the public
    interest, to promote fair competition, and consistent with the
    promotion of market efficiency, innovation, and expansion of
    investment opportunities, the protection of investors, and the
    maintenance of fair and orderly markets, the Commission and the
    Commodity Futures Trading Commission shall jointly issue such
    rules, regulations, or orders as are necessary and appropriate to
    permit the offer and sale of a security futures product traded on
    or subject to the rules of a foreign board of trade to United
    States persons.
      (2) The rules, regulations, or orders adopted under paragraph (1)
    shall take into account, as appropriate, the nature and size of the
    markets that the securities underlying the security futures product
    reflect.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 6, 48 Stat. 885; Pub. L. 94-
    29, Sec. 4, June 4, 1975, 89 Stat. 104; Pub. L. 100-181, title
    III, Secs. 309-312, Dec. 4, 1987, 101 Stat. 1255; Pub. L. 103-202,
    title III, Sec. 303(b), Dec. 17, 1993, 107 Stat. 2365; Pub. L. 106-
    554, Sec. 1(a)(5) [title II, Secs. 202(a), 206(a), (i), (k)(2),
    (l)], Dec. 21, 2000, 114 Stat. 2763, 2763A-416, 2763A-426, 2763A-
    433, 2763A-434.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (b) to (e), (g)(4)(A),
    (h)(3)(G), (7)(C)(ii), and (i), was in the original "this title".
    This chapter, referred to in subsec. (h)(6), was in the original
    "this Act". See References in Text note set out under section 78a
    of this title.
      The Commodity Exchange Act, referred to in subsecs. (g)(1)(A) and
    (h)(6), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended,
    which is classified generally to chapter 1 (Sec. 1 et seq.) of
    Title 7, Agriculture. For complete classification of this Act to
    the Code, see section 1 of Title 7 and Tables.


-MISC1-
                                AMENDMENTS                            
      2000 - Subsec. (g). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    202(a)], added subsec. (g).
      Subsec. (h). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(a)], added subsec. (h).
      Subsec. (i). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(i)], added subsec. (i).
      Subsec. (j). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(k)(2)], added subsec. (j).
      Subsec. (k). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(l)], added subsec. (k).
      1993 - Subsec. (b)(9). Pub. L. 103-202 added par. (9).
      1987 - Subsec. (c)(2). Pub. L. 100-181, Sec. 309, substituted
    "protection of investors shall" for "protection shall".
      Subsec. (c)(3)(A). Pub. L. 100-181, Sec. 310, substituted
    "associated" for "association".
      Subsec. (c)(4). Pub. L. 100-181, Sec. 311, substituted "may limit
    (A)" for "may (A) limit".
      Subsec. (e)(1). Pub. L. 100-181, Sec. 312(1), substituted
    "paragraph (3) of this subsection" for "paragraph (4) of this
    section".
      Subsec. (e)(3), (4). Pub. L. 100-181, Sec. 312(2), (3),
    redesignated par. (4) as (3) and, in subpar. (E), substituted
    "fixing" for "fixes" in introductory provisions, "subparagraph (A)
    of this paragraph" for "paragraph (4)(A) of this subsection" in cl.
    (1), and "subparagraph (B) of this paragraph" for "paragraph (4)(B)
    of this subsection" in cl. (2), and struck out former par. (3)
    which read as follows: "Until December 31, 1976, the Commission, on
    a regular basis, shall file with the Speaker of the House and the
    President of the Senate information concerning the effect on the
    public interest, protection of investors, and maintenance of fair
    and orderly markets of the absence of any schedule or fixed rates
    of commissions, allowances, discounts, or other fees to be charged
    by members of any national securities exchange for effecting
    transactions on such exchange."
      1975 - Pub. L. 94-29 restructured the entire section and, in
    addition, authorized the Commission to require an exchange to file
    such documents and information as it deems necessary or appropriate
    in the public interest or for the protection of investors and to
    prescribe the form and substance of an exchange's application for
    registration, expanded to eight the number of explicit statutory
    requirements that must be satisfied before an exchange may be
    registered as a national securities exchange, set forth the
    authority of a national securities exchange to admit or deny
    persons membership or association with members, prescribed exchange
    procedures for instituting disciplinary actions, denying
    membership, and summarily suspending members or persons associated
    with members, specified the authority of national securities
    exchanges to impose schedules or fix rates of commissions,
    allowances, discounts, or other fees to be charged by its members
    for transacting business on the exchange, and empowered the
    Commission to regulate any broker or dealer who effects
    transactions on an exchange on a regular basis but who is not a
    member of that exchange and any person who effects transactions on
    an exchange without the services of another person acting as
    broker.

                     EFFECTIVE DATE OF 1993 AMENDMENT                 
      Section 304 of title III of Pub. L. 103-202 provided that:
      "(a) Effective Date. - 
        "(1) In general. - The amendments made by section 303 [amending
      this section and section 78o-3 of this title] shall become
      effective 12 months after the date of enactment of this Act [Dec.
      17, 1993].
        "(2) Rulemaking authority. - Notwithstanding paragraph (1), the
      authority of the Securities and Exchange Commission, a registered
      securities association, and a national securities exchange to
      commence rulemaking proceedings for the purpose of issuing rules
      pursuant to the amendments made by section 303 is effective on
      the date of enactment of this Act.
        "(3) Review of filings prior to effective date. - Prior to the
      effective date of regulations promulgated pursuant to this title
      [amending this section and sections 78n and 78o-3 of this title
      and enacting provisions set out as notes under sections 78a and
      78n of this title], the Securities and Exchange Commission shall
      continue to review and declare effective registration statements
      and amendments thereto relating to limited partnership rollup
      transactions in accordance with applicable regulations then in
      effect.
      "(b) Effect on Existing Authority. - The amendments made by this
    title [amending this section and sections 78n and 78o-3 of this
    title] shall not limit the authority of the Securities and Exchange
    Commission, a registered securities association, or a national
    securities exchange under any provision of the Securities Exchange
    Act of 1934 [15 U.S.C. 78a et seq.], or preclude the Commission or
    such association or exchange from imposing, under any other such
    provision, a remedy or procedure required to be imposed under such
    amendments."

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, except for
    amendment of subsecs. (a) through (d) by Pub. L. 94-29 to be
    effective 180 days after June 4, 1975, with provisions of subsecs.
    (b)(2) and (c)(6), as amended by Pub. L. 94-29, or rules or
    regulations thereunder, not to apply in a way so as to deprive any
    person of membership in any national securities exchange (or its
    successor) of which such person was, on June 4, 1975, a member or a
    member firm as defined in the constitution of such exchange, or so
    as to deny membership in any such exchange (or its successor) to a
    natural person who is or becomes associated with such member or
    member firm, see section 31(a) of Pub. L. 94-29, set out as a note
    under section 78b of this title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.


-MISC2-
    CHANGES IN ORGANIZATION AND RULES OF NATIONAL SECURITIES EXCHANGES
                  AND REGISTERED SECURITIES ASSOCIATIONS
      Section 31(b) of Pub. L. 94-29 provided that: "If it appears to
    the Commission at any time within one year of the effective date of
    any amendment made by this Act [see Short Title of 1975 Amendment
    note under section 78a of this title] to the Securities Exchange
    Act of 1934 that the organization or rules of any national
    securities exchange or registered securities association registered
    with the Commission on the date of enactment of this Act [June 4,
    1975] do not comply with such Act as amended, the Commission shall
    so notify such exchange or association in writing, specifying the
    respects in which the exchange or association is not in compliance
    with such Act. On and after the one hundred eightieth day following
    the date of receipt of such notice by a national securities
    exchange or registered securities association, the Commission,
    without regard to the provisions of section 19(h) of the Securities
    Exchange Act of 1934 [section 78s(h) of this title], as amended by
    this Act, is authorized by order, to suspend the registration of
    any such exchange or association or impose limitations on the
    activities, functions, and operations of any such exchange or
    association, if the Commission finds, after notice and opportunity
    for hearing, that the organization or rules of such exchange or
    association do not comply with such Act. Any such suspension or
    limitation shall continue in effect until the Commission, by order,
    declares that such exchange or association is in compliance with
    such requirements."

-End-



-CITE-
    15 USC Sec. 78g                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78g. Margin requirements

-STATUTE-
    (a) Rules and regulations for extension of credit; standard for
      initial extension; undermargined accounts
      For the purpose of preventing the excessive use of credit for the
    purchase or carrying of securities, the Board of Governors of the
    Federal Reserve System shall, prior to October 1, 1934, and from
    time to time thereafter, prescribe rules and regulations with
    respect to the amount of credit that may be initially extended and
    subsequently maintained on any security (other than an exempted
    security or a security futures product). For the initial extension
    of credit, such rules and regulations shall be based upon the
    following standard: An amount not greater than whichever is the
    higher of - 
        (1) 55 per centum of the current market price of the security,
      or
        (2) 100 per centum of the lowest market price of the security
      during the preceding thirty-six calendar months, but not more
      than 75 per centum of the current market price.

    Such rules and regulations may make appropriate provision with
    respect to the carrying of undermargined accounts for limited
    periods and under specified conditions; the withdrawal of funds or
    securities; the substitution or additional purchases of securities;
    the transfer of accounts from one lender to another; special or
    different margin requirements for delayed deliveries, short sales,
    arbitrage transactions, and securities to which paragraph (2) of
    this subsection does not apply; the bases and the methods to be
    used in calculating loans, and margins and market prices; and
    similar administrative adjustments and details. For the purposes of
    paragraph (2) of this subsection, until July 1, 1936, the lowest
    price at which a security has sold on or after July 1, 1933, shall
    be considered as the lowest price at which such security has sold
    during the preceding thirty-six calendar months.
    (b) Lower and higher margin requirements
      Notwithstanding the provisions of subsection (a) of this section,
    the Board of Governors of the Federal Reserve System, may, from
    time to time, with respect to all or specified securities or
    transactions, or classes of securities, or classes of transactions,
    by such rules and regulations (1) prescribe such lower margin
    requirements for the initial extension or maintenance of credit as
    it deems necessary or appropriate for the accommodation of commerce
    and industry, having due regard to the general credit situation of
    the country, and (2) prescribe such higher margin requirements for
    the initial extension or maintenance of credit as it may deem
    necessary or appropriate to prevent the excessive use of credit to
    finance transactions in securities.
    (c) Unlawful credit extension to customers
      (1) Prohibition
        It shall be unlawful for any member of a national securities
      exchange or any broker or dealer, directly or indirectly, to
      extend or maintain credit or arrange for the extension or
      maintenance of credit to or for any customer - 
          (A) on any security (other than an exempted security), except
        as provided in paragraph (2), in contravention of the rules and
        regulations which the Board of Governors of the Federal Reserve
        System (hereafter in this section referred to as the "Board")
        shall prescribe under subsections (a) and (b) of this section;
        and
          (B) without collateral or on any collateral other than
        securities, except in accordance with such rules and
        regulations as the Board may prescribe - 
            (i) to permit under specified conditions and for a limited
          period any such member, broker, or dealer to maintain a
          credit initially extended in conformity with the rules and
          regulations of the Board; and
            (ii) to permit the extension or maintenance of credit in
          cases where the extension or maintenance of credit is not for
          the purpose of purchasing or carrying securities or of
          evading or circumventing the provisions of subparagraph (A).
      (2) Margin regulations
        (A) Compliance with margin rules required
          It shall be unlawful for any broker, dealer, or member of a
        national securities exchange to, directly or indirectly, extend
        or maintain credit to or for, or collect margin from any
        customer on, any security futures product unless such
        activities comply with the regulations - 
            (i) which the Board shall prescribe pursuant to
          subparagraph (B); or
            (ii) if the Board determines to delegate the authority to
          prescribe such regulations, which the Commission and the
          Commodity Futures Trading Commission shall jointly prescribe
          pursuant to subparagraph (B).

        If the Board delegates the authority to prescribe such
        regulations under clause (ii) and the Commission and the
        Commodity Futures Trading Commission have not jointly
        prescribed such regulations within a reasonable period of time
        after the date of such delegation, the Board shall prescribe
        such regulations pursuant to subparagraph (B).
        (B) Criteria for issuance of rules
          The Board shall prescribe, or, if the authority is delegated
        pursuant to subparagraph (A)(ii), the Commission and the
        Commodity Futures Trading Commission shall jointly prescribe,
        such regulations to establish margin requirements, including
        the establishment of levels of margin (initial and maintenance)
        for security futures products under such terms, and at such
        levels, as the Board deems appropriate, or as the Commission
        and the Commodity Futures Trading Commission jointly deem
        appropriate - 
            (i) to preserve the financial integrity of markets trading
          security futures products;
            (ii) to prevent systemic risk;
            (iii) to require that - 
              (I) the margin requirements for a security future product
            be consistent with the margin requirements for comparable
            option contracts traded on any exchange registered pursuant
            to section 78f(a) of this title; and
              (II) initial and maintenance margin levels for a security
            future product not be lower than the lowest level of
            margin, exclusive of premium, required for any comparable
            option contract traded on any exchange registered pursuant
            to section 78f(a) of this title, other than an option on a
            security future;

          except that nothing in this subparagraph shall be construed
          to prevent a national securities exchange or national
          securities association from requiring higher margin levels
          for a security future product when it deems such action to be
          necessary or appropriate; and
            (iv) to ensure that the margin requirements (other than
          levels of margin), including the type, form, and use of
          collateral for security futures products, are and remain
          consistent with the requirements established by the Board,
          pursuant to subparagraphs (A) and (B) of paragraph (1).
      (3) Exception
        This subsection and the rules and regulations issued under this
      subsection shall not apply to any credit extended, maintained, or
      arranged by a member of a national securities exchange or a
      broker or dealer to or for a member of a national securities
      exchange or a registered broker or dealer - 
          (A) a substantial portion of whose business consists of
        transactions with persons other than brokers or dealers; or
          (B) to finance its activities as a market maker or an
        underwriter;

      except that the Board may impose such rules and regulations, in
      whole or in part, on any credit otherwise exempted by this
      paragraph if the Board determines that such action is necessary
      or appropriate in the public interest or for the protection of
      investors.
    (d) Unlawful credit extension in violation of rules and
      regulations; exceptions to application of rules, etc.
      (1) Prohibition
        It shall be unlawful for any person not subject to subsection
      (c) of this section to extend or maintain credit or to arrange
      for the extension or maintenance of credit for the purpose of
      purchasing or carrying any security, in contravention of such
      rules and regulations as the Board shall prescribe to prevent the
      excessive use of credit for the purchasing or carrying of or
      trading in securities in circumvention of the other provisions of
      this section. Such rules and regulations may impose upon all
      loans made for the purpose of purchasing or carrying securities
      limitations similar to those imposed upon members, brokers, or
      dealers by subsection (c) of this section and the rules and
      regulations thereunder.
      (2) Exceptions
        This subsection and the rules and regulations issued under this
      subsection shall not apply to any credit extended, maintained, or
      arranged - 
          (A) by a person not in the ordinary course of business;
          (B) on an exempted security;
          (C) to or for a member of a national securities exchange or a
        registered broker or dealer - 
            (i) a substantial portion of whose business consists of
          transactions with persons other than brokers or dealers; or
            (ii) to finance its activities as a market maker or an
          underwriter;

          (D) by a bank on a security other than an equity security; or
          (E) as the Board shall, by such rules, regulations, or orders
        as it may deem necessary or appropriate in the public interest
        or for the protection of investors, exempt, either
        unconditionally or upon specified terms and conditions or for
        stated periods, from the operation of this subsection and the
        rules and regulations thereunder.
      (3) Board authority
        The Board may impose such rules and regulations, in whole or in
      part, on any credit otherwise exempted by subparagraph (C) if it
      determines that such action is necessary or appropriate in the
      public interest or for the protection of investors.
    (e) Effective date of this section and rules and regulations
      The provisions of this section or the rules and regulations
    thereunder shall not apply on or before July 1, 1937, to any loan
    or extension of credit made prior to June 6, 1934, or to the
    maintenance, renewal, or extension of any such loan or credit,
    except to the extent that the Board of Governors of the Federal
    Reserve System may by rules and regulations prescribe as necessary
    to prevent the circumvention of the provisions of this section or
    the rules and regulations thereunder by means of withdrawals of
    funds or securities, substitutions of securities, or additional
    purchases or by any other device.
    (f) Unlawful receipt of credit; exemptions
      (1) It is unlawful for any United States person, or any foreign
    person controlled by a United States person or acting on behalf of
    or in conjunction with such person, to obtain, receive, or enjoy
    the beneficial use of a loan or other extension of credit from any
    lender (without regard to whether the lender's office or place of
    business is in a State or the transaction occurred in whole or in
    part within a State) for the purpose of (A) purchasing or carrying
    United States securities, or (B) purchasing or carrying within the
    United States of any other securities, if, under this section or
    rules and regulations prescribed thereunder, the loan or other
    credit transaction is prohibited or would be prohibited if it had
    been made or the transaction had otherwise occurred in a lender's
    office or other place of business in a State.
      (2) For the purposes of this subsection - 
        (A) The term "United States person" includes a person which is
      organized or exists under the laws of any State or, in the case
      of a natural person, a citizen or resident of the United States;
      a domestic estate; or a trust in which one or more of the
      foregoing persons has a cumulative direct or indirect beneficial
      interest in excess of 50 per centum of the value of the trust.
        (B) The term "United States security" means a security (other
      than an exempted security) issued by a person incorporated under
      the laws of any State, or whose principal place of business is
      within a State.
        (C) The term "foreign person controlled by a United States
      person" includes any noncorporate entity in which United States
      persons directly or indirectly have more than a 50 per centum
      beneficial interest, and any corporation in which one or more
      United States persons, directly or indirectly, own stock
      possessing more than 50 per centum of the total combined voting
      power of all classes of stock entitled to vote, or more than 50
      per centum of the total value of shares of all classes of stock.

      (3) The Board of Governors of the Federal Reserve System may, in
    its discretion and with due regard for the purposes of this
    section, by rule or regulation exempt any class of United States
    persons or foreign persons controlled by a United States person
    from the application of this subsection.
    (g) Effect of bona fide agreement for delayed delivery of mortgage
      related security
      Subject to such rules and regulations as the Board of Governors
    of the Federal Reserve System may adopt in the public interest and
    for the protection of investors, no member of a national securities
    exchange or broker or dealer shall be deemed to have extended or
    maintained credit or arranged for the extension or maintenance of
    credit for the purpose of purchasing a security, within the meaning
    of this section, by reason of a bona fide agreement for delayed
    delivery of a mortgage related security or a small business related
    security against full payment of the purchase price thereof upon
    such delivery within one hundred and eighty days after the
    purchase, or within such shorter period as the Board of Governors
    of the Federal Reserve System may prescribe by rule or regulation.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 7, 48 Stat. 886; Aug. 23,
    1935, ch. 614, Sec. 203(a), 49 Stat. 704; Pub. L. 90-437, July 29,
    1968, 82 Stat. 452; Pub. L. 91-508, title III, Sec. 301(a), Oct.
    26, 1970, 84 Stat. 1124; Pub. L. 98-440, title I, Sec. 102, Oct. 3,
    1984, 98 Stat. 1690; Pub. L. 103-325, title II, Sec. 203, Sept. 23,
    1994, 108 Stat. 2199; Pub. L. 104-290, title I, Sec. 104(a), Oct.
    11, 1996, 110 Stat. 3422; Pub. L. 105-353, title III, Sec.
    301(b)(5), (6), Nov. 3, 1998, 112 Stat. 3236; Pub. L. 106-554, Sec.
    1(a)(5) [title II, Sec. 206(b)], Dec. 21, 2000, 114 Stat. 2763,
    2763A-429.)


-MISC1-
                                AMENDMENTS                            
      2000 - Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(b)(1)], inserted "or a security futures product" after
    "exempted security" in introductory provisions.
      Subsec. (c)(1)(A). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(b)(2)], inserted "except as provided in paragraph (2)," after
    "security),".
      Subsec. (c)(2), (3). Pub. L. 106-554, Sec. 1(a)(5) [title II,
    Sec. 206(b)(3), (4)], added par. (2) and redesignated former par.
    (2) as (3).
      1998 - Subsecs. (a), (b). Pub. L. 105-353, Sec. 301(b)(5),
    substituted "Board of Governors of the Federal Reserve System" for
    "Federal Reserve Board".
      Subsec. (d). Pub. L. 105-353, Sec. 301(b)(6), substituted
    "exceptions" for "exception" in heading.
      1996 - Subsec. (c). Pub. L. 104-290, Sec. 104(a)(1), amended
    heading and text of subsec. (c) generally. Prior to amendment, text
    read as follows: "It shall be unlawful for any member of a national
    securities exchange or any broker or dealer, directly or
    indirectly, to extend or maintain credit or arrange for the
    extension or maintenance of credit to or for any customer - 
        "(1) on any security (other than an exempted security), in
      contravention of the rules and regulations which the Board of
      Governors of the Federal Reserve System shall prescribe under
      subsections (a) and (b) of this section;
        "(2) without collateral or on any collateral other than
      securities, except in accordance with such rules and regulations
      as the Board of Governors of the Federal Reserve System may
      prescribe (A) to permit under specified conditions and for a
      limited period any such member, broker, or dealer to maintain a
      credit initially extended in conformity with the rules and
      regulations of the Board of Governors of the Federal Reserve
      System, and (B) to permit the extension or maintenance of credit
      in cases where the extension or maintenance of credit is not for
      the purpose of purchasing or carrying securities or of evading or
      circumventing the provisions of paragraph (1) of this
      subsection."
      Subsec. (d). Pub. L. 104-290, Sec. 104(a)(2), amended heading and
    text of subsec. (d) generally. Prior to amendment, text read as
    follows: "It shall be unlawful for any person not subject to
    subsection (c) of this section to extend or maintain credit or to
    arrange for the extension or maintenance of credit for the purpose
    of purchasing or carrying any security, in contravention of such
    rules and regulations as the Board of Governors of the Federal
    Reserve System shall prescribe to prevent the excessive use of
    credit for the purchasing or carrying of or trading in securities
    in circumvention of the other provisions of this section. Such
    rules and regulations may impose upon all loans made for the
    purpose of purchasing or carrying securities limitations similar to
    those imposed upon members, brokers, or dealers by subsection (c)
    of this section and the rules and regulations thereunder. This
    subsection and the rules and regulations thereunder shall not apply
    (A) to a loan made by a person not in the ordinary course of his
    business, (B) to a loan on an exempted security, (C) to a loan to a
    dealer to aid in the financing of the distribution of securities to
    customers not through the medium of a national securities exchange,
    (D) to a loan by a bank on a security other than an equity
    security, or (E) to such other loans as the Board of Governors of
    the Federal Reserve System shall, by such rules and regulations as
    it may deem necessary or appropriate in the public interest or for
    the protection of investors, exempt, either unconditionally or upon
    specified terms and conditions or for stated periods, from the
    operation of this subsection and the rules and regulations
    thereunder."
      1994 - Subsec. (g). Pub. L. 103-325 inserted "or a small business
    related security" after "mortgage related security".
      1984 - Subsec. (g). Pub. L. 98-440 added subsec. (g).
      1970 - Subsec. (f). Pub. L. 91-508 added subsec. (f).
      1968 - Subsec. (a). Pub. L. 90-437, Sec. 1(1), struck out
    "registered on a national securities exchange" after "(other than
    an exempted security)".
      Subsec. (c). Pub. L. 90-437, Sec. 1(2), struck out "who transacts
    a business in securities through the medium of any such member"
    after "any broker or dealer", in par. (1) struck out "registered on
    a national securities exchange" after "(other than an exempted
    security)", and in par. (2) substituted "other than securities" for
    "other than exempted securities and/or securities registered upon a
    national securities exchange".
      Subsec. (d). Pub. L. 90-437, Sec. 1(3), struck out "registered on
    a national securities exchange" after "the purpose of purchasing or
    carrying any security", and "registered on national securities
    exchanges" after "the purpose of purchasing or carrying
    securities".

-CHANGE-
                              CHANGE OF NAME                          
      Act Aug. 23, 1935, in subsec. (e), substituted "Board of
    Governors of the Federal Reserve System" for "Federal Reserve
    Board".


-MISC2-
                     EFFECTIVE DATE OF 1970 AMENDMENT                 
      Amendment by Pub. L. 91-508 effective on first day of seventh
    calendar month which begins after Oct. 26, 1970, except as
    otherwise provided in section 401(c) of Pub. L. 91-508, see section
    401(a) of Pub. L. 91-508, set out as a note under section 1951 of
    Title 12, Banks and Banking.
      Section 401(c) of Pub. L. 91-508 provided that: "The Board of
    Governors of the Federal Reserve System may by regulation provide
    that the amendment made by title III [amending this section] shall
    be effective on any date not earlier than the publication of the
    regulation in the Federal Register and not later than the first day
    of the thirteenth calendar month which begins after the date of
    enactment [Oct. 26, 1970]."

                     VALIDITY OF RULES AND REGULATIONS                 
      Section 301(b) of Pub. L. 91-508 provided that: "The amendment
    made by subsection (a) of this section [amending this section] does
    not affect the continuing validity of any rule or regulation under
    section 7 of the Securities Exchange Act of 1934 [this section] in
    effect prior to the effective date of the amendment."

-End-



-CITE-
    15 USC Sec. 78h                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78h. Restrictions on borrowing and lending by members,
      brokers, and dealers

-STATUTE-
      It shall be unlawful for any registered broker or dealer, member
    of a national securities exchange, or broker or dealer who
    transacts a business in securities through the medium of any member
    of a national securities exchange, directly or indirectly - 
      (a) In contravention of such rules and regulations as the
    Commission shall prescribe for the protection of investors to
    hypothecate or arrange for the hypothecation of any securities
    carried for the account of any customer under circumstances (1)
    that will permit the commingling of his securities without his
    written consent with the securities of any other customer, (2) that
    will permit such securities to be commingled with the securities of
    any person other than a bona fide customer, or (3) that will permit
    such securities to be hypothecated, or subjected to any lien or
    claim of the pledgee, for a sum in excess of the aggregate
    indebtedness of such customers in respect of such securities.
      (b) To lend or arrange for the lending of any securities carried
    for the account of any customer without the written consent of such
    customer or in contravention of such rules and regulations as the
    Commission shall prescribe for the protection of investors.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 8, 48 Stat. 888; Aug. 23,
    1935, ch. 614, Sec. 203(a), 49 Stat. 704; Pub. L. 94-29, Sec. 5,
    June 4, 1975, 89 Stat. 109; Pub. L. 98-440, title I, Sec. 103, Oct.
    3, 1984, 98 Stat. 1690; Pub. L. 103-325, title II, Sec. 204, Sept.
    23, 1994, 108 Stat. 2199; Pub. L. 104-290, title I, Sec. 104(b),
    Oct. 11, 1996, 110 Stat. 3423.)


-MISC1-
                                AMENDMENTS                            
      1996 - Pub. L. 104-290 redesignated subsecs. (b) and (c) as (a)
    and (b), respectively, and struck out former subsec. (a) which
    related to borrowing in ordinary course of business as broker or
    dealer on any security, except exempted security, registered on
    national securities exchange.
      1994 - Subsec. (a). Pub. L. 103-325 inserted "or a small business
    related security" after "mortgage related security" in last
    sentence.
      1984 - Subsec. (a). Pub. L. 98-440 inserted provision that no
    person shall be deemed to have borrowed within the ordinary course
    of business, within the meaning of this subsection, by reason of a
    bona fide agreement for delayed delivery of a mortgage related
    security under certain conditions.
      1975 - Pub. L. 94-29, Sec. 5(1), substituted "any registered
    broker or dealer, member of a national securities exchange, or
    broker or dealer who transacts a business in securities through the
    medium of any member of a national securities exchange" for "any
    member of a national securities exchange, or any broker or dealer
    who transacts a business in securities through the medium of any
    such member" in provisions preceding subsec. (a).
      Subsecs. (b) to (d). Pub. L. 94-29, Sec. 5(2), redesignated
    subsecs. (c) and (d) as (b) and (c), respectively, and in subsec.
    (c) as so redesignated inserted "or in contravention of such rules
    and regulations as the Commissioner shall prescribe for the
    protection of investors" after "written consent of such customer".
    Former subsec. (b), which covered the maximum allowable aggregate
    indebtedness of brokers, was struck out.

-CHANGE-
                              CHANGE OF NAME                          
      Act Aug. 23, 1935, substituted "Board of Governors of the Federal
    Reserve System" for "Federal Reserve Board".


-MISC2-
                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78i                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78i. Manipulation of security prices

-STATUTE-
    (a) Transactions relating to purchase or sale of security
      It shall be unlawful for any person, directly or indirectly, by
    the use of the mails or any means or instrumentality of interstate
    commerce, or of any facility of any national securities exchange,
    or for any member of a national securities exchange - 
        (1) For the purpose of creating a false or misleading
      appearance of active trading in any security registered on a
      national securities exchange, or a false or misleading appearance
      with respect to the market for any such security, (A) to effect
      any transaction in such security which involves no change in the
      beneficial ownership thereof, or (B) to enter an order or orders
      for the purchase of such security with the knowledge that an
      order or orders of substantially the same size, at substantially
      the same time, and at substantially the same price, for the sale
      of any such security, has been or will be entered by or for the
      same or different parties, or (C) to enter any order or orders
      for the sale of any such security with the knowledge that an
      order or orders of substantially the same size, at substantially
      the same time, and at substantially the same price, for the
      purchase of such security, has been or will be entered by or for
      the same or different parties.
        (2) To effect, alone or with one or more other persons, a
      series of transactions in any security registered on a national
      securities exchange or in connection with any security-based swap
      agreement (as defined in section 206B of the Gramm-Leach-Bliley
      Act) with respect to such security creating actual or apparent
      active trading in such security, or raising or depressing the
      price of such security, for the purpose of inducing the purchase
      or sale of such security by others.
        (3) If a dealer or broker, or other person selling or offering
      for sale or purchasing or offering to purchase the security or a
      security-based swap agreement (as defined in section 206B of the
      Gramm-Leach-Bliley Act) with respect to such security, to induce
      the purchase or sale of any security registered on a national
      securities exchange or any security-based swap agreement (as
      defined in section 206B of the Gramm-Leach-Bliley Act) with
      respect to such security by the circulation or dissemination in
      the ordinary course of business of information to the effect that
      the price of any such security will or is likely to rise or fall
      because of market operations of any one or more persons conducted
      for the purpose of raising or depressing the price of such
      security.
        (4) If a dealer or broker, or the person selling or offering
      for sale or purchasing or offering to purchase the security or a
      security-based swap agreement (as defined in section 206B of the
      Gramm-Leach-Bliley Act) with respect to such security, to make,
      regarding any security registered on a national securities
      exchange or any security-based swap agreement (as defined in
      section 206B of the Gramm-Leach-Bliley Act) with respect to such
      security, for the purpose of inducing the purchase or sale of
      such security or such security-based swap agreement, 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, and which he knew or had reasonable
      ground to believe was so false or misleading.
        (5) For a consideration, received directly or indirectly from a
      dealer or broker, or other person selling or offering for sale or
      purchasing or offering to purchase the security or a security-
      based swap agreement (as defined in section 206B of the Gramm-
      Leach-Bliley Act) with respect to such security, to induce the
      purchase of any security registered on a national securities
      exchange or any security-based swap agreement (as defined in
      section 206B of the Gramm-Leach-Bliley Act) with respect to such
      security by the circulation or dissemination of information to
      the effect that the price of any such security will or is likely
      to rise or fall because of the market operations of any one or
      more persons conducted for the purpose of raising or depressing
      the price of such security.
        (6) To effect either alone or with one or more other persons
      any series of transactions for the purchase and/or sale of any
      security registered on a national securities exchange for the
      purpose of pegging, fixing, or stabilizing the price of such
      security in contravention of such rules and regulations as the
      Commission may prescribe as necessary or appropriate in the
      public interest or for the protection of investors.
    (b) Transactions relating to puts, calls, straddles, or options
      It shall be unlawful for any person to effect, by use of any
    facility of a national securities exchange, in contravention of
    such rules and regulations as the Commission may prescribe as
    necessary or appropriate in the public interest or for the
    protection of investors - 
        (1) any transaction in connection with any security whereby any
      party to such transaction acquires (A) any put, call, straddle,
      or other option or privilege of buying the security from or
      selling the security to another without being bound to do so; or
      (B) any security futures product on the security; or
        (2) any transaction in connection with any security with
      relation to which he has, directly or indirectly, any interest in
      any (A) such put, call, straddle, option, or privilege; or (B)
      such security futures product; or
        (3) any transaction in any security for the account of any
      person who he has reason to believe has, and who actually has,
      directly or indirectly, any interest in any (A) such put, call,
      straddle, option, or privilege; or (B) such security futures
      product with relation to such security.
    (c) Endorsement or guarantee of puts, calls, straddles, or options
      It shall be unlawful for any member of a national securities
    exchange directly or indirectly to endorse or guarantee the
    performance of any put, call, straddle, option, or privilege in
    relation to any security registered on a national securities
    exchange, in contravention of such rules and regulations as the
    Commission may prescribe as necessary or appropriate in the public
    interest or for the protection of investors.
    (d) Registered warrant, right, or convertible security not included
      in "put", "call", "straddle", or "option"
      The terms "put", "call", "straddle", "option", or "privilege" as
    used in this section shall not include any registered warrant,
    right, or convertible security.
    (e) Persons liable; suits at law or in equity
      Any person who willfully participates in any act or transaction
    in violation of subsections (a), (b), or (c) of this section, shall
    be liable to any person who shall purchase or sell any security at
    a price which was affected by such act or transaction, and the
    person so injured may sue in law or in equity in any court of
    competent jurisdiction to recover the damages sustained as a result
    of any such act or transaction. In any such suit the court may, in
    its discretion, require an undertaking for the payment of the costs
    of such suit, and assess reasonable costs, including reasonable
    attorneys' fees, against either party litigant. Every person who
    becomes liable to make any payment under this subsection may
    recover contribution as in cases of contract from any person who,
    if joined in the original suit, would have been liable to make the
    same payment. No action shall be maintained to enforce any
    liability created under this section, unless brought within one
    year after the discovery of the facts constituting the violation
    and within three years after such violation.
    (f) Subsection (a) not applicable to exempted securities
      The provisions of subsection (a) of this section shall not apply
    to an exempted security.
    (g) Foreign currencies and security futures products
      (1) Notwithstanding any other provision of law, the Commission
    shall have the authority to regulate the trading of 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 (but not, with respect to any of the
    foregoing, an option on a contract for future delivery other than a
    security futures product).
      (2) Notwithstanding the Commodity Exchange Act [7 U.S.C. 1 et
    seq.], the Commission shall have the authority to regulate the
    trading of any security futures product to the extent provided in
    the securities laws.
    (h) Limitations on practices that affect market volatility
      It shall be unlawful for any person, by the use of the mails or
    any means or instrumentality of interstate commerce or of any
    facility of any national securities exchange, to use or employ any
    act or practice in connection with the purchase or sale of any
    equity security in contravention of such rules or regulations as
    the Commission may adopt, consistent with the public interest, the
    protection of investors, and the maintenance of fair and orderly
    markets - 
        (1) to prescribe means reasonably designed to prevent
      manipulation of price levels of the equity securities market or a
      substantial segment thereof; and
        (2) to prohibit or constrain, during periods of extraordinary
      market volatility, any trading practice in connection with the
      purchase or sale of equity securities that the Commission
      determines (A) has previously contributed significantly to
      extraordinary levels of volatility that have threatened the
      maintenance of fair and orderly markets; and (B) is reasonably
      certain to engender such levels of volatility if not prohibited
      or constrained.

    In adopting rules under paragraph (2), the Commission shall,
    consistent with the purposes of this subsection, minimize the
    impact on the normal operations of the market and a natural
    person's freedom to buy or sell any equity security.
    (i) Limitation on Commission authority
      The authority of the Commission under this section with respect
    to security-based swap agreements (as defined in section 206B of
    the Gramm-Leach-Bliley Act) shall be subject to the restrictions
    and limitations of section 78c-1(b) of this title.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 9, 48 Stat. 889; Pub. L. 97-
    303, Sec. 3, Oct. 13, 1982, 96 Stat. 1409; Pub. L. 101-432, Sec.
    6(a), Oct. 16, 1990, 104 Stat. 975; Pub. L. 106-554, Sec. 1(a)(5)
    [title II, Sec. 205(a)(1), (2), title III, Sec. 303(b), (c)], Dec.
    21, 2000, 114 Stat. 2763, 2763A-425, 2763A-426, 2763A-453, 2763A-
    454.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      Section 206B of the Gramm-Leach-Bliley Act, referred to in
    subsecs. (a)(2) to (5) and (i), is section 206B of Pub. L. 106-102,
    which is set out in a note under section 78c of this title.
      The Commodity Exchange Act, referred to in subsec. (g)(2), is act
    Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended, which is
    classified generally to chapter 1 (Sec. 1 et seq.) of Title 7,
    Agriculture. For complete classification of this Act to the Code,
    see section 1 of Title 7 and Tables.


-MISC1-
                                AMENDMENTS                            
      2000 - Subsec. (a)(2) to (5). Pub. L. 106-554, Sec. 1(a)(5)
    [title III, Sec. 303(b)], amended pars. (2) to (5) generally. Prior
    to amendment, pars. (2) to (5) read as follows:
      "(2) To effect, alone or with one or more other persons, a series
    of transactions in any security registered on a national securities
    exchange creating actual or apparent active trading in such
    security or raising or depressing the price of such security, for
    the purpose of inducing the purchase or sale of such security by
    others.
      "(3) If a dealer or broker, or other person selling or offering
    for sale or purchasing or offering to purchase the security, to
    induce the purchase or sale of any security registered on a
    national securities exchange by the circulation or dissemination in
    the ordinary course of business of information to the effect that
    the price of any such security will or is likely to rise or fall
    because of market operations of any one or more persons conducted
    for the purpose of raising or depressing the prices of such
    security.
      "(4) If a dealer or broker, or other person selling or offering
    for sale or purchasing or offering to purchase the security, to
    make, regarding any security registered on a national securities
    exchange, for the purpose of inducing the purchase or sale of such
    security, 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, and which he knew or had reasonable
    ground to believe was so false or misleading.
      "(5) For a consideration, received directly or indirectly from a
    dealer or broker, or other person selling or offering for sale or
    purchasing or offering to purchase the security, to induce the
    purchase or sale of any security registered on a national
    securities exchange by the circulation or dissemination of
    information to the effect that the price of any such security will
    or is likely to rise or fall because of the market operations of
    any one or more persons conducted for the purpose of raising or
    depressing the price of such security."
      Subsec. (b)(1). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    205(a)(1)(A)], inserted "(A)" after "acquires" and substituted ";
    or (B) any security futures product on the security; or" for ";
    or".
      Subsec. (b)(2). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    205(a)(1)(B)], inserted "(A)" after "interest in any" and
    substituted "; or (B) such security futures product; or" for ";
    or".
      Subsec. (b)(3). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    205(a)(1)(C)], inserted "(A)" after "interest in any" and "; or (B)
    such security futures product" after "privilege".
      Subsec. (g). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    205(a)(2)], designated existing provisions as par. (1), inserted
    "other than a security futures product" after "future delivery",
    and added par. (2).
      Subsec. (i). Pub. L. 106-554, Sec. 1(a)(5) [title III, Sec.
    303(c)], added subsec. (i).
      1990 - Subsec. (h). Pub. L. 101-432 added subsec. (h).
      1982 - Subsec. (f). Pub. L. 97-303, Sec. 3(1), substituted "The
    provisions of subsection (a) of this section shall not apply" for
    "The provisions of this section shall not apply".
      Subsec. (g). Pub. L. 97-303, Sec. 3(2), added subsec. (g).


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78j                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78j. Manipulative and deceptive devices

-STATUTE-
      It shall be unlawful for any person, directly or indirectly, by
    the use of any means or instrumentality of interstate commerce or
    of the mails, or of any facility of any national securities
    exchange - 
        (a)(1) To effect a short sale, or to use or employ any stop-
      loss order in connection with the purchase or sale, of any
      security registered on a national securities exchange, in
      contravention of such rules and regulations as the Commission may
      prescribe as necessary or appropriate in the public interest or
      for the protection of investors.
        (2) Paragraph (1) of this subsection shall not apply to
      security futures products.
        (b) To use or employ, in connection with the purchase or sale
      of any security registered on a national securities exchange or
      any security not so registered, or any securities-based swap
      agreement (as defined in section 206B of the Gramm-Leach-Bliley
      Act), any manipulative or deceptive device or contrivance in
      contravention of such rules and regulations as the Commission may
      prescribe as necessary or appropriate in the public interest or
      for the protection of investors.

    Rules promulgated under subsection (b) of this section that
    prohibit fraud, manipulation, or insider trading (but not rules
    imposing or specifying reporting or recordkeeping requirements,
    procedures, or standards as prophylactic measures against fraud,
    manipulation, or insider trading), and judicial precedents decided
    under subsection (b) of this section and rules promulgated
    thereunder that prohibit fraud, manipulation, or insider trading,
    shall apply to security-based swap agreements (as defined in
    section 206B of the Gramm-Leach-Bliley Act) to the same extent as
    they apply to securities. Judicial precedents decided under section
    77q(a) of this title and sections 78i, 78o, 78p, 78t, and 78u-1 of
    this title, and judicial precedents decided under applicable rules
    promulgated under such sections, shall apply to security-based swap
    agreements (as defined in section 206B of the Gramm-Leach-Bliley
    Act) to the same extent as they apply to securities.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 10, 48 Stat. 891; Pub. L. 106-
    554, Sec. 1(a)(5) [title II, Sec. 206(g), title III, Sec. 303(d)],
    Dec. 21, 2000, 114 Stat. 2763, 2763A-432, 2763A-454.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      Section 206B of the Gramm-Leach-Bliley Act, referred to in text,
    is section 206B of Pub. L. 106-102, which is set out in a note
    under section 78c of this title.


-MISC1-
                                AMENDMENTS                            
      2000 - Pub. L. 106-554, Sec. 1(a)(5) [title III, Sec. 303(d)(2)],
    inserted concluding provisions at end.
      Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(g)], designated existing provisions as par. (1) and added par.
    (2).
      Subsec. (b). Pub. L. 106-554, Sec. 1(a)(5) [title III, Sec.
    303(d)(1)], inserted "or any securities-based swap agreement (as
    defined in section 206B of the Gramm-Leach-Bliley Act)," before
    "any manipulative or deceptive device".


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78j-1                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78j-1. Audit requirements

-STATUTE-
    (a) In general
      Each audit required pursuant to this chapter of the financial
    statements of an issuer by a registered public accounting firm
    shall include, in accordance with generally accepted auditing
    standards, as may be modified or supplemented from time to time by
    the Commission - 
        (1) procedures designed to provide reasonable assurance of
      detecting illegal acts that would have a direct and material
      effect on the determination of financial statement amounts;
        (2) procedures designed to identify related party transactions
      that are material to the financial statements or otherwise
      require disclosure therein; and
        (3) an evaluation of whether there is substantial doubt about
      the ability of the issuer to continue as a going concern during
      the ensuing fiscal year.
    (b) Required response to audit discoveries
      (1) Investigation and report to management
        If, in the course of conducting an audit pursuant to this
      chapter to which subsection (a) of this section applies, the
      registered public accounting firm detects or otherwise becomes
      aware of information indicating that an illegal act (whether or
      not perceived to have a material effect on the financial
      statements of the issuer) has or may have occurred, the firm
      shall, in accordance with generally accepted auditing standards,
      as may be modified or supplemented from time to time by the
      Commission - 
          (A)(i) determine whether it is likely that an illegal act has
        occurred; and
          (ii) if so, determine and consider the possible effect of the
        illegal act on the financial statements of the issuer,
        including any contingent monetary effects, such as fines,
        penalties, and damages; and
          (B) as soon as practicable, inform the appropriate level of
        the management of the issuer and assure that the audit
        committee of the issuer, or the board of directors of the
        issuer in the absence of such a committee, is adequately
        informed with respect to illegal acts that have been detected
        or have otherwise come to the attention of such firm in the
        course of the audit, unless the illegal act is clearly
        inconsequential.
      (2) Response to failure to take remedial action
        If, after determining that the audit committee of the board of
      directors of the issuer, or the board of directors of the issuer
      in the absence of an audit committee, is adequately informed with
      respect to illegal acts that have been detected or have otherwise
      come to the attention of the firm in the course of the audit of
      such firm, the registered public accounting firm concludes that -
      
          (A) the illegal act has a material effect on the financial
        statements of the issuer;
          (B) the senior management has not taken, and the board of
        directors has not caused senior management to take, timely and
        appropriate remedial actions with respect to the illegal act;
        and
          (C) the failure to take remedial action is reasonably
        expected to warrant departure from a standard report of the
        auditor, when made, or warrant resignation from the audit
        engagement;

      the registered public accounting firm shall, as soon as
      practicable, directly report its conclusions to the board of
      directors.
      (3) Notice to Commission; response to failure to notify
        An issuer whose board of directors receives a report under
      paragraph (2) shall inform the Commission by notice not later
      than 1 business day after the receipt of such report and shall
      furnish the registered public accounting firm making such report
      with a copy of the notice furnished to the Commission. If the
      registered public accounting firm fails to receive a copy of the
      notice before the expiration of the required 1-business-day
      period, the registered public accounting firm shall - 
          (A) resign from the engagement; or
          (B) furnish to the Commission a copy of its report (or the
        documentation of any oral report given) not later than 1
        business day following such failure to receive notice.
      (4) Report after resignation
        If a registered public accounting firm resigns from an
      engagement under paragraph (3)(A), the firm shall, not later than
      1 business day following the failure by the issuer to notify the
      Commission under paragraph (3), furnish to the Commission a copy
      of the report of the firm (or the documentation of any oral
      report given).
    (c) Auditor liability limitation
      No registered public accounting firm shall be liable in a private
    action for any finding, conclusion, or statement expressed in a
    report made pursuant to paragraph (3) or (4) of subsection (b) of
    this section, including any rule promulgated pursuant thereto.
    (d) Civil penalties in cease-and-desist proceedings
      If the Commission finds, after notice and opportunity for hearing
    in a proceeding instituted pursuant to section 78u-3 of this title,
    that a registered public accounting firm has willfully violated
    paragraph (3) or (4) of subsection (b) of this section, the
    Commission may, in addition to entering an order under section 78u-
    3 of this title, impose a civil penalty against the registered
    public accounting firm and any other person that the Commission
    finds was a cause of such violation. The determination to impose a
    civil penalty and the amount of the penalty shall be governed by
    the standards set forth in section 78u-2 of this title.
    (e) Preservation of existing authority
      Except as provided in subsection (d) of this section, nothing in
    this section shall be held to limit or otherwise affect the
    authority of the Commission under this chapter.
    (f) Definitions
      As used in this section, the term "illegal act" means an act or
    omission that violates any law, or any rule or regulation having
    the force of law. As used in this section, the term "issuer" means
    an issuer (as defined in section 78c of this title), the securities
    of which are registered under section 78l of this title, or that is
    required to file reports pursuant to section 78o(d) of this title,
    or that files or has filed a registration statement that has not
    yet become effective under the Securities Act of 1933 (15 U.S.C.
    77a et seq.), and that it has not withdrawn.
    (g) Prohibited activities
      Except as provided in subsection (h) of this section, it shall be
    unlawful for a registered public accounting firm (and any
    associated person of that firm, to the extent determined
    appropriate by the Commission) that performs for any issuer any
    audit required by this chapter or the rules of the Commission under
    this chapter or, beginning 180 days after the date of commencement
    of the operations of the Public Company Accounting Oversight Board
    established under section 7211 of this title (in this section
    referred to as the "Board"), the rules of the Board, to provide to
    that issuer, contemporaneously with the audit, any non-audit
    service, including - 
        (1) bookkeeping or other services related to the accounting
      records or financial statements of the audit client;
        (2) financial information systems design and implementation;
        (3) appraisal or valuation services, fairness opinions, or
      contribution-in-kind reports;
        (4) actuarial services;
        (5) internal audit outsourcing services;
        (6) management functions or human resources;
        (7) broker or dealer, investment adviser, or investment banking
      services;
        (8) legal services and expert services unrelated to the audit;
      and
        (9) any other service that the Board determines, by regulation,
      is impermissible.
    (h) Preapproval required for non-audit services
      A registered public accounting firm may engage in any non-audit
    service, including tax services, that is not described in any of
    paragraphs (1) through (9) of subsection (g) of this section for an
    audit client, only if the activity is approved in advance by the
    audit committee of the issuer, in accordance with subsection (i) of
    this section.
    (i) Preapproval requirements
      (1) In general
        (A) Audit committee action
          All auditing services (which may entail providing comfort
        letters in connection with securities underwritings or
        statutory audits required for insurance companies for purposes
        of State law) and non-audit services, other than as provided in
        subparagraph (B), provided to an issuer by the auditor of the
        issuer shall be preapproved by the audit committee of the
        issuer.
        (B) De minimus (!1) exception

          The preapproval requirement under subparagraph (A) is waived
        with respect to the provision of non-audit services for an
        issuer, if - 
            (i) the aggregate amount of all such non-audit services
          provided to the issuer constitutes not more than 5 percent of
          the total amount of revenues paid by the issuer to its
          auditor during the fiscal year in which the nonaudit services
          are provided;
            (ii) such services were not recognized by the issuer at the
          time of the engagement to be non-audit services; and
            (iii) such services are promptly brought to the attention
          of the audit committee of the issuer and approved prior to
          the completion of the audit by the audit committee or by 1 or
          more members of the audit committee who are members of the
          board of directors to whom authority to grant such approvals
          has been delegated by the audit committee.
      (2) Disclosure to investors
        Approval by an audit committee of an issuer under this
      subsection of a non-audit service to be performed by the auditor
      of the issuer shall be disclosed to investors in periodic reports
      required by section 78m(a) of this title.
      (3) Delegation authority
        The audit committee of an issuer may delegate to 1 or more
      designated members of the audit committee who are independent
      directors of the board of directors, the authority to grant
      preapprovals required by this subsection. The decisions of any
      member to whom authority is delegated under this paragraph to
      preapprove an activity under this subsection shall be presented
      to the full audit committee at each of its scheduled meetings.
      (4) Approval of audit services for other purposes
        In carrying out its duties under subsection (m)(2) of this
      section, if the audit committee of an issuer approves an audit
      service within the scope of the engagement of the auditor, such
      audit service shall be deemed to have been preapproved for
      purposes of this subsection.
    (j) Audit partner rotation
      It shall be unlawful for a registered public accounting firm to
    provide audit services to an issuer if the lead (or coordinating)
    audit partner (having primary responsibility for the audit), or the
    audit partner responsible for reviewing the audit, has performed
    audit services for that issuer in each of the 5 previous fiscal
    years of that issuer.
    (k) Reports to audit committees
      Each registered public accounting firm that performs for any
    issuer any audit required by this chapter shall timely report to
    the audit committee of the issuer - 
        (1) all critical accounting policies and practices to be used;
        (2) all alternative treatments of financial information within
      generally accepted accounting principles that have been discussed
      with management officials of the issuer, ramifications of the use
      of such alternative disclosures and treatments, and the treatment
      preferred by the registered public accounting firm; and
        (3) other material written communications between the
      registered public accounting firm and the management of the
      issuer, such as any management letter or schedule of unadjusted
      differences.
    (l) Conflicts of interest
      It shall be unlawful for a registered public accounting firm to
    perform for an issuer any audit service required by this chapter,
    if a chief executive officer, controller, chief financial officer,
    chief accounting officer, or any person serving in an equivalent
    position for the issuer, was employed by that registered
    independent public accounting firm and participated in any capacity
    in the audit of that issuer during the 1-year period preceding the
    date of the initiation of the audit.
    (m) Standards relating to audit committees
      (1) Commission rules
        (A) In general
          Effective not later than 270 days after July 30, 2002, the
        Commission shall, by rule, direct the national securities
        exchanges and national securities associations to prohibit the
        listing of any security of an issuer that is not in compliance
        with the requirements of any portion of paragraphs (2) through
        (6).
        (B) Opportunity to cure defects
          The rules of the Commission under subparagraph (A) shall
        provide for appropriate procedures for an issuer to have an
        opportunity to cure any defects that would be the basis for a
        prohibition under subparagraph (A), before the imposition of
        such prohibition.
      (2) Responsibilities relating to registered public accounting
        firms
        The audit committee of each issuer, in its capacity as a
      committee of the board of directors, shall be directly
      responsible for the appointment, compensation, and oversight of
      the work of any registered public accounting firm employed by
      that issuer (including resolution of disagreements between
      management and the auditor regarding financial reporting) for the
      purpose of preparing or issuing an audit report or related work,
      and each such registered public accounting firm shall report
      directly to the audit committee.
      (3) Independence
        (A) In general
          Each member of the audit committee of the issuer shall be a
        member of the board of directors of the issuer, and shall
        otherwise be independent.
        (B) Criteria
          In order to be considered to be independent for purposes of
        this paragraph, a member of an audit committee of an issuer may
        not, other than in his or her capacity as a member of the audit
        committee, the board of directors, or any other board committee
        - 
            (i) accept any consulting, advisory, or other compensatory
          fee from the issuer; or
            (ii) be an affiliated person of the issuer or any
          subsidiary thereof.
        (C) Exemption authority
          The Commission may exempt from the requirements of
        subparagraph (B) a particular relationship with respect to
        audit committee members, as the Commission determines
        appropriate in light of the circumstances.
      (4) Complaints
        Each audit committee shall establish procedures for - 
          (A) the receipt, retention, and treatment of complaints
        received by the issuer regarding accounting, internal
        accounting controls, or auditing matters; and
          (B) the confidential, anonymous submission by employees of
        the issuer of concerns regarding questionable accounting or
        auditing matters.
      (5) Authority to engage advisers
        Each audit committee shall have the authority to engage
      independent counsel and other advisers, as it determines
      necessary to carry out its duties.
      (6) Funding
        Each issuer shall provide for appropriate funding, as
      determined by the audit committee, in its capacity as a committee
      of the board of directors, for payment of compensation - 
          (A) to the registered public accounting firm employed by the
        issuer for the purpose of rendering or issuing an audit report;
        and
          (B) to any advisers employed by the audit committee under
        paragraph (5).

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 10A, as added Pub. L. 104-67,
    title III, Sec. 301(a), Dec. 22, 1995, 109 Stat. 762; amended Pub.
    L. 107-204, title II, Secs. 201(a), 202-204, 205(b), (d), 206,
    title III, Sec. 301, July 30, 2002, 116 Stat. 771-775.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a), (b)(1), (e), (g), (k),
    and (l), was in the original "this title". See References in Text
    note set out under section 78a of this title.
      The Securities Act of 1933, referred to in subsec. (f), is title
    I of act May 27, 1933, ch. 38, 48 Stat. 74, as amended, which is
    classified generally to subchapter I (Sec. 77a et seq.) of chapter
    2A of this title. For complete classification of this Act to the
    Code, see section 77a of this title and Tables.


-MISC1-
                                AMENDMENTS                            
      2002 - Subsec. (a). Pub. L. 107-204, Sec. 205(b)(1), substituted
    "a registered public accounting firm" for "an independent public
    accountant" in introductory provisions.
      Subsec. (b)(1). Pub. L. 107-204, Sec. 205(b)(2), (4)(A), in
    introductory provisions, substituted "the registered public
    accounting firm" for "the independent public accountant" and "the
    firm" for "the accountant".
      Subsec. (b)(1)(B). Pub. L. 107-204, Sec. 205(b)(4)(B),
    substituted "such firm" for "such accountant".
      Subsec. (b)(2). Pub. L. 107-204, Sec. 205(b)(2), (4)(A), (B), in
    introductory provisions, substituted "the firm" for "the
    accountant", "such firm" for "such accountant", and "the registered
    public accounting firm" for "the independent public accountant"
    and, in concluding provisions, substituted "the registered public
    accounting firm" for "the independent public accountant".
      Subsec. (b)(3). Pub. L. 107-204, Sec. 205(b)(2), substituted "the
    registered public accounting firm" for "the independent public
    accountant" wherever appearing in introductory provisions.
      Subsec. (b)(4). Pub. L. 107-204, Sec. 205(b)(1), (4)(A), (C),
    substituted "a registered public accounting firm" for "an
    independent public accountant", "the firm" for "the accountant",
    and "the report of the firm" for "the accountant's report".
      Subsec. (c). Pub. L. 107-204, Sec. 205(b)(3), substituted "No
    registered public accounting firm" for "No independent public
    accountant".
      Subsec. (d). Pub. L. 107-204, Sec. 205(b)(1), (2), substituted "a
    registered public accounting firm" for "an independent public
    accountant" and "the registered public accounting firm" for "the
    independent public accountant".
      Subsec. (f). Pub. L. 107-204, Sec. 205(d), substituted
    "Definitions" for "Definition" in heading and inserted at end "As
    used in this section, the term 'issuer' means an issuer (as defined
    in section 78c of this title), the securities of which are
    registered under section 78l of this title, or that is required to
    file reports pursuant to section 78o(d) of this title, or that
    files or has filed a registration statement that has not yet become
    effective under the Securities Act of 1933 (15 U.S.C. 77a et seq.),
    and that it has not withdrawn."
      Subsecs. (g), (h). Pub. L. 107-204, Sec. 201(a), added subsecs.
    (g) and (h).
      Subsec. (i). Pub. L. 107-204, Sec. 202, added subsec. (i).
      Subsec. (j). Pub. L. 107-204, Sec. 203, added subsec. (j).
      Subsec. (k). Pub. L. 107-204, Sec. 204, added subsec. (k).
      Subsec. (l). Pub. L. 107-204, Sec. 206, added subsec. (l).
      Subsec. (m). Pub. L. 107-204, Sec. 301, added subsec. (m).

                              EFFECTIVE DATE                          
      Section 301(b) of Pub. L. 104-67 provided that: "The amendment
    made by subsection (a) [enacting this section] shall apply to each
    annual report - 
        "(1) for any period beginning on or after January 1, 1996, with
      respect to any registrant that is required to file selected
      quarterly financial data pursuant to the rules or regulations of
      the Securities and Exchange Commission; and
        "(2) for any period beginning on or after January 1, 1997, with
      respect to any other registrant."

                               CONSTRUCTION                           
      Section 203 of Pub. L. 104-67 provided that: "Nothing in this Act
    [see Short Title of 1995 Amendment note set out under section 78a
    of this title] or the amendments made by this Act shall be deemed
    to create or ratify any implied private right of action, or to
    prevent the Commission, by rule or regulation, from restricting or
    otherwise regulating private actions under the Securities Exchange
    Act of 1934 [15 U.S.C. 78a et seq.]."

-FOOTNOTE-
    (!1) So in original. Probably should be "De minimis".


-End-



-CITE-
    15 USC Sec. 78k                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78k. Trading by members of exchanges, brokers, and dealers

-STATUTE-
    (a) Trading for own account or account of associated person;
      exceptions
      (1) It shall be unlawful for any member of a national securities
    exchange to effect any transaction on such exchange for its own
    account, the account of an associated person, or an account with
    respect to which it or an associated person thereof exercises
    investment discretion: Provided, however, That this paragraph shall
    not make unlawful - 
        (A) any transaction by a dealer acting in the capacity of
      market maker;
        (B) any transaction for the account of an odd-lot dealer in a
      security in which he is so registered;
        (C) any stabilizing transaction effected in compliance with
      rules under section 78j(b) of this title to facilitate a
      distribution of a security in which the member effecting such
      transaction is participating;
        (D) any bona fide arbitrage transaction, any bona fide hedge
      transaction involving a long or short position in an equity
      security and a long or short position in a security entitling the
      holder to acquire or sell such equity security, or any risk
      arbitrage transaction in connection with a merger, acquisition,
      tender offer, or similar transaction involving a
      recapitalization;
        (E) any transaction for the account of a natural person, the
      estate of a natural person, or a trust created by a natural
      person for himself or another natural person;
        (F) any transaction to offset a transaction made in error;
        (G) any other transaction for a member's own account provided
      that (i) such member is primarily engaged in the business of
      underwriting and distributing securities issued by other persons,
      selling securities to customers, and acting as broker, or any one
      or more of such activities, and whose gross income normally is
      derived principally from such business and related activities and
      (ii) such transaction is effected in compliance with rules of the
      Commission which, as a minimum, assure that the transaction is
      not inconsistent with the maintenance of fair and orderly markets
      and yields priority, parity, and precedence in execution to
      orders for the account of persons who are not members or
      associated with members of the exchange;
        (H) any transaction for an account with respect to which such
      member or an associated person thereof exercises investment
      discretion if such member - 
          (i) has obtained, from the person or persons authorized to
        transact business for the account, express authorization for
        such member or associated person to effect such transactions
        prior to engaging in the practice of effecting such
        transactions;
          (ii) furnishes the person or persons authorized to transact
        business for the account with a statement at least annually
        disclosing the aggregate compensation received by the exchange
        member in effecting such transactions; and
          (iii) complies with any rules the Commission has prescribed
        with respect to the requirements of clauses (i) and (ii); and

        (I) any other transaction of a kind which the Commission, by
      rule, determines is consistent with the purposes of this
      paragraph, the protection of investors, and the maintenance of
      fair and orderly markets.

      (2) The Commission, by rule, as it deems necessary or appropriate
    in the public interest and for the protection of investors, to
    maintain fair and orderly markets, or to assure equal regulation of
    exchange markets and markets occurring otherwise than on an
    exchange, may regulate or prohibit:
        (A) transactions on a national securities exchange not unlawful
      under paragraph (1) of this subsection effected by any member
      thereof for its own account (unless such member is acting in the
      capacity of market maker or odd-lot dealer), the account of an
      associated person, or an account with respect to which such
      member or an associated person thereof exercises investment
      discretion;
        (B) transactions otherwise than on a national securities
      exchange effected by use of the mails or any means or
      instrumentality of interstate commerce by any member of a
      national securities exchange, broker, or dealer for the account
      of such member, broker, or dealer (unless such member, broker, or
      dealer is acting in the capacity of a market maker) (!1) the
      account of an associated person, or an account with respect to
      which such member, broker, or dealer or associated person thereof
      exercises investment discretion; and

        (C) transactions on a national securities exchange effected by
      any broker or dealer not a member thereof for the account of such
      broker or dealer (unless such broker or dealer is acting in the
      capacity of market maker), the account of an associated person,
      or an account with respect to which such broker or dealer or
      associated person thereof exercises investment discretion.

      (3) The provisions of paragraph (1) of this subsection insofar as
    they apply to transactions on a national securities exchange
    effected by a member thereof who was a member on February 1, 1978
    shall not become effective until February 1, 1979. Nothing in this
    paragraph shall be construed to impair or limit the authority of
    the Commission to regulate or prohibit such transactions prior to
    February 1, 1979, pursuant to paragraph (2) of this subsection.
    (b) Registration of members as odd-lot dealers and specialists
      When not in contravention of such rules and regulations as the
    Commission may prescribe as necessary or appropriate in the public
    interest and for the protection of investors, to maintain fair and
    orderly markets, or to remove impediments to and perfect the
    mechanism of a national market system, the rules of a national
    securities exchange may permit (1) a member to be registered as an
    odd-lot dealer and as such to buy and sell for his own account so
    far as may be reasonably necessary to carry on such odd-lot
    transactions, and (2) a member to be registered as a specialist.
    Under the rules and regulations of the Commission a specialist may
    be permitted to act as a broker and dealer or limited to acting as
    a broker or dealer. It shall be unlawful for a specialist or an
    official of the exchange to disclose information in regard to
    orders placed with such specialist which is not available to all
    members of the exchange, to any person other than an official of
    the exchange, a representative of the Commission, or a specialist
    who may be acting for such specialist: Provided, however, That the
    Commission, by rule, may require disclosure to all members of the
    exchange of all orders placed with specialists, under such rules
    and regulations as the Commission may prescribe as necessary or
    appropriate in the public interest or for the protection of
    investors. It shall also be unlawful for a specialist permitted to
    act as a broker and dealer to effect on the exchange as broker any
    transaction except upon a market or limited price order.
    (c) Exemptions from provisions of section and rules and regulations
      If because of the limited volume of transactions effected on an
    exchange, it is in the opinion of the Commission impracticable and
    not necessary or appropriate in the public interest or for the
    protection of investors to apply any of the foregoing provisions of
    this section or the rules and regulations thereunder, the
    Commission shall have power, upon application of the exchange and
    on a showing that the rules of such exchange are otherwise adequate
    for the protection of investors, to exempt such exchange and its
    members from any such provision or rules and regulations.
    (d) Prohibition on extension of credit by broker-dealer
      It shall be unlawful for a member of a national securities
    exchange who is both a dealer and a broker, or for any person who
    both as a broker and a dealer transacts a business in securities
    through the medium of a member or otherwise, to effect through the
    use of any facility of a national securities exchange or of the
    mails or of any means or instrumentality of interstate commerce, or
    otherwise in the case of a member, (1) any transaction in
    connection with which, directly or indirectly, he extends or
    maintains or arranges for the extension or maintenance of credit to
    or for a customer on any security (other than an exempted security)
    which was a part of a new issue in the distribution of which he
    participated as a member of a selling syndicate or group within
    thirty days prior to such transaction: Provided, That credit shall
    not be deemed extended by reason of a bona fide delayed delivery of
    (i) any such security against full payment of the entire purchase
    price thereof upon such delivery within thirty-five days after such
    purchase or (ii) any mortgage related security or any small
    business related security against full payment of the entire
    purchase price thereof upon such delivery within one hundred and
    eighty days after such purchase, or within such shorter period as
    the Commission may prescribe by rule or regulation, or (2) any
    transaction with respect to any security (other than an exempted
    security) unless, if the transaction is with a customer, he
    discloses to such customer in writing at or before the completion
    of the transaction whether he is acting as a dealer for his own
    account, as a broker for such customer, or as a broker for some
    other person.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 11, 48 Stat. 891; Aug. 10,
    1954, ch. 667, title II, Sec. 201, 68 Stat. 686; Pub. L. 94-29,
    Sec. 6, June 4, 1975, 89 Stat. 110; Pub. L. 95-283, Sec. 18(a), May
    21, 1978, 92 Stat. 275; Pub. L. 98-440, title I, Sec. 104, Oct. 3,
    1984, 98 Stat. 1690; Pub. L. 103-68, Sec. 1, Aug. 11, 1993, 107
    Stat. 691; Pub. L. 103-325, title II, Sec. 205, Sept. 23, 1994, 108
    Stat. 2199.)


-MISC1-
                                AMENDMENTS                            
      1994 - Subsec. (d)(1)(ii). Pub. L. 103-325 inserted "or any small
    business related security" after "mortgage related security".
      1993 - Subsec. (a)(1)(E). Pub. L. 103-68, Sec. 1(1), struck out
    "(other than an investment company)" after "trust".
      Subsec. (a)(1)(H), (I). Pub. L. 103-68, Sec. 1(2)-(4), added
    subpar. (H) and redesignated former subpar. (H) as (I).
      1984 - Subsec. (d)(1). Pub. L. 98-440 designated existing
    provisions of par. (1) as cl. (i) and added cl. (ii).
      1978 - Subsec. (a)(3). Pub. L. 95-283 substituted "February 1,
    1978" for "May 1, 1975", and "February 1, 1979" for "May 1, 1978"
    in two places.
      1975 - Subsec. (a). Pub. L. 94-29, Sec. 6(2), prohibited stock
    exchange members from effecting any transaction on the exchange for
    its own account, the account of an associated person, or an account
    with respect to which the member or an associated person exercises
    investment discretion, exempted from that prohibition 8 types of
    transactions, and authorized the Commission, as it deems necessary
    or appropriate in the public interest or for the protection of
    investors, to regulate or prohibit the specifically exempted
    transactions, certain transactions otherwise that on a national
    securities exchange, and transactions on a national securities
    exchange effected by a broker or dealer not a member thereof for
    the account of such broker or dealer, the account of an associated
    person, or an account with respect to which such broker, dealer, or
    associated person exercises investment discretion.
      Subsec. (b). Pub. L. 94-29, Sec. 6(2), struck out requirement
    that specialist's dealings be limited to those transactions
    reasonably necessary to permit him to maintain a fair and orderly
    market, expanded the Commission's rulemaking authority in the area
    of specialist's dealings so that the Commission may define
    responsibilities and restrict activities of specialists in response
    to changing conditions in the market, expanded the standards to be
    followed by the Commission in exercising its rulemaking power to
    include the maintenance of fair and orderly markets and the removal
    of impediments to and the perfection of the mechanism of a national
    market system, and inserted specific reference to the Commission's
    power to limit the activity of a specialist to that of a broker or
    dealer.
      Subsec. (e). Pub. L. 94-29, Sec. 6(3), struck out subsec. (e)
    which directed the Commission to make a study, to be submitted on
    or before Jan. 3, 1936, of the feasibility of segregating the
    functions of dealer and broker.
      1954 - Subsec. (d). Act Aug. 10, 1954, reduced from 6 months to
    30 days the prohibition period against extending credit to
    purchasers of a new issue by dealers.

                     EFFECTIVE DATE OF 1978 AMENDMENT                 
      Section 18(b) of Pub. L. 95-283 provided that: "The amendment
    made by subsection (a) of this section [amending this section]
    shall be effective as of May 1, 1978."

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.

                     EFFECTIVE DATE OF 1954 AMENDMENT                 
      Amendment by act Aug. 10, 1954, effective 60 days after Aug. 10,
    1954, see note under section 77b of this title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-FOOTNOTE-
    (!1) So in original. Probably should be followed by a comma.


-End-



-CITE-
    15 USC Sec. 78k-1                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78k-1. National market system for securities; securities
      information processors

-STATUTE-
    (a) Congressional findings; facilitating establishment of national
      market system for securities; designation of qualified securities
      (1) The Congress finds that - 
        (A) The securities markets are an important national asset
      which must be preserved and strengthened.
        (B) New data processing and communications techniques create
      the opportunity for more efficient and effective market
      operations.
        (C) It is in the public interest and appropriate for the
      protection of investors and the maintenance of fair and orderly
      markets to assure - 
          (i) economically efficient execution of securities
        transactions;
          (ii) fair competition among brokers and dealers, among
        exchange markets, and between exchange markets and markets
        other than exchange markets;
          (iii) the availability to brokers, dealers, and investors of
        information with respect to quotations for and transactions in
        securities;
          (iv) the practicability of brokers executing investors'
        orders in the best market; and
          (v) an opportunity, consistent with the provisions of clauses
        (i) and (iv) of this subparagraph, for investors' orders to be
        executed without the participation of a dealer.

        (D) The linking of all markets for qualified securities through
      communication and data processing facilities will foster
      efficiency, enhance competition, increase the information
      available to brokers, dealers, and investors, facilitate the
      offsetting of investors' orders, and contribute to best execution
      of such orders.

      (2) The Commission is directed, therefore, having due regard for
    the public interest, the protection of investors, and the
    maintenance of fair and orderly markets, to use its authority under
    this chapter to facilitate the establishment of a national market
    system for securities (which may include subsystems for particular
    types of securities with unique trading characteristics) in
    accordance with the findings and to carry out the objectives set
    forth in paragraph (1) of this subsection. The Commission, by rule,
    shall designate the securities or classes of securities qualified
    for trading in the national market system from among securities
    other than exempted securities. (Securities or classes of
    securities so designated hereinafter (!1) in this section referred
    to as "qualified securities".)

      (3) The Commission is authorized in furtherance of the directive
    in paragraph (2) of this subsection - 
        (A) to create one or more advisory committees pursuant to the
      Federal Advisory Committee Act (which shall be in addition to the
      National Market Advisory Board established pursuant to subsection
      (d) of this section) and to employ one or more outside experts;
        (B) by rule or order, to authorize or require self-regulatory
      organizations to act jointly with respect to matters as to which
      they share authority under this chapter in planning, developing,
      operating, or regulating a national market system (or a subsystem
      thereof) or one or more facilities thereof; and
        (C) to conduct studies and make recommendations to the Congress
      from time to time as to the possible need for modifications of
      the scheme of self-regulation provided for in this chapter so as
      to adapt it to a national market system.
    (b) Securities information processors; registration; withdrawal of
      registration; access to services; censure; suspension or
      revocation of registration
      (1) Except as otherwise provided in this section, it shall be
    unlawful for any securities information processor unless registered
    in accordance with this subsection, directly or indirectly, to make
    use of the mails or any means or instrumentality of interstate
    commerce to perform the functions of a securities information
    processor. The Commission, by rule or order, upon its own motion or
    upon application, may conditionally or unconditionally exempt any
    securities information processor or class of securities information
    processors or security or class of securities from any provision of
    this section or the rules or regulations thereunder, if the
    Commission finds that such exemption is consistent with the public
    interest, the protection of investors, and the purposes of this
    section, including the maintenance of fair and orderly markets in
    securities and the removal of impediments to and perfection of the
    mechanism of a national market system: Provided, however, That a
    securities information processor not acting as the exclusive
    processor of any information with respect to quotations for or
    transactions in securities is exempt from the requirement to
    register in accordance with this subsection unless the Commission,
    by rule or order, finds that the registration of such securities
    information processor is necessary or appropriate in the public
    interest, for the protection of investors, or for the achievement
    of the purposes of this section.
      (2) A securities information processor may be registered by
    filing with the Commission an application for registration in such
    form as the Commission, by rule, may prescribe containing the
    address of its principal office, or offices, the names of the
    securities and markets for which it is then acting and for which it
    proposes to act as a securities information processor, and such
    other information and documents as the Commission, by rule, may
    prescribe with regard to performance capability, standards and
    procedures for the collection, processing, distribution, and
    publication of information with respect to quotations for and
    transactions in securities, personnel qualifications, financial
    condition, and such other matters as the Commission determines to
    be germane to the provisions of this chapter and the rules and
    regulations thereunder, or necessary or appropriate in furtherance
    of the purposes of this section.
      (3) The Commission shall, upon the filing of an application for
    registration pursuant to paragraph (2) of this subsection, publish
    notice of the filing and afford interested persons an opportunity
    to submit written data, views, and arguments concerning such
    application. Within ninety days of the date of the publication of
    such notice (or within such longer period as to which the applicant
    consents) the Commission shall - 
        (A) by order grant such registration, or
        (B) institute proceedings to determine whether registration
      should be denied. Such proceedings shall include notice of the
      grounds for denial under consideration and opportunity for
      hearing and shall be concluded within one hundred eighty days of
      the date of publication of notice of the filing of the
      application for registration. At the conclusion of such
      proceedings the Commission, by order, shall grant or deny such
      registration. The Commission may extend the time for the
      conclusion of such proceedings for up to sixty days if it finds
      good cause for such extension and publishes its reasons for so
      finding or for such longer periods as to which the applicant
      consents.

    The Commission shall grant the registration of a securities
    information processor if the Commission finds that such securities
    information processor is so organized, and has the capacity, to be
    able to assure the prompt, accurate, and reliable performance of
    its functions as a securities information processor, comply with
    the provisions of this chapter and the rules and regulations
    thereunder, carry out its functions in a manner consistent with the
    purposes of this section, and, insofar as it is acting as an
    exclusive processor, operate fairly and efficiently. The Commission
    shall deny the registration of a securities information processor
    if the Commission does not make any such finding.
      (4) A registered securities information processor may, upon such
    terms and conditions as the Commission deems necessary or
    appropriate in the public interest or for the protection of
    investors, withdraw from registration by filing a written notice of
    withdrawal with the Commission. If the Commission finds that any
    registered securities information processor is no longer in
    existence or has ceased to do business in the capacity specified in
    its application for registration, the Commission, by order, shall
    cancel the registration.
      (5)(A) If any registered securities information processor
    prohibits or limits any person in respect of access to services
    offered, directly or indirectly, by such securities information
    processor, the registered securities information processor shall
    promptly file notice thereof with the Commission. The notice shall
    be in such form and contain such information as the Commission, by
    rule, may prescribe as necessary or appropriate in the public
    interest or for the protection of investors. Any prohibition or
    limitation on access to services with respect to which a registered
    securities information processor is required by this paragraph to
    file notice shall be subject to review by the Commission on its own
    motion, or upon application by any person aggrieved thereby filed
    within thirty days after such notice has been filed with the
    Commission and received by such aggrieved person, or within such
    longer period as the Commission may determine. Application to the
    Commission for review, or the institution of review by the
    Commission on its own motion, shall not operate as a stay of such
    prohibition or limitation, unless the Commission otherwise orders,
    summarily or after notice and opportunity for hearing on the
    question of a stay (which hearing may consist solely of the
    submission of affidavits or presentation of oral arguments). The
    Commission shall establish for appropriate cases an expedited
    procedure for consideration and determination of the question of a
    stay.
      (B) In any proceeding to review the prohibition or limitation of
    any person in respect of access to services offered by a registered
    securities information processor, if the Commission finds, after
    notice and opportunity for hearing, that such prohibition or
    limitation is consistent with the provisions of this chapter and
    the rules and regulations thereunder and that such person has not
    been discriminated against unfairly, the Commission, by order,
    shall dismiss the proceeding. If the Commission does not make any
    such finding or if it finds that such prohibition or limitation
    imposes any burden on competition not necessary or appropriate in
    furtherance of the purposes of this chapter, the Commission, by
    order, shall set aside the prohibition or limitation and require
    the registered securities information processor to permit such
    person access to services offered by the registered securities
    information processor.
      (6) The Commission, by order, may censure or place limitations
    upon the activities, functions, or operations of any registered
    securities information processor or suspend for a period not
    exceeding twelve months or revoke the registration of any such
    processor, if the Commission finds, on the record after notice and
    opportunity for hearing, that such censure, placing of limitations,
    suspension, or revocation is in the public interest, necessary or
    appropriate for the protection of investors or to assure the
    prompt, accurate, or reliable performance of the functions of such
    securities information processor, and that such securities
    information processor has violated or is unable to comply with any
    provision of this chapter or the rules or regulations thereunder.
    (c) Rules and regulations covering use of mails or other means or
      instrumentalities of interstate commerce; reports of purchase or
      sale of qualified securities; limiting registered securities
      transactions to national securities exchanges
      (1) No self-regulatory organization, member thereof, securities
    information processor, broker, or dealer shall make use of the
    mails or any means or instrumentality of interstate commerce to
    collect, process, distribute, publish, or prepare for distribution
    or publication any information with respect to quotations for or
    transactions in any security other than an exempted security, to
    assist, participate in, or coordinate the distribution or
    publication of such information, or to effect any transaction in,
    or to induce or attempt to induce the purchase or sale of, any such
    security in contravention of such rules and regulations as the
    Commission shall prescribe as necessary or appropriate in the
    public interest, for the protection of investors, or otherwise in
    furtherance of the purposes of this chapter to - 
        (A) prevent the use, distribution, or publication of
      fraudulent, deceptive, or manipulative information with respect
      to quotations for and transactions in such securities;
        (B) assure the prompt, accurate, reliable, and fair collection,
      processing, distribution, and publication of information with
      respect to quotations for and transactions in such securities and
      the fairness and usefulness of the form and content of such
      information;
        (C) assure that all securities information processors may, for
      purposes of distribution and publication, obtain on fair and
      reasonable terms such information with respect to quotations for
      and transactions in such securities as is collected, processed,
      or prepared for distribution or publication by any exclusive
      processor of such information acting in such capacity;
        (D) assure that all exchange members, brokers, dealers,
      securities information processors, and, subject to such
      limitations as the Commission, by rule, may impose as necessary
      or appropriate for the protection of investors or maintenance of
      fair and orderly markets, all other persons may obtain on terms
      which are not unreasonably discriminatory such information with
      respect to quotations for and transactions in such securities as
      is published or distributed by any self-regulatory organization
      or securities information processor;
        (E) assure that all exchange members, brokers, and dealers
      transmit and direct orders for the purchase or sale of qualified
      securities in a manner consistent with the establishment and
      operation of a national market system; and
        (F) assure equal regulation of all markets for qualified
      securities and all exchange members, brokers, and dealers
      effecting transactions in such securities.

      (2) The Commission, by rule, as it deems necessary or appropriate
    in the public interest or for the protection of investors, may
    require any person who has effected the purchase or sale of any
    qualified security by use of the mails or any means or
    instrumentality of interstate commerce to report such purchase or
    sale to a registered securities information processor, national
    securities exchange, or registered securities association and
    require such processor, exchange, or association to make
    appropriate distribution and publication of information with
    respect to such purchase or sale.
      (3)(A) The Commission, by rule, is authorized to prohibit brokers
    and dealers from effecting transactions in securities registered
    pursuant to section 78l(b) of this title otherwise than on a
    national securities exchange, if the Commission finds, on the
    record after notice and opportunity for hearing, that - 
        (i) as a result of transactions in such securities effected
      otherwise than on a national securities exchange the fairness or
      orderliness of the markets for such securities has been affected
      in a manner contrary to the public interest or the protection of
      investors;
        (ii) no rule of any national securities exchange unreasonably
      impairs the ability of any dealer to solicit or effect
      transactions in such securities for his own account or
      unreasonably restricts competition among dealers in such
      securities or between dealers acting in the capacity of market
      makers who are specialists in such securities and such dealers
      who are not specialists in such securities, and
        (iii) the maintenance or restoration of fair and orderly
      markets in such securities may not be assured through other
      lawful means under this chapter.

    The Commission may conditionally or unconditionally exempt any
    security or transaction or any class of securities or transactions
    from any such prohibition if the Commission deems such exemption
    consistent with the public interest, the protection of investors,
    and the maintenance of fair and orderly markets.
      (B) For the purposes of subparagraph (A) of this paragraph, the
    ability of a dealer to solicit or effect transactions in securities
    for his own account shall not be deemed to be unreasonably impaired
    by any rule of an exchange fairly and reasonably prescribing the
    sequence in which orders brought to the exchange must be executed
    or which has been adopted to effect compliance with a rule of the
    Commission promulgated under this chapter.
      (4) The Commission is directed to review any and all rules of
    national securities exchanges which limit or condition the ability
    of members to effect transactions in securities otherwise than on
    such exchanges.
      (5) No national securities exchange or registered securities
    association may limit or condition the participation of any member
    in any registered clearing agency.
    (d) National Market Advisory Board
      (1) Not later than one hundred eighty days after June 4, 1975,
    the Commission shall establish a National Market Advisory Board
    (hereinafter in this section referred to as the "Advisory Board")
    to be composed of fifteen members, not all of whom shall be from
    the same geographical area of the United States, appointed by the
    Commission for a term specified by the Commission of not less than
    two years or more than five years. The Advisory Board shall consist
    of persons associated with brokers and dealers (who shall be a
    majority) and persons not so associated who are representative of
    the public and, to the extent feasible, have knowledge of the
    securities markets of the United States.
      (2) It shall be the responsibility of the Advisory Board to
    formulate and furnish to the Commission its views on significant
    regulatory proposals made by the Commission or any self-regulatory
    organization concerning the establishment, operation, and
    regulation of the markets for securities in the United States.
      (3)(A) The Advisory Board shall study and make recommendations to
    the Commission as to the steps it finds appropriate to facilitate
    the establishment of a national market system. In so doing, the
    Advisory Board shall assume the responsibilities of any advisory
    committee appointed to advise the Commission with respect to the
    national market system which is in existence at the time of the
    establishment of the Advisory Board.
      (B) The Advisory Board shall study the possible need for
    modifications of the scheme of self-regulation provided for in this
    chapter so as to adapt it to a national market system, including
    the need for the establishment of a new self-regulatory
    organization (hereinafter in this section referred to as a
    "National Market Regulatory Board" or "Regulatory Board") to
    administer the national market system. In the event the Advisory
    Board determines a National Market Regulatory Board should be
    established, it shall make recommendations as to:
        (i) the point in time at which a Regulatory Board should be
      established;
        (ii) the composition of a Regulatory Board;
        (iii) the scope of the authority of a Regulatory Board;
        (iv) the relationship of a Regulatory Board to the Commission
      and to existing self-regulatory organizations; and
        (v) the manner in which a Regulatory Board should be funded.

    The Advisory Board shall report to the Congress, on or before
    December 31, 1976, the results of such study and its
    recommendations, including such recommendations for legislation as
    it deems appropriate.
      (C) In carrying out its responsibilities under this paragraph,
    the Advisory Board shall consult with self-regulatory
    organizations, brokers, dealers, securities information processors,
    issuers, investors, representatives of Government agencies, and
    other persons interested or likely to participate in the
    establishment, operation, or regulation of the national market
    system.
    (e) National markets system for security futures products
      (1) Consultation and cooperation required
        With respect to security futures products, the Commission and
      the Commodity Futures Trading Commission shall consult and
      cooperate so that, to the maximum extent practicable, their
      respective regulatory responsibilities may be fulfilled and the
      rules and regulations applicable to security futures products may
      foster a national market system for security futures products if
      the Commission and the Commodity Futures Trading Commission
      jointly determine that such a system would be consistent with the
      congressional findings in subsection (a)(1) of this section. In
      accordance with this objective, the Commission shall, at least 15
      days prior to the issuance for public comment of any proposed
      rule or regulation under this section concerning security futures
      products, consult and request the views of the Commodity Futures
      Trading Commission.
      (2) Application of rules by order of CFTC
        No rule adopted pursuant to this section shall be applied to
      any person with respect to the trading of security futures
      products on an exchange that is registered under section 78f(g)
      of this title unless the Commodity Futures Trading Commission has
      issued an order directing that such rule is applicable to such
      persons.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 11A, as added Pub. L. 94-29,
    Sec. 7, June 4, 1975, 89 Stat. 111; amended Pub. L. 98-620, title
    IV, Sec. 402(14), Nov. 8, 1984, 98 Stat. 3358; Pub. L. 100-181,
    title III, Secs. 313, 314, Dec. 4, 1987, 101 Stat. 1256; Pub. L.
    106-554, Sec. 1(a)(5) [title II, Sec. 206(c)], Dec. 21, 2000, 114
    Stat. 2763, 2763A-430.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      The Federal Advisory Committee Act, referred to in subsec.
    (a)(3)(A), is Pub. L. 92-436, Oct. 6, 1972, 86 Stat. 770, as
    amended, which is set out in the Appendix to Title 5, Government
    Organization and Employees.


-MISC1-
                                AMENDMENTS                            
      2000 - Subsec. (e). Pub. L. 106-554 added subsec. (e).
      1987 - Subsec. (b)(2). Pub. L. 100-181, Sec. 313(1), substituted
    "transactions" for "transaction".
      Subsec. (c)(4). Pub. L. 100-181, Sec. 313(2), struck out "On or
    before the ninetieth day following June 4, 1975, the Commission
    shall (i) report to the Congress the results of its review,
    including the effects on competition of such rules, and (ii)
    commence a proceeding in accordance with the provisions of section
    78s(c) of this title to amend any such rule imposing a burden on
    competition which does not appear to the Commission to be necessary
    or appropriate in furtherance of the purposes of this chapter. The
    Commission shall conclude any such proceeding within ninety days of
    the date of publication of notice of its commencement."
      Subsec. (e). Pub. L. 100-181, Sec. 314, struck out subsec. (e)
    which read as follows: "The Commission is authorized and directed
    to make a study of the extent to which persons excluded from the
    definitions of 'broker' and 'dealer' maintain accounts on behalf of
    public customers for buying and selling securities registered under
    section 78l of this title and whether such exclusions are
    consistent with the protection of investors and the other purposes
    of this chapter. The Commission shall report to the Congress, on or
    before December 31, 1976, the results of its study together with
    such recommendations for legislation as it deems advisable."
      1984 - Subsec. (c)(4). Pub. L. 98-620 struck out designation
    "(A)" after "(4)", and struck out subpar. (B) which provided that
    review pursuant to section 78y(b) of this title of any rule
    promulgated by the Commission in accordance with any proceeding
    commenced pursuant to this paragraph would, except as to causes the
    court considers of greater importance, take precedence on the
    docket over all other causes and had to be assigned for
    consideration at the earliest practicable date and expedited in
    every way.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-620 not applicable to cases pending on
    Nov. 8, 1984, see section 403 of Pub. L. 98-620, set out as an
    Effective Date note under section 1657 of Title 28, Judiciary and
    Judicial Procedure.

                              EFFECTIVE DATE                          
      Section effective June 4, 1975, except for subsec. (b) which is
    effective 180 days after June 4, 1975, see section 31(a) of Pub. L.
    94-29, set out as a note under section 78b of this title.

                    TERMINATION OF ADVISORY COMMITTEES                
      Advisory committees established after Jan. 5, 1973, to terminate
    not later than the expiration of the 2-year period beginning on the
    date of their establishment, unless, in the case of a committee
    established by the President or an officer of the Federal
    Government, such committee is renewed by appropriate action prior
    to the expiration of such 2-year period, or in the case of a
    committee established by the Congress, its duration is otherwise
    provided for by law. See section 14 of Pub. L. 92-463, Oct. 6,
    1972, 86 Stat. 776, set out in the Appendix to Title 5, Government
    Organization and Employees.

-FOOTNOTE-
    (!1) So in original. Probably should be "are hereinafter".


-End-



-CITE-
    15 USC Sec. 78l                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78l. Registration requirements for securities

-STATUTE-
    (a) General requirement of registration
      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 chapter 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) Procedure for registration; information
      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 structure, 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, 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.
    (c) Additional or alternative information
      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) Effective date of registration; withdrawal of registration
      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 78m 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) Exemption from provisions of section for period ending not
      later than July 1, 1935
      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) Unlisted trading privileges for security originally listed on
      another national exchange
      (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) of this section, 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 October 22, 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 chapter. Until the earlier of the effective
    date of such rule or regulation or 240 days after October 22, 1994,
    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 chapter.
      (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
      chapter;
        (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 [15 U.S.C. 77a et seq.]; 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 78m or
        78o(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 78y of this title and shall not be deemed to be a
    final agency action for purposes of section 704 of title 5. 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 chapter; 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 chapter.

      (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 chapter. 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 chapter.
      (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 chapter. The powers and duties of the Commission
    under this chapter shall be applicable to the rules of an exchange
    in respect of 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 78m, 78n, or 78p of this title.
    (g) Registration of securities by issuer; exemptions
      (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 one hundred and twenty days after the last day of
      its first fiscal year ended after July 1, 1964, on which the
      issuer has total assets exceeding $1,000,000 and a class of
      equity security (other than an exempted security) held of record
      by seven hundred and fifty or more persons; and
        (B) within one hundred and twenty days after the last day of
      its first fiscal year ended after two years from July 1, 1964, on
      which the issuer has total assets exceeding $1,000,000 and a
      class of equity security (other than an exempted security) held
      of record by five hundred or more but less than seven hundred and
      fifty 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 78r 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 80a-8 of this title.
        (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 80a-3(c)(10)(B) of this title.
        (E) any security of an issuer which is a "cooperative
      association" as defined in the Agricultural Marketing Act,
      approved June 15, 1929, as amended [12 U.S.C. 1141 et seq.], 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 78p 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 title 26, (ii) an annuity plan which meets the
      requirements for deduction of the employer's contribution under
      section 404(a)(2) of title 26, or (iii) a church plan, company,
      or account that is excluded from the definition of an investment
      company under section 80a-3(c)(14) of this title.

      (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 three
    hundred 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.
    (h) Exemption by rules and regulations from certain provisions of
      section
      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 78m, 78n, or 78o(d) of this title or may exempt from
    section 78p of this title 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 chapter, classify issuers and
    prescribe requirements appropriate for each such class.
    (i) Securities issued by banks
      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 [12 U.S.C. 1811 et seq.], the
    powers, functions, and duties vested in the Commission to
    administer and enforce this section and sections 78j-1(m), 78m,
    78n(a), 78n(c), 78n(d), 78n(f), and 78p of this title, and sections
    7241, 7242, 7243, 7244, 7261(b), 7262, 7264, and 7265 of this
    title, (1) with respect to national banks 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, (3) with respect to all
    other insured banks are vested in the Federal Deposit Insurance
    Corporation, and (4) with respect to savings associations the
    accounts of which are insured by the Federal Deposit Insurance
    Corporation are vested in the Office of Thrift Supervision. The
    Comptroller of the Currency, the Board of Governors of the Federal
    Reserve System, the Federal Deposit Insurance Corporation, and the
    Office of Thrift Supervision 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 this section and sections 78j-1(m), 78m,
    78n(a), 78n(c), 78n(d), 78n(f), and 78p of this title, and sections
    7241, 7242, 7243, 7244, 7261(b), 7262, 7264, and 7265 of this
    title, 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 October 28, 1974, and, thereafter, within 60 days of any
    changes made by the Commission in its relevant regulations and
    rules.
    (j) Denial, suspension, or revocation of registration; notice and
      hearing
      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 chapter 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 78s(c) of this title; or
            (ii) section 553 of title 5.
      (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 78y(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) Definitions
        For purposes of this subsection - 
          (A) the term "emergency" means - 
            (i) 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

            (ii) 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; and

          (B) notwithstanding section 78c(a)(47) of this title, the
        term "securities laws" does not include the Public Utility
        Holding Company Act of 1935.(!1)

    (l) Issuance of any security in contravention of rules and
      regulations; application to annuity contracts and variable life
      policies
      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.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 12, 48 Stat. 892; May 27,
    1936, ch. 462, Sec. 1, 49 Stat. 1375; Aug. 10, 1954, ch. 667, title
    II, Sec. 202, 68 Stat. 686; Pub. L. 88-467, Sec. 3, Aug. 20, 1964,
    78 Stat. 565; Pub. L. 90-439, Sec. 1, July 29, 1968, 82 Stat. 454;
    Pub. L. 91-547, Sec. 28(c), Dec. 14, 1970, 84 Stat. 1435; Pub. L.
    93-495, title I, Sec. 105(b), Oct. 28, 1974, 88 Stat. 1503; Pub. L.
    94-29, Secs. 8, 9, June 4, 1975, 89 Stat. 117, 118; Pub. L. 99-514,
    Sec. 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 100-181, title III,
    Sec. 314, Dec. 4, 1987, 101 Stat. 1256; Pub. L. 101-73, title VII,
    Sec. 744(u)(2), Aug. 9, 1989, 103 Stat. 441; Pub. L. 101-432, Sec.
    2, Oct. 16, 1990, 104 Stat. 963; Pub. L. 103-389, Sec. 2, Oct. 22,
    1994, 108 Stat. 4081; Pub. L. 104-62, Sec. 4(d), Dec. 8, 1995, 109
    Stat. 685; Pub. L. 106-554, Sec. 1(a)(5) [title II, Secs. 206(e),
    208(b)(1), (2)], Dec. 21, 2000, 114 Stat. 2763, 2763A-431, 2763A-
    435; Pub. L. 107-204, Sec. 3(b)(4), title II, Sec. 205(c)(1), July
    30, 2002, 116 Stat. 749, 774; Pub. L. 108-359, Sec. 1(c)(2), Oct.
    25, 2004, 118 Stat. 1666; Pub. L. 108-386, Sec. 8(f)(4), Oct. 30,
    2004, 118 Stat. 2232; Pub. L. 108-458, title VII, Sec. 7803(b),
    (c), Dec. 17, 2004, 118 Stat. 3861, 3862.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a), (f), and (j), was in
    the original "this title". See References in Text note set out
    under section 78a of this title.
      The Securities Act of 1933, referred to in subsec.
    (f)(1)(G)(i)(I), is act May 27, 1933, ch. 38, title I, 48 Stat. 74,
    as amended, which is classified generally to subchapter I (Sec. 77a
    et seq.) of chapter 2A of this title. For complete classification
    of this Act to the Code, see section 77a of this title and Tables.
      The Agricultural Marketing Act, approved June 15, 1929, as
    amended, referred to in subsec. (g)(2)(E), is act June 15, 1929,
    ch. 24, 46 Stat. 11, as amended, which is classified generally to
    chapter 7A (Sec. 1141 et seq.) of Title 12, Banks and Banking. For
    complete classification of this Act to the Code, see section
    1141j(f) of Title 12 and Tables.
      The Federal Deposit Insurance Act, referred to in subsec. (i), is
    act Sept. 21, 1950, ch. 967, Sec. 2, 64 Stat. 873, as amended,
    which is classified generally to chapter 16 (Sec. 1811 et seq.) of
    Title 12, Banks and Banking. For complete classification of this
    Act to the Code, see Short Title note set out under section 1811 of
    Title 12 and Tables.
      The Public Utility Holding Company Act of 1935, referred to in
    subsec. (k)(7)(B), is title I of act Aug. 26, 1935, ch. 687, 49
    Stat. 803, as amended, which was classified generally to chapter 2C
    (Sec. 79 et seq.) of this title, prior to repeal by Pub. L. 109-58,
    title XII, Sec. 1263, Aug. 8, 2005, 119 Stat. 974. For complete
    classification of this Act to the Code, see Tables.


-MISC1-
                                AMENDMENTS                            
      2004 - Subsec. (g)(2)(H)(iii). Pub. L. 108-359 added cl. (iii).
      Subsec. (i)(1). Pub. L. 108-386 struck out "and banks operating
    under the Code of Law for the District of Columbia" after "national
    banks".
      Subsec. (k)(2). Pub. L. 108-458, Sec. 7803(b)(1), amended par.
    (2) generally. Prior to amendment, par. (2) provided Commission
    authority to make emergency orders.
      Subsec. (k)(6), (7). Pub. L. 108-458, Sec. 7803(c), added pars.
    (6) and (7) and struck out heading and text of former par. (6).
    Text read as follows: "For purposes of this subsection, the term
    'emergency' means a major market disturbance characterized by or
    constituting - 
        "(A) sudden and excessive fluctuations of securities prices
      generally, or a substantial threat thereof, that threaten fair
      and orderly markets, or
        "(B) a substantial disruption of the safe or efficient
      operation of the national system for clearance and settlement of
      securities, or a substantial threat thereof."
      2002 - Subsec. (b)(1)(J), (K). Pub. L. 107-204, Sec. 205(c)(1),
    substituted "a registered public accounting firm" for "independent
    public accountants".
      Subsec. (i). Pub. L. 107-204, Sec. 3(b)(4)(B), substituted "and
    78p of this title, and sections 7241, 7242, 7243, 7244, 7261(b),
    7262, 7264, and 7265 of this title," for "and 78p of this title,"
    in two places.
      Pub. L. 107-204, Sec. 3(b)(4)(A), substituted "this section and
    sections 78j-1(m), 78m" for "this section and sections 78m" in two
    places.
      2000 - Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    208(b)(1)], inserted at end "The provisions of this subsection
    shall not apply in respect of a security futures product traded on
    a national securities exchange."
      Subsec. (g)(5). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    208(b)(2)], inserted at end "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."
      Subsec. (k)(1). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(e)(1)], inserted at end "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."
      Subsec. (k)(2)(B). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(e)(2)], inserted after first sentence "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."
      1995 - Subsec. (g)(2)(D). Pub. L. 104-62 inserted before period
    at end "; or any security of a fund that is excluded from the
    definition of an investment company under section 80a-3(c)(10)(B)
    of this title".
      1994 - Subsec. (f)(1), (2). Pub. L. 103-389, Sec. 2(a), added
    pars. (1) and (2) and struck out former pars. (1) and (2) which
    related to extension of unlisted trading privileges for securities
    originally listed on another national exchange and approval process
    for application for extension of such privileges, respectively.
      Subsec. (f)(3). Pub. L. 103-389, Sec. 2(b), substituted
    "Notwithstanding paragraph (2), the Commission" for "The
    Commission".
      1990 - Subsec. (k). Pub. L. 101-432 amended subsec. (k)
    generally. Prior to amendment, subsec. (k) read as follows: "If in
    its opinion the public interest and the protection of investors so
    require, the Commission is authorized summarily to suspend trading
    in any security (other than an exempted security) for a period not
    exceeding ten days, or with the approval of the President,
    summarily to suspend all trading on any national securities
    exchange or otherwise, in securities other than exempted
    securities, for a period not exceeding ninety days. 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 which trading is so suspended."
      1989 - Subsec. (i). Pub. L. 101-73, in first sentence, inserted
    "and savings associations" after "securities issued by banks",
    struck out "or institutions the accounts of which are insured by
    the Federal Savings and Loan Insurance Corporation" before ", the
    powers, functions, and duties", inserted new cl. (4) and struck out
    former cl. (4) which read "with respect to institutions the
    accounts of which are insured by the Federal Savings and Loan
    Insurance Corporation are vested in the Federal Home Loan Bank
    Board", and, in second sentence, substituted "Office of Thrift
    Supervision" for "Federal Home Loan Bank Board".
      1987 - Subsec. (m). Pub. L. 100-181 struck out subsec. (m) which
    read as follows: "The Commission is authorized and directed to make
    a study and investigation of the practice of recording the
    ownership of securities in the records of the issuer in other than
    the name of the beneficial owner of such securities to determine
    (1) whether such practice is consistent with the purposes of this
    chapter, with particular reference to subsection (g) of this
    section and sections 78m, 78n, 78o(d), 78p, and 78q-1 of this
    title, and (2) whether steps can be taken to facilitate
    communications between issuers and the beneficial owners of their
    securities while at the same time retaining the benefits of such
    practice. The Commission shall report to the Congress its
    preliminary findings within six months after June 4, 1975, and its
    final conclusions and recommendations within one year of such
    date."
      1986 - Subsec. (g)(2)(H). Pub. L. 99-514 substituted "Internal
    Revenue Code of 1986" for "Internal Revenue Code of 1954", which
    for purposes of codification was translated as "title 26" thus
    requiring no change in text.
      1975 - Subsec. (f)(1). Pub. L. 94-29, Sec. 8(1), added subpar.
    (C) and in provisions following subpar. (C), substituted "is based"
    for "was originally based" and "remains listed and registered on a
    national securities exchange" for "shall remain listed and
    registered on any other national securities exchange".
      Subsec. (f)(2). Pub. L. 94-29, Sec. 8(1), substituted "after
    notice and opportunity for hearing" for "after appropriate notice
    and opportunity for hearing" and "consistent with the maintenance
    of fair and orderly markets and the protection of investors" for
    "necessary or appropriate in the public interest or for the
    protection of investors" in existing provisions and added the
    enumeration of matters to be taken into account by the Commission
    in considering an application for the extension of unlisted trading
    privileges to a security not listed and registered on a national
    securities exchange.
      Subsec. (f)(6). Pub. L. 94-29, Sec. 8(2), substituted "this
    chapter" for "section 78s(b) of this title".
      Subsecs. (j) to (m). Pub. L. 94-29, Sec. 9, added subsecs. (j) to
    (m).
      1974 - Subsec. (i). Pub. L. 93-495 added coverage of institutions
    insured by the Federal Savings and Loan Insurance Corporation, cl.
    (4), and provisions authorizing the Federal Home Loan Bank Board to
    promulgate necessary rules and regulations, and substituted
    provisions relating to issuance of regulations in order to
    implement agency responsibility under this subsec. for provisions
    relating to the binding effect of rules, regulations, forms or
    orders issued or adopted by the Commission pursuant to this
    chapter.
      1970 - Subsec. (g)(2)(H). Pub. L. 91-547 added subpar. (H).
      1968 - Subsec. (i). Pub. L. 90-439 inserted "78n(d), 78n(f),"
    after "78n(c)".
      1964 - Subsec. (b)(1)(I) to (L). Pub. L. 88-467, Sec. 3(a)(1),
    (2), added subpar. (I) and redesignated former subpars. (I) to (K)
    as (J) to (L), respectively.
      Subsec. (b)(3). Pub. L. 88-467, Sec. 3(a)(3), added par. (3).
      Subsec. (f)(1). Pub. L. 88-467, Sec. 3(b), designated first par.
    as (1), redesignated cl. (1) as cl. (A) and substituted therein
    "July 1, 1964" for "March 1, 1934", redesignated cl. (2) as cl. (B)
    and struck out the provision for continuation of unlisted trading
    privileges, which is now incorporated in concluding sentence, and
    struck out cl. (3) which permitted a national security exchange to
    extend unlisted trading privileges to any security in respect to
    which there was available information substantially equivalent to
    that available in respect to a security duly listed and registered
    on a national securities exchange, so long as the registration
    statement was effective and the reports and data continued to be
    filed.
      Subsec. (f)(2). Pub. L. 88-467, Sec. 3(b), designated first
    sentence of second par. as (2) and substituted therein "finds,
    after appropriate notice and opportunity for hearing, that the
    extension" for "finds that the continuation or extension", and
    struck out second through sixth sentences of such second par. which
    related as follows: the second sentence, to notice and opportunity
    for hearing, now incorporated in par. (2); the third sentence, to
    conditions (respecting sufficiently widespread public distribution
    and sufficient public trading activity) for approval of application
    to extend unlisted trading privileges to any security pursuant to
    former clauses (2) and (3) of subsec. (f); the fourth sentence, to
    terms and conditions (subjecting issuer, officers, and directors of
    issuer, and beneficial owners of more than 10 per centum of the
    securities to duties equivalent to duties if the securities were
    registered on a national security exchange) for approval of
    application to extend unlisted trading privileges to any security
    pursuant to former clause (3) of subsec. (f); the fifth sentence,
    to requirement for differentiation by national security exchanges
    between quotations or transactions in listed securities and in
    securities with unlisted trading privileges, now covered by section
    78s(b) of this title; the sixth sentence, to grouping under
    separate headings of quotations or transactions in listed
    securities and in securities with unlisted trading privileges, in
    the publication of quotations or transactions.
      Subsec. (f)(3). Pub. L. 88-467, Sec. 3(b), designated third par.
    as (3).
      Subsec. (f)(4). Pub. L. 88-467, Sec. 3(b), designated second
    sentence of fourth par. as (4), struck out "by reason of inadequate
    public distribution of such security in the vicinity of said
    exchange, or by reason of inadequate public trading activity or of
    the character of trading therein on said exchange," before "such
    termination or suspension is necessary", and struck out first
    sentence of fourth par. which provided for the termination under
    certain conditions of unlisted trading privileges continued for any
    security pursuant to former cl. (1) of subsec. (f), now
    incorporated in par. (1)(A) of subsec. (f).
      Subsec. (f)(5), (6). Pub. L. 88-467, Sec. 3(b), designated fifth
    and sixth pars. as (5) and (6).
      Subsecs. (g) to (i). Pub. L. 88-467, Sec. 3(c)-(e), added
    subsecs. (g) to (i).
      1954 - Subsec. (d). Act Aug. 10, 1954, repealed last sentence
    requiring that rules and regulations limit the registration of
    unissued security to specified cases.
      1936 - Subsec. (f). Act May 27, 1936, amended first par. and
    added subsequent pars.

                     EFFECTIVE DATE OF 2004 AMENDMENT                 
      Amendment by Pub. L. 108-386 effective Oct. 30, 2004, and, except
    as otherwise provided, applicable with respect to fiscal year 2005
    and each succeeding fiscal year, see sections 8(i) and 9 of Pub. L.
    108-386, set out as notes under section 321 of Title 12, Banks and
    Banking.

                     EFFECTIVE DATE OF 1995 AMENDMENT                 
      Amendment by Pub. L. 104-62 applicable as defense to any claim in
    administrative and judicial actions pending on or commenced after
    Dec. 8, 1995, that any person, security, interest, or participation
    of type described in Pub. L. 104-62 is subject to the Securities
    Act of 1933, the Securities Exchange Act of 1934, the Investment
    Company Act of 1940, the Investment Advisers Act of 1940, or any
    State statute or regulation preempted as provided in section 80a-3a
    of this title, except as specifically provided in such statutes,
    see section 7 of Pub. L. 104-62, set out as a note under section
    77c of this title.

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.

                     EFFECTIVE DATE OF 1970 AMENDMENT                 
      Amendment by Pub. L. 91-547 effective Dec. 14, 1970, see section
    30 of Pub. L. 91-547, set out as a note under section 80a-52 of
    this title.

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      Amendment by section 3(a), (c) of Pub. L. 88-467 effective July
    1, 1964, and amendment by section 3(b), (d), (e) of Pub. L. 88-467
    effective Aug. 20, 1964, see section 13 of Pub. L. 88-467, set out
    as a note under section 78c of this title.

                     EFFECTIVE DATE OF 1954 AMENDMENT                 
      Amendment by act Aug. 10, 1954, effective 60 days after Aug. 10,
    1954, see note under section 77b of this title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-FOOTNOTE-               

    (!1) See References in Text note below.


-End-



-CITE-
    15 USC Sec. 78l-1                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78l-1. Applications for unlisted trading privileges deemed
      filed under section 78l of this title

-STATUTE-
      Any application to continue unlisted trading privileges for any
    security heretofore filed by any exchange and approved by the
    Commission pursuant to clause (1) of subsection (f) of section 78l
    of this title and rules and regulations thereunder shall be deemed
    to have been filed and approved pursuant to clause (1) of said
    subsection (f).

-SOURCE-
    (May 27, 1936, ch. 462, Sec. 2, 49 Stat. 1377.)

-COD-
                               CODIFICATION                           
      Section was not enacted as a part of the Securities Exchange Act
    of 1934 which comprises this chapter.

-End-



-CITE-
    15 USC Sec. 78m                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78m. Periodical and other reports

-STATUTE-
    (a) Reports by issuer of security; contents
      Every issuer of a security registered pursuant to section 78l of
    this title shall file with the Commission, in accordance with such
    rules and regulations as the Commission may prescribe as necessary
    or appropriate for the proper protection of investors and to insure
    fair dealing in the security - 
        (1) such information and documents (and such copies thereof) as
      the Commission shall require to keep reasonably current the
      information and documents required to be included in or filed
      with an application or registration statement filed pursuant to
      section 78l of this title, except that the Commission may not
      require the filing of any material contract wholly executed
      before July 1, 1962.
        (2) such annual reports (and such copies thereof), certified if
      required by the rules and regulations of the Commission by
      independent public accountants, and such quarterly reports (and
      such copies thereof), as the Commission may prescribe.

    Every issuer of a security registered on a national securities
    exchange shall also file a duplicate original of such information,
    documents, and reports with the exchange.
    (b) Form of report; books, records, and internal accounting;
      directives
      (1) The Commission may prescribe, in regard to reports made
    pursuant to this chapter, the form or forms in which the required
    information shall be set forth, the items or details to be shown in
    the balance sheet and the earning statement, and the methods to be
    followed in the preparation of reports, in the appraisal or
    valuation of assets and liabilities, in the determination of
    depreciation and depletion, in the differentiation of recurring and
    nonrecurring income, in the differentiation of investment and
    operating income, and in the preparation, where the Commission
    deems it necessary or desirable, of separate and/or consolidated
    balance sheets or income accounts of any person directly or
    indirectly controlling or controlled by the issuer, or any person
    under direct or indirect common control with the issuer; but in the
    case of the reports of any person whose methods of accounting are
    prescribed under the provisions of any law of the United States, or
    any rule or regulation thereunder, the rules and regulations of the
    Commission with respect to reports shall not be inconsistent with
    the requirements imposed by such law or rule or regulation in
    respect of the same subject matter (except that such rules and
    regulations of the Commission may be inconsistent with such
    requirements to the extent that the Commission determines that the
    public interest or the protection of investors so requires).
      (2) Every issuer which has a class of securities registered
    pursuant to section 78l of this title and every issuer which is
    required to file reports pursuant to section 78o(d) of this title
    shall - 
        (A) make and keep books, records, and accounts, which, in
      reasonable detail, accurately and fairly reflect the transactions
      and dispositions of the assets of the issuer;
        (B) devise and maintain a system of internal accounting
      controls sufficient to provide reasonable assurances that - 
          (i) transactions are executed in accordance with management's
        general or specific authorization;
          (ii) transactions are recorded as necessary (I) to permit
        preparation of financial statements in conformity with
        generally accepted accounting principles or any other criteria
        applicable to such statements, and (II) to maintain
        accountability for assets;
          (iii) access to assets is permitted only in accordance with
        management's general or specific authorization; and
          (iv) the recorded accountability for assets is compared with
        the existing assets at reasonable intervals and appropriate
        action is taken with respect to any differences; and

        (C) notwithstanding any other provision of law, pay the
      allocable share of such issuer of a reasonable annual accounting
      support fee or fees, determined in accordance with section 7219
      of this title.

      (3)(A) With respect to matters concerning the national security
    of the United States, no duty or liability under paragraph (2) of
    this subsection shall be imposed upon any person acting in
    cooperation with the head of any Federal department or agency
    responsible for such matters if such act in cooperation with such
    head of a department or agency was done upon the specific, written
    directive of the head of such department or agency pursuant to
    Presidential authority to issue such directives. Each directive
    issued under this paragraph shall set forth the specific facts and
    circumstances with respect to which the provisions of this
    paragraph are to be invoked. Each such directive shall, unless
    renewed in writing, expire one year after the date of issuance.
      (B) Each head of a Federal department or agency of the United
    States who issues a directive pursuant to this paragraph shall
    maintain a complete file of all such directives and shall, on
    October 1 of each year, transmit a summary of matters covered by
    such directives in force at any time during the previous year to
    the Permanent Select Committee on Intelligence of the House of
    Representatives and the Select Committee on Intelligence of the
    Senate.
      (4) No criminal liability shall be imposed for failing to comply
    with the requirements of paragraph (2) of this subsection except as
    provided in paragraph (5) of this subsection.
      (5) No person shall knowingly circumvent or knowingly fail to
    implement a system of internal accounting controls or knowingly
    falsify any book, record, or account described in paragraph (2).
      (6) Where an issuer which has a class of securities registered
    pursuant to section 78l of this title or an issuer which is
    required to file reports pursuant to section 78o(d) of this title
    holds 50 per centum or less of the voting power with respect to a
    domestic or foreign firm, the provisions of paragraph (2) require
    only that the issuer proceed in good faith to use its influence, to
    the extent reasonable under the issuer's circumstances, to cause
    such domestic or foreign firm to devise and maintain a system of
    internal accounting controls consistent with paragraph (2). Such
    circumstances include the relative degree of the issuer's ownership
    of the domestic or foreign firm and the laws and practices
    governing the business operations of the country in which such firm
    is located. An issuer which demonstrates good faith efforts to use
    such influence shall be conclusively presumed to have complied with
    the requirements of paragraph (2).
      (7) For the purpose of paragraph (2) of this subsection, the
    terms "reasonable assurances" and "reasonable detail" mean such
    level of detail and degree of assurance as would satisfy prudent
    officials in the conduct of their own affairs.
    (c) Alternative reports
      If in the judgment of the Commission any report required under
    subsection (a) of this section is inapplicable to any specified
    class or classes of issuers, the Commission shall require in lieu
    thereof the submission of such reports of comparable character as
    it may deem applicable to such class or classes of issuers.
    (d) Reports by persons acquiring more than five per centum of
      certain classes of securities
      (1) Any person who, after acquiring directly or indirectly the
    beneficial ownership of any equity security of a class which is
    registered pursuant to section 78l of this title, or any equity
    security of an insurance company which would have been required to
    be so registered except for the exemption contained in section
    78l(g)(2)(G) of this title, or any equity security issued by a
    closed-end investment company registered under the Investment
    Company Act of 1940 [15 U.S.C. 80a-1 et seq.] or any equity
    security issued by a Native Corporation pursuant to section
    1629c(d)(6) of title 43, is directly or indirectly the beneficial
    owner of more than 5 per centum of such class shall, within ten
    days after such acquisition, send to the issuer of the security at
    its principal executive office, by registered or certified mail,
    send to each exchange where the security is traded, and file with
    the Commission, a statement containing such of the following
    information, and such additional information, as the Commission may
    by rules and regulations, prescribe as necessary or appropriate in
    the public interest or for the protection of investors - 
        (A) the background, and identity, residence, and citizenship
      of, and the nature of such beneficial ownership by, such person
      and all other persons by whom or on whose behalf the purchases
      have been or are to be effected;
        (B) the source and amount of the funds or other consideration
      used or to be used in making the purchases, and if any part of
      the purchase price is represented or is to be represented by
      funds or other consideration borrowed or otherwise obtained for
      the purpose of acquiring, holding, or trading such security, a
      description of the transaction and the names of the parties
      thereto, except that where a source of funds is a loan made in
      the ordinary course of business by a bank, as defined in section
      78c(a)(6) of this title, if the person filing such statement so
      requests, the name of the bank shall not be made available to the
      public;
        (C) if the purpose of the purchases or prospective purchases is
      to acquire control of the business of the issuer of the
      securities, any plans or proposals which such persons may have to
      liquidate such issuer, to sell its assets to or merge it with any
      other persons, or to make any other major change in its business
      or corporate structure;
        (D) the number of shares of such security which are
      beneficially owned, and the number of shares concerning which
      there is a right to acquire, directly or indirectly, by (i) such
      person, and (ii) by each associate of such person, giving the
      background, identity, residence, and citizenship of each such
      associate; and
        (E) information as to any contracts, arrangements, or
      understandings with any person with respect to any securities of
      the issuer, including but not limited to transfer of any of the
      securities, joint ventures, loan or option arrangements, puts or
      calls, guaranties of loans, guaranties against loss or guaranties
      of profits, division of losses or profits, or the giving or
      withholding of proxies, naming the persons with whom such
      contracts, arrangements, or understandings have been entered
      into, and giving the details thereof.

      (2) If any material change occurs in the facts set forth in the
    statements to the issuer and the exchange, and in the statement
    filed with the Commission, an amendment shall be transmitted to the
    issuer and the exchange and shall be filed with the Commission, 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.
      (3) When two or more persons act as a partnership, limited
    partnership, syndicate, or other group for the purpose of
    acquiring, holding, or disposing of securities of an issuer, such
    syndicate or group shall be deemed a "person" for the purposes of
    this subsection.
      (4) In determining, for purposes of this subsection, any
    percentage of a class of any security, such class shall be deemed
    to consist of the amount of the outstanding securities of such
    class, exclusive of any securities of such class held by or for the
    account of the issuer or a subsidiary of the issuer.
      (5) The Commission, by rule or regulation or by order, may permit
    any person to file in lieu of the statement required by paragraph
    (1) of this subsection or the rules and regulations thereunder, a
    notice stating the name of such person, the number of shares of any
    equity securities subject to paragraph (1) which are owned by him,
    the date of their acquisition and such other information as the
    Commission may specify, if it appears to the Commission that such
    securities were acquired by such person in the ordinary course of
    his business and were not acquired for the purpose of and do not
    have the effect of changing or influencing the control of the
    issuer nor in connection with or as a participant in any
    transaction having such purpose or effect.
      (6) The provisions of this subsection shall not apply to - 
        (A) any acquisition or offer to acquire securities made or
      proposed to be made by means of a registration statement under
      the Securities Act of 1933 [15 U.S.C. 77a et seq.];
        (B) any acquisition of the beneficial ownership of a security
      which, together with all other acquisitions by the same person of
      securities of the same class during the preceding twelve months,
      does not exceed 2 per centum of that class;
        (C) any acquisition of an equity security by the issuer of such
      security;
        (D) any acquisition or proposed acquisition of a security which
      the Commission, by rules or regulations or by order, shall exempt
      from the provisions of this subsection as not entered into for
      the purpose of, and not having the effect of, changing or
      influencing the control of the issuer or otherwise as not
      comprehended within the purposes of this subsection.
    (e) Purchase of securities by issuer
      (1) It shall be unlawful for an issuer which has a class of
    equity securities registered pursuant to section 78l of this title,
    or which is a closed-end investment company registered under the
    Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.], to
    purchase any equity security issued by it if such purchase is in
    contravention of such rules and regulations as the Commission, in
    the public interest or for the protection of investors, may adopt
    (A) to define acts and practices which are fraudulent, deceptive,
    or manipulative, and (B) to prescribe means reasonably designed to
    prevent such acts and practices. Such rules and regulations may
    require such issuer to provide holders of equity securities of such
    class with such information relating to the reasons for such
    purchase, the source of funds, the number of shares to be
    purchased, the price to be paid for such securities, the method of
    purchase, and such additional information, as the Commission deems
    necessary or appropriate in the public interest or for the
    protection of investors, or which the Commission deems to be
    material to a determination whether such security should be sold.
      (2) For the purpose of this subsection, a purchase by or for the
    issuer or any person controlling, controlled by, or under common
    control with the issuer, or a purchase subject to control of the
    issuer or any such person, shall be deemed to be a purchase by the
    issuer. The Commission shall have power to make rules and
    regulations implementing this paragraph in the public interest and
    for the protection of investors, including exemptive rules and
    regulations covering situations in which the Commission deems it
    unnecessary or inappropriate that a purchase of the type described
    in this paragraph shall be deemed to be a purchase by the issuer
    for purposes of some or all of the provisions of paragraph (1) of
    this subsection.
      (3) At the time of filing such statement as the Commission may
    require by rule pursuant to paragraph (1) of this subsection, the
    person making the filing shall pay to the Commission a fee at a
    rate that, subject to paragraphs (5) and (6), is equal to $92 per
    $1,000,000 of the value of securities proposed to be purchased. The
    fee shall be reduced with respect to securities in an amount equal
    to any fee paid with respect to any securities issued in connection
    with the proposed transaction under section 6(b) of the Securities
    Act of 1933 [15 U.S.C. 77f(b)], or the fee paid under that section
    shall be reduced in an amount equal to the fee paid to the
    Commission in connection with such transaction under this
    paragraph.
      (4) Offsetting collections. - Fees collected pursuant to this
    subsection for any fiscal year shall be deposited and credited as
    offsetting collections to the account providing appropriations to
    the Commission, and, except as provided in paragraph (9), shall not
    be collected for any fiscal year except to the extent provided in
    advance in appropriation Acts. No fees collected pursuant to this
    subsection for fiscal year 2002 or any succeeding fiscal year shall
    be deposited and credited as general revenue of the Treasury.
      (5) Annual adjustment. - For each of the fiscal years 2003
    through 2011, the Commission shall by order adjust the rate
    required by paragraph (3) for such fiscal year to a rate that is
    equal to the rate (expressed in dollars per million) that is
    applicable under section 6(b) of the Securities Act of 1933 [15
    U.S.C. 77f(b)] for such fiscal year.
      (6) Final rate adjustment. - For fiscal year 2012 and all of the
    succeeding fiscal years, the Commission shall by order adjust the
    rate required by paragraph (3) for all of such fiscal years to a
    rate that is equal to the rate (expressed in dollars per million)
    that is applicable under section 6(b) of the Securities Act of 1933
    [15 U.S.C. 77f(b)] for all of such fiscal years.
      (7) Pro rata application. - The rates per $1,000,000 required by
    this subsection shall be applied pro rata to amounts and balances
    of less than $1,000,000.
      (8) Review and effective date. - In exercising its authority
    under this subsection, the Commission shall not be required to
    comply with the provisions of section 553 of title 5. An adjusted
    rate prescribed under paragraph (5) or (6) and published under
    paragraph (10) shall not be subject to judicial review. Subject to
    paragraphs (4) and (9) - 
        (A) an adjusted rate prescribed under paragraph (5) shall take
      effect on the later of - 
          (i) the first day of the fiscal year to which such rate
        applies; or
          (ii) five days after the date on which a regular
        appropriation to the Commission for such fiscal year is
        enacted; and

        (B) an adjusted rate prescribed under paragraph (6) shall take
      effect on the later of - 
          (i) the first day of fiscal year 2012; or
          (ii) five days after the date on which a regular
        appropriation to the Commission for fiscal year 2012 is
        enacted.

      (9) Lapse of appropriation. - If on the first day of a fiscal
    year a regular appropriation to the Commission has not been
    enacted, the Commission shall continue to collect fees (as
    offsetting collections) under this subsection at the rate in effect
    during the preceding fiscal year, until 5 days after the date such
    a regular appropriation is enacted.
      (10) Publication. - The rate applicable under this subsection for
    each fiscal year is published pursuant to section 6(b)(10) of the
    Securities Act of 1933 [15 U.S.C. 77f(b)(10)].
    (f) Reports by institutional investment managers
      (1) Every institutional investment manager which uses the mails,
    or any means or instrumentality of interstate commerce in the
    course of its business as an institutional investment manager and
    which exercises investment discretion with respect to accounts
    holding equity securities of a class described in subsection (d)(1)
    of this section having an aggregate fair market value on the last
    trading day in any of the preceding twelve months of at least
    $100,000,000 or such lesser amount (but in no case less than
    $10,000,000) as the Commission, by rule, may determine, shall file
    reports with the Commission in such form, for such periods, and at
    such times after the end of such periods as the Commission, by
    rule, may prescribe, but in no event shall such reports be filed
    for periods longer than one year or shorter than one quarter. Such
    reports shall include for each such equity security held on the
    last day of the reporting period by accounts (in aggregate or by
    type as the Commission, by rule, may prescribe) with respect to
    which the institutional investment manager exercises investment
    discretion (other than securities held in amounts which the
    Commission, by rule, determines to be insignificant for purposes of
    this subsection), the name of the issuer and the title, class,
    CUSIP number, number of shares or principal amount, and aggregate
    fair market value of each such security. Such reports may also
    include for accounts (in aggregate or by type) with respect to
    which the institutional investment manager exercises investment
    discretion such of the following information as the Commission, by
    rule, prescribes - 
        (A) the name of the issuer and the title, class, CUSIP number,
      number of shares or principal amount, and aggregate fair market
      value or cost or amortized cost of each other security (other
      than an exempted security) held on the last day of the reporting
      period by such accounts;
        (B) the aggregate fair market value or cost or amortized cost
      of exempted securities (in aggregate or by class) held on the
      last day of the reporting period by such accounts;
        (C) the number of shares of each equity security of a class
      described in subsection (d)(1) of this section held on the last
      day of the reporting period by such accounts with respect to
      which the institutional investment manager possesses sole or
      shared authority to exercise the voting rights evidenced by such
      securities;
        (D) the aggregate purchases and aggregate sales during the
      reporting period of each security (other than an exempted
      security) effected by or for such accounts; and
        (E) with respect to any transaction or series of transactions
      having a market value of at least $500,000 or such other amount
      as the Commission, by rule, may determine, effected during the
      reporting period by or for such accounts in any equity security
      of a class described in subsection (d)(1) of this section - 
          (i) the name of the issuer and the title, class, and CUSIP
        number of the security;
          (ii) the number of shares or principal amount of the security
        involved in the transaction;
          (iii) whether the transaction was a purchase or sale;
          (iv) the per share price or prices at which the transaction
        was effected;
          (v) the date or dates of the transaction;
          (vi) the date or dates of the settlement of the transaction;
          (vii) the broker or dealer through whom the transaction was
        effected;
          (viii) the market or markets in which the transaction was
        effected; and
          (ix) such other related information as the Commission, by
        rule, may prescribe.

      (2) The Commission, by rule, or order, may exempt, conditionally
    or unconditionally, any institutional investment manager or
    security or any class of institutional investment managers or
    securities from any or all of the provisions of this subsection or
    the rules thereunder.
      (3) The Commission shall make available to the public for a
    reasonable fee a list of all equity securities of a class described
    in subsection (d)(1) of this section, updated no less frequently
    than reports are required to be filed pursuant to paragraph (1) of
    this subsection. The Commission shall tabulate the information
    contained in any report filed pursuant to this subsection in a
    manner which will, in the view of the Commission, maximize the
    usefulness of the information to other Federal and State
    authorities and the public. Promptly after the filing of any such
    report, the Commission shall make the information contained therein
    conveniently available to the public for a reasonable fee in such
    form as the Commission, by rule, may prescribe, except that the
    Commission, as it determines to be necessary or appropriate in the
    public interest or for the protection of investors, may delay or
    prevent public disclosure of any such information in accordance
    with section 552 of title 5. Notwithstanding the preceding
    sentence, any such information identifying the securities held by
    the account of a natural person or an estate or trust (other than a
    business trust or investment company) shall not be disclosed to the
    public.
      (4) In exercising its authority under this subsection, the
    Commission shall determine (and so state) that its action is
    necessary or appropriate in the public interest and for the
    protection of investors or to maintain fair and orderly markets or,
    in granting an exemption, that its action is consistent with the
    protection of investors and the purposes of this subsection. In
    exercising such authority the Commission shall take such steps as
    are within its power, including consulting with the Comptroller
    General of the United States, the Director of the Office of
    Management and Budget, the appropriate regulatory agencies, Federal
    and State authorities which, directly or indirectly, require
    reports from institutional investment managers of information
    substantially similar to that called for by this subsection,
    national securities exchanges, and registered securities
    associations, (A) to achieve uniform, centralized reporting of
    information concerning the securities holdings of and transactions
    by or for accounts with respect to which institutional investment
    managers exercise investment discretion, and (B) consistently with
    the objective set forth in the preceding subparagraph, to avoid
    unnecessarily duplicative reporting by, and minimize the compliance
    burden on, institutional investment managers. Federal authorities
    which, directly or indirectly, require reports from institutional
    investment managers of information substantially similar to that
    called for by this subsection shall cooperate with the Commission
    in the performance of its responsibilities under the preceding
    sentence. An institutional investment manager which is a bank, the
    deposits of which are insured in accordance with the Federal
    Deposit Insurance Act [12 U.S.C. 1811 et seq.], shall file with the
    appropriate regulatory agency a copy of every report filed with the
    Commission pursuant to this subsection.
      (5)(A) For purposes of this subsection the term "institutional
    investment manager" includes any person, other than a natural
    person, investing in or buying and selling securities for its own
    account, and any person exercising investment discretion with
    respect to the account of any other person.
      (B) The Commission shall adopt such rules as it deems necessary
    or appropriate to prevent duplicative reporting pursuant to this
    subsection by two or more institutional investment managers
    exercising investment discretion with respect to the same
    amount.(!1)

    (g) Statement of equity security ownership
      (1) Any person who is directly or indirectly the beneficial owner
    of more than 5 per centum of any security of a class described in
    subsection (d)(1) of this section shall send to the issuer of the
    security and shall file with the Commission a statement setting
    forth, in such form and at such time as the Commission may, by
    rule, prescribe - 
        (A) such person's identity, residence, and citizenship; and
        (B) the number and description of the shares in which such
      person has an interest and the nature of such interest.

      (2) If any material change occurs in the facts set forth in the
    statement sent to the issuer and filed with the Commission, an
    amendment shall be transmitted to the issuer and shall be filed
    with the Commission, 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.
      (3) When two or more persons act as a partnership, limited
    partnership, syndicate, or other group for the purpose of
    acquiring, holding, or disposing of securities of an issuer, such
    syndicate or group shall be deemed a "person" for the purposes of
    this subsection.
      (4) In determining, for purposes of this subsection, any
    percentage of a class of any security, such class shall be deemed
    to consist of the amount of the outstanding securities of such
    class, exclusive of any securities of such class held by or for the
    account of the issuer or a subsidiary of the issuer.
      (5) In exercising its authority under this subsection, the
    Commission shall take such steps as it deems necessary or
    appropriate in the public interest or for the protection of
    investors (A) to achieve centralized reporting of information
    regarding ownership, (B) to avoid unnecessarily duplicative
    reporting by and minimize the compliance burden on persons required
    to report, and (C) to tabulate and promptly make available the
    information contained in any report filed pursuant to this
    subsection in a manner which will, in the view of the Commission,
    maximize the usefulness of the information to other Federal and
    State agencies and the public.
      (6) The Commission may, by rule or order, exempt, in whole or in
    part, any person or class of persons from any or all of the
    reporting requirements of this subsection as it deems necessary or
    appropriate in the public interest or for the protection of
    investors.
    (h) Large trader reporting
      (1) Identification requirements for large traders
        For the purpose of monitoring the impact on the securities
      markets of securities transactions involving a substantial volume
      or a large fair market value or exercise value and for the
      purpose of otherwise assisting the Commission in the enforcement
      of this chapter, each large trader shall - 
          (A) provide such information to the Commission as the
        Commission may by rule or regulation prescribe as necessary or
        appropriate, identifying such large trader and all accounts in
        or through which such large trader effects such transactions;
        and
          (B) identify, in accordance with such rules or regulations as
        the Commission may prescribe as necessary or appropriate, to
        any registered broker or dealer by or through whom such large
        trader directly or indirectly effects securities transactions,
        such large trader and all accounts directly or indirectly
        maintained with such broker or dealer by such large trader in
        or through which such transactions are effected.
      (2) Recordkeeping and reporting requirements for brokers and
        dealers
        Every registered broker or dealer shall make and keep for
      prescribed periods such records as the Commission by rule or
      regulation prescribes as necessary or appropriate in the public
      interest, for the protection of investors, or otherwise in
      furtherance of the purposes of this chapter, with respect to
      securities transactions that equal or exceed the reporting
      activity level effected directly or indirectly by or through such
      registered broker or dealer of or for any person that such broker
      or dealer knows is a large trader, or any person that such broker
      or dealer has reason to know is a large trader on the basis of
      transactions in securities effected by or through such broker or
      dealer. Such records shall be available for reporting to the
      Commission, or any self-regulatory organization that the
      Commission shall designate to receive such reports, on the
      morning of the day following the day the transactions were
      effected, and shall be reported to the Commission or a self-
      regulatory organization designated by the Commission immediately
      upon request by the Commission or such a self-regulatory
      organization. Such records and reports shall be in a format and
      transmitted in a manner prescribed by the Commission (including,
      but not limited to, machine readable form).
      (3) Aggregation rules
        The Commission may prescribe rules or regulations governing the
      manner in which transactions and accounts shall be aggregated for
      the purpose of this subsection, including aggregation on the
      basis of common ownership or control.
      (4) Examination of broker and dealer records
        All records required to be made and kept by registered brokers
      and dealers pursuant to this subsection with respect to
      transactions effected by large traders are subject at any time,
      or from time to time, to such reasonable periodic, special, or
      other examinations by representatives of the Commission as the
      Commission deems necessary or appropriate in the public interest,
      for the protection of investors, or otherwise in furtherance of
      the purposes of this chapter.
      (5) Factors to be considered in Commission actions
        In exercising its authority under this subsection, the
      Commission shall take into account - 
          (A) existing reporting systems;
          (B) the costs associated with maintaining information with
        respect to transactions effected by large traders and reporting
        such information to the Commission or self-regulatory
        organizations; and
          (C) the relationship between the United States and
        international securities markets.
      (6) Exemptions
        The Commission, by rule, regulation, or order, consistent with
      the purposes of this chapter, may exempt any person or class of
      persons or any transaction or class of transactions, either
      conditionally or upon specified terms and conditions or for
      stated periods, from the operation of this subsection, and the
      rules and regulations thereunder.
      (7) Authority of Commission to limit disclosure of information
        Notwithstanding any other provision of law, the Commission
      shall not be compelled to disclose any information required to be
      kept or reported under this subsection. Nothing in this
      subsection shall authorize the Commission to withhold information
      from Congress, or prevent the Commission from complying with a
      request for information from any other Federal department or
      agency requesting information for purposes within the scope of
      its jurisdiction, or complying with an order of a court of the
      United States in an action brought by the United States or the
      Commission. 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.
      (8) Definitions
        For purposes of this subsection - 
          (A) the term "large trader" means every person who, for his
        own account or an account for which he exercises investment
        discretion, effects transactions for the purchase or sale of
        any publicly traded security or securities by use of any means
        or instrumentality of interstate commerce or of the mails, or
        of any facility of a national securities exchange, directly or
        indirectly by or through a registered broker or dealer in an
        aggregate amount equal to or in excess of the identifying
        activity level;
          (B) the term "publicly traded security" means any equity
        security (including an option on individual equity securities,
        and an option on a group or index of such securities) listed,
        or admitted to unlisted trading privileges, on a national
        securities exchange, or quoted in an automated interdealer
        quotation system;
          (C) the term "identifying activity level" means transactions
        in publicly traded securities at or above a level of volume,
        fair market value, or exercise value as shall be fixed from
        time to time by the Commission by rule or regulation,
        specifying the time interval during which such transactions
        shall be aggregated;
          (D) the term "reporting activity level" means transactions in
        publicly traded securities at or above a level of volume, fair
        market value, or exercise value as shall be fixed from time to
        time by the Commission by rule, regulation, or order,
        specifying the time interval during which such transactions
        shall be aggregated; and
          (E) the term "person" has the meaning given in section
        78c(a)(9) of this title and also includes two or more persons
        acting as a partnership, limited partnership, syndicate, or
        other group, but does not include a foreign central bank.
    (i) Accuracy of financial reports
      Each financial report that contains financial statements, and
    that is required to be prepared in accordance with (or reconciled
    to) generally accepted accounting principles under this chapter and
    filed with the Commission shall reflect all material correcting
    adjustments that have been identified by a registered public
    accounting firm in accordance with generally accepted accounting
    principles and the rules and regulations of the Commission.
    (j) Off-balance sheet transactions
      Not later than 180 days after July 30, 2002, the Commission shall
    issue final rules providing that each annual and quarterly
    financial report required to be filed with the Commission shall
    disclose all material off-balance sheet transactions, arrangements,
    obligations (including contingent obligations), and other
    relationships of the issuer with unconsolidated entities or other
    persons, that may have a material current or future effect on
    financial condition, changes in financial condition, results of
    operations, liquidity, capital expenditures, capital resources, or
    significant components of revenues or expenses.
    (k) Prohibition on personal loans to executives
      (1) In general
        It shall be unlawful for any issuer (as defined in section 7201
      of this title), directly or indirectly, including through any
      subsidiary, to extend or maintain credit, to arrange for the
      extension of credit, or to renew an extension of credit, in the
      form of a personal loan to or for any director or executive
      officer (or equivalent thereof) of that issuer. An extension of
      credit maintained by the issuer on July 30, 2002, shall not be
      subject to the provisions of this subsection, provided that there
      is no material modification to any term of any such extension of
      credit or any renewal of any such extension of credit on or after
      July 30, 2002.
      (2) Limitation
        Paragraph (1) does not preclude any home improvement and
      manufactured home loans (as that term is defined in section 1464
      of title 12), consumer credit (as defined in section 1602 of this
      title), or any extension of credit under an open end credit plan
      (as defined in section 1602 of this title), or a charge card (as
      defined in section 1637(c)(4)(e) of this title), or any extension
      of credit by a broker or dealer registered under section 78o of
      this title to an employee of that broker or dealer to buy, trade,
      or carry securities, that is permitted under rules or regulations
      of the Board of Governors of the Federal Reserve System pursuant
      to section 78g of this title (other than an extension of credit
      that would be used to purchase the stock of that issuer), that is
      - 
          (A) made or provided in the ordinary course of the consumer
        credit business of such issuer;
          (B) of a type that is generally made available by such issuer
        to the public; and
          (C) made by such issuer on market terms, or terms that are no
        more favorable than those offered by the issuer to the general
        public for such extensions of credit.
      (3) Rule of construction for certain loans
        Paragraph (1) does not apply to any loan made or maintained by
      an insured depository institution (as defined in section 3 of the
      Federal Deposit Insurance Act (12 U.S.C. 1813)), if the loan is
      subject to the insider lending restrictions of section 375b of
      title 12.
    (l) Real time issuer disclosures
      Each issuer reporting under subsec. (a) of this section or
    section 78o(d) of this title shall disclose to the public on a
    rapid and current basis such additional information concerning
    material changes in the financial condition or operations of the
    issuer, in plain English, which may include trend and qualitative
    information and graphic presentations, as the Commission
    determines, by rule, is necessary or useful for the protection of
    investors and in the public interest.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 13, 48 Stat. 894; Pub. L. 88-
    467, Sec. 4, Aug. 20, 1964, 78 Stat. 569; Pub. L. 90-439, Sec. 2,
    July 29, 1968, 82 Stat. 454; Pub. L. 91-567, Secs. 1, 2, Dec. 22,
    1970, 84 Stat. 1497; Pub. L. 94-29, Sec. 10, June 4, 1975, 89 Stat.
    119; Pub. L. 94-210, title III, Sec. 308(b), Feb. 5, 1976, 90 Stat.
    57; Pub. L. 95-213, title I, Sec. 102, title II, Secs. 202, 203,
    Dec. 19, 1977, 91 Stat. 1494, 1498, 1499; Pub. L. 98-38, Sec. 2(a),
    June 6, 1983, 97 Stat. 205; Pub. L. 100-181, title III, Secs. 315,
    316, Dec. 4, 1987, 101 Stat. 1256; Pub. L. 100-241, Sec. 12(d),
    Feb. 3, 1988, 101 Stat. 1810; Pub. L. 100-418, title V, Sec. 5002,
    Aug. 23, 1988, 102 Stat. 1415; Pub. L. 101-432, Sec. 3, Oct. 16,
    1990, 104 Stat. 964; Pub. L. 107-123, Sec. 5, Jan. 16, 2002, 115
    Stat. 2395; Pub. L. 107-204, title I, Sec. 109(h), title IV, Secs.
    401(a), 402(a), 409, July 30, 2002, 116 Stat. 771, 785, 787, 791.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (b)(1), (h)(1), (2), (4),
    (6), and (i), was in the original "this title". See References in
    Text note set out under section 78a of this title.
      The Investment Company Act of 1940, referred to in subsecs.
    (d)(1) and (e)(1), is title I of act Aug. 22, 1940, ch. 686, 54
    Stat. 789, as amended, which is classified generally to subchapter
    I (Sec. 80a-1 et seq.) of chapter 2D of this title. For complete
    classification of this Act to the Code, see section 80a-51 of this
    title and Tables.
      The Securities Act of 1933, referred to in subsec. (d)(6)(A), is
    act May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended, which
    is classified generally to subchapter I (Sec. 77a et seq.) of
    chapter 2A of this title. For complete classification of this Act
    to the Code, see section 77a of this title and Tables.
      The Federal Deposit Insurance Act, referred to in subsec. (f)(4),
    is act Sept. 21, 1950, ch. 967, Sec. 2, 64 Stat. 873, as amended,
    which is classified generally to chapter 16 (Sec. 1811 et seq.) of
    Title 12, Banks and Banking. For complete classification of this
    Act to the Code, see Short Title note set out under section 1811 of
    Title 12 and Tables.
      Section 7201 of this title, referred to in subsec. (k)(1), was in
    the original "section 2 of the Sarbanes-Oxley Act of 2002", Pub. L.
    107-204, which enacted section 7201 of this title and amended
    section 78c of this title.


-MISC1-
                                AMENDMENTS                            
      2002 - Subsec. (b)(2)(C). Pub. L. 107-204, Sec. 109(h), added
    subpar. (C).
      Subsec. (e)(3). Pub. L. 107-123, Sec. 5(1), substituted "a fee at
    a rate that, subject to paragraphs (5) and (6), is equal to $92 per
    $1,000,000 of the value of securities proposed to be purchased" for
    "a fee of  1/50  of 1 per centum of the value of securities
    proposed to be purchased".
      Subsec. (e)(4) to (10). Pub. L. 107-123, Sec. 5(2), added pars.
    (4) to (10).
      Subsecs. (i), (j). Pub. L. 107-204, Sec. 401(a), added subsecs.
    (i) and (j).
      Subsec. (k). Pub. L. 107-204, Sec. 402(a), added subsec. (k).
      Subsec. (l). Pub. L. 107-204, Sec. 409, added subsec. (l).
      1990 - Subsec. (h). Pub. L. 101-432 added subsec. (h).
      1988 - Subsec. (b)(4) to (7). Pub. L. 100-418 added pars. (4) to
    (7).
      Subsec. (d)(1). Pub. L. 100-241 inserted "or any equity security
    issued by a Native Corporation pursuant to section 1629c(d)(6) of
    title 43".
      1987 - Subsec. (c). Pub. L. 100-181, Sec. 315, struck out "of"
    after "thereof".
      Subsec. (h). Pub. L. 100-181, Sec. 316, struck out subsec. (h)
    which required Commission to report to Congress within thirty
    months of Dec. 19, 1977, with respect to effectiveness of ownership
    reporting requirements contained in this chapter and desirability
    and feasibility of reducing or otherwise modifying the 5 per centum
    threshold used in subsecs. (d)(1) and (g)(1) of this section.
      1983 - Subsec. (e)(3). Pub. L. 98-38 added par. (3).
      1977 - Subsec. (b). Pub. L. 95-213, Sec. 102, designated existing
    provisions as par. (1) and added pars. (2) and (3).
      Subsec. (d)(1). Pub. L. 95-213, Sec. 202, inserted references to
    residence and citizenship of persons and to nature of beneficial
    ownership of persons in subpar. (A), and inserted references to
    background, identity, residence, and citizenship of associates of
    persons in subpar. (D).
      Subsecs. (g), (h). Pub. L. 95-213, Sec. 203, added subsecs. (g)
    and (h).
      1976 - Subsec. (b). Pub. L. 94-210 substituted provisions
    relating to exceptions for inconsistent rules and regulations, for
    provisions relating to reporting requirements for carriers subject
    to the provisions of section 20 of title 49, or other carriers
    required to make reports of the same general character as those
    required under section 20 of title 49.
      1975 - Subsec. (f). Pub. L. 94-29 added subsec. (f).
      1970 - Subsec. (d)(1). Pub. L. 91-567, Sec. 1(a), included equity
    securities of insurance companies which would have been required to
    be registered except for the exemption contained in section
    78l(g)(2)(G) of this title, and substituted "5 per centum" for "10
    per centum".
      Subsec. (d)(5), (6). Pub. L. 91-567, Sec. 1(b), added par. (5)
    and redesignated former par. (5) as (6).
      Subsec. (e)(2). Pub. L. 91-567, Sec. 2, inserted provisions
    empowering the Commission to make rules and regulations
    implementing the paragraph in the public interest and for the
    protection of investors.
      1968 - Subsecs. (d), (e). Pub. L. 90-439 added subsecs. (d) and
    (e).
      1964 - Subsec. (a). Pub. L. 88-467 substituted provisions which
    require the issuer of a security registered pursuant to section 78l
    of this title to file reports with the Commission rather than with
    the exchange and to furnish the exchange with duplicate originals
    and prohibit the Commission from requiring the filing of any
    material contract wholly executed before July 1, 1962 for former
    provisions which required the issuer of a security registered on a
    national securities exchange to file certain reports with the
    exchange and to file duplicates with the Commission.

                     EFFECTIVE DATE OF 2002 AMENDMENT                 
      Amendment by Pub. L. 107-123 effective Oct. 1, 2001, except that
    authorities provided by subsec. (e)(9) of this section to not apply
    until Oct. 1, 2002, see section 11 of Pub. L. 107-123, set out as a
    note under section 78ee of this title.

                     EFFECTIVE DATE OF 1976 AMENDMENT                 
      Amendment by Pub. L. 94-210 not applicable to any report by any
    person with respect to a fiscal year of such person which began
    before Feb. 5, 1976, see section 308(d)(2) of Pub. L. 94-210, set
    out as a note under section 80a-3 of this title.

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see section
    13 of Pub. L. 88-467, set out as a note under section 78c of this
    title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.


-MISC2-
                               CONSULTATION                           
      Pub. L. 106-102, title II, Sec. 241, Nov. 12, 1999, 113 Stat.
    1407, provided that:
      "(a) In General. - The Securities and Exchange Commission shall
    consult and coordinate comments with the appropriate Federal
    banking agency before taking any action or rendering any opinion
    with respect to the manner in which any insured depository
    institution or depository institution holding company reports loan
    loss reserves in its financial statement, including the amount of
    any such loan loss reserve.
      "(b) Definitions. - For purposes of subsection (a), the terms
    'insured depository institution', 'depository institution holding
    company', and 'appropriate Federal banking agency' have the same
    meaning as given in section 3 of the Federal Deposit Insurance Act
    [12 U.S.C. 1813]."


-EXEC-
       ASSIGNMENT OF FUNCTION RELATING TO GRANTING OF AUTHORITY FOR
                      ISSUANCE OF CERTAIN DIRECTIVES
      Memorandum of President of the United States, May 5, 2006, 71
    F.R. 27943, provided:
      Memorandum for the Director of National Intelligence
      By virtue of the authority vested in me by the Constitution and
    laws of the United States, including section 301 of title 3, United
    States Code, I hereby assign to you the function of the President
    under section 13(b)(3)(A) of the Securities Exchange Act of 1934,
    as amended (15 U.S.C. 78m(b)(3)(A)). In performing such function,
    you should consult the heads of departments and agencies, as
    appropriate.
      You are authorized and directed to publish this memorandum in the
    Federal Register.
                                                         George W. Bush.

-FOOTNOTE-               

    (!1) So in original. Probably should be "account."


-End-



-CITE-
    15 USC Sec. 78n                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78n. Proxies

-STATUTE-
    (a) Solicitation of proxies in violation of rules and regulations
      It shall be unlawful for any person, by the use of the mails or
    by any means or instrumentality of interstate commerce or of any
    facility of a national securities exchange or otherwise, in
    contravention of such rules and regulations as the Commission may
    prescribe as necessary or appropriate in the public interest or for
    the protection of investors, to solicit or to permit the use of his
    name to solicit any proxy or consent or authorization in respect of
    any security (other than an exempted security) registered pursuant
    to section 78l of this title.
    (b) Giving or refraining from giving proxy in respect of any
      security carried for account of customer
      (1) It shall be unlawful for any member of a national securities
    exchange, or any broker or dealer registered under this chapter, or
    any bank, association, or other entity that exercises fiduciary
    powers, in contravention of such rules and regulations as the
    Commission may prescribe as necessary or appropriate in the public
    interest or for the protection of investors, to give, or to refrain
    from giving a proxy, consent, authorization, or information
    statement in respect of any security registered pursuant to section
    78l of this title, or any security issued by an investment company
    registered under the Investment Company Act of 1940 [15 U.S.C. 80a-
    1 et seq.], and carried for the account of a customer.
      (2) With respect to banks, the rules and regulations prescribed
    by the Commission under paragraph (1) shall not require the
    disclosure of the names of beneficial owners of securities in an
    account held by the bank on December 28, 1985, unless the
    beneficial owner consents to the disclosure. The provisions of this
    paragraph shall not apply in the case of a bank which the
    Commission finds has not made a good faith effort to obtain such
    consent from such beneficial owners.
    (c) Information to holders of record prior to annual or other
      meeting
      Unless proxies, consents, or authorizations in respect of a
    security registered pursuant to section 78l of this title, or a
    security issued by an investment company registered under the
    Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.], are
    solicited by or on behalf of the management of the issuer from the
    holders of record of such security in accordance with the rules and
    regulations prescribed under subsection (a) of this section, prior
    to any annual or other meeting of the holders of such security,
    such issuer shall, in accordance with rules and regulations
    prescribed by the Commission, file with the Commission and transmit
    to all holders of record of such security information substantially
    equivalent to the information which would be required to be
    transmitted if a solicitation were made, but no information shall
    be required to be filed or transmitted pursuant to this subsection
    before July 1, 1964.
    (d) Tender offer by owner of more than five per centum of class of
      securities; exceptions
      (1) It shall be unlawful for any person, directly or indirectly,
    by use of the mails or by any means or instrumentality of
    interstate commerce or of any facility of a national securities
    exchange or otherwise, to make a tender offer for, or a request or
    invitation for tenders of, any class of any equity security which
    is registered pursuant to section 78l of this title, or any equity
    security of an insurance company which would have been required to
    be so registered except for the exemption contained in section
    78l(g)(2)(G) of this title, or any equity security issued by a a
    closed-end investment company registered under the Investment
    Company Act of 1940 [15 U.S.C. 80a-1 et seq.], if, after
    consummation thereof, such person would, directly or indirectly, be
    the beneficial owner of more than 5 per centum of such class,
    unless at the time copies of the offer or request or invitation are
    first published or sent or given to security holders such person
    has filed with the Commission a statement containing such of the
    information specified in section 78m(d) of this title, and such
    additional information as the Commission may by rules and
    regulations prescribe as necessary or appropriate in the public
    interest or for the protection of investors. All requests or
    invitations for tenders or advertisements making a tender offer or
    requesting or inviting tenders of such a security shall be filed as
    a part of such statement and shall contain such of the information
    contained in such statement as the Commission may by rules and
    regulations prescribe. Copies of any additional material soliciting
    or requesting such tender offers subsequent to the initial
    solicitation or request shall contain such information as the
    Commission may by rules and regulations prescribe as necessary or
    appropriate in the public interest or for the protection of
    investors, and shall be filed with the Commission not later than
    the time copies of such material are first published or sent or
    given to security holders. Copies of all statements, in the form in
    which such material is furnished to security holders and the
    Commission, shall be sent to the issuer not later than the date
    such material is first published or sent or given to any security
    holders.
      (2) When two or more persons act as a partnership, limited
    partnership, syndicate, or other group for the purpose of
    acquiring, holding, or disposing of securities of an issuer, such
    syndicate or group shall be deemed a "person" for purposes of this
    subsection.
      (3) In determining, for purposes of this subsection, any
    percentage of a class of any security, such class shall be deemed
    to consist of the amount of the outstanding securities of such
    class, exclusive of any securities of such class held by or for the
    account of the issuer or a subsidiary of the issuer.
      (4) Any solicitation or recommendation to the holders of such a
    security to accept or reject a tender offer or request or
    invitation for tenders shall be made 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.
      (5) Securities deposited pursuant to a tender offer or request or
    invitation for tenders may be withdrawn by or on behalf of the
    depositor at any time until the expiration of seven days after the
    time definitive copies of the offer or request or invitation are
    first published or sent or given to security holders, and at any
    time after sixty days from the date of the original tender offer or
    request or invitation, except as the Commission may otherwise
    prescribe by rules, regulations, or order as necessary or
    appropriate in the public interest or for the protection of
    investors.
      (6) Where any person makes a tender offer, or request or
    invitation for tenders, for less than all the outstanding equity
    securities of a class, and where a greater number of securities is
    deposited pursuant thereto within ten days after copies of the
    offer or request or invitation are first published or sent or given
    to security holders than such person is bound or willing to take up
    and pay for, the securities taken up shall be taken up as nearly as
    may be pro rata, disregarding fractions, according to the number of
    securities deposited by each depositor. The provisions of this
    subsection shall also apply to securities deposited within ten days
    after notice of an increase in the consideration offered to
    security holders, as described in paragraph (7), is first published
    or sent or given to security holders.
      (7) Where any person varies the terms of a tender offer or
    request or invitation for tenders before the expiration thereof by
    increasing the consideration offered to holders of such securities,
    such person shall pay the increased consideration to each security
    holder whose securities are taken up and paid for pursuant to the
    tender offer or request or invitation for tenders whether or not
    such securities have been taken up by such person before the
    variation of the tender offer or request or invitation.
      (8) The provisions of this subsection shall not apply to any
    offer for, or request or invitation for tenders of, any security - 
        (A) if the acquisition of such security, together with all
      other acquisitions by the same person of securities of the same
      class during the preceding twelve months, would not exceed 2 per
      centum of that class;
        (B) by the issuer of such security; or
        (C) which the Commission, by rules or regulations or by order,
      shall exempt from the provisions of this subsection as not
      entered into for the purpose of, and not having the effect of,
      changing or influencing the control of the issuer or otherwise as
      not comprehended within the purposes of this subsection.
    (e) Untrue statement of material fact or omission of fact with
      respect to tender offer
      It shall be unlawful for any person to make any untrue statement
    of a material fact or omit to state any material fact necessary in
    order to make the statements made, in the light of the
    circumstances under which they are made, not misleading, or to
    engage in any fraudulent, deceptive, or manipulative acts or
    practices, in connection with any tender offer or request or
    invitation for tenders, or any solicitation of security holders in
    opposition to or in favor of any such offer, request, or
    invitation. The Commission shall, for the purposes of this
    subsection, by rules and regulations define, and prescribe means
    reasonably designed to prevent, such acts and practices as are
    fraudulent, deceptive, or manipulative.
    (f) Election or designation of majority of directors of issuer by
      owner of more than five per centum of class of securities at
      other than meeting of security holders
      If, pursuant to any arrangement or understanding with the person
    or persons acquiring securities in a transaction subject to
    subsection (d) of this section or subsection (d) of section 78m of
    this title, any persons are to be elected or designated as
    directors of the issuer, otherwise than at a meeting of security
    holders, and the persons so elected or designated will constitute a
    majority of the directors of the issuer, then, prior to the time
    any such person takes office as a director, and in accordance with
    rules and regulations prescribed by the Commission, the issuer
    shall file with the Commission, and transmit to all holders of
    record of securities of the issuer who would be entitled to vote at
    a meeting for election of directors, information substantially
    equivalent to the information which would be required by subsection
    (a) or (c) of this section to be transmitted if such person or
    persons were nominees for election as directors at a meeting of
    such security holders.
    (g) Filing fees
      (1)(A) At the time of filing such preliminary proxy solicitation
    material as the Commission may require by rule pursuant to
    subsection (a) of this section that concerns an acquisition,
    merger, consolidation, or proposed sale or other disposition of
    substantially all the assets of a company, the person making such
    filing, other than a company registered under the Investment
    Company Act of 1940 [15 U.S.C. 80a-1 et seq.], shall pay to the
    Commission the following fees:
        (i) for preliminary proxy solicitation material involving an
      acquisition, merger, or consolidation, if there is a proposed
      payment of cash or transfer of securities or property to
      shareholders, a fee at a rate that, subject to paragraphs (5) and
      (6), is equal to $92 per $1,000,000 of such proposed payment, or
      of the value of such securities or other property proposed to be
      transferred; and
        (ii) for preliminary proxy solicitation material involving a
      proposed sale or other disposition of substantially all of the
      assets of a company, a fee at a rate that, subject to paragraphs
      (5) and (6), is equal to $92 per $1,000,000 of the cash or of the
      value of any securities or other property proposed to be received
      upon such sale or disposition.

      (B) The fee imposed under subparagraph (A) shall be reduced with
    respect to securities in an amount equal to any fee paid to the
    Commission with respect to such securities in connection with the
    proposed transaction under section 77f(b) of this title, or the fee
    paid under that section shall be reduced in an amount equal to the
    fee paid to the Commission in connection with such transaction
    under this subsection. Where two or more companies involved in an
    acquisition, merger, consolidation, sale, or other disposition of
    substantially all the assets of a company must file such proxy
    material with the Commission, each shall pay a proportionate share
    of such fee.
      (2) At the time of filing such preliminary information statement
    as the Commission may require by rule pursuant to subsection (c) of
    this section, the issuer shall pay to the Commission the same fee
    as required for preliminary proxy solicitation material under
    paragraph (1) of this subsection.
      (3) At the time of filing such statement as the Commission may
    require by rule pursuant to subsection (d)(1) of this section, the
    person making the filing shall pay to the Commission a fee at a
    rate that, subject to paragraphs (5) and (6), is equal to $92 per
    $1,000,000 of the aggregate amount of cash or of the value of
    securities or other property proposed to be offered. The fee shall
    be reduced with respect to securities in an amount equal to any fee
    paid with respect to such securities in connection with the
    proposed transaction under section 6(b) of the Securities Act of
    1933 (15 U.S.C. 77f(b)), or the fee paid under that section shall
    be reduced in an amount equal to the fee paid to the Commission in
    connection with such transaction under this subsection.
      (4) Offsetting collections. - Fees collected pursuant to this
    subsection for any fiscal year shall be deposited and credited as
    offsetting collections to the account providing appropriations to
    the Commission, and, except as provided in paragraph (9), shall not
    be collected for any fiscal year except to the extent provided in
    advance in appropriation Acts. No fees collected pursuant to this
    subsection for fiscal year 2002 or any succeeding fiscal year shall
    be deposited and credited as general revenue of the Treasury.
      (5) Annual adjustment. - For each of the fiscal years 2003
    through 2011, the Commission shall by order adjust each of the
    rates required by paragraphs (1) and (3) for such fiscal year to a
    rate that is equal to the rate (expressed in dollars per million)
    that is applicable under section 6(b) of the Securities Act of 1933
    [15 U.S.C. 77f(b)] for such fiscal year.
      (6) Final rate adjustment. - For fiscal year 2012 and all of the
    succeeding fiscal years, the Commission shall by order adjust each
    of the rates required by paragraphs (1) and (3) for all of such
    fiscal years to a rate that is equal to the rate (expressed in
    dollars per million) that is applicable under section 6(b) of the
    Securities Act of 1933 [15 U.S.C. 77f(b)] for all of such fiscal
    years.
      (7) Pro rata application. - The rates per $1,000,000 required by
    this subsection shall be applied pro rata to amounts and balances
    of less than $1,000,000.
      (8) Review and effective date. - In exercising its authority
    under this subsection, the Commission shall not be required to
    comply with the provisions of section 553 of title 5. An adjusted
    rate prescribed under paragraph (5) or (6) and published under
    paragraph (10) shall not be subject to judicial review. Subject to
    paragraphs (4) and (9) - 
        (A) an adjusted rate prescribed under paragraph (5) shall take
      effect on the later of - 
          (i) the first day of the fiscal year to which such rate
        applies; or
          (ii) five days after the date on which a regular
        appropriation to the Commission for such fiscal year is
        enacted; and

        (B) an adjusted rate prescribed under paragraph (6) shall take
      effect on the later of - 
          (i) the first day of fiscal year 2012; or
          (ii) five days after the date on which a regular
        appropriation to the Commission for fiscal year 2012 is
        enacted.

      (9) Lapse of appropriation. - If on the first day of a fiscal
    year a regular appropriation to the Commission has not been
    enacted, the Commission shall continue to collect fees (as
    offsetting collections) under this subsection at the rate in effect
    during the preceding fiscal year, until 5 days after the date such
    a regular appropriation is enacted.
      (10) Publication. - The rate applicable under this subsection for
    each fiscal year is published pursuant to section 6(b)(10) of the
    Securities Act of 1933 [15 U.S.C. 77f(b)(10)].
      (11) Notwithstanding any other provision of law, the Commission
    may impose fees, charges, or prices for matters not involving any
    acquisition, merger, consolidation, sale, or other disposition of
    assets described in this subsection, as authorized by section 9701
    of title 31, or otherwise.
    (h) Proxy solicitations and tender offers in connection with
      limited partnership rollup transactions
      (1) Proxy rules to contain special provisions
        It shall be unlawful for any person to solicit any proxy,
      consent, or authorization concerning a limited partnership rollup
      transaction, or to make any tender offer in furtherance of a
      limited partnership rollup transaction, unless such transaction
      is conducted in accordance with rules prescribed by the
      Commission under subsections (a) and (d) of this section as
      required by this subsection. Such rules shall - 
          (A) permit any holder of a security that is the subject of
        the proposed limited partnership rollup transaction to engage
        in preliminary communications for the purpose of determining
        whether to solicit proxies, consents, or authorizations in
        opposition to the proposed limited partnership rollup
        transaction, without regard to whether any such communication
        would otherwise be considered a solicitation of proxies, and
        without being required to file soliciting material with the
        Commission prior to making that determination, except that - 
            (i) nothing in this subparagraph shall be construed to
          limit the application of any provision of this chapter
          prohibiting, or reasonably designed to prevent, fraudulent,
          deceptive, or manipulative acts or practices under this
          chapter; and
            (ii) any holder of not less than 5 percent of the
          outstanding securities that are the subject of the proposed
          limited partnership rollup transaction who engages in the
          business of buying and selling limited partnership interests
          in the secondary market shall be required to disclose such
          ownership interests and any potential conflicts of interests
          in such preliminary communications;

          (B) require the issuer to provide to holders of the
        securities that are the subject of the limited partnership
        rollup transaction such list of the holders of the issuer's
        securities as the Commission may determine in such form and
        subject to such terms and conditions as the Commission may
        specify;
          (C) prohibit compensating any person soliciting proxies,
        consents, or authorizations directly from security holders
        concerning such a limited partnership rollup transaction - 
            (i) on the basis of whether the solicited proxy, consent,
          or authorization either approves or disapproves the proposed
          limited partnership rollup transaction; or
            (ii) contingent on the approval, disapproval, or completion
          of the limited partnership rollup transaction;

          (D) set forth disclosure requirements for soliciting material
        distributed in connection with a limited partnership rollup
        transaction, including requirements for clear, concise, and
        comprehensible disclosure with respect to - 
            (i) any changes in the business plan, voting rights, form
          of ownership interest, or the compensation of the general
          partner in the proposed limited partnership rollup
          transaction from each of the original limited partnerships;
            (ii) the conflicts of interest, if any, of the general
          partner;
            (iii) whether it is expected that there will be a
          significant difference between the exchange values of the
          limited partnerships and the trading price of the securities
          to be issued in the limited partnership rollup transaction;
            (iv) the valuation of the limited partnerships and the
          method used to determine the value of the interests of the
          limited partners to be exchanged for the securities in the
          limited partnership rollup transaction;
            (v) the differing risks and effects of the limited
          partnership rollup transaction for investors in different
          limited partnerships proposed to be included, and the risks
          and effects of completing the limited partnership rollup
          transaction with less than all limited partnerships;
            (vi) the statement by the general partner required under
          subparagraph (E);
            (vii) such other matters deemed necessary or appropriate by
          the Commission;

          (E) require a statement by the general partner as to whether
        the proposed limited partnership rollup transaction is fair or
        unfair to investors in each limited partnership, a discussion
        of the basis for that conclusion, and an evaluation and a
        description by the general partner of alternatives to the
        limited partnership rollup transaction, such as liquidation;
          (F) provide that, if the general partner or sponsor has
        obtained any opinion (other than an opinion of counsel),
        appraisal, or report that is prepared by an outside party and
        that is materially related to the limited partnership rollup
        transaction, such soliciting materials shall contain or be
        accompanied by clear, concise, and comprehensible disclosure
        with respect to - 
            (i) the analysis of the transaction, scope of review,
          preparation of the opinion, and basis for and methods of
          arriving at conclusions, and any representations and
          undertakings with respect thereto;
            (ii) the identity and qualifications of the person who
          prepared the opinion, the method of selection of such person,
          and any material past, existing, or contemplated
          relationships between the person or any of its affiliates and
          the general partner, sponsor, successor, or any other
          affiliate;
            (iii) any compensation of the preparer of such opinion,
          appraisal, or report that is contingent on the transaction's
          approval or completion; and
            (iv) any limitations imposed by the issuer on the access
          afforded to such preparer to the issuer's personnel,
          premises, and relevant books and records;

          (G) provide that, if the general partner or sponsor has
        obtained any opinion, appraisal, or report as described in
        subparagraph (F) from any person whose compensation is
        contingent on the transaction's approval or completion or who
        has not been given access by the issuer to its personnel and
        premises and relevant books and records, the general partner or
        sponsor shall state the reasons therefor;
          (H) provide that, if the general partner or sponsor has not
        obtained any opinion on the fairness of the proposed limited
        partnership rollup transaction to investors in each of the
        affected partnerships, such soliciting materials shall contain
        or be accompanied by a statement of such partner's or sponsor's
        reasons for concluding that such an opinion is not necessary in
        order to permit the limited partners to make an informed
        decision on the proposed transaction;
          (I) require that the soliciting material include a clear,
        concise, and comprehensible summary of the limited partnership
        rollup transaction (including a summary of the matters referred
        to in clauses (i) through (vii) of subparagraph (D) and a
        summary of the matter referred to in subparagraphs (F), (G),
        and (H)), with the risks of the limited partnership rollup
        transaction set forth prominently in the fore part thereof;
          (J) provide that any solicitation or offering period with
        respect to any proxy solicitation, tender offer, or information
        statement in a limited partnership rollup transaction shall be
        for not less than the lesser of 60 calendar days or the maximum
        number of days permitted under applicable State law; and
          (K) contain such other provisions as the Commission
        determines to be necessary or appropriate for the protection of
        investors in limited partnership rollup transactions.
      (2) Exemptions
        The Commission may, consistent with the public interest, the
      protection of investors, and the purposes of this chapter, exempt
      by rule or order any security or class of securities, any
      transaction or class of transactions, or any person or class of
      persons, in whole or in part, conditionally or unconditionally,
      from the requirements imposed pursuant to paragraph (1) or from
      the definition contained in paragraph (4).
      (3) Effect on Commission authority
        Nothing in this subsection limits the authority of the
      Commission under subsection (a) or (d) of this section or any
      other provision of this chapter or precludes the Commission from
      imposing, under subsection (a) or (d) of this section or any
      other provision of this chapter, a remedy or procedure required
      to be imposed under this subsection.
      (4) "Limited partnership rollup transaction" defined
        Except as provided in paragraph (5), as used in this
      subsection, the term "limited partnership rollup transaction"
      means a transaction involving the combination or reorganization
      of one or more limited partnerships, directly or indirectly, in
      which - 
          (A) some or all of the investors in any of such limited
        partnerships will receive new securities, or securities in
        another entity, that will be reported under a transaction
        reporting plan declared effective before December 17, 1993, by
        the Commission under section 78k-1 of this title;
          (B) any of the investors' limited partnership securities are
        not, as of the date of filing, reported under a transaction
        reporting plan declared effective before December 17, 1993, by
        the Commission under section 78k-1 of this title;
          (C) investors in any of the limited partnerships involved in
        the transaction are subject to a significant adverse change
        with respect to voting rights, the term of existence of the
        entity, management compensation, or investment objectives; and
          (D) any of such investors are not provided an option to
        receive or retain a security under substantially the same terms
        and conditions as the original issue.
      (5) Exclusions from definition
        Notwithstanding paragraph (4), the term "limited partnership
      rollup transaction" does not include - 
          (A) a transaction that involves only a limited partnership or
        partnerships having an operating policy or practice of
        retaining cash available for distribution and reinvesting
        proceeds from the sale, financing, or refinancing of assets in
        accordance with such criteria as the Commission determines
        appropriate;
          (B) a transaction involving only limited partnerships wherein
        the interests of the limited partners are repurchased,
        recalled, or exchanged in accordance with the terms of the
        preexisting limited partnership agreements for securities in an
        operating company specifically identified at the time of the
        formation of the original limited partnership;
          (C) a transaction in which the securities to be issued or
        exchanged are not required to be and are not registered under
        the Securities Act of 1933 [15 U.S.C. 77a et seq.];
          (D) a transaction that involves only issuers that are not
        required to register or report under section 78l of this title,
        both before and after the transaction;
          (E) a transaction, except as the Commission may otherwise
        provide by rule for the protection of investors, involving the
        combination or reorganization of one or more limited
        partnerships in which a non-affiliated party succeeds to the
        interests of a general partner or sponsor, if - 
            (i) such action is approved by not less than 66 2/3 
          percent of the outstanding units of each of the participating
          limited partnerships; and
            (ii) as a result of the transaction, the existing general
          partners will receive only compensation to which they are
          entitled as expressly provided for in the preexisting limited
          partnership agreements; or

          (F) a transaction, except as the Commission may otherwise
        provide by rule for the protection of investors, in which the
        securities offered to investors are securities of another
        entity that are reported under a transaction reporting plan
        declared effective before December 17, 1993, by the Commission
        under section 78k-1 of this title, if - 
            (i) such other entity was formed, and such class of
          securities was reported and regularly traded, not less than
          12 months before the date on which soliciting material is
          mailed to investors; and
            (ii) the securities of that entity issued to investors in
          the transaction do not exceed 20 percent of the total
          outstanding securities of the entity, exclusive of any
          securities of such class held by or for the account of the
          entity or a subsidiary of the entity.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 14, 48 Stat. 895; Pub. L. 88-
    467, Sec. 5, Aug. 20, 1964, 78 Stat. 569; Pub. L. 90-439, Sec. 3,
    July 29, 1968, 82 Stat. 455; Pub. L. 91-567, Secs. 3-5, Dec. 22,
    1970, 84 Stat. 1497; Pub. L. 98-38, Sec. 2(b), June 6, 1983, 97
    Stat. 205; Pub. L. 99-222, Sec. 2, Dec. 28, 1985, 99 Stat. 1737;
    Pub. L. 101-550, title III, Sec. 302, Nov. 15, 1990, 104 Stat.
    2721; Pub. L. 103-202, title III, Sec. 302(a), Dec. 17, 1993, 107
    Stat. 2359; Pub. L. 105-353, title III, Sec. 301(b)(7), Nov. 3,
    1998, 112 Stat. 3236; Pub. L. 107-123, Sec. 6, Jan. 16, 2002, 115
    Stat. 2396.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (b) and (h)(1)(A), (2),
    (3), was in the original "this title". See References in Text note
    set out under section 78a of this title.
      The Investment Company Act of 1940, referred to in subsecs.
    (b)(1), (c), (d)(1), and (g)(1)(A), is title I of act Aug. 22,
    1940, ch. 686, 54 Stat. 789, as amended, which is classified
    generally to subchapter I (Sec. 80a-1 et seq.) of chapter 2D of
    this title. For complete classification of this Act to the Code,
    see section 80a-51 of this title and Tables.
      The Securities Act of 1933, referred to in subsec. (h)(5)(C), is
    act May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended, which
    is classified generally to subchapter I (Sec. 77a et seq.) of
    chapter 2A of this title. For complete classification of this Act
    to the Code, see section 77a of this title and Tables.


-MISC1-
                                AMENDMENTS                            
      2002 - Subsec. (g)(1)(A)(i), (ii), (3). Pub. L. 107-123, Sec.
    6(1), substituted "a fee at a rate that, subject to paragraphs (5)
    and (6), is equal to $92 per $1,000,000 of" for "a fee of  1/50  of
    1 per centum of".
      Subsec. (g)(4) to (11). Pub. L. 107-123, Sec. 6(2), (3), added
    pars. (4) to (10) and redesignated former par. (4) as (11).
      1998 - Subsec. (g)(4). Pub. L. 105-353 substituted
    "consolidation, sale," for "consolidation sale,".
      1993 - Subsec. (h). Pub. L. 103-202 added subsec. (h).
      1990 - Subsec. (b)(1). Pub. L. 101-550, Sec. 302(a), substituted
    "section 78l of this title, or any security issued by an investment
    company registered under the Investment Company Act of 1940," for
    "section 78l of this title" and "authorization, or information
    statement" for "or authorization".
      Subsec. (c). Pub. L. 101-550, Sec. 302(b), substituted "title, or
    a security issued by an investment company registered under the
    Investment Company Act of 1940," for "title".
      1985 - Subsec. (b). Pub. L. 99-222 designated existing provision
    as par. (1), inserted "or any bank, association, or other entity
    that exercises fiduciary powers," after "under this chapter,", and
    added par. (2).
      1983 - Subsec. (g). Pub. L. 98-38 added subsec. (g).
      1970 - Subsec. (d)(1). Pub. L. 91-567, Sec. 3, included equity
    securities of an insurance company which would have been required
    to be registered except for the exemption contained in section
    78l(g)(2)(G) of this title, and substituted "5 per centum" for "10
    per centum".
      Subsec. (d)(8). Pub. L. 91-567, Sec. 4, struck out cl. (A) which
    excluded offers for, or invitations for tenders of, securities
    proposed to be made by means of a registration statement under the
    Securities Act of 1933, and redesignated cls. (B) to (D) as (A) to
    (C), respectively.
      Subsec. (e). Pub. L. 91-567, Sec. 5, inserted provisions
    requiring the Commission, for the purposes of the subsection, by
    rules and regulations to define, and prescribe means reasonably
    designed to prevent, such acts and practices as are fraudulent,
    deceptive, or manipulative.
      1968 - Subsecs. (d) to (f). Pub. L. 90-439 added subsecs. (d) to
    (f).
      1964 - Subsec. (a). Pub. L. 88-467, Sec. 5(a), substituted
    provisions which make it unlawful for any person, in contravention
    of the Commission's rules and regulations, to solicit, or to permit
    the use of his name to solicit, proxies in respect of any security
    registered pursuant to section 78l of this title for former
    provisions which limited the Commission's rulemaking authority to
    proxies relating to securities listed and registered on a national
    securities exchange.
      Subsec. (b). Pub. L. 88-467, Sec. 5(b), substituted provisions
    which make it unlawful for members of a national securities
    exchange and brokers and dealers registered under this chapter, in
    contravention of such rules as may be prescribed by the Commission,
    to give, or to refrain from giving proxies, consents, and other
    authorizations in respect of any security registered under section
    78l of this title carried for the account of customers for former
    provisions which limited the Commission's rulemaking authority only
    to the giving of proxies in respect to listed securities carried
    for the account of customers by members of the national securities
    exchanges and by brokers or dealers who conduct business through
    the medium of an exchange member, and deleted the reference to
    brokers and dealers who transacted business through the medium of
    an exchange member as being now covered by brokers and dealers
    registered under this chapter.
      Subsec. (c). Pub. L. 88-467, Sec. 5(c), added subsec. (c).

                     EFFECTIVE DATE OF 2002 AMENDMENT                 
      Amendment by Pub. L. 107-123 effective Oct. 1, 2001, except that
    authorities provided by subsec. (g)(9) of this section to not apply
    until Oct. 1, 2002, see section 11 of Pub. L. 107-123, set out as a
    note under section 78ee of this title.

                     EFFECTIVE DATE OF 1990 AMENDMENT                 
      Section 303 of Pub. L. 101-550 provided that: "The amendments
    made by section 302 of this title [amending this section] shall
    take effect upon the expiration of 180 days after the date of
    enactment of this Act [Nov. 15, 1990]."

                     EFFECTIVE DATE OF 1985 AMENDMENT                 
      Section 3 of Pub. L. 99-222 provided that: "The amendments made
    by this Act [amending this section] shall become effective one year
    after the date of enactment of this Act [Dec. 28, 1985]."

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see section
    13 of Pub. L. 88-467, set out as a note under section 78c of this
    title.

                                REGULATIONS                            
      Section 302(b) of Pub. L. 103-202 provided that: "The Securities
    and Exchange Commission shall conduct rulemaking proceedings and
    prescribe final regulations under the Securities Act of 1933 [15
    U.S.C. 77a et seq.] and the Securities Exchange Act of 1934 [15
    U.S.C. 78a et seq.] to implement the requirements of section 14(h)
    of the Securities Exchange Act of 1934 [15 U.S.C. 78n(h)], as
    amended by subsection (a), and such regulations shall become
    effective not later than 12 months after the date of enactment of
    this Act [Dec. 17, 1993]."

                      CONSTRUCTION OF 1993 AMENDMENT                  
      Amendment by Pub. L. 103-202 not to limit authority of Securities
    and Exchange Commission, a registered securities association, or a
    national securities exchange under any provision of this chapter or
    preclude the Commission or such association or exchange from
    imposing a remedy or procedure required to be imposed under such
    amendment, see section 304(b) of Pub. L. 103-202, set out in an
    Effective Date of 1993 Amendment note under section 78f of this
    title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.


-MISC2-
        STUDY AND REPORT ON SHAREHOLDER ACCESS TO PROXY STATEMENTS    
      Pub. L. 104-290, title V, Sec. 510(b), Oct. 11, 1996, 110 Stat.
    3450, provided that:
      "(1) Study. - The Commission shall conduct a study of - 
        "(A) whether shareholder access to proxy statements pursuant to
      section 14 of the Securities Exchange Act of 1934 [15 U.S.C. 78n]
      has been impaired by recent statutory, judicial, or regulatory
      changes; and
        "(B) the ability of shareholders to have proposals relating to
      corporate practices and social issues included as part of proxy
      statements.
      "(2) Report. - Not later than 1 year after the date of enactment
    of this Act [Oct. 11, 1996], the Commission shall submit a report
    to the Congress on the results of the study conducted under
    paragraph (1), together with any recommendations for regulatory or
    legislative changes that it considers necessary to improve
    shareholder access to proxy statements."

      EVALUATION OF FAIRNESS OPINION PREPARATION, DISCLOSURE, AND USE  
      Section 302(c) of Pub. L. 103-202 provided that:
      "(1) Evaluation required. - The Comptroller General of the United
    States shall, within 18 months after the date of enactment of this
    Act [Dec. 17, 1993], conduct a study of - 
        "(A) the use of fairness opinions in limited partnership rollup
      transactions;
        "(B) the standards which preparers use in making determinations
      of fairness;
        "(C) the scope of review, quality of analysis, qualifications
      and methods of selection of preparers, costs of preparation, and
      any limitations imposed by issuers on such preparers;
        "(D) the nature and quality of disclosures provided with
      respect to such opinions;
        "(E) any conflicts of interest with respect to the preparation
      of such opinions; and
        "(F) the usefulness of such opinions to limited partners.
      "(2) Report required. - Not later than the end of the 18-month
    period referred to in paragraph (1), the Comptroller General of the
    United States shall submit to the Congress a report on the
    evaluation required by paragraph (1)."

-End-



-CITE-
    15 USC Sec. 78o                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78o. Registration and regulation of brokers and dealers

-STATUTE-
    (a) Registration of all persons utilizing exchange facilities to
      effect transactions; exemptions
      (1) It shall be unlawful for any broker or dealer which is either
    a person other than a natural person or a natural person not
    associated with a broker or dealer which is a person other than a
    natural person (other than such a broker or dealer whose business
    is exclusively intrastate and who does not make use of any facility
    of a national securities exchange) to make use of the mails or any
    means or instrumentality of interstate commerce to effect any
    transactions in, or to induce or attempt to induce the purchase or
    sale of, any security (other than an exempted security or
    commercial paper, bankers' acceptances, or commercial bills) unless
    such broker or dealer is registered in accordance with subsection
    (b) of this section.
      (2) The Commission, by rule or order, as it deems consistent with
    the public interest and the protection of investors, may
    conditionally or unconditionally exempt from paragraph (1) of this
    subsection any broker or dealer or class of brokers or dealers
    specified in such rule or order.
    (b) Manner of registration of brokers and dealers
      (1) A broker or dealer may be registered by filing with the
    Commission an application for registration in such form and
    containing such information and documents concerning such broker or
    dealer and any persons associated with such broker or dealer as the
    Commission, by rule, may prescribe as necessary or appropriate in
    the public interest or for the protection of investors. Within
    forty-five days of the date of the filing of such application (or
    within such longer period as to which the applicant consents), the
    Commission shall - 
        (A) by order grant registration, or
        (B) institute proceedings to determine whether registration
      should be denied. Such proceedings shall include notice of the
      grounds for denial under consideration and opportunity for
      hearing and shall be concluded within one hundred twenty days of
      the date of the filing of the application for registration. At
      the conclusion of such proceedings, the Commission, by order,
      shall grant or deny such registration. The order granting
      registration shall not be effective until such broker or dealer
      has become a member of a registered securities association, or
      until such broker or dealer has become a member of a national
      securities exchange if such broker or dealer effects transactions
      solely on that exchange, unless the Commission has exempted such
      broker or dealer, by rule or order, from such membership. The
      Commission may extend the time for conclusion of such proceedings
      for up to ninety days if it finds good cause for such extension
      and publishes its reasons for so finding or for such longer
      period as to which the applicant consents.

    The Commission shall grant such registration if the Commission
    finds that the requirements of this section are satisfied. The
    Commission shall deny such registration if it does not make such a
    finding or if it finds that if the applicant were so registered,
    its registration would be subject to suspension or revocation under
    paragraph (4) of this subsection.
      (2)(A) An application for registration of a broker or dealer to
    be formed or organized may be made by a broker or dealer to which
    the broker or dealer to be formed or organized is to be the
    successor. Such application, in such form as the Commission, by
    rule, may prescribe, shall contain such information and documents
    concerning the applicant, the successor, and any persons associated
    with the applicant or the successor, as the Commission, by rule,
    may prescribe as necessary or appropriate in the public interest or
    for the protection of investors. The grant or denial of
    registration to such an applicant shall be in accordance with the
    procedures set forth in paragraph (1) of this subsection. If the
    Commission grants such registration, the registration shall
    terminate on the forty-fifth day after the effective date thereof,
    unless prior thereto the successor shall, in accordance with such
    rules and regulations as the Commission may prescribe, adopt the
    application for registration as its own.
      (B) Any person who is a broker or dealer solely by reason of
    acting as a municipal securities dealer or municipal securities
    broker, who so acts through a separately identifiable department or
    division, and who so acted in such a manner on June 4, 1975, may,
    in accordance with such terms and conditions as the Commission, by
    rule, prescribes as necessary and appropriate in the public
    interest and for the protection of investors, register such
    separately identifiable department or division in accordance with
    this subsection. If any such department or division is so
    registered, the department or division and not such person himself
    shall be the broker or dealer for purposes of this chapter.
      (C) Within six months of the date of the granting of registration
    to a broker or dealer, the Commission, or upon the authorization
    and direction of the Commission, a registered securities
    association or national securities exchange of which such broker or
    dealer is a member, shall conduct an inspection of the broker or
    dealer to determine whether it is operating in conformity with the
    provisions of this chapter and the rules and regulations
    thereunder: Provided, however, That the Commission may delay such
    inspection of any class of brokers or dealers for a period not to
    exceed six months.
      (3) Any provision of this chapter (other than section 78e of this
    title and subsection (a) of this section) which prohibits any act,
    practice, or course of business if the mails or any means or
    instrumentality of interstate commerce is used in connection
    therewith shall also prohibit any such act, practice, or course of
    business by any registered broker or dealer or any person acting on
    behalf of such a broker or dealer, irrespective of any use of the
    mails or any means or instrumentality of interstate commerce in
    connection therewith.
      (4) The Commission, by order, shall censure, place limitations on
    the activities, functions, or operations of, suspend for a period
    not exceeding twelve months, or revoke the registration of any
    broker or dealer if it finds, on the record after notice and
    opportunity for hearing, that such censure, placing of limitations,
    suspension, or revocation is in the public interest and that such
    broker or dealer, whether prior or subsequent to becoming such, or
    any person associated with such broker or dealer, whether prior or
    subsequent to becoming so associated - 
        (A) has willfully made or caused to be made in any application
      for registration or report required to be filed with the
      Commission or with any other appropriate regulatory agency under
      this chapter, or in any proceeding before the Commission with
      respect to registration, 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 or report any material fact
      which is required to be stated therein.
        (B) has been convicted within ten years preceding the filing of
      any application for registration or at any time thereafter of any
      felony or misdemeanor or of a substantially equivalent crime by a
      foreign court of competent jurisdiction which the Commission
      finds - 
          (i) involves the purchase or sale of any security, the taking
        of a false oath, the making of a false report, bribery,
        perjury, burglary, any substantially equivalent activity
        however denominated by the laws of the relevant foreign
        government, or conspiracy to commit any such offense;
          (ii) arises out of the conduct of the business of a broker,
        dealer, municipal securities dealer, government securities
        broker, government securities dealer, investment adviser, bank,
        insurance company, fiduciary, transfer agent, nationally
        recognized statistical rating organization, foreign person
        performing a function substantially equivalent to any of the
        above, or entity or person required to be registered under the
        Commodity Exchange Act (7 U.S.C. 1 et seq.) or any
        substantially equivalent foreign statute or regulation;
          (iii) involves the larceny, theft, robbery, extortion,
        forgery, counterfeiting, fraudulent concealment, embezzlement,
        fraudulent conversion, or misappropriation of funds, or
        securities, or substantially equivalent activity however
        denominated by the laws of the relevant foreign government; or
          (iv) involves the violation of section 152, 1341, 1342, or
        1343 or chapter 25 or 47 of title 18 or a violation of a
        substantially equivalent foreign statute.

        (C) is permanently or temporarily enjoined by order, judgment,
      or decree of any court of competent jurisdiction from acting as
      an investment adviser, underwriter, broker, dealer, municipal
      securities dealer, government securities broker, government
      securities dealer, transfer agent, nationally recognized
      statistical rating organization, foreign person performing a
      function substantially equivalent to any of the above, or entity
      or person required to be registered under the Commodity Exchange
      Act or any substantially equivalent foreign statute or
      regulation, or as an affiliated person or employee of any
      investment company, bank, insurance company, foreign entity
      substantially equivalent to any of the above, or entity or person
      required to be registered under the Commodity Exchange Act or any
      substantially equivalent foreign statute or regulation, or from
      engaging in or continuing any conduct or practice in connection
      with any such activity, or in connection with the purchase or
      sale of any security.
        (D) has willfully violated any provision of the Securities Act
      of 1933 [15 U.S.C. 77a et seq.], the Investment Advisers Act of
      1940 [15 U.S.C. 80b-1 et seq.], the Investment Company Act of
      1940 [15 U.S.C. 80a-1 et seq.], the Commodity Exchange Act, this
      chapter, the rules or regulations under any of such statutes, or
      the rules of the Municipal Securities Rulemaking Board, or is
      unable to comply with any such provision.
        (E) has willfully aided, abetted, counseled, commanded,
      induced, or procured the violation by any other person of any
      provision of the Securities Act of 1933, the Investment Advisers
      Act of 1940, the Investment Company Act of 1940, the Commodity
      Exchange Act, this chapter, the rules or regulations under any of
      such statutes, or the rules of the Municipal Securities
      Rulemaking Board, or has failed reasonably to supervise, with a
      view to preventing violations of the provisions of such statutes,
      rules, and regulations, another person who commits such a
      violation, if such other person is subject to his supervision.
      For the purposes of this subparagraph (E) no person shall be
      deemed to have failed reasonably to supervise any other person,
      if - 
          (i) there have been established procedures, and a system for
        applying such procedures, which would reasonably be expected to
        prevent and detect, insofar as practicable, any such violation
        by such other person, and
          (ii) such person has reasonably discharged the duties and
        obligations incumbent upon him by reason of such procedures and
        system without reasonable cause to believe that such procedures
        and system were not being complied with.

        (F) is subject to any order of the Commission barring or
      suspending the right of the person to be associated with a broker
      or dealer;
        (G) has been found by a foreign financial regulatory authority
      to have - 
          (i) made or caused to be made in any application for
        registration or report required to be filed with a foreign
        financial regulatory authority, or in any proceeding before a
        foreign financial regulatory authority with respect to
        registration, any statement that 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 application or report to the foreign financial
        regulatory authority any material fact that is required to be
        stated therein;
          (ii) violated any foreign statute or regulation regarding
        transactions in securities, or contracts of sale of a commodity
        for future delivery, traded on or subject to the rules of a
        contract market or any board of trade;
          (iii) aided, abetted, counseled, commanded, induced, or
        procured the violation by any person of any provision of any
        statutory provisions enacted by a foreign government, or rules
        or regulations thereunder, empowering a foreign financial
        regulatory authority regarding transactions in securities, or
        contracts of sale of a commodity for future delivery, traded on
        or subject to the rules of a contract market or any board of
        trade, or has been found, by a foreign financial regulatory
        authority, to have failed reasonably to supervise, with a view
        to preventing violations of such statutory provisions, rules,
        and regulations, another person who commits such a violation,
        if such other person is subject to his supervision; or

        (H) is subject to any final order of a State securities
      commission (or any agency or officer performing like functions),
      State authority that supervises or examines banks, savings
      associations, or credit unions, State insurance commission (or
      any agency or office performing like functions), an appropriate
      Federal banking agency (as defined in section 3 of the Federal
      Deposit Insurance Act (12 U.S.C. 1813(q))), or the National
      Credit Union Administration, that - 
          (i) bars such person from association with an entity
        regulated by such commission, authority, agency, or officer, or
        from engaging in the business of securities, insurance,
        banking, savings association activities, or credit union
        activities; or
          (ii) constitutes a final order based on violations of any
        laws or regulations that prohibit fraudulent, manipulative, or
        deceptive conduct.

      (5) Pending final determination whether any registration under
    this subsection shall be revoked, the Commission, by order, may
    suspend such registration, if such suspension appears to the
    Commission, after notice and opportunity for hearing, to be
    necessary or appropriate in the public interest or for the
    protection of investors. Any registered broker or dealer may, upon
    such terms and conditions as the Commission deems necessary or
    appropriate in the public interest or for the protection of
    investors, withdraw from registration by filing a written notice of
    withdrawal with the Commission. If the Commission finds that any
    registered broker or dealer is no longer in existence or has ceased
    to do business as a broker or dealer, the Commission, by order,
    shall cancel the registration of such broker or dealer.
      (6)(A) With respect to any person who is associated, who is
    seeking to become associated, or, at the time of the alleged
    misconduct, who was associated or was seeking to become associated
    with a broker or dealer, or any person participating, or, at the
    time of the alleged misconduct, who was participating, in an
    offering of any penny stock, the Commission, by order, shall
    censure, place limitations on the activities or functions of such
    person, or suspend for a period not exceeding 12 months, or bar
    such person from being associated with a broker or dealer, or from
    participating in an offering of penny stock, if the Commission
    finds, on the record after notice and opportunity for a hearing,
    that such censure, placing of limitations, suspension, or bar is in
    the public interest and that such person - 
        (i) has committed or omitted any act, or is subject to an order
      or finding, enumerated in subparagraph (A), (D), or (E) of
      paragraph (4) of this subsection;
        (ii) has been convicted of any offense specified in
      subparagraph (B) of such paragraph (4) within 10 years of the
      commencement of the proceedings under this paragraph; or
        (iii) is enjoined from any action, conduct, or practice
      specified in subparagraph (C) of such paragraph (4).

      (B) It shall be unlawful - 
        (i) for any person as to whom an order under subparagraph (A)
      is in effect, without the consent of the Commission, willfully to
      become, or to be, associated with a broker or dealer in
      contravention of such order, or to participate in an offering of
      penny stock in contravention of such order;
        (ii) for any broker or dealer to permit such a person, without
      the consent of the Commission, to become or remain, a person
      associated with the broker or dealer in contravention of such
      order, if such broker or dealer knew, or in the exercise of
      reasonable care should have known, of such order; or
        (iii) for any broker or dealer to permit such a person, without
      the consent of the Commission, to participate in an offering of
      penny stock in contravention of such order, if such broker or
      dealer knew, or in the exercise of reasonable care should have
      known, of such order and of such participation.

      (C) For purposes of this paragraph, the term "person
    participating in an offering of penny stock" includes any person
    acting as any promoter, finder, consultant, agent, or other person
    who engages in activities with a broker, dealer, or issuer for
    purposes of the issuance or trading in any penny stock, or inducing
    or attempting to induce the purchase or sale of any penny stock.
    The Commission may, by rule or regulation, define such term to
    include other activities, and may, by rule, regulation, or order,
    exempt any person or class of persons, in whole or in part,
    conditionally or unconditionally, from such term.
      (7) No registered broker or dealer or government securities
    broker or government securities dealer registered (or required to
    register) under section 78o-5(a)(1)(A) of this title shall effect
    any transaction in, or induce the purchase or sale of, any security
    unless such broker or dealer meets such standards of operational
    capability and such broker or dealer and all natural persons
    associated with such broker or dealer meet such standards of
    training, experience, competence, and such other qualifications as
    the Commission finds necessary or appropriate in the public
    interest or for the protection of investors. The Commission shall
    establish such standards by rules and regulations, which may - 
        (A) specify that all or any portion of such standards shall be
      applicable to any class of brokers and dealers and persons
      associated with brokers and dealers;
        (B) require persons in any such class to pass tests prescribed
      in accordance with such rules and regulations, which tests shall,
      with respect to any class of partners, officers, or supervisory
      employees (which latter term may be defined by the Commission's
      rules and regulations and as so defined shall include branch
      managers of brokers or dealers) engaged in the management of the
      broker or dealer, include questions relating to bookkeeping,
      accounting, internal control over cash and securities,
      supervision of employees, maintenance of records, and other
      appropriate matters; and
        (C) provide that persons in any such class other than brokers
      and dealers and partners, officers, and supervisory employees of
      brokers or dealers, may be qualified solely on the basis of
      compliance with such standards of training and such other
      qualifications as the Commission finds appropriate.

    The Commission, by rule, may prescribe reasonable fees and charges
    to defray its costs in carrying out this paragraph, including, but
    not limited to, fees for any test administered by it or under its
    direction. The Commission may cooperate with registered securities
    associations and national securities exchanges in devising and
    administering tests and may require registered brokers and dealers
    and persons associated with such brokers and dealers to pass tests
    administered by or on behalf of any such association or exchange
    and to pay such association or exchange reasonable fees or charges
    to defray the costs incurred by such association or exchange in
    administering such tests.
      (8) It shall be unlawful for any registered broker or dealer to
    effect any transaction in, or induce or attempt to induce the
    purchase or sale of, any security (other than or (!1) commercial
    paper, bankers' acceptances, or commercial bills), unless such
    broker or dealer is a member of a securities association registered
    pursuant to section 78o-3 of this title or effects transactions in
    securities solely on a national securities exchange of which it is
    a member.

      (9) The Commission by rule or order, as it deems consistent with
    the public interest and the protection of investors, may
    conditionally or unconditionally exempt from paragraph (8) of this
    subsection any broker or dealer or class of brokers or dealers
    specified in such rule or order.
      (10) For the purposes of determining whether a person is subject
    to a statutory disqualification under section 78f(c)(2), 78o-
    3(g)(2), or 78q-1(b)(4)(A) of this title, the term "Commission" in
    paragraph (4)(B) of this subsection shall mean "exchange",
    "association", or "clearing agency", respectively.
      (11) Broker/dealer registration with respect to transactions in
    security futures products. - 
        (A) Notice registration. - 
          (i) Contents of notice. - Notwithstanding paragraphs (1) and
        (2), a broker or dealer required to register only because it
        effects transactions in security futures products on an
        exchange registered pursuant to section 78f(g) of this title
        may register for purposes of this section by filing with the
        Commission a written notice in such form and containing such
        information concerning such broker or dealer and any persons
        associated with such broker or dealer as the Commission, by
        rule, may prescribe as necessary or appropriate in the public
        interest or for the protection of investors. A broker or dealer
        may not register under this paragraph unless that broker or
        dealer is a member of a national securities association
        registered under section 78o-3(k) of this title.
          (ii) Immediate effectiveness. - Such registration shall be
        effective contemporaneously with the submission of notice, in
        written or electronic form, to the Commission, except that such
        registration shall not be effective if the registration would
        be subject to suspension or revocation under paragraph (4).
          (iii) Suspension. - Such registration shall be suspended
        immediately if a national securities association registered
        pursuant to section 78o-3(k) of this title suspends the
        membership of that broker or dealer.
          (iv) Termination. - Such registration shall be terminated
        immediately if any of the above stated conditions for
        registration set forth in this paragraph are no longer
        satisfied.

        (B) Exemptions for registered brokers and dealers. - A broker
      or dealer registered pursuant to the requirements of subparagraph
      (A) shall be exempt from the following provisions of this chapter
      and the rules thereunder with respect to transactions in security
      futures products:
          (i) Section 78h of this title.
          (ii) Section 78k of this title.
          (iii) Subsections (c)(3) and (c)(5) of this section.
          (iv) Section 78o-4 of this title.
          (v) Section 78o-5 of this title.
          (vi) Subsections (d), (e), (f), (g), (h), and (i) of section
        78q of this title.

      (12) Exemption for security futures product exchange members. - 
        (A) Registration exemption. - A natural person shall be exempt
      from the registration requirements of this section if such person
      - 
          (i) is a member of a designated contract market registered
        with the Commission as an exchange pursuant to section 78f(g)
        of this title;
          (ii) effects transactions only in securities on the exchange
        of which such person is a member; and
          (iii) does not directly accept or solicit orders from public
        customers or provide advice to public customers in connection
        with the trading of security futures products.

        (B) Other exemptions. - A natural person exempt from
      registration pursuant to subparagraph (A) shall also be exempt
      from the following provisions of this chapter and the rules
      thereunder:
          (i) Section 78h of this title.
          (ii) Section 78k of this title.
          (iii) Subsections (c)(3), (c)(5), and (e) of this section.
          (iv) Section 78o-4 of this title.
          (v) Section 78o-5 of this title.
          (vi) Subsections (d), (e), (f), (g), (h), and (i) of section
        78q of this title.
    (c) Use of manipulative or deceptive devices; contravention of
      rules and regulations
      (1)(A) No 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 or attempt to induce the purchase or
    sale of, any security (other than commercial paper, bankers'
    acceptances, or commercial bills) otherwise than on a national
    securities exchange of which it is a member, or any security-based
    swap agreement (as defined in section 206B of the Gramm-Leach-
    Bliley Act), by means of any manipulative, deceptive, or other
    fraudulent device or contrivance.
      (B) No municipal securities dealer shall make use of the mails or
    any means or instrumentality of interstate commerce to effect any
    transaction in, or to induce or attempt to induce the purchase or
    sale of, any municipal security or any security-based swap
    agreement (as defined in section 206B of the Gramm-Leach-Bliley
    Act) involving a municipal security by means of any manipulative,
    deceptive, or other fraudulent device or contrivance.
      (C) No government securities broker or government securities
    dealer shall make use of the mails or any means or instrumentality
    of interstate commerce to effect any transaction in, or to induce
    or to attempt to induce the purchase or sale of, any government
    security or any security-based swap agreement (as defined in
    section 206B of the Gramm-Leach-Bliley Act) involving a government
    security by means of any manipulative, deceptive, or other
    fraudulent device or contrivance.
      (2)(A) No 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 or attempt to induce the purchase or
    sale of, any security (other than an exempted security or
    commercial paper, bankers' acceptances, or commercial bills)
    otherwise than on a national securities exchange of which it is a
    member, in connection with which such broker or dealer engages in
    any fraudulent, deceptive, or manipulative act or practice, or
    makes any fictitious quotation.
      (B) No municipal securities dealer shall make use of the mails or
    any means or instrumentality of interstate commerce to effect any
    transaction in, or to induce or attempt to induce the purchase or
    sale of, any municipal security in connection with which such
    municipal securities dealer engages in any fraudulent, deceptive,
    or manipulative act or practice, or makes any fictitious quotation.
      (C) No government securities broker or government securities
    dealer shall make use of the mails or any means or instrumentality
    of interstate commerce to effect any transaction in, or induce or
    attempt to induce the purchase or sale of, any government security
    in connection with which such government securities broker or
    government securities dealer engages in any fraudulent, deceptive,
    or manipulative act or practice, or makes any fictitious quotation.
      (D) The Commission shall, for the purposes of this paragraph, by
    rules and regulations define, and prescribe means reasonably
    designed to prevent, such acts and practices as are fraudulent,
    deceptive, or manipulative and such quotations as are fictitious.
      (E) The Commission shall, prior to adopting any rule or
    regulation under subparagraph (C), consult with and consider the
    views of the Secretary of the Treasury and each appropriate
    regulatory agency. If the Secretary of the Treasury or any
    appropriate regulatory agency comments in writing on a proposed
    rule or regulation of the Commission under such subparagraph (C)
    that has been published for comment, the Commission shall respond
    in writing to such written comment before adopting the proposed
    rule. If the Secretary of the Treasury determines, and notifies the
    Commission, that such rule or regulation, if implemented, would, or
    as applied does (i) adversely affect the liquidity or efficiency of
    the market for government securities; or (ii) impose any burden on
    competition not necessary or appropriate in furtherance of the
    purposes of this section, the Commission shall, prior to adopting
    the proposed rule or regulation, find that such rule or regulation
    is necessary and appropriate in furtherance of the purposes of this
    section notwithstanding the Secretary's determination.
      (3)(A) No broker or dealer (other than a government securities
    broker or government securities dealer, except a registered 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 or attempt to induce the purchase or sale of, any
    security (other than an exempted security (except a government
    security) or commercial paper, bankers' acceptances, or commercial
    bills) in contravention of such rules and regulations as the
    Commission shall prescribe as necessary or appropriate in the
    public interest or for the protection of investors to provide
    safeguards with respect to the financial responsibility and related
    practices of brokers and dealers including, but not limited to, the
    acceptance of custody and use of customers' securities and the
    carrying and use of customers' deposits or credit balances. Such
    rules and regulations shall (A) require the maintenance of reserves
    with respect to customers' deposits or credit balances, and (B) no
    later than September 1, 1975, establish minimum financial
    responsibility requirements for all brokers and dealers.
      (B) Consistent with this chapter, the Commission, in consultation
    with the Commodity Futures Trading Commission, shall issue such
    rules, regulations, or orders as are necessary to avoid duplicative
    or conflicting regulations applicable to any broker or dealer
    registered with the Commission pursuant to subsection (b) of this
    section (except paragraph (11) thereof), that is also registered
    with the Commodity Futures Trading Commission pursuant to section
    4f(a) of the Commodity Exchange Act [7 U.S.C. 6f(a)] (except
    paragraph (2) thereof), with respect to the application of: (i) the
    provisions of section 78h of this title, subsection (c)(3) of this
    section, and section 78q of this title and the rules and
    regulations thereunder related to the treatment of customer funds,
    securities, or property, maintenance of books and records,
    financial reporting, or other financial responsibility rules,
    involving security futures products; and (ii) similar provisions of
    the Commodity Exchange Act [7 U.S.C. 1 et seq.] and rules and
    regulations thereunder involving security futures products.
      (4) If the Commission finds, after notice and opportunity for a
    hearing, that any person subject to the provisions of section 78l,
    78m, 78n of this title or subsection (d) of this section or any
    rule or regulation thereunder has failed to comply with any such
    provision, rule, or regulation in any material respect, the
    Commission may publish its findings and issue an order requiring
    such person, and any person who was a cause of the failure to
    comply due to an act or omission the person knew or should have
    known would contribute to the failure to comply, to comply, or to
    take steps to effect compliance, with such provision or such rule
    or regulation thereunder upon such terms and conditions and within
    such time as the Commission may specify in such order.
      (5) No dealer (other than a specialist registered on a national
    securities exchange) acting in the capacity of market maker or
    otherwise shall make use of the mails or any means or
    instrumentality of interstate commerce to effect any transaction
    in, or to induce or attempt to induce the purchase or sale of, any
    security (other than an exempted security or a municipal security)
    in contravention of such specified and appropriate standards with
    respect to dealing as the Commission, by rule, shall prescribe as
    necessary or appropriate in the public interest and for the
    protection of investors, to maintain fair and orderly markets, or
    to remove impediments to and perfect the mechanism of a national
    market system. Under the rules of the Commission a dealer in a
    security may be prohibited from acting as a broker in that
    security.
      (6) No 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 or attempt to induce the purchase or sale of, any
    security (other than an exempted security, municipal security,
    commercial paper, bankers' acceptances, or commercial bills) in
    contravention of such rules and regulations as the Commission shall
    prescribe as necessary or appropriate in the public interest and
    for the protection of investors or to perfect or remove impediments
    to a national system for the prompt and accurate clearance and
    settlement of securities transactions, with respect to the time and
    method of, and the form and format of documents used in connection
    with, making settlements of and payments for transactions in
    securities, making transfers and deliveries of securities, and
    closing accounts. Nothing in this paragraph shall be construed (A)
    to affect the authority of the Board of Governors of the Federal
    Reserve System, pursuant to section 78g of this title, to prescribe
    rules and regulations for the purpose of preventing the excessive
    use of credit for the purchase or carrying of securities, or (B) to
    authorize the Commission to prescribe rules or regulations for such
    purpose.
      (7) In connection with any bid for or purchase of a government
    security related to an offering of government securities by or on
    behalf of an issuer, no government securities broker, government
    securities dealer, or bidder for or purchaser of securities in such
    offering shall knowingly or willfully make any false or misleading
    written statement or omit any fact necessary to make any written
    statement made not misleading.
      (8) Prohibition of referral fees. - No broker or dealer, or
    person associated with a broker or dealer, may solicit or accept,
    directly or indirectly, remuneration for assisting an attorney in
    obtaining the representation of any person in any private action
    arising under this chapter or under the Securities Act of 1933 [15
    U.S.C. 77a et seq.].
    (d) Filing of supplementary and periodic information
      Each issuer which has filed a registration statement containing
    an undertaking which is or becomes operative under this subsection
    as in effect prior to August 20, 1964, and each issuer which shall
    after such date file a registration statement which has become
    effective pursuant to the Securities Act of 1933, as amended [15
    U.S.C. 77a et seq.], shall file with the Commission, 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, such supplementary and periodic
    information, documents, and reports as may be required pursuant to
    section 78m of this title in respect of a security registered
    pursuant to section 78l of this title. The duty to file under this
    subsection shall be automatically suspended if and so long as any
    issue of securities of such issuer is registered pursuant to
    section 78l of this title. The duty to file under this subsection
    shall also be automatically suspended as to any fiscal year, other
    than the fiscal year within which such registration statement
    became effective, if, at the beginning of such fiscal year, the
    securities of each class to which the registration statement
    relates are held of record by less than three hundred persons. For
    the purposes of this subsection, the term "class" shall be
    construed to 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 term "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. Nothing
    in this subsection shall apply to securities issued by a foreign
    government or political subdivision thereof.
    (e) Compliance with this chapter by members not required to be
      registered
      The Commission, by rule, as it deems necessary or appropriate in
    the public interest and for the protection of investors or to
    assure equal regulation, may require any member of a national
    securities exchange not required to register under this section and
    any person associated with any such member to comply with any
    provision of this chapter (other than subsection (a) of this
    section) or the rules or regulations thereunder which by its terms
    regulates or prohibits any act, practice, or course of business by
    a "broker or dealer" or "registered broker or dealer" or a "person
    associated with a broker or dealer," respectively.
    (f) Prevention of misuse of material, nonpublic information
      Every registered broker or dealer shall establish, maintain, and
    enforce written policies and procedures reasonably designed, taking
    into consideration the nature of such broker's or dealer's
    business, to prevent the misuse in violation of this chapter, or
    the rules or regulations thereunder, of material, nonpublic
    information by such broker or dealer or any person associated with
    such broker or dealer. The Commission, as it deems necessary or
    appropriate in the public interest or for the protection of
    investors, shall adopt rules or regulations to require specific
    policies or procedures reasonably designed to prevent misuse in
    violation of this chapter (or the rules or regulations thereunder)
    of material, nonpublic information.
    (g) Requirements for transactions in penny stocks
      (1) In general
        No 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 or attempt to induce the purchase or sale of,
      any penny stock by any customer except in accordance with the
      requirements of this subsection and the rules and regulations
      prescribed under this subsection.
      (2) Risk disclosure with respect to penny stocks
        Prior to effecting any transaction in any penny stock, a broker
      or dealer shall give the customer a risk disclosure document that
      - 
          (A) contains a description of the nature and level of risk in
        the market for penny stocks in both public offerings and
        secondary trading;
          (B) contains a description of the broker's or dealer's duties
        to the customer and of the rights and remedies available to the
        customer with respect to violations of such duties or other
        requirements of Federal securities laws;
          (C) contains a brief, clear, narrative description of a
        dealer market, including "bid" and "ask" prices for penny
        stocks and the significance of the spread between the bid and
        ask prices;
          (D) contains the toll free telephone number for inquiries on
        disciplinary actions established pursuant to section 78o-3(i)
        of this title;
          (E) defines significant terms used in the disclosure document
        or in the conduct of trading in penny stocks; and
          (F) contains such other information, and is in such form
        (including language, type size, and format), as the Commission
        shall require by rule or regulation.
      (3) Commission rules relating to disclosure
        The Commission shall adopt rules setting forth additional
      standards for the disclosure by brokers and dealers to customers
      of information concerning transactions in penny stocks. Such
      rules - 
          (A) shall require brokers and dealers to disclose to each
        customer, prior to effecting any transaction in, and at the
        time of confirming any transaction with respect to any penny
        stock, in accordance with such procedures and methods as the
        Commission may require consistent with the public interest and
        the protection of investors - 
            (i) the bid and ask prices for penny stock, or such other
          information as the Commission may, by rule, require to
          provide customers with more useful and reliable information
          relating to the price of such stock;
            (ii) the number of shares to which such bid and ask prices
          apply, or other comparable information relating to the depth
          and liquidity of the market for such stock; and
            (iii) the amount and a description of any compensation that
          the broker or dealer and the associated person thereof will
          receive or has received in connection with such transaction;

          (B) shall require brokers and dealers to provide, to each
        customer whose account with the broker or dealer contains penny
        stocks, a monthly statement indicating the market value of the
        penny stocks in that account or indicating that the market
        value of such stock cannot be determined because of the
        unavailability of firm quotes; and
          (C) may, as the Commission finds necessary or appropriate in
        the public interest or for the protection of investors, require
        brokers and dealers to disclose to customers additional
        information concerning transactions in penny stocks.
      (4) Exemptions
        The Commission, as it determines consistent with the public
      interest and the protection of investors, may by rule,
      regulation, or order exempt in whole or in part, conditionally or
      unconditionally, any person or class of persons, or any
      transaction or class of transactions, from the requirements of
      this subsection. Such exemptions shall include an exemption for
      brokers and dealers based on the minimal percentage of the
      broker's or dealer's commissions, commission-equivalents, and
      markups received from transactions in penny stocks.
      (5) Regulations
        It shall be unlawful for any person to violate such rules and
      regulations as the Commission shall prescribe in the public
      interest or for the protection of investors or to maintain fair
      and orderly markets - 
          (A) as necessary or appropriate to carry out this subsection;
        or
          (B) as reasonably designed to prevent fraudulent, deceptive,
        or manipulative acts and practices with respect to penny
        stocks.
    (h) Limitations on State law
      (1) Capital, margin, books and records, bonding, and reports
        No law, rule, regulation, or order, or other administrative
      action of any State or political subdivision thereof shall
      establish capital, custody, margin, financial responsibility,
      making and keeping records, bonding, or financial or operational
      reporting requirements for brokers, dealers, municipal securities
      dealers, government securities brokers, or government securities
      dealers that differ from, or are in addition to, the requirements
      in those areas established under this chapter. The Commission
      shall consult periodically the securities commissions (or any
      agency or office performing like functions) of the States
      concerning the adequacy of such requirements as established under
      this chapter.
      (2) De minimis transactions by associated persons
        No law, rule, regulation, or order, or other administrative
      action of any State or political subdivision thereof may prohibit
      an associated person of a broker or dealer from effecting a
      transaction described in paragraph (3) for a customer in such
      State if - 
          (A) such associated person is not ineligible to register with
        such State for any reason other than such a transaction;
          (B) such associated person is registered with a registered
        securities association and at least one State; and
          (C) the broker or dealer with which such person is associated
        is registered with such State.
      (3) Described transactions
        (A) In general
          A transaction is described in this paragraph if - 
            (i) such transaction is effected - 
              (I) on behalf of a customer that, for 30 days prior to
            the day of the transaction, maintained an account with the
            broker or dealer; and
              (II) by an associated person of the broker or dealer - 
                (aa) to which the customer was assigned for 14 days
              prior to the day of the transaction; and
                (bb) who is registered with a State in which the
              customer was a resident or was present for at least 30
              consecutive days during the 1-year period prior to the
              day of the transaction; or

            (ii) the transaction is effected - 
              (I) on behalf of a customer that, for 30 days prior to
            the day of the transaction, maintained an account with the
            broker or dealer; and
              (II) during the period beginning on the date on which
            such associated person files an application for
            registration with the State in which the transaction is
            effected and ending on the earlier of - 
                (aa) 60 days after the date on which the application is
              filed; or
                (bb) the date on which such State notifies the
              associated person that it has denied the application for
              registration or has stayed the pendency of the
              application for cause.
        (B) Rules of construction
          For purposes of subparagraph (A)(i)(II) - 
            (i) each of up to 3 associated persons of a broker or
          dealer who are designated to effect transactions during the
          absence or unavailability of the principal associated person
          for a customer may be treated as an associated person to
          which such customer is assigned; and
            (ii) if the customer is present in another State for 30 or
          more consecutive days or has permanently changed his or her
          residence to another State, a transaction is not described in
          this paragraph, unless the associated person of the broker or
          dealer files an application for registration with such State
          not later than 10 business days after the later of the date
          of the transaction, or the date of the discovery of the
          presence of the customer in the other State for 30 or more
          consecutive days or the change in the customer's residence.
    (i) (!2) Rulemaking to extend requirements to new hybrid products

      (1) Consultation
        Prior to commencing a rulemaking under this subsection, the
      Commission shall consult with and seek the concurrence of the
      Board concerning the imposition of broker or dealer registration
      requirements with respect to any new hybrid product. In
      developing and promulgating rules under this subsection, the
      Commission shall consider the views of the Board, including views
      with respect to the nature of the new hybrid product; the
      history, purpose, extent, and appropriateness of the regulation
      of the new product under the Federal banking laws; and the impact
      of the proposed rule on the banking industry.
      (2) Limitation
        The Commission shall not - 
          (A) require a bank to register as a broker or dealer under
        this section because the bank engages in any transaction in, or
        buys or sells, a new hybrid product; or
          (B) bring an action against a bank for a failure to comply
        with a requirement described in subparagraph (A),

      unless the Commission has imposed such requirement by rule or
      regulation issued in accordance with this section.
      (3) Criteria for rulemaking
        The Commission shall not impose a requirement under paragraph
      (2) of this subsection with respect to any new hybrid product
      unless the Commission determines that - 
          (A) the new hybrid product is a security; and
          (B) imposing such requirement is necessary and appropriate in
        the public interest and for the protection of investors.
      (4) Considerations
        In making a determination under paragraph (3), the Commission
      shall consider - 
          (A) the nature of the new hybrid product; and
          (B) the history, purpose, extent, and appropriateness of the
        regulation of the new hybrid product under the Federal
        securities laws and under the Federal banking laws.
      (5) Objection to Commission regulation
        (A) Filing of petition for review
          The Board may obtain review of any final regulation described
        in paragraph (2) in the United States Court of Appeals for the
        District of Columbia Circuit by filing in such court, not later
        than 60 days after the date of publication of the final
        regulation, a written petition requesting that the regulation
        be set aside. Any proceeding to challenge any such rule shall
        be expedited by the Court of Appeals.
        (B) Transmittal of petition and record
          A copy of a petition described in subparagraph (A) shall be
        transmitted as soon as possible by the Clerk of the Court to an
        officer or employee of the Commission designated for that
        purpose. Upon receipt of the petition, the Commission shall
        file with the court the regulation under review and any
        documents referred to therein, and any other relevant materials
        prescribed by the court.
        (C) Exclusive jurisdiction
          On the date of the filing of the petition under subparagraph
        (A), the court has jurisdiction, which becomes exclusive on the
        filing of the materials set forth in subparagraph (B), to
        affirm and enforce or to set aside the regulation at issue.
        (D) Standard of review
          The court shall determine to affirm and enforce or set aside
        a regulation of the Commission under this subsection, based on
        the determination of the court as to whether - 
            (i) the subject product is a new hybrid product, as defined
          in this subsection;
            (ii) the subject product is a security; and
            (iii) imposing a requirement to register as a broker or
          dealer for banks engaging in transactions in such product is
          appropriate in light of the history, purpose, and extent of
          regulation under the Federal securities laws and under the
          Federal banking laws, giving deference neither to the views
          of the Commission nor the Board.
        (E) Judicial stay
          The filing of a petition by the Board pursuant to
        subparagraph (A) shall operate as a judicial stay, until the
        date on which the determination of the court is final
        (including any appeal of such determination).
        (F) Other authority to challenge
          Any aggrieved party may seek judicial review of the
        Commission's rulemaking under this subsection pursuant to
        section 78y of this title.
      (6) Definitions
        For purposes of this subsection:
        (A) New hybrid product
          The term "new hybrid product" means a product that - 
            (i) was not subjected to regulation by the Commission as a
          security prior to the date of the enactment of the Gramm-
          Leach-Bliley Act [Nov. 12, 1999];
            (ii) is not an identified banking product as such term is
          defined in section 206 of such Act; and
            (iii) is not an equity swap within the meaning of section
          206(a)(6) of such Act.
        (B) Board
          The term "Board" means the Board of Governors of the Federal
        Reserve System.
    (i) (!2) Limitation on Commission authority
      The authority of the Commission under this section with respect
    to security-based swap agreements (as defined in section 206B of
    the Gramm-Leach-Bliley Act) shall be subject to the restrictions
    and limitations of section 78c-1(b) of this title.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 15, 48 Stat. 895; May 27,
    1936, ch. 462, Sec. 3, 49 Stat. 1377; June 25, 1938, ch. 677, Sec.
    2, 52 Stat. 1075; Pub. L. 88-467, Sec. 6, Aug. 20, 1964, 78 Stat.
    570; Pub. L. 91-598, Sec. 11(d), formerly Sec. 7(d), Dec. 30, 1970,
    84 Stat. 1653, renumbered Sec. 11(d), Pub. L. 95-283, Sec. 9, May
    21, 1978, 92 Stat. 260; Pub. L. 94-29, Sec. 11, June 4, 1975, 89
    Stat. 121; Pub. L. 95-213, title II, Sec. 204, Dec. 19, 1977, 91
    Stat. 1500; Pub. L. 98-38, Sec. 3(a), June 6, 1983, 97 Stat. 206;
    Pub. L. 98-376, Secs. 4, 6(b), Aug. 10, 1984, 98 Stat. 1265; Pub.
    L. 99-571, title I, Sec. 102(e), (f), Oct. 28, 1986, 100 Stat.
    3218; Pub. L. 100-181, title III, Sec. 317, Dec. 4, 1987, 101 Stat.
    1256; Pub. L. 100-704, Sec. 3(b)(1), Nov. 19, 1988, 102 Stat. 4679;
    Pub. L. 101-429, title V, Secs. 504(a), 505, Oct. 15, 1990, 104
    Stat. 952, 953; Pub. L. 101-550, title II, Sec. 203(a), (c)(1),
    Nov. 15, 1990, 104 Stat. 2715, 2718; Pub. L. 103-202, title I,
    Secs. 105, 106(b)(2)(B), 109(b)(2), 110, Dec. 17, 1993, 107 Stat.
    2348, 2350, 2353; Pub. L. 104-67, title I, Sec. 103(a), Dec. 22,
    1995, 109 Stat. 756; Pub. L. 104-290, title I, Sec. 103(a), Oct.
    11, 1996, 110 Stat. 3420; Pub. L. 105-353, title III, Sec.
    301(b)(8), Nov. 3, 1998, 112 Stat. 3236; Pub. L. 106-102, title II,
    Sec. 205, Nov. 12, 1999, 113 Stat. 1391; Pub. L. 106-554, Sec.
    1(a)(5) [title II, Secs. 203(a)(1), (b), 206(h), title III, Sec.
    303(e), (f)], Dec. 21, 2000, 114 Stat. 2763, 2763A-421, 2763A-422,
    2763A-432, 2763A-454, 2763A-455; Pub. L. 107-204, title VI, Sec.
    604(a), (c)(1)(B)(ii), July 30, 2002, 116 Stat. 795, 796; Pub. L.
    109-291, Sec. 4(b)(1)(A), Sept. 29, 2006, 120 Stat. 1337.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (b)(2)(B), (C), (3),
    (4)(A), (D), (E), (11)(B), (12)(B), (c)(3)(B), (8), (e), (f), and
    (h)(1), was in the original "this title". See References in Text
    note set out under section 78a of this title.
      The Commodity Exchange Act, referred to in subsecs.
    (b)(4)(B)(ii), (C) to (E) and (c)(3)(B), is act Sept. 21, 1922, ch.
    369, 42 Stat. 998, as amended, which is classified generally to
    chapter 1 (Sec. 1 et seq.) of Title 7, Agriculture. For complete
    classification of this Act to the Code, see section 1 of Title 7
    and Tables.
      The Securities Act of 1933, referred to in subsecs. (b)(4)(D),
    (E), (c)(8), and (d), is act May 27, 1933, ch. 38, title I, 48
    Stat. 74, as amended, which is classified generally to subchapter 1
    (Sec. 77a et seq.) of chapter 2A of this title. For complete
    classification of this Act to the Code, see section 77a of this
    title and Tables.
      The Investment Advisers Act of 1940, referred to in subsec.
    (b)(4)(D), (E), is title II of act Aug. 22, 1940, ch. 686, 54 Stat.
    847, as amended, which is classified generally to subchapter II
    (Sec. 80b-1 et seq.) of chapter 2D of this title. For complete
    classification of this Act to the Code, see section 80b-20 of this
    title and Tables.
      The Investment Company Act of 1940, referred to in subsec.
    (b)(4)(D), (E), is title I of act Aug. 22, 1940, ch. 686, 54 Stat.
    789, as amended, which is classified generally to subchapter 1
    (Sec. 80a-1 et seq.) of chapter 2D of this title. For complete
    classification of this Act to the Code, see section 80a-51 of this
    title and Tables.
      Sections 206 and 206B of the Gramm-Leach-Bliley Act, referred to
    in subsecs. (c)(1), (i)(6)(A)(ii), (iii), and (i), are sections 206
    and 206B of Pub. L. 106-102, which are set out as notes under
    section 78c of this title.


-MISC1-
                                AMENDMENTS                            
      2006 - Subsec. (b)(4)(B)(ii), (C). Pub. L. 109-291 inserted
    "nationally recognized statistical rating organization," after
    "transfer agent,".
      2002 - Subsec. (b)(4)(F). Pub. L. 107-204, Sec. 604(a)(1), added
    subpar. (F) and struck out former subpar. (F) which read as
    follows: "is subject to an order of the Commission entered pursuant
    to paragraph (6) of this subsection (b) barring or suspending the
    right of such person to be associated with a broker or dealer."
      Subsec. (b)(4)(H). Pub. L. 107-204, Sec. 604(a)(2), added subpar.
    (H).
      Subsec. (b)(6)(A)(i). Pub. L. 107-204, Sec. 604(c)(1)(B)(ii),
    substituted ", or is subject to an order or finding," for "or
    omission".
      2000 - Subsec. (b)(11). Pub. L. 106-554, Sec. 1(a)(5) [title II,
    Sec. 203(a)(1)], added par. (11).
      Subsec. (b)(12). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    203(b)], added par. (12).
      Subsec. (c)(1). Pub. L. 106-554, Sec. 1(a)(5) [title III, Sec.
    303(e)], amended par. (1) generally. Prior to amendment, par. (1)
    consisted of subpars. (A) to (E) prohibiting use of mails or
    instrumentality of interstate commerce for transactions in
    securities by manipulative, deceptive, or other fraudulent device,
    requiring the Commission, by regulation, to define such devices as
    manipulative, deceptive or fraudulent, and providing for
    consultation with the Secretary of the Treasury and other agencies
    prior to adoption of regulations.
      Subsec. (c)(3). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(h)], designated existing provisions as subpar. (A) and added
    subpar. (B).
      Subsec. (i). Pub. L. 106-554, Sec. 1(a)(5) [title III, Sec.
    303(f)], added subsec. (i) relating to limitation on Commission
    authority.
      1999 - Subsec. (i). Pub. L. 106-102 added subsec. (i) relating to
    rulemaking to extend requirements to new hybrid products.
      1998 - Subsec. (c)(8). Pub. L. 105-353, Sec. 301(b)(8)(A),
    realigned margins.
      Subsec. (h)(2). Pub. L. 105-353, Sec. 301(b)(8)(B), substituted
    "effecting" for "affecting" in introductory provisions.
      Subsec. (h)(3)(A)(i)(II)(bb). Pub. L. 105-353, Sec. 301(b)(8)(C),
    inserted "or" after semicolon at end.
      Subsec. (h)(3)(A)(ii)(I). Pub. L. 105-353, Sec. 301(b)(8)(D),
    substituted "maintained" for "maintains".
      Subsec. (h)(3)(B)(ii). Pub. L. 105-353, Sec. 301(b)(8)(E),
    substituted "associated" for "association".
      1996 - Subsec. (h). Pub. L. 104-290 added subsec. (h).
      1995 - Subsec. (c)(8). Pub. L. 104-67 added par. (8).
      1993 - Subsec. (b)(1)(B). Pub. L. 103-202, Sec. 109(b)(2),
    inserted "The order granting registration shall not be effective
    until such broker or dealer has become a member of a registered
    securities association, or until such broker or dealer has become a
    member of a national securities exchange if such broker or dealer
    effects transactions solely on that exchange, unless the Commission
    has exempted such broker or dealer, by rule or order, from such
    membership." before "The Commission may extend".
      Subsec. (b)(7). Pub. L. 103-202, Sec. 106(b)(2)(B), inserted "or
    government securities broker or government securities dealer
    registered (or required to register) under section 78o-5(a)(1)(A)
    of this title" after "No registered broker or dealer" in
    introductory provisions.
      Subsec. (c)(1). Pub. L. 103-202, Sec. 105(b), inserted subpar.
    designation "(A)" after "(1)", substituted "contrivance." along
    with subpar. designation "(B)" and "No municipal securities dealer"
    for "contrivance, and no municipal securities dealer", substituted
    "contrivance." along with subpar. (C), subpar. designation "(D)"
    and "The Commission shall" for "contrivance. The Commission shall",
    and added subpar. (E).
      Subsec. (c)(2). Pub. L. 103-202, Sec. 105(a), inserted subpar.
    designation "(A)" after "(2)", substituted "fictitious quotation."
    along with subpar. designation "(B)" and "No municipal securities
    dealer" for "fictitious quotation, and no municipal securities
    dealer", substituted "fictitious quotation." along with subpar.
    (C), subpar. designation "(D)" and "The Commission shall" for
    "fictitious quotation. The Commission shall", and added subpar.
    (E).
      Subsec. (c)(7). Pub. L. 103-202, Sec. 110, added par. (7).
      1990 - Subsec. (b)(4)(B). Pub. L. 101-550, Sec. 203(a)(1),
    inserted "or of a substantially equivalent crime by a foreign court
    of competent jurisdiction" after "misdemeanor".
      Subsec. (b)(4)(B)(i). Pub. L. 101-550, Sec. 203(a)(2), inserted
    "any substantially equivalent activity however denominated by the
    laws of the relevant foreign government," after "burglary,".
      Subsec. (b)(4)(B)(ii). Pub. L. 101-550, Sec. 203(a)(3), inserted
    "foreign person performing a function substantially equivalent to
    any of the above," after "transfer agent," and "or any
    substantially equivalent foreign statute or regulation" before
    semicolon at end.
      Subsec. (b)(4)(B)(iii). Pub. L. 101-550, Sec. 203(a)(4), inserted
    ", or substantially equivalent activity however denominated by the
    laws of the relevant foreign government" after "securities".
      Subsec. (b)(4)(B)(iv). Pub. L. 101-550, Sec. 203(a)(5), inserted
    "or a violation of a substantially equivalent foreign statute"
    after "title 18".
      Subsec. (b)(4)(C). Pub. L. 101-550, Sec. 203(a)(6), inserted
    "foreign person performing a function substantially equivalent to
    any of the above," after "transfer agent,", "or any substantially
    equivalent foreign statute or regulation" after "Commodity Exchange
    Act" wherever appearing, and "foreign entity substantially
    equivalent to any of the above," after "insurance company,".
      Subsec. (b)(4)(G). Pub. L. 101-550, Sec. 203(a)(7), added subpar.
    (G).
      Subsec. (b)(6). Pub. L. 101-429, Sec. 504(a), amended par. (6)
    generally. Prior to amendment, par. (6) read as follows: "The
    Commission, by order, shall censure or place limitations on the
    activities or functions of any person associated, seeking to become
    associated, or, at the time of the alleged misconduct, associated
    or seeking to become associated with a broker or dealer, or suspend
    for a period not exceeding twelve months or bar any such person
    from being associated with a broker or dealer, if the Commission
    finds, on the record after notice and opportunity for hearing, that
    such censure, placing of limitations, suspension, or bar is in the
    public interest and that such person has committed or omitted any
    act or omission enumerated in subparagraph (A), (D), (E), or (G) of
    paragraph (4) of this subsection, has been convicted of any offense
    specified in subparagraph (B) of said paragraph (4) within ten
    years of the commencement of the proceedings under this paragraph,
    or is enjoined from any action, conduct, or practice specified in
    subparagraph (C) of said paragraph (4). It shall be unlawful for
    any person as to whom such an order suspending or barring him from
    being associated with a broker or dealer is in effect willfully to
    become, or to be, associated with a broker or dealer without the
    consent of the Commission, and it shall be unlawful for any broker
    or dealer to permit such a person to become, or remain, a person
    associated with him without the consent of the Commission, if such
    broker or dealer knew, or in the exercise of reasonable care should
    have known, of such order."
      Pub. L. 101-550, Sec. 203(c)(1), substituted "(A), (D), (E), or
    (G)" for "(A), (D), or (E)".
      Subsec. (g). Pub. L. 101-429, Sec. 505, added subsec. (g).
      1988 - Subsec. (f). Pub. L. 100-704 added subsec. (f).
      1987 - Subsec. (b)(4)(B)(ii). Pub. L. 100-181, Sec. 317(1),
    substituted "fiduciary, transfer agent, or" for "fiduciary, or
    any".
      Subsec. (b)(4)(C). Pub. L. 100-181, Sec. 317(2), added subpar.
    (C) and struck out former subpar. (C) which read as follows: "is
    permanently or temporarily enjoined by order, judgment, or decree
    of any court of competent jurisdiction from acting as an investment
    adviser, underwriter, broker, dealer, entity or person required to
    be registered under the Commodity Exchange Act, municipal
    securities dealer, government securities broker, or government
    securities dealer, or as an affiliated person or employee of any
    investment company, bank, entity or person required to be
    registered under such Act, or insurance company, or from engaging
    in or continuing any conduct or practice in connection with any
    such activity, or in connection with the purchase or sale of any
    security."
      Subsec. (b)(6). Pub. L. 100-181, Sec. 317(3), substituted
    "seeking to become associated, or, at the time of the alleged
    misconduct, associated or seeking to become associated" for "or
    seeking to become associated," in first sentence.
      Subsec. (b)(10). Pub. L. 100-181, Sec. 317(4), substituted "78q-
    1(b)(4)(A)" for "78q-1(b)(4)(B)".
      1986 - Subsec. (b)(4)(A). Pub. L. 99-571, Sec. 102(e)(1),
    inserted "or with any other appropriate regulatory agency".
      Subsec. (b)(4)(B)(ii). Pub. L. 99-571, Sec. 102(e)(2), inserted
    "government securities broker, government securities dealer,".
      Subsec. (b)(4)(C). Pub. L. 99-571, Sec. 102(e)(3), substituted
    "municipal securities dealer, government securities broker, or
    government securities dealer," for "or municipal securities
    dealer,".
      Subsec. (b)(8). Pub. L. 99-571, Sec. 102(e)(4), substituted "any
    registered broker or dealer" for "any broker or dealer required to
    register pursuant to this chapter" and struck out "an exempted
    security" after "other than".
      Subsec. (c)(3). Pub. L. 99-571, Sec. 102(f), inserted "(other
    than a government securities broker or government securities
    dealer, except a registered broker or dealer)" and "(except a
    government security)".
      1984 - Subsec. (b)(4)(B)(ii). Pub. L. 98-376, Sec. 6(b)(1),
    substituted "fiduciary, or any entity or person required to be
    registered under the Commodity Exchange Act (7 U.S.C. 1 et seq.)"
    for "or fiduciary".
      Subsec. (b)(4)(C). Pub. L. 98-376, Sec. 6(b)(2), inserted "entity
    or person required to be registered under the Commodity Exchange
    Act," and "entity or person required to be registered under such
    Act".
      Subsec. (b)(4)(D), (E). Pub. L. 98-376, Sec. 6(b)(3), inserted
    "the Commodity Exchange Act,".
      Subsec. (c)(4). Pub. L. 98-376, Sec. 4, inserted reference to
    section 78n of this title and "and any person who was a cause of
    the failure to comply due to an act or omission the person knew or
    should have known would contribute to the failure to comply,".
      1983 - Subsec. (b)(8). Pub. L. 98-38, Sec. 3(a)(1), added par.
    (8) and struck out former par. (8), which had directed that, in
    addition to the fees and charges authorized by par. (7) of this
    subsection, each registered broker or dealer not a member of a
    registered securities association pay to the Commission such
    reasonable fees and charges as necessary to defray the costs of the
    additional regulatory duties required to be performed by the
    Commission because such broker or dealer effected transactions in
    securities otherwise than on a national securities exchange of
    which it was a member and was not a member of a registered
    securities association, and that the Commission, by rule, establish
    such fees and charges.
      Subsec. (b)(9). Pub. L. 98-38, Sec. 3(a)(2), added par. (9) and
    struck out former par. (9), which had provided that no broker or
    dealer subject to par. (8) of this subsection could effect any
    transaction in, or induce the purchase or sale of, any security
    (otherwise than on a national securities exchange of which it was a
    member) in contravention of such rules and regulations as the
    Commission might prescribe designed to promote just and equitable
    principles of trade, to remove impediments to and perfect the
    mechanism of a free and open market and a national market system,
    and, in general, to protect investors and the public interest.
      1977 - Subsec. (d). Pub. L. 95-213 authorized the Commission to
    define, for purposes of this subsection, term "held of record".
      1975 - Pub. L. 94-29, Sec. 11(1), amended section catchline.
      Subsec. (a). Pub. L. 94-29, Sec. 11(2), required registration
    with the Commission of all persons utilizing an exchange's
    facilities to effect transactions.
      Subsec. (b). Pub. L. 94-29, Sec. 11(2), expanded coverage to
    include municipal securities dealers, permitted nonbank municipal
    securities dealers and brokers to register company departments or
    divisions conducting municipal securities activities rather than
    the company of which the department or division is a part,
    subjected municipal securities and associated persons thereof to
    the Commission's enforcement and disciplinary powers, updated the
    list of statutory offenses which bar a person from becoming a
    broker-dealer or an associated person of a broker-dealer, expanded
    Commission regulatory control to include all brokers and dealers
    executing transactions on exchanges of which such brokers and
    dealers are not members, required any registered broker-dealer who
    is not a member of a registered securities association to pay the
    Commission fees imposed by it to defray the costs of the additional
    regulatory duties to be performed by the Commission, and clarified
    the power of national securities exchanges, registered securities
    associations, and registered clearing agencies to make
    determinations as to whether a person is subject to statutory
    disqualification.
      Subsec. (c)(1). Pub. L. 94-29, Sec. 11(3), expanded the
    Commission's authority to define devices, contrivances, acts, and
    practices deemed manipulative, deceptive, and otherwise fraudulent
    for municipal securities dealers as well as for brokers and
    dealers.
      Subsec. (c)(2). Pub. L. 94-29, Sec. 11(3), expanded the
    Commission's authority to define quotations deemed to be fictitious
    for municipal securities dealers as well as for brokers and
    dealers.
      Subsec. (c)(3). Pub. L. 94-29, Sec. 11(3), inserted requirement
    that rules and regulations be promulgated no later than Sept. 1,
    1975, establishing minimum financial responsibility requirements
    for all brokers and dealers.
      Subsec. (c)(5). Pub. L. 94-29, Sec. 11(4), substituted provisions
    authorizing the Commission to regulate trading activities of market
    makers other than specialists registered on a national securities
    exchange for provisions authorizing the Commission summarily to
    suspend trading, otherwise than on a national securities exchange,
    in any security other than an exempted security for a period not
    exceeding 10 days if the public interest and the protection of
    investors so requires.
      Subsec. (c)(6). Pub. L. 94-29, Sec. 11(5), added par. (6).
      Subsec. (e). Pub. L. 94-29, Sec. 11(6), added subsec. (e).
      1970 - Subsec. (c)(3). Pub. L. 91-598 extended Commission's
    rulemaking power to both the exchange and the over-the-counter
    markets, striking out "otherwise than on a national securities
    exchange" before "in contravention of such rules and regulations"
    and substituting "shall prescribe" for "may prescribe" and provided
    for safeguards with respect to the related practices of brokers and
    dealers, including customers' securities and customers' deposits or
    credit balances, and maintenance of reserves with respect to such
    deposits or credit balances.
      1964 - Subsec. (a). Pub. L. 88-467, Sec. 6(a), designated
    existing provisions as par. (1) and added par. (2).
      Subsec. (b)(1). Pub. L. 88-467, Sec. 6(b), designated first par.
    as (1) and substituted "persons associated with such broker or
    dealer" for "person directly or indirectly controlling or
    controlled by, or under direct or indirect common control with,
    such broker or dealer,".
      Subsec. (b)(2). Pub. L. 88-467, Sec. 6(b), designated second par.
    as (2) and substituted "associated with the applicant" for
    "directly or indirectly controlling or controlled by, or under
    direct or indirect common control with, the applicant".
      Subsec. (b)(3). Pub. L. 88-467, Sec. 6(b), designated third par.
    as (3) and substituted "effective date of the registration" for
    "effective date thereof".
      Subsec. (b)(4). Pub. L. 88-467, Sec. 6(b), added par. (4).
      Subsec. (b)(5). Pub. L. 88-467, Sec. 6(b), designated first
    sentence of fourth par, as (5), provided for censure and for
    suspension for period not exceeding twelve months, substituted the
    language "that such broker or dealer, whether prior or subsequent
    to becoming such, or any person associated with such broker or
    dealer, whether prior or subsequent to becoming so associated" for
    "that (1) such broker or dealer whether prior or subsequent to
    becoming such, or (2) any partner, officer, director, or branch
    manager of such broker or dealer (or any person occupying a similar
    status or performing similar functions), or any person directly or
    indirectly controlling or controlled by such broker or dealer,
    whether prior or subsequent to becoming such", substituted in
    clause (A) the provision respecting false or misleading statements
    in any report required to, be filed with the Commission for such
    statements in any document supplemental to application for
    registration and inserted in such clause (A) the material fact
    omission provision, designated existing provisions of clause (B) as
    items (i) and (ii), included in item (ii) the business of
    investment broker, and added items (iii) and (iv), provided in
    clause (C) for enjoyment from acting as an investment adviser,
    underwriter, broker, or dealer, or as an affiliated person or
    employee of any investment company, bank, or insurance company, or
    from engaging in or continuing any conduct or practice in
    connection with any such activity, made clause (D) applicable to
    violations of the Investment Advisers Act of 1940 and the
    Investment Company Act of 1940, and added clauses (E) and (F).
      Subsec. (b)(6). Pub. L. 88-467, Sec. 6(b), designated second
    through fifth sentences of fourth par. as (6) and, in provision
    constituting first sentence of par. (6) substituted "any
    registration under this subsection" for "any such registration" and
    inserted "(which may consist solely of affidavits and oral
    argument)" after "opportunity for hearing".
      Subsec. (b)(7) to (10). Pub. L. 88-467, Sec. 6(b), added pars.
    (7) to (10).
      Subsec. (c)(4), (5). Pub. L. 88-467, Sec. 6(c), added pars. (4)
    and (5).
      Subsec. (d). Pub. L. 88-467, Sec. 6(d), substituted provisions
    which require every issuer filing a registration statement under
    the Securities Act of 1933 to file for the fiscal year in which the
    registration statement becomes effective such reports as may be
    required by the Commission under section 78m of this title and
    provide for suspension of duty to file reports for any later fiscal
    years if at the beginning of such fiscal year the securities to
    which the registration statement relates are held of record by less
    than three hundred persons for former provisions which required the
    registration statement filed under the Securities Act to contain an
    undertaking if the value of the securities offered plus the value
    of other outstanding securities of the same class amounted to
    $2,000,000 or more and suspended the duty to file if the value of
    securities outstanding was reduced to less than $1,000,000 or the
    issuer had become subject to an equivalent reporting requirement
    and deleted "or to any other security which the Commission may by
    rules and regulations exempt as not comprehended within the
    purposes of this subsection" after "political subdivision thereof".
      1938 - Subsec. (c)(2), (3). Act June 25, 1938, added pars. (2)
    and (3).
      1936 - Act May 27, 1936, amended section generally.

                     EFFECTIVE DATE OF 1999 AMENDMENT                 
      Amendment by Pub. L. 106-102 effective at the end of the 18-month
    period beginning on Nov. 12, 1999, see section 209 of Pub. L. 106-
    102, set out as a note under section 1828 of Title 12, Banks and
    Banking.

                     EFFECTIVE DATE OF 1995 AMENDMENT                 
      Amendment by Pub. L. 104-67 not to affect or apply to any private
    action arising under this chapter or title I of the Securities Act
    of 1933 (15 U.S.C. 77a et seq.), commenced before and pending on
    Dec. 22, 1995, see section 108 of Pub. L. 104-67, set out as a note
    under section 77l of this title.

                     EFFECTIVE DATE OF 1990 AMENDMENT                 
      Amendment by section 504(a) of Pub. L. 101-429 effective 12
    months after Oct. 15, 1990, or upon issuance of final regulations
    initially implementing such amendment, whichever is earlier, and
    with provisions relating to civil penalties and accounting and
    disgorgement, see section 1(c)(2), (3)(A) of Pub. L. 101-429, set
    out in a note under section 77g of this title.
      Amendment by section 505 of Pub. L. 101-429 effective 18 months
    after Oct. 15, 1990, or upon issuance of final regulations
    initially implementing such amendment, whichever is earlier, with
    provision to commence rulemaking proceedings to implement such
    amendment not later than 180 days after Oct. 15, 1990, and with
    provisions relating to civil penalties and accounting and
    disgorgement, see section 1(c)(2), (3)(B), (C) of Pub. L. 101-429,
    set out in a note under section 77g of this title.

                     EFFECTIVE DATE OF 1988 AMENDMENT                 
      Section 9 of Pub. L. 100-704 provided that: "The amendments made
    by this Act [enacting sections 78t-1, 78u-1, and 80b-4a of this
    title and amending this section and sections 78c, 78u, 78ff, and
    78kk of this title], except for section 6 [amending sections 78c
    and 78u of this title], shall not apply to any actions occurring
    before the date of enactment of this Act [Nov. 19, 1988]."

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Amendment by Pub. L. 99-571 effective 270 days after Oct. 28,
    1986, see section 401 of Pub. L. 99-571, set out as an Effective
    Date note under section 78o-5 of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment Pub. L. 98-376 effective Aug. 10, 1984, see section 7
    of Pub. L. 98-376, set out as a note under section 78c of this
    title.

                     EFFECTIVE DATE OF 1983 AMENDMENT                 
      Section 3(b) of Pub. L. 98-38 provided that: "The amendments made
    by subsection (a) [amending this section] shall become effective
    six months after the date of enactment of this Act [June 6, 1983]."

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, except for
    amendment of subsec. (a) by Pub. L. 94-29 which is effective 180
    days after June 4, 1975, see section 31(a) of Pub. L. 94-29, set
    out as a note under section 78b of this title.

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      Amendment by Pub. L. 88-467 of subsec. (a) of this section
    effective July 1, 1964, and of subsecs. (b), (c)(4), (5), and (d)
    of this section effective Aug. 20, 1964, see section 13 of Pub. L.
    88-467, set out as a note under section 78c of this title.

                      CONSTRUCTION OF 1995 AMENDMENT                  
      Nothing in amendment by Pub. L. 104-67 to be deemed to create or
    ratify any implied right of action, or to prevent Commission, by
    rule or regulation, from restricting or otherwise regulating
    private actions under this chapter, see section 203 of Pub. L. 104-
    67, set out as a Construction note under section 78j-1 of this
    title.

                      CONSTRUCTION OF 1993 AMENDMENT                  
      Amendment by sections 105, 106(b)(2)(B), and 109(b)(2) of Pub. L.
    103-202 not to be construed to govern initial issuance of any
    public debt obligation or to grant any authority to (or extend any
    authority of) the Securities and Exchange Commission, any
    appropriate regulatory agency, or a self-regulatory organization to
    prescribe any procedure, term, or condition of such initial
    issuance, to promulgate any rule or regulation governing such
    initial issuance, or to otherwise regulate in any manner such
    initial issuance, see section 111 of Pub. L. 103-202, set out as a
    note under section 78o-5 of this title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.


-MISC2-
               STUDY AND REPORT ON BROKER-DEALER UNIFORMITY           
      Section 510(d) of Pub. L. 104-290 provided that:
      "(1) Study. - The Commission, after consultation with registered
    securities associations, national securities exchanges, and States,
    shall conduct a study of the impact of disparate State licensing
    requirements on associated persons of registered brokers or dealers
    and methods for States to attain uniform licensing requirements for
    such persons.
      "(2) Report. - Not later than 1 year after the date of enactment
    of this Act [Oct. 11, 1996], the Commission shall submit to the
    Congress a report on the study conducted under paragraph (1). Such
    report shall include recommendations concerning appropriate methods
    described in paragraph (1)(B), including any necessary legislative
    changes to implement such recommendations."

          PENNY STOCK REFORM; CONGRESSIONAL STATEMENT OF FINDINGS      
      Section 502 of Pub. L. 101-429 provided that: "The Congress finds
    the following:
        "(1) The maintenance of an honest and healthy primary and
      secondary market for securities offerings is essential to
      enhancing long-term capital formation and economic growth and
      providing legitimate investment opportunities for individuals and
      institutions.
        "(2) Protecting investors in new securities is a critical
      component in the maintenance of an honest and healthy market for
      such securities.
        "(3) Protecting issuers of new securities and promoting the
      capital formation process on behalf of small companies are
      fundamental concerns in maintaining a strong economy and viable
      trading markets.
        "(4) Unscrupulous market practices and market participants have
      pervaded the 'penny stock' market with an overwhelming amount of
      fraud and abuse.
        "(5) Although the Securities and Exchange Commission, State
      securities regulators, and securities self-regulators have made
      efforts to curb these abusive and harmful practices, the penny
      stock market still lacks an adequate and sufficient regulatory
      structure, particularly in comparison to the structure for
      overseeing trading in National Market System securities.
        "(6) Investors in the penny stock market suffer from a serious
      lack of adequate information concerning price and volume of penny
      stock transactions, the nature of this market, and the specific
      securities in which they are investing.
        "(7) Current practices do not adequately regulate the role of
      'promoters' and 'consultants' in the penny stock market, and many
      professionals who have been banned from the securities markets
      have ended up in promoter and consultant roles, contributing
      substantially to fraudulent and abusive schemes.
        "(8) The present regulatory environment has permitted the
      ascendancy of the use of particular market practices, such as
      'reverse mergers' with shell corporations and 'blank check'
      offerings, which are used to facilitate manipulation schemes and
      harm investors.
        "(9) In light of the substantial and continuing problems in the
      penny stock markets, additional legislative measures are
      necessary and appropriate."

       REVISION OF SANCTION AUTHORITY WITH RESPECT TO PENNY STOCKS;
                        RECOMMENDATIONS TO CONGRESS
      Section 504(b) of Pub. L. 101-429 provided that: "Within 6 months
    after the date of enactment of this Act [Oct. 15, 1990], the
    Securities and Exchange Commission shall submit to each House of
    the Congress such recommendations as the Commission considers
    appropriate with respect to further revision of section 15(b)(6) of
    the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(6)). In
    preparing such recommendations, the Commission shall consider the
    desirability and effect of expanding the applicability of such
    section to any promoter, finder, consultant, agent or other person
    who engages in activities with a broker, dealer, or issuer for
    purposes of the issuance of or trading in, or inducing or
    attempting to induce the purchase or sale of, any security (and not
    just penny stock)."

-FOOTNOTE-
    (!1) So in original. The word "or" probably should not appear.

    (!2) So in original. Two subsecs. (i) have been enacted.


-End-



-CITE-
    15 USC Sec. 78o-1                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78o-1. Brokers deemed to be registered

-STATUTE-
      All brokers and dealers for whom registration was in effect on
    May 27, 1936, in accordance with rules and regulations of the
    Commission prescribed pursuant to section 78o of this title shall
    be deemed to be registered pursuant to said section.

-SOURCE-
    (May 27, 1936, ch. 462, Sec. 10, 49 Stat. 1380.)

-COD-
                               CODIFICATION                           
      Section was not enacted as a part of the Securities Exchange Act
    of 1934 which comprises this chapter.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78o-2                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78o-2. Liabilities arising prior to amendment unaffected

-STATUTE-
      Nothing in this Act shall be deemed to extinguish any liability
    which may have arisen prior to the effective date of this Act by
    reason of any violation of section 78o of this title or of any rule
    or regulation thereunder.

-SOURCE-
    (May 27, 1936, ch. 462, Sec. 11, 49 Stat. 1380.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This Act, referred to in text, is act May 27, 1936, ch. 462, 49
    Stat. 1375, popularly known as the Unlisted Securities Trading Act,
    which enacted sections 78l-1, 78o-1, 78o-2, and 78hh-1 of this
    title, and amended sections 78l, 78o, 78q, 78r, 78t, 78u, 78w, and
    78ff of this title.
      Effective date of this Act, referred to in text, is July 1, 1934.
    See section 78hh-1 of this title.

-COD-
                               CODIFICATION                           
      Section was not enacted as a part of the Securities Exchange Act
    of 1934 which comprises this chapter.

-End-



-CITE-
    15 USC Sec. 78o-3                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78o-3. Registered securities associations

-STATUTE-
    (a) Registration; application
      An association of brokers and dealers may be registered as a
    national securities association pursuant to subsection (b) of this
    section, or as an affiliated securities association pursuant to
    subsection (d) of this section, under the terms and conditions
    hereinafter provided in this section and in accordance with the
    provisions of section 78s(a) of this title, by filing with the
    Commission an application for registration in such form as the
    Commission, by rule, may prescribe containing the rules of the
    association and such other information and documents as the
    Commission, by rule, may prescribe as necessary or appropriate in
    the public interest or for the protection of investors.
    (b) Determinations by Commission requisite to registration of
      applicant as national securities association
      An association of brokers and dealers shall not be registered as
    a national securities association unless the Commission determines
    that - 
        (1) By reason of the number and geographical distribution of
      its members and the scope of their transactions, such association
      will be able to carry out the purposes of this section.
        (2) Such association is so organized and has the capacity to be
      able to carry out the purposes of this chapter and to comply, and
      (subject to any rule or order of the Commission pursuant to
      section 78q(d) or 78s(g)(2) of this title) to enforce compliance
      by its members and persons associated with its members, with the
      provisions of this chapter, the rules and regulations thereunder,
      the rules of the Municipal Securities Rulemaking Board, and the
      rules of the association.
        (3) Subject to the provisions of subsection (g) of this
      section, the rules of the association provide that any registered
      broker or dealer may become a member of such association and any
      person may become associated with a member thereof.
        (4) The rules of the association assure a fair representation
      of its members in the selection of its directors and
      administration of its affairs and provide that one or more
      directors shall be representative of issuers and investors and
      not be associated with a member of the association, broker, or
      dealer.
        (5) The rules of the association provide for the equitable
      allocation of reasonable dues, fees, and other charges among
      members and issuers and other persons using any facility or
      system which the association operates or controls.
        (6) The rules of the association are designed to prevent
      fraudulent and manipulative acts and practices, to promote just
      and equitable principles of trade, to foster cooperation and
      coordination with persons engaged in regulating, clearing,
      settling, processing information with respect to, and
      facilitating transactions in securities, to remove impediments to
      and perfect the mechanism of a free and open market and a
      national market system, and, in general, to protect investors and
      the public interest; and are not designed to permit unfair
      discrimination between customers, issuers, brokers, or dealers,
      to fix minimum profits, to impose any schedule or fix rates of
      commissions, allowances, discounts, or other fees to be charged
      by its members, or to regulate by virtue of any authority
      conferred by this chapter matters not related to the purposes of
      this chapter or the administration of the association.
        (7) The rules of the association provide that (subject to any
      rule or order of the Commission pursuant to section 78q(d) or
      78s(g)(2) of this title) its members and persons associated with
      its members shall be appropriately disciplined for violation of
      any provision of this chapter, the rules or regulations
      thereunder, the rules of the Municipal Securities Rulemaking
      Board, or the rules of the association, by expulsion, suspension,
      limitation of activities, functions, and operations, fine,
      censure, being suspended or barred from being associated with a
      member, or any other fitting sanction.
        (8) The rules of the association are in accordance with the
      provisions of subsection (h) of this section, and, in general,
      provide a fair procedure for the disciplining of members and
      persons associated with members, the denial of membership to any
      person seeking membership therein, the barring of any person from
      becoming associated with a member thereof, and the prohibition or
      limitation by the association of any person with respect to
      access to services offered by the association or a member
      thereof.
        (9) The rules of the association do not impose any burden on
      competition not necessary or appropriate in furtherance of the
      purposes of this chapter.
        (10) The requirements of subsection (c) of this section,
      insofar as these may be applicable, are satisfied.
        (11) The rules of the association include provisions governing
      the form and content of quotations relating to securities sold
      otherwise than on a national securities exchange which may be
      distributed or published by any member or person associated with
      a member, and the persons to whom such quotations may be
      supplied. Such rules relating to quotations shall be designed to
      produce fair and informative quotations, to prevent fictitious or
      misleading quotations, and to promote orderly procedures for
      collecting, distributing, and publishing quotations.
        (12) The rules of the association to promote just and equitable
      principles of trade, as required by paragraph (6), include rules
      to prevent members of the association from participating in any
      limited partnership rollup transaction (as such term is defined
      in paragraphs (4) and (5) of section 78n(h) of this title) unless
      such transaction was conducted in accordance with procedures
      designed to protect the rights of limited partners, including - 
          (A) the right of dissenting limited partners to one of the
        following:
            (i) an appraisal and compensation;
            (ii) retention of a security under substantially the same
          terms and conditions as the original issue;
            (iii) approval of the limited partnership rollup
          transaction by not less than 75 percent of the outstanding
          securities of each of the participating limited partnerships;
            (iv) the use of a committee that is independent, as
          determined in accordance with rules prescribed by the
          association, of the general partner or sponsor, that has been
          approved by a majority of the outstanding securities of each
          of the participating partnerships, and that has such
          authority as is necessary to protect the interest of limited
          partners, including the authority to hire independent
          advisors, to negotiate with the general partner or sponsor on
          behalf of the limited partners, and to make a recommendation
          to the limited partners with respect to the proposed
          transaction; or
            (v) other comparable rights that are prescribed by rule by
          the association and that are designed to protect dissenting
          limited partners;

          (B) the right not to have their voting power unfairly reduced
        or abridged;
          (C) the right not to bear an unfair portion of the costs of a
        proposed limited partnership rollup transaction that is
        rejected; and
          (D) restrictions on the conversion of contingent interests or
        fees into non-contingent interests or fees and restrictions on
        the receipt of a non-contingent equity interest in exchange for
        fees for services which have not yet been provided.

      As used in this paragraph, the term "dissenting limited partner"
      means a person who, on the date on which soliciting material is
      mailed to investors, is a holder of a beneficial interest in a
      limited partnership that is the subject of a limited partnership
      rollup transaction, and who casts a vote against the transaction
      and complies with procedures established by the association,
      except that for purposes of an exchange or tender offer, such
      person shall file an objection in writing under the rules of the
      association during the period in which the offer is outstanding.
        (13) The rules of the association prohibit the authorization
      for quotation on an automated interdealer quotation system
      sponsored by the association of any security designated by the
      Commission as a national market system security resulting from a
      limited partnership rollup transaction (as such term is defined
      in paragraphs (4) and (5) of section 78n(h) of this title),
      unless such transaction was conducted in accordance with
      procedures designed to protect the rights of limited partners,
      including - 
          (A) the right of dissenting limited partners to one of the
        following:
            (i) an appraisal and compensation;
            (ii) retention of a security under substantially the same
          terms and conditions as the original issue;
            (iii) approval of the limited partnership rollup
          transaction by not less than 75 percent of the outstanding
          securities of each of the participating limited partnerships;
            (iv) the use of a committee that is independent, as
          determined in accordance with rules prescribed by the
          association, of the general partner or sponsor, that has been
          approved by a majority of the outstanding securities of each
          of the participating partnerships, and that has such
          authority as is necessary to protect the interest of limited
          partners, including the authority to hire independent
          advisors, to negotiate with the general partner or sponsor on
          behalf of the limited partners, and to make a recommendation
          to the limited partners with respect to the proposed
          transaction; or
            (v) other comparable rights that are prescribed by rule by
          the association and that are designed to protect dissenting
          limited partners;

          (B) the right not to have their voting power unfairly reduced
        or abridged;
          (C) the right not to bear an unfair portion of the costs of a
        proposed limited partnership rollup transaction that is
        rejected; and
          (D) restrictions on the conversion of contingent interests or
        fees into non-contingent interests or fees and restrictions on
        the receipt of a non-contingent equity interest in exchange for
        fees for services which have not yet been provided.

      As used in this paragraph, the term "dissenting limited partner"
      means a person who, on the date on which soliciting material is
      mailed to investors, is a holder of a beneficial interest in a
      limited partnership that is the subject of a limited partnership
      rollup transaction, and who casts a vote against the transaction
      and complies with procedures established by the association,
      except that for purposes of an exchange or tender offer, such
      person shall file an objection in writing under the rules of the
      association during the period during which the offer is
      outstanding.
        (14) The rules of the association include provisions governing
      the sales, or offers of sales, of securities on the premises of
      any military installation to any member of the Armed Forces or a
      dependent thereof, which rules require - 
          (A) the broker or dealer performing brokerage services to
        clearly and conspicuously disclose to potential investors - 
            (i) that the securities offered are not being offered or
          provided by the broker or dealer on behalf of the Federal
          Government, and that its offer is not sanctioned,
          recommended, or encouraged by the Federal Government; and
            (ii) the identity of the registered broker-dealer offering
          the securities;

          (B) such broker or dealer to perform an appropriate
        suitability determination, including consideration of costs and
        knowledge about securities, prior to making a recommendation of
        a security to a member of the Armed Forces or a dependent
        thereof; and
          (C) that no person receive any referral fee or incentive
        compensation in connection with a sale or offer of sale of
        securities, unless such person is an associated person of a
        registered broker or dealer and is qualified pursuant to the
        rules of a self-regulatory organization.
    (c) National association rules; provision for registration of
      affiliated securities association
      The Commission may permit or require the rules of an association
    applying for registration pursuant to subsection (b) of this
    section, to provide for the admission of an association registered
    as an affiliated securities association pursuant to subsection (d)
    of this section, to participation in said applicant association as
    an affiliate thereof, under terms permitting such powers and
    responsibilities to such affiliate, and under such other
    appropriate terms and conditions, as may be provided by the rules
    of said applicant association, if such rules appear to the
    Commission to be necessary or appropriate in the public interest or
    for the protection of investors and to carry out the purposes of
    this section. The duties and powers of the Commission with respect
    to any national securities association or any affiliated securities
    association shall in no way be limited by reason of any such
    affiliation.
    (d) Registration as affiliated association; prerequisites;
      association rules
      An applicant association shall not be registered as an affiliated
    securities association unless it appears to the Commission that - 
        (1) such association, notwithstanding that it does not satisfy
      the requirements set forth in paragraph (1) of subsection (b) of
      this section, will, forthwith upon the registration thereof, be
      admitted to affiliation with an association registered as a
      national securities association pursuant to subsection (b) of
      this section, in the manner and under the terms and conditions
      provided by the rules of said national securities association in
      accordance with subsection (c) of this section; and
        (2) such association and its rules satisfy the requirements set
      forth in paragraphs (2) to (10), inclusive, and paragraph
      (12),(!1) of subsection (b) of this section; except that in the
      case of any such association any restrictions upon membership
      therein of the type authorized by paragraph (3) of subsection (b)
      of this section shall not be less stringent than in the case of
      the national securities association with which such association
      is to be affiliated.

    (e) Dealings with nonmember professionals
      (1) The rules of a registered securities association may provide
    that no member thereof shall deal with any nonmember professional
    (as defined in paragraph (2) of this subsection) except at the same
    prices, for the same commissions or fees, and on the same terms and
    conditions as are by such member accorded to the general public.
      (2) For the purposes of this subsection, the term "nonmember
    professional" shall include (A) with respect to transactions in
    securities other than municipal securities, any registered broker
    or dealer who is not a member of any registered securities
    association, except such a broker or dealer who deals exclusively
    in commercial paper, bankers' acceptances, and commercial bills,
    and (B) with respect to transactions in municipal securities, any
    municipal securities dealer (other than a bank or division or
    department of a bank) who is not a member of any registered
    securities association and any municipal securities broker who is
    not a member of any such association.
      (3) Nothing in this subsection shall be so construed or applied
    as to prevent (A) any member of a registered securities association
    from granting to any other member of any registered securities
    association any dealer's discount, allowance, commission, or
    special terms, in connection with the purchase or sale of
    securities, or (B) any member of a registered securities
    association or any municipal securities dealer which is a bank or a
    division or department of a bank from granting to any member of any
    registered securities association or any such municipal securities
    dealer any dealer's discount, allowance, commission, or special
    terms in connection with the purchase or sale of municipal
    securities: Provided, however, That the granting of any such
    discount, allowance, commission, or special terms in connection
    with the purchase or sale of municipal securities shall be subject
    to rules of the Municipal Securities Rulemaking Board adopted
    pursuant to section 78o-4(b)(2)(K) of this title.
    (f) Transactions in municipal securities
      Nothing in subsection (b)(6) or (b)(11) of this section shall be
    construed to permit a registered securities association to make
    rules concerning any transaction by a registered broker or dealer
    in a municipal security.
    (g) Denial of membership
      (1) A registered securities association shall deny membership to
    any person who is not a registered broker or dealer.
      (2) A registered securities association may, and in cases in
    which the Commission, by order, directs as necessary or appropriate
    in the public interest or for the protection of investors shall,
    deny membership to any registered broker or dealer, and bar from
    becoming associated with a member any person, who is subject to a
    statutory disqualification. A registered securities association
    shall file notice with the Commission not less than thirty days
    prior to admitting any registered broker or dealer to membership or
    permitting any person to become associated with a member, if the
    association knew, or in the exercise of reasonable care should have
    known, that such broker or dealer or person was subject to a
    statutory disqualification. The notice shall be in such form and
    contain such information as the Commission, by rule, may prescribe
    as necessary or appropriate in the public interest or for the
    protection of investors.
      (3)(A) A registered securities association may deny membership
    to, or condition the membership of, a registered broker or dealer
    if (i) such broker or dealer does not meet such standards of
    financial responsibility or operational capability or such broker
    or dealer or any natural person associated with such broker or
    dealer does not meet such standards of training, experience, and
    competence as are prescribed by the rules of the association or
    (ii) such broker or dealer or person associated with such broker or
    dealer has engaged and there is a reasonable likelihood he will
    again engage in acts or practices inconsistent with just and
    equitable principles of trade. A registered securities association
    may examine and verify the qualifications of an applicant to become
    a member and the natural persons associated with such an applicant
    in accordance with procedures established by the rules of the
    association.
      (B) A registered securities association may bar a natural person
    from becoming associated with a member or condition the association
    of a natural person with a member if such natural person (i) does
    not meet such standards of training, experience, and competence as
    are prescribed by the rules of the association or (ii) has engaged
    and there is a reasonable likelihood he will again engage in acts
    or practices inconsistent with just and equitable principles of
    trade. A registered securities association may examine and verify
    the qualifications of an applicant to become a person associated
    with a member in accordance with procedures established by the
    rules of the association and require a natural person associated
    with a member, or any class of such natural persons, to be
    registered with the association in accordance with procedures so
    established.
      (C) A registered securities association may bar any person from
    becoming associated with a member if such person does not agree (i)
    to supply the association with such information with respect to its
    relationship and dealings with the member as may be specified in
    the rules of the association and (ii) to permit examination of its
    books and records to verify the accuracy of any information so
    supplied.
      (D) Nothing in subparagraph (A), (B), or (C) of this paragraph
    shall be construed to permit a registered securities association to
    deny membership to or condition the membership of, or bar any
    person from becoming associated with or condition the association
    of any person with, a broker or dealer that engages exclusively in
    transactions in municipal securities.
      (4) A registered securities association may deny membership to a
    registered broker or dealer not engaged in a type of business in
    which the rules of the association require members to be engaged:
    Provided, however, That no registered securities association may
    deny membership to a registered broker or dealer by reason of the
    amount of such type of business done by such broker or dealer or
    the other types of business in which he is engaged.
    (h) Discipline of registered securities association members and
      persons associated with members; summary proceedings
      (1) In any proceeding by a registered securities association to
    determine whether a member or person associated with a member
    should be disciplined (other than a summary proceeding pursuant to
    paragraph (3) of this subsection) the association shall bring
    specific charges, notify such member or person of, and give him an
    opportunity to defend against, such charges, and keep a record. A
    determination by the association to impose a disciplinary sanction
    shall be supported by a statement setting forth - 
        (A) any act or practice in which such member or person
      associated with a member has been found to have engaged, or which
      such member or person has been found to have omitted;
        (B) the specific provision of this chapter, the rules or
      regulations thereunder, the rules of the Municipal Securities
      Rulemaking Board, or the rules of the association which any such
      act or practice, or omission to act, is deemed to violate; and
        (C) the sanction imposed and the reason therefor.

      (2) In any proceeding by a registered securities association to
    determine whether a person shall be denied membership, barred from
    becoming associated with a member, or prohibited or limited with
    respect to access to services offered by the association or a
    member thereof (other than a summary proceeding pursuant to
    paragraph (3) of this subsection), the association shall notify
    such person of and give him an opportunity to be heard upon, the
    specific grounds for denial, bar, or prohibition or limitation
    under consideration and keep a record. A determination by the
    association to deny membership, bar a person from becoming
    associated with a member, or prohibit or limit a person with
    respect to access to services offered by the association or a
    member thereof shall be supported by a statement setting forth the
    specific grounds on which the denial, bar, or prohibition or
    limitation is based.
      (3) A registered securities association may summarily (A) suspend
    a member or person associated with a member who has been and is
    expelled or suspended from any self-regulatory organization or
    barred or suspended from being associated with a member of any self-
    regulatory organization, (B) suspend a member who is in such
    financial or operating difficulty that the association determines
    and so notifies the Commission that the member cannot be permitted
    to continue to do business as a member with safety to investors,
    creditors, other members, or the association, or (C) limit or
    prohibit any person with respect to access to services offered by
    the association if subparagraph (A) or (B) of this paragraph is
    applicable to such person or, in the case of a person who is not a
    member, if the association determines that such person does not
    meet the qualification requirements or other prerequisites for such
    access and such person cannot be permitted to continue to have such
    access with safety to investors, creditors, members, or the
    association. Any person aggrieved by any such summary action shall
    be promptly afforded an opportunity for a hearing by the
    association in accordance with the provisions of paragraph (1) or
    (2) of this subsection. The Commission, by order, may stay any such
    summary action on its own motion or upon application by any person
    aggrieved thereby, if the Commission determines summarily or after
    notice and opportunity for hearing (which hearing may consist
    solely of the submission of affidavits or presentation of oral
    arguments) that such stay is consistent with the public interest
    and the protection of investors.
    (i) Obligation to maintain registration, disciplinary, and other
      data
      (1) Maintenance of system to respond to inquiries
        A registered securities association shall - 
          (A) establish and maintain a system for collecting and
        retaining registration information;
          (B) establish and maintain a toll-free telephone listing, and
        a readily accessible electronic or other process, to receive
        and promptly respond to inquiries regarding - 
            (i) registration information on its members and their
          associated persons; and
            (ii) registration information on the members and their
          associated persons of any registered national securities
          exchange that uses the system described in subparagraph (A)
          for the registration of its members and their associated
          persons; and

          (C) adopt rules governing the process for making inquiries
        and the type, scope, and presentation of information to be
        provided in response to such inquiries in consultation with any
        registered national securities exchange providing information
        pursuant to subparagraph (B)(ii).
      (2) Recovery of costs
        A registered securities association may charge persons making
      inquiries described in paragraph (1)(B), other than individual
      investors, reasonable fees for responses to such inquiries.
      (3) Process for disputed information
        Each registered securities association shall adopt rules
      establishing an administrative process for disputing the accuracy
      of information provided in response to inquiries under this
      subsection in consultation with any registered national
      securities exchange providing information pursuant to paragraph
      (1)(B)(ii).
      (4) Limitation on liability
        A registered securities association, or an exchange reporting
      information to such an association, shall not have any liability
      to any person for any actions taken or omitted in good faith
      under this subsection.
      (5) Definition
        For purposes of this subsection, the term "registration
      information" means the information reported in connection with
      the registration or licensing of brokers and dealers and their
      associated persons, including disciplinary actions, regulatory,
      judicial, and arbitration proceedings, and other information
      required by law, or exchange or association rule, and the source
      and status of such information.
    (j) Registration for sales of private securities offerings
      A registered securities association shall create a limited
    qualification category for any associated person of a member who
    effects sales as part of a primary offering of securities not
    involving a public offering, pursuant to section 77c(b), 77d(2), or
    77d(6) of this title and the rules and regulations thereunder, and
    shall deem qualified in such limited qualification category,
    without testing, any bank employee who, in the six month period
    preceding November 12, 1999, engaged in effecting such sales.
    (k) Limited purpose national securities association
      (1) Regulation of members with respect to security futures
        products
        A futures association registered under section 21 of title 7
      shall be a registered national securities association for the
      limited purpose of regulating the activities of members who are
      registered as brokers or dealers in security futures products
      pursuant to section 78o(b)(11) of this title.
      (2) Requirements for registration
        Such a securities association shall - 
          (A) be so organized and have the capacity to carry out the
        purposes of the securities laws applicable to security futures
        products and to comply, and (subject to any rule or order of
        the Commission pursuant to section 78s(g)(2) of this title) to
        enforce compliance by its members and persons associated with
        its members, with the provisions of the securities laws
        applicable to security futures products, the rules and
        regulations thereunder, and its rules;
          (B) have rules that - 
            (i) are designed to prevent fraudulent and manipulative
          acts and practices, to promote just and equitable principles
          of trade, and, in general, to protect investors and the
          public interest, including rules governing sales practices
          and the advertising of security futures products reasonably
          comparable to those of other national securities associations
          registered pursuant to subsection (a) of this section that
          are applicable to security futures products; and
            (ii) are not designed to regulate by virtue of any
          authority conferred by this chapter matters not related to
          the purposes of this chapter or the administration of the
          association;

          (C) have rules that provide that (subject to any rule or
        order of the Commission pursuant to section 78s(g)(2) of this
        title) its members and persons associated with its members
        shall be appropriately disciplined for violation of any
        provision of the securities laws applicable to security futures
        products, the rules or regulations thereunder, or the rules of
        the association, by expulsion, suspension, limitation of
        activities, functions, and operations, fine, censure, being
        suspended or barred from being associated with a member, or any
        other fitting sanction; and
          (D) have rules that ensure that members and natural persons
        associated with members meet such standards of training,
        experience, and competence necessary to effect transactions in
        security futures products and are tested for their knowledge of
        securities and security futures products.
      (3) Exemption from rule change submission
        Such a securities association shall be exempt from submitting
      proposed rule changes pursuant to section 78s(b) of this title,
      except that - 
          (A) the association shall file proposed rule changes related
        to higher margin levels, fraud or manipulation, recordkeeping,
        reporting, listing standards, or decimal pricing for security
        futures products, sales practices for, advertising of, or
        standards of training, experience, competence, or other
        qualifications for security futures products for persons who
        effect transactions in security futures products, or rules
        effectuating the association's obligation to enforce the
        securities laws pursuant to section 78s(b)(7) of this title;
          (B) the association shall file pursuant to sections 78s(b)(1)
        and 78s(b)(2) of this title proposed rule changes related to
        margin, except for changes resulting in higher margin levels;
        and
          (C) the association shall file pursuant to section 78s(b)(1)
        of this title proposed rule changes that have been abrogated by
        the Commission pursuant to section 78s(b)(7)(C) of this title.
      (4) Other exemptions
        Such a securities association shall be exempt from and shall
      not be required to enforce compliance by its members, and its
      members shall not, solely with respect to their transactions
      effected in security futures products, be required to comply,
      with the following provisions of this chapter and the rules
      thereunder:
          (A) Section 78h of this title.
          (B) Subsections (b)(1), (b)(3), (b)(4), (b)(5), (b)(8),
        (b)(10), (b)(11), (b)(12), (b)(13), (c), (d), (e), (f), (g),
        (h), and (i) of this section.
          (C) Subsections (d), (f), and (k) of section 78q of this
        title.
          (D) Subsections (a), (f), and (h) of section 78s of this
        title.
    (l) Rules to avoid duplicative regulation of dual registrants
      Consistent with this chapter, each national securities
    association registered pursuant to subsection (a) of this section
    shall issue such rules as are necessary to avoid duplicative or
    conflicting rules applicable to any broker or dealer registered
    with the Commission pursuant to section 78o(b) of this title
    (except paragraph (11) thereof), that is also registered with the
    Commodity Futures Trading Commission pursuant to section 6f(a) of
    title 7 (except paragraph (2) thereof), with respect to the
    application of - 
        (1) rules of such national securities association of the type
      specified in section 78o(c)(3)(B) of this title involving
      security futures products; and
        (2) similar rules of national securities associations
      registered pursuant to subsection (k) of this section and
      national securities exchanges registered pursuant to section
      78f(g) of this title involving security futures products.
    (m) Procedures and rules for security future products
      A national securities association registered pursuant to
    subsection (a) of this section shall, not later than 8 months after
    December 21, 2000, implement the procedures specified in section
    78f(h)(5)(A) of this title and adopt the rules specified in
    subparagraphs (B) and (C) of section 78f(h)(5) of this title.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 15A, as added June 25, 1938,
    ch. 677, Sec. 1, 52 Stat. 1070; amended Pub. L. 88-467, Sec. 7,
    Aug. 20, 1964, 78 Stat. 574; Pub. L. 94-29, Sec. 12, June 4, 1975,
    89 Stat. 127; Pub. L. 99-571, title I, Sec. 102(g), Oct. 28, 1986,
    100 Stat. 3218; Pub. L. 101-429, title V, Sec. 509, Oct. 15, 1990,
    104 Stat. 957; Pub. L. 103-202, title I, Sec. 106(b)(1), title III,
    Sec. 303(a), (c), Dec. 17, 1993, 107 Stat. 2350, 2364, 2366; Pub.
    L. 106-102, title II, Sec. 203, Nov. 12, 1999, 113 Stat. 1391; Pub.
    L. 106-554, Sec. 1(a)(5) [title II, Secs. 203(c), 206(j), (k)(1)],
    Dec. 21, 2000, 114 Stat. 2763, 2763A-422, 2763A-433; Pub. L. 109-
    290, Secs. 5, 6, Sept. 29, 2006, 120 Stat. 1319, 1320.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (b)(2), (6), (7), (9),
    (h)(1)(B), (k)(2)(B)(ii), (4), and (l), was in the original "this
    title". See References in Text note set out under section 78a of
    this title.
      Paragraph (12), of subsection (b) of this section, referred to in
    subsec. (d)(2), was omitted in the general amendment of subsec. (b)
    by Pub. L. 94-29, see par. (11) of subsec. (b). A new par. (12) was
    added by Pub. L. 103-302, Sec. 303(a).


-MISC1-
                                AMENDMENTS                            
      2006 - Subsec. (b)(14). Pub. L. 109-290, Sec. 5, added par. (14).
      Subsec. (i). Pub. L. 109-290, Sec. 6, inserted heading and
    amended text of subsec. (i) generally. Prior to amendment, text
    read as follows: "A registered securities association shall, within
    one year from October 15, 1990, (1) establish and maintain a toll-
    free telephone listing to receive inquiries regarding disciplinary
    actions involving its members and their associated persons, and (2)
    promptly respond to such inquiries in writing. Such association may
    charge persons, other than individual investors, reasonable fees
    for written responses to such inquiries. Such an association shall
    not have any liability to any person for any actions taken or
    omitted in good faith under this paragraph."
      2000 - Subsec. (k). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    203(c)], added subsec. (k).
      Subsec. (l). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(j)], added subsec. (l).
      Subsec. (m). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(k)(1)], added subsec. (m).
      1999 - Subsec. (j). Pub. L. 106-102 added subsec. (j).
      1993 - Subsec. (b)(12). Pub. L. 103-202, Sec. 303(a), added par.
    (12).
      Subsec. (b)(13). Pub. L. 103-202, Sec. 303(c), added par. (13).
      Subsec. (f). Pub. L. 103-202, Sec. 106(b)(1)(A), redesignated
    par. (3) as entire subsec. (f) and struck out pars. (1) and (2)
    which read as follows:
      "(1) Except as provided in paragraph (2) of this subsection,
    nothing in this section shall be construed to apply with respect to
    any transaction by a registered broker or dealer in any exempted
    security.
      "(2) A registered securities association may adopt and implement
    rules applicable to members of such association (A) to enforce
    compliance by registered brokers and dealers with applicable
    provisions of this chapter and the rules and regulations
    thereunder, (B) to provide that its members and persons associated
    with its members shall be appropriately disciplined, in accordance
    with subsections (b)(7), (b)(8), and (h) of this section, for
    violation of applicable provisions of this chapter and the rules
    and regulations thereunder, (C) to provide for reasonable
    inspection and examination of the books and records of registered
    brokers and dealers, (D) to provide for the matters described in
    paragraphs (b)(3), (b)(4), and (b)(5) of this section, (E) to
    implement the provisions of subsection (g) of this section, and (F)
    to prohibit fraudulent, misleading, deceptive, and false
    advertising."
      Subsec. (g)(3)(D). Pub. L. 103-202, Sec. 106(b)(1)(B)(i),
    substituted "transactions in municipal securities" for
    "transactions in exempted securities".
      Subsec. (g)(4), (5). Pub. L. 103-202, Sec. 106(b)(1)(B)(ii),
    (iii), redesignated par. (5) as (4) and struck out former par. (4)
    which allowed a registered securities association to deny
    membership to, condition the membership of, or to otherwise bar
    association with, the association, under circumstances where a
    government securities broker or dealer or other person violated
    financial responsibility rules adopted under section 78o-5(b)(1)(A)
    of this title, or where it appeared likely that such person or
    entity had or would engage in conduct which would subject such
    person or entity to sanctions under section 78o-5(c) of this title.
      1990 - Subsec. (i). Pub. L. 101-429 added subsec. (i).
      1986 - Subsec. (f). Pub. L. 99-571, Sec. 102(g)(1), amended
    subsec. (f) generally. Prior to amendment, subsec. (f) read as
    follows: "Nothing in this section shall be construed to apply with
    respect to any transaction by a broker or dealer in any exempted
    security."
      Subsec. (g)(3)(D). Pub. L. 99-571, Sec. 102(g)(2)(A), added
    subpar. (D).
      Subsec. (g)(4), (5). Pub. L. 99-571, Sec. 102(g)(2)(B), (C),
    added par. (4) and redesignated former par. (4) as (5).
      1975 - Subsec. (a). Pub. L. 94-29, Sec. 12(2), struck out "with
    the Commission" after "registered", inserted reference to section
    78s(a) of this title, substituted provisions covering an
    application for registration in the form prescribed by Commission
    rule containing the rules of the association and such other
    information and documents as the Commission prescribes as necessary
    or appropriate in the public interest or for the protection of
    investors for provisions covering a statement in the form
    prescribed by the Commission setting forth specified information
    and accompanied by specified documents, and struck out provision
    that registration not be construed as a waiver of constitutional
    rights or as a waiver of the right to contest the validity of
    Commission rules or regulations.
      Subsec. (b). Pub. L. 94-29, Sec. 12(2), amended subsec. (b)
    generally, to conform its provisions concerning the registration
    and regulation of national and affiliated securities associations
    to those covering the registration and regulation of national
    securities exchanges contained in section 78f of this title and
    inserted provisions necessary to accommodate the creation of the
    Municipal Securities Rulemaking Board and to implement its
    purposes.
      Subsec. (e). Pub. L. 94-29, Sec. 12(3), redesignated subsec. (i)
    as (e) and in subsec. (e) as so redesignated substituted "nonmember
    professional" for "nonmember broker or dealer" in par. (1),
    substituted "term 'nonmember professional' shall include (A) with
    respect to transactions in securities other than municipal
    securities, any registered broker or dealer who is not a member of
    any registered securities association, except such a broker or
    dealer who deals exclusively in commercial paper, bankers'
    acceptances, and commercial bills" for "term 'nonmember broker or
    dealer' shall include any broker or dealer who makes use of the
    mails or of any means or instrumentality of interstate commerce to
    effect any transaction in, or to induce the purchase or sale of,
    any security otherwise than on a national securities exchange, who
    is not a member of any registered securities association, except a
    broker or dealer who deals exclusively in commercial paper,
    bankers' acceptances, or commercial bills" and added cl. (B) in
    par. (2), and, in par. (3), designated existing provisions as cl.
    (A) and added cl. (B). Former subsec. (e), covering the grant and
    denial of registration and the revocation of affiliated association
    registration, was struck out. See section 78s of this title.
      Subsec. (f). Pub. L. 94-29, Sec. 12(3), redesignated subsec. (m)
    as (f). Former subsec. (f), covering withdrawal from registration,
    was struck out. See section 78s of this title.
      Subsec. (g). Pub. L. 94-29, Sec. 12(3), (4), added subsec. (g).
    Former subsec. (g), covering review by the Commission of adverse
    actions against association members and stays of such actions, was
    struck out. See section 78s of this title.
      Subsec. (h). Pub. L. 94-29, Sec. 12(3), (4), added subsec. (h).
    Former subsec. (h), covering the Commission's action upon findings,
    was struck out. See section 78s of this title.
      Subsec. (i). Pub. L. 94-29, Sec. 12(3), redesignated subsec. (i)
    as (e) and amended subsec. (e) as so redesignated.
      Subsecs. (j) to (l). Pub. L. 94-29, Sec. 12(3), struck out
    subsecs. (j) to (l) which covered the filing of changes or
    additions to association rules and current information, the
    abrogation and alteration of association rules and supplements to
    association rules, the suspension of an association or its members,
    the revocation of registration, the expulsion of members, and the
    removal of officers or directors. See section 78s of this title.
      Subsec. (m). Pub. L. 94-29, Sec. 12(3), redesignated subsec. (m)
    as (f).
      Subsec. (n). Pub. L. 94-29, Sec. 12(3), struck out subsec. (n)
    which directed that provisions of this section prevail in the event
    of any conflict between this section and any other law of the
    United States in force on June 25, 1938.
      1964 - Subsec. (b)(1), (2). Pub. L. 88-467, Sec. 7(a)(1),
    substituted a period for the semicolon at end of pars. (1) and (2).
      Subsec. (b)(3). Pub. L. 88-467, Sec. 7(a)(1), (2), substituted a
    period for the semicolon at end of par. (3), struck out "of" before
    "any means", substituted "paragraph (4) or (5) of this subsection,
    or a rule of the association permitted under this paragraph. The
    rules" for "paragraph (4) of this subsection: Provided, That the
    rules", and inserted provision authorizing a registered securities
    association to adopt rules under which it might exclude from
    membership persons who had been suspended or expelled from a
    national securities exchange or who were barred or suspended from
    being associated with all brokers or dealers who are members of
    such an exchange for violation of exchange rules.
      Subsec. (b)(4). Pub. L. 88-467, Sec. 7(a)(1), (3), substituted a
    period for the semicolon at end of par. (4), deleted from text
    preceding cl. (A) the language "or (2) any partner, officer,
    director, or branch manager of such broker or dealer (or any person
    occupying a similar status or performing similar functions), or any
    person directly or indirectly controlling or controlled by such
    broker or dealer, whether prior or subsequent to becoming such",
    inserted in cl. (A) "or has been and is barred or suspended from
    being associated with all brokers or dealers which are members of
    such exchange", inserted in cl. (B) provision for suspension for
    period not exceeding twelve months or barring or suspending the
    broker or dealer from being associated with a broker or dealer,
    inserted at the beginning of cl. (C) "whether prior or subsequent
    to becoming a broker or dealer," (derived from former cl. (1) of
    this paragraph) and added to cl. (C) provision conferring
    jurisdiction upon the Commission, an exchange, or a registered
    securities association to determine whether an individual is the
    cause of disciplinary action taken by them against a broker or a
    dealer, and added cl. (D).
      Subsec. (b)(5). Pub. L. 88-467, Sec. 7(a)(4), added par. (5).
    Former par. (5) redesignated (6).
      Subsec. (b)(6) to (8). Pub. L. 88-467, Sec. 7(a)(1), (4),
    substituted periods for semicolons at end of paragraphs, and
    redesignated former pars. (5) to (7) as (6) to (8), respectively.
    Former pars. (6) to (8) redesignated (7) to (9), respectively.
      Subsec. (b)(9). Pub. L. 88-467, Sec. 7(a)(1), (4), (5),
    substituted a period for the semicolon at the end, redesignated
    former par. (8) as (9), and inserted "and persons associated with
    its members" and "or being suspended or barred from being
    associated with all members,", respectively. Former par. (9)
    redesignated (10).
      Subsec. (b)(10). Pub. L. 88-467, Sec. 7(a)(4), (6), redesignated
    former par. (9) as (10), and inserted in paragraph preceding cl.
    (A) "and persons associated with members", "or the barring of any
    person from being associated with a member", "or other persons",
    and "or person", substituted a period for a comma at end of cls.
    (A) and (B) and a period for ", and" at end of cl. (C), inserted in
    cl. (A) "or other person" in two places and in concluding sentence
    "or whether any person shall be barred from being associated with a
    member", "or person", "or bar" in two places, and substituted a
    period for "; and", respectively. Former par. (10) redesignated
    (11).
      Subsec. (b)(11). Pub. L. 88-467, Sec. 7(a)(4), redesignated
    former par. (10) as (11).
      Subsec. (b)(12). Pub. L. 88-467, Sec. 7(a)(7), added par. (12).
      Pub. L. 88-467, Sec. 7(a)(7), inserted effective date provisions
    for application of subsec. (b) prior to its amendment and since its
    amendment with July 1, 1964 as the guiding date.
      Subsec. (d)(2). Pub. L. 88-467, Sec. 7(b), substituted "(10)" for
    "(9)" and inserted "and paragraph (12)," after ", inclusive,".
      Subsec. (g). Pub. L. 88-467, Sec. 7(c), provided that
    disciplinary action taken by a registered securities association
    against a person associated with a member will be reviewable by the
    Commission, shortened the period for review by an aggrieved person
    from sixty days or within such longer period as the Commission may
    determine to thirty days or within such longer period as the
    Commission may determine, authorized the Commission, after notice
    and opportunity for hearing on the question of stay to order no
    stay of action of a registered securities association pending the
    Commission's decision on review, and authorized the Commission to
    limit the hearing on the question of stay to affidavits and oral
    arguments.
      Subsec. (h). Pub. L. 88-467, Sec. 7(d), made the procedures and
    the Commission's authority in reviewing disciplinary action by a
    registered securities association against members and in reviewing
    association action in denying membership also applicable to
    Commission review of disciplinary action against persons associated
    with members and to the barring by an association of any person
    from being associated with a member.
      Subsec. (k)(2). Pub. L. 88-467, Sec. 7(e), inserted ", or with
    such modifications of such alteration or supplement as it deems
    necessary" after "in the manner theretofore requested",
    redesignated cls. (1) to (4) as (A) to (D), respectively, and
    inserted in cl. (A) "or the barring from being associated with a
    member" and "or persons associated with members, or the
    qualifications required for members or natural persons associated
    with members or any class thereof".
      Subsec. (l). Pub. L. 88-467, Sec. 7(f), substituted a period for
    a semicolon at end of par. (1) and inserted in par. (2) preceding
    cl. (A) ", or to suspend for a period not exceeding twelve months
    or to bar any person from being associated with a member thereof,".

                     EFFECTIVE DATE OF 1999 AMENDMENT                 
      Amendment by Pub. L. 106-102 effective at the end of the 18-month
    period beginning on Nov. 12, 1999, see section 209 of Pub. L. 106-
    102, set out as a note under section 1828 of Title 12, Banks and
    Banking.

                     EFFECTIVE DATE OF 1993 AMENDMENT                 
      Amendment by section 303(a), (c) of Pub. L. 103-202 effective 12
    months after Dec. 17, 1993, with provisions for rulemaking
    authority and review of filings prior to effective date, see
    section 304(a) of Pub. L. 103-202, set out as a note under section
    78f of this title.

                     EFFECTIVE DATE OF 1990 AMENDMENT                 
      Amendment by Pub. L. 101-429 effective Oct. 15, 1990, with
    provisions relating to civil penalties and accounting and
    disgorgement, see section 1(c)(1), (2) of Pub. L. 101-429, set out
    in a note under section 77g of this title.

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Amendment by Pub. L. 99-571 effective 270 days after Oct. 28,
    1986, see section 401 of Pub. L. 99-571, set out as an Effective
    Date note under section 78o-5 of this title.

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective 180 days after June 4, 1975,
    see section 31(a) of Pub. L. 94-29, set out as a note under section
    78b of this title.

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see section
    13 of Pub. L. 88-467, set out as a note under section 78c of this
    title.

                      CONSTRUCTION OF 1993 AMENDMENT                  
      Amendment by section 106(b)(1) of Pub. L. 103-202 not to be
    construed to govern initial issuance of any public debt obligation
    or to grant any authority to (or extend any authority of) the
    Securities and Exchange Commission, any appropriate regulatory
    agency, or a self-regulatory organization to prescribe any
    procedure, term, or condition of such initial issuance, to
    promulgate any rule or regulation governing such initial issuance,
    or to otherwise regulate in any manner such initial issuance, see
    section 111 of Pub. L. 103-202, set out as a note under section 78o-
    5 of this title.
      Amendment by section 303(a), (c) of Pub. L. 103-202 not to limit
    authority of Securities and Exchange Commission, a registered
    securities association or a national securities exchange under any
    provision of this chapter, or preclude the Commission or such
    association or exchange from imposing a remedy or procedure
    required to be imposed under such amendment, see section 304(b) of
    Pub. L. 103-202, set out in an Effective Date of 1993 Amendment
    note under section 78f of this title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-FOOTNOTE-
    (!1) See References in Text note below.


-End-



-CITE-
    15 USC Sec. 78o-4                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78o-4. Municipal securities

-STATUTE-
    (a) Registration of municipal securities dealers
      (1) It shall be unlawful for any municipal securities dealer
    (other than one registered as a broker or dealer under section 78o
    of this title) to make use of the mails or any means or
    instrumentality of interstate commerce to effect any transaction
    in, or to induce or attempt to induce the purchase or sale of, any
    municipal security unless such municipal securities dealer is
    registered in accordance with this subsection.
      (2) A municipal securities dealer may be registered by filing
    with the Commission an application for registration in such form
    and containing such information and documents concerning such
    municipal securities dealer and any persons associated with such
    municipal securities dealer as the Commission, by rule, may
    prescribe as necessary or appropriate in the public interest or for
    the protection of investors. Within forty-five days of the date of
    the filing of such application (or within such longer period as to
    which the applicant consents), the Commission shall - 
        (A) by order grant registration, or
        (B) institute proceedings to determine whether registration
      should be denied. Such proceedings shall include notice of the
      grounds for denial under consideration and opportunity for
      hearing and shall be concluded within one hundred twenty days of
      the date of the filing of the application for registration. At
      the conclusion of such proceedings the Commission, by order,
      shall grant or deny such registration. The Commission may extend
      the time for the conclusion of such proceedings for up to ninety
      days if it finds good cause for such extension and publishes its
      reasons for so finding or for such longer period as to which the
      applicant consents.

    The Commission shall grant the registration of a municipal
    securities dealer if the Commission finds that the requirements of
    this section are satisfied. The Commission shall deny such
    registration if it does not make such a finding or if it finds that
    if the applicant were so registered, its registration would be
    subject to suspension or revocation under subsection (c) of this
    section.
      (3) Any provision of this chapter (other than section 78e of this
    title or paragraph (1) of this subsection) which prohibits any act,
    practice, or course of business if the mails or any means or
    instrumentality of interstate commerce is used in connection
    therewith shall also prohibit any such act, practice, or course of
    business by any registered municipal securities dealer or any
    person acting on behalf of such municipal securities dealer,
    irrespective of any use of the mails or any means or
    instrumentality of interstate commerce in connection therewith.
      (4) The Commission, by rule or order, upon its own motion or upon
    application, may conditionally or unconditionally exempt any
    broker, dealer, or municipal securities dealer or class of brokers,
    dealers, or municipal securities dealers from any provision of this
    section or the rules or regulations thereunder, if the Commission
    finds that such exemption is consistent with the public interest,
    the protection of investors, and the purposes of this section.
    (b) Municipal Securities Rulemaking Board; rules and regulations
      (1) Not later than one hundred twenty days after June 4, 1975,
    the Commission shall establish a Municipal Securities Rulemaking
    Board (hereinafter in this section referred to as the "Board"), to
    be composed initially of fifteen members appointed by the
    Commission, which shall perform the duties set forth in this
    section. The initial members of the Board shall serve as members
    for a term of two years, and shall consist of (A) five individuals
    who are not associated with any broker, dealer, or municipal
    securities dealer (other than by reason of being under common
    control with, or indirectly controlling, any broker or dealer which
    is not a municipal securities broker or municipal securities
    dealer), at least one of whom shall be representative of investors
    in municipal securities, and at least one of whom shall be
    representative of issuers of municipal securities (which members
    are hereinafter referred to as "public representatives"); (B) five
    individuals who are associated with and representative of municipal
    securities brokers and municipal securities dealers which are not
    banks or subsidiaries or departments or divisions of banks (which
    members are hereinafter referred to as "broker-dealer
    representatives"); and (C) five individuals who are associated with
    and representative of municipal securities dealers which are banks
    or subsidiaries or departments or divisions of banks (which members
    are hereinafter referred to as "bank representatives"). Prior to
    the expiration of the terms of office of the initial members of the
    Board, an election shall be held under rules adopted by the Board
    (pursuant to subsection (b)(2)(B) of this section) of the members
    to succeed such initial members.
      (2) The Board shall propose and adopt rules to effect the
    purposes of this chapter with respect to transactions in municipal
    securities effected by brokers, dealers, and municipal securities
    dealers. (Such rules are hereinafter collectively referred to in
    this chapter as "rules of the Board".) The rules of the Board, as a
    minimum, shall:
        (A) provide that no municipal securities broker or municipal
      securities dealer shall effect any transaction in, or induce or
      attempt to induce the purchase or sale of, any municipal security
      unless such municipal securities broker or municipal securities
      dealer meets such standards of operational capability and such
      municipal securities broker or municipal securities dealer and
      every natural person associated with such municipal securities
      broker or municipal securities dealer meet such standards of
      training, experience, competence, and such other qualifications
      as the Board finds necessary or appropriate in the public
      interest or for the protection of investors. In connection with
      the definition and application of such standards the Board may - 
          (i) appropriately classify municipal securities brokers and
        municipal securities dealers (taking into account relevant
        matters, including types of business done, nature of securities
        other than municipal securities sold, and character of business
        organization), and persons associated with municipal securities
        brokers and municipal securities dealers;
          (ii) specify that all or any portion of such standards shall
        be applicable to any such class;
          (iii) require persons in any such class to pass tests
        administered in accordance with subsection (c)(7) of this
        section; and
          (iv) provide that persons in any such class other than
        municipal securities brokers and municipal securities dealers
        and partners, officers, and supervisory employees of municipal
        securities brokers or municipal securities dealers, may be
        qualified solely on the basis of compliance with such standards
        of training and such other qualifications as the Board finds
        appropriate.

        (B) establish fair procedures for the nomination and election
      of members of the Board and assure fair representation in such
      nominations and elections of municipal securities brokers and
      municipal securities dealers. Such rules shall provide that the
      membership of the Board shall at all times be equally divided
      among public representatives, broker-dealer representatives, and
      bank representatives, and that the public representatives shall
      be subject to approval by the Commission to assure that no one of
      them is associated with any broker, dealer, or municipal
      securities dealer (other than by reason of being under common
      control with, or indirectly controlling, any broker or dealer
      which is not a municipal securities broker or municipal
      securities dealer) and that at least one is representative of
      investors in municipal securities and at least one is
      representative of issuers of municipal securities. Such rules
      shall also specify the term members shall serve and may increase
      the number of members which shall constitute the whole Board
      provided that such number is an odd number.
        (C) be designed to prevent fraudulent and manipulative acts and
      practices, to promote just and equitable principles of trade, to
      foster cooperation and coordination with persons engaged in
      regulating, clearing, settling, processing information with
      respect to, and facilitating transactions in municipal
      securities, to remove impediments to and perfect the mechanism of
      a free and open market in municipal securities, and, in general,
      to protect investors and the public interest; and not be designed
      to permit unfair discrimination between customers, issuers,
      municipal securities brokers, or municipal securities dealers, to
      fix minimum profits, to impose any schedule or fix rates of
      commissions, allowances, discounts, or other fees to be charged
      by municipal securities brokers or municipal securities dealers,
      to regulate by virtue of any authority conferred by this chapter
      matters not related to the purposes of this chapter or the
      administration of the Board, or to impose any burden on
      competition not necessary or appropriate in furtherance of the
      purposes of this chapter.
        (D) if the Board deems appropriate, provide for the arbitration
      of claims, disputes, and controversies relating to transactions
      in municipal securities: Provided, however, That no person other
      than a municipal securities broker, municipal securities dealer,
      or person associated with such a municipal securities broker or
      municipal securities dealer may be compelled to submit to such
      arbitration except at his instance and in accordance with section
      78cc of this title.
        (E) provide for the periodic examination in accordance with
      subsection (c)(7) of this section of municipal securities brokers
      and municipal securities dealers to determine compliance with
      applicable provisions of this chapter, the rules and regulations
      thereunder, and the rules of the Board. Such rules shall specify
      the minimum scope and frequency of such examinations and shall be
      designed to avoid unnecessary regulatory duplication or undue
      regulatory burdens for any such municipal securities broker or
      municipal securities dealer.
        (F) include provisions governing the form and content of
      quotations relating to municipal securities which may be
      distributed or published by any municipal securities broker,
      municipal securities dealer, or person associated with such a
      municipal securities broker or municipal securities dealer, and
      the persons to whom such quotations may be supplied. Such rules
      relating to quotations shall be designed to produce fair and
      informative quotations, to prevent fictitious or misleading
      quotations, and to promote orderly procedures for collecting,
      distributing, and publishing quotations.
        (G) prescribe records to be made and kept by municipal
      securities brokers and municipal securities dealers and the
      periods for which such records shall be preserved.
        (H) define the term "separately identifiable department or
      division", as that term is used in section 78c(a)(30) of this
      title, in accordance with specified and appropriate standards to
      assure that a bank is not deemed to be engaged in the business of
      buying and selling municipal securities through a separately
      identifiable department or division unless such department or
      division is organized and administered so as to permit
      independent examination and enforcement of applicable provisions
      of this chapter, the rules and regulations thereunder, and the
      rules of the Board. A separately identifiable department or
      division of a bank may be engaged in activities other than those
      relating to municipal securities.
        (I) provide for the operation and administration of the Board,
      including the selection of a Chairman from among the members of
      the Board, the compensation of the members of the Board, and the
      appointment and compensation of such employees, attorneys, and
      consultants as may be necessary or appropriate to carry out the
      Board's functions under this section.
        (J) provide that each municipal securities broker and each
      municipal securities dealer shall pay to the Board such
      reasonable fees and charges as may be necessary or appropriate to
      defray the costs and expenses of operating and administering the
      Board. Such rules shall specify the amount of such fees and
      charges.
        (K) establish the terms and conditions under which any
      municipal securities dealer may sell, or prohibit any municipal
      securities dealer from selling, any part of a new issue of
      municipal securities to a municipal securities investment
      portfolio during the underwriting period.

      (3) Nothing in this section shall be construed to impair or limit
    the power of the Commission under this chapter.
    (c) Discipline of municipal securities dealers; censure; suspension
      or revocation of registration; other sanctions; investigations
      (1) No broker, dealer, or municipal securities dealer shall make
    use of the mails or any means or instrumentality of interstate
    commerce to effect any transaction in, or to induce or attempt to
    induce the purchase or sale of, any municipal security in
    contravention of any rule of the Board.
      (2) The Commission, by order, shall censure, place limitations on
    the activities, functions, or operations, suspend for a period not
    exceeding twelve months, or revoke the registration of any
    municipal securities dealer, if it finds, on the record after
    notice and opportunity for hearing, that such censure, placing of
    limitations, denial, suspension, or revocation, is in the public
    interest and that such municipal securities dealer has committed or
    omitted any act, or is subject to an order or finding, enumerated
    in subparagraph (A), (D), (E), (H), or (G) of paragraph (4) of
    section 78o(b) of this title, has been convicted of any offense
    specified in subparagraph (B) of such paragraph (4) within ten
    years of the commencement of the proceedings under this paragraph,
    or is enjoined from any action, conduct, or practice specified in
    subparagraph (C) of such paragraph (4).
      (3) Pending final determination whether any registration under
    this section shall be revoked, the Commission, by order, may
    suspend such registration, if such suspension appears to the
    Commission, after notice and opportunity for hearing, to be
    necessary or appropriate in the public interest or for the
    protection of investors. Any registered municipal securities dealer
    may, upon such terms and conditions as the Commission may deem
    necessary in the public interest or for the protection of
    investors, withdraw from registration by filing a written notice of
    withdrawal with the Commission. If the Commission finds that any
    registered municipal securities dealer is no longer in existence or
    has ceased to do business as a municipal securities dealer, the
    Commission, by order, shall cancel the registration of such
    municipal securities dealer.
      (4) The Commission, by order, shall censure or place limitations
    on the activities or functions of any person associated, seeking to
    become associated, or, at the time of the alleged misconduct,
    associated or seeking to become associated with a municipal
    securities dealer, or suspend for a period not exceeding twelve
    months or bar any such person from being associated with a
    municipal securities dealer, if the Commission finds, on the record
    after notice and opportunity for hearing, that such censure,
    placing of limitations, suspension, or bar is in the public
    interest and that such person has committed any act, or is subject
    to an order or finding, enumerated in subparagraph (A), (D), (E),
    (H), or (G) of paragraph (4) of section 78o(b) of this title, has
    been convicted of any offense specified in subparagraph (B) of such
    paragraph (4) within 10 years of the commencement of the
    proceedings under this paragraph, or is enjoined from any action,
    conduct, or practice specified in subparagraph (C) of such
    paragraph (4). It shall be unlawful for any person as to whom an
    order entered pursuant to this paragraph or paragraph (5) of this
    subsection suspending or barring him from being associated with a
    municipal securities dealer is in effect willfully to become, or to
    be, associated with a municipal securities dealer without the
    consent of the Commission, and it shall be unlawful for any
    municipal securities dealer to permit such a person to become, or
    remain, a person associated with him without the consent of the
    Commission, if such municipal securities dealer knew, or, in the
    exercise of reasonable care should have known, of such order.
      (5) With respect to any municipal securities dealer for which the
    Commission is not the appropriate regulatory agency, the
    appropriate regulatory agency for such municipal securities dealer
    may sanction any such municipal securities dealer in the manner and
    for the reasons specified in paragraph (2) of this subsection and
    any person associated with such municipal securities dealer in the
    manner and for the reasons specified in paragraph (4) of this
    subsection. In addition, such appropriate regulatory agency may, in
    accordance with section 1818 of title 12, enforce compliance by
    such municipal securities dealer or any person associated with such
    municipal securities dealer with the provisions of this section,
    section 78q of this title, the rules of the Board, and the rules of
    the Commission pertaining to municipal securities dealers, persons
    associated with municipal securities dealers, and transactions in
    municipal securities. For purposes of the preceding sentence, any
    violation of any such provision shall constitute adequate basis for
    the issuance of any order under section 1818(b) or 1818(c) of title
    12, and the customers of any such municipal securities dealer shall
    be deemed to be "depositors" as that term is used in section
    1818(c) of title 12. Nothing in this paragraph shall be construed
    to affect in any way the powers of such appropriate regulatory
    agency to proceed against such municipal securities dealer under
    any other provision of law.
      (6)(A) The Commission, prior to the entry of an order of
    investigation, or commencement of any proceedings, against any
    municipal securities dealer, or person associated with any
    municipal securities dealer, for which the Commission is not the
    appropriate regulatory agency, for violation of any provision of
    this section, section 78o(c)(1) or 78o(c)(2) of this title, any
    rule or regulation under any such section, or any rule of the
    Board, shall (i) give notice to the appropriate regulatory agency
    for such municipal securities dealer of the identity of such
    municipal securities dealer or person associated with such
    municipal securities dealer, the nature of and basis for such
    proposed action, and whether the Commission is seeking a monetary
    penalty against such municipal securities dealer or such associated
    person pursuant to section 78u-2 of this title; and (ii) consult
    with such appropriate regulatory agency concerning the effect of
    such proposed action on sound banking practices and the feasibility
    and desirability of coordinating such action with any proceeding or
    proposed proceeding by such appropriate regulatory agency against
    such municipal securities dealer or associated person.
      (B) The appropriate regulatory agency for a municipal securities
    dealer (if other than the Commission), prior to the entry of an
    order of investigation, or commencement of any proceedings, against
    such municipal securities dealer or person associated with such
    municipal securities dealer, for violation of any provision of this
    section, the rules of the Board, or the rules or regulations of the
    Commission pertaining to municipal securities dealers, persons
    associated with municipal securities dealers, or transactions in
    municipal securities shall (i) give notice to the Commission of the
    identity of such municipal securities dealer or person associated
    with such municipal securities dealer and the nature of and basis
    for such proposed action and (ii) consult with the Commission
    concerning the effect of such proposed action on the protection of
    investors and the feasibility and desirability of coordinating such
    action with any proceeding or proposed proceeding by the Commission
    against such municipal securities dealer or associated person.
      (C) Nothing in this paragraph shall be construed to impair or
    limit (other than by the requirement of prior consultation) the
    power of the Commission or the appropriate regulatory agency for a
    municipal securities dealer to initiate any action of a class
    described in this paragraph or to affect in any way the power of
    the Commission or such appropriate regulatory agency to initiate
    any other action pursuant to this chapter or any other provision of
    law.
      (7)(A) Tests required pursuant to subsection (b)(2)(A)(iii) of
    this section shall be administered by or on behalf of and periodic
    examinations pursuant to subsection (b)(2)(E) of this section shall
    be conducted by - 
        (i) a registered securities association, in the case of
      municipal securities brokers and municipal securities dealers who
      are members of such association; and
        (ii) the appropriate regulatory agency for any municipal
      securities broker or municipal securities dealer, in the case of
      all other municipal securities brokers and municipal securities
      dealers.

      (B) A registered securities association shall make a report of
    any examination conducted pursuant to subsection (b)(2)(E) of this
    section and promptly furnish the Commission a copy thereof and any
    data supplied to it in connection with such examination. Subject to
    such limitations as the Commission, by rule, determines to be
    necessary or appropriate in the public interest or for the
    protection of investors, the Commission shall, on request, make
    available to the Board a copy of any report of an examination of a
    municipal securities broker or municipal securities dealer made by
    or furnished to the Commission pursuant to this paragraph or
    section 78q(c)(3) of this title.
      (8) The Commission is authorized, by order, if in its opinion
    such action is necessary or appropriate in the public interest, for
    the protection of investors, or otherwise, in furtherance of the
    purposes of this chapter, to remove from office or censure any
    member or employee of the Board, who, the Commission finds, on the
    record after notice and opportunity for hearing, has willfully (A)
    violated any provision of this chapter, the rules and regulations
    thereunder, or the rules of the Board or (B) abused his authority.
    (d) Issuance of municipal securities
      (1) Neither the Commission nor the Board is authorized under this
    chapter, by rule or regulation, to require any issuer of municipal
    securities, directly or indirectly through a purchaser or
    prospective purchaser of securities from the issuer, to file with
    the Commission or the Board prior to the sale of such securities by
    the issuer any application, report, or document in connection with
    the issuance, sale, or distribution of such securities.
      (2) The Board is not authorized under this chapter to require any
    issuer of municipal securities, directly or indirectly through a
    municipal securities broker or municipal securities dealer or
    otherwise, to furnish to the Board or to a purchaser or a
    prospective purchaser of such securities any application, report,
    document, or information with respect to such issuer: Provided,
    however, That the Board may require municipal securities brokers
    and municipal securities dealers to furnish to the Board or
    purchasers or prospective purchasers of municipal securities
    applications, reports, documents, and information with respect to
    the issuer thereof which is generally available from a source other
    than such issuer. Nothing in this paragraph shall be construed to
    impair or limit the power of the Commission under any provision of
    this chapter.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 15B, as added Pub. L. 94-29,
    Sec. 13, June 4, 1975, 89 Stat. 131; amended Pub. L. 98-38, Sec. 4,
    June 6, 1983, 97 Stat. 207; Pub. L. 100-181, title III, Secs. 318-
    320, Dec. 4, 1987, 101 Stat. 1256, 1257; Pub. L. 101-429, title
    II, Sec. 205, Oct. 15, 1990, 104 Stat. 941; Pub. L. 101-550, title
    II, Sec. 203(c)(1), Nov. 15, 1990, 104 Stat. 2718; Pub. L. 105-353,
    title III, Sec. 301(b)(9), Nov. 3, 1998, 112 Stat. 3236; Pub. L.
    107-204, title VI, Sec. 604(c)(1)(B), July 30, 2002, 116 Stat.
    796.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a)(3), (b)(2), (3),
    (c)(6)(C), (8), and (d), was in the original "this title". See
    References in Text note set out under section 78a of this title.


-MISC1-
                                AMENDMENTS                            
      2002 - Subsec. (c)(2), (4). Pub. L. 107-204 substituted ", or is
    subject to an order or finding," for "or omission" and "(H), or
    (G)" for "or (G)".
      1998 - Subsec. (c)(4). Pub. L. 105-353 substituted "convicted of
    any offense" for "convicted by any offense" in first sentence.
      1990 - Subsec. (c)(2), (4). Pub. L. 101-550 substituted "(A),
    (D), (E), or (G)" for "(A), (D), or (E)".
      Subsec. (c)(6)(A). Pub. L. 101-429 substituted ", the nature" for
    "and the nature" and "proposed action, and whether the Commission
    is seeking a monetary penalty against such municipal securities
    dealer or such associated person pursuant to section 78u-2 of this
    title; and" for "proposed action and".
      1987 - Subsec. (b)(2)(C). Pub. L. 100-181, Sec. 318, substituted
    "municipal securities dealers, to regulate" for "municipal security
    dealers, to regulate" "purposes of this chapter" for "purposes of
    this chapter or the securities", and "burden on competition" for
    "burden or competition".
      Subsec. (c)(4). Pub. L. 100-181, Sec. 319, substituted new first
    sentence for former first sentence which read as follows: "The
    Commission, by order, shall censure any person associated, or
    seeking to become associated with, a municipal securities dealer or
    suspend for a period not exceeding twelve months or bar any such
    person from being associated with a municipal securities dealer, if
    the Commission finds, on the record after notice and opportunity
    for hearing, that such censure, suspension, or bar is in the public
    interest and that such person has committed or omitted any act or
    omission enumerated in subparagraph (A), (D), or (E) of paragraph
    (4) of section 78o(b) of this title, has been convicted of any
    offense specified in subparagraph (B) of such paragraph (4) within
    ten years of the commencement of the proceedings under this
    paragraph, or is enjoined from any action, conduct, or practice
    specified in subparagraph (C) of such paragraph (4)."
      Subsec. (c)(6)(A). Pub. L. 100-181, Sec. 320, substituted "Board"
    for "board".
      1983 - Subsec. (b)(1)(A). Pub. L. 98-38, Sec. 4(a), inserted
    "(other than by reason of being under common control with, or
    indirectly controlling, any broker or dealer which is not a
    municipal securities broker or municipal securities dealer)" after
    "securities dealer".
      Subsec. (b)(2)(B). Pub. L. 98-38, Sec. 4(b), inserted "(other
    than by reason of being under common control with, or indirectly
    controlling, any broker or dealer which is not a municipal
    securities broker or municipal securities dealer)" after "broker,
    dealer, or municipal securities dealer".

                     EFFECTIVE DATE OF 1990 AMENDMENT                 
      Amendment by Pub. L. 101-429 effective Oct. 15, 1990, with
    provisions relating to civil penalties and accounting and
    disgorgement, see section 1(c)(1), (2) of Pub. L. 101-429, set out
    in a note under section 77g of this title.

                              EFFECTIVE DATE                          
      Section effective June 4, 1975, except for subsec. (a) which is
    effective 180 days after June 4, 1975, see section 31(a) of Pub. L.
    94-29, set out as a note under section 78b of this title.

-End-



-CITE-
    15 USC Sec. 78o-5                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78o-5. Government securities brokers and dealers

-STATUTE-
    (a) Registration requirements; notice to regulatory agencies;
      manner of registration; exemption from registration requirements
      (1)(A) It shall be unlawful for any government securities broker
    or government securities dealer (other than a registered broker or
    dealer or a financial institution) to make use of the mails or any
    means or instrumentality of interstate commerce to effect any
    transaction in, or to induce or attempt to induce the purchase or
    sale of, any government security unless such government securities
    broker or government securities dealer is registered in accordance
    with paragraph (2) of this subsection.
      (B)(i) It shall be unlawful for any government securities broker
    or government securities dealer that is a registered broker or
    dealer or a financial institution to make use of the mails or any
    means or instrumentality of interstate commerce to effect any
    transaction in, or to induce or attempt to induce the purchase or
    sale of, any government security unless such government securities
    broker or government securities dealer has filed with the
    appropriate regulatory agency written notice that it is a
    government securities broker or government securities dealer. When
    such a government securities broker or government securities dealer
    ceases to act as such it shall file with the appropriate regulatory
    agency a written notice that it is no longer acting as a government
    securities broker or government securities dealer.
      (ii) Such notices shall be in such form and contain such
    information concerning a government securities broker or government
    securities dealer that is a financial institution and any persons
    associated with such government securities broker or government
    securities dealer as the Board of Governors of the Federal Reserve
    System shall, by rule, after consultation with each appropriate
    regulatory agency (including the Commission), prescribe as
    necessary or appropriate in the public interest or for the
    protection of investors. Such notices shall be in such form and
    contain such information concerning a government securities broker
    or government securities dealer that is a registered broker or
    dealer and any persons associated with such government securities
    broker or government securities dealer as the Commission shall, by
    rule, prescribe as necessary or appropriate in the public interest
    or for the protection of investors.
      (iii) Each appropriate regulatory agency (other than the
    Commission) shall make available to the Commission the notices
    which have been filed with it under this subparagraph, and the
    Commission shall maintain and make available to the public such
    notices and the notices it receives under this subparagraph.
      (2) A government securities broker or a government securities
    dealer subject to the registration requirement of paragraph (1)(A)
    of this subsection may be registered by filing with the Commission
    an application for registration in such form and containing such
    information and documents concerning such government securities
    broker or government securities dealer and any persons associated
    with such government securities broker or government securities
    dealer as the Commission, by rule, may prescribe as necessary or
    appropriate in the public interest or for the protection of
    investors. Within 45 days of the date of filing of such application
    (or within such longer period as to which the applicant consents),
    the Commission shall - 
        (i) by order grant registration, or
        (ii) institute proceedings to determine whether registration
      should be denied. Such proceedings shall include notice of the
      grounds for denial under consideration and opportunity for
      hearing and shall be concluded within 120 days of the date of the
      filing of the application for registration. At the conclusion of
      such proceedings, the Commission, by order, shall grant or deny
      such registration. The order granting registration shall not be
      effective until such government securities broker or government
      securities dealer has become a member of a national securities
      exchange registered under section 78f of this title, or a
      securities association registered under section 78o-3 of this
      title, unless the Commission has exempted such government
      securities broker or government securities dealer, by rule or
      order, from such membership. The Commission may extend the time
      for the conclusion of such proceedings for up to 90 days if it
      finds good cause for such extension and publishes its reasons for
      so finding or for such longer period as to which the applicant
      consents.

    The Commission shall grant the registration of a government
    securities broker or a government securities dealer if the
    Commission finds that the requirements of this section are
    satisfied. The Commission shall deny such registration if it does
    not make such a finding or if it finds that if the applicant were
    so registered, its registration would be subject to suspension or
    revocation under subsection (c) of this section.
      (3) Any provision of this chapter (other than section 78e of this
    title or paragraph (1) of this subsection) which prohibits any act,
    practice, or course of business if the mails or any means or
    instrumentality of interstate commerce is used in connection
    therewith shall also prohibit any such act, practice, or course of
    business by any government securities broker or government
    securities dealer registered or having filed notice under paragraph
    (1) of this subsection or any person acting on behalf of such
    government securities broker or government securities dealer,
    irrespective of any use of the mails or any means or
    instrumentality of interstate commerce in connection therewith.
      (4) No government securities broker or government securities
    dealer that is required to register under paragraph (1)(A) and that
    is not a member of the Securities Investor Protection Corporation
    shall effect any transaction in any security in contravention of
    such rules as the Commission shall prescribe pursuant to this
    subsection to assure that its customers receive complete, accurate,
    and timely disclosure of the inapplicability of Securities Investor
    Protection Corporation coverage to their accounts.
      (5) The Secretary of the Treasury (hereinafter in this section
    referred to as the "Secretary"), by rule or order, upon the
    Secretary's own motion or upon application, may conditionally or
    unconditionally exempt any government securities broker or
    government securities dealer, or class of government securities
    brokers or government securities dealers, from any provision of
    subsection (a), (b), or (d) of this section, other than subsection
    (d)(3) of this section, or the rules thereunder, if the Secretary
    finds that such exemption is consistent with the public interest,
    the protection of investors, and the purposes of this chapter.
    (b) Rules with respect to transactions in government securities
      (1) The Secretary shall propose and adopt rules to effect the
    purposes of this chapter with respect to transactions in government
    securities effected by government securities brokers and government
    securities dealers as follows:
        (A) Such rules shall provide safeguards with respect to the
      financial responsibility and related practices of government
      securities brokers and government securities dealers including,
      but not limited to, capital adequacy standards, the acceptance of
      custody and use of customers' securities, the carrying and use of
      customers' deposits or credit balances, and the transfer and
      control of government securities subject to repurchase agreements
      and in similar transactions.
        (B) Such rules shall require every government securities broker
      and government securities dealer to make reports to and furnish
      copies of records to the appropriate regulatory agency, and to
      file with the appropriate regulatory agency, annually or more
      frequently, a balance sheet and income statement certified by an
      independent public accountant, prepared on a calendar or fiscal
      year basis, and such other financial statements (which shall, as
      the Secretary specifies, be certified) and information concerning
      its financial condition as required by such rules.
        (C) Such rules shall require records to be made and kept by
      government securities brokers and government securities dealers
      and shall specify the periods for which such records shall be
      preserved.

      (2) Risk Assessment for Holding Company Systems. - 
        (A) Obligations to obtain, maintain, and report information. -
      Every person who is registered as a government securities broker
      or government securities dealer under this section shall obtain
      such information and make and keep such records as the Secretary
      by rule prescribes concerning the registered person's policies,
      procedures, or systems for monitoring and controlling financial
      and operational risks to it resulting from the activities of any
      of its associated persons, other than a natural person. Such
      records shall describe, in the aggregate, each of the financial
      and securities activities conducted by, and customary sources of
      capital and funding of, those of its associated persons whose
      business activities are reasonably likely to have a material
      impact on the financial or operational condition of such
      registered person, including its capital, its liquidity, or its
      ability to conduct or finance its operations. The Secretary, by
      rule, may require summary reports of such information to be filed
      with the registered person's appropriate regulatory agency no
      more frequently than quarterly.
        (B) Authority to require additional information. - If, as a
      result of adverse market conditions or based on reports provided
      pursuant to subparagraph (A) of this paragraph or other available
      information, the appropriate regulatory agency reasonably
      concludes that it has concerns regarding the financial or
      operational condition of any government securities broker or
      government securities dealer registered under this section, such
      agency may require the registered person to make reports
      concerning the financial and securities activities of any of such
      person's associated persons, other than a natural person, whose
      business activities are reasonably likely to have a material
      impact on the financial or operational condition of such
      registered person. The appropriate regulatory agency, in
      requiring reports pursuant to this subparagraph, shall specify
      the information required, the period for which it is required,
      the time and date on which the information must be furnished, and
      whether the information is to be furnished directly to the
      appropriate regulatory agency or to a self-regulatory
      organization with primary responsibility for examining the
      registered person's financial and operational condition.
        (C) Special provisions with respect to associated persons
      subject to federal banking agency regulation. - 
          (i) Cooperation in implementation. - In developing and
        implementing reporting requirements pursuant to subparagraph
        (A) of this paragraph with respect to associated persons
        subject to examination by or reporting requirements of a
        Federal banking agency, the Secretary shall consult with and
        consider the views of each such Federal banking agency. If a
        Federal banking agency comments in writing on a proposed rule
        of the Secretary under this paragraph that has been published
        for comment, the Secretary shall respond in writing to such
        written comment before adopting the proposed rule. The
        Secretary shall, at the request of a Federal banking agency,
        publish such comment and response in the Federal Register at
        the time of publishing the adopted rule.
          (ii) Use of banking agency reports. - A registered government
        securities broker or government securities dealer shall be in
        compliance with any recordkeeping or reporting requirement
        adopted pursuant to subparagraph (A) of this paragraph
        concerning an associated person that is subject to examination
        by or reporting requirements of a Federal banking agency if
        such government securities broker or government securities
        dealer utilizes for such recordkeeping or reporting requirement
        copies of reports filed by the associated person with the
        Federal banking agency pursuant to section 161 of title 12,
        subchapter VIII of chapter 3 of title 12, section 1817(a) of
        title 12, section 1467a(b) of title 12, or section 1847 of
        title 12. The Secretary may, however, by rule adopted pursuant
        to subparagraph (A), require any registered government
        securities broker or government securities dealer filing such
        reports with the appropriate regulatory agency to obtain,
        maintain, or report supplemental information if the Secretary
        makes an explicit finding, based on information provided by the
        appropriate regulatory agency, that such supplemental
        information is necessary to inform the appropriate regulatory
        agency regarding potential risks to such government securities
        broker or government securities dealer. Prior to requiring any
        such supplemental information, the Secretary shall first
        request the Federal banking agency to expand its reporting
        requirements to include such information.
          (iii) Procedure for requiring additional information. - Prior
        to making a request pursuant to subparagraph (B) of this
        paragraph for information with respect to an associated person
        that is subject to examination by or reporting requirements of
        a Federal banking agency, the appropriate regulatory agency
        shall - 
            (I) notify such banking agency of the information required
          with respect to such associated person; and
            (II) consult with such agency to determine whether the
          information required is available from such agency and for
          other purposes, unless the appropriate regulatory agency
          determines that any delay resulting from such consultation
          would be inconsistent with ensuring the financial and
          operational condition of the government securities broker or
          government securities dealer or the stability or integrity of
          the securities markets.

          (iv) Exclusion for examination reports. - Nothing in this
        subparagraph shall be construed to permit the Secretary or an
        appropriate regulatory agency to require any registered
        government securities broker or government securities dealer to
        obtain, maintain, or furnish any examination report of any
        Federal banking agency or any supervisory recommendations or
        analysis contained therein.
          (v) Confidentiality of information provided. - No information
        provided to or obtained by an appropriate regulatory agency
        from any Federal banking agency pursuant to a request under
        clause (iii) of this subparagraph regarding any associated
        person which is subject to examination by or reporting
        requirements of a Federal banking agency may be disclosed to
        any other person (other than a self-regulatory organization),
        without the prior written approval of the Federal banking
        agency. Nothing in this clause shall authorize the Secretary or
        any appropriate regulatory agency to withhold information from
        Congress, or prevent the Secretary or any appropriate
        regulatory agency from complying with a request for information
        from any other Federal department or agency requesting the
        information for purposes within the scope of its jurisdiction,
        or complying with an order of a court of the United States in
        an action brought by the United States or the Commission.
          (vi) Notice to banking agencies concerning financial and
        operational condition concerns. - The Secretary or appropriate
        regulatory agency shall notify the Federal banking agency of
        any concerns of the Secretary or the appropriate regulatory
        agency regarding significant financial or operational risks
        resulting from the activities of any government securities
        broker or government securities dealer to any associated person
        thereof which is subject to examination by or reporting
        requirements of the Federal banking agency.
          (vii) Definition. - For purposes of this subparagraph, the
        term "Federal banking agency" shall have the same meaning as
        the term "appropriate Federal banking agency" in section
        1813(q) of title 12.

        (D) Exemptions. - The Secretary by rule or order may exempt any
      person or class of persons, under such terms and conditions and
      for such periods as the Secretary shall provide in such rule or
      order, from the provisions of this paragraph, and the rules
      thereunder. In granting such exemptions, the Secretary shall
      consider, among other factors - 
          (i) whether information of the type required under this
        paragraph is available from a supervisory agency (as defined in
        section 3401(6) (!1) of title 12), a State insurance commission
        or similar State agency, the Commodity Futures Trading
        Commission, or a similar foreign regulator;

          (ii) the primary business of any associated person;
          (iii) the nature and extent of domestic or foreign regulation
        of the associated person's activities;
          (iv) the nature and extent of the registered person's
        securities transactions; and
          (v) with respect to the registered person and its associated
        persons, on a consolidated basis, the amount and proportion of
        assets devoted to, and revenues derived from, activities in the
        United States securities markets.

        (E) Conformity with requirements under section 78q(h). - In
      exercising authority pursuant to subparagraph (A) of this
      paragraph concerning information with respect to associated
      persons of government securities brokers and government
      securities dealers who are also associated persons of registered
      brokers or dealers reporting to the Commission pursuant to
      section 78q(h) of this title, the requirements relating to such
      associated persons shall conform, to the greatest extent
      practicable, to the requirements under section 78q(h) of this
      title.
        (F) Authority to limit disclosure of information. -
      Notwithstanding any other provision of law, the Secretary and any
      appropriate regulatory agency shall not be compelled to disclose
      any information required to be reported under this paragraph, or
      any information supplied to the Secretary or any appropriate
      regulatory agency by any domestic or foreign regulatory agency
      that relates to the financial or operational condition of any
      associated person of a registered government securities broker or
      a government securities dealer. Nothing in this paragraph shall
      authorize the Secretary or any appropriate regulatory agency to
      withhold information from Congress, or prevent the Secretary or
      any appropriate regulatory agency from complying with a request
      for information from any other Federal department or agency
      requesting the information for purposes within the scope of its
      jurisdiction, or complying with an order of a court of the United
      States in an action brought by the United States or the
      Commission. For purposes of section 552 of title 5, this
      paragraph shall be considered a statute described in subsection
      (b)(3)(B) of such section 552.

      (3)(A) With respect to any financial institution that has filed
    notice as a government securities broker or government securities
    dealer or that is required to file notice under subsection
    (a)(1)(B) of this section, the appropriate regulatory agency for
    such government securities broker or government securities dealer
    may issue such rules and regulations with respect to transactions
    in government securities as may be necessary to prevent fraudulent
    and manipulative acts and practices and to promote just and
    equitable principles of trade. If the Secretary of the Treasury
    determines, and notifies the appropriate regulatory agency, that
    such rule or regulation, if implemented, would, or as applied does
    (i) adversely affect the liquidity or efficiency of the market for
    government securities; or (ii) impose any burden on competition not
    necessary or appropriate in furtherance of the purposes of this
    section, the appropriate regulatory agency shall, prior to adopting
    the proposed rule or regulation, find that such rule or regulation
    is necessary and appropriate in furtherance of the purposes of this
    section notwithstanding the Secretary's determination.
      (B) The appropriate regulatory agency shall consult with and
    consider the views of the Secretary prior to approving or amending
    a rule or regulation under this paragraph, except where the
    appropriate regulatory agency determines that an emergency exists
    requiring expeditious and summary action and publishes its reasons
    therefor. If the Secretary comments in writing to the appropriate
    regulatory agency on a proposed rule or regulation that has been
    published for comment, the appropriate regulatory agency shall
    respond in writing to such written comment before approving the
    proposed rule or regulation.
      (C) In promulgating rules under this section, the appropriate
    regulatory agency shall consider the sufficiency and
    appropriateness of then existing laws and rules applicable to
    government securities brokers, government securities dealers, and
    persons associated with government securities brokers and
    government securities dealers.
      (4) Rules promulgated and orders issued under this section shall -
     
        (A) be designed to prevent fraudulent and manipulative acts and
      practices and to protect the integrity, liquidity, and efficiency
      of the market for government securities, investors, and the
      public interest; and
        (B) not be designed to permit unfair discrimination between
      customers, issuers, government securities brokers, or government
      securities dealers, or to impose any burden on competition not
      necessary or appropriate in furtherance of the purposes of this
      chapter.

      (5) In promulgating rules and issuing orders under this section,
    the Secretary - 
        (A) may appropriately classify government securities brokers
      and government securities dealers (taking into account relevant
      matters, including types of business done, nature of securities
      other than government securities purchased or sold, and character
      of business organization) and persons associated with government
      securities brokers and government securities dealers;
        (B) may determine, to the extent consistent with paragraph (2)
      of this subsection and with the public interest, the protection
      of investors, and the purposes of this chapter, not to apply, in
      whole or in part, certain rules under this section, or to apply
      greater, lesser, or different standards, to certain classes of
      government securities brokers, government securities dealers, or
      persons associated with government securities brokers or
      government securities dealers;
        (C) shall consider the sufficiency and appropriateness of then
      existing laws and rules applicable to government securities
      brokers, government securities dealers, and persons associated
      with government securities brokers and government securities
      dealers; and
        (D) shall consult with and consider the views of the Commission
      and the Board of Governors of the Federal Reserve System, except
      where the Secretary determines that an emergency exists requiring
      expeditious or summary action and publishes its reasons for such
      determination.

      (6) If the Commission or the Board of Governors of the Federal
    Reserve System comments in writing on a proposed rule of the
    Secretary that has been published for comment, the Secretary shall
    respond in writing to such written comment before approving the
    proposed rule.
      (7) No government securities broker or government securities
    dealer shall make use of the mails or any means or instrumentality
    of interstate commerce to effect any transaction in, or to induce
    or attempt to induce the purchase or sale of, any government
    security in contravention of any rule under this section.
    (c) Sanctions for violations
      (1) With respect to any government securities broker or
    government securities dealer registered or required to register
    under subsection (a)(1)(A) of this section - 
        (A) The Commission, by order, shall censure, place limitations
      on the activities, functions, or operations of, suspend for a
      period not exceeding 12 months, or revoke the registration of
      such government securities broker or government securities
      dealer, if it finds, on the record after notice and opportunity
      for hearing, that such censure, placing of limitations,
      suspension, or revocation is in the public interest and that such
      government securities broker or government securities dealer, or
      any person associated with such government securities broker or
      government securities dealer (whether prior or subsequent to
      becoming so associated), has committed or omitted any act, or is
      subject to an order or finding, enumerated in subparagraph (A),
      (D), (E), (H), or (G) of paragraph (4) of section 78o(b) of this
      title, has been convicted of any offense specified in
      subparagraph (B) of such paragraph (4) within 10 years of the
      commencement of the proceedings under this paragraph, or is
      enjoined from any action, conduct, or practice specified in
      subparagraph (C) of such paragraph (4).
        (B) Pending final determination whether registration of any
      government securities broker or government securities dealer
      shall be revoked, the Commission, by order, may suspend such
      registration, if such suspension appears to the Commission, after
      notice and opportunity for hearing, to be necessary or
      appropriate in the public interest or for the protection of
      investors. Any registered government securities broker or
      registered government securities dealer may, upon such terms and
      conditions as the Commission may deem necessary in the public
      interest or for the protection of investors, withdraw from
      registration by filing a written notice of withdrawal with the
      Commission. If the Commission finds that any registered
      government securities broker or registered government securities
      dealer is no longer in existence or has ceased to do business as
      a government securities broker or government securities dealer,
      the Commission, by order, shall cancel the registration of such
      government securities broker or government securities dealer.
        (C) The Commission, by order, shall censure or place
      limitations on the activities or functions of any person
      associated, or seeking to become associated, with a government
      securities broker or government securities dealer registered or
      required to register under subsection (a)(1)(A) of this section
      or suspend for a period not exceeding 12 months or bar any such
      person from being associated with such a government securities
      broker or government securities dealer, if the Commission finds,
      on the record after notice and opportunity for hearing, that such
      censure, placing of limitations, suspension, or bar is in the
      public interest and that such person has committed or omitted any
      act, or is subject to an order or finding, enumerated in
      subparagraph (A), (D), (E), (H), or (G) of paragraph (4) of
      section 78o(b) of this title, has been convicted of any offense
      specified in subparagraph (B) of such paragraph (4) within 10
      years of the commencement of the proceedings under this
      paragraph, or is enjoined from any action, conduct, or practice
      specified in subparagraph (C) of such paragraph (4).

      (2)(A) With respect to any government securities broker or
    government securities dealer which is not registered or required to
    register under subsection (a)(1)(A) of this section, the
    appropriate regulatory agency for such government securities broker
    or government securities dealer may, in the manner and for the
    reasons specified in paragraph (1)(A) of this subsection, censure,
    place limitations on the activities, functions, or operations of,
    suspend for a period not exceeding 12 months, or bar from acting as
    a government securities broker or government securities dealer any
    such government securities broker or government securities dealer,
    and may sanction any person associated with such government
    securities broker or government securities dealer in the manner and
    for the reasons specified in paragraph (1)(C) of this subsection.
      (B) In addition, where applicable, such appropriate regulatory
    agency may, in accordance with section 1818 of title 12, section
    1464 of title 12, or section 1730 (!2) of title 12, enforce
    compliance by such government securities broker or government
    securities dealer or any person associated with such government
    securities broker or government securities dealer with the
    provisions of this section and the rules thereunder.

      (C) For purposes of subparagraph (B) of this paragraph, any
    violation of any such provision shall constitute adequate basis for
    the issuance of any order under section 1818(b) or (c) of title 12,
    section 1464(d)(2) or (d)(3) (!2) of title 12, or section 1730(e)
    or (f) (!2) of title 12, and the customers of any such government
    securities broker or government securities dealer shall be deemed,
    respectively, "depositors" as that term is used in section 1818(c)
    of title 12, "savings account holders" as that term is used in
    section 1464(d)(3) (!2) of title 12, or "insured members" as that
    term is used in section 1730(f) (!2) of title 12.
      (D) Nothing in this paragraph shall be construed to affect in any
    way the powers of such appropriate regulatory agency to proceed
    against such government securities broker or government securities
    dealer under any other provision of law.
      (E) Each appropriate regulatory agency (other than the
    Commission) shall promptly notify the Commission after it has
    imposed any sanction under this paragraph on a government
    securities broker or government securities dealer, or a person
    associated with a government securities broker or government
    securities dealer, and the Commission shall maintain, and make
    available to the public, a record of such sanctions and any
    sanctions imposed by it under this subsection.
      (3) It shall be unlawful for any person as to whom an order
    entered pursuant to paragraph (1) or (2) of this subsection
    suspending or barring him from being associated with a government
    securities broker or government securities dealer is in effect
    willfully to become, or to be, associated with a government
    securities broker or government securities dealer without the
    consent of the appropriate regulatory agency, and it shall be
    unlawful for any government securities broker or government
    securities dealer to permit such a person to become, or remain, a
    person associated with it without the consent of the appropriate
    regulatory agency, if such government securities broker or
    government securities dealer knew, or, in the exercise of
    reasonable care should have known, of such order.
    (d) Records of brokers and dealers subject to examination
      (1) All records of a government securities broker or government
    securities dealer are subject at any time, or from time to time, to
    such reasonable periodic, special, or other examinations by
    representatives of the appropriate regulatory agency for such
    government securities broker or government securities dealer as
    such appropriate regulatory agency deems necessary or appropriate
    in the public interest, for the protection of investors, or
    otherwise in furtherance of the purposes of this chapter.
      (2) Information received by an appropriate regulatory agency, the
    Secretary, or the Commission from or with respect to any government
    securities broker, government securities dealer, any person
    associated with a government securities broker or government
    securities dealer, or any other person subject to this section or
    rules promulgated thereunder, may be made available by the
    Secretary or the recipient agency to the Commission, the Secretary,
    the Department of Justice, the Commodity Futures Trading
    Commission, any appropriate regulatory agency, any self-regulatory
    organization, or any Federal Reserve Bank.
      (3) Government Securities Trade Reconstruction. - 
        (A) Furnishing records. - Every government securities broker
      and government securities dealer shall furnish to the Commission
      on request such records of government securities transactions,
      including records of the date and time of execution of trades, as
      the Commission may require to reconstruct trading in the course
      of a particular inquiry or investigation being conducted by the
      Commission for enforcement or surveillance purposes. In requiring
      information pursuant to this paragraph, the Commission shall
      specify the information required, the period for which it is
      required, the time and date on which the information must be
      furnished, and whether the information is to be furnished
      directly to the Commission, to the Federal Reserve Bank of New
      York, or to an appropriate regulatory agency or self-regulatory
      organization with responsibility for examining the government
      securities broker or government securities dealer. The Commission
      may require that such information be furnished in machine
      readable form notwithstanding any limitation in subparagraph (B).
      In utilizing its authority to require information in machine
      readable form, the Commission shall minimize the burden such
      requirement may place on small government securities brokers and
      dealers.
        (B) Limitation; construction. - The Commission shall not
      utilize its authority under this paragraph to develop regular
      reporting requirements, except that the Commission may require
      information to be furnished under this paragraph as frequently as
      necessary for particular inquiries or investigations for
      enforcement or surveillance purposes. This paragraph shall not be
      construed as requiring, or as authorizing the Commission to
      require, any government securities broker or government
      securities dealer to obtain or maintain any information for
      purposes of this paragraph which is not otherwise maintained by
      such broker or dealer in accordance with any other provision of
      law or usual and customary business practice. The Commission
      shall, where feasible, avoid requiring any information to be
      furnished under this paragraph that the Commission may obtain
      from the Federal Reserve Bank of New York.
        (C) Procedures for requiring information. - At the time the
      Commission requests any information pursuant to subparagraph (A)
      with respect to any government securities broker or government
      securities dealer for which the Commission is not the appropriate
      regulatory agency, the Commission shall notify the appropriate
      regulatory agency for such government securities broker or
      government securities dealer and, upon request, furnish to the
      appropriate regulatory agency any information supplied to the
      Commission.
        (D) Consultation. - Within 90 days after December 17, 1993, and
      annually thereafter, or upon the request of any other appropriate
      regulatory agency, the Commission shall consult with the other
      appropriate regulatory agencies to determine the availability of
      records that may be required to be furnished under this paragraph
      and, for those records available directly from the other
      appropriate regulatory agencies, to develop a procedure for
      furnishing such records expeditiously upon the Commission's
      request.
        (E) Exclusion for examination reports. - Nothing in this
      paragraph shall be construed so as to permit the Commission to
      require any government securities broker or government securities
      dealer to obtain, maintain, or furnish any examination report of
      any appropriate regulatory agency other than the Commission or
      any supervisory recommendations or analysis contained in any such
      examination report.
        (F) Authority to limit disclosure of information. -
      Notwithstanding any other provision of law, the Commission and
      the appropriate regulatory agencies shall not be compelled to
      disclose any information required or obtained under this
      paragraph. Nothing in this paragraph shall authorize the
      Commission or any appropriate regulatory agency to withhold
      information from Congress, or prevent the Commission or any
      appropriate regulatory agency from complying with a request for
      information from any other Federal department or agency
      requesting information for purposes within the scope of its
      jurisdiction, or from complying with an order of a court of the
      United States in an action brought by the United States, the
      Commission, or the appropriate regulatory agency. For purposes of
      section 552 of title 5, this subparagraph shall be considered a
      statute described in subsection (b)(3)(B) of such section 552.
    (e) Membership in national securities exchange; exemptions
      (1) It shall be unlawful for any government securities broker or
    government securities dealer registered or required to register
    with the Commission under subsection (a)(1)(A) of this section to
    effect any transaction in, or induce or attempt to induce the
    purchase or sale of, any government security, unless such
    government securities broker or government securities dealer is a
    member of a national securities exchange registered under section
    78f of this title or a securities association registered under
    section 78o-3 of this title.
      (2) The Commission, after consultation with the Secretary, by
    rule or order, as it deems consistent with the public interest and
    the protection of investors, may conditionally or unconditionally
    exempt from paragraph (1) of this subsection any government
    securities broker or government securities dealer or class of
    government securities brokers or government securities dealers
    specified in such rule or order.
    (f) Large position reporting
      (1) Reporting requirements
        The Secretary may adopt rules to require specified persons
      holding, maintaining, or controlling large positions in to-be-
      issued or recently issued Treasury securities to file such
      reports regarding such positions as the Secretary determines to
      be necessary and appropriate for the purpose of monitoring the
      impact in the Treasury securities market of concentrations of
      positions in Treasury securities and for the purpose of otherwise
      assisting the Commission in the enforcement of this chapter,
      taking into account any impact of such rules on the efficiency
      and liquidity of the Treasury securities market and the cost to
      taxpayers of funding the Federal debt. Unless otherwise specified
      by the Secretary, reports required under this subsection shall be
      filed with the Federal Reserve Bank of New York, acting as agent
      for the Secretary. Such reports shall, on a timely basis, be
      provided directly to the Commission by the person with whom they
      are filed.
      (2) Recordkeeping requirements
        Rules under this subsection may require persons holding,
      maintaining, or controlling large positions in Treasury
      securities to make and keep for prescribed periods such records
      as the Secretary determines are necessary or appropriate to
      ensure that such persons can comply with reporting requirements
      under this subsection.
      (3) Aggregation rules
        Rules under this subsection - 
          (A) may prescribe the manner in which positions and accounts
        shall be aggregated for the purpose of this subsection,
        including aggregation on the basis of common ownership or
        control; and
          (B) may define which persons (individually or as a group)
        hold, maintain, or control large positions.
      (4) Definitional authority; determination of reporting threshold
        (A) In prescribing rules under this subsection, the Secretary
      may, consistent with the purpose of this subsection, define terms
      used in this subsection that are not otherwise defined in section
      78c of this title.
        (B) Rules under this subsection shall specify - 
          (i) the minimum size of positions subject to reporting under
        this subsection, which shall be no less than the size that
        provides the potential for manipulation or control of the
        supply or price, or the cost of financing arrangements, of an
        issue or the portion thereof that is available for trading;
          (ii) the types of positions (which may include financing
        arrangements) to be reported;
          (iii) the securities to be covered; and
          (iv) the form and manner in which reports shall be
        transmitted, which may include transmission in machine readable
        form.
      (5) Exemptions
        Consistent with the public interest and the protection of
      investors, the Secretary by rule or order may exempt in whole or
      in part, conditionally or unconditionally, any person or class of
      persons, or any transaction or class of transactions, from the
      requirements of this subsection.
      (6) Limitation on disclosure of information
        Notwithstanding any other provision of law, the Secretary and
      the Commission shall not be compelled to disclose any information
      required to be kept or reported under this subsection. Nothing in
      this subsection shall authorize the Secretary or the Commission
      to withhold information from Congress, or prevent the Secretary
      or the Commission from complying with a request for information
      from any other Federal department or agency requesting
      information for purposes within the scope of its jurisdiction, or
      from complying with an order of a court of the United States in
      an action brought by the United States, the Secretary, or the
      Commission. For purposes of section 552 of title 5, this
      paragraph shall be considered a statute described in subsection
      (b)(3)(B) of such section 552.
    (g) Effect on other laws; authority of Commission
      (1) Nothing in this section except paragraph (2) of this
    subsection shall be construed to impair or limit the authority
    under any other provision of law of the Commission, the Secretary
    of the Treasury, the Board of Governors of the Federal Reserve
    System, the Comptroller of the Currency, the Federal Deposit
    Insurance Corporation, the Director of the Office of Thrift
    Supervision, the Federal Savings and Loan Insurance Corporation,
    the Secretary of Housing and Urban Development, and the Government
    National Mortgage Association.
      (2) Notwithstanding any other provision of this chapter, the
    Commission shall not have any authority to make investigations of,
    require the filing of a statement by, or take any other action
    under this chapter against a government securities broker or
    government securities dealer, or any person associated with a
    government securities broker or government securities dealer, for
    any violation or threatened violation of the provisions of this
    section, other than subsection (d)(3) of this section (!3) or the
    rules or regulations thereunder, unless the Commission is the
    appropriate regulatory agency for such government securities broker
    or government securities dealer. Nothing in the preceding sentence
    shall be construed to limit the authority of the Commission with
    respect to violations or threatened violations of any provision of
    this chapter other than this section (except subsection (d)(3) of
    this section), the rules or regulations under any such other
    provision, or investigations pursuant to section 78u(a)(2) of this
    title to assist a foreign securities authority.

    (h) Emergency authority
      The Secretary may, by order, take any action with respect to a
    matter or action subject to regulation by the Secretary under this
    section, or the rules of the Secretary under this section,
    involving a government security or a market therein (or significant
    portion or segment of that market), that the Commission may take
    under section 78l(k)(2) of this title with respect to transactions
    in securities (other than exempted securities) or a market therein
    (or significant portion or segment of that market).

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 15C, as added Pub. L. 99-571,
    title I, Sec. 101, Oct. 28, 1986, 100 Stat. 3208; amended Pub. L.
    100-181, title VIII, Sec. 801(a), Dec. 4, 1987, 101 Stat. 1265;
    Pub. L. 101-73, title VII, Sec. 744(u)(3), Aug. 9, 1989, 103 Stat.
    441; Pub. L. 101-432, Sec. 4(b), Oct. 16, 1990, 104 Stat. 970; Pub.
    L. 101-550, title II, Sec. 203(c), Nov. 15, 1990, 104 Stat. 2718;
    Pub. L. 103-202, title I, Secs. 102-104, 106(a), 108, 109(b)(1),
    (c), Dec. 17, 1993, 107 Stat. 2345, 2346, 2349, 2351-2353; Pub. L.
    105-353, title III, Sec. 301(b)(10), Nov. 3, 1998, 112 Stat. 3236;
    Pub. L. 107-204, title VI, Sec. 604(c)(1)(B), July 30, 2002, 116
    Stat. 796; Pub. L. 108-458, title VII, Sec. 7803(d), Dec. 17, 2004,
    118 Stat. 3863.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a)(3), (5), (b)(1),
    (2)(B), (4)(B), (d)(1), (f)(1), and (g)(2), was in the original
    "this title". See References in Text note set out under section 78a
    of this title.
      Subchapter VIII of chapter 3 of title 12, referred to in subsec.
    (b)(2)(C)(ii), was in the original "section 9 of the Federal
    Reserve Act", meaning section 9 of act Dec. 23, 1913, ch. 6, 38
    Stat. 251, as amended, which is classified generally to subchapter
    VIII (Sec. 321 et seq.) of chapter 3 of Title 12, Banks and
    Banking.
      Section 3401(6) of title 12, referred to in subsec. (b)(2)(D)(i),
    was redesignated section 3401(7) of title 12 by Pub. L. 101-73,
    title IX, Sec. 941(1), Aug. 9, 1989, 103 Stat. 496.
      Section 1730 of title 12, referred to in subsec. (c)(2)(B), (C),
    was repealed by Pub. L. 101-73, title IV, Sec. 407, Aug. 9, 1989,
    103 Stat. 363.
      Section 1464(d)(2) and (d)(3) of title 12, referred to in subsec.
    (c)(2)(C), was amended generally by Pub. L. 101-73, title III, Sec.
    301, Aug. 9, 1989, 103 Stat. 282, and, as so amended, no longer
    relates to issuance of orders nor contains the term "savings
    account holders".


-MISC1-
                                AMENDMENTS                            
      2004 - Subsec. (h). Pub. L. 108-458 added subsec. (h).
      2002 - Subsec. (c)(1)(A), (C). Pub. L. 107-204 substituted ", or
    is subject to an order or finding," for "or omission" and "(H), or
    (G)" for "or (G)".
      1998 - Subsec. (f)(5). Pub. L. 105-353 substituted "class of
    persons" for "class or persons".
      1993 - Subsec. (a)(2)(ii). Pub. L. 103-202, Sec. 109(b)(1),
    inserted "The order granting registration shall not be effective
    until such government securities broker or government securities
    dealer has become a member of a national securities exchange
    registered under section 78f of this title, or a securities
    association registered under section 78o-3 of this title, unless
    the Commission has exempted such government securities broker or
    government securities dealer, by rule or order, from such
    membership." before "The Commission may extend".
      Subsec. (a)(4). Pub. L. 103-202, Sec. 108(2), added par. (4).
    Former par. (4) redesignated (5).
      Pub. L. 103-202, Sec. 103(b)(1), inserted ", other than
    subsection (d)(3) of this section," after "subsection (a), (b), or
    (d) of this section".
      Subsec. (a)(5). Pub. L. 103-202, Sec. 108(1), redesignated par.
    (4) as (5).
      Subsec. (b)(3) to (7). Pub. L. 103-202, Sec. 106(a), added par.
    (3) and redesignated former pars. (3) to (6) as (4) to (7),
    respectively.
      Subsec. (d)(2). Pub. L. 103-202, Sec. 109(c), amended par. (2)
    generally. Prior to amendment, par. (2) read as follows:
    "Information received by any appropriate regulatory agency or the
    Secretary from or with respect to any government securities broker
    or government securities dealer or with respect to any person
    associated therewith may be made available by the Secretary or the
    recipient agency to the Commission, the Secretary, any appropriate
    regulatory agency, and any self-regulatory organization."
      Subsec. (d)(3). Pub. L. 103-202, Sec. 103(a), added par. (3).
      Subsec. (f). Pub. L. 103-202, Sec. 104(2), added subsec. (f).
    Former subsec. (f) redesignated (g).
      Subsec. (f)(2). Pub. L. 103-202, Sec. 103(b)(2), inserted ",
    other than subsection (d)(3) of this section" after "threatened
    violation of the provisions of this section" and "(except
    subsection (d)(3) of this section)" after "other than this
    section".
      Subsec. (g). Pub. L. 103-202, Sec. 104(1), redesignated subsec.
    (f) as (g).
      Pub. L. 103-202, Sec. 102, struck out subsec. (g) which read as
    follows:
      "(1) The authority of the Secretary to issue orders and to
    propose and adopt rules under this section shall terminate on
    October 1, 1991.
      "(2) All orders and rules - 
        "(A) which have been issued or adopted by the Secretary, and
        "(B) which are in effect on the date specified in paragraph
      (1),
    shall continue in effect according to their terms."
      1990 - Subsec. (b)(2) to (6). Pub. L. 101-432 added par. (2) and
    redesignated former pars. (2) to (5) as (3) to (6), respectively.
      Subsec. (c)(1)(A), (C). Pub. L. 101-550, Sec. 203(c)(1),
    substituted "(A), (D), (E), or (G)" for "(A), (D), or (E)".
      Subsec. (f)(2). Pub. L. 101-550, Sec. 203(c)(2), substituted "the
    rules or regulations under any such other provision, or
    investigations pursuant to section 78u(a)(2) of this title to
    assist a foreign securities authority" for "or the rules or
    regulations under any such other provision".
      1989 - Subsec. (f)(1). Pub. L. 101-73 substituted "Director of
    the Office of Thrift Supervision" for "Federal Home Loan Bank
    Board".
      1987 - Subsec. (a)(1)(B)(i). Pub. L. 100-181 substituted "When
    such" for "When".

                              EFFECTIVE DATE                          
      Title IV of Pub. L. 99-571 provided that:

      "SEC. 401. GENERAL EFFECTIVE DATES.
      "Except as provided in section 402, this Act [enacting section
    78o-5 of this title and section 9110 of Title 31, Money and
    Finance, amending sections 78c, 78o, 78o-3, 78q, 78w, 78y, 80a-9,
    and 80b-3 of this title and section 3121 of Title 31, and enacting
    provisions set out as notes under sections 78a and 78o-5 of this
    title] and the amendments made by this Act shall take effect 270
    days after the date of enactment of this Act [Oct. 28, 1986].

      "SEC. 402. EFFECTIVE DATE AND REQUIREMENTS FOR REGULATIONS.
      "Notwithstanding section 401, the Secretary of the Treasury and
    each appropriate regulatory agency shall, within 120 days after the
    date of enactment of this Act [Oct. 28, 1986], publish for notice
    and public comment such regulations as are initially required to
    implement this Act, which regulations shall become effective as
    temporary regulations 210 days after the date of enactment of this
    Act and as final regulations not later than 270 days after the date
    of enactment of this Act.

      "SEC. 403. REGISTRATION DATE.
      "No person may continue to act as a government securities broker
    or government securities dealer after 270 days after the date of
    enactment of this Act [Oct. 28, 1986] unless such person has been
    registered or has provided notice to the Commission or the
    appropriate regulatory agency as required by the amendment made by
    section 101 of this Act [enacting section 78o-5 of this title]."

                    TRANSITIONAL AND SAVINGS PROVISIONS                
      Section 301 of Pub. L. 99-571 provided that:
      "(a) Effect on Pending Administrative Proceedings. - The
    provisions of this Act [see Effective Date note above] shall not
    affect any proceedings pending on the effective date of this Act
    [see Effective Date note above].
      "(b) Effect on Pending Judicial Proceedings. - The provisions of
    this Act shall not affect suits commenced prior to the effective
    date of this Act, and in all such suits, proceedings shall be had,
    appeals taken, and judgments rendered in the same manner and effect
    as if this Act had not been enacted.
      "(c) Discretion of the Federal Reserve Bank of New York. -
    Nothing in this Act shall be construed to limit or impair the
    discretion or authority of the Federal Reserve Bank of New York to
    require reports or establish terms and conditions in connection
    with the Bank's relationship with any government securities broker
    or government securities dealer, including a primary dealer.
      "(d) Jurisdiction of the Commodity Futures Trading Commission. -
    Nothing in this Act affects the jurisdiction of the Commodity
    Futures Trading Commission as set forth in the Commodity Exchange
    Act [7 U.S.C. 1 et seq.] over trading of commodity futures
    contracts and options on such contracts involving government
    securities."

                      CONSTRUCTION OF 1993 AMENDMENT                  
      Section 111 of title I of Pub. L. 103-202 provided that:
      "(a) In General. - No provision of, or amendment made by, this
    title [amending this section and sections 78c, 78o, 78o-3, 78s, and
    78w of this title and enacting provisions set out as notes below]
    may be construed - 
        "(1) to govern the initial issuance of any public debt
      obligation, or
        "(2) to grant any authority to (or extend any authority of) the
      Securities and Exchange Commission, any appropriate regulatory
      agency, or a self-regulatory organization - 
          "(A) to prescribe any procedure, term, or condition of such
        initial issuance,
          "(B) to promulgate any rule or regulation governing such
        initial issuance, or
          "(C) to otherwise regulate in any manner such initial
        issuance.
      "(b) Exception. - Subsection (a) of this section shall not apply
    to the amendment made by section 110 of this Act [amending section
    78o of this title].
      "(c) Public Debt Obligation. - For purposes of this section, the
    term 'public debt obligation' means an obligation subject to the
    public debt limit established in section 3101 of title 31, United
    States Code."


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      Federal Savings and Loan Insurance Corporation abolished and
    functions transferred, see sections 401 to 406 of Pub. L. 101-73,
    set out as a note under section 1437 of Title 12, Banks and
    Banking.


-MISC2-
                          CONGRESSIONAL FINDINGS                      
      Section 101 of Pub. L. 103-202 provided that: "The Congress finds
    that - 
        "(1) the liquid and efficient operation of the government
      securities market is essential to facilitate government borrowing
      at the lowest possible cost to taxpayers;
        "(2) the fair and honest treatment of investors will strengthen
      the integrity and liquidity of the government securities market;
        "(3) rules promulgated by the Secretary of the Treasury
      pursuant to the Government Securities Act of 1986 [see Short
      Title of 1986 Amendment note set out under section 78a of this
      title] have worked well to protect investors from unregulated
      dealers and maintain the efficiency of the government securities
      market; and
        "(4) extending the authority of the Secretary and providing new
      authority will ensure the continued strength of the government
      securities market."

      Section 1(b) of Pub. L. 99-571 provided that: "The Congress finds
    that transactions in government securities are affected with a
    public interest which makes it necessary - 
        "(1) to provide for the integrity, stability, and efficiency of
      such transactions and of matters and practices related thereto;
        "(2) to impose adequate regulation of government securities
      brokers and government securities dealers generally; and
        "(3) to require appropriate financial responsibility,
      recordkeeping, reporting, and related regulatory requirements;
    in order to protect investors and to insure the maintenance of
    fair, honest, and liquid markets in such securities."

           STUDY OF REGULATORY SYSTEM FOR GOVERNMENT SECURITIES       
      Section 112 of title I of Pub. L. 103-202 provided that:
      "(a) Joint Study. - The Secretary of the Treasury, the Securities
    and Exchange Commission, and the Board of Governors of the Federal
    Reserve System shall - 
        "(1) with respect to any rules promulgated or amended after
      October 1, 1991, pursuant to section 15C of the Securities
      Exchange Act of 1934 [15 U.S.C. 78o-5] or any amendment made by
      this title [amending this section and sections 78c, 78o, 78o-3,
      78s, and 78w of this title], and any national securities
      association rule changes applicable principally to government
      securities transactions approved after October 1, 1991 - 
          "(A) evaluate the effectiveness of such rules in carrying out
        the purposes of such Act [15 U.S.C. 78a et seq.]; and
          "(B) evaluate the impact of any such rules on the efficiency
        and liquidity of the government securities market and the cost
        of funding the Federal debt;
        "(2) evaluate the effectiveness of surveillance and enforcement
      with respect to government securities, and the impact on such
      surveillance and enforcement of the availability of automated,
      time- sequenced records of essential information pertaining to
      trades in such securities; and
        "(3) submit to the Congress, not later than March 31, 1998, any
      recommendations they may consider appropriate concerning - 
          "(A) the regulation of government securities brokers and
        government securities dealers;
          "(B) the dissemination of information concerning quotations
        for and transactions in government securities;
          "(C) the prevention of sales practice abuses in connection
        with transactions in government securities; and
          "(D) such other matters as they consider appropriate.
      "(b) Treasury Study. - The Secretary of the Treasury, in
    consultation with the Securities and Exchange Commission, shall - 
        "(1) conduct a study of - 
          "(A) the identity and nature of the business of government
        securities brokers and government securities dealers that are
        registered with the Securities and Exchange Commission under
        section 15C of the Securities Exchange Act of 1934 [15 U.S.C.
        78o-5]; and
          "(B) the continuing need for, and regulatory and financial
        consequences of, a separate regulatory system for such
        government securities brokers and government securities
        dealers; and
        "(2) submit to the Congress, not later than 18 months after the
      date of enactment of this Act [Dec. 17, 1993], the Secretary's
      recommendations for change, if any, or such other recommendations
      as the Secretary considers appropriate."

     STUDIES AND RECOMMENDATIONS WITH RESPECT TO EXTENSION OF TREASURY
                                 AUTHORITY
      Section 103 of Pub. L. 99-571 directed Secretary of the Treasury,
    together with Securities and Exchange Commission and Board of
    Governors of the Federal Reserve System, to evaluate the
    effectiveness of the rules promulgated pursuant to 15 U.S.C. 78o-5
    in effecting the purposes of this chapter, and shall submit to
    Congress, not later than Oct. 1, 1990, their recommendation with
    respect to the extension of the Secretary's authority under 15
    U.S.C. 78o-5 and such other recommendations as they considered
    appropriate; and directed Comptroller General to conduct a study of
    the regulation of government securities brokers and government
    securities dealers pursuant to 15 U.S.C. 78o-5 and the
    effectiveness of the amendments made by this Act in protecting
    investors and in effecting the purposes described in 15 U.S.C. 78o-
    5(b)(2), and submit to Congress, not later than Mar. 31, 1990, his
    recommendations with respect to the extension of the Secretary's
    authority under 15 U.S.C. 78o-5 and such other recommendations as
    he considered appropriate.

-FOOTNOTE-
    (!1) See References in Text note below.

    (!2) See References in Text note below.

    (!3) So in original. Probably should be followed by a comma.


-End-



-CITE-
    15 USC Sec. 78o-6                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78o-6. Securities analysts and research reports

-STATUTE-
    (a) Analyst protections
      The Commission, or upon the authorization and direction of the
    Commission, a registered securities association or national
    securities exchange, shall have adopted, not later than 1 year
    after July 30, 2002, rules reasonably designed to address conflicts
    of interest that can arise when securities analysts recommend
    equity securities in research reports and public appearances, in
    order to improve the objectivity of research and provide investors
    with more useful and reliable information, including rules designed
    - 
        (1) to foster greater public confidence in securities research,
      and to protect the objectivity and independence of securities
      analysts, by - 
          (A) restricting the prepublication clearance or approval of
        research reports by persons employed by the broker or dealer
        who are engaged in investment banking activities, or persons
        not directly responsible for investment research, other than
        legal or compliance staff;
          (B) limiting the supervision and compensatory evaluation of
        securities analysts to officials employed by the broker or
        dealer who are not engaged in investment banking activities;
        and
          (C) requiring that a broker or dealer and persons employed by
        a broker or dealer who are involved with investment banking
        activities may not, directly or indirectly, retaliate against
        or threaten to retaliate against any securities analyst
        employed by that broker or dealer or its affiliates as a result
        of an adverse, negative, or otherwise unfavorable research
        report that may adversely affect the present or prospective
        investment banking relationship of the broker or dealer with
        the issuer that is the subject of the research report, except
        that such rules may not limit the authority of a broker or
        dealer to discipline a securities analyst for causes other than
        such research report in accordance with the policies and
        procedures of the firm;

        (2) to define periods during which brokers or dealers who have
      participated, or are to participate, in a public offering of
      securities as underwriters or dealers should not publish or
      otherwise distribute research reports relating to such securities
      or to the issuer of such securities;
        (3) to establish structural and institutional safeguards within
      registered brokers or dealers to assure that securities analysts
      are separated by appropriate informational partitions within the
      firm from the review, pressure, or oversight of those whose
      involvement in investment banking activities might potentially
      bias their judgment or supervision; and
        (4) to address such other issues as the Commission, or such
      association or exchange, determines appropriate.
    (b) Disclosure
      The Commission, or upon the authorization and direction of the
    Commission, a registered securities association or national
    securities exchange, shall have adopted, not later than 1 year
    after July 30, 2002, rules reasonably designed to require each
    securities analyst to disclose in public appearances, and each
    registered broker or dealer to disclose in each research report, as
    applicable, conflicts of interest that are known or should have
    been known by the securities analyst or the broker or dealer, to
    exist at the time of the appearance or the date of distribution of
    the report, including - 
        (1) the extent to which the securities analyst has debt or
      equity investments in the issuer that is the subject of the
      appearance or research report;
        (2) whether any compensation has been received by the
      registered broker or dealer, or any affiliate thereof, including
      the securities analyst, from the issuer that is the subject of
      the appearance or research report, subject to such exemptions as
      the Commission may determine appropriate and necessary to prevent
      disclosure by virtue of this paragraph of material non-public
      information regarding specific potential future investment
      banking transactions of such issuer, as is appropriate in the
      public interest and consistent with the protection of investors;
        (3) whether an issuer, the securities of which are recommended
      in the appearance or research report, currently is, or during the
      1-year period preceding the date of the appearance or date of
      distribution of the report has been, a client of the registered
      broker or dealer, and if so, stating the types of services
      provided to the issuer;
        (4) whether the securities analyst received compensation with
      respect to a research report, based upon (among any other
      factors) the investment banking revenues (either generally or
      specifically earned from the issuer being analyzed) of the
      registered broker or dealer; and
        (5) such other disclosures of conflicts of interest that are
      material to investors, research analysts, or the broker or dealer
      as the Commission, or such association or exchange, determines
      appropriate.
    (c) Definitions
      In this section - 
        (1) the term "securities analyst" means any associated person
      of a registered broker or dealer that is principally responsible
      for, and any associated person who reports directly or indirectly
      to a securities analyst in connection with, the preparation of
      the substance of a research report, whether or not any such
      person has the job title of "securities analyst"; and
        (2) the term "research report" means a written or electronic
      communication that includes an analysis of equity securities of
      individual companies or industries, and that provides information
      reasonably sufficient upon which to base an investment decision.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 15D, as added Pub. L. 107-
    204, title V, Sec. 501(a), July 30, 2002, 116 Stat. 791.)


-MISC1-
                           COMMISSION AUTHORITY                       
      Pub. L. 107-204, title V, Sec. 501(c), July 30, 2002, 116 Stat.
    793, provided that: "The Commission may promulgate and amend its
    regulations, or direct a registered securities association or
    national securities exchange to promulgate and amend its rules, to
    carry out section 15D of the Securities Exchange Act of 1934 [15
    U.S.C. 78o-6], as added by this section, as is necessary for the
    protection of investors and in the public interest."

-End-



-CITE-
    15 USC Sec. 78o-7                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78o-7. Registration of nationally recognized statistical
      rating organizations

-STATUTE-
    (a) Registration procedures
      (1) Application for registration
        (A) In general
          A credit rating agency that elects to be treated as a
        nationally recognized statistical rating organization for
        purposes of this chapter (in this section referred to as the
        "applicant"), shall furnish to the Commission an application
        for registration, in such form as the Commission shall require,
        by rule or regulation issued in accordance with subsection (n),
        and containing the information described in subparagraph (B).
        (B) Required information
          An application for registration under this section shall
        contain information regarding - 
            (i) credit ratings performance measurement statistics over
          short-term, mid-term, and long-term periods (as applicable)
          of the applicant;
            (ii) the procedures and methodologies that the applicant
          uses in determining credit ratings;
            (iii) policies or procedures adopted and implemented by the
          applicant to prevent the misuse, in violation of this chapter
          (or the rules and regulations hereunder), of material,
          nonpublic information;
            (iv) the organizational structure of the applicant;
            (v) whether or not the applicant has in effect a code of
          ethics, and if not, the reasons therefor;
            (vi) any conflict of interest relating to the issuance of
          credit ratings by the applicant;
            (vii) the categories described in any of clauses (i)
          through (v) of section 78c(a)(62)(B) of this title with
          respect to which the applicant intends to apply for
          registration under this section;
            (viii) on a confidential basis, a list of the 20 largest
          issuers and subscribers that use the credit rating services
          of the applicant, by amount of net revenues received
          therefrom in the fiscal year immediately preceding the date
          of submission of the application;
            (ix) on a confidential basis, as to each applicable
          category of obligor described in any of clauses (i) through
          (v) of section 78c(a)(62)(B) of this title, written
          certifications described in subparagraph (C), except as
          provided in subparagraph (D); and
            (x) any other information and documents concerning the
          applicant and any person associated with such applicant as
          the Commission, by rule, may prescribe as necessary or
          appropriate in the public interest or for the protection of
          investors.
        (C) Written certifications
          Written certifications required by subparagraph (B)(ix) - 
            (i) shall be provided from not fewer than 10 qualified
          institutional buyers, none of which is affiliated with the
          applicant;
            (ii) may address more than one category of obligors
          described in any of clauses (i) through (v) of section
          78c(a)(62)(B) of this title;
            (iii) shall include not fewer than 2 certifications for
          each such category of obligor; and
            (iv) shall state that the qualified institutional buyer - 
              (I) meets the definition of a qualified institutional
            buyer under section 78c(a)(64) of this title; and
              (II) has used the credit ratings of the applicant for at
            least the 3 years immediately preceding the date of the
            certification in the subject category or categories of
            obligors.
        (D) Exemption from certification requirement
          A written certification under subparagraph (B)(ix) is not
        required with respect to any credit rating agency which has
        received, or been the subject of, a no-action letter from the
        staff of the Commission prior to August 2, 2006, stating that
        such staff would not recommend enforcement action against any
        broker or dealer that considers credit ratings issued by such
        credit rating agency to be ratings from a nationally recognized
        statistical rating organization.
        (E) Limitation on liability of qualified institutional buyers
          No qualified institutional buyer shall be liable in any
        private right of action for any opinion or statement expressed
        in a certification made pursuant to subparagraph (B)(ix).
      (2) Review of application
        (A) Initial determination
          Not later than 90 days after the date on which the
        application for registration is furnished to the Commission
        under paragraph (1) (or within such longer period as to which
        the applicant consents) the Commission shall - 
            (i) by order, grant such registration for ratings in the
          subject category or categories of obligors, as described in
          clauses (i) through (v) of section 78c(a)(62)(B) of this
          title; or
            (ii) institute proceedings to determine whether
          registration should be denied.
        (B) Conduct of proceedings
          (i) Content
            Proceedings referred to in subparagraph (A)(ii) shall - 
              (I) include notice of the grounds for denial under
            consideration and an opportunity for hearing; and
              (II) be concluded not later than 120 days after the date
            on which the application for registration is furnished to
            the Commission under paragraph (1).
          (ii) Determination
            At the conclusion of such proceedings, the Commission, by
          order, shall grant or deny such application for registration.
          (iii) Extension authorized
            The Commission may extend the time for conclusion of such
          proceedings for not longer than 90 days, if it finds good
          cause for such extension and publishes its reasons for so
          finding, or for such longer period as to which the applicant
          consents.
        (C) Grounds for decision
          The Commission shall grant registration under this subsection
        - 
            (i) if the Commission finds that the requirements of this
          section are satisfied; and
            (ii) unless the Commission finds (in which case the
          Commission shall deny such registration) that - 
              (I) the applicant does not have adequate financial and
            managerial resources to consistently produce credit ratings
            with integrity and to materially comply with the procedures
            and methodologies disclosed under paragraph (1)(B) and with
            subsections (g), (h), (i), and (j); or
              (II) if the applicant were so registered, its
            registration would be subject to suspension or revocation
            under subsection (d).
      (3) Public availability of information
        Subject to section 78x of this title, the Commission shall, by
      rule, require a nationally recognized statistical rating
      organization, upon the granting of registration under this
      section, to make the information and documents submitted to the
      Commission in its completed application for registration, or in
      any amendment submitted under paragraph (1) or (2) of subsection
      (b), publicly available on its website, or through another
      comparable, readily accessible means, except as provided in
      clauses (viii) and (ix) of paragraph (1)(B).
    (b) Update of registration
      (1) Update
        Each nationally recognized statistical rating organization
      shall promptly amend its application for registration under this
      section if any information or document provided therein becomes
      materially inaccurate, except that a nationally recognized
      statistical rating organization is not required to amend - 
          (A) the information required to be furnished under subsection
        (a)(1)(B)(i) by furnishing information under this paragraph,
        but shall amend such information in the annual submission of
        the organization under paragraph (2) of this subsection; or
          (B) the certifications required to be provided under
        subsection (a)(1)(B)(ix) by furnishing information under this
        paragraph.
      (2) Certification
        Not later than 90 days after the end of each calendar year,
      each nationally recognized statistical rating organization shall
      furnish to the Commission an amendment to its registration, in
      such form as the Commission, by rule, may prescribe as necessary
      or appropriate in the public interest or for the protection of
      investors - 
          (A) certifying that the information and documents in the
        application for registration of such nationally recognized
        statistical rating organization (other than the certifications
        required under subsection (a)(1)(B)(ix)) continue to be
        accurate; and
          (B) listing any material change that occurred to such
        information or documents during the previous calendar year.
    (c) Accountability for ratings procedures
      (1) Authority
        The Commission shall have exclusive authority to enforce the
      provisions of this section in accordance with this chapter with
      respect to any nationally recognized statistical rating
      organization, if such nationally recognized statistical rating
      organization issues credit ratings in material contravention of
      those procedures relating to such nationally recognized
      statistical rating organization, including procedures relating to
      the prevention of misuse of nonpublic information and conflicts
      of interest, that such nationally recognized statistical rating
      organization - 
          (A) includes in its application for registration under
        subsection (a)(1)(B)(ii); or
          (B) makes and disseminates in reports pursuant to section
        78q(a) of this title or the rules and regulations thereunder.
      (2) Limitation
        The rules and regulations that the Commission may prescribe
      pursuant to this chapter, as they apply to nationally recognized
      statistical rating organizations, shall be narrowly tailored to
      meet the requirements of this chapter applicable to nationally
      recognized statistical rating organizations. Notwithstanding any
      other provision of law, neither the Commission nor any State (or
      political subdivision thereof) may regulate the substance of
      credit ratings or the procedures and methodologies by which any
      nationally recognized statistical rating organization determines
      credit ratings.
    (d) Censure, denial, or suspension of registration; notice and
      hearing
      The Commission, by order, shall censure, place limitations on the
    activities, functions, or operations of, suspend for a period not
    exceeding 12 months, or revoke the registration of any nationally
    recognized statistical rating organization if the Commission finds,
    on the record after notice and opportunity for hearing, that such
    censure, placing of limitations, suspension, or revocation is
    necessary for the protection of investors and in the public
    interest and that such nationally recognized statistical rating
    organization, or any person associated with such an organization,
    whether prior to or subsequent to becoming so associated - 
        (1) has committed or omitted any act, or is subject to an order
      or finding, enumerated in subparagraph (A), (D), (E), (H), or (G)
      of section 78o(b)(4) of this title, has been convicted of any
      offense specified in section 78o(b)(4)(B) of this title, or is
      enjoined from any action, conduct, or practice specified in
      subparagraph (C) of section 78o(b)(4) of this title, during the
      10-year period preceding the date of commencement of the
      proceedings under this subsection, or at any time thereafter;
        (2) has been convicted during the 10-year period preceding the
      date on which an application for registration is furnished to the
      Commission under this section, or at any time thereafter, of - 
          (A) any crime that is punishable by imprisonment for 1 or
        more years, and that is not described in section 78o(b)(4)(B)
        of this title; or
          (B) a substantially equivalent crime by a foreign court of
        competent jurisdiction;

        (3) is subject to any order of the Commission barring or
      suspending the right of the person to be associated with a
      nationally recognized statistical rating organization;
        (4) fails to furnish the certifications required under
      subsection (b)(2); or
        (5) fails to maintain adequate financial and managerial
      resources to consistently produce credit ratings with integrity.
    (e) Termination of registration
      (1) Voluntary withdrawal
        A nationally recognized statistical rating organization may,
      upon such terms and conditions as the Commission may establish as
      necessary in the public interest or for the protection of
      investors, withdraw from registration by furnishing a written
      notice of withdrawal to the Commission.
      (2) Commission authority
        In addition to any other authority of the Commission under this
      chapter, if the Commission finds that a nationally recognized
      statistical rating organization is no longer in existence or has
      ceased to do business as a credit rating agency, the Commission,
      by order, shall cancel the registration under this section of
      such nationally recognized statistical rating organization.
    (f) Representations
      (1) Ban on representations of sponsorship by United States or
        agency thereof
        It shall be unlawful for any nationally recognized statistical
      rating organization to represent or imply in any manner
      whatsoever that such nationally recognized statistical rating
      organization has been designated, sponsored, recommended, or
      approved, or that the abilities or qualifications thereof have in
      any respect been passed upon, by the United States or any agency,
      officer, or employee thereof.
      (2) Ban on representation as NRSRO of unregistered credit rating
        agencies
        It shall be unlawful for any credit rating agency that is not
      registered under this section as a nationally recognized
      statistical rating organization to state that such credit rating
      agency is a nationally recognized statistical rating organization
      registered under this chapter.
      (3) Statement of registration under Securities Exchange Act of
        1934 provisions
        No provision of paragraph (1) shall be construed to prohibit a
      statement that a nationally recognized statistical rating
      organization is a nationally recognized statistical rating
      organization under this chapter, if such statement is true in
      fact and if the effect of such registration is not
      misrepresented.
    (g) Prevention of misuse of nonpublic information
      (1) Organization policies and procedures
        Each nationally recognized statistical rating organization
      shall establish, maintain, and enforce written policies and
      procedures reasonably designed, taking into consideration the
      nature of the business of such nationally recognized statistical
      rating organization, to prevent the misuse in violation of this
      chapter, or the rules or regulations hereunder, of material,
      nonpublic information by such nationally recognized statistical
      rating organization or any person associated with such nationally
      recognized statistical rating organization.
      (2) Commission authority
        The Commission shall issue final rules in accordance with
      subsection (n) to require specific policies or procedures that
      are reasonably designed to prevent misuse in violation of this
      chapter (or the rules or regulations hereunder) of material,
      nonpublic information.
    (h) Management of conflicts of interest
      (1) Organization policies and procedures
        Each nationally recognized statistical rating organization
      shall establish, maintain, and enforce written policies and
      procedures reasonably designed, taking into consideration the
      nature of the business of such nationally recognized statistical
      rating organization and affiliated persons and affiliated
      companies thereof, to address and manage any conflicts of
      interest that can arise from such business.
      (2) Commission authority
        The Commission shall issue final rules in accordance with
      subsection (n) to prohibit, or require the management and
      disclosure of, any conflicts of interest relating to the issuance
      of credit ratings by a nationally recognized statistical rating
      organization, including, without limitation, conflicts of
      interest relating to - 
          (A) the manner in which a nationally recognized statistical
        rating organization is compensated by the obligor, or any
        affiliate of the obligor, for issuing credit ratings or
        providing related services;
          (B) the provision of consulting, advisory, or other services
        by a nationally recognized statistical rating organization, or
        any person associated with such nationally recognized
        statistical rating organization, to the obligor, or any
        affiliate of the obligor;
          (C) business relationships, ownership interests, or any other
        financial or personal interests between a nationally recognized
        statistical rating organization, or any person associated with
        such nationally recognized statistical rating organization, and
        the obligor, or any affiliate of the obligor;
          (D) any affiliation of a nationally recognized statistical
        rating organization, or any person associated with such
        nationally recognized statistical rating organization, with any
        person that underwrites the securities or money market
        instruments that are the subject of a credit rating; and
          (E) any other potential conflict of interest, as the
        Commission deems necessary or appropriate in the public
        interest or for the protection of investors.
    (i) Prohibited conduct
      (1) Prohibited acts and practices
        The Commission shall issue final rules in accordance with
      subsection (n) to prohibit any act or practice relating to the
      issuance of credit ratings by a nationally recognized statistical
      rating organization that the Commission determines to be unfair,
      coercive, or abusive, including any act or practice relating to -
      
          (A) conditioning or threatening to condition the issuance of
        a credit rating on the purchase by the obligor or an affiliate
        thereof of other services or products, including pre-credit
        rating assessment products, of the nationally recognized
        statistical rating organization or any person associated with
        such nationally recognized statistical rating organization;
          (B) lowering or threatening to lower a credit rating on, or
        refusing to rate, securities or money market instruments issued
        by an asset pool or as part of any asset-backed or mortgage-
        backed securities transaction, unless a portion of the assets
        within such pool or part of such transaction, as applicable,
        also is rated by the nationally recognized statistical rating
        organization; or
          (C) modifying or threatening to modify a credit rating or
        otherwise departing from its adopted systematic procedures and
        methodologies in determining credit ratings, based on whether
        the obligor, or an affiliate of the obligor, purchases or will
        purchase the credit rating or any other service or product of
        the nationally recognized statistical rating organization or
        any person associated with such organization.
      (2) Rule of construction
        Nothing in paragraph (1), or in any rules or regulations
      adopted thereunder, may be construed to modify, impair, or
      supersede the operation of any of the antitrust laws (as defined
      in section 12 of this title, except that such term includes
      section 45 of this title, to the extent that such section 45
      applies to unfair methods of competition).
    (j) Designation of compliance officer
      Each nationally recognized statistical rating organization shall
    designate an individual responsible for administering the policies
    and procedures that are required to be established pursuant to
    subsections (g) and (h), and for ensuring compliance with the
    securities laws and the rules and regulations thereunder, including
    those promulgated by the Commission pursuant to this section.
    (k) Statements of financial condition
      Each nationally recognized statistical rating organization shall,
    on a confidential basis, furnish to the Commission, at intervals
    determined by the Commission, such financial statements, certified
    (if required by the rules or regulations of the Commission) by an
    independent public accountant, and information concerning its
    financial condition, as the Commission, by rule, may prescribe as
    necessary or appropriate in the public interest or for the
    protection of investors.
    (l) Sole method of registration
      (1) In general
        On and after the effective date of this section, a credit
      rating agency may only be registered as a nationally recognized
      statistical rating organization for any purpose in accordance
      with this section.
      (2) Prohibition on reliance on no-action relief
        On and after the effective date of this section - 
          (A) an entity that, before that date, received advice,
        approval, or a no-action letter from the Commission or staff
        thereof to be treated as a nationally recognized statistical
        rating organization pursuant to the Commission rule at section
        240.15c3-1 of title 17, Code of Federal Regulations, may
        represent itself or act as a nationally recognized statistical
        rating organization only - 
            (i) during Commission consideration of the application, if
          such entity has furnished an application for registration
          under this section; and
            (ii) on and after the date of approval of its application
          for registration under this section; and

          (B) the advice, approval, or no-action letter described in
        subparagraph (A) shall be void.
      (3) Notice to other agencies
        Not later than 30 days after September 29, 2006, the Commission
      shall give notice of the actions undertaken pursuant to this
      section to each Federal agency which employs in its rules and
      regulations the term "nationally recognized statistical rating
      organization" (as that term is used under Commission rule 15c3-1
      (17 C.F.R. 240.15c3-1), as in effect on September 29, 2006).
    (m) Rules of construction
      (1) No waiver of rights, privileges, or defenses
        Registration under and compliance with this section does not
      constitute a waiver of, or otherwise diminish, any right,
      privilege, or defense that a nationally recognized statistical
      rating organization may otherwise have under any provision of
      State or Federal law, including any rule, regulation, or order
      thereunder.
      (2) No private right of action
        Nothing in this section may be construed as creating any
      private right of action, and no report furnished by a nationally
      recognized statistical rating organization in accordance with
      this section or section 78q of this title shall create a private
      right of action under section 78r of this title or any other
      provision of law.
    (n) Regulations
      (1) New provisions
        Such rules and regulations as are required by this section or
      are otherwise necessary to carry out this section, including the
      application form required under subsection (a) - 
          (A) shall be issued by the Commission in final form, not
        later than 270 days after September 29, 2006; and
          (B) shall become effective not later than 270 days after
        September 29, 2006.
      (2) Review of existing regulations
        Not later than 270 days after September 29, 2006, the
      Commission shall - 
          (A) review its existing rules and regulations which employ
        the term "nationally recognized statistical rating
        organization" or "NRSRO"; and
          (B) amend or revise such rules and regulations in accordance
        with the purposes of this section, as the Commission may
        prescribe as necessary or appropriate in the public interest or
        for the protection of investors.
    (o) NRSROs subject to Commission authority
      (1) In general
        No provision of the laws of any State or political subdivision
      thereof requiring the registration, licensing, or qualification
      as a credit rating agency or a nationally recognized statistical
      rating organization shall apply to any nationally recognized
      statistical rating organization or person employed by or working
      under the control of a nationally recognized statistical rating
      organization.
      (2) Limitation
        Nothing in this subsection prohibits the securities commission
      (or any agency or office performing like functions) of any State
      from investigating and bringing an enforcement action with
      respect to fraud or deceit against any nationally recognized
      statistical rating organization or person associated with a
      nationally recognized statistical rating organization.
    (p) Applicability
      This section, other than subsection (n), which shall apply on
    September 29, 2006, shall apply on the earlier of - 
        (1) the date on which regulations are issued in final form
      under subsection (n)(1); or
        (2) 270 days after September 29, 2006.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 15E, as added Pub. L. 109-
    291, Sec. 4(a), Sept. 29, 2006, 120 Stat. 1329.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a)(1)(A), (B)(iii), (c),
    (e)(2), (f)(2), (3), and (g), was in the original "this title". See
    References in Text note set out under section 78a of this title.
      The Securities Exchange Act of 1934, referred to in subsec.
    (f)(3), is act June 6, 1934, ch. 404, 48 Stat. 881, as amended,
    which is classified principally to this chapter (Sec. 78a et seq.).
    For complete classification of this Act to the Code, see section
    78a of this title and Tables.


-MISC1-
                                 FINDINGS                             
      Pub. L. 109-291, Sec. 2, Sept. 29, 2006, 120 Stat. 1327, provided
    that: "Upon the basis of facts disclosed by the record and report
    of the Securities and Exchange Commission made pursuant to section
    702 of the Sarbanes-Oxley Act of 2002 [Pub. L. 107-204] (116 Stat.
    797), hearings before the Committee on Banking, Housing, and Urban
    Affairs of the Senate and the Committee on Financial Services of
    the House of Representatives during the 108th and 109th Congresses,
    comment letters to the concept releases and proposed rules of the
    Commission, and facts otherwise disclosed and ascertained, Congress
    finds that credit rating agencies are of national importance, in
    that, among other things - 
        "(1) their ratings, publications, writings, analyses, and
      reports are furnished and distributed, and their contracts,
      subscription agreements, and other arrangements with clients are
      negotiated and performed, by the use of the mails and other means
      and instrumentalities of interstate commerce;
        "(2) their ratings, publications, writings, analyses, and
      reports customarily relate to the purchase and sale of securities
      traded on securities exchanges and in interstate over-the-counter
      markets, securities issued by companies engaged in business in
      interstate commerce, and securities issued by national banks and
      member banks of the Federal Reserve System;
        "(3) the foregoing transactions occur in such volume as
      substantially to affect interstate commerce, the securities
      markets, the national banking system, and the national economy;
        "(4) the oversight of such credit rating agencies serves the
      compelling interest of investor protection;
        "(5) the 2 largest credit rating agencies serve the vast
      majority of the market, and additional competition is in the
      public interest; and
        "(6) the Commission has indicated that it needs statutory
      authority to oversee the credit rating industry."

             SECURITIES AND EXCHANGE COMMISSION ANNUAL REPORT         
      Pub. L. 109-291, Sec. 6, Sept. 29, 2006, 120 Stat. 1338, provided
    that: "The Commission shall submit an annual report to the
    Committee on Banking, Housing, and Urban Affairs of the Senate and
    the Committee on Financial Services of the House of Representatives
    that, with respect to the year to which the report relates - 
        "(1) identifies applicants for registration under section 15E
      of the Securities Exchange Act of 1934 [15 U.S.C. 78o-7], as
      added by this Act;
        "(2) specifies the number of and actions taken on such
      applications; and
        "(3) specifies the views of the Commission on the state of
      competition, transparency, and conflicts of interest among
      nationally recognized statistical rating organizations."

-CROSS-
                                DEFINITIONS                            
      Pub. L. 109-291, Sec. 3(b), Sept. 29, 2006, 120 Stat. 1328,
    provided that: "As used in this Act [see Short Title of 2006
    Amendment note set out under section 78a of this title] - 
        "(1) the term 'Commission' means the Securities and Exchange
      Commission; and
        "(2) the term 'nationally recognized statistical rating
      organization' has the same meaning as in section 3(a)(62) of the
      Securities Exchange Act of 1934 [15 U.S.C. 78c(a)(62)], as added
      by this Act."

-End-



-CITE-
    15 USC Sec. 78p                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78p. Directors, officers, and principal stockholders

-STATUTE-
    (a) Disclosures required
      (1) Directors, officers, and principal stockholders required to
        file
        Every person who is directly or indirectly the beneficial owner
      of more than 10 percent of any class of any equity security
      (other than an exempted security) which is registered pursuant to
      section 78l of this title, or who is a director or an officer of
      the issuer of such security, shall file the statements required
      by this subsection with the Commission (and, if such security is
      registered on a national securities exchange, also with the
      exchange).
      (2) Time of filing
        The statements required by this subsection shall be filed - 
          (A) at the time of the registration of such security on a
        national securities exchange or by the effective date of a
        registration statement filed pursuant to section 78l(g) of this
        title;
          (B) within 10 days after he or she becomes such beneficial
        owner, director, or officer;
          (C) if there has been a change in such ownership, or if such
        person shall have purchased or sold a security-based swap
        agreement (as defined in section 206(b) (!1) of the Gramm-Leach-
        Bliley Act (15 U.S.C. 78c note)) involving such equity
        security, before the end of the second business day following
        the day on which the subject transaction has been executed, or
        at such other time as the Commission shall establish, by rule,
        in any case in which the Commission determines that such 2-day
        period is not feasible.

      (3) Contents of statements
        A statement filed - 
          (A) under subparagraph (A) or (B) of paragraph (2) shall
        contain a statement of the amount of all equity securities of
        such issuer of which the filing person is the beneficial owner;
        and
          (B) under subparagraph (C) of such paragraph shall indicate
        ownership by the filing person at the date of filing, any such
        changes in such ownership, and such purchases and sales of the
        security-based swap agreements as have occurred since the most
        recent such filing under such subparagraph.
      (4) Electronic filing and availability
        Beginning not later than 1 year after July 30, 2002 - 
          (A) a statement filed under subparagraph (C) of paragraph (2)
        shall be filed electronically;
          (B) the Commission shall provide each such statement on a
        publicly accessible Internet site not later than the end of the
        business day following that filing; and
          (C) the issuer (if the issuer maintains a corporate website)
        shall provide that statement on that corporate website, not
        later than the end of the business day following that filing.
    (b) Profits from purchase and sale of security within six months
      For the purpose of preventing the unfair use of information which
    may have been obtained by such beneficial owner, director, or
    officer by reason of his relationship to the issuer, any profit
    realized by him from any purchase and sale, or any sale and
    purchase, of any equity security of such issuer (other than an
    exempted security) or a security-based swap agreement (as defined
    in section 206B of the Gramm-Leach-Bliley Act) involving any such
    equity security within any period of less than six months, unless
    such security or security-based swap agreement was acquired in good
    faith in connection with a debt previously contracted, shall inure
    to and be recoverable by the issuer, irrespective of any intention
    on the part of such beneficial owner, director, or officer in
    entering into such transaction of holding the security or security-
    based swap agreement purchased or of not repurchasing the security
    or security-based swap agreement sold for a period exceeding six
    months. Suit to recover such profit may be instituted at law or in
    equity in any court of competent jurisdiction by the issuer, or by
    the owner of any security of the issuer in the name and in behalf
    of the issuer if the issuer shall fail or refuse to bring such suit
    within sixty days after request or shall fail diligently to
    prosecute the same thereafter; but no such suit shall be brought
    more than two years after the date such profit was realized. This
    subsection shall not be construed to cover any transaction where
    such beneficial owner was not such both at the time of the purchase
    and sale, or the sale and purchase, of the security or security-
    based swap agreement (as defined in section 206B of the Gramm-
    Leach-Bliley Act) involved, or any transaction or transactions
    which the Commission by rules and regulations may exempt as not
    comprehended within the purpose of this subsection.
    (c) Conditions for sale of security by beneficial owner, director,
      or officer
      It shall be unlawful for any such beneficial owner, director, or
    officer, directly or indirectly, to sell any equity security of
    such issuer (other than an exempted security), if the person
    selling the security or his principal (1) does not own the security
    sold, or (2) if owning the security, does not deliver it against
    such sale within twenty days thereafter, or does not within five
    days after such sale deposit it in the mails or other usual
    channels of transportation; but no person shall be deemed to have
    violated this subsection if he proves that notwithstanding the
    exercise of good faith he was unable to make such delivery or
    deposit within such time, or that to do so would cause undue
    inconvenience or expense.
    (d) Securities held in investment account, transactions in ordinary
      course of business, and establishment of primary or secondary
      market
      The provisions of subsection (b) of this section shall not apply
    to any purchase and sale, or sale and purchase, and the provisions
    of subsection (c) of this section shall not apply to any sale, of
    an equity security not then or theretofore held by him in an
    investment account, by a dealer in the ordinary course of his
    business and incident to the establishment or maintenance by him of
    a primary or secondary market (otherwise than on a national
    securities exchange or an exchange exempted from registration under
    section 78e of this title) for such security. The Commission may,
    by such rules and regulations as it deems necessary or appropriate
    in the public interest, define and prescribe terms and conditions
    with respect to securities held in an investment account and
    transactions made in the ordinary course of business and incident
    to the establishment or maintenance of a primary or secondary
    market.
    (e) Application of section to foreign or domestic arbitrage
      transactions
      The provisions of this section shall not apply to foreign or
    domestic arbitrage transactions unless made in contravention of
    such rules and regulations as the Commission may adopt in order to
    carry out the purposes of this section.
    (f) Treatment of transactions in security futures products
      The provisions of this section shall apply to ownership of and
    transactions in security futures products.
    (g) Limitation on Commission authority
      The authority of the Commission under this section with respect
    to security-based swap agreements (as defined in section 206B of
    the Gramm-Leach-Bliley Act) shall be subject to the restrictions
    and limitations of section 78c-1(b) of this title.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 16, 48 Stat. 896; Pub. L. 88-
    467, Sec. 8, Aug. 20, 1964, 78 Stat. 579; Pub. L. 106-554, Sec.
    1(a)(5) [title II, Sec. 208(b)(3), title III, Sec. 303(g), (h)],
    Dec. 21, 2000, 114 Stat. 2763, 2763A-435, 2763A-455, 2763A-456;
    Pub. L. 107-204, title IV, Sec. 403(a), July 30, 2002, 116 Stat.
    788.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      Section 206(b) of the Gramm-Leach-Bliley Act, referred to in
    subsec. (a)(2)(C), probably means section 206B of Pub. L. 106-102,
    which is set out in a note under section 78c of this title.
      Section 206B of the Gramm-Leach-Bliley Act, referred to in
    subsecs. (b) and (g), is section 206B of Pub. L. 106-102, which is
    set out in a note under section 78c of this title.


-MISC1-
                                AMENDMENTS                            
      2002 - Pub. L. 107-204 reenacted section catchline without
    change, added heading and text of subsec. (a), and struck out
    former subsec. (a) which read as follows: "Every person who is
    directly or indirectly the beneficial owner of more than 10 per
    centum of any class of any equity security (other than an exempted
    security) which is registered pursuant to section 78l of this
    title, or who is a director or an officer of the issuer of such
    security, shall file, at the time of the registration of such
    security on a national securities exchange or by the effective date
    of a registration statement filed pursuant to section 78l(g) of
    this title, or within ten days after he becomes such beneficial
    owner, director, or officer, a statement with the Commission (and,
    if such security is registered on a national securities exchange,
    also with the exchange) of the amount of all equity securities of
    such issuer of which he is the beneficial owner, and within ten
    days after the close of each calendar month thereafter, if there
    has been a change in such ownership or if such person shall have
    purchased or sold a security-based swap agreement (as defined in
    section 206B of the Gramm-Leach-Bliley Act) involving such equity
    security during such month, shall file with the Commission (and if
    such security is registered on a national securities exchange,
    shall also file with the exchange), a statement indicating his
    ownership at the close of the calendar month and such changes in
    his ownership and such purchases and sales of such security-based
    swap agreements as have occurred during such calendar month."
      2000 - Subsecs. (a), (b). Pub. L. 106-554, Sec. 1(a)(5) [title
    III, Sec. 303(g)], amended subsecs. (a) and (b) generally, revising
    provisions to extend application to security-based swap agreements.
      Subsec. (f). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    208(b)(3)], added subsec. (f).
      Subsec. (g). Pub. L. 106-554, Sec. 1(a)(5) [title III, Sec.
    303(h)], added subsec. (g).
      1964 - Subsec. (a). Pub. L. 88-467, Sec. 8(a), substituted
    "registered pursuant to section 78l of this title" for "registered
    on a national securities exchange", "Commission (and, if such
    security is registered on a national securities exchange, also with
    the exchange)" for "exchange (and a duplicate original thereof with
    the Commission)", "a change" for "any change", and "Commission (and
    if such security is registered on a national securities exchange,
    shall also file with the exchange) a statement" for "exchange a
    statement (and a duplicate original thereof with the Commission)",
    and inserted "on a national securities exchange or by the effective
    date of a registration statement filed pursuant to section 78l(g)
    of this title" after "registration of such security".
      Subsecs. (d), (e). Pub. L. 88-467, Sec. 8(b), added subsec. (d)
    and redesignated former subsec. (d) as (e).

                     EFFECTIVE DATE OF 2002 AMENDMENT                 
      Pub. L. 107-204, title IV, Sec. 403(b), July 30, 2002, 116 Stat.
    789, provided that: "The amendment made by this section [amending
    this section] shall be effective 30 days after the date of the
    enactment of this Act [July 30, 2002]."

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see section
    13 of Pub. L. 88-467, set out as a note under section 78c of this
    title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-FOOTNOTE-
    (!1) See References in Text note below.


-End-



-CITE-
    15 USC Sec. 78q                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78q. Records and reports

-STATUTE-
    (a) Rules and regulations
      (1) Every national securities exchange, member thereof, broker or
    dealer who transacts a business in securities through the medium of
    any such member, registered securities association, registered
    broker or dealer, registered municipal securities dealer,
    registered securities information processor, registered transfer
    agent, nationally recognized statistical rating organization, and
    registered clearing agency and the Municipal Securities Rulemaking
    Board shall make and keep for prescribed periods such records,
    furnish such copies thereof, and make and disseminate such reports
    as the Commission, by rule, prescribes as necessary or appropriate
    in the public interest, for the protection of investors, or
    otherwise in furtherance of the purposes of this chapter. Any
    report that a nationally recognized statistical rating organization
    is required by Commission rules under this paragraph to make and
    disseminate to the Commission shall be deemed furnished to the
    Commission.
      (2) Every registered clearing agency shall also make and keep for
    prescribed periods such records, furnish such copies thereof, and
    make and disseminate such reports, as the appropriate regulatory
    agency for such clearing agency, by rule, prescribes as necessary
    or appropriate for the safeguarding of securities and funds in the
    custody or control of such clearing agency or for which it is
    responsible.
      (3) Every registered transfer agent shall also make and keep for
    prescribed periods such records, furnish such copies thereof, and
    make such reports as the appropriate regulatory agency for such
    transfer agent, by rule, prescribes as necessary or appropriate in
    furtherance of the purposes of section 78q-1 of this title.
    (b) Records subject to examination
      (1) Procedures for cooperation with other agencies
        All records of persons described in subsection (a) of this
      section are subject at any time, or from time to time, to such
      reasonable periodic, special, or other examinations by
      representatives of the Commission and the appropriate regulatory
      agency for such persons as the Commission or the appropriate
      regulatory agency for such persons deems necessary or appropriate
      in the public interest, for the protection of investors, or
      otherwise in furtherance of the purposes of this chapter:
      Provided, however, That the Commission shall, prior to conducting
      any such examination of a - 
          (A) registered clearing agency, registered transfer agent, or
        registered municipal securities dealer for which it is not the
        appropriate regulatory agency, give notice to the appropriate
        regulatory agency for such clearing agency, transfer agent, or
        municipal securities dealer of such proposed examination and
        consult with such appropriate regulatory agency concerning the
        feasibility and desirability of coordinating such examination
        with examinations conducted by such appropriate regulatory
        agency with a view to avoiding unnecessary regulatory
        duplication or undue regulatory burdens for such clearing
        agency, transfer agent, or municipal securities dealer; or
          (B) broker or dealer registered pursuant to section
        78o(b)(11) of this title, exchange registered pursuant to
        section 78f(g) of this title, or national securities
        association registered pursuant to section 78o-3(k) of this
        title gives notice to the Commodity Futures Trading Commission
        of such proposed examination and consults with the Commodity
        Futures Trading Commission concerning the feasibility and
        desirability of coordinating such examination with examinations
        conducted by the Commodity Futures Trading Commission in order
        to avoid unnecessary regulatory duplication or undue regulatory
        burdens for such broker or dealer or exchange.
      (2) Furnishing data and reports to CFTC
        The Commission shall notify the Commodity Futures Trading
      Commission of any examination conducted of any broker or dealer
      registered pursuant to section 78o(b)(11) of this title, exchange
      registered pursuant to section 78f(g) of this title, or national
      securities association registered pursuant to section 78o-3(k) of
      this title and, upon request, furnish to the Commodity Futures
      Trading Commission any examination report and data supplied to,
      or prepared by, the Commission in connection with such
      examination.
      (3) Use of CFTC reports
        Prior to conducting an examination under paragraph (1), the
      Commission shall use the reports of examinations, if the
      information available therein is sufficient for the purposes of
      the examination, of - 
          (A) any broker or dealer registered pursuant to section
        78o(b)(11) of this title;
          (B) exchange (!1) registered pursuant to section 78f(g) of
        this title; or

          (C) national (!2) securities association registered pursuant
        to section 78o-3(k) of this title;


      that is made by the Commodity Futures Trading Commission, a
      national securities association registered pursuant to section
      78o-3(k) of this title, or an exchange registered pursuant to
      section 78f(g) of this title.
      (4) Rules of construction
        (A) Notwithstanding any other provision of this subsection, the
      records of a broker or dealer registered pursuant to section
      78o(b)(11) of this title, an exchange registered pursuant to
      section 78f(g) of this title, or a national securities
      association registered pursuant to section 78o-3(k) of this title
      described in this subparagraph shall not be subject to routine
      periodic examinations by the Commission.
        (B) Any recordkeeping rules adopted under this subsection for a
      broker or dealer registered pursuant to section 78o(b)(11) of
      this title, an exchange registered pursuant to section 78f(g) of
      this title, or a national securities association registered
      pursuant to section 78o-3(k) of this title shall be limited to
      records with respect to persons, accounts, agreements, contracts,
      and transactions involving security futures products.
        (C) Nothing in the proviso in paragraph (1) shall be construed
      to impair or limit (other than by the requirement of prior
      consultation) the power of the Commission under this subsection
      to examine any clearing agency, transfer agent, or municipal
      securities dealer or to affect in any way the power of the
      Commission under any other provision of this chapter or otherwise
      to inspect, examine, or investigate any such clearing agency,
      transfer agent, or municipal securities dealer.
    (c) Copies of reports filed with other regulatory agencies
      (1) Every clearing agency, transfer agent, and municipal
    securities dealer for which the Commission is not the appropriate
    regulatory agency shall (A) file with the appropriate regulatory
    agency for such clearing agency, transfer agent, or municipal
    securities dealer a copy of any application, notice, proposal,
    report, or document filed with the Commission by reason of its
    being a clearing agency, transfer agent, or municipal securities
    dealer and (B) file with the Commission a copy of any application,
    notice, proposal, report, or document filed with such appropriate
    regulatory agency by reason of its being a clearing agency,
    transfer agent, or municipal securities dealer. The Municipal
    Securities Rulemaking Board shall file with each agency enumerated
    in section 78c(a)(34)(A) of this title copies of every proposed
    rule change filed with the Commission pursuant to section 78s(b) of
    this title.
      (2) The appropriate regulatory agency for a clearing agency,
    transfer agent, or municipal securities dealer for which the
    Commission is not the appropriate regulatory agency shall file with
    the Commission notice of the commencement of any proceeding and a
    copy of any order entered by such appropriate regulatory agency
    against any clearing agency, transfer agent, municipal securities
    dealer, or person associated with a transfer agent or municipal
    securities dealer, and the Commission shall file with such
    appropriate regulatory agency, if any, notice of the commencement
    of any proceeding and a copy of any order entered by the Commission
    against the clearing agency, transfer agent, or municipal
    securities dealer, or against any person associated with a transfer
    agent or municipal securities dealer for which the agency is the
    appropriate regulatory agency.
      (3) The Commission and the appropriate regulatory agency for a
    clearing agency, transfer agent, or municipal securities dealer for
    which the Commission is not the appropriate regulatory agency shall
    each notify the other and make a report of any examination
    conducted by it of such clearing agency, transfer agent, or
    municipal securities dealer, and, upon request, furnish to the
    other a copy of such report and any data supplied to it in
    connection with such examination.
      (4) The Commission or the appropriate regulatory agency may
    specify that documents required to be filed pursuant to this
    subsection with the Commission or such agency, respectively, may be
    retained by the originating clearing agency, transfer agent, or
    municipal securities dealer, or filed with another appropriate
    regulatory agency. The Commission or the appropriate regulatory
    agency (as the case may be) making such a specification shall
    continue to have access to the document on request.
    (d) Self-regulatory organizations
      (1) The Commission, by rule or order, as it deems necessary or
    appropriate in the public interest and for the protection of
    investors, to foster cooperation and coordination among self-
    regulatory organizations, or to remove impediments to and foster
    the development of a national market system and national system for
    the clearance and settlement of securities transactions, may - 
        (A) with respect to any person who is a member of or
      participant in more than one self-regulatory organization,
      relieve any such self-regulatory organization of any
      responsibility under this chapter (i) to receive regulatory
      reports from such person, (ii) to examine such person for
      compliance, or to enforce compliance by such person, with
      specified provisions of this chapter, the rules and regulations
      thereunder, and its own rules, or (iii) to carry out other
      specified regulatory functions with respect to such person, and
        (B) allocate among self-regulatory organizations the authority
      to adopt rules with respect to matters as to which, in the
      absence of such allocation, such self-regulatory organizations
      share authority under this chapter.

    In making any such rule or entering any such order, the Commission
    shall take into consideration the regulatory capabilities and
    procedures of the self-regulatory organizations, availability of
    staff, convenience of location, unnecessary regulatory duplication,
    and such other factors as the Commission may consider germane to
    the protection of investors, cooperation and coordination among
    self-regulatory organizations, and the development of a national
    market system and a national system for the clearance and
    settlement of securities transactions. The Commission, by rule or
    order, as it deems necessary or appropriate in the public interest
    and for the protection of investors, may require any self-
    regulatory organization relieved of any responsibility pursuant to
    this paragraph, and any person with respect to whom such
    responsibility relates, to take such steps as are specified in any
    such rule or order to notify customers of, and persons doing
    business with, such person of the limited nature of such self-
    regulatory organization's responsibility for such person's acts,
    practices, and course of business.
      (2) A self-regulatory organization shall furnish copies of any
    report of examination of any person who is a member of or a
    participant in such self-regulatory organization to any other self-
    regulatory organization of which such person is a member or in
    which such person is a participant upon the request of such person,
    such other self-regulatory organization, or the Commission.
    (e) Balance sheet and income statement; other financial statements
      and information
      (1)(A) Every registered broker or dealer shall annually file with
    the Commission a balance sheet and income statement certified by a
    registered public accounting firm, prepared on a calendar or fiscal
    year basis, and such other financial statements (which shall, as
    the Commission specifies, be certified) and information concerning
    its financial condition as the Commission, by rule may prescribe as
    necessary or appropriate in the public interest or for the
    protection of investors.
      (B) Every registered broker and dealer shall annually send to its
    customers its certified balance sheet and such other financial
    statements and information concerning its financial condition as
    the Commission, by rule, may prescribe pursuant to subsection (a)
    of this section.
      (C) The Commission, by rule or order, may conditionally or
    unconditionally exempt any registered broker or dealer, or class of
    such brokers or dealers, from any provision of this paragraph if
    the Commission determines that such exemption is consistent with
    the public interest and the protection of investors.
      (2) The Commission, by rule, as it deems necessary or appropriate
    in the public interest or for the protection of investors, may
    prescribe the form and content of financial statements filed
    pursuant to this chapter and the accounting principles and
    accounting standards used in their preparation.
    (f) Missing, lost, counterfeit, and stolen securities
      (1) Every national securities exchange, member thereof,
    registered securities association, broker, dealer, municipal
    securities dealer, government securities broker, government
    securities dealer, registered transfer agent, registered clearing
    agency, participant therein, member of the Federal Reserve System,
    and bank whose deposits are insured by the Federal Deposit
    Insurance Corporation shall - 
        (A) report to the Commission or other person designated by the
      Commission and, in the case of securities issued pursuant to
      chapter 31 of title 31, to the Secretary of the Treasury such
      information about missing, lost, counterfeit, or stolen
      securities, in such form and within such time as the Commission,
      by rule, determines is necessary or appropriate in the public
      interest or for the protection of investors; such information
      shall be available on request for a reasonable fee, to any such
      exchange, member, association, broker, dealer, municipal
      securities dealer, government securities broker, government
      securities dealer, transfer agent, clearing agency, participant,
      member of the Federal Reserve System, or insured bank, and such
      other persons as the Commission, by rule, designates; and
        (B) make such inquiry with respect to information reported
      pursuant to this subsection as the Commission, by rule,
      prescribes as necessary or appropriate in the public interest or
      for the protection of investors, to determine whether securities
      in their custody or control, for which they are responsible, or
      in which they are effecting, clearing, or settling a transaction
      have been reported as missing, lost, counterfeit, or stolen.

      (2) Every member of a national securities exchange, broker,
    dealer, registered transfer agent, and registered clearing agency,
    shall require that each of its partners, directors, officers, and
    employees be fingerprinted and shall submit such fingerprints, or
    cause the same to be submitted, to the Attorney General of the
    United States for identification and appropriate processing. The
    Commission, by rule, may exempt from the provisions of this
    paragraph upon specified terms, conditions, and periods, any class
    of partners, directors, officers, or employees of any such member,
    broker, dealer, transfer agent, or clearing agency, if the
    Commission finds that such action is not inconsistent with the
    public interest or the protection of investors. Notwithstanding any
    other provision of law, in providing identification and processing
    functions, the Attorney General shall provide the Commission and
    self-regulatory organizations designated by the Commission with
    access to all criminal history record information.
      (3)(A) In order to carry out the authority under paragraph (1)
    above, the Commission or its designee may enter into agreement with
    the Attorney General to use the facilities of the National Crime
    Information Center ("NCIC") to receive, store, and disseminate
    information in regard to missing, lost, counterfeit, or stolen
    securities and to permit direct inquiry access to NCIC's file on
    such securities for the financial community.
      (B) In order to carry out the authority under paragraph (1) of
    this subsection, the Commission or its designee and the Secretary
    of the Treasury shall enter into an agreement whereby the
    Commission or its designee will receive, store, and disseminate
    information in the possession, and which comes into the possession,
    of the Department of the Treasury in regard to missing, lost,
    counterfeit, or stolen securities.
      (4) In regard to paragraphs (1), (2), and (3), above insofar as
    such paragraphs apply to any bank or member of the Federal Reserve
    System, the Commission may delegate its authority to:
        (A) the Comptroller of the Currency as to national banks;
        (B) the Federal Reserve Board in regard to any member of the
      Federal Reserve System which is not a national bank; and
        (C) the Federal Deposit Insurance Corporation for any State
      bank which is insured by the Federal Deposit Insurance
      Corporation but which is not a member of the Federal Reserve
      System.

      (5) The Commission shall encourage the insurance industry to
    require their insured to report expeditiously instances of missing,
    lost, counterfeit, or stolen securities to the Commission or to
    such other person as the Commission may, by rule, designate to
    receive such information.
    (g) Persons extending credit
      Any broker, dealer, or other person extending credit who is
    subject to the rules and regulations prescribed by the Board of
    Governors of the Federal Reserve System pursuant to this chapter
    shall make such reports to the Board as it may require as necessary
    or appropriate to enable it to perform the functions conferred upon
    it by this chapter. If any such broker, dealer, or other person
    shall fail to make any such report or fail to furnish full
    information therein, or, if in the judgment of the Board it is
    otherwise necessary, such broker, dealer, or other person shall
    permit such inspections to be made by the Board with respect to the
    business operations of such broker, dealer, or other person as the
    Board may deem necessary to enable it to obtain the required
    information.
    (h) Risk assessment for holding company systems
      (1) Obligations to obtain, maintain, and report information
        Every person who is (A) a registered broker or dealer, or (B) a
      registered municipal securities dealer for which the Commission
      is the appropriate regulatory agency, shall obtain such
      information and make and keep such records as the Commission by
      rule prescribes concerning the registered person's policies,
      procedures, or systems for monitoring and controlling financial
      and operational risks to it resulting from the activities of any
      of its associated persons, other than a natural person. Such
      records shall describe, in the aggregate, each of the financial
      and securities activities conducted by, and the customary sources
      of capital and funding of, those of its associated persons whose
      business activities are reasonably likely to have a material
      impact on the financial or operational condition of such
      registered person, including its net capital, its liquidity, or
      its ability to conduct or finance its operations. The Commission,
      by rule, may require summary reports of such information to be
      filed with the Commission no more frequently than quarterly.
      (2) Authority to require additional information
        If, as a result of adverse market conditions or based on
      reports provided to the Commission pursuant to paragraph (1) of
      this subsection or other available information, the Commission
      reasonably concludes that it has concerns regarding the financial
      or operational condition of (A) any registered broker or dealer,
      or (B) any registered municipal securities dealer, government
      securities broker, or government securities dealer for which the
      Commission is the appropriate regulatory agency, the Commission
      may require the registered person to make reports concerning the
      financial and securities activities of any of such person's
      associated persons, other than a natural person, whose business
      activities are reasonably likely to have a material impact on the
      financial or operational condition of such registered person. The
      Commission, in requiring reports pursuant to this paragraph,
      shall specify the information required, the period for which it
      is required, the time and date on which the information must be
      furnished, and whether the information is to be furnished
      directly to the Commission or to a self-regulatory organization
      with primary responsibility for examining the registered person's
      financial and operational condition.
      (3) Special provisions with respect to associated persons subject
        to Federal banking agency regulation
        (A) Cooperation in implementation
          In developing and implementing reporting requirements
        pursuant to paragraph (1) of this subsection with respect to
        associated persons subject to examination by or reporting
        requirements of a Federal banking agency, the Commission shall
        consult with and consider the views of each such Federal
        banking agency. If a Federal banking agency comments in writing
        on a proposed rule of the Commission under this subsection that
        has been published for comment, the Commission shall respond in
        writing to such written comment before adopting the proposed
        rule. The Commission shall, at the request of the Federal
        banking agency, publish such comment and response in the
        Federal Register at the time of publishing the adopted rule.
        (B) Use of banking agency reports
          A registered broker, dealer, or municipal securities dealer
        shall be in compliance with any recordkeeping or reporting
        requirement adopted pursuant to paragraph (1) of this
        subsection concerning an associated person that is subject to
        examination by or reporting requirements of a Federal banking
        agency if such broker, dealer, or municipal securities dealer
        utilizes for such recordkeeping or reporting requirement copies
        of reports filed by the associated person with the Federal
        banking agency pursuant to section 161 of title 12, subchapter
        VIII of chapter 3 of title 12, section 1817(a) of title 12,
        section 1467a(b) of title 12, or section 1847 of title 12. The
        Commission may, however, by rule adopted pursuant to paragraph
        (1), require any broker, dealer, or municipal securities dealer
        filing such reports with the Commission to obtain, maintain, or
        report supplemental information if the Commission makes an
        explicit finding that such supplemental information is
        necessary to inform the Commission regarding potential risks to
        such broker, dealer, or municipal securities dealer. Prior to
        requiring any such supplemental information, the Commission
        shall first request the Federal banking agency to expand its
        reporting requirements to include such information.
        (C) Procedure for requiring additional information
          Prior to making a request pursuant to paragraph (2) of this
        subsection for information with respect to an associated person
        that is subject to examination by or reporting requirements of
        a Federal banking agency, the Commission shall - 
            (i) notify such agency of the information required with
          respect to such associated person; and
            (ii) consult with such agency to determine whether the
          information required is available from such agency and for
          other purposes, unless the Commission determines that any
          delay resulting from such consultation would be inconsistent
          with ensuring the financial and operational condition of the
          broker, dealer, municipal securities dealer, government
          securities broker, or government securities dealer or the
          stability or integrity of the securities markets.
        (D) Exclusion for examination reports
          Nothing in this subsection shall be construed to permit the
        Commission to require any registered broker or dealer, or any
        registered municipal securities dealer, government securities
        broker, or government securities dealer for which the
        Commission is the appropriate regulatory agency, to obtain,
        maintain, or furnish any examination report of any Federal
        banking agency or any supervisory recommendations or analysis
        contained therein.
        (E) Confidentiality of information provided
          No information provided to or obtained by the Commission from
        any Federal banking agency pursuant to a request by the
        Commission under subparagraph (C) of this paragraph regarding
        any associated person which is subject to examination by or
        reporting requirements of a Federal banking agency may be
        disclosed to any other person (other than a self-regulatory
        organization), without the prior written approval of the
        Federal banking agency. Nothing in this subsection shall
        authorize the Commission to withhold information from Congress,
        or prevent the Commission from complying with a request for
        information from any other Federal department or agency
        requesting the information for purposes within the scope of its
        jurisdiction, or complying with an order of a court of the
        United States in an action brought by the United States or the
        Commission.
        (F) Notice to banking agencies concerning financial and
          operational condition concerns
          The Commission shall notify the Federal banking agency of any
        concerns of the Commission regarding significant financial or
        operational risks resulting from the activities of any
        registered broker or dealer, or any registered municipal
        securities dealer, government securities broker, or government
        securities dealer for which the Commission is the appropriate
        regulatory agency, to any associated person thereof which is
        subject to examination by or reporting requirements of the
        Federal banking agency.
        (G) "Federal banking agency" defined
          For purposes of this paragraph, the term "Federal banking
        agency" shall have the same meaning as the term "appropriate
        Federal bank agency" in section 1813(q) of title 12.
      (4) Exemptions
        The Commission by rule or order may exempt any person or class
      of persons, under such terms and conditions and for such periods
      as the Commission shall provide in such rule or order, from the
      provisions of this subsection, and the rules thereunder. In
      granting such exemptions, the Commission shall consider, among
      other factors - 
          (A) whether information of the type required under this
        subsection is available from a supervisory agency (as defined
        in section 3401(6) (!3) of title 12), a State insurance
        commission or similar State agency, the Commodity Futures
        Trading Commission, or a similar foreign regulator;

          (B) the primary business of any associated person;
          (C) the nature and extent of domestic or foreign regulation
        of the associated person's activities;
          (D) the nature and extent of the registered person's
        securities activities; and
          (E) with respect to the registered person and its associated
        persons, on a consolidated basis, the amount and proportion of
        assets devoted to, and revenues derived from, activities in the
        United States securities markets.
      (5) Authority to limit disclosure of information
        Notwithstanding any other provision of law, the Commission
      shall not be compelled to disclose any information required to be
      reported under this subsection, or any information supplied to
      the Commission by any domestic or foreign regulatory agency that
      relates to the financial or operational condition of any
      associated person of a registered broker, dealer, government
      securities broker, government securities dealer, or municipal
      securities dealer. Nothing in this subsection shall authorize the
      Commission to withhold information from Congress, or prevent the
      Commission from complying with a request for information from any
      other Federal department or agency requesting the information for
      purposes within the scope of its jurisdiction, or complying with
      an order of a court of the United States in an action brought by
      the United States or the Commission. 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. In
      prescribing regulations to carry out the requirements of this
      subsection, the Commission shall designate information described
      in or obtained pursuant to subparagraph (B) or (C) of paragraph
      (3) of this subsection as confidential information for purposes
      of section 78x(b)(2) of this title.
    (i) Investment bank holding companies
      (1) Elective supervision of an investment bank holding company
        not having a bank or savings association affiliate
        (A) In general
          An investment bank holding company that is not - 
            (i) an affiliate of an insured bank (other than an
          institution described in subparagraph (D), (F), or (G) of
          section 1841(c)(2), or held under section 1843(f), of title
          12), or a savings association;
            (ii) a foreign bank, foreign company, or company that is
          described in section 3106(a) of title 12; or
            (iii) a foreign bank that controls, directly or indirectly,
          a corporation chartered under section 25A of the Federal
          Reserve Act [12 U.S.C. 611 et seq.],

        may elect to become supervised by filing with the Commission a
        notice of intention to become supervised, pursuant to
        subparagraph (B) of this paragraph. Any investment bank holding
        company filing such a notice shall be supervised in accordance
        with this section and comply with the rules promulgated by the
        Commission applicable to supervised investment bank holding
        companies.
        (B) Notification of status as a supervised investment bank
          holding company
          An investment bank holding company that elects under
        subparagraph (A) to become supervised by the Commission shall
        file with the Commission a written notice of intention to
        become supervised by the Commission in such form and containing
        such information and documents concerning such investment bank
        holding company as the Commission, by rule, may prescribe as
        necessary or appropriate in furtherance of the purposes of this
        section. Unless the Commission finds that such supervision is
        not necessary or appropriate in furtherance of the purposes of
        this section, such supervision shall become effective 45 days
        after the date of receipt of such written notice by the
        Commission or within such shorter time period as the
        Commission, by rule or order, may determine.
      (2) Election not to be supervised by the Commission as an
        investment bank holding company
        (A) Voluntary withdrawal
          A supervised investment bank holding company that is
        supervised pursuant to paragraph (1) may, upon such terms and
        conditions as the Commission deems necessary or appropriate,
        elect not to be supervised by the Commission by filing a
        written notice of withdrawal from Commission supervision. Such
        notice shall not become effective until 1 year after receipt by
        the Commission, or such shorter or longer period as the
        Commission deems necessary or appropriate to ensure effective
        supervision of the material risks to the supervised investment
        bank holding company and to the affiliated broker or dealer, or
        to prevent evasion of the purposes of this section.
        (B) Discontinuation of Commission supervision
          If the Commission finds that any supervised investment bank
        holding company that is supervised pursuant to paragraph (1) is
        no longer in existence or has ceased to be an investment bank
        holding company, or if the Commission finds that continued
        supervision of such a supervised investment bank holding
        company is not consistent with the purposes of this section,
        the Commission may discontinue the supervision pursuant to a
        rule or order, if any, promulgated by the Commission under this
        section.
      (3) Supervision of investment bank holding companies
        (A) Recordkeeping and reporting
          (i) In general
            Every supervised investment bank holding company and each
          affiliate thereof shall make and keep for prescribed periods
          such records, furnish copies thereof, and make such reports,
          as the Commission may require by rule, in order to keep the
          Commission informed as to - 
              (I) the company's or affiliate's activities, financial
            condition, policies, systems for monitoring and controlling
            financial and operational risks, and transactions and
            relationships between any broker or dealer affiliate of the
            supervised investment bank holding company; and
              (II) the extent to which the company or affiliate has
            complied with the provisions of this chapter and
            regulations prescribed and orders issued under this
            chapter.
          (ii) Form and contents
            Such records and reports shall be prepared in such form and
          according to such specifications (including certification by
          a registered public accounting firm), as the Commission may
          require and shall be provided promptly at any time upon
          request by the Commission. Such records and reports may
          include - 
              (I) a balance sheet and income statement;
              (II) an assessment of the consolidated capital of the
            supervised investment bank holding company;
              (III) an independent auditor's report attesting to the
            supervised investment bank holding company's compliance
            with its internal risk management and internal control
            objectives; and
              (IV) reports concerning the extent to which the company
            or affiliate has complied with the provisions of this
            chapter and any regulations prescribed and orders issued
            under this chapter.
        (B) Use of existing reports
          (i) In general
            The Commission shall, to the fullest extent possible,
          accept reports in fulfillment of the requirements under this
          paragraph that the supervised investment bank holding company
          or its affiliates have been required to provide to another
          appropriate regulatory agency or self-regulatory
          organization.
          (ii) Availability
            A supervised investment bank holding company or an
          affiliate of such company shall provide to the Commission, at
          the request of the Commission, any report referred to in
          clause (i).
        (C) Examination authority
          (i) Focus of examination authority
            The Commission may make examinations of any supervised
          investment bank holding company and any affiliate of such
          company in order to - 
              (I) inform the Commission regarding - 
                (aa) the nature of the operations and financial
              condition of the supervised investment bank holding
              company and its affiliates;
                (bb) the financial and operational risks within the
              supervised investment bank holding company that may
              affect any broker or dealer controlled by such supervised
              investment bank holding company; and
                (cc) the systems of the supervised investment bank
              holding company and its affiliates for monitoring and
              controlling those risks; and

              (II) monitor compliance with the provisions of this
            subsection, provisions governing transactions and
            relationships between any broker or dealer affiliated with
            the supervised investment bank holding company and any of
            the company's other affiliates, and applicable provisions
            of subchapter II of chapter 53, title 31 (commonly referred
            to as the "Bank Secrecy Act") and regulations thereunder.
          (ii) Restricted focus of examinations
            The Commission shall limit the focus and scope of any
          examination of a supervised investment bank holding company
          to - 
              (I) the company; and
              (II) any affiliate of the company that, because of its
            size, condition, or activities, the nature or size of the
            transactions between such affiliate and any affiliated
            broker or dealer, or the centralization of functions within
            the holding company system, could, in the discretion of the
            Commission, have a materially adverse effect on the
            operational or financial condition of the broker or dealer.
          (iii) Deference to other examinations
            For purposes of this subparagraph, the Commission shall, to
          the fullest extent possible, use the reports of examination
          of an institution described in subparagraph (D), (F), or (G)
          of section 1841(c)(2), or held under section 1843(f), of
          title 12 made by the appropriate regulatory agency, or of a
          licensed insurance company made by the appropriate State
          insurance regulator.
      (4) Functional regulation of banking and insurance activities of
        supervised investment bank holding companies
        The Commission shall defer to - 
          (A) the appropriate regulatory agency with regard to all
        interpretations of, and the enforcement of, applicable banking
        laws relating to the activities, conduct, ownership, and
        operations of banks, and institutions described in subparagraph
        (D), (F), and (G) of section 1841(c)(2), or held under section
        1843(f), of title 12; and
          (B) the appropriate State insurance regulators with regard to
        all interpretations of, and the enforcement of, applicable
        State insurance laws relating to the activities, conduct, and
        operations of insurance companies and insurance agents.
      (5) Definitions
        For purposes of this subsection:
          (A) The term "investment bank holding company" means - 
            (i) any person other than a natural person that owns or
          controls one or more brokers or dealers; and
            (ii) the associated persons of the investment bank holding
          company.

          (B) The term "supervised investment bank holding company"
        means any investment bank holding company that is supervised by
        the Commission pursuant to this subsection.
          (C) The terms "affiliate", "bank", "bank holding company",
        "company", "control", and "savings association" have the same
        meanings as given in section 1841 of title 12.
          (D) The term "insured bank" has the same meaning as given in
        section 1813 of title 12.
          (E) The term "foreign bank" has the same meaning as given in
        section 3101(7) of title 12.
          (F) The terms "person associated with an investment bank
        holding company" and "associated person of an investment bank
        holding company" mean any person directly or indirectly
        controlling, controlled by, or under common control with, an
        investment bank holding company.
    (j) Authority to limit disclosure of information
      Notwithstanding any other provision of law, the Commission shall
    not be compelled to disclose any information required to be
    reported under subsection (h) or (i) of this section or any
    information supplied to the Commission by any domestic or foreign
    regulatory agency that relates to the financial or operational
    condition of any associated person of a broker or dealer,
    investment bank holding company, or any affiliate of an investment
    bank holding company. Nothing in this subsection shall authorize
    the Commission to withhold information from Congress, or prevent
    the Commission from complying with a request for information from
    any other Federal department or agency or any self-regulatory
    organization requesting the information for purposes within the
    scope of its jurisdiction, or complying with an order of a court of
    the United States in an action brought by the United States or the
    Commission. 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. In prescribing regulations to carry out the
    requirements of this subsection, the Commission shall designate
    information described in or obtained pursuant to subparagraphs (A),
    (B), and (C) of subsection (i)(5) (!4) of this section as
    confidential information for purposes of section 78x(b)(2) of this
    title.

    (k) Coordination of examining authorities
      (1) Elimination of duplication
        The Commission and the examining authorities, through
      cooperation and coordination of examination and oversight
      activities, shall eliminate any unnecessary and burdensome
      duplication in the examination process.
      (2) Coordination of examinations
        The Commission and the examining authorities shall share such
      information, including reports of examinations, customer
      complaint information, and other nonpublic regulatory
      information, as appropriate to foster a coordinated approach to
      regulatory oversight of brokers and dealers that are subject to
      examination by more than one examining authority.
      (3) Examinations for cause
        At any time, any examining authority may conduct an examination
      for cause of any broker or dealer subject to its jurisdiction.
      (4) Confidentiality
        (A) In general
          Section 78x of this title shall apply to the sharing of
        information in accordance with this subsection. The Commission
        shall take appropriate action under section 78x(c) of this
        title to ensure that such information is not inappropriately
        disclosed.
        (B) Appropriate disclosure not prohibited
          Nothing in this paragraph authorizes the Commission or any
        examining authority to withhold information from the Congress,
        or prevent the Commission or any examining authority from
        complying with a request for information from any other Federal
        department or agency requesting the information for purposes
        within the scope of its jurisdiction, or complying with an
        order of a court of the United States in an action brought by
        the United States or the Commission.
      (5) "Examining authority" defined
        For purposes of this subsection, the term "examining authority"
      means a self-regulatory organization registered with the
      Commission under this chapter (other than a registered clearing
      agency) with the authority to examine, inspect, and otherwise
      oversee the activities of a registered broker or dealer.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 17, 48 Stat. 897; May 27,
    1936, ch. 462, Sec. 4, 49 Stat. 1379; June 25, 1938, ch. 677, Sec.
    5, 52 Stat. 1076; Pub. L. 94-29, Sec. 14, June 4, 1975, 89 Stat.
    137; Pub. L. 99-571, title I, Sec. 102(h), (i), Oct. 28, 1986, 100
    Stat. 3219; Pub. L. 100-181, title III, Sec. 321, title VIII, Sec.
    801(b), Dec. 4, 1987, 101 Stat. 1257, 1265; Pub. L. 101-432, Sec.
    4(a), Oct. 16, 1990, 104 Stat. 966; Pub. L. 104-290, title I, Sec.
    108, Oct. 11, 1996, 110 Stat. 3425; Pub. L. 105-353, title III,
    Sec. 301(b)(5), Nov. 3, 1998, 112 Stat. 3236; Pub. L. 106-102,
    title II, Sec. 231(a), Nov. 12, 1999, 113 Stat. 1402; Pub. L. 106-
    554, Sec. 1(a)(5) [title II, Sec. 204], Dec. 21, 2000, 114 Stat.
    2763, 2763A-424; Pub. L. 107-204, title II, Sec. 205(c)(2), July
    30, 2002, 116 Stat. 774; Pub. L. 108-386, Sec. 8(f)(5), (6), Oct.
    30, 2004, 118 Stat. 2232; Pub. L. 109-291, Sec. 5, Sept. 29, 2006,
    120 Stat. 1338.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a)(1), (b), (d)(1)(A),
    (B), (e)(2), (g), (i)(3)(A)(ii)(IV), and (k)(5), was in the
    original "this title", and this chapter, referred to in subsec.
    (i)(3)(A)(i)(II), was in the original "this Act". See References in
    Text note set out under section 78a of this title.
      Subchapter VIII of chapter 3 of title 12, referred to in subsec.
    (h)(3)(B), was in the original "section 9 of the Federal Reserve
    Act", meaning section 9 of act Dec. 23, 1913, ch. 6, 38 Stat. 251,
    as amended, which is classified generally to subchapter VIII (Sec.
    321 et seq.) of chapter 3 of Title 12, Banks and Banking.
      Section 3401(6) of title 12, referred to in subsec. (h)(4)(A),
    was redesignated section 3401(7) of title 12 by Pub. L. 101-73,
    title IX, Sec. 941(1), Aug. 9, 1989, 103 Stat. 496.
      Section 25A of the Federal Reserve Act, referred to in subsec.
    (i)(1)(A)(iii), is classified to subchapter II (Sec. 611 et seq.)
    of chapter 6 of Title 12, Banks and Banking.
      The Bank Secrecy Act, referred to in subsec. (i)(3)(C)(i)(II), is
    also the popular name of title I of Pub. L. 91-508, Oct. 26, 1970,
    84 Stat. 1114, as amended, which is classified principally to
    chapter 21 (Sec. 1951 et seq.) of Title 12, Banks and Banking. For
    complete classification of this Act to the Code, see Short Title
    note set out under section 1951 of Title 12 and Tables.


-MISC1-
                                AMENDMENTS                            
      2006 - Subsec. (a)(1). Pub. L. 109-291 inserted "nationally
    recognized statistical rating organization," after "registered
    transfer agent," and inserted at end "Any report that a nationally
    recognized statistical rating organization is required by
    Commission rules under this paragraph to make and disseminate to
    the Commission shall be deemed furnished to the Commission."
      2004 - Subsec. (f)(4)(A). Pub. L. 108-386, Sec. 8(f)(5), struck
    out "and banks operating under the Code of Law for the District of
    Columbia" before semicolon.
      Subsec. (f)(4)(B). Pub. L. 108-386, Sec. 8(f)(6), struck out "or
    a bank operating under the Code of Law for the District of
    Columbia" before semicolon.
      2002 - Subsecs. (e)(1)(A), (i)(3)(A)(ii). Pub. L. 107-204
    substituted "a registered public accounting firm" for "an
    independent public accountant".
      2000 - Subsec. (b). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    204(5)], which directed amendment of subsec. (b) by adding at the
    end pars. (2) to (4)(B), was executed by making the addition after
    par. (1), to reflect the probable intent of Congress.
      Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec. 204(1) to (4),
    (6)], inserted subsec. heading, inserted par. (1) designation and
    heading before "All", substituted "prior to conducting any such
    examination of a - " for "prior to conducting any such examination
    of a", inserted subpar. (A) designation before "registered
    clearing", added subpar. (B), designated last sentence as par.
    (4)(C) and substituted "Nothing in the proviso in paragraph (1)"
    for "Nothing in the proviso to the preceding sentence".
      1999 - Subsecs. (i) to (k). Pub. L. 106-102 added subsecs. (i)
    and (j) and redesignated former subsec. (i) as (k).
      1998 - Subsec. (g). Pub. L. 105-353 substituted "Board of
    Governors of the Federal Reserve System" for "Federal Reserve
    Board" in first sentence.
      1996 - Subsec. (i). Pub. L. 104-290 added subsec. (i).
      1990 - Subsec. (h). Pub. L. 101-432 added subsec. (h).
      1987 - Subsec. (c)(2). Pub. L. 100-181, Sec. 321(1), substituted
    new par. (2) for former par. (2) which read as follows: "The
    appropriate regulatory agency for a clearing agency, transfer
    agent, or municipal securities dealer for which the Commission is
    not the appropriate regulatory agency shall file with the
    Commission notice of the commencement of any proceeding and a copy
    of any order entered by such appropriate regulatory agency against
    such clearing agency, transfer agent, or municipal securities
    dealer, and the Commission shall file with such appropriate
    regulatory agency notice of the commencement of any proceeding and
    a copy of any order entered by the Commission against such clearing
    agency, transfer agent, or municipal securities dealer."
      Subsec. (f)(1)(A). Pub. L. 100-181, Sec. 801(b), substituted
    "securities issued pursuant to chapter 31 of title 31" for
    "government securities".
      Subsec. (f)(2). Pub. L. 100-181, Sec. 321(2), inserted at end
    "Notwithstanding any other provision of law, in providing
    identification and processing functions, the Attorney General shall
    provide the Commission and self-regulatory organizations designated
    by the Commission with access to all criminal history record
    information."
      Subsec. (f)(3)(A). Pub. L. 100-181, Sec. 321(3), substituted
    "paragraph (1)" for "paragraphs (1) and (2)".
      1986 - Subsec. (c)(4). Pub. L. 99-571, Sec. 102(h), added par.
    (4).
      Subsec. (f)(1). Pub. L. 99-571, Sec. 102(i)(1), inserted
    "government securities broker, government securities dealer," in
    introductory provisions and in subpar. (A).
      Subsec. (f)(1)(A). Pub. L. 99-571, Sec. 102(i)(2), inserted "and,
    in the case of government securities, to the Secretary of the
    Treasury".
      Subsec. (f)(3). Pub. L. 99-571, Sec. 102(i)(3), designated
    existing provisions as subpar. (A) and added subpar. (B).
      1975 - Subsec. (a). Pub. L. 94-29 designated existing provisions
    as par. (1), expanded the coverage to require registered municipal
    securities dealers, the Municipal Securities Rulemaking Board,
    registered securities information processors, and registered
    clearing agencies to make and keep such records, to furnish copies
    thereof, and to make such reports as the Commission may prescribe
    and clarified the Commission's authority to require the
    dissemination of reports submitted pursuant to the rules of the
    Commission, and added pars. (2) and (3).
      Subsecs. (b) to (g). Pub. L. 94-29 added subsecs. (b) to (f) and
    redesignated former subsec. (b) as (g).
      1938 - Subsec. (a). Act June 25, 1938, inserted "every registered
    securities association".
      1936 - Subsec. (a). Act May 27, 1936, substituted "every broker
    or dealer registered pursuant to section 78o of this title" for
    "every broker or dealer making or creating a market for both the
    purchase and sale of securities through the use of the mails or of
    any means or instrumentality of interstate commerce".

                     EFFECTIVE DATE OF 2004 AMENDMENT                 
      Amendment by Pub. L. 108-386 effective Oct. 30, 2004, and, except
    as otherwise provided, applicable with respect to fiscal year 2005
    and each succeeding fiscal year, see sections 8(i) and 9 of Pub. L.
    108-386, set out as notes under section 321 of Title 12, Banks and
    Banking.

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Amendment by Pub. L. 99-571 effective 270 days after Oct. 28,
    1986, see section 401 of Pub. L. 99-571, set out as an Effective
    Date note under section 78o-5 of this title.

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-FOOTNOTE-
    (!1) So in original. Probably should be preceded by "an".

    (!2) So in original. Probably should be preceded by "a".

    (!3) See References in Text note below.

    (!4) So in original. Probably should be subsection "(i)(3)".


-End-



-CITE-
    15 USC Sec. 78q-1                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78q-1. National system for clearance and settlement of
      securities transactions

-STATUTE-
    (a) Congressional findings; facilitating establishment of system
      (1) The Congress finds that - 
        (A) The prompt and accurate clearance and settlement of
      securities transactions, including the transfer of record
      ownership and the safeguarding of securities and funds related
      thereto, are necessary for the protection of investors and
      persons facilitating transactions by and acting on behalf of
      investors.
        (B) Inefficient procedures for clearance and settlement impose
      unnecessary costs on investors and persons facilitating
      transactions by and acting on behalf of investors.
        (C) New data processing and communications techniques create
      the opportunity for more efficient, effective, and safe
      procedures for clearance and settlement.
        (D) The linking of all clearance and settlement facilities and
      the development of uniform standards and procedures for clearance
      and settlement will reduce unnecessary costs and increase the
      protection of investors and persons facilitating transactions by
      and acting on behalf of investors.

      (2)(A) The Commission is directed, therefore, having due regard
    for the public interest, the protection of investors, the
    safeguarding of securities and funds, and maintenance of fair
    competition among brokers and dealers, clearing agencies, and
    transfer agents, to use its authority under this chapter - 
        (i) to facilitate the establishment of a national system for
      the prompt and accurate clearance and settlement of transactions
      in securities (other than exempt securities); and
        (ii) to facilitate the establishment of linked or coordinated
      facilities for clearance and settlement of transactions in
      securities, securities options, contracts of sale for future
      delivery and options thereon, and commodity options;

    in accordance with the findings and to carry out the objectives set
    forth in paragraph (1) of this subsection.
      (B) The Commission shall use its authority under this chapter to
    assure equal regulation under this chapter of registered clearing
    agencies and registered transfer agents. In carrying out its
    responsibilities set forth in subparagraph (A)(ii) of this
    paragraph, the Commission shall coordinate with the Commodity
    Futures Trading Commission and consult with the Board of Governors
    of the Federal Reserve System.
    (b) Registration of clearing agencies; application; determinations
      by Commission requisite to registration of applicant as clearing
      agency; denial of participation; discipline; summary proceedings;
      exemption; facilities for handling derivatives
      (1) Except as otherwise provided in this section, it shall be
    unlawful for any clearing agency, unless registered in accordance
    with this subsection, directly or indirectly, to make use of the
    mails or any means or instrumentality of interstate commerce to
    perform the functions of a clearing agency with respect to any
    security (other than an exempted security). The Commission, by rule
    or order, upon its own motion or upon application, may
    conditionally or unconditionally exempt any clearing agency or
    security or any class of clearing agencies or securities from any
    provisions of this section or the rules or regulations thereunder,
    if the Commission finds that such exemption is consistent with the
    public interest, the protection of investors, and the purposes of
    this section, including the prompt and accurate clearance and
    settlement of securities transactions and the safeguarding of
    securities and funds. A clearing agency or transfer agent shall not
    perform the functions of both a clearing agency and a transfer
    agent unless such clearing agency or transfer agent is registered
    in accordance with this subsection and subsection (c) of this
    section.
      (2) A clearing agency may be registered under the terms and
    conditions hereinafter provided in this subsection and in
    accordance with the provisions of section 78s(a) of this title, by
    filing with the Commission an application for registration in such
    form as the Commission, by rule, may prescribe containing the rules
    of the clearing agency and such other information and documents as
    the Commission, by rule, may prescribe as necessary or appropriate
    in the public interest or for the prompt and accurate clearance and
    settlement of securities transactions.
      (3) A clearing agency shall not be registered unless the
    Commission determines that - 
        (A) Such clearing agency is so organized and has the capacity
      to be able to facilitate the prompt and accurate clearance and
      settlement of securities transactions and derivative agreements,
      contracts, and transactions for which it is responsible, to
      safeguard securities and funds in its custody or control or for
      which it is responsible, to comply with the provisions of this
      chapter and the rules and regulations thereunder, to enforce
      (subject to any rule or order of the Commission pursuant to
      section 78q(d) or 78s(g)(2) of this title) compliance by its
      participants with the rules of the clearing agency, and to carry
      out the purposes of this section.
        (B) Subject to the provisions of paragraph (4) of this
      subsection, the rules of the clearing agency provide that any (i)
      registered broker or dealer, (ii) other registered clearing
      agency, (iii) registered investment company, (iv) bank, (v)
      insurance company, or (vi) other person or class of persons as
      the Commission, by rule, may from time to time designate as
      appropriate to the development of a national system for the
      prompt and accurate clearance and settlement of securities
      transactions may become a participant in such clearing agency.
        (C) The rules of the clearing agency assure a fair
      representation of its shareholders (or members) and participants
      in the selection of its directors and administration of its
      affairs. (The Commission may determine that the representation of
      participants is fair if they are afforded a reasonable
      opportunity to acquire voting stock of the clearing agency,
      directly or indirectly, in reasonable proportion to their use of
      such clearing agency.)
        (D) The rules of the clearing agency provide for the equitable
      allocation of reasonable dues, fees, and other charges among its
      participants.
        (E) The rules of the clearing agency do not impose any schedule
      of prices, or fix rates or other fees, for services rendered by
      its participants.
        (F) The rules of the clearing agency are designed to promote
      the prompt and accurate clearance and settlement of securities
      transactions and, to the extent applicable, derivative
      agreements, contracts, and transactions, to assure the
      safeguarding of securities and funds which are in the custody or
      control of the clearing agency or for which it is responsible, to
      foster cooperation and coordination with persons engaged in the
      clearance and settlement of securities transactions, to remove
      impediments to and perfect the mechanism of a national system for
      the prompt and accurate clearance and settlement of securities
      transactions, and, in general, to protect investors and the
      public interest; and are not designed to permit unfair
      discrimination in the admission of participants or among
      participants in the use of the clearing agency, or to regulate by
      virtue of any authority conferred by this chapter matters not
      related to the purposes of this section or the administration of
      the clearing agency.
        (G) The rules of the clearing agency provide that (subject to
      any rule or order of the Commission pursuant to section 78q(d) or
      78s(g)(2) of this title) its participants shall be appropriately
      disciplined for violation of any provision of the rules of the
      clearing agency by expulsion, suspension, limitation of
      activities, functions, and operations, fine, censure, or any
      other fitting sanction.
        (H) The rules of the clearing agency are in accordance with the
      provisions of paragraph (5) of this subsection, and, in general,
      provide a fair procedure with respect to the disciplining of
      participants, the denial of participation to any person seeking
      participation therein, and the prohibition or limitation by the
      clearing agency of any person with respect to access to services
      offered by the clearing agency.
        (I) The rules of the clearing agency do not impose any burden
      on competition not necessary or appropriate in furtherance of the
      purposes of this chapter.

      (4)(A) A registered clearing agency may, and in cases in which
    the Commission, by order, directs as appropriate in the public
    interest shall, deny participation to any person subject to a
    statutory disqualification. A registered clearing agency shall file
    notice with the Commission not less than thirty days prior to
    admitting any person to participation, if the clearing agency knew,
    or in the exercise of reasonable care should have known, that such
    person was subject to a statutory disqualification. The notice
    shall be in such form and contain such information as the
    Commission, by rule, may prescribe as necessary or appropriate in
    the public interest or for the protection of investors.
      (B) A registered clearing agency may deny participation to, or
    condition the participation of, any person if such person does not
    meet such standards of financial responsibility, operational
    capability, experience, and competence as are prescribed by the
    rules of the clearing agency. A registered clearing agency may
    examine and verify the qualifications of an applicant to be a
    participant in accordance with procedures established by the rules
    of the clearing agency.
      (5)(A) In any proceeding by a registered clearing agency to
    determine whether a participant should be disciplined (other than a
    summary proceeding pursuant to subparagraph (C) of this paragraph),
    the clearing agency shall bring specific charges, notify such
    participant of, and give him an opportunity to defend against such
    charges, and keep a record. A determination by the clearing agency
    to impose a disciplinary sanction shall be supported by a statement
    setting forth - 
        (i) any act or practice in which such participant has been
      found to have engaged, or which such participant has been found
      to have omitted;
        (ii) the specific provisions of the rules of the clearing
      agency which any such act or practice, or omission to act, is
      deemed to violate; and
        (iii) the sanction imposed and the reasons therefor.

      (B) In any proceeding by a registered clearing agency to
    determine whether a person shall be denied participation or
    prohibited or limited with respect to access to services offered by
    the clearing agency, the clearing agency shall notify such person
    of, and give him an opportunity to be heard upon, the specific
    grounds for denial or prohibition or limitation under consideration
    and keep a record. A determination by the clearing agency to deny
    participation or prohibit or limit a person with respect to access
    to services offered by the clearing agency shall be supported by a
    statement setting forth the specific grounds on which the denial or
    prohibition or limitation is based.
      (C) A registered clearing agency may summarily suspend and close
    the accounts of a participant who (i) has been and is expelled or
    suspended from any self-regulatory organization, (ii) is in default
    of any delivery of funds or securities to the clearing agency, or
    (iii) is in such financial or operating difficulty that the
    clearing agency determines and so notifies the appropriate
    regulatory agency for such participant that such suspension and
    closing of accounts are necessary for the protection of the
    clearing agency, its participants, creditors, or investors. A
    participant so summarily suspended shall be promptly afforded an
    opportunity for a hearing by the clearing agency in accordance with
    the provisions of subparagraph (A) of this paragraph. The
    appropriate regulatory agency for such participant, by order, may
    stay any such summary suspension on its own motion or upon
    application by any person aggrieved thereby, if such appropriate
    regulatory agency determines summarily or after notice and
    opportunity for hearing (which hearing may consist solely of the
    submission of affidavits or presentation of oral arguments) that
    such stay is consistent with the public interest and protection of
    investors.
      (6) No registered clearing agency shall prohibit or limit access
    by any person to services offered by any participant therein.
      (7)(A) A clearing agency that is regulated directly or indirectly
    by the Commodity Futures Trading Commission through its association
    with a designated contract market for security futures products
    that is a national securities exchange registered pursuant to
    section 78f(g) of this title, and that would be required to
    register pursuant to paragraph (1) of this subsection only because
    it performs the functions of a clearing agency with respect to
    security futures products effected pursuant to the rules of the
    designated contract market with which such agency is associated, is
    exempted from the provisions of this section and the rules and
    regulations thereunder, except that if such a clearing agency
    performs the functions of a clearing agency with respect to a
    security futures product that is not cash settled, it must have
    arrangements in place with a registered clearing agency to effect
    the payment and delivery of the securities underlying the security
    futures product.
      (B) Any clearing agency that performs the functions of a clearing
    agency with respect to security futures products must coordinate
    with and develop fair and reasonable links with any and all other
    clearing agencies that perform the functions of a clearing agency
    with respect to security futures products, in order to permit, as
    of the compliance date (as defined in section 78f(h)(6)(C) (!1) of
    this title), security futures products to be purchased on one
    market and offset on another market that trades such products.

      (8) A registered clearing agency shall be permitted to provide
    facilities for the clearance and settlement of any derivative
    agreements, contracts, or transactions that are excluded from the
    Commodity Exchange Act [7 U.S.C. 1 et seq.], subject to the
    requirements of this section and to such rules and regulations as
    the Commission may prescribe as necessary or appropriate in the
    public interest, for the protection of investors, or otherwise in
    furtherance of the purposes of this chapter.
    (c) Registration of transfer agents
      (1) Except as otherwise provided in this section, it shall be
    unlawful for any transfer agent, unless registered in accordance
    with this section, directly or indirectly, to make use of the mails
    or any means or instrumentality of interstate commerce to perform
    the function of a transfer agent with respect to any security
    registered under section 78l of this title or which would be
    required to be registered except for the exemption from
    registration provided by subsection (g)(2)(B) or (g)(2)(G) of that
    section. The appropriate regulatory agency, by rule or order, upon
    its own motion or upon application, may conditionally or
    unconditionally exempt any person or security or class of persons
    or securities from any provision of this section or any rule or
    regulation prescribed under this section, if the appropriate
    regulatory agency finds (A) that such exemption is in the public
    interest and consistent with the protection of investors and the
    purposes of this section, including the prompt and accurate
    clearance and settlement of securities transactions and the
    safeguarding of securities and funds, and (B) the Commission does
    not object to such exemption.
      (2) A transfer agent may be registered by filing with the
    appropriate regulatory agency for such transfer agent an
    application for registration in such form and containing such
    information and documents concerning such transfer agent and any
    persons associated with the transfer agent as such appropriate
    regulatory agency may prescribe as necessary or appropriate in
    furtherance of the purposes of this section. Except as hereinafter
    provided, such registration shall become effective 45 days after
    receipt of such application by such appropriate regulatory agency
    or within such shorter period of time as such appropriate
    regulatory agency may determine.
      (3) The appropriate regulatory agency for a transfer agent, by
    order, shall deny registration to, censure, place limitations on
    the activities, functions, or operations of, suspend for a period
    not exceeding 12 months, or revoke the registration of such
    transfer agent, if such appropriate regulatory agency finds, on the
    record after notice and opportunity for hearing, that such denial,
    censure, placing of limitations, suspension, or revocation is in
    the public interest and that such transfer agent, whether prior or
    subsequent to becoming such, or any person associated with such
    transfer agent, whether prior or subsequent to becoming so
    associated - 
        (A) has committed or omitted any act, or is subject to an order
      or finding, enumerated in subparagraph (A), (D), (E), (H), or (G)
      of paragraph (4) of section 78o(b) of this title, has been
      convicted of any offense specified in subparagraph (B) of such
      paragraph (4) within ten years of the commencement of the
      proceedings under this paragraph, or is enjoined from any action,
      conduct, or practice specified in subparagraph (C) of such
      paragraph (4); or
        (B) is subject to an order entered pursuant to subparagraph (C)
      of paragraph (4) of this subsection barring or suspending the
      right of such person to be associated with a transfer agent.

      (4)(A) Pending final determination whether any registration by a
    transfer agent under this subsection shall be denied, the
    appropriate regulatory agency for such transfer agent, by order,
    may postpone the effective date of such registration for a period
    not to exceed fifteen days, but if, after notice and opportunity
    for hearing (which may consist solely of affidavits and oral
    arguments), it shall appear to such appropriate regulatory agency
    to be necessary or appropriate in the public interest or for the
    protection of investors to postpone the effective date of such
    registration until final determination, such appropriate regulatory
    agency shall so order. Pending final determination whether any
    registration under this subsection shall be revoked, such
    appropriate regulatory agency, by order, may suspend such
    registration, if such suspension appears to such appropriate
    regulatory agency, after notice and opportunity for hearing, to be
    necessary or appropriate in the public interest or for the
    protection of investors.
      (B) A registered transfer agent may, upon such terms and
    conditions as the appropriate regulatory agency for such transfer
    agent deems necessary or appropriate in the public interest, for
    the protection of investors, or in furtherance of the purposes of
    this section, withdraw from registration by filing a written notice
    of withdrawal with such appropriate regulatory agency. If such
    appropriate regulatory agency finds that any transfer agent for
    which it is the appropriate regulatory agency, is no longer in
    existence or has ceased to do business as a transfer agent, such
    appropriate regulatory agency, by order, shall cancel or deny the
    registration.
      (C) The appropriate regulatory agency for a transfer agent, by
    order, shall censure or place limitations on the activities or
    functions of any person associated, seeking to become associated,
    or, at the time of the alleged misconduct, associated or seeking to
    become associated with the transfer agent, or suspend for a period
    not exceeding twelve months or bar any such person from being
    associated with the transfer agent, if the appropriate regulatory
    agency finds, on the record after notice and opportunity for
    hearing, that such censure, placing of limitations, suspension, or
    bar is in the public interest and that such person has committed or
    omitted any act, or is subject to an order or finding, enumerated
    in subparagraph (A), (D), (E), (H), or (G) or (!2) paragraph (4) of
    section 78o(b) of this title, has been convicted of any offense
    specified in subparagraph (B) of such paragraph (4) within ten
    years of the commencement of the proceedings under this paragraph,
    or is enjoined from any action, conduct, or practice specified in
    subparagraph (C) of such paragraph (4). It shall be unlawful for
    any person as to whom such an order suspending or barring him from
    being associated with a transfer agent is in effect willfully to
    become, or to be, associated with a transfer agent without the
    consent of the appropriate regulatory agency that entered the order
    and the appropriate regulatory agency for that transfer agent. It
    shall be unlawful for any transfer agent to permit such a person to
    become, or remain, a person associated with it without the consent
    of such appropriate regulatory agencies, if the transfer agent
    knew, or in the exercise of reasonable care should have known, of
    such order. The Commission may establish, by rule, procedures by
    which a transfer agent reasonably can determine whether a person
    associated or seeking to become associated with it is subject to
    any such order, and may require, by rule, that any transfer agent
    comply with such procedures.

    (d) Activities of clearing agencies and transfer agents;
      enforcement by appropriate regulatory agencies
      (1) No registered clearing agency or registered transfer agent
    shall, directly or indirectly, engage in any activity as clearing
    agency or transfer agent in contravention of such rules and
    regulations (A) as the Commission may prescribe as necessary or
    appropriate in the public interest, for the protection of
    investors, or otherwise in furtherance of the purposes of this
    chapter, or (B) as the appropriate regulatory agency for such
    clearing agency or transfer agent may prescribe as necessary or
    appropriate for the safeguarding of securities and funds.
      (2) With respect to any clearing agency or transfer agent for
    which the Commission is not the appropriate regulatory agency, the
    appropriate regulatory agency for such clearing agency or transfer
    agent may, in accordance with section 1818 of title 12, enforce
    compliance by such clearing agency or transfer agent with the
    provisions of this section, sections 78q and 78s of this title, and
    the rules and regulations thereunder. For purposes of the preceding
    sentence, any violation of any such provision shall constitute
    adequate basis for the issuance of an order under section 1818(b)
    or 1818(c) of title 12, and the participants in any such clearing
    agency and the persons doing business with any such transfer agent
    shall be deemed to be "depositors" as that term is used in section
    1818(c) of title 12.
      (3)(A) With respect to any clearing agency or transfer agent for
    which the Commission is not the appropriate regulatory agency, the
    Commission and the appropriate regulatory agency for such clearing
    agency or transfer agent shall consult and cooperate with each
    other, and, as may be appropriate, with State banking authorities
    having supervision over such clearing agency or transfer agent
    toward the end that, to the maximum extent practicable, their
    respective regulatory responsibilities may be fulfilled and the
    rules and regulations applicable to such clearing agency or
    transfer agent may be in accord with both sound banking practices
    and a national system for the prompt and accurate clearance and
    settlement of securities transactions. In accordance with this
    objective - 
        (i) the Commission and such appropriate regulatory agency
      shall, at least fifteen days prior to the issuance for public
      comment of any proposed rule or regulation or adoption of any
      rule or regulation concerning such clearing agency or transfer
      agent, consult and request the views of the other; and
        (ii) such appropriate regulatory agency shall assume primary
      responsibility to examine and enforce compliance by such clearing
      agency or transfer agent with the provisions of this section and
      sections 78q and 78s of this title.

      (B) Nothing in the preceding subparagraph or elsewhere in this
    chapter shall be construed to impair or limit (other than by the
    requirement of notification) the Commission's authority to make
    rules under any provision of this chapter or to enforce compliance
    pursuant to any provision of this chapter by any clearing agency,
    transfer agent, or person associated with a transfer agent with the
    provisions of this chapter and the rules and regulations
    thereunder.
      (4) Nothing in this section shall be construed to impair the
    authority of any State banking authority or other State or Federal
    regulatory authority having jurisdiction over a person registered
    as a clearing agency, transfer agent, or person associated with a
    transfer agent, to make and enforce rules governing such person
    which are not inconsistent with this chapter and the rules and
    regulations thereunder.
      (5) A registered transfer agent may not, directly or indirectly,
    engage in any activity in connection with the guarantee of a
    signature of an endorser of a security, including the acceptance or
    rejection of such guarantee, in contravention of such rules and
    regulations as the Commission may prescribe as necessary or
    appropriate in the public interest, for the protection of
    investors, to facilitate the equitable treatment of financial
    institutions which issue such guarantees, or otherwise in
    furtherance of the purposes of this chapter.
    (e) Physical movement of securities certificates
      The Commission shall use its authority under this chapter to end
    the physical movement of securities certificates in connection with
    the settlement among brokers and dealers of transactions in
    securities consummated by means of the mails or any means or
    instrumentalities of interstate commerce.
    (f) Rules concerning transfer of securities and rights and
      obligations of involved or affected parties
      (1) Notwithstanding any provision of State law, except as
    provided in paragraph (3), if the Commission makes each of the
    findings described in paragraph (2)(A), the Commission may adopt
    rules concerning - 
        (A) the transfer of certificated or uncertificated securities
      (other than government securities issued pursuant to chapter 31
      of title 31 or securities otherwise processed within a book-entry
      system operated by the Federal Reserve banks pursuant to a
      Federal book-entry regulation) or limited interests (including
      security interests) therein; and
        (B) rights and obligations of purchasers, sellers, owners,
      lenders, borrowers, and financial intermediaries (including
      brokers, dealers, banks, and clearing agencies) involved in or
      affected by such transfers, and the rights of third parties whose
      interests in such securities devolve from such transfers.

      (2)(A) The findings described in this paragraph are findings by
    the Commission that - 
        (i) such rule is necessary or appropriate for the protection of
      investors or in the public interest and is reasonably designed to
      promote the prompt, accurate, and safe clearance and settlement
      of securities transactions;
        (ii) in the absence of a uniform rule, the safe and efficient
      operation of the national system for clearance and settlement of
      securities transactions will be, or is, substantially impeded;
      and
        (iii) to the extent such rule will impair or diminish, directly
      or indirectly, rights of persons specified in paragraph (1)(B)
      under State law concerning transfers of securities (or limited
      interests therein), the benefits of such rule outweigh such
      impairment or diminution of rights.

      (B) In making the findings described in subparagraph (A), the
    Commission shall give consideration to the recommendations of the
    Advisory Committee established under paragraph (4), and it shall
    consult with and consider the views of the Secretary of the
    Treasury and the Board of Governors of the Federal Reserve System.
    If the Secretary of the Treasury objects, in writing, to any
    proposed rule of the Commission on the basis of the Secretary's
    view on the issues described in clauses (i), (ii), and (iii) of
    subparagraph (A), the Commission shall consider all feasible
    alternatives to the proposed rule, and it shall not adopt any such
    rule unless the Commission makes an explicit finding that the rule
    is the most practicable method for achieving safe and efficient
    operation of the national clearance and settlement system.
      (3) Any State may, prior to the expiration of 2 years after the
    Commission adopts a rule under this subsection, enact a statute
    that specifically refers to this subsection and the specific rule
    thereunder and establishes, prospectively from the date of
    enactment of the State statute, a provision that differs from that
    applicable under the Commission's rule.
      (4)(A) Within 90 days after October 16, 1990, the Commission
    shall (and at such times thereafter as the Commission may
    determine, the Commission may), after consultation with the
    Secretary of the Treasury and the Board of Governors of the Federal
    Reserve System, establish an advisory committee under the Federal
    Advisory Committee Act (5 U.S.C. App.). The Advisory Committee
    shall be directed to consider and report to the Commission on such
    matters as the Commission, after consultation with the Secretary of
    the Treasury and the Board of Governors of the Federal Reserve
    System, determines, including the areas, if any, in which State
    commercial laws and related Federal laws concerning the transfer of
    certificated or uncertificated securities, limited interests
    (including security interests) in such securities, or the creation
    or perfection of security interests in such securities do not
    provide the necessary certainty, uniformity, and clarity for
    purchasers, sellers, owners, lenders, borrowers, and financial
    intermediaries concerning their respective rights and obligations.
      (B) The Advisory Committee shall consist of 15 members, of which -
     
        (i) 11 shall be designated by the Commission in accordance with
      the Federal Advisory Committee Act; and
        (ii) 2 each shall be designated by the Board of Governors of
      the Federal Reserve System and the Secretary of the Treasury.

      (C) The Advisory Committee shall conduct its activities in
    accordance with the Federal Advisory Committee Act. Within 6 months
    of its designation, or such longer time as the Commission may
    designate, the Advisory Committee shall issue a report to the
    Commission, and shall cause copies of that report to be delivered
    to the Secretary of the Treasury and the Chairman of the Board of
    Governors of the Federal Reserve System.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 17A, as added Pub. L. 94-29,
    Sec. 15, June 4, 1975, 89 Stat. 141; amended Pub. L. 100-181, title
    III, Sec. 322, Dec. 4, 1987, 101 Stat. 1257; Pub. L. 101-429, title
    II, Sec. 206, Oct. 15, 1990, 104 Stat. 941; Pub. L. 101-432, Sec.
    5, Oct. 16, 1990, 104 Stat. 973; Pub. L. 101-550, title II, Sec.
    203(c)(1), Nov. 15, 1990, 104 Stat. 2718; Pub. L. 106-554, Sec.
    1(a)(5) [title II, Secs. 206(d), 207], Dec. 21, 2000, 114 Stat.
    2763, 2763A-431, 2763A-434; Pub. L. 107-204, title VI, Sec.
    604(c)(1)(C), July 30, 2002, 116 Stat. 796.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a)(2), (b)(3)(A), (F),
    (I), (8), (d)(1), (3)(B), (4), (5), and (e), was in the original
    "this title". See References in Text note set out under section 78a
    of this title.
      The Commodity Exchange Act, referred to in subsec. (b)(8), is act
    Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended, which is
    classified generally to chapter 1 (Sec. 1 et seq.) of Title 7,
    Agriculture. For complete classification of this Act to the Code,
    see section 1 of Title 7 and Tables.
      The Federal Advisory Committee Act, referred to in subsec.
    (f)(4), is Pub. L. 92-463, Oct. 6, 1972, 86 Stat. 770, as amended,
    which is set out in the Appendix to Title 5, Government
    Organization and Employees.


-MISC1-
                                AMENDMENTS                            
      2002 - Subsec. (c)(3)(A), (4)(C). Pub. L. 107-204 inserted ", or
    is subject to an order or finding," before "enumerated" and
    substituted "(H), or (G)" for "or (G)".
      2000 - Subsec. (b)(3)(A). Pub. L. 106-554, Sec. 1(a)(5) [title
    II, Sec. 207(1)], inserted "and derivative agreements, contracts,
    and transactions" after "prompt and accurate clearance and
    settlement of securities transactions".
      Subsec. (b)(3)(F). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    207(2)], inserted "and, to the extent applicable, derivative
    agreements, contracts, and transactions" after "designed to promote
    the prompt and accurate clearance and settlement of securities
    transactions".
      Subsec. (b)(7). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(d)], added par. (7).
      Subsec. (b)(8). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    207(3)], added par. (8).
      1990 - Subsec. (a)(2). Pub. L. 101-432, Sec. 5(a), amended par.
    (2) generally. Prior to amendment, par. (2) read as follows: "The
    Commission is directed, therefore, having due regard for the public
    interest, the protection of investors, the safeguarding of
    securities and funds, and maintenance of fair competition among
    brokers and dealers, clearing agencies, and transfer agents, to use
    its authority under this chapter to facilitate the establishment of
    a national system for the prompt and accurate clearance and
    settlement of transactions in securities (other than exempted
    securities) in accordance with the findings and to carry out the
    objectives set forth in paragraph (1) of this subsection. The
    Commission shall use its authority under this chapter to assure
    equal regulation under this chapter of registered clearing agencies
    and registered transfer agents."
      Subsec. (c)(3)(A), (4)(C). Pub. L. 101-550 substituted "(A), (D),
    (E), or (G)" for "(A), (D), or (E)".
      Subsec. (d)(5). Pub. L. 101-429 added par. (5).
      Subsec. (f). Pub. L. 101-432, Sec. 5(b), added subsec. (f).
      1987 - Subsec. (c)(2). Pub. L. 100-181, Sec. 322(1), (2),
    inserted "and any persons associated with the transfer agent" in
    first sentence and substituted "45" for "thirty" in second
    sentence.
      Subsec. (c)(3), (4). Pub. L. 100-181, Sec. 322(3)-(5), added par.
    (3), struck out former par. (3)(A) which read as follows: "The
    appropriate regulatory agency for a transfer agent, by order, shall
    deny registration to, censure, place limitations on the activities,
    functions, or operations of, suspend for a period not exceeding
    twelve months, or revoke the registration of such transfer agent,
    if such appropriate regulatory agency finds, on the record after
    notice and opportunity for hearing, that such denial, censure,
    placing of limitations, suspension, or revocation is in the public
    interest and that such transfer agent has willfully violated or is
    unable to comply with any provision of this section or section 78q
    of this title or the rules or regulations thereunder.",
    redesignated subpars. (B) and (C) of former par. (3) as subpars.
    (A) and (B), respectively, of new par. (4), and added subpar. (C)
    to such par. (4).
      Subsec. (d)(3)(B). Pub. L. 100-181, Sec. 322(6), substituted
    "clearing agency, transfer agent, or person associated with a
    transfer agent" for "clearing agency or transfer agent".
      Subsec. (d)(4). Pub. L. 100-181, Sec. 322(7), substituted ",
    transfer agent, or person associated with a transfer agent," for
    "or transfer agent".

                     EFFECTIVE DATE OF 1990 AMENDMENT                 
      Amendment by Pub. L. 101-429 effective Oct. 15, 1990, with
    provisions relating to civil penalties and accounting and
    disgorgement, see section 1(c)(1), (2) of Pub. L. 101-429, set out
    in a note under section 77g of this title.

                              EFFECTIVE DATE                          
      Section effective June 4, 1975, except for subsecs. (b) and (c)
    which are effective 180 days after June 4, 1975, see section 31(a)
    of Pub. L. 94-29, set out as a note under section 78b of this
    title.

       CLEARANCE AND SETTLEMENT OF TRANSACTIONS; REPORT TO CONGRESS   
      Section 8(b) of Pub. L. 101-432 directed Securities and Exchange
    Commission, in consultation with Commodity Futures Trading
    Commission, Board of Governors of the Federal Reserve System, and
    other relevant regulatory authorities, to examine progress toward
    establishing linked or coordinated facilities for clearance and
    settlement of transactions in securities, securities options,
    contracts of sale for future delivery and options thereon, and
    commodity options, and to submit to Congress, not later than 2
    years from Oct. 16, 1990, a report detailing and evaluating such
    progress.

-FOOTNOTE-
    (!1) So in original. Probably should be "section 78f(h)(7)(C)".

    (!2) So in original. Probably should be "of".


-End-



-CITE-
    15 USC Sec. 78q-2                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78q-2. Automated quotation systems for penny stocks

-STATUTE-
    (a) Findings
      The Congress finds that - 
        (1) the market for penny stocks suffers from a lack of reliable
      and accurate quotation and last sale information available to
      investors and regulators;
        (2) it is in the public interest and appropriate for the
      protection of investors and the maintenance of fair and orderly
      markets to improve significantly the information available to
      brokers, dealers, investors, and regulators with respect to
      quotations for and transactions in penny stocks; and
        (3) a fully implemented automated quotation system for penny
      stocks would meet the information needs of investors and market
      participants and would add visibility and regulatory and
      surveillance data to that market.
    (b) Mandate to facilitate establishment of automated quotation
      systems
      (1) In general
        The Commission shall facilitate the widespread dissemination of
      reliable and accurate last sale and quotation information with
      respect to penny stocks in accordance with the findings set forth
      in subsection (a) of this section, with a view toward
      establishing, at the earliest feasible time, one or more
      automated quotation systems that will collect and disseminate
      information regarding all penny stocks.
      (2) Characteristics of systems
        Each such automated quotation system shall - 
          (A) be operated by a registered securities association or a
        national securities exchange in accordance with such rules as
        the Commission and these entities shall prescribe;
          (B) collect and disseminate quotation and transaction
        information;
          (C) except as provided in subsection (c) of this section,
        provide bid and ask quotations of participating brokers or
        dealers, or comparably accurate and reliable pricing
        information, which shall constitute firm bids or offers for at
        least such minimum numbers of shares or minimum dollar amounts
        as the Commission and the registered securities association or
        national securities exchange shall require; and
          (D) provide for the reporting of the volume of penny stock
        transactions, including last sale reporting, when the volume
        reaches appropriate levels that the Commission shall specify by
        rule or order.
    (c) Exemptive authority
      The Commission may, by rule or order, grant such exemptions, in
    whole or in part, conditionally or unconditionally, to any penny
    stock or class of penny stocks from the requirements of subsection
    (b) of this section as the Commission determines to be consistent
    with the public interest, the protection of investors, and the
    maintenance of fair and orderly markets.
    (d) Commission reporting requirements
      The Commission shall, in each of the first 5 annual reports
    (under section 78w(b)(1) of this title) submitted more than 12
    months after October 15, 1990, include a description of the status
    of the penny stock automated quotation system or systems required
    by subsection (b) of this section. Such description shall include -
    
        (1) a review of the development, implementation, and progress
      of the project, including achievement of significant milestones
      and current project schedule; and
        (2) a review of the activities of registered securities
      associations and national securities exchanges in the development
      of the system.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 17B, as added Pub. L. 101-
    429, title V, Sec. 506, Oct. 15, 1990, 104 Stat. 955.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      Section 78w(b)(1) of this title, referred to in subsec. (d), was
    omitted from the Code. For further details related to reports
    referred to in subsec. (d), see Codification note set out under
    section 78w of this title.


-MISC1-
                              EFFECTIVE DATE                          
      Section effective Oct. 15, 1990, with provisions relating to
    civil penalties and accounting and disgorgement, see section
    1(c)(1), (2) of Pub. L. 101-429, set out in an Effective Date of
    1990 Amendment note under section 77g of this title.

-End-



-CITE-
    15 USC Sec. 78r                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78r. Liability for misleading statements

-STATUTE-
    (a) Persons liable; persons entitled to recover; defense of good
      faith; suit at law or in equity; costs, etc.
      Any person who shall make or cause to be made any statement in
    any application, report, or document filed pursuant to this chapter
    or any rule or regulation thereunder or any undertaking contained
    in a registration statement as provided in subsection (d) of
    section 78o of this title, which statement 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, shall be liable to
    any person (not knowing that such statement was false or
    misleading) who, in reliance upon such statement, shall have
    purchased or sold a security at a price which was affected by such
    statement, for damages caused by such reliance, unless the person
    sued shall prove that he acted in good faith and had no knowledge
    that such statement was false or misleading. A person seeking to
    enforce such liability may sue at law or in equity in any court of
    competent jurisdiction. In any such suit the court may, in its
    discretion, require an undertaking for the payment of the costs of
    such suit, and assess reasonable costs, including reasonable
    attorneys' fees, against either party litigant.
    (b) Contribution
      Every person who becomes liable to make payment under this
    section may recover contribution as in cases of contract from any
    person who, if joined in the original suit, would have been liable
    to make the same payment.
    (c) Period of limitations
      No action shall be maintained to enforce any liability created
    under this section unless brought within one year after the
    discovery of the facts constituting the cause of action and within
    three years after such cause of action accrued.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 18, 48 Stat. 897; May 27,
    1936, ch. 462, Sec. 5, 49 Stat. 1379.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsec. (a), was in the original
    "this title". See References in Text note set out under section 78a
    of this title.


-MISC1-
                                AMENDMENTS                            
      1936 - Subsec. (a). Act May 27, 1936, inserted "or any
    undertaking contained in a registration statement as provided in
    subsection (d) of section 78o of this title".

-End-



-CITE-
    15 USC Sec. 78s                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78s. Registration, responsibilities, and oversight of self-
      regulatory organizations

-STATUTE-
    (a) Registration procedures; notice of filing; other regulatory
      agencies
      (1) The Commission shall, upon the filing of an application for
    registration as a national securities exchange, registered
    securities association, or registered clearing agency, pursuant to
    section 78f, 78o-3, or 78q-1 of this title, respectively, publish
    notice of such filing and afford interested persons an opportunity
    to submit written data, views, and arguments concerning such
    application. Within ninety days of the date of publication of such
    notice (or within such longer period as to which the applicant
    consents), the Commission shall - 
        (A) by order grant such registration, or
        (B) institute proceedings to determine whether registration
      should be denied. Such proceedings shall include notice of the
      grounds for denial under consideration and opportunity for
      hearing and shall be concluded within one hundred eighty days of
      the date of a publication of notice of the filing of the
      application for registration. At the conclusion of such
      proceedings the Commission, by order, shall grant or deny such
      registration. The Commission may extend the time for conclusion
      of such proceedings for up to ninety days if it finds good cause
      for such extension and publishes its reasons for so finding or
      for such longer period as to which the applicant consents.

    The Commission shall grant such registration if it finds that the
    requirements of this chapter and the rules and regulations
    thereunder with respect to the applicant are satisfied. The
    Commission shall deny such registration if it does not make such
    finding.
      (2) With respect to an application for registration filed by a
    clearing agency for which the Commission is not the appropriate
    regulatory agency - 
        (A) The Commission shall not grant registration prior to the
      sixtieth day after the date of publication of notice of the
      filing of such application unless the appropriate regulatory
      agency for such clearing agency has notified the Commission of
      such appropriate regulatory agency's determination that such
      clearing agency is so organized and has the capacity to be able
      to safeguard securities and funds in its custody or control or
      for which it is responsible and that the rules of such clearing
      agency are designed to assure the safeguarding of such securities
      and funds.
        (B) The Commission shall institute proceedings in accordance
      with paragraph (1)(B) of this subsection to determine whether
      registration should be denied if the appropriate regulatory
      agency for such clearing agency notifies the Commission within
      sixty days of the date of publication of notice of the filing of
      such application of such appropriate regulatory agency's (i)
      determination that such clearing agency may not be so organized
      or have the capacity to be able to safeguard securities or funds
      in its custody or control or for which it is responsible or that
      the rules of such clearing agency may not be designed to assure
      the safeguarding of such securities and funds and (ii) reasons
      for such determination.
        (C) The Commission shall deny registration if the appropriate
      regulatory agency for such clearing agency notifies the
      Commission prior to the conclusion of proceedings instituted in
      accordance with paragraph (1)(B) of this subsection of such
      appropriate regulatory agency's (i) determination that such
      clearing agency is not so organized or does not have the capacity
      to be able to safeguard securities or funds in its custody or
      control or for which it is responsible or that the rules of such
      clearing agency are not designed to assure the safeguarding of
      such securities or funds and (ii) reasons for such determination.

      (3) A self-regulatory organization may, upon such terms and
    conditions as the Commission, by rule, deems necessary or
    appropriate in the public interest or for the protection of
    investors, withdraw from registration by filing a written notice of
    withdrawal with the Commission. If the Commission finds that any
    self-regulatory organization is no longer in existence or has
    ceased to do business in the capacity specified in its application
    for registration, the Commission, by order, shall cancel its
    registration. Upon the withdrawal of a national securities
    association from registration or the cancellation, suspension, or
    revocation of the registration of a national securities
    association, the registration of any association affiliated
    therewith shall automatically terminate.
    (b) Proposed rule changes; notice; proceedings
      (1) Each self-regulatory organization shall file with the
    Commission, in accordance with such rules as the Commission may
    prescribe, copies of any proposed rule or any proposed change in,
    addition to, or deletion from the rules of such self-regulatory
    organization (hereinafter in this subsection collectively referred
    to as a "proposed rule change") accompanied by a concise general
    statement of the basis and purpose of such proposed rule change.
    The Commission shall, upon the filing of any proposed rule change,
    publish notice thereof together with the terms of substance of the
    proposed rule change or a description of the subjects and issues
    involved. The Commission shall give interested persons an
    opportunity to submit written data, views, and arguments concerning
    such proposed rule change. No proposed rule change shall take
    effect unless approved by the Commission or otherwise permitted in
    accordance with the provisions of this subsection.
      (2) Within thirty-five days of the date of publication of notice
    of the filing of a proposed rule change in accordance with
    paragraph (1) of this subsection, or within such longer period as
    the Commission may designate up to ninety days of such date if it
    finds such longer period to be appropriate and publishes its
    reasons for so finding or as to which the self-regulatory
    organization consents, the Commission shall - 
        (A) by order approve such proposed rule change, or
        (B) institute proceedings to determine whether the proposed
      rule change should be disapproved. Such proceedings shall include
      notice of the grounds for disapproval under consideration and
      opportunity for hearing and be concluded within one hundred
      eighty days of the date of publication of notice of the filing of
      the proposed rule change. At the conclusion of such proceedings
      the Commission, by order, shall approve or disapprove such
      proposed rule change. The Commission may extend the time for
      conclusion of such proceedings for up to sixty days if it finds
      good cause for such extension and publishes its reasons for so
      finding or for such longer period as to which the self-regulatory
      organization consents.

    The Commission shall approve a proposed rule change of a self-
    regulatory organization if it finds that such proposed rule change
    is consistent with the requirements of this chapter and the rules
    and regulations thereunder applicable to such organization. The
    Commission shall disapprove a proposed rule change of a self-
    regulatory organization if it does not make such finding. The
    Commission shall not approve any proposed rule change prior to the
    thirtieth day after the date of publication of notice of the filing
    thereof, unless the Commission finds good cause for so doing and
    publishes its reasons for so finding.
      (3)(A) Notwithstanding the provisions of paragraph (2) of this
    subsection, a proposed rule change may take effect upon filing with
    the Commission if designated by the self-regulatory organization as
    (i) constituting a stated policy, practice, or interpretation with
    respect to the meaning, administration, or enforcement of an
    existing rule of the self-regulatory organization, (ii)
    establishing or changing a due, fee, or other charge imposed by the
    self-regulatory organization, or (iii) concerned solely with the
    administration of the self-regulatory organization or other matters
    which the Commission, by rule, consistent with the public interest
    and the purposes of this subsection, may specify as without the
    provisions of such paragraph (2).
      (B) Notwithstanding any other provision of this subsection, a
    proposed rule change may be put into effect summarily if it appears
    to the Commission that such action is necessary for the protection
    of investors, the maintenance of fair and orderly markets, or the
    safeguarding of securities or funds. Any proposed rule change so
    put into effect shall be filed promptly thereafter in accordance
    with the provisions of paragraph (1) of this subsection.
      (C) Any proposed rule change of a self-regulatory organization
    which has taken effect pursuant to subparagraph (A) or (B) of this
    paragraph may be enforced by such organization to the extent it is
    not inconsistent with the provisions of this chapter, the rules and
    regulations thereunder, and applicable Federal and State law. At
    any time within sixty days of the date of filing of such a proposed
    rule change in accordance with the provisions of paragraph (1) of
    this subsection, the Commission summarily may abrogate the change
    in the rules of the self-regulatory organization made thereby and
    require that the proposed rule change be refiled in accordance with
    the provisions of paragraph (1) of this subsection and reviewed in
    accordance with the provisions of paragraph (2) of this subsection,
    if it appears to the Commission that such action is necessary or
    appropriate in the public interest, for the protection of
    investors, or otherwise in furtherance of the purposes of this
    chapter. Commission action pursuant to the preceding sentence shall
    not affect the validity or force of the rule change during the
    period it was in effect and shall not be reviewable under section
    78y of this title nor deemed to be "final agency action" for
    purposes of section 704 of title 5.
      (4) With respect to a proposed rule change filed by a registered
    clearing agency for which the Commission is not the appropriate
    regulatory agency - 
        (A) The Commission shall not approve any such proposed rule
      change prior to the thirtieth day after the date of publication
      of notice of the filing whereof unless the appropriate regulatory
      agency for such clearing agency has notified the Commission of
      such appropriate regulatory agency's determination that the
      proposed rule change is consistent with the safeguarding of
      securities and funds in the custody or control of such clearing
      agency or for which it is responsible.
        (B) The Commission shall institute proceedings in accordance
      with paragraph (2)(B) of this subsection to determine whether any
      such proposed rule change should be disapproved, if the
      appropriate regulatory agency for such clearing agency notifies
      the Commission within thirty days of the date of publication of
      notice of the filing of the proposed rule change of such
      appropriate regulatory agency's (i) determination that the
      proposed rule change may be inconsistent with the safeguarding of
      securities or funds in the custody or control of such clearing
      agency or for which it is responsible and (ii) reasons for such
      determination.
        (C) The Commission shall disapprove any such proposed rule
      change if the appropriate regulatory agency for such clearing
      agency notifies the Commission prior to the conclusion of
      proceedings instituted in accordance with paragraph (2)(B) of
      this subsection of such appropriate regulatory agency's (i)
      determination that the proposed rule change is inconsistent with
      the safeguarding of securities or funds in the custody or control
      of such clearing agency or for which it is responsible and (ii)
      reasons for such determination.
        (D) The Commission shall abrogate any change in the rules of
      such a clearing agency made by a proposed rule change which has
      taken effect pursuant to paragraph (3) of this subsection,
      require that the proposed rule change be refiled in accordance
      with the provisions of paragraph (1) of this subsection, and
      reviewed in accordance with the provisions of paragraph (2) of
      this subsection, if the appropriate regulatory agency for such
      clearing agency notifies the Commission within thirty days of the
      date of filing of such proposed rule change of such appropriate
      regulatory agency's (i) determination that the rules of such
      clearing agency as so changed may be inconsistent with the
      safeguarding of securities or funds in the custody or control of
      such clearing agency or for which it is responsible and (ii)
      reasons for such determination.

      (5) The Commission shall consult with and consider the views of
    the Secretary of the Treasury prior to approving a proposed rule
    filed by a registered securities association that primarily
    concerns conduct related to transactions in government securities,
    except where the Commission determines that an emergency exists
    requiring expeditious or summary action and publishes its reasons
    therefor. If the Secretary of the Treasury comments in writing to
    the Commission on a proposed rule that has been published for
    comment, the Commission shall respond in writing to such written
    comment before approving the proposed rule. If the Secretary of the
    Treasury determines, and notifies the Commission, that such rule,
    if implemented, would, or as applied does (i) adversely affect the
    liquidity or efficiency of the market for government securities; or
    (ii) impose any burden on competition not necessary or appropriate
    in furtherance of the purposes of this section, the Commission
    shall, prior to adopting the proposed rule, find that such rule is
    necessary and appropriate in furtherance of the purposes of this
    section notwithstanding the Secretary's determination.
      (6) In approving rules described in paragraph (5), the Commission
    shall consider the sufficiency and appropriateness of then existing
    laws and rules applicable to government securities brokers,
    government securities dealers, and persons associated with
    government securities brokers and government securities dealers.
      (7) Security futures product rule changes. - 
        (A) Filing required. - A self-regulatory organization that is
      an exchange registered with the Commission pursuant to section
      78f(g) of this title or that is a national securities association
      registered pursuant to section 78o-3(k) of this title shall file
      with the Commission, in accordance with such rules as the
      Commission may prescribe, copies of any proposed rule change or
      any proposed change in, addition to, or deletion from the rules
      of such self-regulatory organization (hereinafter in this
      paragraph collectively referred to as a "proposed rule change")
      that relates to higher margin levels, fraud or manipulation,
      recordkeeping, reporting, listing standards, or decimal pricing
      for security futures products, sales practices for security
      futures products for persons who effect transactions in security
      futures products, or rules effectuating such self-regulatory
      organization's obligation to enforce the securities laws. Such
      proposed rule change shall be accompanied by a concise general
      statement of the basis and purpose of such proposed rule change.
      The Commission shall, upon the filing of any proposed rule
      change, promptly publish notice thereof together with the terms
      of substance of the proposed rule change or a description of the
      subjects and issues involved. The Commission shall give
      interested persons an opportunity to submit data, views, and
      arguments concerning such proposed rule change.
        (B) Filing with cftc. - A proposed rule change filed with the
      Commission pursuant to subparagraph (A) shall be filed
      concurrently with the Commodity Futures Trading Commission. Such
      proposed rule change may take effect upon filing of a written
      certification with the Commodity Futures Trading Commission under
      section 7a-2(c) of title 7, upon a determination by the Commodity
      Futures Trading Commission that review of the proposed rule
      change is not necessary, or upon approval of the proposed rule
      change by the Commodity Futures Trading Commission.
        (C) Abrogation of rule changes. - Any proposed rule change of a
      self-regulatory organization that has taken effect pursuant to
      subparagraph (B) may be enforced by such self-regulatory
      organization to the extent such rule is not inconsistent with the
      provisions of this chapter, the rules and regulations thereunder,
      and applicable Federal law. At any time within 60 days of the
      date of the filing of a written certification with the Commodity
      Futures Trading Commission under section 7a-2(c) of title 7, the
      date the Commodity Futures Trading Commission determines that
      review of such proposed rule change is not necessary, or the date
      the Commodity Futures Trading Commission approves such proposed
      rule change, the Commission, after consultation with the
      Commodity Futures Trading Commission, may summarily abrogate the
      proposed rule change and require that the proposed rule change be
      refiled in accordance with the provisions of paragraph (1), if it
      appears to the Commission that such proposed rule change unduly
      burdens competition or efficiency, conflicts with the securities
      laws, or is inconsistent with the public interest and the
      protection of investors. Commission action pursuant to the
      preceding sentence shall not affect the validity or force of the
      rule change during the period it was in effect and shall not be
      reviewable under section 78y of this title nor deemed to be a
      final agency action for purposes of section 704 of title 5.
        (D) Review of resubmitted abrogated rules. - 
          (i) Proceedings. - Within 35 days of the date of publication
        of notice of the filing of a proposed rule change that is
        abrogated in accordance with subparagraph (C) and refiled in
        accordance with paragraph (1), or within such longer period as
        the Commission may designate up to 90 days after such date if
        the Commission finds such longer period to be appropriate and
        publishes its reasons for so finding or as to which the self-
        regulatory organization consents, the Commission shall - 
            (I) by order approve such proposed rule change; or
            (II) after consultation with the Commodity Futures Trading
          Commission, institute proceedings to determine whether the
          proposed rule change should be disapproved. Proceedings under
          subclause (II) shall include notice of the grounds for
          disapproval under consideration and opportunity for hearing
          and be concluded within 180 days after the date of
          publication of notice of the filing of the proposed rule
          change. At the conclusion of such proceedings, the
          Commission, by order, shall approve or disapprove such
          proposed rule change. The Commission may extend the time for
          conclusion of such proceedings for up to 60 days if the
          Commission finds good cause for such extension and publishes
          its reasons for so finding or for such longer period as to
          which the self-regulatory organization consents.

          (ii) Grounds for approval. - The Commission shall approve a
        proposed rule change of a self-regulatory organization under
        this subparagraph if the Commission finds that such proposed
        rule change does not unduly burden competition or efficiency,
        does not conflict with the securities laws, and is not
        inconsistent with the public interest or the protection of
        investors. The Commission shall disapprove such a proposed rule
        change of a self-regulatory organization if it does not make
        such finding. The Commission shall not approve any proposed
        rule change prior to the 30th day after the date of publication
        of notice of the filing thereof, unless the Commission finds
        good cause for so doing and publishes its reasons for so
        finding.

      (8) Decimal pricing. - Not later than 9 months after the date on
    which trading in any security futures product commences under this
    chapter, all self-regulatory organizations listing or trading
    security futures products shall file proposed rule changes
    necessary to implement decimal pricing of security futures
    products. The Commission may not require such rules to contain
    equal minimum increments in such decimal pricing.
      (9) Consultation with cftc. - 
        (A) Consultation required. - The Commission shall consult with
      and consider the views of the Commodity Futures Trading
      Commission prior to approving or disapproving a proposed rule
      change filed by a national securities association registered
      pursuant to section 78o-3(a) of this title or a national
      securities exchange subject to the provisions of subsection (a)
      of this section that primarily concerns conduct related to
      transactions in security futures products, except where the
      Commission determines that an emergency exists requiring
      expeditious or summary action and publishes its reasons therefor.
        (B) Responses to cftc comments and findings. - If the Commodity
      Futures Trading Commission comments in writing to the Commission
      on a proposed rule that has been published for comment, the
      Commission shall respond in writing to such written comment
      before approving or disapproving the proposed rule. If the
      Commodity Futures Trading Commission determines, and notifies the
      Commission, that such rule, if implemented or as applied, would -
      
          (i) adversely affect the liquidity or efficiency of the
        market for security futures products; or
          (ii) impose any burden on competition not necessary or
        appropriate in furtherance of the purposes of this section,

      the Commission shall, prior to approving or disapproving the
      proposed rule, find that such rule is necessary and appropriate
      in furtherance of the purposes of this section notwithstanding
      the Commodity Futures Trading Commission's determination.
    (c) Amendment by Commission of rules of self-regulatory
      organizations
      The Commission, by rule, may abrogate, add to, and delete from
    (hereinafter in this subsection collectively referred to as
    "amend") the rules of a self-regulatory organization (other than a
    registered clearing agency) as the Commission deems necessary or
    appropriate to insure the fair administration of the self-
    regulatory organization, to conform its rules to requirements of
    this chapter and the rules and regulations thereunder applicable to
    such organization, or otherwise in furtherance of the purposes of
    this chapter, in the following manner:
        (1) The Commission shall notify the self-regulatory
      organization and publish notice of the proposed rulemaking in the
      Federal Register. The notice shall include the text of the
      proposed amendment to the rules of the self-regulatory
      organization and a statement of the Commission's reasons,
      including any pertinent facts, for commencing such proposed
      rulemaking.
        (2) The Commission shall give interested persons an opportunity
      for the oral presentation of data, views, and arguments, in
      addition to an opportunity to make written submissions. A
      transcript shall be kept of any oral presentation.
        (3) A rule adopted pursuant to this subsection shall
      incorporate the text of the amendment to the rules of the self-
      regulatory organization and a statement of the Commission's
      basis for and purpose in so amending such rules. This statement
      shall include an identification of any facts on which the
      Commission considers its determination so to amend the rules of
      the self-regulatory agency to be based, including the reasons for
      the Commission's conclusions as to any of such facts which were
      disputed in the rulemaking.
        (4)(A) Except as provided in paragraphs (1) through (3) of this
      subsection, rulemaking under this subsection shall be in
      accordance with the procedures specified in section 553 of title
      5 for rulemaking not on the record.
        (B) Nothing in this subsection shall be construed to impair or
      limit the Commission's power to make, or to modify or alter the
      procedures the Commission may follow in making, rules and
      regulations pursuant to any other authority under this chapter.
        (C) Any amendment to the rules of a self-regulatory
      organization made by the Commission pursuant to this subsection
      shall be considered for all purposes of this chapter to be part
      of the rules of such self-regulatory organization and shall not
      be considered to be a rule of the Commission.
        (5) With respect to rules described in subsection (b)(5) of
      this section, the Commission shall consult with and consider the
      views of the Secretary of the Treasury before abrogating, adding
      to, and deleting from such rules, except where the Commission
      determines that an emergency exists requiring expeditious or
      summary action and publishes its reasons therefor.
    (d) Notice of disciplinary action taken by self-regulatory
      organization against a member or participant; review of action by
      appropriate regulatory agency; procedure
      (1) If any self-regulatory organization imposes any final
    disciplinary sanction on any member thereof or participant therein,
    denies membership or participation to any applicant, or prohibits
    or limits any person in respect to access to services offered by
    such organization or member thereof or if any self-regulatory
    organization (other than a registered clearing agency) imposes any
    final disciplinary sanction on any person associated with a member
    or bars any person from becoming associated with a member, the self-
    regulatory organization shall promptly file notice thereof with
    the appropriate regulatory agency for the self-regulatory
    organization and (if other than the appropriate regulatory agency
    for the self-regulatory organization) the appropriate regulatory
    agency for such member, participant, applicant, or other person.
    The notice shall be in such form and contain such information as
    the appropriate regulatory agency for the self-regulatory
    organization, by rule, may prescribe as necessary or appropriate in
    furtherance of the purposes of this chapter.
      (2) Any action with respect to which a self-regulatory
    organization is required by paragraph (1) of this subsection to
    file notice shall be subject to review by the appropriate
    regulatory agency for such member, participant, applicant, or other
    person, on its own motion, or upon application by any person
    aggrieved thereby filed within thirty days after the date such
    notice was filed with such appropriate regulatory agency and
    received by such aggrieved person, or within such longer period as
    such appropriate regulatory agency may determine. Application to
    such appropriate regulatory agency for review, or the institution
    of review by such appropriate regulatory agency on its own motion,
    shall not operate as a stay of such action unless such appropriate
    regulatory agency otherwise orders, summarily or after notice and
    opportunity for hearing on the question of a stay (which hearing
    may consist solely of the submission of affidavits or presentation
    of oral arguments). Each appropriate regulatory agency shall
    establish for appropriate cases an expedited procedure for
    consideration and determination of the question of a stay.
      (3) The provisions of this subsection shall apply to an exchange
    registered pursuant to section 78f(g) of this title or a national
    securities association registered pursuant to section 78o-3(k) of
    this title only to the extent that such exchange or association
    imposes any final disciplinary sanction for - 
        (A) a violation of the Federal securities laws or the rules and
      regulations thereunder; or
        (B) a violation of a rule of such exchange or association, as
      to which a proposed change would be required to be filed under
      this section, except that, to the extent that the exchange or
      association rule violation relates to any account, agreement,
      contract, or transaction, this subsection shall apply only to the
      extent such violation involves a security futures product.
    (e) Disposition of review; cancellation, reduction, or remission of
      sanction
      (1) In any proceeding to review a final disciplinary sanction
    imposed by a self-regulatory organization on a member thereof or
    participant therein or a person associated with such a member,
    after notice and opportunity for hearing (which hearing may consist
    solely of consideration of the record before the self-regulatory
    organization and opportunity for the presentation of supporting
    reasons to affirm, modify, or set aside the sanction) - 
        (A) if the appropriate regulatory agency for such member,
      participant, or person associated with a member finds that such
      member, participant, or person associated with a member has
      engaged in such acts or practices, or has omitted such acts, as
      the self-regulatory organization has found him to have engaged in
      or omitted, that such acts or practices, or omissions to act, are
      in violation of such provisions of this chapter, the rules or
      regulations thereunder, the rules of the self-regulatory
      organization, or, in the case of a registered securities
      association, the rules of the Municipal Securities Rulemaking
      Board as have been specified in the determination of the self-
      regulatory organization, and that such provisions are, and were
      applied in a manner, consistent with the purposes of this
      chapter, such appropriate regulatory agency, by order, shall so
      declare and, as appropriate, affirm the sanction imposed by the
      self-regulatory organization, modify the sanction in accordance
      with paragraph (2) of this subsection, or remand to the self-
      regulatory organization for further proceedings; or
        (B) if such appropriate regulatory agency does not make any
      such finding it shall, by order, set aside the sanction imposed
      by the self-regulatory organization and, if appropriate, remand
      to the self-regulatory organization for further proceedings.

      (2) If the appropriate regulatory agency for a member,
    participant, or person associated with a member, having due regard
    for the public interest and the protection of investors, finds
    after a proceeding in accordance with paragraph (1) of this
    subsection that a sanction imposed by a self-regulatory
    organization upon such member, participant, or person associated
    with a member imposes any burden on competition not necessary or
    appropriate in furtherance of the purposes of this chapter or is
    excessive or oppressive, the appropriate regulatory agency may
    cancel, reduce, or require the remission of such sanction.
    (f) Dismissal of review proceeding
      In any proceeding to review the denial of membership or
    participation in a self-regulatory organization to any applicant,
    the barring of any person from becoming associated with a member of
    a self-regulatory organization, or the prohibition or limitation by
    a self-regulatory organization of any person with respect to access
    to services offered by the self-regulatory organization or any
    member thereof, if the appropriate regulatory agency for such
    applicant or person, after notice and opportunity for hearing
    (which hearing may consist solely of consideration of the record
    before the self-regulatory organization and opportunity for the
    presentation of supporting reasons to dismiss the proceeding or set
    aside the action of the self-regulatory organization) finds that
    the specific grounds on which such denial, bar, or prohibition or
    limitation is based exist in fact, that such denial, bar, or
    prohibition or limitation is in accordance with the rules of the
    self-regulatory organization, and that such rules are, and were
    applied in a manner, consistent with the purposes of this chapter,
    such appropriate regulatory agency, by order, shall dismiss the
    proceeding. If such appropriate regulatory agency does not make any
    such finding or if it finds that such denial, bar, or prohibition
    or limitation imposes any burden on competition not necessary or
    appropriate in furtherance of the purposes of this chapter, such
    appropriate regulatory agency, by order, shall set aside the action
    of the self-regulatory organization and require it to admit such
    applicant to membership or participation, permit such person to
    become associated with a member, or grant such person access to
    services offered by the self-regulatory organization or member
    thereof.
    (g) Compliance with rules and regulations
      (1) Every self-regulatory organization shall comply with the
    provisions of this chapter, the rules and regulations thereunder,
    and its own rules, and (subject to the provisions of section 78q(d)
    of this title, paragraph (2) of this subsection, and the rules
    thereunder) absent reasonable justification or excuse enforce
    compliance - 
        (A) in the case of a national securities exchange, with such
      provisions by its members and persons associated with its
      members;
        (B) in the case of a registered securities association, with
      such provisions and the provisions of the rules of the Municipal
      Securities Rulemaking Board by its members and persons associated
      with its members; and
        (C) in the case of a registered clearing agency, with its own
      rules by its participants.

      (2) The Commission, by rule, consistent with the public interest,
    the protection of investors, and the other purposes of this
    chapter, may relieve any self-regulatory organization of any
    responsibility under this chapter to enforce compliance with any
    specified provision of this chapter or the rules or regulations
    thereunder by any member of such organization or person associated
    with such a member, or any class of such members or persons
    associated with a member.
    (h) Suspension or revocation of self-regulatory organization's
      registration; censure; other sanctions
      (1) The appropriate regulatory agency for a self-regulatory
    organization is authorized, by order, if in its opinion such action
    is necessary or appropriate in the public interest, for the
    protection of investors, or otherwise in furtherance of the
    purposes of this chapter, to suspend for a period not exceeding
    twelve months or revoke the registration of such self-regulatory
    organization, or to censure or impose limitations upon the
    activities, functions, and operations of such self-regulatory
    organization, if such appropriate regulatory agency finds, on the
    record after notice and opportunity for hearing, that such self-
    regulatory organization has violated or is unable to comply with
    any provision of this chapter, the rules or regulations thereunder,
    or its own rules or without reasonable justification or excuse has
    failed to enforce compliance - 
        (A) in the case of a national securities exchange, with any
      such provision by a member thereof or a person associated with a
      member thereof;
        (B) in the case of a registered securities association, with
      any such provision or any provision of the rules of the Municipal
      Securities Rulemaking Board by a member thereof or a person
      associated with a member thereof; or
        (C) in the case of a registered clearing agency, with any
      provision of its own rules by a participant therein.

      (2) The appropriate regulatory agency for a self-regulatory
    organization is authorized, by order, if in its opinion such action
    is necessary or appropriate in the public interest, for the
    protection of investors, or otherwise in furtherance of the
    purposes of this chapter, to suspend for a period not exceeding
    twelve months or expel from such self-regulatory organization any
    member thereof or participant therein, if such member or
    participant is subject to an order of the Commission pursuant to
    section 78o(b)(4) of this title or if such appropriate regulatory
    agency finds, on the record after notice and opportunity for
    hearing, that such member or participant has willfully violated or
    has effected any transaction for any other person who, such member
    or participant had reason to believe, was violating with respect to
    such transaction - 
        (A) in the case of a national securities exchange, any
      provision of the Securities Act of 1933 [15 U.S.C. 77a et seq.],
      the Investment Advisers Act of 1940 [15 U.S.C. 80b-1 et seq.],
      the Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.],
      this chapter, or the rules or regulations under any of such
      statutes;
        (B) in the case of a registered securities association, any
      provision of the Securities Act of 1933, the Investment Advisers
      Act of 1940, the Investment Company Act of 1940, this chapter,
      the rules or regulations under any of such statutes, or the rules
      of the Municipal Securities Rulemaking Board; or
        (C) in the case of a registered clearing agency, any provision
      of the rules of the clearing agency.

      (3) The appropriate regulatory agency for a national securities
    exchange or registered securities association is authorized, by
    order, if in its opinion such action is necessary or appropriate in
    the public interest, for the protection of investors, or otherwise
    in furtherance of the purposes of this chapter, to suspend for a
    period not exceeding twelve months or to bar any person from being
    associated with a member of such national securities exchange or
    registered securities association, if such person is subject to an
    order of the Commission pursuant to section 78o(b)(6) of this title
    or if such appropriate regulatory agency finds, on the record after
    notice and opportunity for hearing, that such person has willfully
    violated or has effected any transaction for any other person who,
    such person associated with a member had reason to believe, was
    violating with respect to such transaction - 
        (A) in the case of a national securities exchange, any
      provision of the Securities Act of 1933, the Investment Advisers
      Act of 1940, the Investment Company Act of 1940, this chapter, or
      the rules or regulations under any of such statutes; or
        (B) in the case of a registered securities association, any
      provision of the Securities Act of 1933, the Investment Advisers
      Act of 1940, the Investment Company Act of 1940, this chapter,
      the rules or regulations under any of the statutes, or the rules
      of the Municipal Securities Rulemaking Board.

      (4) The appropriate regulatory agency for a self-regulatory
    organization is authorized, by order, if in its opinion such action
    is necessary or appropriate in the public interest, for the
    protection of investors, or otherwise in furtherance of the
    purposes of this chapter, to remove from office or censure any
    officer or director of such self-regulatory organization, if such
    appropriate regulatory agency finds, on the record after notice and
    opportunity for hearing, that such officer or director has
    willfully violated any provision of this chapter, the rules or
    regulations thereunder, or the rules of such self-regulatory
    organization, willfully abused his authority, or without reasonable
    justification or excuse has failed to enforce compliance - 
        (A) in the case of a national securities exchange, with any
      such provision by any member or person associated with a member;
        (B) in the case of a registered securities association, with
      any such provision or any provision of the rules of the Municipal
      Securities Rulemaking Board by any member or person associated
      with a member; or
        (C) in the case of a registered clearing agency, with any
      provision of the rules of the clearing agency by any participant.
    (i) Appointment of trustee
      If a proceeding under subsection (h)(1) of this section results
    in the suspension or revocation of the registration of a clearing
    agency, the appropriate regulatory agency for such clearing agency
    may, upon notice to such clearing agency, apply to any court of
    competent jurisdiction specified in section 78u(d) or 78aa of this
    title for the appointment of a trustee. In the event of such an
    application, the court may, to the extent it deems necessary or
    appropriate, take exclusive jurisdiction of such clearing agency
    and the records and assets thereof, wherever located; and the court
    shall appoint the appropriate regulatory agency for such clearing
    agency or a person designated by such appropriate regulatory agency
    as trustee with power to take possession and continue to operate or
    terminate the operations of such clearing agency in an orderly
    manner for the protection of participants and investors, subject to
    such terms and conditions as the court may prescribe.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 19, 48 Stat. 898; Pub. L. 87-
    196, Sept. 5, 1961, 75 Stat. 465; Pub. L. 87-561, July 27, 1962,
    76 Stat. 247; Pub. L. 90-438, July 29, 1968, 82 Stat. 453; Pub. L.
    91-94, Oct. 20, 1969, 83 Stat. 141; Pub. L. 91-410, Sept. 25, 1970,
    84 Stat. 862; Pub. L. 94-29, Sec. 16, June 4, 1975, 89 Stat. 146;
    Pub. L. 103-202, title I, Sec. 106(c), Dec. 17, 1993, 107 Stat.
    2350; Pub. L. 105-353, title III, Sec. 301(b)(11), Nov. 3, 1998,
    112 Stat. 3236; Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    202(b), (c)], Dec. 21, 2000, 114 Stat. 2763, 2763A-418, 2763A-421.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a)(1), (b)(2), (3)(C),
    (7)(C), (8), (c), (d)(1), (e)(1)(A), (2), (f), (g), and (h), was in
    the original "this title". See References in Text note set out
    under section 78a of this title.
      The Securities Act of 1933, referred to in subsec. (h), is act
    May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended, which is
    classified generally to subchapter I (Sec. 77a et seq.) of chapter
    2A of this title. For complete classification of this Act to the
    Code, see section 77a of this title and Tables.
      The Investment Advisers Act of 1940, referred to in subsec. (h),
    is title II of act Aug. 22, 1940, ch. 686, 54 Stat. 847, as
    amended, which is classified generally to subchapter II (Sec. 80b-1
    et seq.) of chapter 2D of this title. For complete classification
    of this Act to the Code, see section 80b-20 of this title and
    Tables.
      The Investment Company Act of 1940, referred to in subsec. (h),
    is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, as amended,
    which is classified generally to subchapter I (Sec. 80a-1 et seq.)
    of chapter 2D of this title. For complete classification of this
    Act to the Code, see section 80a-51 of this title and Tables.


-MISC1-
                                AMENDMENTS                            
      2000 - Subsec. (b)(7). Pub. L. 106-554, Sec. 1(a)(5) [title II,
    Sec. 202(b)(1)], added par. (7).
      Subsec. (b)(8). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    202(b)(2)], added par. (8).
      Subsec. (b)(9). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    202(b)(3)], added par. (9).
      Subsec. (d)(3). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    202(c)], added par. (3).
      1998 - Subsec. (c)(5). Pub. L. 105-353 realigned margins.
      1993 - Subsec. (b)(5), (6). Pub. L. 103-202, Sec. 106(c)(1),
    added pars. (5) and (6).
      Subsec. (c)(5). Pub. L. 103-202, Sec. 106(c)(2), added par. (5).
      1975 - Pub. L. 94-29 amended section generally, substituting
    provisions covering the registration, responsibilities, and
    oversight of self-regulatory organizations by the Commission for
    provisions covering only the Commission's powers with respect to
    exchanges and securities, with a view to consolidating and
    expanding the Commission's oversight powers with respect to self-
    regulatory organizations, their members, participants, and
    officers, and with a view to giving the Commission identical powers
    over all self-regulatory organizations, including registered
    clearing agencies, and substantially strengthening the Commission's
    ability to assure that these organizations carry out their
    statutory responsibilities.
      1970 - Subsec. (e)(1). Pub. L. 91-410 substituted "December 31,
    1970" for "September 1, 1970".
      1969 - Subsec. (e). Pub. L. 91-94 substituted "September 1, 1970"
    for "September 1, 1969" in par. (1), and "$945,000" for "$875,000"
    in par. (4).
      1968 - Subsec. (e). Pub. L. 90-438 added subsec. (e).
      1962 - Subsec. (d). Pub. L. 87-561 substituted "April 3, 1963"
    for "January 3, 1963" and "$950,000" for "$750,000".
      1961 - Subsec. (d). Pub. L. 87-196 added subsec. (d).

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, except for
    amendment of subsec. (g) by Pub. L. 94-29 which is effective 180
    days after June 4, 1975, see section 31(a) of Pub. L. 94-29, set
    out as a note under section 78b of this title.

                      CONSTRUCTION OF 1993 AMENDMENT                  
      Amendment by Pub. L. 103-202 not to be construed to govern
    initial issuance of any public debt obligation or to grant any
    authority to (or extend any authority of) the Securities and
    Exchange Commission, any appropriate regulatory agency, or a self-
    regulatory organization to prescribe any procedure, term, or
    condition of such initial issuance, to promulgate any rule or
    regulation governing such initial issuance, or to otherwise
    regulate in any manner such initial issuance, see section 111 of
    Pub. L. 103-202, set out as a note under section 78o-5 of this
    title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.


-MISC2-
      REVIEW OF REGULATORY STRUCTURES AND PROCEDURES WITH RESPECT TO
                           PENNY STOCKS; REPORT
      Pub. L. 101-429, title V, Sec. 510, Oct. 15, 1990, 104 Stat. 957,
    directed Comptroller General, in consultation with Securities and
    Exchange Commission, to conduct a review of rules, procedures,
    facilities, and oversight and enforcement activities of self-
    regulatory organizations under Securities Exchange Act of 1934,
    with respect to penny stocks (within the meaning of 15 U.S.C.
    78c(a)(51)), and, within one year after Oct. 15, 1990, to submit a
    report on the review including a statement of findings and such
    recommendations as the Comptroller General considered appropriate
    with respect to legislative or administrative changes.

-End-



-CITE-
    15 USC Sec. 78t                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78t. Liability of controlling persons and persons who aid and
      abet violations

-STATUTE-
    (a) Joint and several liability; good faith defense
      Every person who, directly or indirectly, controls any person
    liable under any provision of this chapter or of any rule or
    regulation thereunder shall also be liable jointly and severally
    with and to the same extent as such controlled person to any person
    to whom such controlled person is liable, unless the controlling
    person acted in good faith and did not directly or indirectly
    induce the act or acts constituting the violation or cause of
    action.
    (b) Unlawful activity through or by means of any other person
      It shall be unlawful for any person, directly or indirectly, to
    do any act or thing which it would be unlawful for such person to
    do under the provisions of this chapter or any rule or regulation
    thereunder through or by means of any other person.
    (c) Hindering, delaying, or obstructing the making or filing of any
      document, report, or information
      It shall be unlawful for any director or officer of, or any owner
    of any securities issued by, any issuer required to file any
    document, report, or information under this chapter or any rule or
    regulation thereunder without just cause to hinder, delay, or
    obstruct the making or filing of any such document, report, or
    information.
    (d) Liability for trading in securities while in possession of
      material nonpublic information
      Wherever communicating, or purchasing or selling a security while
    in possession of, material nonpublic information would violate, or
    result in liability to any purchaser or seller of the security
    under any provisions of this chapter, or any rule or regulation
    thereunder, such conduct in connection with a purchase or sale of a
    put, call, straddle, option, privilege or security-based swap
    agreement (as defined in section 206B of the Gramm-Leach-Bliley
    Act) with respect to such security or with respect to a group or
    index of securities including such security, shall also violate and
    result in comparable liability to any purchaser or seller of that
    security under such provision, rule, or regulation.
    (e) Prosecution of persons who aid and abet violations
      For purposes of any action brought by the Commission under
    paragraph (1) or (3) of section 78u(d) of this title, any person
    that knowingly provides substantial assistance to another person in
    violation of a provision of this chapter, or of any rule or
    regulation issued under this chapter, shall be deemed to be in
    violation of such provision to the same extent as the person to
    whom such assistance is provided.
    (f) Limitation on Commission authority
      The authority of the Commission under this section with respect
    to security-based swap agreements (as defined in section 206B of
    the Gramm-Leach-Bliley Act) shall be subject to the restrictions
    and limitations of section 78c-1(b) of this title.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 20, 48 Stat. 899; May 27,
    1936, ch. 462, Sec. 6, 49 Stat. 1379; Pub. L. 88-467, Sec. 9, Aug.
    20, 1964, 78 Stat. 579; Pub. L. 98-376, Sec. 5, Aug. 10, 1984, 98
    Stat. 1265; Pub. L. 104-67, title I, Sec. 104, Dec. 22, 1995, 109
    Stat. 757; Pub. L. 105-353, title III, Sec. 301(b)(12), Nov. 3,
    1998, 112 Stat. 3236; Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    205(a)(3), title III, Sec. 303(i), (j)], Dec. 21, 2000, 114 Stat.
    2763, 2763A-426, 2763A-456.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in text, was in the original "this
    title". See References in Text note set out under section 78a of
    this title.
      Section 206B of the Gramm-Leach-Bliley Act, referred to in
    subsecs. (d) and (f), is section 206B of Pub. L. 106-102, which is
    set out in a note under section 78c of this title.


-MISC1-
                                AMENDMENTS                            
      2000 - Subsec. (d). Pub. L. 106-554, Sec. 1(a)(5) [title III,
    Sec. 303(i)], amended subsec. (d) generally. Prior to amendment,
    subsec. (d) read as follows: "Wherever communicating, or purchasing
    or selling a security while in possession of, material nonpublic
    information would violate, or result in liability to any purchaser
    or seller of the security under any provision of this chapter, or
    any rule or regulation thereunder, such conduct in connection with
    a purchase or sale of a put, call, straddle, option,, privilege, or
    security futures product with respect to such security or with
    respect to a group or index of securities including such security,
    shall also violate and result in comparable liability to any
    purchaser or seller of that security under such provision, rule, or
    regulation."
      Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec. 205(a)(3)],
    substituted ", privilege, or security futures product" for "or
    privilege".
      Subsec. (f). Pub. L. 106-554, Sec. 1(a)(5) [title III, Sec.
    303(j)], added subsec. (f).
      1998 - Subsecs. (e), (f). Pub. L. 105-353 redesignated subsec.
    (f) as (e).
      1995 - Pub. L. 104-67, Sec. 104(1), substituted "liability of
    controlling persons and persons who aid and abet violations" for
    "Liabilities of controlling persons" in section catchline.
      Subsec. (f). Pub. L. 104-67, Sec. 104(2), added subsec. (f).
      1984 - Subsec. (d). Pub. L. 98-376 added subsec. (d).
      1964 - Subsec. (c). Pub. L. 88-467 extended application of
    provisions of subsec. (c) by substituting the prohibition against
    any officer or director of, or an owner of securities issued by, a
    company from hindering, delaying, or obstructing the preparation or
    filing of any report, document, or information required to be filed
    under this chapter for existing provisions applicable only to
    filings by companies with securities registered on a national
    securities exchange or subject to the provisions of section 78o(d)
    of this title.
      1936 - Subsec. (c). Act May 27, 1936, inserted "or any
    undertaking contained in a registration statement as provided in
    subsection (d) of section 78o of this title".

                     EFFECTIVE DATE OF 1995 AMENDMENT                 
      Amendment by Pub. L. 104-67 not to affect or apply to any private
    action arising under this chapter or title I of the Securities Act
    of 1933 (15 U.S.C. 77a et seq.), commenced before and pending on
    Dec. 22, 1995, see section 108 of Pub. L. 104-67, set out as a note
    under section 77l of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-376 effective Aug. 10, 1984, see section
    7 of Pub. L. 98-376, set out as a note under section 78c of this
    title.

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see section
    13 of Pub. L. 88-467, set out as a note under section 78c of this
    title.

                      CONSTRUCTION OF 1995 AMENDMENT                  
      Nothing in amendment by Pub. L. 104-67 to be deemed to create or
    ratify any implied right of action, or to prevent Commission, by
    rule or regulation, from restricting or otherwise regulating
    private actions under this chapter, see section 203 of Pub. L. 104-
    67, set out as a Construction note under section 78j-1 of this
    title.

-End-



-CITE-
    15 USC Sec. 78t-1                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78t-1. Liability to contemporaneous traders for insider
      trading

-STATUTE-
    (a) Private rights of action based on contemporaneous trading
      Any person who violates any provision of this chapter or the
    rules or regulations thereunder by purchasing or selling a security
    while in possession of material, nonpublic information shall be
    liable in an action in any court of competent jurisdiction to any
    person who, contemporaneously with the purchase or sale of
    securities that is the subject of such violation, has purchased
    (where such violation is based on a sale of securities) or sold
    (where such violation is based on a purchase of securities)
    securities of the same class.
    (b) Limitations on liability
      (1) Contemporaneous trading actions limited to profit gained or
        loss avoided
        The total amount of damages imposed under subsection (a) of
      this section shall not exceed the profit gained or loss avoided
      in the transaction or transactions that are the subject of the
      violation.
      (2) Offsetting disgorgements against liability
        The total amount of damages imposed against any person under
      subsection (a) of this section shall be diminished by the
      amounts, if any, that such person may be required to disgorge,
      pursuant to a court order obtained at the instance of the
      Commission, in a proceeding brought under section 78u(d) of this
      title relating to the same transaction or transactions.
      (3) Controlling person liability
        No person shall be liable under this section solely by reason
      of employing another person who is liable under this section, but
      the liability of a controlling person under this section shall be
      subject to section 78t(a) of this title.
      (4) Statute of limitations
        No action may be brought under this section more than 5 years
      after the date of the last transaction that is the subject of the
      violation.
    (c) Joint and several liability for communicating
      Any person who violates any provision of this chapter or the
    rules or regulations thereunder by communicating material,
    nonpublic information shall be jointly and severally liable under
    subsection (a) of this section with, and to the same extent as, any
    person or persons liable under subsection (a) of this section to
    whom the communication was directed.
    (d) Authority not to restrict other express or implied rights of
      action
      Nothing in this section shall be construed to limit or condition
    the right of any person to bring an action to enforce a requirement
    of this chapter or the availability of any cause of action implied
    from a provision of this chapter.
    (e) Provisions not to affect public prosecutions
      This section shall not be construed to bar or limit in any manner
    any action by the Commission or the Attorney General under any
    other provision of this chapter, nor shall it bar or limit in any
    manner any action to recover penalties, or to seek any other order
    regarding penalties.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 20A, as added Pub. L. 100-
    704, Sec. 5, Nov. 19, 1988, 102 Stat. 4680.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a), (c), (d), and (e), was
    in the original "this title". See References in Text note set out
    under section 78a of this title.


-MISC1-
                              EFFECTIVE DATE                          
      Section not applicable to actions occurring before Nov. 19, 1988,
    see section 9 of Pub. L. 100-704 set out as an Effective Date of
    1988 Amendment note under section 78o of this title.

-End-



-CITE-
    15 USC Sec. 78u                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78u. Investigations and actions

-STATUTE-
    (a) Authority and discretion of Commission to investigate
      violations
      (1) The Commission may, in its discretion, make such
    investigations as it deems necessary to determine whether any
    person has violated, is violating, or is about to violate any
    provision of this chapter, the rules or regulations thereunder, the
    rules of a national securities exchange or registered securities
    association of which such person is a member or a person associated
    with a member, the rules of a registered clearing agency in which
    such person is a participant, the rules of the Public Company
    Accounting Oversight Board, of which such person is a registered
    public accounting firm or a person associated with such a firm, or
    the rules of the Municipal Securities Rulemaking Board, and may
    require or permit any person to file with it a statement in
    writing, under oath or otherwise as the Commission shall determine,
    as to all the facts and circumstances concerning the matter to be
    investigated. The Commission is authorized in its discretion, to
    publish information concerning any such violations, and to
    investigate any facts, conditions, practices, or matters which it
    may deem necessary or proper to aid in the enforcement of such
    provisions, in the prescribing of rules and regulations under this
    chapter, or in securing information to serve as a basis for
    recommending further legislation concerning the matters to which
    this chapter relates.
      (2) On request from a foreign securities authority, the
    Commission may provide assistance in accordance with this paragraph
    if the requesting authority states that the requesting authority is
    conducting an investigation which it deems necessary to determine
    whether any person has violated, is violating, or is about to
    violate any laws or rules relating to securities matters that the
    requesting authority administers or enforces. The Commission may,
    in its discretion, conduct such investigation as the Commission
    deems necessary to collect information and evidence pertinent to
    the request for assistance. Such assistance may be provided without
    regard to whether the facts stated in the request would also
    constitute a violation of the laws of the United States. In
    deciding whether to provide such assistance, the Commission shall
    consider whether (A) the requesting authority has agreed to provide
    reciprocal assistance in securities matters to the Commission; and
    (B) compliance with the request would prejudice the public interest
    of the United States.
    (b) Attendance of witnesses; production of records
      For the purpose of any such investigation, or any other
    proceeding under this chapter, any member of the Commission or any
    officer designated by it is empowered to administer oaths and
    affirmations, subpena witnesses, compel their attendance, take
    evidence, and require the production of any books, papers,
    correspondence, memoranda, or other records which the Commission
    deems relevant or material to the inquiry. Such attendance of
    witnesses and the production of any such records may be required
    from any place in the United States or any State at any designated
    place of hearing.
    (c) Judicial enforcement of investigative power of Commission;
      refusal to obey subpena; criminal sanctions
      In case of contumacy by, or refusal to obey a subpena issued to,
    any person, the Commission may invoke the aid of any court of the
    United States within the jurisdiction of which such investigation
    or proceeding is carried on, or where such person resides or
    carries on business, in requiring the attendance and testimony of
    witnesses and the production of books, papers, correspondence,
    memoranda, and other records. And such court may issue an order
    requiring such person to appear before the Commission or member or
    officer designated by the Commission, there to produce records, if
    so ordered, or to give testimony touching the matter under
    investigation or in question; and any failure to obey such order of
    the court may be punished by such court as a contempt thereof. All
    process in any such case may be served in the judicial district
    whereof such person is an inhabitant or wherever he may be found.
    Any person who shall, without just cause, fail or refuse to attend
    and testify or to answer any lawful inquiry or to produce books,
    papers, correspondence, memoranda, and other records, if in his
    power so to do, in obedience to the subpena of the Commission,
    shall be guilty of a misdemeanor and, upon conviction, shall be
    subject to a fine of not more than $1,000 or to imprisonment for a
    term of not more than one year, or both.
    (d) Injunction proceedings; authority of court to prohibit persons
      from serving as officers and directors; money penalties in civil
      actions
      (1) Whenever it shall appear to the Commission that any person is
    engaged or is about to engage in acts or practices constituting a
    violation of any provision of this chapter, the rules or
    regulations thereunder, the rules of a national securities exchange
    or registered securities association of which such person is a
    member or a person associated with a member, the rules of a
    registered clearing agency in which such person is a participant,
    the rules of the Public Company Accounting Oversight Board, of
    which such person is a registered public accounting firm or a
    person associated with such a firm, or the rules of the Municipal
    Securities Rulemaking Board, it may in its discretion bring an
    action in the proper district court of the United States, the
    United States District Court for the District of Columbia, or the
    United States courts of any territory or other place subject to the
    jurisdiction of the United States, to enjoin such acts or
    practices, and upon a proper showing a permanent or temporary
    injunction or restraining order shall be granted without bond. The
    Commission may transmit such evidence as may be available
    concerning such acts or practices as may constitute a violation of
    any provision of this chapter or the rules or regulations
    thereunder to the Attorney General, who may, in his discretion,
    institute the necessary criminal proceedings under this chapter.
      (2) Authority of Court To Prohibit Persons From Serving as
    Officers and Directors. - In any proceeding under paragraph (1) of
    this subsection, the court may prohibit, conditionally or
    unconditionally, and permanently or for such period of time as it
    shall determine, any person who violated section 78j(b) of this
    title or the rules or regulations thereunder from acting as an
    officer or director of any issuer that has a class of securities
    registered pursuant to section 78l of this title or that is
    required to file reports pursuant to section 78o(d) of this title
    if the person's conduct demonstrates unfitness to serve as an
    officer or director of any such issuer.
      (3) Money Penalties in Civil Actions. - 
        (A) Authority of commission. - Whenever it shall appear to the
      Commission that any person has violated any provision of this
      chapter, the rules or regulations thereunder, or a cease-and-
      desist order entered by the Commission pursuant to section 78u-3
      of this title, other than by committing a violation subject to a
      penalty pursuant to section 78u-1 of this title, the Commission
      may bring an action in a United States district court to seek,
      and the court shall have jurisdiction to impose, upon a proper
      showing, a civil penalty to be paid by the person who committed
      such violation.
        (B) Amount of penalty. - 
          (i) First tier. - The amount of the penalty shall be
        determined by the court in light of the facts and
        circumstances. For each violation, the amount of the penalty
        shall not exceed the greater of (I) $5,000 for a natural person
        or $50,000 for any other person, or (II) the gross amount of
        pecuniary gain to such defendant as a result of the violation.
          (ii) Second tier. - Notwithstanding clause (i), the amount of
        penalty for each such violation shall not exceed the greater of
        (I) $50,000 for a natural person or $250,000 for any other
        person, or (II) the gross amount of pecuniary gain to such
        defendant as a result of the violation, if the violation
        described in subparagraph (A) involved fraud, deceit,
        manipulation, or deliberate or reckless disregard of a
        regulatory requirement.
          (iii) Third tier. - Notwithstanding clauses (i) and (ii), the
        amount of penalty for each such violation shall not exceed the
        greater of (I) $100,000 for a natural person or $500,000 for
        any other person, or (II) the gross amount of pecuniary gain to
        such defendant as a result of the violation, if - 
            (aa) the violation described in subparagraph (A) involved
          fraud, deceit, manipulation, or deliberate or reckless
          disregard of a regulatory requirement; and
            (bb) such violation directly or indirectly resulted in
          substantial losses or created a significant risk of
          substantial losses to other persons.

        (C) Procedures for collection. - 
          (i) Payment of penalty to treasury. - A penalty imposed under
        this section shall be payable into the Treasury of the United
        States, except as otherwise provided in section 7246 of this
        title.
          (ii) Collection of penalties. - If a person upon whom such a
        penalty is imposed shall fail to pay such penalty within the
        time prescribed in the court's order, the Commission may refer
        the matter to the Attorney General who shall recover such
        penalty by action in the appropriate United States district
        court.
          (iii) Remedy not exclusive. - The actions authorized by this
        paragraph may be brought in addition to any other action that
        the Commission or the Attorney General is entitled to bring.
          (iv) Jurisdiction and venue. - For purposes of section 78aa
        of this title, actions under this paragraph shall be actions to
        enforce a liability or a duty created by this chapter.

        (D) Special provisions relating to a violation of a cease-and-
      desist order. - In an action to enforce a cease-and-desist order
      entered by the Commission pursuant to section 78u-3 of this
      title, each separate violation of such order shall be a separate
      offense, except that in the case of a violation through a
      continuing failure to comply with the order, each day of the
      failure to comply shall be deemed a separate offense.

      (4) Prohibition of attorneys' fees paid from commission
    disgorgement funds. - Except as otherwise ordered by the court upon
    motion by the Commission, or, in the case of an administrative
    action, as otherwise ordered by the Commission, funds disgorged as
    the result of an action brought by the Commission in Federal court,
    or as a result of any Commission administrative action, shall not
    be distributed as payment for attorneys' fees or expenses incurred
    by private parties seeking distribution of the disgorged funds.
      (5) Equitable Relief. - In any action or proceeding brought or
    instituted by the Commission under any provision of the securities
    laws, the Commission may seek, and any Federal court may grant, any
    equitable relief that may be appropriate or necessary for the
    benefit of investors.
      (6) Authority of a court to prohibit persons from participating
    in an offering of penny stock. - 
        (A) In general. - In any proceeding under paragraph (1) against
      any person participating in, or, at the time of the alleged
      misconduct who was participating in, an offering of penny stock,
      the court may prohibit that person from participating in an
      offering of penny stock, conditionally or unconditionally, and
      permanently or for such period of time as the court shall
      determine.
        (B) Definition. - For purposes of this paragraph, the term
      "person participating in an offering of penny stock" includes any
      person engaging in activities with a broker, dealer, or issuer
      for purposes of issuing, trading, or inducing or attempting to
      induce the purchase or sale of, any penny stock. The Commission
      may, by rule or regulation, define such term to include other
      activities, and may, by rule, regulation, or order, exempt any
      person or class of persons, in whole or in part, conditionally or
      unconditionally, from inclusion in such term.
    (e) Mandamus
      Upon application of the Commission the district courts of the
    United States and the United States courts of any territory or
    other place subject to the jurisdiction of the United States shall
    have jurisdiction to issue writs of mandamus, injunctions, and
    orders commanding (1) any person to comply with the provisions of
    this chapter, the rules, regulations, and orders thereunder, the
    rules of a national securities exchange or registered securities
    association of which such person is a member or person associated
    with a member, the rules of a registered clearing agency in which
    such person is a participant, the rules of the Public Company
    Accounting Oversight Board, of which such person is a registered
    public accounting firm or a person associated with such a firm, the
    rules of the Municipal Securities Rulemaking Board, or any
    undertaking contained in a registration statement as provided in
    subsection (d) of section 78o of this title, (2) any national
    securities exchange or registered securities association to enforce
    compliance by its members and persons associated with its members
    with the provisions of this chapter, the rules, regulations, and
    orders thereunder, and the rules of such exchange or association,
    or (3) any registered clearing agency to enforce compliance by its
    participants with the provisions of the rules of such clearing
    agency.
    (f) Rules of self-regulatory organizations or Board
      Notwithstanding any other provision of this chapter, the
    Commission shall not bring any action pursuant to subsection (d) or
    (e) of this section against any person for violation of, or to
    command compliance with, the rules of a self-regulatory
    organization or the Public Company Accounting Oversight Board
    unless it appears to the Commission that (1) such self-regulatory
    organization or the Public Company Accounting Oversight Board is
    unable or unwilling to take appropriate action against such person
    in the public interest and for the protection of investors, or (2)
    such action is otherwise necessary or appropriate in the public
    interest or for the protection of investors.
    (g) Consolidation of actions; consent of Commission
      Notwithstanding the provisions of section 1407(a) of title 28, or
    any other provision of law, no action for equitable relief
    instituted by the Commission pursuant to the securities laws shall
    be consolidated or coordinated with other actions not brought by
    the Commission, even though such other actions may involve common
    questions of fact, unless such consolidation is consented to by the
    Commission.
    (h) Access to records
      (1) The Right to Financial Privacy Act of 1978 [12 U.S.C. 3401 et
    seq.] shall apply with respect to the Commission, except as
    otherwise provided in this subsection.
      (2) Notwithstanding section 1105 or 1107 of the Right to
    Financial Privacy Act of 1978 [12 U.S.C. 3405 or 3407], the
    Commission may have access to and obtain copies of, or the
    information contained in financial records of a customer from a
    financial institution without prior notice to the customer upon an
    ex parte showing to an appropriate United States district court
    that the Commission seeks such financial records pursuant to a
    subpena issued in conformity with the requirements of section 19(b)
    (!1) of the Securities Act of 1933, section 21(b) of the Securities
    Exchange Act of 1934 [15 U.S.C. 78u(b)], section 18(c) of the
    Public Utility Holding Company Act of 1935,(!1) section 42(b) of
    the Investment Company Act of 1940 [15 U.S.C. 80a-41(b)], or
    section 209(b) of the Investment Advisers Act of 1940 [15 U.S.C.
    80b-9(b)], and that the Commission has reason to believe that - 

        (A) delay in obtaining access to such financial records, or the
      required notice, will result in - 
          (i) flight from prosecution;
          (ii) destruction of or tampering with evidence;
          (iii) transfer of assets or records outside the territorial
        limits of the United States;
          (iv) improper conversion of investor assets; or
          (v) impeding the ability of the Commission to identify or
        trace the source or disposition of funds involved in any
        securities transaction;

        (B) such financial records are necessary to identify or trace
      the record or beneficial ownership interest in any security;
        (C) the acts, practices or course of conduct under
      investigation involve - 
          (i) the dissemination of materially false or misleading
        information concerning any security, issuer, or market, or the
        failure to make disclosures required under the securities laws,
        which remain uncorrected; or
          (ii) a financial loss to investors or other persons protected
        under the securities laws which remains substantially
        uncompensated; or

        (D) the acts, practices or course of conduct under
      investigation - 
          (i) involve significant financial speculation in securities;
        or
          (ii) endanger the stability of any financial or investment
        intermediary.

      (3) Any application under paragraph (2) for a delay in notice
    shall be made with reasonable specificity.
      (4)(A) Upon a showing described in paragraph (2), the presiding
    judge or magistrate judge shall enter an ex parte order granting
    the requested delay for a period not to exceed ninety days and an
    order prohibiting the financial institution involved from
    disclosing that records have been obtained or that a request for
    records has been made.
      (B) Extensions of the period of delay of notice provided in
    subparagraph (A) of up to ninety days each may be granted by the
    court upon application, but only in accordance with this subsection
    or section 1109(a), (b)(1), or (b)(2) of the Right to Financial
    Privacy Act of 1978 [12 U.S.C. 3409(a), (b)(1), or (b)(2)].
      (C) Upon expiration of the period of delay of notification
    ordered under subparagraph (A) or (B), the customer shall be served
    with or mailed a copy of the subpena insofar as it applies to the
    customer together with the following notice which shall describe
    with reasonable specificity the nature of the investigation for
    which the Commission sought the financial records:
      "Records or information concerning your transactions which are
    held by the financial institution named in the attached subpena
    were supplied to the Securities and Exchange Commission on (date).
    Notification was withheld pursuant to a determination by the (title
    of court so ordering) under section 21(h) of the Securities
    Exchange Act of 1934 that (state reason). The purpose of the
    investigation or official proceeding was (state purpose)."
      (5) Upon application by the Commission, all proceedings pursuant
    to paragraphs (2) and (4) shall be held in camera and the records
    thereof sealed until expiration of the period of delay or such
    other date as the presiding judge or magistrate judge may permit.
      (6) The Commission shall compile an annual tabulation of the
    occasions on which the Commission used each separate subparagraph
    or clause of paragraph (2) of this subsection or the provisions of
    the Right to Financial Privacy Act of 1978 [12 U.S.C. 3401 et seq.]
    to obtain access to financial records of a customer and include it
    in its annual report to the Congress. Section 1121(b) (!1) of the
    Right to Financial Privacy Act of 1978 shall not apply with respect
    to the Commission.
      (7)(A) Following the expiration of the period of delay of
    notification ordered by the court pursuant to paragraph (4) of this
    subsection, the customer may, upon motion, reopen the proceeding in
    the district court which issued the order. If the presiding judge
    or magistrate judge finds that the movant is the customer to whom
    the records obtained by the Commission pertain, and that the
    Commission has obtained financial records or information contained
    therein in violation of this subsection, other than paragraph (1),
    it may order that the customer be granted civil penalties against
    the Commission in an amount equal to the sum of - 
        (i) $100 without regard to the volume of records involved;
        (ii) any out-of-pocket damages sustained by the customer as a
      direct result of the disclosure; and
        (iii) if the violation is found to have been willful,
      intentional, and without good faith, such punitive damages as the
      court may allow, together with the costs of the action and
      reasonable attorney's fees as determined by the court.

      (B) Upon a finding that the Commission has obtained financial
    records or information contained therein in violation of this
    subsection, other than paragraph (1), the court, in its discretion,
    may also or in the alternative issue injunctive relief to require
    the Commission to comply with this subsection with respect to any
    subpena which the Commission issues in the future for financial
    records of such customer for purposes of the same investigation.
      (C) Whenever the court determines that the Commission has failed
    to comply with this subsection, other than paragraph (1), and the
    court finds that the circumstances raise questions of whether an
    officer or employee of the Commission acted in a willful and
    intentional manner and without good faith with respect to the
    violation, the Office of Personnel Management shall promptly
    initiate a proceeding to determine whether disciplinary action is
    warranted against the agent or employee who was primarily
    responsible for the violation. After investigating and considering
    the evidence submitted, the Office of Personnel Management shall
    submit its findings and recommendations to the Commission and shall
    send copies of the findings and recommendations to the officer or
    employee or his representative. The Commission shall take the
    corrective action that the Office of Personnel Management
    recommends.
      (8) The relief described in paragraphs (7) and (10) shall be the
    only remedies or sanctions available to a customer for a violation
    of this subsection, other than paragraph (1), and nothing herein or
    in the Right to Financial Privacy Act of 1978 [12 U.S.C. 3401 et
    seq.] shall be deemed to prohibit the use in any investigation or
    proceeding of financial records, or the information contained
    therein, obtained by a subpena issued by the Commission. In the
    case of an unsuccessful action under paragraph (7), the court shall
    award the costs of the action and attorney's fees to the Commission
    if the presiding judge or magistrate judge finds that the
    customer's claims were made in bad faith.
      (9)(A) The Commission may transfer financial records or the
    information contained therein to any government authority if the
    Commission proceeds as a transferring agency in accordance with
    section 1112 of the Right to Financial Privacy Act of 1978 [12
    U.S.C. 3412], except that the customer notice required under
    section 1112(b) or (c) of such Act [12 U.S.C. 3412(b) or (c)] may
    be delayed upon a showing by the Commission, in accordance with the
    procedure set forth in paragraphs (4) and (5), that one or more of
    subparagraphs (A) through (D) of paragraph (2) apply.
      (B) The Commission may, without notice to the customer pursuant
    to section 1112 or the Right to Financial Privacy Act of 1978 [12
    U.S.C. 3412], transfer financial records or the information
    contained therein to a State securities agency or to the Department
    of Justice. Financial records or information transferred by the
    Commission to the Department of Justice or to a State securities
    agency pursuant to the provisions of this subparagraph may be
    disclosed or used only in an administrative, civil, or criminal
    action or investigation by the Department of Justice or the State
    securities agency which arises out of or relates to the acts,
    practices, or courses of conduct investigated by the Commission,
    except that if the Department of Justice or the State securities
    agency determines that the information should be disclosed or used
    for any other purpose, it may do so if it notifies the customer,
    except as otherwise provided in the Right to Financial Privacy Act
    of 1978 [12 U.S.C. 3401 et seq.], within 30 days of its
    determination, or complies with the requirements of section 1109 of
    such Act [12 U.S.C. 3409] regarding delay of notice.
      (10) Any government authority violating paragraph (9) shall be
    subject to the procedures and penalties applicable to the
    Commission under paragraph (7)(A) with respect to a violation by
    the Commission in obtaining financial records.
      (11) Notwithstanding the provisions of this subsection, the
    Commission may obtain financial records from a financial
    institution or transfer such records in accordance with provisions
    of the Right to Financial Privacy Act of 1978 [12 U.S.C. 3401 et
    seq.].
      (12) Nothing in this subsection shall enlarge or restrict any
    rights of a financial institution to challenge requests for records
    made by the Commission under existing law. Nothing in this
    subsection shall entitle a customer to assert any rights of a
    financial institution.
      (13) Unless the context otherwise requires, all terms defined in
    the Right to Financial Privacy Act of 1978 [12 U.S.C. 3401 et seq.]
    which are common to this subsection shall have the same meaning as
    in such Act.
    (i) Information to CFTC
      The Commission shall provide the Commodity Futures Trading
    Commission with notice of the commencement of any proceeding and a
    copy of any order entered by the Commission against any broker or
    dealer registered pursuant to section 78o(b)(11) of this title, any
    exchange registered pursuant to section 78f(g) of this title, or
    any national securities association registered pursuant to section
    78o-3(k) of this title.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 21, 48 Stat. 899; May 27,
    1936, ch. 462, Sec. 7, 49 Stat. 1379; Pub. L. 91-452, title II,
    Sec. 212, Oct. 15, 1970, 84 Stat. 929; Pub. L. 94-29, Sec. 17, June
    4, 1975, 89 Stat. 154; Pub. L. 96-433, Secs. 3, 4, Oct. 10, 1980,
    94 Stat. 1855, 1858; Pub. L. 98-376, Sec. 2, Aug. 10, 1984, 98
    Stat. 1264; Pub. L. 100-181, title III, Sec. 323, Dec. 4, 1987, 101
    Stat. 1259; Pub. L. 100-704, Secs. 3(a)(1), 6(b), Nov. 19, 1988,
    102 Stat. 4677, 4681; Pub. L. 101-429, title II, Sec. 201, Oct. 15,
    1990, 104 Stat. 935; Pub. L. 101-650, title III, Sec. 321, Dec. 1,
    1990, 104 Stat. 5117; Pub. L. 104-67, title I, Sec. 103(b)(2), Dec.
    22, 1995, 109 Stat. 756; Pub. L. 106-554, Sec. 1(a)(5) [title II,
    Sec. 205(a)(5)], Dec. 21, 2000, 114 Stat. 2763, 2763A-426; Pub. L.
    107-204, Sec. 3(b)(2), title III, Secs. 305(a)(1), (b), 308(d)(1),
    title VI, Sec. 603(a), July 30, 2002, 116 Stat. 749, 778, 779, 785,
    794.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a)(1), (b), (d), (e), and
    (f), was in the original "this title". See References in Text note
    set out under section 78a of this title.
      The Right to Financial Privacy Act of 1978, referred to in
    subsec. (h)(1), (6), (8), (9)(B), (11), and (13), is title XI of
    Pub. L. 95-630, Nov. 10, 1978, 92 Stat. 3697, as amended, which is
    classified generally to chapter 35 (Sec. 3401 et seq.) of Title 12,
    Banks and Banking. Section 1121(b) of the Act, which was classified
    to section 3421(b) of Title 12, was repealed by Pub. L. 104-66,
    title III, Sec. 3001(d), Dec. 21, 1995, 109 Stat. 734. For complete
    classification of this Act to the Code, see Short Title note set
    out under section 3401 of Title 12 and Tables.
      Section 19(b) of the Securities Act of 1933, referred to in
    subsec. (h)(2), was redesignated section 19(c) by Pub. L. 107-204,
    title I, Sec. 108(a)(1), July 30, 2002, 116 Stat. 768, and is
    classified to section 77s(c) of this title.
      Section 18(c) of the Public Utility Holding Company Act of 1935,
    referred to in subsec. (h)(2), was classified to section 79r(c) of
    this title, prior to repeal by Pub. L. 109-58, title XII, Sec.
    1263, Aug. 8, 2005, 119 Stat. 974.
      Section 21(h) of the Securities Exchange Act of 1934, referred to
    in the paragraph within quotation marks following subsec.
    (h)(4)(C), is classified to subsection (h) of this section.


-MISC1-
                                AMENDMENTS                            
      2002 - Subsec. (a)(1). Pub. L. 107-204, Sec. 3(b)(2)(A), inserted
    "the rules of the Public Company Accounting Oversight Board, of
    which such person is a registered public accounting firm or a
    person associated with such a firm," after "is a participant,".
      Subsec. (d)(1). Pub. L. 107-204, Sec. 3(b)(2)(B), inserted "the
    rules of the Public Company Accounting Oversight Board, of which
    such person is a registered public accounting firm or a person
    associated with such a firm," after "is a participant,".
      Subsec. (d)(2). Pub. L. 107-204, Sec. 305(a)(1), substituted
    "unfitness" for "substantial unfitness".
      Subsec. (d)(3)(C)(i). Pub. L. 107-204, Sec. 308(d)(1), inserted
    ", except as otherwise provided in section 7246 of this title"
    before period at end.
      Subsec. (d)(5). Pub. L. 107-204, Sec. 305(b), added par. (5).
      Subsec. (d)(6). Pub. L. 107-204, Sec. 603(a), added par. (6).
      Subsec. (e). Pub. L. 107-204, Sec. 3(b)(2)(C), inserted "the
    rules of the Public Company Accounting Oversight Board, of which
    such person is a registered public accounting firm or a person
    associated with such a firm," after "is a participant,".
      Subsec. (f). Pub. L. 107-204, Sec. 3(b)(2)(D), inserted "or the
    Public Company Accounting Oversight Board" after "self-regulatory
    organization" in two places.
      2000 - Subsec. (i). Pub. L. 106-554 added subsec. (i).
      1995 - Subsec. (d)(4). Pub. L. 104-67 added par. (4).
      1990 - Subsec. (d). Pub. L. 101-429 designated existing provision
    as par. (1) and added pars. (2) and (3).
      1988 - Subsec. (a). Pub. L. 100-704, Sec. 6(b), designated
    existing provisions as par. (1) and added par. (2).
      Subsec. (d). Pub. L. 100-704, Sec. 3(a)(1), redesignated par. (1)
    as entire subsec. (d) and struck out par. (2) which provided civil
    penalties for purchasing or selling securities while in possession
    of material nonpublic information.
      1987 - Subsec. (d). Pub. L. 100-181, Sec. 323(1), substituted
    "Whenever" for "Wherever".
      Subsec. (e). Pub. L. 100-181, Sec. 323(2), struck out ", the
    United States District Court for the District of Columbia," after
    "the district courts of the United States".
      Subsec. (g). Pub. L. 100-181, Sec. 323(3), struck out "The term
    'securities laws' as used herein and in subsection (h) of this
    section includes 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 Public Utility Holding Company Act of 1935 (15 U.S.C. 79 et
    seq.), 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-1 et seq.), and the
    Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et
    seq.)." See 15 U.S.C. 78c(a)(47).
      1984 - Subsec. (d). Pub. L. 98-376 designated existing provisions
    as par. (1) and added par. (2).
      1980 - Subsec. (g). Pub. L. 96-433, Sec. 4, inserted "and in
    subsection (h) of this section."
      Subsec. (h). Pub. L. 96-433, Sec. 3, added subsec. (h).
      1975 - Subsec. (a). Pub. L. 94-29, Sec. 17(1), expanded the
    Commission's power to conduct investigations to include violations
    of the rules of a national securities exchange, registered
    securities association, registered clearing agency, or the
    Municipal Securities Rulemaking Board.
      Subsec. (d). Pub. L. 94-29, Sec. 17(2), redesignated subsec. (e)
    as (d) and amended it generally, substituting "has engaged, is
    engaged, or is about to engage" for "is engaged or about to
    engage", "any provision" for "the provisions", "the rules or
    regulations" for "or of any rule or regulation", and "such a
    showing" for "a proper showing", and inserting "the rules of a
    national securities exchange or registered securities association
    of which such persons is a member or a person associated with a
    member, the rules of a registered clearing agency in which such
    person is a participant, or the rules of the Municipal Securities
    Rulemaking Board," in first sentence and inserting "as may
    constitute a violation of any provision of this chapter or the
    rules or regulations thereunder" in second sentence. Former subsec.
    (d) was repealed by Pub. L. 91-452. See 1970 Amendment note below.
      Subsec. (e). Pub. L. 94-29, Sec. 17(2), redesignated subsec. (f)
    as (e) and amended it generally, substituting "mandamus,
    injunctions, and orders commanding (1) any person to comply with
    the provisions of this chapter, the rules, regulations, and orders
    thereunder, the rules of a national securities exchange or
    registered securities association of which such person is a member
    or person associated with a member, the rules of a registered
    clearing agency in which such person is a participant, the rules of
    the Municipal Securities Rulemaking Board, or any undertaking
    contained in a registration statement as provided in subsection (d)
    of section 78o of this title" for "mandamus commanding any person
    to comply with the provisions of this chapter or any order of the
    Commission made in pursuance thereof or with any undertaking
    contained in a registration statement as provided in subsection (d)
    of section 78o of this title" and adding cls. (2) and (3). Former
    subsec. (e) redesignated (d).
      Subsecs. (f), (g). Pub. L. 94-29, Sec. 17(3), added subsecs. (f)
    and (g). Former subsec. (f) redesignated (e).
      1970 - Subsec. (d). Pub. L. 91-452 struck out subsec. (d) which
    related to immunity from prosecution of any individual compelled to
    testify or produce evidence, documentary or otherwise, after
    claiming his privilege against self-incrimination.
      1936 - Subsec. (f). Act May 27, 1936, inserted "or with any
    undertaking contained in a registration statement as provided in
    subsection (d) of section 78o of this title".

-CHANGE-
                              CHANGE OF NAME                          
      Words "magistrate judge" substituted for "magistrate" wherever
    appearing in subsec. (h)(4)(A), (5), (7)(A), (8) pursuant to
    section 321 of Pub. L. 101-650, set out as a note under section 631
    of Title 28, Judiciary and Judicial Procedure.


-MISC2-
                     EFFECTIVE DATE OF 1995 AMENDMENT                 
      Amendment by Pub. L. 104-67 not to affect or apply to any private
    action arising under this chapter or title I of the Securities Act
    of 1933 (15 U.S.C. 77a et seq.), commenced before and pending on
    Dec. 22, 1995, see section 108 of Pub. L. 104-67, set out as a note
    under section 77l of this title.

                     EFFECTIVE DATE OF 1990 AMENDMENT                 
      Amendment by Pub. L. 101-429 effective Oct. 15, 1990, with
    provisions relating to civil penalties and accounting and
    disgorgement, see section 1(c)(1), (2) of Pub. L. 101-429, set out
    in a note under section 77g of this title.

                     EFFECTIVE DATE OF 1988 AMENDMENT                 
      Amendment by section 3(a)(1) of Pub. L. 100-704 not applicable to
    actions occurring before Nov. 19, 1988, see section 9 of Pub. L.
    100-704 set out as a note under section 78o of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-376 effective Aug. 10, 1984, see section
    7 of Pub. L. 98-376, set out as a note under section 78c of this
    title.

                     EFFECTIVE DATE OF 1980 AMENDMENT                 
      Section 5 of Pub. L. 96-433 provided that:
      "(a) The amendments made by section 1 of this Act [amending
    section 78fff-3 of this title] shall take effect on the date of
    enactment of this Act [Oct. 10, 1980].
      "(b) The amendments made by sections 2, 3, and 4 of this Act
    [amending this section and section 3422 of Title 12, Banks and
    Banking] shall take effect on November 10, 1980. Nothing in this
    Act [amending this section and section 78fff-3 of this title and
    section 3422 of Title 12] or in the Right to Financial Privacy Act
    of 1978 [12 U.S.C. 3401 et seq.] shall apply to any Securities and
    Exchange Commission subpena issued prior to such date."

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.

                     EFFECTIVE DATE OF 1970 AMENDMENT                 
      Amendment by Pub. L. 91-452 effective on sixtieth day following
    Oct. 15, 1970, see section 260 of Pub. L. 91-452, set out as an
    Effective Date; Savings Provision note under section 6001 of Title
    18, Crimes and Criminal Procedure.

                             SAVINGS PROVISION                         
      Amendment by Pub. L. 91-452 not to affect any immunity to which
    any individual is entitled under this section by reason of any
    testimony given before the sixtieth day following Oct. 15, 1970,
    see section 260 of Pub. L. 91-452, set out as an Effective Date;
    Savings Provision note under section 6001 of Title 18, Crimes and
    Criminal Procedure.

                      CONSTRUCTION OF 1995 AMENDMENT                  
      Nothing in amendment by Pub. L. 104-67 to be deemed to create or
    ratify any implied right of action, or to prevent Commission, by
    rule or regulation, from restricting or otherwise regulating
    private actions under this chapter, see section 203 of Pub. L. 104-
    67, set out as a Construction note under section 78j-1 of this
    title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.


-MISC3-
               PROMOTION OF RECIPROCAL SUBPOENA ENFORCEMENT           
      Pub. L. 105-353, title I, Sec. 102, Nov. 3, 1998, 112 Stat. 3233,
    provided that:
      "(a) Commission Action. - The Securities and Exchange Commission,
    in consultation with State securities commissions (or any agencies
    or offices performing like functions), shall seek to encourage the
    adoption of State laws providing for reciprocal enforcement by
    State securities commissions of subpoenas issued by another State
    securities commission seeking to compel persons to attend, testify
    in, or produce documents or records in connection with an action or
    investigation by a State securities commission of an alleged
    violation of State securities laws.
      "(b) Report. - Not later than 24 months after the date of
    enactment of this Act [Nov. 3, 1998], the Securities and Exchange
    Commission (hereafter in this section referred to as the
    'Commission') shall submit a report to the Congress - 
        "(1) identifying the States that have adopted laws described in
      subsection (a);
        "(2) describing the actions undertaken by the Commission and
      State securities commissions to promote the adoption of such
      laws; and
        "(3) identifying any further actions that the Commission
      recommends for such purposes."

-FOOTNOTE-
    (!1) See References in Text note below.


-End-



-CITE-
    15 USC Sec. 78u-1                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78u-1. Civil penalties for insider trading

-STATUTE-
    (a) Authority to impose civil penalties
      (1) Judicial actions by Commission authorized
        Whenever it shall appear to the Commission that any person has
      violated any provision of this chapter or the rules or
      regulations thereunder by purchasing or selling a security or
      security-based swap agreement (as defined in section 206B of the
      Gramm-Leach-Bliley Act) while in possession of material,
      nonpublic information in, or has violated any such provision by
      communicating such information in connection with, a transaction
      on or through the facilities of a national securities exchange or
      from or through a broker or dealer, and which is not part of a
      public offering by an issuer of securities other than
      standardized options or security futures products, the Commission
      - 
          (A) may bring an action in a United States district court to
        seek, and the court shall have jurisdiction to impose, a civil
        penalty to be paid by the person who committed such violation;
        and
          (B) may, subject to subsection (b)(1) of this section, bring
        an action in a United States district court to seek, and the
        court shall have jurisdiction to impose, a civil penalty to be
        paid by a person who, at the time of the violation, directly or
        indirectly controlled the person who committed such violation.
      (2) Amount of penalty for person who committed violation
        The amount of the penalty which may be imposed on the person
      who committed such violation shall be determined by the court in
      light of the facts and circumstances, but shall not exceed three
      times the profit gained or loss avoided as a result of such
      unlawful purchase, sale, or communication.
      (3) Amount of penalty for controlling person
        The amount of the penalty which may be imposed on any person
      who, at the time of the violation, directly or indirectly
      controlled the person who committed such violation, shall be
      determined by the court in light of the facts and circumstances,
      but shall not exceed the greater of $1,000,000, or three times
      the amount of the profit gained or loss avoided as a result of
      such controlled person's violation. If such controlled person's
      violation was a violation by communication, the profit gained or
      loss avoided as a result of the violation shall, for purposes of
      this paragraph only, be deemed to be limited to the profit gained
      or loss avoided by the person or persons to whom the controlled
      person directed such communication.
    (b) Limitations on liability
      (1) Liability of controlling persons
        No controlling person shall be subject to a penalty under
      subsection (a)(1)(B) of this section unless the Commission
      establishes that - 
          (A) such controlling person knew or recklessly disregarded
        the fact that such controlled person was likely to engage in
        the act or acts constituting the violation and failed to take
        appropriate steps to prevent such act or acts before they
        occurred; or
          (B) such controlling person knowingly or recklessly failed to
        establish, maintain, or enforce any policy or procedure
        required under section 78o(f) of this title or section 80b-4a
        of this title and such failure substantially contributed to or
        permitted the occurrence of the act or acts constituting the
        violation.
      (2) Additional restrictions on liability
        No person shall be subject to a penalty under subsection (a) of
      this section solely by reason of employing another person who is
      subject to a penalty under such subsection, unless such employing
      person is liable as a controlling person under paragraph (1) of
      this subsection. Section 78t(a) of this title shall not apply to
      actions under subsection (a) of this section.
    (c) Authority of Commission
      The Commission, by such rules, regulations, and orders as it
    considers necessary or appropriate in the public interest or for
    the protection of investors, may exempt, in whole or in part,
    either unconditionally or upon specific terms and conditions, any
    person or transaction or class of persons or transactions from this
    section.
    (d) Procedures for collection
      (1) Payment of penalty to Treasury
        A penalty imposed under this section shall (subject to
      subsection (e) of this section) be payable into the Treasury of
      the United States, except as otherwise provided in section 7246
      of this title.
      (2) Collection of penalties
        If a person upon whom such a penalty is imposed shall fail to
      pay such penalty within the time prescribed in the court's order,
      the Commission may refer the matter to the Attorney General who
      shall recover such penalty by action in the appropriate United
      States district court.
      (3) Remedy not exclusive
        The actions authorized by this section may be brought in
      addition to any other actions that the Commission or the Attorney
      General are entitled to bring.
      (4) Jurisdiction and venue
        For purposes of section 78aa of this title, actions under this
      section shall be actions to enforce a liability or a duty created
      by this chapter.
      (5) Statute of limitations
        No action may be brought under this section more than 5 years
      after the date of the purchase or sale. This section shall not be
      construed to bar or limit in any manner any action by the
      Commission or the Attorney General under any other provision of
      this chapter, nor shall it bar or limit in any manner any action
      to recover penalties, or to seek any other order regarding
      penalties, imposed in an action commenced within 5 years of such
      transaction.
    (e) Authority to award bounties to informants
      Notwithstanding the provisions of subsection (d)(1) of this
    section, there shall be paid from amounts imposed as a penalty
    under this section and recovered by the Commission or the Attorney
    General, such sums, not to exceed 10 percent of such amounts, as
    the Commission deems appropriate, to the person or persons who
    provide information leading to the imposition of such penalty. Any
    determinations under this subsection, including whether, to whom,
    or in what amount to make payments, shall be in the sole discretion
    of the Commission, except that no such payment shall be made to any
    member, officer, or employee of any appropriate regulatory agency,
    the Department of Justice, or a self-regulatory organization. Any
    such determination shall be final and not subject to judicial
    review.
    (f) Definition
      For purposes of this section, "profit gained" or "loss avoided"
    is the difference between the purchase or sale price of the
    security and the value of that security as measured by the trading
    price of the security a reasonable period after public
    dissemination of the nonpublic information.
    (g) Limitation on Commission authority
      The authority of the Commission under this section with respect
    to security-based swap agreements (as defined in section 206B of
    the Gramm-Leach-Bliley Act) shall be subject to the restrictions
    and limitations of section 78c-1(b) of this title.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 21A, as added Pub. L. 100-
    704, Sec. 3(a)(2), Nov. 19, 1988, 102 Stat. 4677; amended Pub. L.
    101-429, title II, Sec. 202(b), Oct. 15, 1990, 104 Stat. 938; Pub.
    L. 106-554, Sec. 1(a)(5) [title II, Sec. 205(a)(4), title III, Sec.
    303(k), (l)], Dec. 21, 2000, 114 Stat. 2763, 2763A-426, 2763A-456,
    2763A-457; Pub. L. 107-204, title III, Sec. 308(d)(2), July 30,
    2002, 116 Stat. 785.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a) and (d)(4), (5), was in
    the original "this title". See References in Text note set out
    under section 78a of this title.
      Section 206B of the Gramm-Leach-Bliley Act, referred to in
    subsecs. (a)(1) and (g), is section 206B of Pub. L. 106-102, which
    is set out in a note under section 78c of this title.


-MISC1-
                                AMENDMENTS                            
      2002 - Subsec. (d)(1). Pub. L. 107-204 inserted ", except as
    otherwise provided in section 7246 of this title" before period at
    end.
      2000 - Subsec. (a)(1). Pub. L. 106-554, Sec. 1(a)(5) [title III,
    Sec. 303(k)], inserted "or security-based swap agreement (as
    defined in section 206B of the Gramm-Leach-Bliley Act)" after
    "purchasing or selling a security" in introductory provisions.
      Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec. 205(a)(4)],
    substituted "standardized options or security futures products, the
    Commission - " for "standardized options, the Commission - " in
    introductory provisions.
      Subsec. (g). Pub. L. 106-554, Sec. 1(a)(5) [title III, Sec.
    303(l)], added subsec. (g).
      1990 - Pub. L. 101-429 inserted "for insider trading" in section
    catchline.

                     EFFECTIVE DATE OF 1990 AMENDMENT                 
      Amendment by Pub. L. 101-429 effective Oct. 15, 1990, with
    provisions relating to civil penalties and accounting and
    disgorgement, see section 1(c)(1), (2) of Pub. L. 101-429, set out
    in a note under section 77g of this title.

                              EFFECTIVE DATE                          
      Section not applicable to actions occurring before Nov. 19, 1988,
    see section 9 of Pub. L. 100-704 set out as an Effective Date of
    1988 Amendment note under section 78o of this title.

                          CONGRESSIONAL FINDINGS                      
      Section 2 of Pub. L. 100-704 provided that: "The Congress finds
    that - 
        "(1) the rules and regulations of the Securities and Exchange
      Commission under the Securities Exchange Act of 1934 [15 U.S.C.
      78a et seq.] governing trading while in possession of material,
      nonpublic information are, as required by such Act, necessary and
      appropriate in the public interest and for the protection of
      investors;
        "(2) the Commission has, within the limits of accepted
      administrative and judicial construction of such rules and
      regulations, enforced such rules and regulations vigorously,
      effectively, and fairly; and
        "(3) nonetheless, additional methods are appropriate to deter
      and prosecute violations of such rules and regulations."

     COMMISSION RECOMMENDATIONS FOR ADDITIONAL CIVIL PENALTY AUTHORITY
                                 REQUIRED
      Section 3(c) of Pub. L. 100-704 provided that: "The Securities
    and Exchange Commission shall, within 60 days after the date of
    enactment of this Act [Nov. 19, 1988], submit to each House of the
    Congress any recommendations the Commission considers appropriate
    with respect to the extension of the Commission's authority to seek
    civil penalties or impose administrative fines for violations other
    than those described in section 21A of the Securities Exchange Act
    of 1934 [15 U.S.C. 78u-1] (as added by this section)."

-End-



-CITE-
    15 USC Sec. 78u-2                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78u-2. Civil remedies in administrative proceedings

-STATUTE-
    (a) Commission authority to assess money penalties
      In any proceeding instituted pursuant to sections 78o(b)(4),
    78o(b)(6), 78o-6, 78o-4, 78o-5, 78o-7, or 78q-1 of this title
    against any person, the Commission or the appropriate regulatory
    agency may impose a civil penalty if it finds, on the record after
    notice and opportunity for hearing, that such person - 
        (1) has willfully violated any provision of the Securities Act
      of 1933 [15 U.S.C. 77a 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-1 et seq.], or this chapter, or the rules or
      regulations thereunder, or the rules of the Municipal Securities
      Rulemaking Board;
        (2) has willfully aided, abetted, counseled, commanded,
      induced, or procured such a violation by any other person;
        (3) has willfully made or caused to be made in any application
      for registration or report required to be filed with the
      Commission or with any other appropriate regulatory agency under
      this chapter, or in any proceeding before the Commission with
      respect to registration, 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 or report any material fact
      which is required to be stated therein; or
        (4) has failed reasonably to supervise, within the meaning of
      section 78o(b)(4)(E) of this title, with a view to preventing
      violations of the provisions of such statutes, rules and
      regulations, another person who commits such a violation, if such
      other person is subject to his supervision;

    and that such penalty is in the public interest.
    (b) Maximum amount of penalty
      (1) First tier
        The maximum amount of penalty for each act or omission
      described in subsection (a) of this section shall be $5,000 for a
      natural person or $50,000 for any other person.
      (2) Second tier
        Notwithstanding paragraph (1), the maximum amount of penalty
      for each such act or omission shall be $50,000 for a natural
      person or $250,000 for any other person if the act or omission
      described in subsection (a) of this section involved fraud,
      deceit, manipulation, or deliberate or reckless disregard of a
      regulatory requirement.
      (3) Third tier
        Notwithstanding paragraphs (1) and (2), the maximum amount of
      penalty for each such act or omission shall be $100,000 for a
      natural person or $500,000 for any other person if - 
          (A) the act or omission described in subsection (a) of this
        section involved fraud, deceit, manipulation, or deliberate or
        reckless disregard of a regulatory requirement; and
          (B) such act or omission directly or indirectly resulted in
        substantial losses or created a significant risk of substantial
        losses to other persons or resulted in substantial pecuniary
        gain to the person who committed the act or omission.
    (c) Determination of public interest
      In considering under this section whether a penalty is in the
    public interest, the Commission or the appropriate regulatory
    agency may consider - 
        (1) whether the act or omission for which such penalty is
      assessed involved fraud, deceit, manipulation, or deliberate or
      reckless disregard of a regulatory requirement;
        (2) the harm to other persons resulting either directly or
      indirectly from such act or omission;
        (3) the extent to which any person was unjustly enriched,
      taking into account any restitution made to persons injured by
      such behavior;
        (4) whether such person previously has been found by the
      Commission, another appropriate regulatory agency, or a self-
      regulatory organization to have violated the Federal securities
      laws, State securities laws, or the rules of a self-regulatory
      organization, has been enjoined by a court of competent
      jurisdiction from violations of such laws or rules, or has been
      convicted by a court of competent jurisdiction of violations of
      such laws or of any felony or misdemeanor described in section
      78o(b)(4)(B) of this title;
        (5) the need to deter such person and other persons from
      committing such acts or omissions; and
        (6) such other matters as justice may require.
    (d) Evidence concerning ability to pay
      In any proceeding in which the Commission or the appropriate
    regulatory agency may impose a penalty under this section, a
    respondent may present evidence of the respondent's ability to pay
    such penalty. The Commission or the appropriate regulatory agency
    may, in its discretion, consider such evidence in determining
    whether such penalty is in the public interest. Such evidence may
    relate to the extent of such person's ability to continue in
    business and the collectability of a penalty, taking into account
    any other claims of the United States or third parties upon such
    person's assets and the amount of such person's assets.
    (e) Authority to enter order requiring accounting and disgorgement
      In any proceeding in which the Commission or the appropriate
    regulatory agency may impose a penalty under this section, the
    Commission or the appropriate regulatory agency may enter an order
    requiring accounting and disgorgement, including reasonable
    interest. The Commission is authorized to adopt rules, regulations,
    and orders concerning payments to investors, rates of interest,
    periods of accrual, and such other matters as it deems appropriate
    to implement this subsection.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 21B, as added Pub. L. 101-
    429, title II, Sec. 202(a), Oct. 15, 1990, 104 Stat. 937; amended
    Pub. L. 107-204, title V, Sec. 501(b), July 30, 2002, 116 Stat.
    793; Pub. L. 109-291, Sec. 4(b)(1)(B), Sept. 29, 2006, 120 Stat.
    1337.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      The Securities Act of 1933, referred to in subsec. (a)(1), is act
    May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended, which is
    classified generally to subchapter I (Sec. 77a et seq.) of chapter
    2A of this title. For complete classification of this Act to the
    Code, see section 77a of this title and Tables.
      The Investment Company Act of 1940, referred to in subsec.
    (a)(1), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, as
    amended, which is classified generally to subchapter I (Sec. 80a-1
    et seq.) of chapter 2D of this title. For complete classification
    of this Act to the Code, see section 80a-51 of this title and
    Tables.
      The Investment Advisers Act of 1940, referred to in subsec.
    (a)(1), is title II of act Aug. 22, 1940, ch. 686, 54 Stat. 847, as
    amended, which is classified generally to subchapter II (Sec. 80b-1
    et seq.) of chapter 2D of this title. For complete classification
    of this Act to the Code, see section 80b-20 of this title and
    Tables.
      This chapter, referred to in subsec. (a)(1), (3), was in the
    original "this title". See References in Text note set out under
    section 78a of this title.


-MISC1-
                                AMENDMENTS                            
      2006 - Subsec. (a). Pub. L. 109-291 inserted "78o-7," after "78o-
    5," in introductory provisions.
      2002 - Subsec. (a). Pub. L. 107-204 inserted "78o-6," before "78o-
    4," in introductory provisions.

                              EFFECTIVE DATE                          
      Section effective Oct. 15, 1990, with provisions relating to
    civil penalties and accounting and disgorgement, see section
    1(c)(1), (2) of Pub. L. 101-429, set out in an Effective Date of
    1990 Amendment note under section 77g of this title.

-End-



-CITE-
    15 USC Sec. 78u-3                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78u-3. Cease-and-desist proceedings

-STATUTE-
    (a) Authority of Commission
      If the Commission finds, after notice and opportunity for
    hearing, that any person is violating, has violated, or is about to
    violate any provision of this chapter, or any rule or regulation
    thereunder, the Commission may publish its findings and enter an
    order requiring such person, and any other person that is, was, or
    would be a cause of the violation, due to an act or omission the
    person knew or should have known would contribute to such
    violation, to cease and desist from committing or causing such
    violation and any future violation of the same provision, rule, or
    regulation. Such order may, in addition to requiring a person to
    cease and desist from committing or causing a violation, require
    such person to comply, or to take steps to effect compliance, with
    such provision, rule, or regulation, upon such terms and conditions
    and within such time as the Commission may specify in such order.
    Any such order may, as the Commission deems appropriate, require
    future compliance or steps to effect future compliance, either
    permanently or for such period of time as the Commission may
    specify, with such provision, rule, or regulation with respect to
    any security, any issuer, or any other person.
    (b) Hearing
      The notice instituting proceedings pursuant to subsection (a) of
    this section shall fix a hearing date not earlier than 30 days nor
    later than 60 days after service of the notice unless an earlier or
    a later date is set by the Commission with the consent of any
    respondent so served.
    (c) Temporary order
      (1) In general
        Whenever the Commission determines that the alleged violation
      or threatened violation specified in the notice instituting
      proceedings pursuant to subsection (a) of this section, or the
      continuation thereof, is likely to result in significant
      dissipation or conversion of assets, significant harm to
      investors, or substantial harm to the public interest, including,
      but not limited to, losses to the Securities Investor Protection
      Corporation, prior to the completion of the proceedings, the
      Commission may enter a temporary order requiring the respondent
      to cease and desist from the violation or threatened violation
      and to take such action to prevent the violation or threatened
      violation and to prevent dissipation or conversion of assets,
      significant harm to investors, or substantial harm to the public
      interest as the Commission deems appropriate pending completion
      of such proceedings. Such an order shall be entered only after
      notice and opportunity for a hearing, unless the Commission
      determines that notice and hearing prior to entry would be
      impracticable or contrary to the public interest. A temporary
      order shall become effective upon service upon the respondent
      and, unless set aside, limited, or suspended by the Commission or
      a court of competent jurisdiction, shall remain effective and
      enforceable pending the completion of the proceedings.
      (2) Applicability
        paragraph (1) subsection (!1) shall apply only to a respondent
      that acts, or, at the time of the alleged misconduct acted, as a
      broker, dealer, investment adviser, investment company, municipal
      securities dealer, government securities broker, government
      securities dealer, registered public accounting firm (as defined
      in section 7201 of this title), or transfer agent, or is, or was
      at the time of the alleged misconduct, an associated person of,
      or a person seeking to become associated with, any of the
      foregoing.

      (3) Temporary freeze
        (A) In general
          (i) Issuance of temporary order
            Whenever, during the course of a lawful investigation
          involving possible violations of the Federal securities laws
          by an issuer of publicly traded securities or any of its
          directors, officers, partners, controlling persons, agents,
          or employees, it shall appear to the Commission that it is
          likely that the issuer will make extraordinary payments
          (whether compensation or otherwise) to any of the foregoing
          persons, the Commission may petition a Federal district court
          for a temporary order requiring the issuer to escrow, subject
          to court supervision, those payments in an interest-bearing
          account for 45 days.
          (ii) Standard
            A temporary order shall be entered under clause (i), only
          after notice and opportunity for a hearing, unless the court
          determines that notice and hearing prior to entry of the
          order would be impracticable or contrary to the public
          interest.
          (iii) Effective period
            A temporary order issued under clause (i) shall - 
              (I) become effective immediately;
              (II) be served upon the parties subject to it; and
              (III) unless set aside, limited or suspended by a court
            of competent jurisdiction, shall remain effective and
            enforceable for 45 days.
          (iv) Extensions authorized
            The effective period of an order under this subparagraph
          may be extended by the court upon good cause shown for not
          longer than 45 additional days, provided that the combined
          period of the order shall not exceed 90 days.
        (B) Process on determination of violations
          (i) Violations charged
            If the issuer or other person described in subparagraph (A)
          is charged with any violation of the Federal securities laws
          before the expiration of the effective period of a temporary
          order under subparagraph (A) (including any applicable
          extension period), the order shall remain in effect, subject
          to court approval, until the conclusion of any legal
          proceedings related thereto, and the affected issuer or other
          person, shall have the right to petition the court for review
          of the order.
          (ii) Violations not charged
            If the issuer or other person described in subparagraph (A)
          is not charged with any violation of the Federal securities
          laws before the expiration of the effective period of a
          temporary order under subparagraph (A) (including any
          applicable extension period), the escrow shall terminate at
          the expiration of the 45-day effective period (or the
          expiration of any extension period, as applicable), and the
          disputed payments (with accrued interest) shall be returned
          to the issuer or other affected person.
    (d) Review of temporary orders
      (1) Commission review
        At any time after the respondent has been served with a
      temporary cease-and-desist order pursuant to subsection (c) of
      this section, the respondent may apply to the Commission to have
      the order set aside, limited, or suspended. If the respondent has
      been served with a temporary cease-and-desist order entered
      without a prior Commission hearing, the respondent may, within 10
      days after the date on which the order was served, request a
      hearing on such application and the Commission shall hold a
      hearing and render a decision on such application at the earliest
      possible time.
      (2) Judicial review
        Within - 
          (A) 10 days after the date the respondent was served with a
        temporary cease-and-desist order entered with a prior
        Commission hearing, or
          (B) 10 days after the Commission renders a decision on an
        application and hearing under paragraph (1), with respect to
        any temporary cease-and-desist order entered without a prior
        Commission hearing,

      the respondent may apply to the United States district court for
      the district in which the respondent resides or has its principal
      place of business, or for the District of Columbia, for an order
      setting aside, limiting, or suspending the effectiveness or
      enforcement of the order, and the court shall have jurisdiction
      to enter such an order. A respondent served with a temporary
      cease-and-desist order entered without a prior Commission hearing
      may not apply to the court except after hearing and decision by
      the Commission on the respondent's application under paragraph
      (1) of this subsection.
      (3) No automatic stay of temporary order
        The commencement of proceedings under paragraph (2) of this
      subsection shall not, unless specifically ordered by the court,
      operate as a stay of the Commission's order.
      (4) Exclusive review
        Section 78y of this title shall not apply to a temporary order
      entered pursuant to this section.
    (e) Authority to enter order requiring accounting and disgorgement
      In any cease-and-desist proceeding under subsection (a) of this
    section, the Commission may enter an order requiring accounting and
    disgorgement, including reasonable interest. The Commission is
    authorized to adopt rules, regulations, and orders concerning
    payments to investors, rates of interest, periods of accrual, and
    such other matters as it deems appropriate to implement this
    subsection.
    (f) Authority of the Commission to prohibit persons from serving as
      officers or directors
      In any cease-and-desist proceeding under subsection (a) of this
    section, the Commission may issue an order to prohibit,
    conditionally or unconditionally, and permanently or for such
    period of time as it shall determine, any person who has violated
    section 78j(b) of this title or the rules or regulations
    thereunder, from acting as an officer or director of any issuer
    that has a class of securities registered pursuant to section 78l
    of this title, or that is required to file reports pursuant to
    section 78o(d) of this title, if the conduct of that person
    demonstrates unfitness to serve as an officer or director of any
    such issuer.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 21C, as added Pub. L. 101-
    429, title II, Sec. 203, Oct. 15, 1990, 104 Stat. 939; amended
    Pub. L. 107-204, Sec. 3(b)(3), title XI, Secs. 1103, 1105(a), July
    30, 2002, 116 Stat. 749, 807, 809.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsec. (a), was in the original
    "this title". See References in Text note set out under section 78a
    of this title.
      Section 7201 of this title, referred to in subsec. (c)(2), was in
    the original "section 2 of the Sarbanes-Oxley Act of 2002", Pub. L.
    107-204, which enacted section 7201 of this title and amended
    section 78c of this title.


-MISC1-
                                AMENDMENTS                            
      2002 - Subsec. (c)(2). Pub. L. 107-204, Sec. 1103(b), substituted
    "paragraph (1)" for "This".
      Pub. L. 107-204, Sec. 3(b)(3), inserted "registered public
    accounting firm (as defined in section 7201 of this title)," after
    "government securities dealer,".
      Subsec. (c)(3). Pub. L. 107-204, Sec. 1103(a), added par. (3).
      Subsec. (f). Pub. L. 107-204, Sec. 1105(a), added subsec. (f).

                              EFFECTIVE DATE                          
      Section effective Oct. 15, 1990, with provisions relating to
    civil penalties and accounting and disgorgement, see section
    1(c)(1), (2) of Pub. L. 101-429, set out in an Effective Date of
    1990 Amendment note under section 77g of this title.

-FOOTNOTE-
    (!1) So in original.


-End-



-CITE-
    15 USC Sec. 78u-4                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78u-4. Private securities litigation

-STATUTE-
    (a) Private class actions
      (1) In general
        The provisions of this subsection shall apply in each private
      action arising under this chapter that is brought as a plaintiff
      class action pursuant to the Federal Rules of Civil Procedure.
      (2) Certification filed with complaint
        (A) In general
          Each plaintiff seeking to serve as a representative party on
        behalf of a class shall provide a sworn certification, which
        shall be personally signed by such plaintiff and filed with the
        complaint, that - 
            (i) states that the plaintiff has reviewed the complaint
          and authorized its filing;
            (ii) states that the plaintiff did not purchase the
          security that is the subject of the complaint at the
          direction of plaintiff's counsel or in order to participate
          in any private action arising under this chapter;
            (iii) states that the plaintiff is willing to serve as a
          representative party on behalf of a class, including
          providing testimony at deposition and trial, if necessary;
            (iv) sets forth all of the transactions of the plaintiff in
          the security that is the subject of the complaint during the
          class period specified in the complaint;
            (v) identifies any other action under this chapter, filed
          during the 3-year period preceding the date on which the
          certification is signed by the plaintiff, in which the
          plaintiff has sought to serve as a representative party on
          behalf of a class; and
            (vi) states that the plaintiff will not accept any payment
          for serving as a representative party on behalf of a class
          beyond the plaintiff's pro rata share of any recovery, except
          as ordered or approved by the court in accordance with
          paragraph (4).
        (B) Nonwaiver of attorney-client privilege
          The certification filed pursuant to subparagraph (A) shall
        not be construed to be a waiver of the attorney-client
        privilege.
      (3) Appointment of lead plaintiff
        (A) Early notice to class members
          (i) In general
            Not later than 20 days after the date on which the
          complaint is filed, the plaintiff or plaintiffs shall cause
          to be published, in a widely circulated national business-
          oriented publication or wire service, a notice advising
          members of the purported plaintiff class - 
              (I) of the pendency of the action, the claims asserted
            therein, and the purported class period; and
              (II) that, not later than 60 days after the date on which
            the notice is published, any member of the purported class
            may move the court to serve as lead plaintiff of the
            purported class.
          (ii) Multiple actions
            If more than one action on behalf of a class asserting
          substantially the same claim or claims arising under this
          chapter is filed, only the plaintiff or plaintiffs in the
          first filed action shall be required to cause notice to be
          published in accordance with clause (i).
          (iii) Additional notices may be required under Federal rules
            Notice required under clause (i) shall be in addition to
          any notice required pursuant to the Federal Rules of Civil
          Procedure.
        (B) Appointment of lead plaintiff
          (i) In general
            Not later than 90 days after the date on which a notice is
          published under subparagraph (A)(i), the court shall consider
          any motion made by a purported class member in response to
          the notice, including any motion by a class member who is not
          individually named as a plaintiff in the complaint or
          complaints, and shall appoint as lead plaintiff the member or
          members of the purported plaintiff class that the court
          determines to be most capable of adequately representing the
          interests of class members (hereafter in this paragraph
          referred to as the "most adequate plaintiff") in accordance
          with this subparagraph.
          (ii) Consolidated actions
            If more than one action on behalf of a class asserting
          substantially the same claim or claims arising under this
          chapter has been filed, and any party has sought to
          consolidate those actions for pretrial purposes or for trial,
          the court shall not make the determination required by clause
          (i) until after the decision on the motion to consolidate is
          rendered. As soon as practicable after such decision is
          rendered, the court shall appoint the most adequate plaintiff
          as lead plaintiff for the consolidated actions in accordance
          with this paragraph.
          (iii) Rebuttable presumption
            (I) In general
              Subject to subclause (II), for purposes of clause (i),
            the court shall adopt a presumption that the most adequate
            plaintiff in any private action arising under this chapter
            is the person or group of persons that - 
                (aa) has either filed the complaint or made a motion in
              response to a notice under subparagraph (A)(i);
                (bb) in the determination of the court, has the largest
              financial interest in the relief sought by the class; and
                (cc) otherwise satisfies the requirements of Rule 23 of
              the Federal Rules of Civil Procedure.
            (II) Rebuttal evidence
              The presumption described in subclause (I) may be
            rebutted only upon proof by a member of the purported
            plaintiff class that the presumptively most adequate
            plaintiff - 
                (aa) will not fairly and adequately protect the
              interests of the class; or
                (bb) is subject to unique defenses that render such
              plaintiff incapable of adequately representing the class.
          (iv) Discovery
            For purposes of this subparagraph, discovery relating to
          whether a member or members of the purported plaintiff class
          is the most adequate plaintiff may be conducted by a
          plaintiff only if the plaintiff first demonstrates a
          reasonable basis for a finding that the presumptively most
          adequate plaintiff is incapable of adequately representing
          the class.
          (v) Selection of lead counsel
            The most adequate plaintiff shall, subject to the approval
          of the court, select and retain counsel to represent the
          class.
          (vi) Restrictions on professional plaintiffs
            Except as the court may otherwise permit, consistent with
          the purposes of this section, a person may be a lead
          plaintiff, or an officer, director, or fiduciary of a lead
          plaintiff, in no more than 5 securities class actions brought
          as plaintiff class actions pursuant to the Federal Rules of
          Civil Procedure during any 3-year period.
      (4) Recovery by plaintiffs
        The share of any final judgment or of any settlement that is
      awarded to a representative party serving on behalf of a class
      shall be equal, on a per share basis, to the portion of the final
      judgment or settlement awarded to all other members of the class.
      Nothing in this paragraph shall be construed to limit the award
      of reasonable costs and expenses (including lost wages) directly
      relating to the representation of the class to any representative
      party serving on behalf of a class.
      (5) Restrictions on settlements under seal
        The terms and provisions of any settlement agreement of a class
      action shall not be filed under seal, except that on motion of
      any party to the settlement, the court may order filing under
      seal for those portions of a settlement agreement as to which
      good cause is shown for such filing under seal. For purposes of
      this paragraph, good cause shall exist only if publication of a
      term or provision of a settlement agreement would cause direct
      and substantial harm to any party.
      (6) Restrictions on payment of attorneys' fees and expenses
        Total attorneys' fees and expenses awarded by the court to
      counsel for the plaintiff class shall not exceed a reasonable
      percentage of the amount of any damages and prejudgment interest
      actually paid to the class.
      (7) Disclosure of settlement terms to class members
        Any proposed or final settlement agreement that is published or
      otherwise disseminated to the class shall include each of the
      following statements, along with a cover page summarizing the
      information contained in such statements:
        (A) Statement of plaintiff recovery
          The amount of the settlement proposed to be distributed to
        the parties to the action, determined in the aggregate and on
        an average per share basis.
        (B) Statement of potential outcome of case
          (i) Agreement on amount of damages
            If the settling parties agree on the average amount of
          damages per share that would be recoverable if the plaintiff
          prevailed on each claim alleged under this chapter, a
          statement concerning the average amount of such potential
          damages per share.
          (ii) Disagreement on amount of damages
            If the parties do not agree on the average amount of
          damages per share that would be recoverable if the plaintiff
          prevailed on each claim alleged under this chapter, a
          statement from each settling party concerning the issue or
          issues on which the parties disagree.
          (iii) Inadmissibility for certain purposes
            A statement made in accordance with clause (i) or (ii)
          concerning the amount of damages shall not be admissible in
          any Federal or State judicial action or administrative
          proceeding, other than an action or proceeding arising out of
          such statement.
        (C) Statement of attorneys' fees or costs sought
          If any of the settling parties or their counsel intend to
        apply to the court for an award of attorneys' fees or costs
        from any fund established as part of the settlement, a
        statement indicating which parties or counsel intend to make
        such an application, the amount of fees and costs that will be
        sought (including the amount of such fees and costs determined
        on an average per share basis), and a brief explanation
        supporting the fees and costs sought. Such information shall be
        clearly summarized on the cover page of any notice to a party
        of any proposed or final settlement agreement.
        (D) Identification of lawyers' representatives
          The name, telephone number, and address of one or more
        representatives of counsel for the plaintiff class who will be
        reasonably available to answer questions from class members
        concerning any matter contained in any notice of settlement
        published or otherwise disseminated to the class.
        (E) Reasons for settlement
          A brief statement explaining the reasons why the parties are
        proposing the settlement.
        (F) Other information
          Such other information as may be required by the court.
      (8) Security for payment of costs in class actions
        In any private action arising under this chapter that is
      certified as a class action pursuant to the Federal Rules of
      Civil Procedure, the court may require an undertaking from the
      attorneys for the plaintiff class, the plaintiff class, or both,
      or from the attorneys for the defendant, the defendant, or both,
      in such proportions and at such times as the court determines are
      just and equitable, for the payment of fees and expenses that may
      be awarded under this subsection.
      (9) Attorney conflict of interest
        If a plaintiff class is represented by an attorney who directly
      owns or otherwise has a beneficial interest in the securities
      that are the subject of the litigation, the court shall make a
      determination of whether such ownership or other interest
      constitutes a conflict of interest sufficient to disqualify the
      attorney from representing the plaintiff class.
    (b) Requirements for securities fraud actions
      (1) Misleading statements and omissions
        In any private action arising under this chapter in which the
      plaintiff alleges that the defendant - 
          (A) made an untrue statement of a material fact; or
          (B) omitted to state a material fact necessary in order to
        make the statements made, in the light of the circumstances in
        which they were made, not misleading;

      the complaint shall specify each statement alleged to have been
      misleading, the reason or reasons why the statement is
      misleading, and, if an allegation regarding the statement or
      omission is made on information and belief, the complaint shall
      state with particularity all facts on which that belief is
      formed.
      (2) Required state of mind
        In any private action arising under this chapter in which the
      plaintiff may recover money damages only on proof that the
      defendant acted with a particular state of mind, the complaint
      shall, with respect to each act or omission alleged to violate
      this chapter, state with particularity facts giving rise to a
      strong inference that the defendant acted with the required state
      of mind.
      (3) Motion to dismiss; stay of discovery
        (A) Dismissal for failure to meet pleading requirements
          In any private action arising under this chapter, the court
        shall, on the motion of any defendant, dismiss the complaint if
        the requirements of paragraphs (1) and (2) are not met.
        (B) Stay of discovery
          In any private action arising under this chapter, all
        discovery and other proceedings shall be stayed during the
        pendency of any motion to dismiss, unless the court finds upon
        the motion of any party that particularized discovery is
        necessary to preserve evidence or to prevent undue prejudice to
        that party.
        (C) Preservation of evidence
          (i) In general
            During the pendency of any stay of discovery pursuant to
          this paragraph, unless otherwise ordered by the court, any
          party to the action with actual notice of the allegations
          contained in the complaint shall treat all documents, data
          compilations (including electronically recorded or stored
          data), and tangible objects that are in the custody or
          control of such person and that are relevant to the
          allegations, as if they were the subject of a continuing
          request for production of documents from an opposing party
          under the Federal Rules of Civil Procedure.
          (ii) Sanction for willful violation
            A party aggrieved by the willful failure of an opposing
          party to comply with clause (i) may apply to the court for an
          order awarding appropriate sanctions.
        (D) Circumvention of stay of discovery
          Upon a proper showing, a court may stay discovery proceedings
        in any private action in a State court, as necessary in aid of
        its jurisdiction, or to protect or effectuate its judgments, in
        an action subject to a stay of discovery pursuant to this
        paragraph.
      (4) Loss causation
        In any private action arising under this chapter, the plaintiff
      shall have the burden of proving that the act or omission of the
      defendant alleged to violate this chapter caused the loss for
      which the plaintiff seeks to recover damages.
    (c) Sanctions for abusive litigation
      (1) Mandatory review by court
        In any private action arising under this chapter, upon final
      adjudication of the action, the court shall include in the record
      specific findings regarding compliance by each party and each
      attorney representing any party with each requirement of Rule
      11(b) of the Federal Rules of Civil Procedure as to any
      complaint, responsive pleading, or dispositive motion.
      (2) Mandatory sanctions
        If the court makes a finding under paragraph (1) that a party
      or attorney violated any requirement of Rule 11(b) of the Federal
      Rules of Civil Procedure as to any complaint, responsive
      pleading, or dispositive motion, the court shall impose sanctions
      on such party or attorney in accordance with Rule 11 of the
      Federal Rules of Civil Procedure. Prior to making a finding that
      any party or attorney has violated Rule 11 of the Federal Rules
      of Civil Procedure, the court shall give such party or attorney
      notice and an opportunity to respond.
      (3) Presumption in favor of attorneys' fees and costs
        (A) In general
          Subject to subparagraphs (B) and (C), for purposes of
        paragraph (2), the court shall adopt a presumption that the
        appropriate sanction - 
            (i) for failure of any responsive pleading or dispositive
          motion to comply with any requirement of Rule 11(b) of the
          Federal Rules of Civil Procedure is an award to the opposing
          party of the reasonable attorneys' fees and other expenses
          incurred as a direct result of the violation; and
            (ii) for substantial failure of any complaint to comply
          with any requirement of Rule 11(b) of the Federal Rules of
          Civil Procedure is an award to the opposing party of the
          reasonable attorneys' fees and other expenses incurred in the
          action.
        (B) Rebuttal evidence
          The presumption described in subparagraph (A) may be rebutted
        only upon proof by the party or attorney against whom sanctions
        are to be imposed that - 
            (i) the award of attorneys' fees and other expenses will
          impose an unreasonable burden on that party or attorney and
          would be unjust, and the failure to make such an award would
          not impose a greater burden on the party in whose favor
          sanctions are to be imposed; or
            (ii) the violation of Rule 11(b) of the Federal Rules of
          Civil Procedure was de minimis.
        (C) Sanctions
          If the party or attorney against whom sanctions are to be
        imposed meets its burden under subparagraph (B), the court
        shall award the sanctions that the court deems appropriate
        pursuant to Rule 11 of the Federal Rules of Civil Procedure.
    (d) Defendant's right to written interrogatories
      In any private action arising under this chapter in which the
    plaintiff may recover money damages, the court shall, when
    requested by a defendant, submit to the jury a written
    interrogatory on the issue of each such defendant's state of mind
    at the time the alleged violation occurred.
    (e) Limitation on damages
      (1) In general
        Except as provided in paragraph (2), in any private action
      arising under this chapter in which the plaintiff seeks to
      establish damages by reference to the market price of a security,
      the award of damages to the plaintiff shall not exceed the
      difference between the purchase or sale price paid or received,
      as appropriate, by the plaintiff for the subject security and the
      mean trading price of that security during the 90-day period
      beginning on the date on which the information correcting the
      misstatement or omission that is the basis for the action is
      disseminated to the market.
      (2) Exception
        In any private action arising under this chapter in which the
      plaintiff seeks to establish damages by reference to the market
      price of a security, if the plaintiff sells or repurchases the
      subject security prior to the expiration of the 90-day period
      described in paragraph (1), the plaintiff's damages shall not
      exceed the difference between the purchase or sale price paid or
      received, as appropriate, by the plaintiff for the security and
      the mean trading price of the security during the period
      beginning immediately after dissemination of information
      correcting the misstatement or omission and ending on the date on
      which the plaintiff sells or repurchases the security.
      (3) "Mean trading price" defined
        For purposes of this subsection, the "mean trading price" of a
      security shall be an average of the daily trading price of that
      security, determined as of the close of the market each day
      during the 90-day period referred to in paragraph (1).
    (f) Proportionate liability
      (1) Applicability
        Nothing in this subsection shall be construed to create,
      affect, or in any manner modify, the standard for liability
      associated with any action arising under the securities laws.
      (2) Liability for damages
        (A) Joint and several liability
          Any covered person against whom a final judgment is entered
        in a private action shall be liable for damages jointly and
        severally only if the trier of fact specifically determines
        that such covered person knowingly committed a violation of the
        securities laws.
        (B) Proportionate liability
          (i) In general
            Except as provided in subparagraph (A), a covered person
          against whom a final judgment is entered in a private action
          shall be liable solely for the portion of the judgment that
          corresponds to the percentage of responsibility of that
          covered person, as determined under paragraph (3).
          (ii) Recovery by and costs of covered person
            In any case in which a contractual relationship permits, a
          covered person that prevails in any private action may
          recover the attorney's fees and costs of that covered person
          in connection with the action.
      (3) Determination of responsibility
        (A) In general
          In any private action, the court shall instruct the jury to
        answer special interrogatories, or if there is no jury, shall
        make findings, with respect to each covered person and each of
        the other persons claimed by any of the parties to have caused
        or contributed to the loss incurred by the plaintiff, including
        persons who have entered into settlements with the plaintiff or
        plaintiffs, concerning - 
            (i) whether such person violated the securities laws;
            (ii) the percentage of responsibility of such person,
          measured as a percentage of the total fault of all persons
          who caused or contributed to the loss incurred by the
          plaintiff; and
            (iii) whether such person knowingly committed a violation
          of the securities laws.
        (B) Contents of special interrogatories or findings
          The responses to interrogatories, or findings, as
        appropriate, under subparagraph (A) shall specify the total
        amount of damages that the plaintiff is entitled to recover and
        the percentage of responsibility of each covered person found
        to have caused or contributed to the loss incurred by the
        plaintiff or plaintiffs.
        (C) Factors for consideration
          In determining the percentage of responsibility under this
        paragraph, the trier of fact shall consider - 
            (i) the nature of the conduct of each covered person found
          to have caused or contributed to the loss incurred by the
          plaintiff or plaintiffs; and
            (ii) the nature and extent of the causal relationship
          between the conduct of each such person and the damages
          incurred by the plaintiff or plaintiffs.
      (4) Uncollectible share
        (A) In general
          Notwithstanding paragraph (2)(B), upon (!1) motion made not
        later than 6 months after a final judgment is entered in any
        private action, the court determines that all or part of the
        share of the judgment of the covered person is not collectible
        against that covered person, and is also not collectible
        against a covered person described in paragraph (2)(A), each
        covered person described in paragraph (2)(B) shall be liable
        for the uncollectible share as follows:

          (i) Percentage of net worth
            Each covered person shall be jointly and severally liable
          for the uncollectible share if the plaintiff establishes that
          - 
              (I) the plaintiff is an individual whose recoverable
            damages under the final judgment are equal to more than 10
            percent of the net worth of the plaintiff; and
              (II) the net worth of the plaintiff is equal to less than
            $200,000.
          (ii) Other plaintiffs
            With respect to any plaintiff not described in subclauses
          (I) and (II) of clause (i), each covered person shall be
          liable for the uncollectible share in proportion to the
          percentage of responsibility of that covered person, except
          that the total liability of a covered person under this
          clause may not exceed 50 percent of the proportionate share
          of that covered person, as determined under paragraph (3)(B).
          (iii) Net worth
            For purposes of this subparagraph, net worth shall be
          determined as of the date immediately preceding the date of
          the purchase or sale (as applicable) by the plaintiff of the
          security that is the subject of the action, and shall be
          equal to the fair market value of assets, minus liabilities,
          including the net value of the investments of the plaintiff
          in real and personal property (including personal
          residences).
        (B) Overall limit
          In no case shall the total payments required pursuant to
        subparagraph (A) exceed the amount of the uncollectible share.
        (C) Covered persons subject to contribution
          A covered person against whom judgment is not collectible
        shall be subject to contribution and to any continuing
        liability to the plaintiff on the judgment.
      (5) Right of contribution
        To the extent that a covered person is required to make an
      additional payment pursuant to paragraph (4), that covered person
      may recover contribution - 
          (A) from the covered person originally liable to make the
        payment;
          (B) from any covered person liable jointly and severally
        pursuant to paragraph (2)(A);
          (C) from any covered person held proportionately liable
        pursuant to this paragraph who is liable to make the same
        payment and has paid less than his or her proportionate share
        of that payment; or
          (D) from any other person responsible for the conduct giving
        rise to the payment that would have been liable to make the
        same payment.
      (6) Nondisclosure to jury
        The standard for allocation of damages under paragraphs (2) and
      (3) and the procedure for reallocation of uncollectible shares
      under paragraph (4) shall not be disclosed to members of the
      jury.
      (7) Settlement discharge
        (A) In general
          A covered person who settles any private action at any time
        before final verdict or judgment shall be discharged from all
        claims for contribution brought by other persons. Upon entry of
        the settlement by the court, the court shall enter a bar order
        constituting the final discharge of all obligations to the
        plaintiff of the settling covered person arising out of the
        action. The order shall bar all future claims for contribution
        arising out of the action - 
            (i) by any person against the settling covered person; and
            (ii) by the settling covered person against any person,
          other than a person whose liability has been extinguished by
          the settlement of the settling covered person.
        (B) Reduction
          If a covered person enters into a settlement with the
        plaintiff prior to final verdict or judgment, the verdict or
        judgment shall be reduced by the greater of - 
            (i) an amount that corresponds to the percentage of
          responsibility of that covered person; or
            (ii) the amount paid to the plaintiff by that covered
          person.
      (8) Contribution
        A covered person who becomes jointly and severally liable for
      damages in any private action may recover contribution from any
      other person who, if joined in the original action, would have
      been liable for the same damages. A claim for contribution shall
      be determined based on the percentage of responsibility of the
      claimant and of each person against whom a claim for contribution
      is made.
      (9) Statute of limitations for contribution
        In any private action determining liability, an action for
      contribution shall be brought not later than 6 months after the
      entry of a final, nonappealable judgment in the action, except
      that an action for contribution brought by a covered person who
      was required to make an additional payment pursuant to paragraph
      (4) may be brought not later than 6 months after the date on
      which such payment was made.
      (10) Definitions
        For purposes of this subsection - 
          (A) a covered person "knowingly commits a violation of the
        securities laws" - 
            (i) with respect to an action that is based on an untrue
          statement of material fact or omission of a material fact
          necessary to make the statement not misleading, if - 
              (I) that covered person makes an untrue statement of a
            material fact, with actual knowledge that the
            representation is false, or omits to state a fact necessary
            in order to make the statement made not misleading, with
            actual knowledge that, as a result of the omission, one of
            the material representations of the covered person is
            false; and
              (II) persons are likely to reasonably rely on that
            misrepresentation or omission; and

            (ii) with respect to an action that is based on any conduct
          that is not described in clause (i), if that covered person
          engages in that conduct with actual knowledge of the facts
          and circumstances that make the conduct of that covered
          person a violation of the securities laws;

          (B) reckless conduct by a covered person shall not be
        construed to constitute a knowing commission of a violation of
        the securities laws by that covered person;
          (C) the term "covered person" means - 
            (i) a defendant in any private action arising under this
          chapter; or
            (ii) a defendant in any private action arising under
          section 77k of this title, who is an outside director of the
          issuer of the securities that are the subject of the action;
          and

          (D) the term "outside director" shall have the meaning given
        such term by rule or regulation of the Commission.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 21D, as added and amended
    Pub. L. 104-67, title I, Sec. 101(b), title II, Sec. 201(a), Dec.
    22, 1995, 109 Stat. 743, 758; Pub. L. 105-353, title I, Sec.
    101(b)(2), title III, Sec. 301(b)(13), Nov. 3, 1998, 112 Stat.
    3233, 3236.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in text, was in the original "this
    title". See References in Text note set out under section 78a of
    this title.
      The Federal Rules of Civil Procedure, referred to in subsecs.
    (a)(1), (3)(A)(iii), (B)(iii)(I)(cc), (vi), (8), (b)(3)(C)(i), and
    (c), are set out in the Appendix to Title 28, Judiciary and
    Judicial Procedure.


-MISC1-
                                AMENDMENTS                            
      1998 - Subsec. (b)(3)(D). Pub. L. 105-353, Sec. 101(b)(2), added
    subpar. (D).
      Subsecs. (f), (g). Pub. L. 105-353, Sec. 301(b)(13)(B),
    redesignated subsec. (g) as (f).
      Subsec. (g)(2)(B)(i). Pub. L. 105-353, Sec. 301(b)(13)(A),
    substituted "subparagraph (A)" for "paragraph (1)".
      1995 - Subsec. (g). Pub. L. 104-67, Sec. 201(a), added subsec.
    (g).

                     EFFECTIVE DATE OF 1998 AMENDMENT                 
      Amendment by section 101(b)(2) of Pub. L. 105-353 not to affect
    or apply to any action commenced before and pending on Nov. 3,
    1998, see section 101(c) of Pub. L. 105-353, set out as a note
    under section 77p of this title.

                     EFFECTIVE DATE OF 1995 AMENDMENT                 
      Amendment by Pub. L. 104-67 not to affect or apply to any private
    action arising under securities laws commenced before and pending
    on Dec. 22, 1995, see section 202 of Pub. L. 104-67, set out as a
    note under section 77k of this title.

                              EFFECTIVE DATE                          
      This section not to affect or apply to any private action arising
    under this chapter or title I of the Securities Act of 1933 (15
    U.S.C. 77a et seq.), commenced before and pending on Dec. 22, 1995,
    see section 108 of Pub. L. 104-67, set out as an Effective Date of
    1995 Amendment note under section 77l of this title.

                               CONSTRUCTION                           
      Nothing in section to be deemed to create or ratify any implied
    right of action, or to prevent Commission, by rule or regulation,
    from restricting or otherwise regulating private actions under this
    chapter, see section 203 of Pub. L. 104-67, set out as a note under
    section 78j-1 of this title.

-FOOTNOTE-
    (!1) So in original. Probably should be preceded by "if,".


-End-



-CITE-
    15 USC Sec. 78u-5                                           01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78u-5. Application of safe harbor for forward-looking
      statements

-STATUTE-
    (a) Applicability
      This section shall apply only to a forward-looking statement made
    by - 
        (1) an issuer that, at the time that the statement is made, is
      subject to the reporting requirements of section 78m(a) of this
      title or section 78o(d) of this title;
        (2) a person acting on behalf of such issuer;
        (3) an outside reviewer retained by such issuer making a
      statement on behalf of such issuer; or
        (4) an underwriter, with respect to information provided by
      such issuer or information derived from information provided by
      such issuer.
    (b) Exclusions
      Except to the extent otherwise specifically provided by rule,
    regulation, or order of the Commission, this section shall not
    apply to a forward-looking statement - 
        (1) that is made with respect to the business or operations of
      the issuer, if the issuer - 
          (A) during the 3-year period preceding the date on which the
        statement was first made - 
            (i) was convicted of any felony or misdemeanor described in
          clauses (i) through (iv) of section 78o(b)(4)(B) of this
          title; or
            (ii) has been made the subject of a judicial or
          administrative decree or order arising out of a governmental
          action that - 
              (I) prohibits future violations of the antifraud
            provisions of the securities laws;
              (II) requires that the issuer cease and desist from
            violating the antifraud provisions of the securities laws;
            or
              (III) determines that the issuer violated the antifraud
            provisions of the securities laws;

          (B) makes the forward-looking statement in connection with an
        offering of securities by a blank check company;
          (C) issues penny stock;
          (D) makes the forward-looking statement in connection with a
        rollup transaction; or
          (E) makes the forward-looking statement in connection with a
        going private transaction; or

        (2) that is - 
          (A) included in a financial statement prepared in accordance
        with generally accepted accounting principles;
          (B) contained in a registration statement of, or otherwise
        issued by, an investment company;
          (C) made in connection with a tender offer;
          (D) made in connection with an initial public offering;
          (E) made in connection with an offering by, or relating to
        the operations of, a partnership, limited liability company, or
        a direct participation investment program; or
          (F) made in a disclosure of beneficial ownership in a report
        required to be filed with the Commission pursuant to section
        78m(d) of this title.
    (c) Safe harbor
      (1) In general
        Except as provided in subsection (b) of this section, in any
      private action arising under this chapter that is based on an
      untrue statement of a material fact or omission of a material
      fact necessary to make the statement not misleading, a person
      referred to in subsection (a) of this section shall not be liable
      with respect to any forward-looking statement, whether written or
      oral, if and to the extent that - 
          (A) the forward-looking statement is - 
            (i) identified as a forward-looking statement, and is
          accompanied by meaningful cautionary statements identifying
          important factors that could cause actual results to differ
          materially from those in the forward-looking statement; or
            (ii) immaterial; or

          (B) the plaintiff fails to prove that the forward-looking
        statement - 
            (i) if made by a natural person, was made with actual
          knowledge by that person that the statement was false or
          misleading; or
            (ii) if made by a business entity; (!1) was - 

              (I) made by or with the approval of an executive officer
            of that entity; and
              (II) made or approved by such officer with actual
            knowledge by that officer that the statement was false or
            misleading.
      (2) Oral forward-looking statements
        In the case of an oral forward-looking statement made by an
      issuer that is subject to the reporting requirements of section
      78m(a) of this title or section 78o(d) of this title, or by a
      person acting on behalf of such issuer, the requirement set forth
      in paragraph (1)(A) shall be deemed to be satisfied - 
          (A) if the oral forward-looking statement is accompanied by a
        cautionary statement - 
            (i) that the particular oral statement is a forward-looking
          statement; and
            (ii) that the actual results might differ materially from
          those projected in the forward-looking statement; and

          (B) if - 
            (i) the oral forward-looking statement is accompanied by an
          oral statement that additional information concerning factors
          that could cause actual results to materially differ from
          those in the forward-looking statement is contained in a
          readily available written document, or portion thereof;
            (ii) the accompanying oral statement referred to in clause
          (i) identifies the document, or portion thereof, that
          contains the additional information about those factors
          relating to the forward-looking statement; and
            (iii) the information contained in that written document is
          a cautionary statement that satisfies the standard
          established in paragraph (1)(A).
      (3) Availability
        Any document filed with the Commission or generally
      disseminated shall be deemed to be readily available for purposes
      of paragraph (2).
      (4) Effect on other safe harbors
        The exemption provided for in paragraph (1) shall be in
      addition to any exemption that the Commission may establish by
      rule or regulation under subsection (g) of this section.
    (d) Duty to update
      Nothing in this section shall impose upon any person a duty to
    update a forward-looking statement.
    (e) Dispositive motion
      On any motion to dismiss based upon subsection (c)(1) of this
    section, the court shall consider any statement cited in the
    complaint and any cautionary statement accompanying the forward-
    looking statement, which are not subject to material dispute,
    cited by the defendant.
    (f) Stay pending decision on motion
      In any private action arising under this chapter, the court shall
    stay discovery (other than discovery that is specifically directed
    to the applicability of the exemption provided for in this section)
    during the pendency of any motion by a defendant for summary
    judgment that is based on the grounds that - 
        (1) the statement or omission upon which the complaint is based
      is a forward-looking statement within the meaning of this
      section; and
        (2) the exemption provided for in this section precludes a
      claim for relief.
    (g) Exemption authority
      In addition to the exemptions provided for in this section, the
    Commission may, by rule or regulation, provide exemptions from or
    under any provision of this chapter, including with respect to
    liability that is based on a statement or that is based on
    projections or other forward-looking information, if and to the
    extent that any such exemption is consistent with the public
    interest and the protection of investors, as determined by the
    Commission.
    (h) Effect on other authority of Commission
      Nothing in this section limits, either expressly or by
    implication, the authority of the Commission to exercise similar
    authority or to adopt similar rules and regulations with respect to
    forward-looking statements under any other statute under which the
    Commission exercises rulemaking authority.
    (i) Definitions
      For purposes of this section, the following definitions shall
    apply:
      (1) Forward-looking statement
        The term "forward-looking statement" means - 
          (A) a statement containing a projection of revenues, income
        (including income loss), earnings (including earnings loss) per
        share, capital expenditures, dividends, capital structure, or
        other financial items;
          (B) a statement of the plans and objectives of management for
        future operations, including plans or objectives relating to
        the products or services of the issuer;
          (C) a statement of future economic performance, including any
        such statement contained in a discussion and analysis of
        financial condition by the management or in the results of
        operations included pursuant to the rules and regulations of
        the Commission;
          (D) any statement of the assumptions underlying or relating
        to any statement described in subparagraph (A), (B), or (C);
          (E) any report issued by an outside reviewer retained by an
        issuer, to the extent that the report assesses a forward-
        looking statement made by the issuer; or
          (F) a statement containing a projection or estimate of such
        other items as may be specified by rule or regulation of the
        Commission.
      (2) Investment company
        The term "investment company" has the same meaning as in
      section 80a-3(a) of this title.
      (3) Going private transaction
        The term "going private transaction" has the meaning given that
      term under the rules or regulations of the Commission issued
      pursuant to section 78m(e) of this title.
      (4) Person acting on behalf of an issuer
        The term "person acting on behalf of an issuer" means any
      officer, director, or employee of such issuer.
      (5) Other terms
        The terms "blank check company", "rollup transaction",
      "partnership", "limited liability company", "executive officer of
      an entity" and "direct participation investment program", have
      the meanings given those terms by rule or regulation of the
      Commission.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 21E, as added Pub. L. 104-67,
    title I, Sec. 102(b), Dec. 22, 1995, 109 Stat. 753.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (c)(1), (f), and (g), was
    in the original "this title". See References in Text note set out
    under section 78a of this title.


-MISC1-
                              EFFECTIVE DATE                          
      This section not to affect or apply to any private action arising
    under this chapter or title I of the Securities Act of 1933 (15
    U.S.C. 77a et seq.), commenced before and pending on Dec. 22, 1995,
    see section 108 of Pub. L. 104-67, set out as an Effective Date of
    1995 Amendment note under section 77l of this title.

                               CONSTRUCTION                           
      Nothing in section to be deemed to create or ratify any implied
    right of action, or to prevent Commission, by rule or regulation,
    from restricting or otherwise regulating private actions under this
    chapter, see section 203 of Pub. L. 104-67, set out as a note under
    section 78j-1 of this title.

-FOOTNOTE-
    (!1) So in original. The semicolon probably should be a comma.


-End-



-CITE-
    15 USC Sec. 78v                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78v. Hearings by Commission

-STATUTE-
      Hearings may be public and may be held before the Commission, any
    member or members thereof, or any officer or officers of the
    Commission designated by it, and appropriate records thereof shall
    be kept.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 22, 48 Stat. 901.)


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78w                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78w. Rules, regulations, and orders; annual reports

-STATUTE-
    (a) Power to make rules and regulations; considerations; public
      disclosure
      (1) The Commission, the Board of Governors of the Federal Reserve
    System, and the other agencies enumerated in section 78c(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 chapter for which they are responsible or for the execution of
    the functions vested in them by this chapter, 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
    chapter 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 78c(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 chapter,
    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 chapter. 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 chapter, 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 chapter.
      (3) The Commission and the Secretary, in making rules and
    regulations pursuant to any provision of this chapter, considering
    any application for registration in accordance with section 78s(a)
    of this title, or reviewing any proposed rule change of a self-
    regulatory organization in accordance with section 78s(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.
    (b) Annual report to Congress
      (1) The Commission, the Board of Governors of the Federal Reserve
    System, and the other agencies enumerated in section 78c(a)(34) of
    this title, other than the Office of Thrift Supervision, 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 chapter.
      (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
    chapter with respect to such self-regulatory organization,
    including a description of any examination conducted as part of
    such activities of any such organization, any material
    recommendation presented as part of such activities to such
    organization for changes in its organization or rules, and any
    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 chapter with respect to such municipal
    securities dealers, including the nature of and reason for any
    sanction imposed pursuant to this chapter 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 chapter, 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 chapter 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 78m(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, 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) Procedure for adjudication
      The Commission, by rule, shall prescribe the procedure applicable
    to every case pursuant to this chapter of adjudication (as defined
    in section 551 of title 5) 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 October 15, 1990, the Commission shall
    establish regulations providing for the expeditious conduct of
    hearings and rendering of decisions under section 78u-3 of this
    title, section 77h-1 of this title, section 80a-9(f) of this title,
    and section 80b-3(k) of this title.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 23, 48 Stat. 901; Aug. 23,
    1935, ch. 614, Sec. 203(a), 49 Stat. 704; May 27, 1936, ch. 462,
    Sec. 8, 49 Stat. 1379; Pub. L. 88-467, Sec. 10, Aug. 20, 1964, 78
    Stat. 580; Pub. L. 94-29, Sec. 18, June 4, 1975, 89 Stat. 155; Pub.
    L. 99-571, title I, Sec. 102(j), Oct. 28, 1986, 100 Stat. 3220;
    Pub. L. 100-181, title III, Secs. 324, 325, Dec. 4, 1987, 101 Stat.
    1259; Pub. L. 101-429, title II, Sec. 204, Oct. 15, 1990, 104 Stat.
    940; Pub. L. 103-202, title I, Sec. 107, Dec. 17, 1993, 107 Stat.
    2351; Pub. L. 109-351, title IV, Sec. 401(a)(3), Oct. 13, 2006, 120
    Stat. 1973.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a) to (c), was in the
    original "this title". See References in Text note set out under
    section 78a of this title.


-MISC1-
                                AMENDMENTS                            
      2006 - Subsec. (b)(1). Pub. L. 109-351 inserted "other than the
    Office of Thrift Supervision," before "shall each".
      1993 - Subsec. (b)(4)(C) to (K). Pub. L. 103-202, Sec. 107,
    redesignated subpars. (E) to (G) and (I) to (K) as (C) to (E) and
    (F) to (H), respectively, added a new subpar. (I), and struck out
    former subpars. (C), (D), and (H). Prior to amendment, subpars.
    (C), (D), and (H) read as follows:
      "(C) beginning in 1975 and ending in 1980, information, data, and
    recommendations with respect to the development of a national
    system for the prompt and accurate clearance and settlement of
    securities transactions, including a summary of the regulatory
    activities, operational capabilities, financial resources, and
    plans of self-regulatory organizations and registered transfer
    agents with respect thereto;
      "(D) beginning in 1975 and ending in 1980, a description of the
    steps taken, and an evaluation of the progress made, toward the
    establishment of a national market system, and recommendations for
    further legislation it considers advisable with respect to such
    system;
      "(H) beginning in 1975 and ending in 1980, a description of the
    effect the absence of any schedule or fixed rates of commissions,
    allowances, discounts, or other fees to be charged by members for
    effecting transactions on a national securities exchange is having
    on the maintenance of fair and orderly markets and the development
    of a national market system for securities;".
      1990 - Subsec. (d). Pub. L. 101-429 added subsec. (d).
      1987 - Subsec. (a)(1). Pub. L. 100-181, Sec. 324(1), inserted
    "or" before "any self-regulatory organization" in last sentence.
      Subsec. (a)(3). Pub. L. 100-181, Sec. 324(2), inserted "shall"
    after "section 78s(b) of this title,".
      Subsec. (b)(4)(F). Pub. L. 100-181, Sec. 325, substituted "the"
    for "The".
      1986 - Subsec. (a)(2). Pub. L. 99-571, Sec. 102(j)(1), (2),
    inserted "and the Secretary of the Treasury" in three places and
    "or the Secretary's" in one place.
      Subsec. (a)(3). Pub. L. 99-571, Sec. 102(j)(3), (4), inserted
    "and the Secretary" in three places and "or the Secretary" in one
    place.
      1975 - Subsec. (a). Pub. L. 94-29 designated existing provisions
    as par. (1), inserted references to other agencies enumerated in
    section 78c(a)(34) of this title, regulations appropriate to
    implement the provisions of this chapter for which the agencies are
    responsible, the classification of persons, transactions,
    statements, applications, and reports, the prescribing of greater,
    lesser, or different requirements for different classifications,
    and the non-liability of self-regulatory organization, and added
    pars. (2) and (3).
      Subsec. (b). Pub. L. 94-29 designated existing provisions as par.
    (1), substituted "The Commission, the Board of Governors of the
    Federal Reserve System, and the other agencies enumerated in
    section 78c(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
    chapter" for "The Commission and the Board of Governors of the
    Federal Reserve System, respectively, shall include in their annual
    reports to Congress such information, data, and recommendation for
    further legislation as they may deem advisable with regard to
    matters within their respective jurisdictions under this chapter.
    The Commission shall include in its annual reports to the Congress
    for the fiscal years ended on June 30 of 1965, 1966, and 1967
    information, data, and recommendations specifically related to the
    operation of the amendments to this chapter made by the Securities
    Acts Amendments of 1964", and added pars. (2) to (4).
      Subsec. (c). Pub. L. 94-29 added subsec. (c).
      1964 - Subsec. (b). Pub. L. 88-467 required the Commission in its
    annual reports to Congress for fiscal years ending June 30, 1965,
    1966, and 1967, to furnish information, data, and recommendations
    specifically related to the operations of the amendments to the
    Securities Exchange Act of 1934 made by the Securities Act
    Amendments of 1964.
      1936 - Subsec. (a). Act May 27, 1936, inserted second sentence.

-CHANGE-
                              CHANGE OF NAME                          
      Section 203(a) of act Aug. 23, 1935, substituted "Board of
    Governors of the Federal Reserve System" for "Federal Reserve
    Board".


-MISC2-
                     EFFECTIVE DATE OF 1990 AMENDMENT                 
      Amendment by Pub. L. 101-429 effective Oct. 15, 1990, with
    provisions relating to civil penalties and accounting and
    disgorgement, see section 1(c)(1), (2) of Pub. L. 101-429, set out
    in a note under section 77g of this title.

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Amendment by Pub. L. 99-571 effective 270 days after Oct. 28,
    1986, see section 401 of Pub. L. 99-571, set out as an Effective
    Date note under section 78o-5 of this title.

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see section
    13 of Pub. L. 88-467, set out as a note under section 78c of this
    title.

                      CONSTRUCTION OF 1993 AMENDMENT                  
      Amendment by Pub. L. 103-202 not to be construed to govern
    initial issuance of any public debt obligation or to grant any
    authority to (or extend any authority of) the Securities and
    Exchange Commission, any appropriate regulatory agency, or a self-
    regulatory organization to prescribe any procedure, term, or
    condition of such initial issuance, to promulgate any rule or
    regulation governing such initial issuance, or to otherwise
    regulate in any manner such initial issuance, see section 111 of
    Pub. L. 103-202, set out as a note under section 78o-5 of this
    title.

                   TERMINATION OF REPORTING REQUIREMENTS               
      For termination, effective May 15, 2000, of provisions of law
    requiring submittal to Congress of any annual, semiannual, or other
    regular periodic report listed in House Document No. 103-7 (in
    which the 2nd item on page 143, the 18th item on page 167, the 7th
    item on page 172, and 18th item on page 190 identify a reporting
    provision which, as subsequently amended, is contained in subsec.
    (b) of this section), see section 3003 of Pub. L. 104-66, as
    amended, set out as a note under section 1113 of Title 31, Money
    and Finance.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78x                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78x. Public availability of information

-STATUTE-
    (a) "Records" defined
      For purposes of section 552 of title 5 the term "records"
    includes all applications, statements, reports, contracts,
    correspondence, notices, and other documents filed with or
    otherwise obtained by the Commission pursuant to this chapter or
    otherwise.
    (b) Disclosure or personal use
      It shall be unlawful for any member, officer, or employee of the
    Commission to disclose to any person other than a member, officer,
    or employee of the Commission, or to use for personal benefit, any
    information contained in any application, statement, report,
    contract, correspondence, notice, or other document filed with or
    otherwise obtained by the Commission (1) in contravention of the
    rules and regulations of the Commission under section 552 of title
    5, or (2) in circumstances where the Commission has determined
    pursuant to such rules to accord confidential treatment to such
    information.
    (c) Confidential disclosures
      The Commission may, in its discretion and upon a showing that
    such information is needed, provide all "records" (as defined in
    subsection (a) of this section) and other information in its
    possession to such persons, both domestic and foreign, as the
    Commission by rule deems appropriate if the person receiving such
    records or information provides such assurances of confidentiality
    as the Commission deems appropriate.
    (d) Records obtained from foreign securities authorities
      Except as provided in subsection (e) of this section, the
    Commission shall not be compelled to disclose records obtained from
    a foreign securities authority if (1) the foreign securities
    authority has in good faith determined and represented to the
    Commission that public disclosure of such records would violate the
    laws applicable to that foreign securities authority, and (2) the
    Commission obtains such records pursuant to (A) such procedure as
    the Commission may authorize for use in connection with the
    administration or enforcement of the securities laws, or (B) a
    memorandum of understanding. 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.
    (e) Savings provision
      Nothing in this section shall - 
        (1) alter the Commission's responsibilities under the Right to
      Financial Privacy Act (12 U.S.C. 3401 et seq.), as limited by
      section 78u(h) of this title, with respect to transfers of
      records covered by such statutes, or
        (2) authorize the Commission to withhold information from the
      Congress or prevent the Commission from complying with an order
      of a court of the United States in an action commenced by the
      United States or the Commission.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 24, 48 Stat. 901; Aug. 23,
    1935, ch. 614, Sec. 203(a), 49 Stat. 704; Pub. L. 94-29, Sec. 19,
    June 4, 1975, 89 Stat. 158; Pub. L. 101-550, title II, Sec. 202(a),
    Nov. 15, 1990, 104 Stat. 2715.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsec. (a), was in the original
    "this title". See References in Text note set out under section 78a
    of this title.
      The Right to Financial Privacy Act, referred to in subsec.
    (e)(1), probably means the Right to Financial Privacy Act of 1978,
    title XI of Pub. L. 95-630, Nov. 10, 1978, 92 Stat. 3697, as
    amended, which is classified generally to chapter 35 (Sec. 3401 et
    seq.) of Title 12, Banks and Banking. For complete classification
    of this Act to the Code, see Short Title note set out under section
    3401 of Title 12 and Tables.


-MISC1-
                                AMENDMENTS                            
      1990 - Subsec. (b). Pub. L. 101-550, Sec. 202(a)(1), struck out
    at end "Nothing in this subsection shall authorize the Commission
    to withhold information from the Congress."
      Subsecs. (c) to (e). Pub. L. 101-550, Sec. 202(a)(2), added
    subsecs. (c) to (e).
      1975 - Subsec. (a). Pub. L. 94-29 substituted "For purposes of
    section 552 of title 5, the term 'records' includes all
    applications, statements, reports, contracts, correspondence,
    notices, and other documents filed with or otherwise obtained by
    the Commission pursuant to this chapter or otherwise" for "Nothing
    in this chapter shall be construed to require, or to authorize the
    Commission to require, the revealing of trade secrets or processes
    in any application, report, or document filed with the Commission
    under this chapter".
      Subsecs. (b), (c). Pub. L. 94-29 redesignated subsec. (c) as (b)
    and substituted "application, statement, report, contract,
    correspondence, notice, or other document filed with or otherwise
    obtained by the Commission (1) in contravention of the rules and
    regulations of the Commission under section 552 of title 5, or (2)
    in circumstances where the Commission has determined pursuant to
    such rules to accord confidential treatment for such information.
    Nothing in this subsection shall authorize the Commission to
    withhold information from Congress" for "application, report, or
    document filed with the Commission which is not made available to
    the public pursuant to subsection (b) of this section: Provided,
    That the Commission may make available to the Board of Governors of
    the Federal Reserve System any information requested by the Board
    for the purpose of enabling it to perform its duties under this
    chapter". Former subsec. (b), providing for written objection to
    public disclosure of information, was struck out.

-CHANGE-
                              CHANGE OF NAME                          
      Section 203(a) of act Aug. 23, 1935, substituted "Board of
    Governors of the Federal Reserve System" for "Federal Reserve
    Board".


-MISC2-
                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78y                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78y. Court review of orders and rules

-STATUTE-
    (a) Final Commission orders; persons aggrieved; petition; record;
      findings; affirmance, modification, enforcement, or setting aside
      of orders; remand to adduce additional evidence
      (1) A person aggrieved by a final order of the Commission entered
    pursuant to this chapter may obtain review of the order in the
    United States Court of Appeals for the circuit in which he resides
    or has his principal place of business, or for the District of
    Columbia Circuit, by filing in such court, within sixty days after
    the entry of the order, a written petition requesting that the
    order be modified or set aside in whole or in part.
      (2) A copy of the petition shall be transmitted forthwith by the
    clerk of the court to a member of the Commission or an officer
    designated by the Commission for that purpose. Thereupon the
    Commission shall file in the court the record on which the order
    complained of is entered, as provided in section 2112 of title 28
    and the Federal Rules of Appellate Procedure.
      (3) On the filing of the petition, the court has jurisdiction,
    which becomes exclusive on the filing of the record, to affirm or
    modify and enforce or to set aside the order in whole or in part.
      (4) The findings of the Commission as to the facts, if supported
    by substantial evidence, are conclusive.
      (5) If either party applies to the court for leave to adduce
    additional evidence and shows to the satisfaction of the court that
    the additional evidence is material and that there was reasonable
    ground for failure to adduce it before the Commission, the court
    may remand the case to the Commission for further proceedings, in
    whatever manner and on whatever conditions the court considers
    appropriate. If the case is remanded to the Commission, it shall
    file in the court a supplemental record containing any new
    evidence, any further or modified findings, and any new order.
    (b) Commission rules; persons adversely affected; petition; record;
      affirmance, enforcement, or setting aside of rules; findings;
      transfer of proceedings
      (1) A person adversely affected by a rule of the Commission
    promulgated pursuant to section 78f, 78i(h)(2), 78k, 78k-1,
    78o(c)(5) or (6), 78o-3, 78q, 78q-1, or 78s of this title may
    obtain review of this rule in the United States Court of Appeals
    for the circuit in which he resides or has his principal place of
    business or for the District of Columbia Circuit, by filing in such
    court, within sixty days after the promulgation of the rule, a
    written petition requesting that the rule be set aside.
      (2) A copy of the petition shall be transmitted forthwith by the
    clerk of the court to a member of the Commission or an officer
    designated for that purpose. Thereupon, the Commission shall file
    in the court the rule under review and any documents referred to
    therein, the Commission's notice of proposed rulemaking and any
    documents referred to therein, all written submissions and the
    transcript of any oral presentations in the rulemaking, factual
    information not included in the foregoing that was considered by
    the Commission in the promulgation of the rule or proffered by the
    Commission as pertinent to the rule, the report of any advisory
    committee received or considered by the Commission in the
    rulemaking, and any other materials prescribed by the court.
      (3) On the filing of the petition, the court has jurisdiction,
    which becomes exclusive on the filing of the materials set forth in
    paragraph (2) of this subsection, to affirm and enforce or to set
    aside the rule.
      (4) The findings of the Commission as to the facts identified by
    the Commission as the basis, in whole or in part, of the rule, if
    supported by substantial evidence, are conclusive. The court shall
    affirm and enforce the rule unless the Commission's action in
    promulgating the rule is found to be arbitrary, capricious, an
    abuse of discretion, or otherwise not in accordance with law;
    contrary to constitutional right, power, privilege, or immunity; in
    excess of statutory jurisdiction, authority, or limitations, or
    short of statutory right; or without observance of procedure
    required by law.
      (5) If proceedings have been instituted under this subsection in
    two or more courts of appeals with respect to the same rule, the
    Commission shall file the materials set forth in paragraph (2) of
    this subsection in that court in which a proceeding was first
    instituted. The other courts shall thereupon transfer all such
    proceedings to the court in which the materials have been filed.
    For the convenience of the parties in the interest of justice that
    court may thereafter transfer all the proceedings to any other
    court of appeals.
    (c) Objections not urged before Commission; stay of orders and
      rules; transfer of enforcement or review proceedings
      (1) No objection to an order or rule of the Commission, for which
    review is sought under this section, may be considered by the court
    unless it was urged before the Commission or there was reasonable
    ground for failure to do so.
      (2) The filing of a petition under this section does not operate
    as a stay of the Commission's order or rule. Until the court's
    jurisdiction becomes exclusive, the Commission may stay its order
    or rule pending judicial review if it finds that justice so
    requires. After the filing of a petition under this section, the
    court, on whatever conditions may be required and to the extent
    necessary to prevent irreparable injury, may issue all necessary
    and appropriate process to stay the order or rule or to preserve
    status or rights pending its review; but (notwithstanding section
    705 of title 5) no such process may be issued by the court before
    the filing of the record or the materials set forth in subsection
    (b)(2) of this section unless: (A) the Commission has denied a stay
    or failed to grant requested relief, (B) a reasonable period has
    expired since the filing of an application for a stay without a
    decision by the Commission, or (C) there was reasonable ground for
    failure to apply to the Commission.
      (3) When the same order or rule is the subject of one or more
    petitions for review filed under this section and an action for
    enforcement filed in a district court of the United States under
    section 78u(d) or (e) of this title, that court in which the
    petition or the action is first filed has jurisdiction with respect
    to the order or rule to the exclusion of any other court, and
    thereupon all such proceedings shall be transferred to that court;
    but, for the convenience of the parties in the interest of justice,
    that court may thereafter transfer all the proceedings to any other
    court of appeals or district court of the United States, whether or
    not a petition for review or an action for enforcement was
    originally filed in the transferee court. The scope of review by a
    district court under section 78u(d) or (e) of this title is in all
    cases the same as by a court of appeals under this section.
    (d) Other appropriate regulatory agencies
      (1) For purposes of the preceding subsections of this section,
    the term "Commission" includes the agencies enumerated in section
    78c(a)(34) of this title insofar as such agencies are acting
    pursuant to this chapter and the Secretary of the Treasury insofar
    as he is acting pursuant to section 78o-5 of this title.
      (2) For purposes of subsection (a)(4) of this section and section
    706 of title 5, an order of the Commission pursuant to section
    78s(a) of this title denying registration to a clearing agency for
    which the Commission is not the appropriate regulatory agency or
    pursuant to section 78s(b) of this title disapproving a proposed
    rule change by such a clearing agency shall be deemed to be an
    order of the appropriate regulatory agency for such clearing agency
    insofar as such order was entered by reason of a determination by
    such appropriate regulatory agency pursuant to section 78s(a)(2)(C)
    or 78s(b)(4)(C) of this title that such registration or proposed
    rule change would be inconsistent with the safeguarding of
    securities or funds.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 25, 48 Stat. 901; June 7,
    1934, ch. 426, 48 Stat. 926; June 25, 1948, ch. 646, Sec. 32(a), 62
    Stat. 991; May 24, 1949, ch. 139, Sec. 127, 63 Stat. 107; Pub. L.
    85-791, Sec. 10, Aug. 28, 1958, 72 Stat. 945; Pub. L. 94-29, Sec.
    20, June 4, 1975, 89 Stat. 158; Pub. L. 99-571, title I, Sec.
    102(k), Oct. 28, 1986, 100 Stat. 3220; Pub. L. 101-432, Sec. 6(b),
    Oct. 16, 1990, 104 Stat. 975.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a)(1) and (d)(1), was in
    the original "this title". See References in Text note set out
    under section 78a of this title.
      The Federal Rules of Appellate Procedure, referred to in subsec.
    (a)(2), are set out in the Appendix to Title 28, Judiciary and
    Judicial Procedure.


-MISC1-
                                AMENDMENTS                            
      1990 - Subsec. (b)(1). Pub. L. 101-432 inserted "78i(h)(2),"
    after "section 78f,".
      1986 - Subsec. (d)(1). Pub. L. 99-571 inserted "and the Secretary
    of the Treasury insofar as he is acting pursuant to section 78o-5
    of this title".
      1975 - Subsec. (a). Pub. L. 94-29 revised existing provisions
    into five numbered paragraphs.
      Subsec. (b). Pub. L. 94-29 substituted provisions permitting
    persons adversely affected by any rule promulgated by the
    Commission pursuant to sections 78f, 78k, 78k-1, 78o(c)(5) or (6),
    78o-3, 78q, 78q-1, or 78s of this title to obtain direct review in
    an appropriate Court of Appeals for provisions that commencement of
    proceedings under subsec. (a) shall not, unless specifically
    ordered by the court, operate as a stay of the Commission's order.
      Subsecs. (c), (d). Pub. L. 94-29 added subsecs. (c) and (d).
      1958 - Subsec. (a). Pub. L. 85-791, in second sentence,
    substituted "transmitted by the clerk of the court to" for "served
    upon", struck out "certify and" before "file in the court", struck
    out "a transcript of" after "file in the court", and inserted "as
    provided in section 2112 of title 28", and, in third sentence,
    substituted "petition" for "transcript", and "jurisdiction, which
    upon the filing of the record shall be exclusive" for "exclusive
    jurisdiction".

-CHANGE-
                              CHANGE OF NAME                          
      Act June 25, 1948, eff. Sept. 1, 1948, as amended by act May 24,
    1949, substituted "court of appeals" for "circuit court of
    appeals".
      Act June 7, 1934, substituted "United States Court of Appeals for
    the District of Columbia" for "Court of Appeals for District of
    Columbia".


-MISC2-
                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Amendment by Pub. L. 99-571 effective 270 days after Oct. 28,
    1986, see section 401 of Pub. L. 99-571, set out as an Effective
    Date note under section 78o-5 of this title.

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78z                                             01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78z. Unlawful representations

-STATUTE-
      No action or failure to act by the Commission or the Board of
    Governors of the Federal Reserve System, in the administration of
    this chapter shall be construed to mean that the particular
    authority has in any way passed upon the merits of, or given
    approval to, any security or any transaction or transactions
    therein, nor shall such action or failure to act with regard to any
    statement or report filed with or examined by such authority
    pursuant to this chapter or rules and regulations thereunder, be
    deemed a finding by such authority that such statement or report is
    true and accurate on its face or that it is not false or
    misleading. It shall be unlawful to make, or cause to be made, to
    any prospective purchaser or seller of a security any
    representation that any such action or failure to act by any such
    authority is to be so construed or has such effect.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 26, 48 Stat. 902; Pub. L. 105-
    353, title III, Sec. 301(b)(5), Nov. 3, 1998, 112 Stat. 3236.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in text, was in the original "this
    title". See References in Text note set out under section 78a of
    this title.


-MISC1-
                                AMENDMENTS                            
      1998 - Pub. L. 105-353 substituted "Board of Governors of the
    Federal Reserve System" for "Federal Reserve Board".


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78aa                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78aa. Jurisdiction of offenses and suits

-STATUTE-
      The district courts of the United States and the United States
    courts of any Territory or other place subject to the jurisdiction
    of the United States shall have exclusive jurisdiction of
    violations of this chapter or the rules and regulations thereunder,
    and of all suits in equity and actions at law brought to enforce
    any liability or duty created by this chapter or the rules and
    regulations thereunder. Any criminal proceeding may be brought in
    the district wherein any act or transaction constituting the
    violation occurred. Any suit or action to enforce any liability or
    duty created by this chapter or rules and regulations thereunder,
    or to enjoin any violation of such chapter or rules and
    regulations, may be brought in any such district or in the district
    wherein the defendant is found or is an inhabitant or transacts
    business, and process in such cases may be served in any other
    district of which the defendant is an inhabitant or wherever the
    defendant may be found. Judgments and decrees so rendered shall be
    subject to review as provided in sections 1254, 1291, 1292, and
    1294 of title 28. No costs shall be assessed for or against the
    Commission in any proceeding under this chapter brought by or
    against it in the Supreme Court or such other courts.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 27, 48 Stat. 902; June 25,
    1936, ch. 804, 49 Stat. 1921; June 25, 1948, ch. 646, Sec. 32(b),
    62 Stat. 991; May 24, 1949, ch. 139, Sec. 127, 63 Stat. 107; Pub.
    L. 100-181, title III, Sec. 326, Dec. 4, 1987, 101 Stat. 1259.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in text, was in the original "this
    title". See References in Text note set out under section 78a of
    this title.

-COD-
                               CODIFICATION                           
      As originally enacted section contained references to the Supreme
    Court of the District of Columbia. Act June 25, 1936, substituted
    "the district court of the United States for the District of
    Columbia" for "the Supreme Court of the District of Columbia", and
    act June 25, 1948, as amended by act May 24, 1949, substituted
    "United States District Court for the District of Columbia" for
    "district court of the United States for the District of Columbia".
    Pub. L. 100-181 struck out reference to the United States District
    Court for the District of Columbia. Previously, such words had been
    editorially eliminated as superfluous in view of section 132(a) of
    Title 28, Judiciary and Judicial Procedure, which provides that
    "There shall be in each judicial district a district court which
    shall be a court of record known as the United States District
    Court for the district", and section 88 of Title 28 which provides
    that "the District of Columbia constitutes one judicial district".


-MISC1-
                                AMENDMENTS                            
      1987 - Pub. L. 100-181 struck out ", the United States District
    Court for the District of Columbia," after "district courts of the
    United States" and substituted "sections 1254, 1291, 1292, and 1294
    of title 28" for "sections 128 and 240 of the Judicial Code, as
    amended (U.S.C., title 28, secs. 225 and 347)". See Codification
    note above.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78aa-1                                          01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78aa-1. Special provision relating to statute of limitations
      on private causes of action

-STATUTE-
    (a) Effect on pending causes of action
      The limitation period for any private civil action implied under
    section 78j(b) of this title that was commenced on or before June
    19, 1991, shall be the limitation period provided by the laws
    applicable in the jurisdiction, including principles of
    retroactivity, as such laws existed on June 19, 1991.
    (b) Effect on dismissed causes of action
      Any private civil action implied under section 78j(b) of this
    title that was commenced on or before June 19, 1991 - 
        (1) which was dismissed as time barred subsequent to June 19,
      1991, and
        (2) which would have been timely filed under the limitation
      period provided by the laws applicable in the jurisdiction,
      including principles of retroactivity, as such laws existed on
      June 19, 1991,

    shall be reinstated on motion by the plaintiff not later than 60
    days after December 19, 1991.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 27A, as added Pub. L. 102-
    242, title IV, Sec. 476, Dec. 19, 1991, 105 Stat. 2387.)

-End-



-CITE-
    15 USC Sec. 78bb                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78bb. Effect on existing law

-STATUTE-
    (a) Addition of rights and remedies; recovery of actual damages;
      State securities commissions
      Except as provided in subsection (f) of this section, the rights
    and remedies provided by this chapter shall be in addition to any
    and all other rights and remedies that may exist at law or in
    equity; but no person permitted to maintain a suit for damages
    under the provisions of this chapter shall recover, through
    satisfaction of judgment in one or more actions, a total amount in
    excess of his actual damages on account of the act complained of.
    Except as otherwise specifically provided in this chapter, nothing
    in this chapter shall affect the jurisdiction of the securities
    commission (or any agency or officer performing like functions) of
    any State over any security or any person insofar as it does not
    conflict with the provisions of this chapter or the rules and
    regulations thereunder. No State law which prohibits or regulates
    the making or promoting of wagering or gaming contracts, or the
    operation of "bucket shops" or other similar or related activities,
    shall invalidate any put, call, straddle, option, privilege, or
    other security subject to this chapter, or apply to any activity
    which is incidental or related to the offer, purchase, sale,
    exercise, settlement, or closeout of any such security. No
    provision of State law regarding the offer, sale, or distribution
    of securities shall apply to any transaction in a security futures
    product, except that this sentence shall not be construed as
    limiting any State antifraud law of general applicability.
    (b) Modification of disciplinary procedures
      Nothing in this chapter shall be construed to modify existing law
    with regard to the binding effect (1) on any member of or
    participant in any self-regulatory organization of any action taken
    by the authorities of such organization to settle disputes between
    its members or participants, (2) on any municipal securities dealer
    or municipal securities broker of any action taken pursuant to a
    procedure established by the Municipal Securities Rulemaking Board
    to settle disputes between municipal securities dealers and
    municipal securities brokers, or (3) of any action described in
    paragraph (1) or (2) on any person who has agreed to be bound
    thereby.
    (c) Continuing validity of disciplinary sanctions
      The stay, setting aside, or modification pursuant to section
    78s(e) of this title of any disciplinary sanction imposed by a self-
    regulatory organization on a member thereof, person associated
    with a member, or participant therein, shall not affect the
    validity or force of any action taken as a result of such sanction
    by the self-regulatory organization prior to such stay, setting
    aside, or modification: Provided, That such action is not
    inconsistent with the provisions of this chapter or the rules or
    regulations thereunder. The rights of any person acting in good
    faith which arise out of any such action shall not be affected in
    any way by such stay, setting aside, or modification.
    (d) Physical location of facilities of registered clearing agencies
      or registered transfer agents not to subject changes in
      beneficial or record ownership of securities to State or local
      taxes
      No State or political subdivision thereof shall impose any tax on
    any change in beneficial or record ownership of securities effected
    through the facilities of a registered clearing agency or
    registered transfer agent or any nominee thereof or custodian
    therefor or upon the delivery or transfer of securities to or
    through or receipt from such agency or agent or any nominee thereof
    or custodian therefor, unless such change in beneficial or record
    ownership or such transfer or delivery or receipt would otherwise
    be taxable by such State or political subdivision if the facilities
    of such registered clearing agency, registered transfer agent, or
    any nominee thereof or custodian therefor were not physically
    located in the taxing State or political subdivision. No State or
    political subdivision thereof shall impose any tax on securities
    which are deposited in or retained by a registered clearing agency,
    registered transfer agent, or any nominee thereof or custodian
    therefor, unless such securities would otherwise be taxable by such
    State or political subdivision if the facilities of such registered
    clearing agency, registered transfer agent, or any nominee thereof
    or custodian therefor were not physically located in the taxing
    State or political subdivision.
    (e) Exchange, broker, and dealer commissions; brokerage and
      research services
      (1) No person using the mails, or any means or instrumentality of
    interstate commerce, in the exercise of investment discretion with
    respect to an account shall be deemed to have acted unlawfully or
    to have breached a fiduciary duty under State or Federal law unless
    expressly provided to the contrary by a law enacted by the Congress
    or any State subsequent to June 4, 1975, solely by reason of his
    having caused the account to pay a member of an exchange, broker,
    or dealer an amount of commission for effecting a securities
    transaction in excess of the amount of commission another member of
    an exchange, broker, or dealer would have charged for effecting
    that transaction, if such person determined in good faith that such
    amount of commission was reasonable in relation to the value of the
    brokerage and research services provided by such member, broker, or
    dealer, viewed in terms of either that particular transaction or
    his overall responsibilities with respect to the accounts as to
    which he exercises investment discretion. This subsection is
    exclusive and plenary insofar as conduct is covered by the
    foregoing, unless otherwise expressly provided by contract:
    Provided, however, That nothing in this subsection shall be
    construed to impair or limit the power of the Commission under any
    other provision of this chapter or otherwise.
      (2) A person exercising investment discretion with respect to an
    account shall make such disclosure of his policies and practices
    with respect to commissions that will be paid for effecting
    securities transactions, at such times and in such manner, as the
    appropriate regulatory agency, by rule, may prescribe as necessary
    or appropriate in the public interest or for the protection of
    investors.
      (3) For purposes of this subsection a person provides brokerage
    and research services insofar as he - 
        (A) furnishes advice, either directly or through publications
      or writings, as to the value of securities, the advisability of
      investing in, purchasing, or selling securities, and the
      availability of securities or purchasers or sellers of
      securities;
        (B) furnishes analyses and reports concerning issuers,
      industries, securities, economic factors and trends, portfolio
      strategy, and the performance of accounts; or
        (C) effects securities transactions and performs functions
      incidental thereto (such as clearance, settlement, and custody)
      or required in connection therewith by rules of the Commission or
      a self-regulatory organization of which such person is a member
      or person associated with a member or in which such person is a
      participant.

      (4) The provisions of this subsection shall not apply with regard
    to securities that are security futures products.
    (f) Limitations on remedies
      (1) Class action limitations
        No covered class action based upon the statutory or common law
      of any State or subdivision thereof may be maintained in any
      State or Federal court by any private party alleging - 
          (A) a misrepresentation or omission of a material fact in
        connection with the purchase or sale of a covered security; or
          (B) that the defendant used or employed any manipulative or
        deceptive device or contrivance in connection with the purchase
        or sale of a covered security.
      (2) Removal of covered class actions
        Any covered class action brought in any State court involving a
      covered security, as set forth in paragraph (1), shall be
      removable to the Federal district court for the district in which
      the action is pending, and shall be subject to paragraph (1).
      (3) Preservation of certain actions
        (A) Actions under State law of State of incorporation
          (i) Actions preserved
            Notwithstanding paragraph (1) or (2), a covered class
          action described in clause (ii) of this subparagraph that is
          based upon the statutory or common law of the State in which
          the issuer is incorporated (in the case of a corporation) or
          organized (in the case of any other entity) may be maintained
          in a State or Federal court by a private party.
          (ii) Permissible actions
            A covered class action is described in this clause if it
          involves - 
              (I) the purchase or sale of securities by the issuer or
            an affiliate of the issuer exclusively from or to holders
            of equity securities of the issuer; or
              (II) any recommendation, position, or other communication
            with respect to the sale of securities of an issuer that - 
                (aa) is made by or on behalf of the issuer or an
              affiliate of the issuer to holders of equity securities
              of the issuer; and
                (bb) concerns decisions of such equity holders with
              respect to voting their securities, acting in response to
              a tender or exchange offer, or exercising dissenters' or
              appraisal rights.
        (B) State actions
          (i) In general
            Notwithstanding any other provision of this subsection,
          nothing in this subsection may be construed to preclude a
          State or political subdivision thereof or a State pension
          plan from bringing an action involving a covered security on
          its own behalf, or as a member of a class comprised solely of
          other States, political subdivisions, or State pension plans
          that are named plaintiffs, and that have authorized
          participation, in such action.
          (ii) State pension plan defined
            For purposes of this subparagraph, the term "State pension
          plan" means a pension plan established and maintained for its
          employees by the government of a State or political
          subdivision thereof, or by any agency or instrumentality
          thereof.
        (C) Actions under contractual agreements between issuers and
          indenture trustees
          Notwithstanding paragraph (1) or (2), a covered class action
        that seeks to enforce a contractual agreement between an issuer
        and an indenture trustee may be maintained in a State or
        Federal court by a party to the agreement or a successor to
        such party.
        (D) Remand of removed actions
          In an action that has been removed from a State court
        pursuant to paragraph (2), if the Federal court determines that
        the action may be maintained in State court pursuant to this
        subsection, the Federal court shall remand such action to such
        State court.
      (4) Preservation of State jurisdiction
        The securities commission (or any agency or office performing
      like functions) of any State shall retain jurisdiction under the
      laws of such State to investigate and bring enforcement actions.
      (5) Definitions
        For purposes of this subsection, the following definitions
      shall apply:
        (A) Affiliate of the issuer
          The term "affiliate of the issuer" means a person that
        directly or indirectly, through one or more intermediaries,
        controls or is controlled by or is under common control with,
        the issuer.
        (B) Covered class action
          The term "covered class action" means - 
            (i) any single lawsuit in which - 
              (I) damages are sought on behalf of more than 50 persons
            or prospective class members, and questions of law or fact
            common to those persons or members of the prospective
            class, without reference to issues of individualized
            reliance on an alleged misstatement or omission,
            predominate over any questions affecting only individual
            persons or members; or
              (II) one or more named parties seek to recover damages on
            a representative basis on behalf of themselves and other
            unnamed parties similarly situated, and questions of law or
            fact common to those persons or members of the prospective
            class predominate over any questions affecting only
            individual persons or members; or

            (ii) any group of lawsuits filed in or pending in the same
          court and involving common questions of law or fact, in which
          - 
              (I) damages are sought on behalf of more than 50 persons;
            and
              (II) the lawsuits are joined, consolidated, or otherwise
            proceed as a single action for any purpose.
        (C) Exception for derivative actions
          Notwithstanding subparagraph (B), the term "covered class
        action" does not include an exclusively derivative action
        brought by one or more shareholders on behalf of a corporation.
        (D) Counting of certain class members
          For purposes of this paragraph, a corporation, investment
        company, pension plan, partnership, or other entity, shall be
        treated as one person or prospective class member, but only if
        the entity is not established for the purpose of participating
        in the action.
        (E) Covered security
          The term "covered security" means a security that satisfies
        the standards for a covered security specified in paragraph (1)
        or (2) of section 18(b) of the Securities Act of 1933 [15
        U.S.C. 77r(b)], at the time during which it is alleged that the
        misrepresentation, omission, or manipulative or deceptive
        conduct occurred, except that such term shall not include any
        debt security that is exempt from registration under the
        Securities Act of 1933 [15 U.S.C. 77a et seq.] pursuant to
        rules issued by the Commission under section 4(2) of that Act
        [15 U.S.C. 77d(2)].
        (F) Rule of construction
          Nothing in this paragraph shall be construed to affect the
        discretion of a State court in determining whether actions
        filed in such court should be joined, consolidated, or
        otherwise allowed to proceed as a single action.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 28, 48 Stat. 903; Pub. L. 94-
    29, Sec. 21, June 4, 1975, 89 Stat. 160; Pub. L. 97-303, Sec. 4,
    Oct. 13, 1982, 96 Stat. 1409; Pub. L. 100-181, title III, Secs. 327-
    329, Dec. 4, 1987, 101 Stat. 1259; Pub. L. 104-290, title I, Sec.
    103(b), Oct. 11, 1996, 110 Stat. 3422; Pub. L. 105-353, title I,
    Sec. 101(b)(1), Nov. 3, 1998, 112 Stat. 3230; Pub. L. 106-554, Sec.
    1(a)(5) [title II, Secs. 203(a)(2), 210], Dec. 21, 2000, 114 Stat.
    2763, 2763A-422, 2763A-436.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a) to (c) and (e), was in
    the original "this title". See References in Text note set out
    under section 78a of this title.
      The Securities Act of 1933, referred to in subsec. (f)(5)(E), is
    act May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended, which
    is classified generally to subchapter I (Sec. 77a et seq.) of
    chapter 2A of this title. For complete classification of this Act
    to the Code, see section 77a of this title and Tables.


-MISC1-
                                AMENDMENTS                            
      2000 - Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    210], inserted "subject to this chapter" after "privilege, or other
    security", substituted "any such security" for "any such
    instrument, if such instrument is traded pursuant to rules and
    regulations of a self-regulatory organization that are filed with
    the Commission pursuant to section 78s(b) of this title", and
    inserted at end "No provision of State law regarding the offer,
    sale, or distribution of securities shall apply to any transaction
    in a security futures product, except that this sentence shall not
    be construed as limiting any State antifraud law of general
    applicability."
      Subsec. (e)(4). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    203(a)(2)], added par. (4).
      1998 - Subsec. (a). Pub. L. 105-353, Sec. 101(b)(1)(A),
    substituted "Except as provided in subsection (f) of this section,
    the rights and remedies" for "The rights and remedies".
      Subsec. (f). Pub. L. 105-353, Sec. 101(b)(1)(B), added subsec.
    (f).
      1996 - Subsec. (a). Pub. L. 104-290 substituted "Except as
    otherwise specifically provided in this chapter, nothing" for
    "Nothing".
      1987 - Subsec. (c). Pub. L. 100-181, Sec. 327, substituted "on"
    for "or" after "self-regulatory organization".
      Subsec. (d). Pub. L. 100-181, Sec. 328, substituted "change in
    beneficial" for "change is beneficial".
      Subsec. (e)(1). Pub. L. 100-181, Sec. 329, substituted
    "subsequent to the date of enactment of the Securities Acts
    Amendments of 1975" for "subsequent to the date of enactment of the
    Securities Acts Amendments in 1975", which for purposes of
    codification was translated as "subsequent to June 4, 1975," thus
    requiring no change in text.
      1982 - Subsec. (a). Pub. L. 97-303 inserted provision that no
    State law which prohibits or regulates the making or promoting of
    wagering or gaming contracts, or the operation of "bucket shops" or
    other similar or related activities, shall invalidate any put,
    call, straddle, option, privilege, or other security, or apply to
    any activity which is incidental or related to the offer, purchase,
    sale, exercise, settlement, or closeout of any such instrument, if
    such instrument is traded pursuant to rules and regulations of a
    self-regulatory organization that are filed with the Commission
    pursuant to section 78s(b) of this title.
      1975 - Subsec. (b). Pub. L. 94-29, Sec. 21(1), struck out
    provisions that nothing in this chapter be construed to modify
    existing law with regard to the binding effect on any member of an
    exchange of any disciplinary action taken by the authorities of an
    exchange and made the remaining provisions applicable to all
    members of and participants in all self-regulatory organizations as
    well as municipal securities professionals.
      Subsecs. (c) to (e). Pub. L. 94-29, Sec. 21(2), added subsecs.
    (c) to (e).

                     EFFECTIVE DATE OF 1998 AMENDMENT                 
      Amendment by Pub. L. 105-353 not to affect or apply to any action
    commenced before and pending on Nov. 3, 1998, see section 101(c) of
    Pub. L. 105-353, set out as a note under section 77p of this title.

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78cc                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78cc. Validity of contracts

-STATUTE-
    (a) Waiver provisions
      Any condition, stipulation, or provision binding any person to
    waive compliance with any provision of this chapter or of any rule
    or regulation thereunder, or of any rule of an exchange required
    thereby shall be void.
    (b) Contract provisions in violation of chapter
      Every contract made in violation of any provision of this chapter
    or of any rule or regulation thereunder, and every contract
    (including any contract for listing a security on an exchange)
    heretofore or hereafter made, the performance of which involves the
    violation of, or the continuance of any relationship or practice in
    violation of, any provision of this chapter or any rule or
    regulation thereunder, shall be void (1) as regards the rights of
    any person who, in violation of any such provision, rule, or
    regulation, shall have made or engaged in the performance of any
    such contract, and (2) as regards the rights of any person who, not
    being a party to such contract, shall have acquired any right
    thereunder with actual knowledge of the facts by reason of which
    the making or performance of such contract was in violation of any
    such provision, rule, or regulation: Provided, (A) That no contract
    shall be void by reason of this subsection because of any violation
    of any rule or regulation prescribed pursuant to paragraph (3) of
    subsection (c) of section 78o of this title, and (B) that no
    contract shall be deemed to be void by reason of this subsection in
    any action maintained in reliance upon this subsection, by any
    person to or for whom any broker or dealer sells, or from or for
    whom any broker or dealer purchases, a security in violation of any
    rule or regulation prescribed pursuant to paragraph (1) or (2) of
    subsection (c) of section 78o of this title, unless such action is
    brought within one year after the discovery that such sale or
    purchase involves such violation and within three years after such
    violation. The Commission may, in a rule or regulation prescribed
    pursuant to such paragraph (2) of such section 78o(c) of this
    title, designate such rule or regulation, or portion thereof, as a
    rule or regulation, or portion thereof, a contract in violation of
    which shall not be void by reason of this subsection.
    (c) Validity of loans, extensions of credit, and creation of liens;
      actual knowledge of violation
      Nothing in this chapter shall be construed (1) to affect the
    validity of any loan or extension of credit (or any extension or
    renewal thereof) made or of any lien created prior or subsequent to
    the enactment of this chapter, unless at the time of the making of
    such loan or extension of credit (or extension or renewal thereof)
    or the creating of such lien, the person making such loan or
    extension of credit (or extension or renewal thereof) or acquiring
    such lien shall have actual knowledge of facts by reason of which
    the making of such loan or extension of credit (or extension or
    renewal thereof) or the acquisition of such lien is a violation of
    the provisions of this chapter or any rule or regulation
    thereunder, or (2) to afford a defense to the collection of any
    debt or obligation or the enforcement of any lien by any person who
    shall have acquired such debt, obligation, or lien in good faith
    for value and without actual knowledge of the violation of any
    provision of this chapter or any rule or regulation thereunder
    affecting the legality of such debt, obligation, or lien.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 29, 48 Stat. 903; June 25,
    1938, ch. 677, Sec. 3, 52 Stat. 1076; Pub. L. 101-429, title V,
    Sec. 507, Oct. 15, 1990, 104 Stat. 956.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a), (b), and (c), was in
    the original "this title". See References in Text note set out
    under section 78a of this title.


-MISC1-
                                AMENDMENTS                            
      1990 - Subsec. (b). Pub. L. 101-429 substituted in cl. (A)
    "paragraph (3)" for "paragraph (2) or (3)" and in cl. (B)
    "paragraph (1) or (2)" for "paragraph (1)", and inserted at end
    "The Commission may, in a rule or regulation prescribed pursuant to
    such paragraph (2) of such section 78o(c) of this title, designate
    such rule or regulation, or portion thereof, as a rule or
    regulation, or portion thereof, a contract in violation of which
    shall not be void by reason of this subsection."
      1938 - Subsec. (b). Act June 25, 1938, inserted proviso.

                     EFFECTIVE DATE OF 1990 AMENDMENT                 
      Amendment by Pub. L. 101-429 effective Oct. 15, 1990, with
    provisions relating to civil penalties and accounting and
    disgorgement, see section 1(c)(1), (2) of Pub. L. 101-429, set out
    in a note under section 77g of this title.

-End-



-CITE-
    15 USC Sec. 78dd                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78dd. Foreign securities exchanges

-STATUTE-
      (a) It shall be unlawful for any broker or dealer, directly or
    indirectly, to make use of the mails or of any means or
    instrumentality of interstate commerce for the purpose of effecting
    on an exchange not within or subject to the jurisdiction of the
    United States, any transaction in any security the issuer of which
    is a resident of, or is organized under the laws of, or has its
    principal place of business in, a place within or subject to the
    jurisdiction of the United States, in contravention of such rules
    and regulations as the Commission may prescribe as necessary or
    appropriate in the public interest or for the protection of
    investors or to prevent the evasion of this chapter.
      (b) The provisions of this chapter or of any rule or regulation
    thereunder shall not apply to any person insofar as he transacts a
    business in securities without the jurisdiction of the United
    States, unless he transacts such business in contravention of such
    rules and regulations as the Commission may prescribe as necessary
    or appropriate to prevent the evasion of this chapter.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 30, 48 Stat. 904.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsecs. (a) and (b), was in the
    original "this title". See References in Text note set out under
    section 78a of this title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

-End-



-CITE-
    15 USC Sec. 78dd-1                                          01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78dd-1. Prohibited foreign trade practices by issuers

-STATUTE-
    (a) Prohibition
      It shall be unlawful for any issuer which has a class of
    securities registered pursuant to section 78l of this title or
    which is required to file reports under section 78o(d) of this
    title, or for any officer, director, employee, or agent of such
    issuer or any stockholder thereof acting on behalf of such issuer,
    to make use of the mails or any means or instrumentality of
    interstate commerce corruptly in furtherance of an offer, payment,
    promise to pay, or authorization of the payment of any money, or
    offer, gift, promise to give, or authorization of the giving of
    anything of value to - 
        (1) any foreign official for purposes of - 
          (A)(i) influencing any act or decision of such foreign
        official in his official capacity, (ii) inducing such foreign
        official to do or omit to do any act in violation of the lawful
        duty of such official, or (iii) securing any improper
        advantage; or
          (B) inducing such foreign official to use his influence with
        a foreign government or instrumentality thereof to affect or
        influence any act or decision of such government or
        instrumentality,

      in order to assist such issuer in obtaining or retaining business
      for or with, or directing business to, any person;
        (2) any foreign political party or official thereof or any
      candidate for foreign political office for purposes of - 
          (A)(i) influencing any act or decision of such party,
        official, or candidate in its or his official capacity, (ii)
        inducing such party, official, or candidate to do or omit to do
        an act in violation of the lawful duty of such party, official,
        or candidate, or (iii) securing any improper advantage; or
          (B) inducing such party, official, or candidate to use its or
        his influence with a foreign government or instrumentality
        thereof to affect or influence any act or decision of such
        government or instrumentality,

      in order to assist such issuer in obtaining or retaining business
      for or with, or directing business to, any person; or
        (3) any person, while knowing that all or a portion of such
      money or thing of value will be offered, given, or promised,
      directly or indirectly, to any foreign official, to any foreign
      political party or official thereof, or to any candidate for
      foreign political office, for purposes of - 
          (A)(i) influencing any act or decision of such foreign
        official, political party, party official, or candidate in his
        or its official capacity, (ii) inducing such foreign official,
        political party, party official, or candidate to do or omit to
        do any act in violation of the lawful duty of such foreign
        official, political party, party official, or candidate, or
        (iii) securing any improper advantage; or
          (B) inducing such foreign official, political party, party
        official, or candidate to use his or its influence with a
        foreign government or instrumentality thereof to affect or
        influence any act or decision of such government or
        instrumentality,

      in order to assist such issuer in obtaining or retaining business
      for or with, or directing business to, any person.
    (b) Exception for routine governmental action
      Subsections (a) and (g) of this section shall not apply to any
    facilitating or expediting payment to a foreign official, political
    party, or party official the purpose of which is to expedite or to
    secure the performance of a routine governmental action by a
    foreign official, political party, or party official.
    (c) Affirmative defenses
      It shall be an affirmative defense to actions under subsection
    (a) or (g) of this section that - 
        (1) the payment, gift, offer, or promise of anything of value
      that was made, was lawful under the written laws and regulations
      of the foreign official's, political party's, party official's,
      or candidate's country; or
        (2) the payment, gift, offer, or promise of anything of value
      that was made, was a reasonable and bona fide expenditure, such
      as travel and lodging expenses, incurred by or on behalf of a
      foreign official, party, party official, or candidate and was
      directly related to - 
          (A) the promotion, demonstration, or explanation of products
        or services; or
          (B) the execution or performance of a contract with a foreign
        government or agency thereof.
    (d) Guidelines by Attorney General
      Not later than one year after August 23, 1988, the Attorney
    General, after consultation with the Commission, the Secretary of
    Commerce, the United States Trade Representative, the Secretary of
    State, and the Secretary of the Treasury, and after obtaining the
    views of all interested persons through public notice and comment
    procedures, shall determine to what extent compliance with this
    section would be enhanced and the business community would be
    assisted by further clarification of the preceding provisions of
    this section and may, based on such determination and to the extent
    necessary and appropriate, issue - 
        (1) guidelines describing specific types of conduct, associated
      with common types of export sales arrangements and business
      contracts, which for purposes of the Department of Justice's
      present enforcement policy, the Attorney General determines would
      be in conformance with the preceding provisions of this section;
      and
        (2) general precautionary procedures which issuers may use on a
      voluntary basis to conform their conduct to the Department of
      Justice's present enforcement policy regarding the preceding
      provisions of this section.

    The Attorney General shall issue the guidelines and procedures
    referred to in the preceding sentence in accordance with the
    provisions of subchapter II of chapter 5 of title 5 and those
    guidelines and procedures shall be subject to the provisions of
    chapter 7 of that title.
    (e) Opinions of Attorney General
      (1) The Attorney General, after consultation with appropriate
    departments and agencies of the United States and after obtaining
    the views of all interested persons through public notice and
    comment procedures, shall establish a procedure to provide
    responses to specific inquiries by issuers concerning conformance
    of their conduct with the Department of Justice's present
    enforcement policy regarding the preceding provisions of this
    section. The Attorney General shall, within 30 days after receiving
    such a request, issue an opinion in response to that request. The
    opinion shall state whether or not certain specified prospective
    conduct would, for purposes of the Department of Justice's present
    enforcement policy, violate the preceding provisions of this
    section. Additional requests for opinions may be filed with the
    Attorney General regarding other specified prospective conduct that
    is beyond the scope of conduct specified in previous requests. In
    any action brought under the applicable provisions of this section,
    there shall be a rebuttable presumption that conduct, which is
    specified in a request by an issuer and for which the Attorney
    General has issued an opinion that such conduct is in conformity
    with the Department of Justice's present enforcement policy, is in
    compliance with the preceding provisions of this section. Such a
    presumption may be rebutted by a preponderance of the evidence. In
    considering the presumption for purposes of this paragraph, a court
    shall weigh all relevant factors, including but not limited to
    whether the information submitted to the Attorney General was
    accurate and complete and whether it was within the scope of the
    conduct specified in any request received by the Attorney General.
    The Attorney General shall establish the procedure required by this
    paragraph in accordance with the provisions of subchapter II of
    chapter 5 of title 5 and that procedure shall be subject to the
    provisions of chapter 7 of that title.
      (2) Any document or other material which is provided to, received
    by, or prepared in the Department of Justice or any other
    department or agency of the United States in connection with a
    request by an issuer under the procedure established under
    paragraph (1), shall be exempt from disclosure under section 552 of
    title 5 and shall not, except with the consent of the issuer, be
    made publicly available, regardless of whether the Attorney General
    responds to such a request or the issuer withdraws such request
    before receiving a response.
      (3) Any issuer who has made a request to the Attorney General
    under paragraph (1) may withdraw such request prior to the time the
    Attorney General issues an opinion in response to such request. Any
    request so withdrawn shall have no force or effect.
      (4) The Attorney General shall, to the maximum extent
    practicable, provide timely guidance concerning the Department of
    Justice's present enforcement policy with respect to the preceding
    provisions of this section to potential exporters and small
    businesses that are unable to obtain specialized counsel on issues
    pertaining to such provisions. Such guidance shall be limited to
    responses to requests under paragraph (1) concerning conformity of
    specified prospective conduct with the Department of Justice's
    present enforcement policy regarding the preceding provisions of
    this section and general explanations of compliance
    responsibilities and of potential liabilities under the preceding
    provisions of this section.
    (f) Definitions
      For purposes of this section:
        (1)(A) The term "foreign official" means any officer or
      employee of a foreign government or any department, agency, or
      instrumentality thereof, or of a public international
      organization, or any person acting in an official capacity for or
      on behalf of any such government or department, agency, or
      instrumentality, or for or on behalf of any such public
      international organization.
        (B) For purposes of subparagraph (A), the term "public
      international organization" means - 
          (i) an organization that is designated by Executive order
        pursuant to section 288 of title 22; or
          (ii) any other international organization that is designated
        by the President by Executive order for the purposes of this
        section, effective as of the date of publication of such order
        in the Federal Register.

        (2)(A) A person's state of mind is "knowing" with respect to
      conduct, a circumstance, or a result if - 
          (i) such person is aware that such person is engaging in such
        conduct, that such circumstance exists, or that such result is
        substantially certain to occur; or
          (ii) such person has a firm belief that such circumstance
        exists or that such result is substantially certain to occur.

        (B) When knowledge of the existence of a particular
      circumstance is required for an offense, such knowledge is
      established if a person is aware of a high probability of the
      existence of such circumstance, unless the person actually
      believes that such circumstance does not exist.
        (3)(A) The term "routine governmental action" means only an
      action which is ordinarily and commonly performed by a foreign
      official in - 
          (i) obtaining permits, licenses, or other official documents
        to qualify a person to do business in a foreign country;
          (ii) processing governmental papers, such as visas and work
        orders;
          (iii) providing police protection, mail pick-up and delivery,
        or scheduling inspections associated with contract performance
        or inspections related to transit of goods across country;
          (iv) providing phone service, power and water supply, loading
        and unloading cargo, or protecting perishable products or
        commodities from deterioration; or
          (v) actions of a similar nature.

        (B) The term "routine governmental action" does not include any
      decision by a foreign official whether, or on what terms, to
      award new business to or to continue business with a particular
      party, or any action taken by a foreign official involved in the
      decisionmaking process to encourage a decision to award new
      business to or continue business with a particular party.
    (g) Alternative jurisdiction
      (1) It shall also be unlawful for any issuer organized under the
    laws of the United States, or a State, territory, possession, or
    commonwealth of the United States or a political subdivision
    thereof and which has a class of securities registered pursuant to
    section 78l of this title or which is required to file reports
    under section 78o(d) of this title, or for any United States person
    that is an officer, director, employee, or agent of such issuer or
    a stockholder thereof acting on behalf of such issuer, to corruptly
    do any act outside the United States in furtherance of an offer,
    payment, promise to pay, or authorization of the payment of any
    money, or offer, gift, promise to give, or authorization of the
    giving of anything of value to any of the persons or entities set
    forth in paragraphs (1), (2), and (3) of subsection (a) of this
    section for the purposes set forth therein, irrespective of whether
    such issuer or such officer, director, employee, agent, or
    stockholder makes use of the mails or any means or instrumentality
    of interstate commerce in furtherance of such offer, gift, payment,
    promise, or authorization.
      (2) As used in this subsection, the term "United States person"
    means a national of the United States (as defined in section 1101
    of title 8) or any corporation, partnership, association, joint-
    stock company, business trust, unincorporated organization, or
    sole proprietorship organized under the laws of the United States
    or any State, territory, possession, or commonwealth of the United
    States, or any political subdivision thereof.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 30A, as added Pub. L. 95-213,
    title I, Sec. 103(a), Dec. 19, 1977, 91 Stat. 1495; amended Pub. L.
    100-418, title V, Sec. 5003(a), Aug. 23, 1988, 102 Stat. 1415; Pub.
    L. 105-366, Sec. 2(a)-(c), Nov. 10, 1998, 112 Stat. 3302, 3303.)


-MISC1-
                                AMENDMENTS                            
      1998 - Subsec. (a)(1)(A). Pub. L. 105-366, Sec. 2(a)(1), amended
    subpar. (A) generally. Prior to amendment, subpar. (A) read as
    follows:
      "(A)(i) influencing any act or decision of such foreign official
    in his official capacity, or (ii) inducing such foreign official to
    do or omit to do any act in violation of the lawful duty of such
    official, or".
      Subsec. (a)(2)(A). Pub. L. 105-366, Sec. 2(a)(2), amended subpar.
    (A) generally. Prior to amendment, subpar. (A) read as follows:
      "(A)(i) influencing any act or decision of such party, official,
    or candidate in its or his official capacity, or (ii) inducing such
    party, official, or candidate to do or omit to do an act in
    violation of the lawful duty of such party, official, or
    candidate,".
      Subsec. (a)(3)(A). Pub. L. 105-366, Sec. 2(a)(3), amended subpar.
    (A) generally. Prior to amendment, subpar. (A) read as follows:
      "(A)(i) influencing any act or decision of such foreign official,
    political party, party official, or candidate in his or its
    official capacity, or (ii) inducing such foreign official,
    political party, party official, or candidate to do or omit to do
    any act in violation of the lawful duty of such foreign official,
    political party, party official, or candidate, or".
      Subsec. (b). Pub. L. 105-366, Sec. 2(c)(2), substituted
    "Subsections (a) and (g)" for "Subsection (a)".
      Subsec. (c). Pub. L. 105-366, Sec. 2(c)(3), substituted
    "subsection (a) or (g)" for "subsection (a)".
      Subsec. (f)(1). Pub. L. 105-366, Sec. 2(b), amended par. (1)
    generally. Prior to amendment, par. (1) read as follows: "The term
    'foreign official' means any officer or employee of a foreign
    government or any department, agency, or instrumentality thereof,
    or any person acting in an official capacity for or on behalf of
    any such government or department, agency, or instrumentality."
      Subsec. (g). Pub. L. 105-366, Sec. 2(c)(1), added subsec. (g).
      1988 - Pub. L. 100-418 substituted "Prohibited foreign trade" for
    "Foreign corrupt" in section catchline and amended text generally,
    revising and restating provisions of subsec. (a) relating to
    prohibitions, adding subsecs. (b) to (e), and redesignating
    provisions of subsec. (b) relating to definitions as subsec. (f)
    and amending those provisions generally.

       TREATMENT OF INTERNATIONAL ORGANIZATIONS PROVIDING COMMERCIAL
                          COMMUNICATIONS SERVICES
      Pub. L. 105-366, Sec. 5, Nov. 10, 1998, 112 Stat. 3309, provided
    that:
      "(a) Definition. - For purposes of this section:
        "(1) International organization providing commercial
      communications services. - The term 'international organization
      providing commercial communications services' means - 
          "(A) the International Telecommunications Satellite
        Organization established pursuant to the Agreement Relating to
        the International Telecommunications Satellite Organization;
        and
          "(B) the International Mobile Satellite Organization
        established pursuant to the Convention on the International
        Maritime Satellite Organization.
        "(2) Pro-competitive privatization. - The term 'pro-competitive
      privatization' means a privatization that the President
      determines to be consistent with the United States policy of
      obtaining full and open competition to such organizations (or
      their successors), and nondiscriminatory market access, in the
      provision of satellite services.
      "(b) Treatment as Public International Organizations. - 
        "(1) Treatment. - An international organization providing
      commercial communications services shall be treated as a public
      international organization for purposes of section 30A of the
      Securities Exchange Act of 1934 (15 U.S.C. 78dd-1) and sections
      104 and 104A of the Foreign Corrupt Practices Act of 1977 (15
      U.S.C. 78dd-2 [and 78dd-3]) until such time as the President
      certifies to the Committee on Commerce [now Committee on Energy
      and Commerce] of the House of Representatives and the Committees
      on Banking, Housing and Urban Affairs and Commerce, Science, and
      Transportation that such international organization providing
      commercial communications services has achieved a pro-competitive
      privatization.
        "(2) Limitation on effect of treatment. - The requirement for a
      certification under paragraph (1), and any certification made
      under such paragraph, shall not be construed to affect the
      administration by the Federal Communications Commission of the
      Communications Act of 1934 [47 U.S.C. 151 et seq.] in authorizing
      the provision of services to, from, or within the United States
      over space segment of the international satellite organizations,
      or the privatized affiliates or successors thereof.
      "(c) Extension of Legal Process. - 
        "(1) In general. - Except as required by international
      agreements to which the United States is a party, an
      international organization providing commercial communications
      services, its officials and employees, and its records shall not
      be accorded immunity from suit or legal process for any act or
      omission taken in connection with such organization's capacity as
      a provider, directly or indirectly, of commercial
      telecommunications services to, from, or within the United
      States.
        "(2) No effect on personal liability. - Paragraph (1) shall not
      affect any immunity from personal liability of any individual who
      is an official or employee of an international organization
      providing commercial communications services.
        "(3) Effective date. - This subsection shall take effect on May
      1, 1999.
      "(d) Elimination or Limitation of Exceptions. - 
        "(1) Action required. - The President shall, in a manner that
      is consistent with requirements in international agreements to
      which the United States is a party, expeditiously take all
      appropriate actions necessary to eliminate or to reduce
      substantially all privileges and immunities that are accorded to
      an international organization described in subparagraph (A) or
      (B) of subsection (a)(1), its officials, its employees, or its
      records, and that are not eliminated pursuant to subsection (c).
        "(2) Designation of agreements. - The President shall designate
      which agreements constitute international agreements to which the
      United States is a party for purposes of this section.
      "(e) Preservation of Law Enforcement and Intelligence Functions. -
     Nothing in subsection (c) or (d) of this section shall affect any
    immunity from suit or legal process of an international
    organization providing commercial communications services, or the
    privatized affiliates or successors thereof, for acts or omissions -
     
        "(1) under chapter 119, 121, 206, or 601 of title 18, United
      States Code, the Foreign Intelligence Surveillance Act of 1978
      (50 U.S.C. 1801 et seq.), section 514 of the Comprehensive Drug
      Abuse Prevention and Control Act of 1970 (21 U.S.C. 884), or Rule
      104, 501, or 608 of the Federal Rules of Evidence [28 U.S.C.
      App.];
        "(2) under similar State laws providing protection to service
      providers cooperating with law enforcement agencies pursuant to
      State electronic surveillance or evidence laws, rules,
      regulations, or procedures; or
        "(3) pursuant to a court order.
      "(f) Rules of Construction. - 
        "(1) Negotiations. - Nothing in this section shall affect the
      President's existing constitutional authority regarding the time,
      scope, and objectives of international negotiations.
        "(2) Privatization. - Nothing in this section shall be
      construed as legislative authorization for the privatization of
      INTELSAT or Inmarsat, nor to increase the President's authority
      with respect to negotiations concerning such privatization."
      [Memorandum of President of the United States, Nov. 16, 1998, 63
    F.R. 65997, delegated to Secretary of State functions and
    authorities vested in the President by section 5(d)(2) of Pub. L.
    105-366, set out above.]

                        ENFORCEMENT AND MONITORING                    
      Pub. L. 105-366, Sec. 6, Nov. 10, 1998, 112 Stat. 3311, provided
    that:
      "(a) Reports Required. - Not later than July 1 of 1999 and each
    of the 5 succeeding years, the Secretary of Commerce shall submit
    to the House of Representatives and the Senate a report that
    contains the following information with respect to implementation
    of the Convention:
        "(1) Ratification. - A list of the countries that have ratified
      the Convention, the dates of ratification by such countries, and
      the entry into force for each such country.
        "(2) Domestic legislation. - A description of domestic laws
      enacted by each party to the Convention that implement
      commitments under the Convention, and assessment of the
      compatibility of such laws with the Convention.
        "(3) Enforcement. - As assessment of the measures taken by each
      party to the Convention during the previous year to fulfill its
      obligations under the Convention and achieve its object and
      purpose including - 
          "(A) an assessment of the enforcement of the domestic laws
        described in paragraph (2);
          "(B) an assessment of the efforts by each such party to
        promote public awareness of such domestic laws and the
        achievement of such object and purpose; and
          "(C) an assessment of the effectiveness, transparency, and
        viability of the monitoring process for the Convention,
        including its inclusion of input from the private sector and
        nongovernmental organizations.
        "(4) Laws prohibiting tax deduction of bribes. - An explanation
      of the domestic laws enacted by each party to the Convention that
      would prohibit the deduction of bribes in the computation of
      domestic taxes.
        "(5) New signatories. - A description of efforts to expand
      international participation in the Convention by adding new
      signatories to the Convention and by assuring that all countries
      which are or become members of the Organization for Economic
      Cooperation and Development are also parties to the Convention.
        "(6) Subsequent efforts. - An assessment of the status of
      efforts to strengthen the Convention by extending the
      prohibitions contained in the Convention to cover bribes to
      political parties, party officials, and candidates for political
      office.
        "(7) Advantages. - Advantages, in terms of immunities, market
      access, or otherwise, in the countries or regions served by the
      organizations described in section 5(a) [set out as a note
      above], the reason for such advantages, and an assessment of
      progress toward fulfilling the policy described in that section.
        "(8) Bribery and transparency. - An assessment of anti-bribery
      programs and transparency with respect to each of the
      international organizations covered by this Act [enacting section
      78dd-3 of this title, amending this section and sections 78dd-2
      and 78ff of this title, and enacting provisions set out as notes
      under this section].
        "(9) Private sector review. - A description of the steps taken
      to ensure full involvement of United States private sector
      participants and representatives of nongovernmental organizations
      in the monitoring and implementation of the Convention.
        "(10) Additional information. - In consultation with the
      private sector participants and representatives of
      nongovernmental organizations described in paragraph (9), a list
      of additional means for enlarging the scope of the Convention and
      otherwise increasing its effectiveness. Such additional means
      shall include, but not be limited to, improved recordkeeping
      provisions and the desirability of expanding the applicability of
      the Convention to additional individuals and organizations and
      the impact on United States business of section 30A of the
      Securities Exchange Act of 1934 [15 U.S.C. 78dd-1] and sections
      104 and 104A of the Foreign Corrupt Practices Act of 1977 [15
      U.S.C. 78dd-2, 78dd-3].
      "(b) Definition. - For purposes of this section, the term
    'Convention' means the Convention on Combating Bribery of Foreign
    Public Officials in International Business Transactions adopted on
    November 21, 1997, and signed on December 17, 1997, by the United
    States and 32 other nations."

    INTERNATIONAL AGREEMENTS CONCERNING ACTS PROHIBITED WITH RESPECT TO
             ISSUERS AND DOMESTIC CONCERNS; REPORT TO CONGRESS
      Section 5003(d) of Pub. L. 100-418 provided that:
      "(1) Negotiations. - It is the sense of the Congress that the
    President should pursue the negotiation of an international
    agreement, among the members of the Organization of Economic
    Cooperation and Development, to govern persons from those countries
    concerning acts prohibited with respect to issuers and domestic
    concerns by the amendments made by this section [amending sections
    78dd-1, 78dd-2, and 78ff of this title]. Such international
    agreement should include a process by which problems and conflicts
    associated with such acts could be resolved.
      "(2) Report to congress. - (A) Within 1 year after the date of
    the enactment of this Act [Aug. 23, 1988], the President shall
    submit to the Congress a report on - 
        "(i) the progress of the negotiations referred to in paragraph
      (1),[;]
        "(ii) those steps which the executive branch and the Congress
      should consider taking in the event that these negotiations do
      not successfully eliminate any competitive disadvantage of United
      States businesses that results when persons from other countries
      commit the acts described in paragraph (1); and
        "(iii) possible actions that could be taken to promote
      cooperation by other countries in international efforts to
      prevent bribery of foreign officials, candidates, or parties in
      third countries.
      "(B) The President shall include in the report submitted under
    subparagraph (A) - 
        "(i) any legislative recommendations necessary to give the
      President the authority to take appropriate action to carry out
      clauses (ii) and (iii) of subparagraph (A);
        "(ii) an analysis of the potential effect on the interests of
      the United States, including United States national security,
      when persons from other countries commit the acts described in
      paragraph (1); and
        "(iii) an assessment of the current and future role of private
      initiatives in curtailing such acts."
      [For delegation of functions of the President under section
    5003(d)(1) of Pub. L. 100-418 to the Secretary of State, see
    section 3-101 of Ex. Ord. No. 12661, Dec. 27, 1988, 54 F.R. 779,
    set out as a note under section 2901 of Title 19, Customs Duties.]


-EXEC-
          EX. ORD. NO. 13259. DESIGNATION OF PUBLIC INTERNATIONAL
     ORGANIZATIONS FOR PURPOSES OF THE SECURITIES EXCHANGE ACT OF 1934
               AND THE FOREIGN CORRUPT PRACTICES ACT OF 1977
      Ex. Ord. No. 13259, Mar. 19, 2002, 67 F.R. 13239, provided:
      By the authority vested in me as President by the Constitution
    and the laws of the United States of America, including section
    30A(f)(1)(B)(ii) of the Securities Exchange Act of 1934 (15 U.S.C.
    78dd-1(f)(1)(B)(ii)) and sections 104(h)(2)(B)(ii) and
    104A(f)(2)(B)(ii) of the Foreign Corrupt Practices Act of 1977 (15
    U.S.C. 78dd-2(h)(2)(B)(ii), 78dd-3(f)(2)(B)(ii)), I hereby
    designate as "public international organizations" for the purposes
    of application of section 30A of the Securities Exchange Act of
    1934 and sections 104 and 104A of the Foreign Corrupt Practices Act
    of 1977:
      (a) The European Union, including: the European Communities (the
    European Community, the European Coal & Steel Community, and the
    European Atomic Energy Community); institutions of the European
    Union, such as the European Commission, the Council of the European
    Union, the European Parliament, the European Court of Justice, the
    European Court of Auditors, the Economic and Social Committee, the
    Committee of the Regions, the European Central Bank, and the
    European Investment Bank; and any departments, agencies, and
    instrumentalities thereof; and
      (b) The European Police Office (Europol), including any
    departments, agencies, and instrumentalities thereof.
      Designation in this Executive Order is intended solely to further
    the purposes of the statutes mentioned above and is not
    determinative of whether an entity is a public international
    organization for the purpose of other statutes or regulations.
                                                         George W. Bush.

-End-



-CITE-
    15 USC Sec. 78dd-2                                          01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78dd-2. Prohibited foreign trade practices by domestic
      concerns

-STATUTE-
    (a) Prohibition
      It shall be unlawful for any domestic concern, other than an
    issuer which is subject to section 78dd-1 of this title, or for any
    officer, director, employee, or agent of such domestic concern or
    any stockholder thereof acting on behalf of such domestic concern,
    to make use of the mails or any means or instrumentality of
    interstate commerce corruptly in furtherance of an offer, payment,
    promise to pay, or authorization of the payment of any money, or
    offer, gift, promise to give, or authorization of the giving of
    anything of value to - 
        (1) any foreign official for purposes of - 
          (A)(i) influencing any act or decision of such foreign
        official in his official capacity, (ii) inducing such foreign
        official to do or omit to do any act in violation of the lawful
        duty of such official, or (iii) securing any improper
        advantage; or
          (B) inducing such foreign official to use his influence with
        a foreign government or instrumentality thereof to affect or
        influence any act or decision of such government or
        instrumentality,

      in order to assist such domestic concern in obtaining or
      retaining business for or with, or directing business to, any
      person;
        (2) any foreign political party or official thereof or any
      candidate for foreign political office for purposes of - 
          (A)(i) influencing any act or decision of such party,
        official, or candidate in its or his official capacity, (ii)
        inducing such party, official, or candidate to do or omit to do
        an act in violation of the lawful duty of such party, official,
        or candidate, or (iii) securing any improper advantage; or
          (B) inducing such party, official, or candidate to use its or
        his influence with a foreign government or instrumentality
        thereof to affect or influence any act or decision of such
        government or instrumentality,

      in order to assist such domestic concern in obtaining or
      retaining business for or with, or directing business to, any
      person; or
        (3) any person, while knowing that all or a portion of such
      money or thing of value will be offered, given, or promised,
      directly or indirectly, to any foreign official, to any foreign
      political party or official thereof, or to any candidate for
      foreign political office, for purposes of - 
          (A)(i) influencing any act or decision of such foreign
        official, political party, party official, or candidate in his
        or its official capacity, (ii) inducing such foreign official,
        political party, party official, or candidate to do or omit to
        do any act in violation of the lawful duty of such foreign
        official, political party, party official, or candidate, or
        (iii) securing any improper advantage; or
          (B) inducing such foreign official, political party, party
        official, or candidate to use his or its influence with a
        foreign government or instrumentality thereof to affect or
        influence any act or decision of such government or
        instrumentality,

      in order to assist such domestic concern in obtaining or
      retaining business for or with, or directing business to, any
      person.
    (b) Exception for routine governmental action
      Subsections (a) and (i) of this section shall not apply to any
    facilitating or expediting payment to a foreign official, political
    party, or party official the purpose of which is to expedite or to
    secure the performance of a routine governmental action by a
    foreign official, political party, or party official.
    (c) Affirmative defenses
      It shall be an affirmative defense to actions under subsection
    (a) or (i) of this section that - 
        (1) the payment, gift, offer, or promise of anything of value
      that was made, was lawful under the written laws and regulations
      of the foreign official's, political party's, party official's,
      or candidate's country; or
        (2) the payment, gift, offer, or promise of anything of value
      that was made, was a reasonable and bona fide expenditure, such
      as travel and lodging expenses, incurred by or on behalf of a
      foreign official, party, party official, or candidate and was
      directly related to - 
          (A) the promotion, demonstration, or explanation of products
        or services; or
          (B) the execution or performance of a contract with a foreign
        government or agency thereof.
    (d) Injunctive relief
      (1) When it appears to the Attorney General that any domestic
    concern to which this section applies, or officer, director,
    employee, agent, or stockholder thereof, is engaged, or about to
    engage, in any act or practice constituting a violation of
    subsection (a) or (i) of this section, the Attorney General may, in
    his discretion, bring a civil action in an appropriate district
    court of the United States to enjoin such act or practice, and upon
    a proper showing, a permanent injunction or a temporary restraining
    order shall be granted without bond.
      (2) For the purpose of any civil investigation which, in the
    opinion of the Attorney General, is necessary and proper to enforce
    this section, the Attorney General or his designee are empowered to
    administer oaths and affirmations, subpoena witnesses, take
    evidence, and require the production of any books, papers, or other
    documents which the Attorney General deems relevant or material to
    such investigation. The attendance of witnesses and the production
    of documentary evidence may be required from any place in the
    United States, or any territory, possession, or commonwealth of the
    United States, at any designated place of hearing.
      (3) In case of contumacy by, or refusal to obey a subpoena issued
    to, any person, the Attorney General may invoke the aid of any
    court of the United States within the jurisdiction of which such
    investigation or proceeding is carried on, or where such person
    resides or carries on business, in requiring the attendance and
    testimony of witnesses and the production of books, papers, or
    other documents. Any such court may issue an order requiring such
    person to appear before the Attorney General or his designee, there
    to produce records, if so ordered, or to give testimony touching
    the matter under investigation. Any failure to obey such order of
    the court may be punished by such court as a contempt thereof. All
    process in any such case may be served in the judicial district in
    which such person resides or may be found. The Attorney General may
    make such rules relating to civil investigations as may be
    necessary or appropriate to implement the provisions of this
    subsection.
    (e) Guidelines by Attorney General
      Not later than 6 months after August 23, 1988, the Attorney
    General, after consultation with the Securities and Exchange
    Commission, the Secretary of Commerce, the United States Trade
    Representative, the Secretary of State, and the Secretary of the
    Treasury, and after obtaining the views of all interested persons
    through public notice and comment procedures, shall determine to
    what extent compliance with this section would be enhanced and the
    business community would be assisted by further clarification of
    the preceding provisions of this section and may, based on such
    determination and to the extent necessary and appropriate, issue - 
        (1) guidelines describing specific types of conduct, associated
      with common types of export sales arrangements and business
      contracts, which for purposes of the Department of Justice's
      present enforcement policy, the Attorney General determines would
      be in conformance with the preceding provisions of this section;
      and
        (2) general precautionary procedures which domestic concerns
      may use on a voluntary basis to conform their conduct to the
      Department of Justice's present enforcement policy regarding the
      preceding provisions of this section.

    The Attorney General shall issue the guidelines and procedures
    referred to in the preceding sentence in accordance with the
    provisions of subchapter II of chapter 5 of title 5 and those
    guidelines and procedures shall be subject to the provisions of
    chapter 7 of that title.
    (f) Opinions of Attorney General
      (1) The Attorney General, after consultation with appropriate
    departments and agencies of the United States and after obtaining
    the views of all interested persons through public notice and
    comment procedures, shall establish a procedure to provide
    responses to specific inquiries by domestic concerns concerning
    conformance of their conduct with the Department of Justice's
    present enforcement policy regarding the preceding provisions of
    this section. The Attorney General shall, within 30 days after
    receiving such a request, issue an opinion in response to that
    request. The opinion shall state whether or not certain specified
    prospective conduct would, for purposes of the Department of
    Justice's present enforcement policy, violate the preceding
    provisions of this section. Additional requests for opinions may be
    filed with the Attorney General regarding other specified
    prospective conduct that is beyond the scope of conduct specified
    in previous requests. In any action brought under the applicable
    provisions of this section, there shall be a rebuttable presumption
    that conduct, which is specified in a request by a domestic concern
    and for which the Attorney General has issued an opinion that such
    conduct is in conformity with the Department of Justice's present
    enforcement policy, is in compliance with the preceding provisions
    of this section. Such a presumption may be rebutted by a
    preponderance of the evidence. In considering the presumption for
    purposes of this paragraph, a court shall weigh all relevant
    factors, including but not limited to whether the information
    submitted to the Attorney General was accurate and complete and
    whether it was within the scope of the conduct specified in any
    request received by the Attorney General. The Attorney General
    shall establish the procedure required by this paragraph in
    accordance with the provisions of subchapter II of chapter 5 of
    title 5 and that procedure shall be subject to the provisions of
    chapter 7 of that title.
      (2) Any document or other material which is provided to, received
    by, or prepared in the Department of Justice or any other
    department or agency of the United States in connection with a
    request by a domestic concern under the procedure established under
    paragraph (1), shall be exempt from disclosure under section 552 of
    title 5 and shall not, except with the consent of the domestic
    concern, be made publicly available, regardless of whether the
    Attorney General responds to such a request or the domestic concern
    withdraws such request before receiving a response.
      (3) Any domestic concern who has made a request to the Attorney
    General under paragraph (1) may withdraw such request prior to the
    time the Attorney General issues an opinion in response to such
    request. Any request so withdrawn shall have no force or effect.
      (4) The Attorney General shall, to the maximum extent
    practicable, provide timely guidance concerning the Department of
    Justice's present enforcement policy with respect to the preceding
    provisions of this section to potential exporters and small
    businesses that are unable to obtain specialized counsel on issues
    pertaining to such provisions. Such guidance shall be limited to
    responses to requests under paragraph (1) concerning conformity of
    specified prospective conduct with the Department of Justice's
    present enforcement policy regarding the preceding provisions of
    this section and general explanations of compliance
    responsibilities and of potential liabilities under the preceding
    provisions of this section.
    (g) Penalties
      (1)(A) Any domestic concern that is not a natural person and that
    violates subsection (a) or (i) of this section shall be fined not
    more than $2,000,000.
      (B) Any domestic concern that is not a natural person and that
    violates subsection (a) or (i) of this section shall be subject to
    a civil penalty of not more than $10,000 imposed in an action
    brought by the Attorney General.
      (2)(A) Any natural person that is an officer, director, employee,
    or agent of a domestic concern, or stockholder acting on behalf of
    such domestic concern, who willfully violates subsection (a) or (i)
    of this section shall be fined not more than $100,000 or imprisoned
    not more than 5 years, or both.
      (B) Any natural person that is an officer, director, employee, or
    agent of a domestic concern, or stockholder acting on behalf of
    such domestic concern, who violates subsection (a) or (i) of this
    section shall be subject to a civil penalty of not more than
    $10,000 imposed in an action brought by the Attorney General.
      (3) Whenever a fine is imposed under paragraph (2) upon any
    officer, director, employee, agent, or stockholder of a domestic
    concern, such fine may not be paid, directly or indirectly, by such
    domestic concern.
    (h) Definitions
      For purposes of this section:
        (1) The term "domestic concern" means - 
          (A) any individual who is a citizen, national, or resident of
        the United States; and
          (B) any corporation, partnership, association, joint-stock
        company, business trust, unincorporated organization, or sole
        proprietorship which has its principal place of business in the
        United States, or which is organized under the laws of a State
        of the United States or a territory, possession, or
        commonwealth of the United States.

        (2)(A) The term "foreign official" means any officer or
      employee of a foreign government or any department, agency, or
      instrumentality thereof, or of a public international
      organization, or any person acting in an official capacity for or
      on behalf of any such government or department, agency, or
      instrumentality, or for or on behalf of any such public
      international organization.
        (B) For purposes of subparagraph (A), the term "public
      international organization" means - 
          (i) an organization that is designated by Executive order
        pursuant to section 288 of title 22; or
          (ii) any other international organization that is designated
        by the President by Executive order for the purposes of this
        section, effective as of the date of publication of such order
        in the Federal Register.

        (3)(A) A person's state of mind is "knowing" with respect to
      conduct, a circumstance, or a result if - 
          (i) such person is aware that such person is engaging in such
        conduct, that such circumstance exists, or that such result is
        substantially certain to occur; or
          (ii) such person has a firm belief that such circumstance
        exists or that such result is substantially certain to occur.

        (B) When knowledge of the existence of a particular
      circumstance is required for an offense, such knowledge is
      established if a person is aware of a high probability of the
      existence of such circumstance, unless the person actually
      believes that such circumstance does not exist.
        (4)(A) The term "routine governmental action" means only an
      action which is ordinarily and commonly performed by a foreign
      official in - 
          (i) obtaining permits, licenses, or other official documents
        to qualify a person to do business in a foreign country;
          (ii) processing governmental papers, such as visas and work
        orders;
          (iii) providing police protection, mail pick-up and delivery,
        or scheduling inspections associated with contract performance
        or inspections related to transit of goods across country;
          (iv) providing phone service, power and water supply, loading
        and unloading cargo, or protecting perishable products or
        commodities from deterioration; or
          (v) actions of a similar nature.

        (B) The term "routine governmental action" does not include any
      decision by a foreign official whether, or on what terms, to
      award new business to or to continue business with a particular
      party, or any action taken by a foreign official involved in the
      decision-making process to encourage a decision to award new
      business to or continue business with a particular party.
        (5) 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, and such term includes the
      intrastate use of - 
          (A) a telephone or other interstate means of communication,
        or
          (B) any other interstate instrumentality.
    (i) Alternative jurisdiction
      (1) It shall also be unlawful for any United States person to
    corruptly do any act outside the United States in furtherance of an
    offer, payment, promise to pay, or authorization of the payment of
    any money, or offer, gift, promise to give, or authorization of the
    giving of anything of value to any of the persons or entities set
    forth in paragraphs (1), (2), and (3) of subsection (a) of this
    section, for the purposes set forth therein, irrespective of
    whether such United States person makes use of the mails or any
    means or instrumentality of interstate commerce in furtherance of
    such offer, gift, payment, promise, or authorization.
      (2) As used in this subsection, the term "United States person"
    means a national of the United States (as defined in section 1101
    of title 8) or any corporation, partnership, association, joint-
    stock company, business trust, unincorporated organization, or
    sole proprietorship organized under the laws of the United States
    or any State, territory, possession, or commonwealth of the United
    States, or any political subdivision thereof.

-SOURCE-
    (Pub. L. 95-213, title I, Sec. 104, Dec. 19, 1977, 91 Stat. 1496;
    Pub. L. 100-418, title V, Sec. 5003(c), Aug. 23, 1988, 102 Stat.
    1419; Pub. L. 103-322, title XXXIII, Sec. 330005, Sept. 13, 1994,
    108 Stat. 2142; Pub. L. 105-366, Sec. 3, Nov. 10, 1998, 112 Stat.
    3304.)

-COD-
                               CODIFICATION                           
      Section was enacted as part of Pub. L. 95-213, the Foreign
    Corrupt Practices Act of 1977, and not as part of act June 6, 1934,
    ch. 404, 48 Stat. 881, the Securities Exchange Act of 1934, which
    comprises this chapter.


-MISC1-
                                AMENDMENTS                            
      1998 - Subsec. (a)(1)(A). Pub. L. 105-366, Sec. 3(a)(1), amended
    subpar. (A) generally. Prior to amendment, subpar. (A) read as
    follows:
      "(A)(i) influencing any act or decision of such foreign official
    in his official capacity, or (ii) inducing such foreign official to
    do or omit to do any act in violation of the lawful duty of such
    official, or".
      Subsec. (a)(2)(A). Pub. L. 105-366, Sec. 3(a)(2), amended subpar.
    (A) generally. Prior to amendment, subpar. (A) read as follows:
      "(A)(i) influencing any act or decision of such party, official,
    or candidate in its or his official capacity, or (ii) inducing such
    party, official, or candidate to do or omit to do an act in
    violation of the lawful duty of such party, official, or
    candidate,".
      Subsec. (a)(3)(A). Pub. L. 105-366, Sec. 3(a)(3), amended subpar.
    (A) generally. Prior to amendment, subpar. (A) read as follows:
      "(A)(i) influencing any act or decision of such foreign official,
    political party, party official, or candidate in his or its
    official capacity, or (ii) inducing such foreign official,
    political party, party official, or candidate to do or omit to do
    any act in violation of the lawful duty of such foreign official,
    political party, party official, or candidate, or".
      Subsec. (b). Pub. L. 105-366, Sec. 3(d)(2), substituted
    "Subsections (a) and (i)" for "Subsection (a)".
      Subsec. (c). Pub. L. 105-366, Sec. 3(d)(3), substituted
    "subsection (a) or (i)" for "subsection (a)" in introductory
    provisions.
      Subsec. (d)(1). Pub. L. 105-366, Sec. 3(d)(4), substituted
    "subsection (a) or (i)" for "subsection (a)".
      Subsec. (g)(1). Pub. L. 105-366, Sec. 3(b)(1), amended par. (1)
    generally. Prior to amendment, par. (1) read as follows:
      "(1)(A) Any domestic concern that violates subsection (a) of this
    section shall be fined not more than $2,000,000.
      "(B) Any domestic concern that violates subsection (a) of this
    section shall be subject to a civil penalty of not more than
    $10,000 imposed in an action brought by the Attorney General."
      Subsec. (g)(2). Pub. L. 105-366, Sec. 3(b)(2), amended par. (2)
    generally. Prior to amendment, par. (2) read as follows:
      "(2)(A) Any officer or director of a domestic concern, or
    stockholder acting on behalf of such domestic concern, who
    willfully violates subsection (a) of this section shall be fined
    not more than $100,000, or imprisoned not more than 5 years, or
    both.
      "(B) Any employee or agent of a domestic concern who is a United
    States citizen, national, or resident or is otherwise subject to
    the jurisdiction of the United States (other than an officer,
    director, or stockholder acting on behalf of such domestic
    concern), and who willfully violates subsection (a) of this
    section, shall be fined not more than $100,000, or imprisoned not
    more than 5 years, or both.
      "(C) Any officer, director, employee, or agent of a domestic
    concern, or stockholder acting on behalf of such domestic concern,
    who violates subsection (a) of this section shall be subject to a
    civil penalty of not more than $10,000 imposed in an action brought
    by the Attorney General."
      Subsec. (h)(2). Pub. L. 105-366, Sec. 3(c), amended par. (2)
    generally. Prior to amendment, par. (2) read as follows: "The term
    'foreign official' means any officer or employee of a foreign
    government or any department, agency, or instrumentality thereof,
    or any person acting in an official capacity for or on behalf of
    any such government or department, agency, or instrumentality."
      Subsec. (h)(4)(A). Pub. L. 105-366, Sec. 3(e), substituted "The"
    for "For purposes of paragraph (1), the" in introductory
    provisions.
      Subsec. (i). Pub. L. 105-366, Sec. 3(d)(1), added subsec. (i).
      1994 - Subsec. (a)(3). Pub. L. 103-322 substituted "domestic
    concern" for "issuer" in closing provisions.
      1988 - Pub. L. 100-418 substituted "Prohibited foreign trade" for
    "Foreign corrupt" in section catchline and amended text generally,
    revising and restating as subsecs. (a) to (h) provisions of former
    subsecs. (a) to (d).

-End-



-CITE-
    15 USC Sec. 78dd-3                                          01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78dd-3. Prohibited foreign trade practices by persons other
      than issuers or domestic concerns

-STATUTE-
    (a) Prohibition
      It shall be unlawful for any person other than an issuer that is
    subject to section 78dd-1 of this title or a domestic concern (as
    defined in section 78dd-2 of this title), or for any officer,
    director, employee, or agent of such person or any stockholder
    thereof acting on behalf of such person, while in the territory of
    the United States, corruptly to make use of the mails or any means
    or instrumentality of interstate commerce or to do any other act in
    furtherance of an offer, payment, promise to pay, or authorization
    of the payment of any money, or offer, gift, promise to give, or
    authorization of the giving of anything of value to - 
        (1) any foreign official for purposes of - 
          (A)(i) influencing any act or decision of such foreign
        official in his official capacity, (ii) inducing such foreign
        official to do or omit to do any act in violation of the lawful
        duty of such official, or (iii) securing any improper
        advantage; or
          (B) inducing such foreign official to use his influence with
        a foreign government or instrumentality thereof to affect or
        influence any act or decision of such government or
        instrumentality,

      in order to assist such person in obtaining or retaining business
      for or with, or directing business to, any person;
        (2) any foreign political party or official thereof or any
      candidate for foreign political office for purposes of - 
          (A)(i) influencing any act or decision of such party,
        official, or candidate in its or his official capacity, (ii)
        inducing such party, official, or candidate to do or omit to do
        an act in violation of the lawful duty of such party, official,
        or candidate, or (iii) securing any improper advantage; or
          (B) inducing such party, official, or candidate to use its or
        his influence with a foreign government or instrumentality
        thereof to affect or influence any act or decision of such
        government or instrumentality,

      in order to assist such person in obtaining or retaining business
      for or with, or directing business to, any person; or
        (3) any person, while knowing that all or a portion of such
      money or thing of value will be offered, given, or promised,
      directly or indirectly, to any foreign official, to any foreign
      political party or official thereof, or to any candidate for
      foreign political office, for purposes of - 
          (A)(i) influencing any act or decision of such foreign
        official, political party, party official, or candidate in his
        or its official capacity, (ii) inducing such foreign official,
        political party, party official, or candidate to do or omit to
        do any act in violation of the lawful duty of such foreign
        official, political party, party official, or candidate, or
        (iii) securing any improper advantage; or
          (B) inducing such foreign official, political party, party
        official, or candidate to use his or its influence with a
        foreign government or instrumentality thereof to affect or
        influence any act or decision of such government or
        instrumentality,

      in order to assist such person in obtaining or retaining business
      for or with, or directing business to, any person.
    (b) Exception for routine governmental action
      Subsection (a) of this section shall not apply to any
    facilitating or expediting payment to a foreign official, political
    party, or party official the purpose of which is to expedite or to
    secure the performance of a routine governmental action by a
    foreign official, political party, or party official.
    (c) Affirmative defenses
      It shall be an affirmative defense to actions under subsection
    (a) of this section that - 
        (1) the payment, gift, offer, or promise of anything of value
      that was made, was lawful under the written laws and regulations
      of the foreign official's, political party's, party official's,
      or candidate's country; or
        (2) the payment, gift, offer, or promise of anything of value
      that was made, was a reasonable and bona fide expenditure, such
      as travel and lodging expenses, incurred by or on behalf of a
      foreign official, party, party official, or candidate and was
      directly related to - 
          (A) the promotion, demonstration, or explanation of products
        or services; or
          (B) the execution or performance of a contract with a foreign
        government or agency thereof.
    (d) Injunctive relief
      (1) When it appears to the Attorney General that any person to
    which this section applies, or officer, director, employee, agent,
    or stockholder thereof, is engaged, or about to engage, in any act
    or practice constituting a violation of subsection (a) of this
    section, the Attorney General may, in his discretion, bring a civil
    action in an appropriate district court of the United States to
    enjoin such act or practice, and upon a proper showing, a permanent
    injunction or a temporary restraining order shall be granted
    without bond.
      (2) For the purpose of any civil investigation which, in the
    opinion of the Attorney General, is necessary and proper to enforce
    this section, the Attorney General or his designee are empowered to
    administer oaths and affirmations, subpoena witnesses, take
    evidence, and require the production of any books, papers, or other
    documents which the Attorney General deems relevant or material to
    such investigation. The attendance of witnesses and the production
    of documentary evidence may be required from any place in the
    United States, or any territory, possession, or commonwealth of the
    United States, at any designated place of hearing.
      (3) In case of contumacy by, or refusal to obey a subpoena issued
    to, any person, the Attorney General may invoke the aid of any
    court of the United States within the jurisdiction of which such
    investigation or proceeding is carried on, or where such person
    resides or carries on business, in requiring the attendance and
    testimony of witnesses and the production of books, papers, or
    other documents. Any such court may issue an order requiring such
    person to appear before the Attorney General or his designee, there
    to produce records, if so ordered, or to give testimony touching
    the matter under investigation. Any failure to obey such order of
    the court may be punished by such court as a contempt thereof.
      (4) All process in any such case may be served in the judicial
    district in which such person resides or may be found. The Attorney
    General may make such rules relating to civil investigations as may
    be necessary or appropriate to implement the provisions of this
    subsection.
    (e) Penalties
      (1)(A) Any juridical person that violates subsection (a) of this
    section shall be fined not more than $2,000,000.
      (B) Any juridical person that violates subsection (a) of this
    section shall be subject to a civil penalty of not more than
    $10,000 imposed in an action brought by the Attorney General.
      (2)(A) Any natural person who willfully violates subsection (a)
    of this section shall be fined not more than $100,000 or imprisoned
    not more than 5 years, or both.
      (B) Any natural person who violates subsection (a) of this
    section shall be subject to a civil penalty of not more than
    $10,000 imposed in an action brought by the Attorney General.
      (3) Whenever a fine is imposed under paragraph (2) upon any
    officer, director, employee, agent, or stockholder of a person,
    such fine may not be paid, directly or indirectly, by such person.
    (f) Definitions
      For purposes of this section:
        (1) The term "person", when referring to an offender, means any
      natural person other than a national of the United States (as
      defined in section 1101 of title 8 (!1) or any corporation,
      partnership, association, joint-stock company, business trust,
      unincorporated organization, or sole proprietorship organized
      under the law of a foreign nation or a political subdivision
      thereof.

        (2)(A) The term "foreign official" means any officer or
      employee of a foreign government or any department, agency, or
      instrumentality thereof, or of a public international
      organization, or any person acting in an official capacity for or
      on behalf of any such government or department, agency, or
      instrumentality, or for or on behalf of any such public
      international organization.
        (B) For purposes of subparagraph (A), the term "public
      international organization" means - 
          (i) an organization that is designated by Executive order
        pursuant to section 288 of title 22; or
          (ii) any other international organization that is designated
        by the President by Executive order for the purposes of this
        section, effective as of the date of publication of such order
        in the Federal Register.

        (3)(A) A person's state of mind is knowing, with respect to
      conduct, a circumstance or a result if - 
          (i) such person is aware that such person is engaging in such
        conduct, that such circumstance exists, or that such result is
        substantially certain to occur; or
          (ii) such person has a firm belief that such circumstance
        exists or that such result is substantially certain to occur.

        (B) When knowledge of the existence of a particular
      circumstance is required for an offense, such knowledge is
      established if a person is aware of a high probability of the
      existence of such circumstance, unless the person actually
      believes that such circumstance does not exist.
        (4)(A) The term "routine governmental action" means only an
      action which is ordinarily and commonly performed by a foreign
      official in - 
          (i) obtaining permits, licenses, or other official documents
        to qualify a person to do business in a foreign country;
          (ii) processing governmental papers, such as visas and work
        orders;
          (iii) providing police protection, mail pick-up and delivery,
        or scheduling inspections associated with contract performance
        or inspections related to transit of goods across country;
          (iv) providing phone service, power and water supply, loading
        and unloading cargo, or protecting perishable products or
        commodities from deterioration; or
          (v) actions of a similar nature.

        (B) The term "routine governmental action" does not include any
      decision by a foreign official whether, or on what terms, to
      award new business to or to continue business with a particular
      party, or any action taken by a foreign official involved in the
      decision-making process to encourage a decision to award new
      business to or continue business with a particular party.
        (5) 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, and such term includes the
      intrastate use of - 
          (A) a telephone or other interstate means of communication,
        or
          (B) any other interstate instrumentality.

-SOURCE-
    (Pub. L. 95-213, title I, Sec. 104A, as added Pub. L. 105-366, Sec.
    4, Nov. 10, 1998, 112 Stat. 3306.)

-COD-
                               CODIFICATION                           
      Section was enacted as part of Pub. L. 95-213, the Foreign
    Corrupt Practices Act of 1977, and not as part of act June 6, 1934,
    ch. 404, 48 Stat. 881, the Securities Exchange Act of 1934, which
    comprises this chapter.

-FOOTNOTE-
    (!1) So in original. A closing parenthesis probably should appear.


-End-



-CITE-
    15 USC Sec. 78ee                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78ee. Transaction fees

-STATUTE-
    (a) Recovery of cost of services
      The Commission shall, in accordance with this section, collect
    transaction fees and assessments that are designed to recover the
    costs to the Government of the supervision and regulation of
    securities markets and securities professionals, and costs related
    to such supervision and regulation, including enforcement
    activities, policy and rulemaking activities, administration, legal
    services, and international regulatory activities.
    (b) Exchange-traded securities
      Subject to subsection (j) of this section, each national
    securities exchange shall pay to the Commission a fee at a rate
    equal to $15 per $1,000,000 of the aggregate dollar amount of sales
    of securities (other than bonds, debentures, other evidences of
    indebtedness, security futures products, and options on securities
    indexes (excluding a narrow-based security index)) transacted on
    such national securities exchange.
    (c) Off-exchange trades of exchange registered and last-sale-
      reported securities
      Subject to subsection (j) of this section, each national
    securities association shall pay to the Commission a fee at a rate
    equal to $15 per $1,000,000 of the aggregate dollar amount of sales
    transacted by or through any member of such association otherwise
    than on a national securities exchange of securities (other than
    bonds, debentures, other evidences of indebtedness, security
    futures products, and options on securities indexes (excluding a
    narrow-based security index)) registered on a national securities
    exchange or subject to prompt last sale reporting pursuant to the
    rules of the Commission or a registered national securities
    association.
    (d) Assessments on security futures transactions
      Each national securities exchange and national securities
    association shall pay to the Commission an assessment equal to
    $0.009 for each round turn transaction (treated as including one
    purchase and one sale of a contract of sale for future delivery) on
    a security future traded on such national securities exchange or by
    or through any member of such association otherwise than on a
    national securities exchange, except that for fiscal year 2007 and
    each succeeding fiscal year such assessment shall be equal to
    $0.0042 for each such transaction.
    (e) Dates for payments
      The fees and assessments required by subsections (b), (c), and
    (d) of this section shall be paid - 
        (1) on or before March 15, with respect to transactions and
      sales occurring during the period beginning on the preceding
      September 1 and ending at the close of the preceding December 31;
      and
        (2) on or before September 30, with respect to transactions and
      sales occurring during the period beginning on the preceding
      January 1 and ending at the close of the preceding August 31.
    (f) Exemptions
      The Commission, by rule, may exempt any sale of securities or any
    class of sales of securities from any fee or assessment imposed by
    this section, if the Commission finds that such exemption is
    consistent with the public interest, the equal regulation of
    markets and brokers and dealers, and the development of a national
    market system.
    (g) Publication
      The Commission shall publish in the Federal Register notices of
    the fee and assessment rates applicable under this section for each
    fiscal year not later than April 30 of the fiscal year preceding
    the fiscal year to which such rate applies, together with any
    estimates or projections on which such fees are based.
    (h) Pro rata application
      The rates per $1,000,000 required by this section shall be
    applied pro rata to amounts and balances of less than $1,000,000.
    (i) Deposit of fees
      (1) Offsetting collections
        Fees collected pursuant to subsections (b), (c), and (d) of
      this section for any fiscal year - 
          (A) shall be deposited and credited as offsetting collections
        to the account providing appropriations to the Commission; and
          (B) except as provided in subsection (k) of this section,
        shall not be collected for any fiscal year except to the extent
        provided in advance in appropriation Acts.
      (2) General revenues prohibited
        No fees collected pursuant to subsections (b), (c), and (d) of
      this section for fiscal year 2002 or any succeeding fiscal year
      shall be deposited and credited as general revenue of the
      Treasury.
    (j) Recapture of projection windfalls for further rate reductions
      (1) Annual adjustment
        For each of the fiscal years 2003 through 2011, the Commission
      shall by order adjust each of the rates applicable under
      subsections (b) and (c) of this section for such fiscal year to a
      uniform adjusted rate that, when applied to the baseline estimate
      of the aggregate dollar amount of sales for such fiscal year, is
      reasonably likely to produce aggregate fee collections under this
      section (including assessments collected under subsection (d) of
      this section) that are equal to the target offsetting collection
      amount for such fiscal year.
      (2) Mid-year adjustment
        For each of the fiscal years 2002 through 2011, the Commission
      shall determine, by March 1 of such fiscal year, whether, based
      on the actual aggregate dollar volume of sales during the first 5
      months of such fiscal year, the baseline estimate of the
      aggregate dollar volume of sales used under paragraph (1) for
      such fiscal year (or $48,800,000,000,000 in the case of fiscal
      year 2002) is reasonably likely to be 10 percent (or more)
      greater or less than the actual aggregate dollar volume of sales
      for such fiscal year. If the Commission so determines, the
      Commission shall by order, no later than such March 1, adjust
      each of the rates applicable under subsections (b) and (c) of
      this section for such fiscal year to a uniform adjusted rate
      that, when applied to the revised estimate of the aggregate
      dollar amount of sales for the remainder of such fiscal year, is
      reasonably likely to produce aggregate fee collections under this
      section (including fees collected during such 5-month period and
      assessments collected under subsection (d) of this section) that
      are equal to the target offsetting collection amount for such
      fiscal year. In making such revised estimate, the Commission
      shall, after consultation with the Congressional Budget Office
      and the Office of Management and Budget, use the same methodology
      required by subsection (l)(2) of this section.
      (3) Final rate adjustment
        For fiscal year 2012 and all of the succeeding fiscal years,
      the Commission shall by order adjust each of the rates applicable
      under subsections (b) and (c) of this section for all of such
      fiscal years to a uniform adjusted rate that, when applied to the
      baseline estimate of the aggregate dollar amount of sales for
      fiscal year 2012, is reasonably likely to produce aggregate fee
      collections under this section in fiscal year 2012 (including
      assessments collected under subsection (d) of this section) equal
      to the target offsetting collection amount for fiscal year 2011.
      (4) Review and effective date
        In exercising its authority under this subsection, the
      Commission shall not be required to comply with the provisions of
      section 553 of title 5. An adjusted rate prescribed under
      paragraph (1), (2), or (3) and published under subsection (g) of
      this section shall not be subject to judicial review. Subject to
      subsections (i)(1)(B) and (k) of this section - 
          (A) an adjusted rate prescribed under paragraph (1) shall
        take effect on the later of - 
            (i) the first day of the fiscal year to which such rate
          applies; or
            (ii) thirty days after the date on which a regular
          appropriation to the Commission for such fiscal year is
          enacted;

          (B) an adjusted rate prescribed under paragraph (2) shall
        take effect on April 1 of the fiscal year to which such rate
        applies; and
          (C) an adjusted rate prescribed under paragraph (3) shall
        take effect on the later of - 
            (i) the first day of fiscal year 2012; or
            (ii) thirty days after the date on which a regular
          appropriation to the Commission for fiscal year 2012 is
          enacted.
    (k) Lapse of appropriation
      If on the first day of a fiscal year a regular appropriation to
    the Commission has not been enacted, the Commission shall continue
    to collect (as offsetting collections) the fees and assessments
    under subsections (b), (c), and (d) of this section at the rate in
    effect during the preceding fiscal year, until 30 days after the
    date such a regular appropriation is enacted.
    (l) Definitions
      For purposes of this section:
      (1) Target offsetting collection amount
        The target offsetting collection amount for each of the fiscal
      years 2002 through 2011 is determined according to the following
      table:

                                                      Target
                                                         offsetting     
    Fiscal year:                                      collection
                                                         amount         
     2002                                                 $732,000,000
     2003                                                 $849,000,000
     2004                                               $1,028,000,000
     2005                                               $1,220,000,000
     2006                                               $1,435,000,000
     2007                                                 $881,000,000
     2008                                                 $892,000,000
     2009                                               $1,023,000,000
     2010                                               $1,161,000,000
     2011                                               $1,321,000,000
      (2) Baseline estimate of the aggregate dollar amount of sales
        The baseline estimate of the aggregate dollar amount of sales
      for any fiscal year is the baseline estimate of the aggregate
      dollar amount of sales of securities (other than bonds,
      debentures, other evidences of indebtedness, security futures
      products, and options on securities indexes (excluding a narrow-
      based security index)) to be transacted on each national
      securities exchange and by or through any member of each national
      securities association (otherwise than on a national securities
      exchange) during such fiscal year as determined by the
      Commission, after consultation with the Congressional Budget
      Office and the Office of Management and Budget, using the
      methodology required for making projections pursuant to section
      907 of title 2.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 31, 48 Stat. 904; Mar. 17,
    1944, ch. 101, 58 Stat. 117; Pub. L. 94-29, Sec. 22, June 4, 1975,
    89 Stat. 162; Pub. L. 104-290, title IV, Sec. 405(a), Oct. 11,
    1996, 110 Stat. 3442; Pub. L. 105-353, title III, Sec. 301(b)(14),
    Nov. 3, 1998, 112 Stat. 3236; Pub. L. 106-554, Sec. 1(a)(5) [title
    II, Sec. 206(f)], Dec. 21, 2000, 114 Stat. 2763, 2763A-432; Pub. L.
    107-123, Secs. 2, 3, Jan. 16, 2002, 115 Stat. 2390.)


-MISC1-
                                AMENDMENTS                            
      2002 - Subsec. (b). Pub. L. 107-123, Sec. 3(a)(1), substituted
    "Subject to subsection (j) of this section, each" for "Every" and
    struck out at end "Fees collected pursuant to this subsection shall
    be deposited and collected as general revenue of the Treasury."
      Pub. L. 107-123, Sec. 2(1)-(3), substituted "$15 per $1,000,000"
    for " 1/300  of one percent" and "security futures products, and
    options on securities indexes (excluding a narrow-based security
    index)" for "and security futures products" and struck out ",
    except that for fiscal year 2007 or any succeeding fiscal year such
    rate shall be equal to  1/800  of one percent of such aggregate
    dollar amount of sales" before period at end of first sentence.
      Subsec. (c). Pub. L. 107-123, Sec. 3(a)(3), redesignated subsec.
    (d) as (c), substituted "Off-exchange trades of exchange registered
    and last-sale-reported securities" for "Off-exchange trades of last-
    sale-reported securities" in subsec. heading, struck out par. (1)
    heading, substituted "Subject to subsection (j) of this section,
    each national securities" for "Each national securities", inserted
    "registered on a national securities exchange or" after "narrow-
    based security index))", struck out ", excluding any sales for
    which a fee is paid under subsection (c) of this section" after
    "national securities association", and struck out pars. (2) and
    (3), which related to deposit of fees and lapse of appropriations.
      Pub. L. 107-123, Sec. 3(a)(2), struck out heading and text of
    former subsec. (c). Text read as follows: "Each national securities
    association shall pay to the Commission a fee at a rate equal to 
    1/300  of one percent of the aggregate dollar amount of sales
    transacted by or through any member of such association otherwise
    than on a national securities exchange of securities registered on
    such an exchange (other than bonds, debentures, other evidences of
    indebtedness, and security futures products), except that for
    fiscal year 2007 or any succeeding fiscal year such rate shall be
    equal to  1/800  of one percent of such aggregate dollar amount of
    sales. Fees collected pursuant to this subsection shall be
    deposited and collected as general revenue of the Treasury."
      Pub. L. 107-123, Sec. 2(1),(2), (4), which directed that subsec.
    (d) be amended by substituting "$15 per $1,000,000" for " 1/300  of
    one percent" and "security futures products, and options on
    securities indexes (excluding a narrow-based security index)" for
    "and security futures products", and striking out ", except that
    for fiscal year 2007, or any succeeding fiscal year, such rate
    shall be equal to (!1/800) of one percent of such aggregate dollar
    amount of sale" before period at end of par. (1), was executed by
    making the amendment in subsec. (c), to reflect the probable intent
    of Congress and the amendment by Pub. L. 107-123, Sec. 3(a)(3),
    which redesignated subsec. (d) as (c). See above.
      Subsec. (d). Pub. L. 107-123, Sec. 3(a)(4), (6), redesignated
    subsec. (e) as (d) and substituted "except that for fiscal year
    2007 and each succeeding fiscal year such assessment shall be equal
    to $0.0042 for each such transaction" for "except that for fiscal
    year 2007 or any succeeding fiscal year such assessment shall be
    equal to $0.0075 for each such transaction. Assessments collected
    pursuant to this subsection shall be deposited and collected as
    general revenue of the Treasury". Former subsec. (d) redesignated
    (c).
      Pub. L. 107-123, Sec. 2(5), which directed that subsec. (e) be
    amended by substituting "$0.009" for "$0.02", was executed by
    making the amendment in subsec. (d), to reflect the probable intent
    of Congress and the amendment by Pub. L. 107-123, Sec. 3(a)(4), (6)
    which redesignated subsec. (e) as (d). See above.
      Subsec. (e). Pub. L. 107-123, Sec. 3(a)(5), (6), redesignated
    subsec. (f) as (e) and substituted "Dates for payments" for "Dates
    for payment of fees" in heading and "The fees and assessments
    required" for "The fees required" in introductory provisions.
    Former subsec. (e) redesignated (d).
      Subsec. (f). Pub. L. 107-123, Sec. 3(a)(6), redesignated subsec.
    (g) as (f). Former subsec. (f) redesignated (e).
      Subsec. (g). Pub. L. 107-123, Sec. 3(a)(6), (b)(2), redesignated
    subsec. (h) as (g) and inserted before period at end "not later
    than April 30 of the fiscal year preceding the fiscal year to which
    such rate applies, together with any estimates or projections on
    which such fees are based". Former subsec. (g) redesignated (f).
      Subsec. (h). Pub. L. 107-123, Sec. 3(a)(6), redesignated subsec.
    (i), as enacted by Pub. L. 107-123, Sec. 2(6), as (h). See below.
    Former subsec. (h) redesignated (g).
      Subsec. (i). Pub. L. 107-123, Sec. 3(a)(7), added subsec. (i).
      Pub. L. 107-123, Sec. 2(6), added subsec. (i).
      Subsecs. (j) to (l). Pub. L. 107-123, Sec. 3(b)(1), added
    subsecs. (j) to (l).
      2000 - Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(f)(1)], inserted "and assessments" after "fees".
      Subsecs. (b), (c), (d)(1). Pub. L. 106-554, Sec. 1(a)(5) [title
    II, Sec. 206(f)(2)], substituted "other evidences of indebtedness,
    and security futures products" for "and other evidences of
    indebtedness".
      Subsec. (e). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(f)(6)], added subsec. (e). Former subsec. (e) redesignated (f).
      Subsec. (f). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(f)(5)], redesignated subsec. (e) as (f). Former subsec. (f)
    redesignated (g).
      Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec. 206(f)(3)],
    inserted "or assessment" after "fee".
      Subsec. (g). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(f)(5)], redesignated subsec. (f) as (g). Former subsec. (g)
    redesignated (h).
      Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec. 206(f)(4)],
    inserted "and assessment" after "fee".
      Subsec. (h). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    206(f)(5)], redesignated subsec. (g) as (h).
      1998 - Subsec. (a). Pub. L. 105-353 substituted "this section"
    for "this subsection".
      1996 - Pub. L. 104-290 reenacted section catchline without change
    and amended text generally. Prior to amendment, text read as
    follows: "Every national securities exchange shall pay to the
    Commission on or before March 15 of each calendar year a fee in an
    amount equal to one three-hundredths of 1 per centum of the
    aggregate dollar amount of the sales of securities (other than
    bonds, debentures, and other evidences of indebtedness) transacted
    on such national securities exchange during each preceding calendar
    year to which this section applies. Every registered broker and
    dealer shall pay to the Commission on or before March 15 of each
    calendar year a fee in an amount equal to one three-hundredths of 1
    per centum of the aggregate dollar amount of the sales of
    securities registered on a national securities exchange (other than
    bonds, debentures, and other evidences of indebtedness) transacted
    by such broker or dealer otherwise than on such an exchange during
    each preceding calendar year: Provided, however, That no payment
    shall be required for any calendar year in which such payment would
    be less than one hundred dollars. The Commission, by rule, may
    exempt any sale of securities or any class of sales of securities
    from any fee imposed by this section, if the Commission finds that
    such exemption is consistent with the public interest, the equal
    regulation of markets and brokers and dealers, and the development
    of a national market system."
      1975 - Pub. L. 94-29 amended section generally, extending
    provisions requiring the payment of fees to include transactions in
    listed securities which occur in the over-the-counter market.
      1944 - Act Mar. 17, 1944, amended section generally, inserting
    provisions exempting from the payment of the fee securities
    designated for exemption by the Secretary of the Treasury.

                     EFFECTIVE DATE OF 2002 AMENDMENT                 
      Pub. L. 107-123, Sec. 11, Jan. 16, 2002, 115 Stat. 2401, provided
    that:
      "(a) In General. - Except as provided in subsections (b) and (c),
    the amendments made by this Act [see Short Title of 2002 Amendment
    note set out under section 78a of this title] shall take effect on
    October 1, 2001.
      "(b) Immediate Transaction Fee Reductions. - The amendments made
    by section 2 [amending this section] shall take effect on the later
    of - 
        "(1) the first day of fiscal year 2002; or
        "(2) thirty days after the date on which a regular
      appropriation to the Commission for such fiscal year is enacted.
      "(c) Additional Exceptions. - The authorities provided by section
    6(b)(9) of the Securities Act of 1933 [15 U.S.C. 77f(b)(9)] and
    sections 13(e)(9), 14(g)(9), and 31(k) of the Securities Exchange
    Act of 1934 [15 U.S.C. 78m(e)(9), 78n(g)(9), and 78ee(k)], as so
    designated by this Act, shall not apply until October 1, 2002."

                     EFFECTIVE DATE OF 1996 AMENDMENT                 
      Section 405(b) of Pub. L. 104-290 provided that:
      "(1) In general. - Except as provided in paragraph (2), the
    amendment made by subsection (a) [amending this section] shall
    apply with respect to transactions in securities that occur on or
    after October 1, 1997.
      "(2) Off-exchange trades of last sale reported transactions. -
    The amendment made by subsection (a) [amending this section] shall
    apply with respect to transactions described in section 31(d)(1) of
    the Securities Exchange Act of 1934 [subsec. (d)(1) of this
    section] (as amended by subsection (a) of this section) that occur
    on or after September 1, 1997."

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective Jan. 1, 1976, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.


-TRANS-
                           TRANSFER OF FUNCTIONS                       
      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.


-MISC2-
                   STUDY OF THE EFFECT OF FEE REDUCTIONS               
      Pub. L. 107-123, Sec. 9, Jan. 16, 2002, 115 Stat. 2400, provided
    that:
      "(a) Study. - The Office of Economic Analysis of the Securities
    and Exchange Commission (hereinafter referred to as the 'Office')
    shall conduct a study of the extent to which the benefits of
    reductions in fees effected as a result of this Act [see Short
    Title of 2002 Amendment note set out under section 78a of this
    title] are passed on to investors.
      "(b) Factors for Consideration. - In conducting the study under
    subsection (a), the Office shall - 
        "(1) consider the various elements of the securities industry
      directly and indirectly benefiting from the fee reductions,
      including purchasers and sellers of securities, members of
      national securities exchanges, issuers, broker-dealers,
      underwriters, participants in investment companies, retirement
      programs, and others;
        "(2) consider the impact on different types of investors, such
      as individual equity holders, individual investment company
      shareholders, businesses, and other types of investors;
        "(3) include in the interpretation of the term 'investor'
      shareholders of entities subject to the fee reductions; and
        "(4) consider the economic benefits to investors flowing from
      the fee reductions to include such factors as market efficiency,
      expansion of investment opportunities, and enhanced liquidity and
      capital formation.
      "(c) Report to Congress. - Not later than 2 years after the date
    of the enactment of this Act [Jan. 16, 2002], the Securities and
    Exchange Commission shall submit to the Congress the report
    prepared by the Office on the findings of the study conducted under
    subsection (a)."

    FEES FROM NATIONAL SECURITIES ASSOCIATIONS FOR MEMBER TRANSACTIONS
                OTHER THAN ON NATIONAL SECURITIES EXCHANGES
      Pub. L. 104-208, div. A, title I, Sec. 101(a) [title V], Sept.
    30, 1996, 110 Stat. 3009, 3009-61, provided in part: "That
    effective January 1, 1997, every national securities association
    shall pay to the Commission a fee at a rate of one-three-hundredth
    of one percentum of the aggregate dollar amount of sales transacted
    by or through any member of such association otherwise than on a
    national securities exchange (other than bonds, debentures, and
    other evidences of indebtedness) subject to prompt last sale
    reporting pursuant to the rules of the Commission or a registered
    national securities association, excluding any sales for which a
    fee is paid under section 31 of the Securities Exchange Act of 1934
    (15 U.S.C. 78ee), and such increase shall be deposited as an
    offsetting collection to this appropriation, to remain available
    until expended, to recover the costs to the Government of the
    supervision and regulation of securities markets and securities
    professionals: Provided further, That the fee due from every
    national securities association shall be paid on or before
    September 30, 1997, with respect to transactions and sales
    occurring during the period beginning on January 1, 1997, and
    ending at the close of August 31, 1997".

-End-



-CITE-
    15 USC Sec. 78ff                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78ff. Penalties

-STATUTE-
    (a) Willful violations; false and misleading statements
      Any person who willfully violates any provision of this chapter
    (other than section 78dd-1 of this title), or any rule or
    regulation thereunder the violation of which is made unlawful or
    the observance of which is required under the terms of this
    chapter, or any person who willfully and knowingly makes, or causes
    to be made, any statement in any application, report, or document
    required to be filed under this chapter or any rule or regulation
    thereunder or any undertaking contained in a registration statement
    as provided in subsection (d) of section 78o of this title, or by
    any self-regulatory organization in connection with an application
    for membership or participation therein or to become associated
    with a member thereof which statement was false or misleading with
    respect to any material fact, shall upon conviction be fined not
    more than $5,000,000, or imprisoned not more than 20 years, or
    both, except that when such person is a person other than a natural
    person, a fine not exceeding $25,000,000 may be imposed; but no
    person shall be subject to imprisonment under this section for the
    violation of any rule or regulation if he proves that he had no
    knowledge of such rule or regulation.
    (b) Failure to file information, documents, or reports
      Any issuer which fails to file information, documents, or reports
    required to be filed under subsection (d) of section 78o of this
    title or any rule or regulation thereunder shall forfeit to the
    United States the sum of $100 for each and every day such failure
    to file shall continue. Such forfeiture, which shall be in lieu of
    any criminal penalty for such failure to file which might be deemed
    to arise under subsection (a) of this section, shall be payable
    into the Treasury of the United States and shall be recoverable in
    a civil suit in the name of the United States.
    (c) Violations by issuers, officers, directors, stockholders,
      employees, or agents of issuers
      (1)(A) Any issuer that violates subsection (a) or (g) of section
    78dd-1 of this title shall be fined not more than $2,000,000.
      (B) Any issuer that violates subsection (a) or (g) of section
    78dd-1 of this title shall be subject to a civil penalty of not
    more than $10,000 imposed in an action brought by the Commission.
      (2)(A) Any officer, director, employee, or agent of an issuer, or
    stockholder acting on behalf of such issuer, who willfully violates
    subsection (a) or (g) of section 78dd-1 of this title shall be
    fined not more than $100,000, or imprisoned not more than 5 years,
    or both.
      (B) Any officer, director, employee, or agent of an issuer, or
    stockholder acting on behalf of such issuer, who violates
    subsection (a) or (g) of section 78dd-1 of this title shall be
    subject to a civil penalty of not more than $10,000 imposed in an
    action brought by the Commission.
      (3) Whenever a fine is imposed under paragraph (2) upon any
    officer, director, employee, agent, or stockholder of an issuer,
    such fine may not be paid, directly or indirectly, by such issuer.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 32, 48 Stat. 904; May 27,
    1936, ch. 462, Sec. 9, 49 Stat. 1380; June 25, 1938, ch. 677, Sec.
    4, 52 Stat. 1076; Pub. L. 88-467, Sec. 11, Aug. 20, 1964, 78 Stat.
    580; Pub. L. 94-29, Secs. 23, 27(b), June 4, 1975, 89 Stat. 162,
    163; Pub. L. 95-213, title I, Sec. 103(b), Dec. 19, 1977, 91 Stat.
    1496; Pub. L. 98-376, Sec. 3, Aug. 10, 1984, 98 Stat. 1265; Pub. L.
    100-418, title V, Sec. 5003(b), Aug. 23, 1988, 102 Stat. 1419; Pub.
    L. 100-704, Sec. 4, Nov. 19, 1988, 102 Stat. 4680; Pub. L. 105-366,
    Sec. 2(d), Nov. 10, 1998, 112 Stat. 3303; Pub. L. 107-204, title
    XI, Sec. 1106, July 30, 2002, 116 Stat. 810.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsec. (a), was in the original
    "this title". See References in Text note set out under section 78a
    of this title.


-MISC1-
                                AMENDMENTS                            
      2002 - Subsec. (a). Pub. L. 107-204 substituted "$5,000,000, or
    imprisoned not more than 20 years" for "$1,000,000, or imprisoned
    not more than 10 years" and "$25,000,000" for "$2,500,000".
      1998 - Subsec. (c)(1). Pub. L. 105-366, Sec. 2(d)(1), (2),
    substituted "subsection (a) or (g) of section 78dd-1" for "section
    78dd-1(a)" in subpars. (A) and (B).
      Subsec. (c)(2). Pub. L. 105-366, Sec. 2(d)(3), amended par. (2)
    generally. Prior to amendment, par. (2) read as follows:
      "(2)(A) Any officer or director of an issuer, or stockholder
    acting on behalf of such issuer, who willfully violates section
    78dd-1(a) of this title shall be fined not more than $100,000, or
    imprisoned not more than 5 years, or both.
      "(B) Any employee or agent of an issuer who is a United States
    citizen, national, or resident or is otherwise subject to the
    jurisdiction of the United States (other than an officer, director,
    or stockholder acting on behalf of such issuer), and who willfully
    violates section 78dd-1(a) of this title, shall be fined not more
    than $100,000, or imprisoned not more than 5 years, or both.
      "(C) Any officer, director, employee, or agent of an issuer, or
    stockholder acting on behalf of such issuer, who violates section
    78dd-1(a) of this title shall be subject to a civil penalty of not
    more than $10,000 imposed in an action brought by the Commission."
      1988 - Subsec. (a). Pub. L. 100-704 substituted "$1,000,000" for
    "$100,000", "10 years" for "five years", "is a person other than a
    natural person" for "is an exchange", and "$2,500,000" for
    "$500,000".
      Subsec. (c). Pub. L. 100-418 amended subsec. (c) generally. Prior
    to amendment, subsec. (c) read as follows:
      "(1) Any issuer which violates section 78dd-1(a) of this title
    shall, upon conviction, be fined not more than $1,000,000.
      "(2) Any officer or director of an issuer, or any stockholder
    acting on behalf of such issuer, who willfully violates section
    78dd-1(a) of this title shall, upon conviction, be fined not more
    than $10,000, or imprisoned not more than five years, or both.
      "(3) Whenever an issuer is found to have violated section 78dd-
    1(a) of this title, any employee or agent of such issuer who is a
    United States citizen, national, or resident or is otherwise
    subject to the jurisdiction of the United States (other than an
    officer, director, or stockholder of such issuer), and who
    willfully carried out the act or practice constituting such
    violation shall, upon conviction, be fined not more than $10,000,
    or imprisoned not more than five years, or both.
      "(4) Whenever a fine is imposed under paragraph (2) or (3) of
    this subsection upon any officer, director, stockholder, employee,
    or agent of an issuer, such fine shall not be paid, directly or
    indirectly, by such issuer."
      1984 - Subsec. (a). Pub. L. 98-376 substituted "$100,000" for
    "$10,000".
      1977 - Subsec. (a). Pub. L. 95-213, Sec. 103(b)(1), inserted
    "(other than section 78dd-1 of this title)" after "Any person who
    willfully violates any provision of this chapter".
      Subsec. (c). Pub. L. 95-213, Sec. 103(b)(2), added subsec. (c).
      1975 - Subsec. (a). Pub. L. 94-29, Secs. 23(1), 27(b), inserted
    "or by any self-regulatory organization in connection with an
    application for membership or participation therein or to become
    associated with a member thereof," and substituted "or imprisoned
    not more than five years" for "or imprisoned not more than two
    years".
      Subsec. (c). Pub. L. 94-29, Sec. 23(2), struck out subsec. (c)
    which rendered this section inapplicable to violations of any rule
    or regulation prescribed pursuant to paragraph (3) of subsection
    (c) of section 78o of this title.
      1964 - Subsec. (b). Pub. L. 88-467 substituted "required to be
    filed under" for "pursuant to an undertaking contained in a
    registration statement as provided in" and inserted "or any rule or
    regulation thereunder" after "section 78o of this title."
      1938 - Subsec. (c). Act June 25, 1938, added subsec. (c).
      1936 - Subsec. (a). Act May 27, 1936, inserted "or any
    undertaking contained in a registration statement as provided in
    subsection (d) of section 78o of this title".
      Subsec. (b). Act May 27, 1936, added subsec. (b).

                     EFFECTIVE DATE OF 1988 AMENDMENT                 
      Amendment by Pub. L. 100-704 not applicable to actions occurring
    before Nov. 19, 1988, see section 9 of Pub. L. 100-704, set out as
    a note under section 78o of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-376 effective Aug. 10, 1984, see section
    7 of Pub. L. 98-376, set out as a note under section 78c of this
    title.

                     EFFECTIVE DATE OF 1975 AMENDMENT                 
      Amendment by Pub. L. 94-29 effective June 4, 1975, see section
    31(a) of Pub. L. 94-29, set out as a note under section 78b of this
    title.

                     EFFECTIVE DATE OF 1964 AMENDMENT                 
      Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see section
    13 of Pub. L. 88-467, set out as a note under section 78c of this
    title.

-End-



-CITE-
    15 USC Sec. 78gg                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78gg. Separability

-STATUTE-
      If any provision of this chapter, or the application of such
    provision to any person or circumstances, shall be held invalid,
    the remainder of the chapter and the application of such provision
    to persons or circumstances other than those as to which it is held
    invalid, shall not be affected thereby.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 33, 48 Stat. 905.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in text, was in the original "this
    Act". See References in Text note set out under section 78a of this
    title.

-End-



-CITE-
    15 USC Sec. 78hh                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78hh. Effective date

-STATUTE-
      This chapter shall become effective on July 1, 1934, except that
    sections 78f and 78l(b to e) of this title shall become effective
    on September 1, 1934; and sections 78e, 78g, 78h, 78i(a)(6), 78j,
    78k, 78l(a), 78m, 78n, 78o, 78p, 78q, 78r, 78s, and 78dd of this
    title shall become effective on October 1, 1934.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 34, 48 Stat. 905.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in text, was in the original "This
    Act". See References in Text note set out under section 78a of this
    title.

-End-



-CITE-
    15 USC Sec. 78hh-1                                          01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78hh-1. Effective date of certain sections

-STATUTE-
      This Act shall become effective on May 27, 1936; except that
    clause (2) of subsection (f) of section 78l of this title, and
    subsections (a) and (d) of section 78o of this title, shall become
    effective ninety days after May 27, 1936, and that clause (3) of
    subsection (f) of section 78l of this title shall become effective
    six months after May 27, 1936.

-SOURCE-
    (May 27, 1936, ch. 462, Sec. 12, 49 Stat. 1380.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This Act, referred to in text, is act May 27, 1936, ch. 462, 49
    Stat. 1375, popularly known as the Unlisted Securities Trading Act,
    which enacted sections 78l-1, 78o-1, 78o-2, and 78hh-1 of this
    title, and amended sections 78l, 78o, 78q, 78r, 78t, 78u, 78w, and
    78ff of this title.

-COD-
                               CODIFICATION                           
      Section was not enacted as a part of the Securities Exchange Act
    of 1934 which comprises this chapter.

-End-



-CITE-
    15 USC Sec. 78ii                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78ii. Omitted

-COD-
                               CODIFICATION                           
      Section, act June 6, 1934, ch. 404, title II, Sec. 210, 48 Stat.
    908, transferred the powers, duties and functions of the Federal
    Trade Commission under subchapter I of chapter 2A of this title to
    the Securities and Exchange Commission. Pending proceedings before
    the Federal Trade Commission were continued before the Securities
    and Exchange Commission.

-End-



-CITE-
    15 USC Sec. 78jj                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78jj. Repealed.

-MISC1-
    Sec. 78jj. Repealed. Pub. L. 100-181, title III, Sec. 330, Dec. 4,
      1987, 101 Stat. 1259.
      Section, act June 6, 1934, ch. 404, title II, Sec. 211, 48 Stat.
    909, provided for a study and report by Securities and Exchange
    Commission of reorganization proceedings. Study as basis for Trust
    Indenture Act of 1939, see section 77bbb of this title.

-End-



-CITE-
    15 USC Sec. 78kk                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78kk. Authorization of appropriations

-STATUTE-
      In addition to any other funds authorized to be appropriated to
    the Commission, there are authorized to be appropriated to carry
    out the functions, powers, and duties of the Commission,
    $776,000,000 for fiscal year 2003, of which - 
        (1) $102,700,000 shall be available to fund additional
      compensation, including salaries and benefits, as authorized in
      the Investor and Capital Markets Fee Relief Act (Public Law 107-
      123; 115 Stat. 2390 et seq.);
        (2) $108,400,000 shall be available for information technology,
      security enhancements, and recovery and mitigation activities in
      light of the terrorist attacks of September 11, 2001; and
        (3) $98,000,000 shall be available to add not fewer than an
      additional 200 qualified professionals to provide enhanced
      oversight of auditors and audit services required by the Federal
      securities laws, and to improve Commission investigative and
      disciplinary efforts with respect to such auditors and services,
      as well as for additional professional support staff necessary to
      strengthen the programs of the Commission involving Full
      Disclosure and Prevention and Suppression of Fraud, risk
      management, industry technology review, compliance, inspections,
      examinations, market regulation, and investment management.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 35, as added Pub. L. 94-29,
    Sec. 24, June 4, 1975, 89 Stat. 162; amended Pub. L. 95-20, Apr.
    13, 1977, 91 Stat. 47; Pub. L. 95-211, Dec. 19, 1977, 91 Stat.
    1492; Pub. L. 95-425, Sec. 1, Oct. 6, 1978, 92 Stat. 962; Pub. L.
    96-477, title IV, Sec. 401, Oct. 21, 1980, 94 Stat. 2291; Pub. L.
    100-181, title I, Sec. 101, Dec. 4, 1987, 101 Stat. 1249; Pub. L.
    100-704, Sec. 8, Nov. 19, 1988, 102 Stat. 4683; Pub. L. 101-550,
    title I, Sec. 102, Nov. 15, 1990, 104 Stat. 2713; Pub. L. 104-290,
    title IV, Sec. 403, Oct. 11, 1996, 110 Stat. 3441; Pub. L. 105-353,
    title II, Sec. 201, Nov. 3, 1998, 112 Stat. 3233; Pub. L. 107-204,
    title VI, Sec. 601, July 30, 2002, 116 Stat. 793.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      The Investor and Capital Markets Fee Relief Act, referred to in
    par. (1), is Pub. L. 107-123, Jan. 16, 2002, 115 Stat. 2390. For
    complete classification of this Act to the Code, see Short Title of
    2002 Amendments note set out under section 78a of this title and
    Tables.

-COD-
                               CODIFICATION                           
      Pub. L. 94-29, which directed amendment of the Securities
    Exchange Act of 1934 by adding this section at the end, is
    reflected in the source credit above as adding this section to
    title I of the Securities Exchange Act of 1934, to reflect the
    probable intent of Congress.


-MISC1-
                                AMENDMENTS                            
      2002 - Pub. L. 107-204 reenacted section catchline without change
    and amended text generally, updating fiscal year from 1999 to 2003,
    striking out subsec. designations, and substituting provisions
    relating to funding of additional compensation, terrorist-related
    information technology, security enhancements, and recovery and
    mitigation activities, and an additional 200 qualified
    professionals to provide enhanced oversight for provisions relating
    to miscellaneous expenses such as meetings and official functions.
      1998 - Pub. L. 105-353 reenacted section catchline without change
    and amended text generally. Prior to amendment, text read as
    follows: "There are authorized to be appropriated to carry out the
    functions, powers, and duties of the Commission $300,000,000 for
    fiscal year 1997, in addition to any other funds authorized to be
    appropriated to the Commission."
      1996 - Pub. L. 104-290 reenacted section catchline without change
    and amended text generally. Prior to amendment, text read as
    follows: "There are authorized to be appropriated to carry out the
    functions, powers, and duties of the Commission - 
        "(1) $178,023,000 for the fiscal year ending September 30,
      1990; and
        "(2) $212,609,000 for the fiscal year ending September 30,
      1991."
      1990 - Pub. L. 101-550 amended section generally, substituting
    present provisions for former provisions which provided for fiscal
    years 1988 and 1989: in subsec. (a), for authorization of
    appropriations for the Commission; in subsec. (b), for amounts for
    the EDGAR system; and in subsec. (c), for amounts for reception and
    representation expenses and for membership in the International
    Organization of Securities Commissions.
      1988 - Subsec. (c). Pub. L. 100-704 added subsec. (c).
      1987 - Pub. L. 100-181 amended section generally. Prior to
    amendment, section read as follows: "There are authorized to be
    appropriated to carry out the functions, powers, and duties of the
    Commission not to exceed $51,000,000 for the fiscal year ending
    June 30, 1976, $56,500,000 for the fiscal year ending September 30,
    1977, $63,750,000 for the fiscal year ending September 30, 1978,
    $69,000,000 for the fiscal year ending September 30, 1979,
    $79,000,000 for the fiscal year ending September 30, 1980,
    $85,500,000 for the fiscal year ending September 30, 1981,
    $96,640,000 for the fiscal year ending September 30, 1982, and
    $106,610,000 for the fiscal year ending September 30, 1983. For
    fiscal years succeeding fiscal year 1983, there may be appropriated
    such sums as the Congress may hereafter authorize by law."
      1980 - Pub. L. 96-477 authorized appropriations of $85,500,000
    for fiscal year ending Sept. 30, 1981, $96,640,000 for fiscal year
    ending Sept. 30, 1982, and $106,610,000 for fiscal year ending
    Sept. 30, 1983, and provided that for fiscal years succeeding 1983,
    there may be appropriated such sums as Congress may authorize by
    law.
      1978 - Pub. L. 95-425 inserted provision authorizing
    appropriations of not to exceed $69,000,000, and $79,000,000 for
    fiscal years ending Sept. 30, 1979 and 1980, respectively, and
    substituted "fiscal year 1980" for "fiscal year 1978".
      1977 - Pub. L. 95-211 authorized appropriations of not to exceed
    $63,750,000 for fiscal year ending Sept. 30, 1978, and substituted
    "For the fiscal years succeeding fiscal year 1978" for "For fiscal
    years succeeding the 1977 fiscal year" in provisions relating to
    appropriations for succeeding fiscal years.
      Pub. L. 95-20 substituted "$56,500,000" for "$55,000,000".

                     EFFECTIVE DATE OF 1988 AMENDMENT                 
      Amendment by Pub. L. 100-704 not applicable to actions occurring
    before Nov. 19, 1988, see section 9 of Pub. L. 100-704 set out as a
    note under section 78o of this title.

                              EFFECTIVE DATE                          
      Section effective June 4, 1975, see section 31(a) of Pub. L. 94-
    29, set out as a note under section 78b of this title.

-End-



-CITE-
    15 USC Sec. 78ll                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78ll. Requirements for the EDGAR system

-STATUTE-
      The Commission, by rule or regulation - 
        (1) shall provide that any information in the EDGAR system that
      is required to be disseminated by the contractor - 
          (A) may be sold or disseminated by the contractor only
        pursuant to a uniform schedule of fees prescribed by the
        Commission;
          (B) may be obtained by a purchaser by direct interconnection
        with the EDGAR system;
          (C) shall be equally available on equal terms to all persons;
        and
          (D) may be used, resold, or redisseminated by any person who
        has lawfully obtained such information without restriction and
        without payment of additional fees or royalties; and

        (2) shall require that persons, or classes of persons, required
      to make filings with the Commission submit such filings in a form
      and manner suitable for entry into the EDGAR system and shall
      specify the date that such requirement is effective with respect
      to that person or class; except that the Commission may exempt
      persons or classes of persons, or filings or classes of filings,
      from such rules or regulations in order to prevent hardships or
      to avoid imposing unreasonable burdens or as otherwise may be
      necessary or appropriate.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 35A, as added Pub. L. 100-
    181, title I, Sec. 102, Dec. 4, 1987, 101 Stat. 1249; amended Pub.
    L. 105-353, title II, Sec. 202, Nov. 3, 1998, 112 Stat. 3234.)

-COD-
                               CODIFICATION                           
      Pub. L. 100-181, which directed amendment of the Securities
    Exchange Act of 1934 by adding this section after section 35 of the
    Act, is reflected in the source credit above as adding this section
    to title I of the Securities Exchange Act of 1934, to reflect the
    probable intent of Congress. See Codification note set out under
    section 78kk of this title.


-MISC1-
                                AMENDMENTS                            
      1998 - Subsecs. (a) to (c). Pub. L. 105-353, Sec. 202(1), struck
    out subsecs. (a) to (c) which: in subsec. (a) required
    certifications and reports as prerequisite to obligation or
    expenditure of funds for establishment or operation of EDGAR
    system, and provided that former section 78kk(b) amounts were to be
    exclusive source of funds for systems procurement and operation; in
    subsec. (b) required report on status of EDGAR development,
    implementation, and progress to certain Congressional committees at
    six-month intervals; and in subsec. (c) required certification to
    Congressional committees of total costs, cost/benefit analysis,
    assurances of compliance, capabilities of system, competence of
    personnel, and review of test group filings prior to entering into
    contract for EDGAR system.
      Subsec. (d). Pub. L. 105-353, Sec. 202(2), struck out "(d)"
    before "The Commission" in introductory provisions, in par. (2)
    substituted period for "; and" at end, and struck out par. (3)
    which read as follows: "shall require all persons who make any
    filing with the Commission, in addition to complying with such
    other rules concerning the form and manner of filing as the
    Commission may prescribe, to submit such filings in written or
    printed form - 
        "(A) for a period of at least one year after the effective date
      specified for such person or class under paragraph (2); or
        "(B) for a shorter period if the Commission determines that the
      EDGAR system (i) is reliable, (ii) provides a suitable
      alternative to such written and printed filings, and (iii)
      assures that the provision of information through the EDGAR
      system is as effective and efficient for filers, users, and
      disseminators as provision of such information in written or
      printed form."
      Subsec. (e). Pub. L. 105-353, Sec. 202(1), struck out subsec. (e)
    which read as follows: "For the purposes of carrying out its
    responsibilities under subsection (d)(3) of this section, the
    Commission shall consult with representatives of persons filing,
    disseminating, and using information contained in filings with the
    Commission."

-End-



-CITE-
    15 USC Sec. 78mm                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78mm. General exemptive authority

-STATUTE-
    (a) Authority
      (1) In general
        Except as provided in subsection (b) of this section, but
      notwithstanding any other provision of this chapter, the
      Commission, by rule, regulation, or order, may conditionally or
      unconditionally exempt any person, security, or transaction, or
      any class or classes of persons, securities, or transactions,
      from any provision or provisions of this chapter or of any rule
      or regulation thereunder, to the extent that such exemption is
      necessary or appropriate in the public interest, and is
      consistent with the protection of investors.
      (2) Procedures
        The Commission shall, by rule or regulation, determine the
      procedures under which an exemptive order under this section
      shall be granted and may, in its sole discretion, decline to
      entertain any application for an order of exemption under this
      section.
    (b) Limitation
      The Commission may not, under this section, exempt any person,
    security, or transaction, or any class or classes of persons,
    securities, or transactions from section 78o-5 of this title or the
    rules or regulations issued thereunder or (for purposes of section
    78o-5 of this title and the rules and regulations issued
    thereunder) from any definition in paragraph (42), (43), (44), or
    (45) of section 78c(a) of this title.

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 36, as added Pub. L. 104-290,
    title I, Sec. 105(b), Oct. 11, 1996, 110 Stat. 3424.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsec. (a)(1), was in the original
    "this title". See References in Text note set out under section 78a
    of this title.

-End-



-CITE-
    15 USC Sec. 78nn                                            01/03/2007

-EXPCITE-
    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-
    Sec. 78nn. Tennessee Valley Authority

-STATUTE-
    (a) In general
      Commencing with the issuance by the Tennessee Valley Authority of
    an annual report on Commission Form 10-K (or any successor thereto)
    for fiscal year 2006 and thereafter, the Tennessee Valley Authority
    shall file with the Commission, in accordance with such rules and
    regulations as the Commission has prescribed or may prescribe, such
    periodic, current, and supplementary information, documents, and
    reports as would be required pursuant to section 78m of this title
    if the Tennessee Valley Authority were an issuer of a security
    registered pursuant to section 78l of this title. Notwithstanding
    the preceding sentence, the Tennessee Valley Authority shall not be
    required to register any securities under this chapter, and shall
    not be deemed to have registered any securities under this chapter.
    (b) Limited treatment as issuer
      Commencing with the issuance by the Tennessee Valley Authority of
    an annual report on Commission Form 10-K (or any successor thereto)
    for fiscal year 2006 and thereafter, the Tennessee Valley Authority
    shall be deemed to be an issuer for purposes of section 78j-1 of
    this title, other than for subsection (m)(1) or (m)(3) of section
    78j-1 of this title. The Tennessee Valley Authority shall not be
    required by this subsection to comply with the rules issued by any
    national securities exchange or national securities association in
    response to rules issued by the Commission pursuant to section 78j-
    1(m)(1) of this title.
    (c) No effect on TVA authority
      Nothing in this section shall be construed to diminish, impair,
    or otherwise affect the authority of the Board of Directors of the
    Tennessee Valley Authority to carry out its statutory functions
    under the Tennessee Valley Authority Act of 1933 [16 U.S.C. 831 et
    seq.].

-SOURCE-
    (June 6, 1934, ch. 404, title I, Sec. 37, as added Pub. L. 108-447,
    div. H, title V, Sec. 520(2), Dec. 8, 2004, 118 Stat. 3267.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      This chapter, referred to in subsec. (a), was in the original
    "this title". See References in Text note set out under section 78a
    of this title and Codification note below.
      The Tennessee Valley Authority Act of 1933, referred to in
    subsec. (c), is act May 18, 1933, ch. 32, 48 Stat. 58, as amended,
    which is classified generally to chapter 12A (Sec. 831 et seq.) of
    Title 16, Conservation. For complete classification of this Act to
    the Code, see section 831 of Title 16 and Tables.

-COD-
                               CODIFICATION                           
      Pub. L. 108-447, which directed amendment of the Securities
    Exchange Act of 1934 by adding this section at the end, is
    reflected in the source credit above as adding this section to
    title I of the Securities Exchange Act of 1934, to reflect the
    probable intent of Congress.

-End-