59–006 

114TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 114–337 

SECURITIES AND EXCHANGE COMMISSION REPORTING 

MODERNIZATION ACT 

NOVEMBER 16, 2015.—Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 3032] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 3032) to amend the Securities Exchange Act of 1934 to 

repeal a certain reporting requirement of the Securities and Exchange Commission, having considered the same, report favorably 

thereon without amendment and recommend that the bill do pass. 

PURPOSE AND SUMMARY

Introduced by Representative Sinema, H.R. 3032, the ‘‘Securities 

and Exchange Commission Reporting Modernization Act,’’ eliminates a reporting requirement applicable only to the Securities and 

Exchange Commission and previously repealed for all other federal 

agencies. 

BACKGROUND AND NEED FOR LEGISLATION

Section 1121(b) of the Right to Financial Privacy Act (RFPA) required federal agencies to report the number of times they requested that a financial institution provide their customer’s financial records (1) pursuant to a customer’s consent, (2) an administrative or judicial subpoena for which the RFPA required prior notice 

to the customer, or (3) pursuant to the RFPA’s procedures for delaying notice of such records request to the customer. When the 

SEC became subject to the RFPA in 1981, Congress added Section 

21(h) to the Securities Exchange Act of 1934. Section 21(h)(6) requires the SEC to report annually on requests under the RFPA as 

well as the number of times the agency sought judicial orders deVerDate Sep 11 2014 05:22 Nov 18, 2015 Jkt 059006 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\HR337.XXX HR337

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laying customer notice of its investigative subpoenas under Section 

21(h) of the Securities Exchange Act. 

In 1995, the Federal Reports Elimination and Sunset Act repealed Section 1121 of the RFPA in its entirety. However, the corresponding report provision of Section 21(h)(6) of the Securities Exchange Act was left intact. As a result, while all other agencies previously subject to the reporting requirement have ceased making 

RFPA reports, the SEC is now the only federal agency that has 

continued to compile and publish these reports. 

By letter, SEC Chair Mary Jo White has requested that the Financial Services Committee seek the repeal of the RFPA reporting 

requirement. Chair White’s request is supported by all five SEC 

Commissioners. 

HEARINGS

The Committee on Financial Services held no hearings on H.R. 

3032 in the 114th Congress. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

July 28, 2015 and July 29, 2015, and ordered H.R. 3032 to be reported favorably to the House without amendment by a recorded 

vote of 58 yeas to 0 nays (Record vote no. FC–52), a quorum being 

present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. The sole vote in committee was a motion by Chairman Hensarling to report the bill favorably to the House without amendment. The motion was agreed 

to by a recorded vote of 58 yeas to 0 nays (Record vote no. FC–52), 

a quorum being present. 


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COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 3032 will eliminate a reporting requirement that is no longer necessary and has 

been repealed for all other federal agencies in order to ensure that 

the SEC may more efficiently direct resources toward fulfilling its 

mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, August 20, 2015. 

Hon. JEB HENSARLING, Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3032, the Securities and 

Exchange Commission Reporting Modernization Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Susan Willie. 

Sincerely, 

KEITH HALL. 

Enclosure. 


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H.R. 3032—Securities and Exchange Commission Reporting Modernization Act 

H.R. 3032 would repeal a requirement that the Securities and 

Exchange Commission (SEC) include in its annual report to the 

Congress a list of each instance when the agency used certain provisions of law to obtain access to the financial records of a customer 

of a financial institution. 

Based on information from the SEC, CBO expects that repealing 

the reporting requirement under H.R. 3032 would not significantly 

change the workload of the agency. CBO estimates that implementing the bill would not have a significant effect on the agency’s 

discretionary costs. Under current law, the SEC is authorized to 

collect fees to offset its annual appropriation; therefore, assuming 

appropriation action consistent with that authority, CBO estimates 

that implementing the bill would have a negligible effect on net 

discretionary spending. Enacting H.R. 3032 would not affect direct 

spending or revenues; therefore, pay-as-you-go procedures do not 

apply. 

H.R. 3032 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

not affect the budgets of state, local, or tribal governments. 

The CBO staff contact for this estimate is Susan Willie. The estimate was approved by H. Samuel Papenfuss, Deputy Assistant Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 3032 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

DUPLICATION OF FEDERAL PROGRAMS

Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015), the 

Committee states that no provision of H.R. 3032 establishes or reauthorizes a program of the Federal Government known to be duplicative of another Federal program, a program that was included 

in any report from the Government Accountability Office to Congress pursuant to section 21 of Public Law 111–139, or a program 


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related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(k) of H. Res. 5, 114th Cong. (2015), the 

Committee states that H.R. 3032 contains no directed rulemaking. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section: cites H.R. 3032 as the ‘‘Securities and Exchange 

Commission Reporting Modernization Act.’’ 

Section 2. Elimination of reporting requirement 

This section eliminates the reporting requirement contained in 

Section 21(h) of the Securities Exchange Act of 1934. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets and existing law in which no 

change is proposed is shown in roman): 

SECURITIES EXCHANGE ACT OF 1934 

TITLE I—REGULATION OF SECURITIES EXCHANGES 

* * * * * * * 

INVESTIGATIONS; INJUNCTIONS AND PROSECUTION OF OFFENSES

SEC. 21. (a)(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 title, 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, or, as to 

any act or practice, or omission to act, while associated with a 

member, formerly associated with a member, the rules of a registered clearing agency in which such person is a participant, or, 

as to any act or practice, or omission to act, while a participant, 

was a participant, the rules of the Public Company Accounting 

Oversight Board, of which such person is a registered public accounting firm, a person associated with such a firm, or, as to any 

act, practice, or omission to act, while associated with such firm, 

a person formerly 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 


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rules and regulations under this title, or in securing information to 

serve as a basis for recommending further legislation concerning 

the matters to which this title 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) For the purpose of any such investigation, or any other proceeding under this title, any member of the Commission or any officer designated by it is empowered to administer oaths and affirmations, subpoena 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) In case of contumacy by, or refusal to obey a subpoena 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 subpoena 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)(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 title, the rules or regulations thereunder, the rules of a national securities exchange or regVerDate Sep 11 2014 05:22 Nov 18, 2015 Jkt 059006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6601 E:\HR\OC\HR337.XXX HR337

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istered 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 title or the rules or regulations thereunder to the Attorney General, who may, in his discretion, institute 

the necessary criminal proceedings under this title. 

(2) AUTHORITY OF A 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 10(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 12 of this title or that is required to file reports pursuant 

to section 15(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 title, the rules or regulations thereunder, or a cease-anddesist order entered by the Commission pursuant to section 

21C of this title, other than by committing a violation subject 

to a penalty pursuant to section 21A, 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. 


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(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 308 of the Sarbanes-Oxley Act of 2002 and section 21F 

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 

27 of this title, actions under this paragraph shall be actions to enforce a liability or a duty created by this title. 

(D) SPECIAL PROVISIONS RELATING TO A VIOLATION OF A

CEASE-AND-DESIST ORDER.—In an action to enforce a cease-anddesist order entered by the Commission pursuant to section 

21C, 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.— 


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(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) 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 title, 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 15 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 title, 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) Notwithstanding any other provision of this title, 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) Notwithstanding the provisions of section 1407(a) of title 28, 

United States Code, 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. 


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(h)(1) The Right to Financial Privacy Act of 1978 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, 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 subpoena issued in conformity with the requirements of section 19(b) of the Securities Act of 1933, section 

21(b) of the Securities Exchange Act of 1934, section 42(b) of the 

Investment Company Act of 1940, or section 209(b) of the Investment Advisers Act of 1940, 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 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. 


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(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 may permit. 

ø(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 to obtain access to financial records of a customer and include it in its annual report 

to the Congress. Section 1121(b) 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 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 


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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 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 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, except 

that the customer notice required under section 1112(b) or (c) of 

such Act 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 of the Right to Financial Privacy Act of 1978, 

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, within 30 days of its determination, or complies with the requirements of section 1109 of such Act 

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) 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 subVerDate Sep 11 2014 05:22 Nov 18, 2015 Jkt 059006 PO 00000 Frm 00013 Fmt 6659 Sfmt 6601 E:\HR\OC\HR337.XXX HR337

SSpencer on DSK4SPTVN1PROD with REPORTS
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section 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 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 15(b)(11), any exchange registered pursuant to section 

6(g), or any national securities association registered pursuant to 

section 15A(k). 

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SSpencer on DSK4SPTVN1PROD with REPORTS