Municipal Securities Investor Protection Act of 1996

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Municipal Securities Investor 
Protection Act of 1996''.

SEC. 2. TREATMENT OF MUNICIPAL SECURITIES IN THE SECURITIES ACT OF 
              1933.

    Section 3 of the Securities Act of 1933 (15 U.S.C. 77c) is amended 
by adding at the end the following new subsection:
    ``(d)(1) Notwithstanding subsection (a)(2), a security issued by a 
municipal issuer shall only be exempt from the provisions of this 
title--
            ``(A) if the municipal issuer pledges the full faith and 
        credit or the taxing power of that municipal issuer to make 
        timely payments of principal and interest on the obligation; or
            ``(B) if the municipal issuer--
                    ``(i) offers or sells such securities in a single 
                transaction in an aggregate principal amount equal to 
                less than $1,000,000,000; or
                    ``(ii) offers or sells such securities in a series 
                of related transactions, and at the time of the offer 
                or sale of such securities, does not reasonably 
                anticipate that the aggregate principal amount of the 
                series of related transactions will exceed 
                $1,000,000,000.
    ``(2) For purposes of this subsection--
            ``(A) the term `municipal issuer' means--
                    ``(i) a State, the District of Columbia, or a 
                Territory of the United States; or
                    ``(ii) a public instrumentality or political 
                subdivision of an entity referred to in clause (i);
            ``(B) the term `series of related transactions' means a 
        series of separate securities offerings made--
                    ``(i) as part of a single plan of financing; or
                    ``(ii) for the same general purpose; and
            ``(C) the term `reasonably anticipate' shall have the 
        meaning provided that term by the Commission by regulation, 
        taking into consideration, as necessary or appropriate--
                    ``(i) the public interest;
                    ``(ii) the protection of investors; and
                    ``(iii) the need to prevent the circumvention of 
                the requirements of this subsection.''.

SEC. 3. TREATMENT OF MUNICIPAL SECURITIES IN THE SECURITIES EXCHANGE 
              ACT OF 1934.

    (a) In General.--Section 3(a)(12) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a)(12)) is amended--
            (1) in subparagraph (A), by striking clause (ii) and 
        inserting the following:
            ``(ii) any security issued by a municipal issuer with 
        respect to which the municipal issuer--
                    ``(I) pledges the full faith and credit or the 
                taxing power of that municipal issuer to make timely 
                payments of principal and interest on the obligation; 
                or
                    ``(II)(aa) offers or sells such securities in a 
                single transaction in an aggregate principal amount 
                equal to less than $1,000,000,000; or
                    ``(bb) offers or sells such securities in a series 
                of related transactions, and at the time of the offer 
                or sale of such securities, does not reasonably 
                anticipate that the aggregate principal amount of the 
                series of related transactions will exceed 
                $1,000,000,000;'';
            (2) in subparagraph (B)(ii), by striking ``municipal 
        securities'' and inserting ``the securities described in 
        subparagraph (A)(ii)'';
            (3) by redesignating subparagraph (C) as subparagraph (D); 
        and
            (4) by inserting after subparagraph (B) the following:
    ``(C) For purposes of subparagraph (A)(ii)--
            ``(i) the term `municipal issuer' means--
                    ``(I) a State or any political subdivision thereof, 
                or an agency or instrumentality of a State or any 
                political subdivision thereof; or
                    ``(II) any municipal corporate instrumentality of a 
                State;
            ``(ii) the term `series of related transactions' means a 
        series of separate securities offerings made--
                    ``(I) as part of a single plan of financing; or
                    ``(II) for the same general purpose; and
            ``(iii) the term `reasonably anticipate' shall have the 
        meaning provided that term by the Commission by regulation, 
        taking into consideration, as necessary or appropriate--
                    ``(I) the public interest;
                    ``(II) the protection of investors; and
                    ``(III) the need to prevent the circumvention of 
                the requirements of subparagraph (A)(ii).''.
    (b) Treatment of Municipal Securities That Are Not Exempted 
Securities.--The third sentence of section 15(d) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o(d)) is amended by inserting before 
the period the following: ``, except that, with respect to a class of 
municipal securities that are not exempted securities, the duty to file 
under this subsection may not be suspended by reason of the number of 
security holders of record of that class of municipal securities''.
    (c) Reporting Prior to the Sale of Securities.--Section 15B(d)(1) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(d)(1)) is 
amended--
            (1) by striking ``(d)(1) Neither'' and inserting 
        ``(d)(1)(A) Except as provided in subparagraph (B), neither''; 
        and
            (2) by adding at the end the following new subparagraph:
    ``(B) Subparagraph (A) does not apply to an issuer of any municipal 
security that is not an exempted security.''.

SEC. 4. TREATMENT OF CERTAIN MUNICIPAL SECURITIES IN THE TRUST 
              INDENTURE ACT OF 1939.

    Section 304(a)(4) of the Trust Indenture Act of 1939 (15 U.S.C. 
77ddd(a)(4)) is amended by striking ``of subsection 3(a) thereof'' and 
inserting ``of subsection (a), or subsection (d) of section 3 of that 
Act''.

Summary: Municipal Securities Investor Protection Act of 1996 - Amends the Securities Act of 1933 and the Securities Exchange Act of 1934 to provide that a municipal issuer shall only be exempt from its provisions if such issuer: (1) pledges its full faith and credit or taxing power to make timely payments of principal and interest. (2) offers or sells such securities in a minimum single transaction amount of under $1 billion. Or (3) offers or sells such securities in a series of related transactions, but does not reasonably anticipate that the aggregate principal amount of the series will exceed $1 billion at the time of such offer or sale. Amends the Securities Exchange Act of 1934 to provide that the duty to file supplementary and periodic information by non-exempt municipal securities may not be suspended by reason of the number of security holders of record of that class of securities. Authorizes the Securities and Exchange Commission to require non- exempt municipal security issuers to file requisite documents before the sale of such securities. Amends the Trust Indenture Act of 1939 to make conforming amendments.