In the House of Representatives, U. S.,

November 16, 2001.

Resolved, That the bill from the Senate (S. 1196) entitled ‘‘An Act to amend the Small Business Investment Act

of 1958, and for other purposes’’, do pass with the following

AMENDMENT:

Strike out all after the enacting clause and insert:

1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Small Business Invest3 ment Company Amendments Act of 2001’’.

4 SEC. 2. SUBSIDY FEES.

5 (a) IN GENERAL.—Section 303 of the Small Business

6 Investment Act of 1958 (15 U.S.C. 683) is amended—

7 (1) in subsection (b)—

8 (A) by striking ‘‘of not more than 1 percent

9 per year’’;

10 (B) by inserting ‘‘which amount may not

11 exceed 1.38 percent per year, and’’ before ‘‘which

12 shall be paid’’; and

13 (C) by striking ‘‘September 30, 2000’’ and

14 inserting ‘‘September 30, 2001’’; and

15 (2) in subsection (g)(2)—
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1 (A) by striking ‘‘of not more than 1 percent

2 per year’’;

3 (B) by inserting ‘‘which amount may not

4 exceed 1.38 percent per year, and’’ before ‘‘which

5 shall be paid’’; and

6 (C) by striking ‘‘September 30, 2000’’ and

7 inserting ‘‘September 30, 2001’’.

8 (b) EFFECTIVE DATE.—The amendments made by this

9 section shall become effective on October 1, 2001.

10 SEC. 3. CONFLICTS OF INTEREST.

11 Section 312 of the Small Business Investment Act of

12 1958 (15 U.S.C. 687d) is amended by striking ‘‘(including

13 disclosure in the locality most directly affected by the trans14 action)’’.

15 SEC. 4. PENALTIES FOR FALSE STATEMENTS.

16 (a) CRIMINAL PENALTIES.—Section 1014 of title 18,

17 United States Code, is amended by inserting ‘‘, as defined

18 in section 103 of the Small Business Investment Act of 1958

19 (15 U.S.C. 662), or the Small Business Administration in

20 connection with any provision of that Act’’ after ‘‘small

21 business investment company’’.

22 (b) CIVIL PENALTIES.—Section 951 of the Financial

23 Institutions Reform, Recovery, and Enforcement Act of

24 1989 (12 U.S.C. 1833a) is amended—
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1 (1) by redesignating subsections (d) through (g)

2 as subsections (e) through (h), respectively; and

3 (2) in subsection (c)—

4 (A) in paragraph (1), by striking ‘‘or’’ at

5 the end;

6 (B) in paragraph (2)—

7 (i) by striking ‘‘1341;’’ and inserting

8 ‘‘1341’’; and

9 (ii) by striking ‘‘institution.’’ and in10 serting ‘‘institution; or’’;

11 (C) by inserting immediately after para12 graph (2) the following:

13 ‘‘(3) section 16(a) of the Small Business Act (15

14 U.S.C. 645(a)).’’; and

15 (D) by striking ‘‘This section shall’’ and in16 serting the following:

17 ‘‘(d) EFFECTIVE DATE.—This section shall’’.

18 SEC. 5. REMOVAL OR SUSPENSION OF MANAGEMENT OFFI19 CIALS.

20 Section 313 of the Small Business Investment Act of

21 1958 (15 U.S.C. 687e) is amended to read as follows:

22 ‘‘SEC. 313. REMOVAL OR SUSPENSION OF MANAGEMENT OF23 FICIALS.

24 ‘‘(a) DEFINITION OF ‘MANAGEMENT OFFICIAL’.—In

25 this section, the term ‘management official’ means an offi-
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1 cer, director, general partner, manager, employee, agent, or

2 other participant in the management or conduct of the af3 fairs of a licensee.

4 ‘‘(b) REMOVAL OF MANAGEMENT OFFICIALS.—

5 ‘‘(1) NOTICE OF REMOVAL.—The Administrator

6 may serve upon any management official a written

7 notice of its intention to remove that management of8 ficial whenever, in the opinion of the

9 Administrator—

10 ‘‘(A) such management official—

11 ‘‘(i) has willfully and knowingly com12 mitted any substantial violation of—

13 ‘‘(I) this Act;

14 ‘‘(II) any regulation issued under

15 this Act; or

16 ‘‘(III) a cease-and-desist order

17 which has become final; or

18 ‘‘(ii) has willfully and knowingly com19 mitted or engaged in any act, omission, or

20 practice which constitutes a substantial

21 breach of a fiduciary duty of that person as

22 a management official; and

23 ‘‘(B) the violation or breach of fiduciary

24 duty is one involving personal dishonesty on the

25 part of such management official.
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1 ‘‘(2) CONTENTS OF NOTICE.—A notice of inten2 tion to remove a management official, as provided in

3 paragraph (1), shall contain a statement of the facts

4 constituting grounds therefor, and shall fix a time

5 and place at which a hearing will be held thereon.

6 ‘‘(3) HEARINGS.—

7 ‘‘(A) TIMING.—A hearing described in

8 paragraph (2) shall be fixed for a date not ear9 lier than 30 days nor later than 60 days after

10 the date of service of notice of the hearing, unless

11 an earlier or a later date is set by the Adminis12 trator at the request of—

13 ‘‘(i) the management official, and for

14 good cause shown; or

15 ‘‘(ii) the Attorney General of the

16 United States.

17 ‘‘(B) CONSENT.—Unless the management of18 ficial shall appear at a hearing described in this

19 paragraph in person or by a duly authorized

20 representative, that management official shall be

21 deemed to have consented to the issuance of an

22 order of removal under paragraph (1).

23 ‘‘(4) ISSUANCE OF ORDER OF REMOVAL.—

24 ‘‘(A) IN GENERAL.—In the event of consent

25 under paragraph (3)(B), or if upon the record
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1 made at a hearing described in this subsection,

2 the Administrator finds that any of the grounds

3 specified in the notice of removal has been estab4 lished, the Administrator may issue such orders

5 of removal from office as the Administrator

6 deems appropriate.

7 ‘‘(B) EFFECTIVENESS.—An order under

8 subparagraph (A) shall—

9 ‘‘(i) become effective at the expiration

10 of 30 days after the date of service upon the

11 subject licensee and the management official

12 concerned (except in the case of an order

13 issued upon consent as described in para14 graph (3)(B), which shall become effective at

15 the time specified in such order); and

16 ‘‘(ii) remain effective and enforceable,

17 except to such extent as it is stayed, modi18 fied, terminated, or set aside by action of

19 the Administrator or a reviewing court in

20 accordance with this section.

21 ‘‘(c) AUTHORITY TO SUSPEND OR PROHIBIT PARTICI22 PATION.—

23 ‘‘(1) IN GENERAL.—The Administrator may, if

24 the Administrator deems it necessary for the protec25 tion of the licensee or the interests of the Administra-
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1 tion, suspend from office or prohibit from further par2 ticipation in any manner in the management or con3 duct of the affairs of the licensee, or both, any man4 agement official referred to in subsection (b)(1), by

5 written notice to such effect served upon the manage6 ment official.

7 ‘‘(2) EFFECTIVENESS.—A suspension or prohibi8 tion under paragraph (1)—

9 ‘‘(A) shall become effective upon service of

10 notice under paragraph (1); and

11 ‘‘(B) unless stayed by a court in pro12 ceedings authorized by paragraph (3), shall re13 main in effect—

14 ‘‘(i) pending the completion of the ad15 ministrative proceedings pursuant to a no16 tice of intention to remove served under sub17 section (b); and

18 ‘‘(ii) until such time as the Adminis19 trator shall dismiss the charges specified in

20 the notice, or, if an order of removal or pro21 hibition is issued against the management

22 official, until the effective date of any such

23 order.

24 ‘‘(3) JUDICIAL REVIEW.—Not later than 10 days

25 after any management official has been suspended
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1 from office or prohibited from participation in the

2 management or conduct of the affairs of a licensee, or

3 both, under paragraph (1), that management official

4 may apply to the United States district court for the

5 judicial district in which the home office of the li6 censee is located, or the United States District Court

7 for the District of Columbia, for a stay of the suspen8 sion or prohibition pending the completion of the ad9 ministrative proceedings pursuant to a notice of in10 tent to remove served upon the management official

11 under subsection (b), and such court shall have juris12 diction to stay such action.

13 ‘‘(d) AUTHORITY TO SUSPEND ON CRIMINAL

14 CHARGES.—

15 ‘‘(1) IN GENERAL.—Whenever a manage16 ment official is charged in any information, in17 dictment, or complaint authorized by a United

18 States attorney, with the commission of or par19 ticipation in a felony involving dishonesty or

20 breach of trust, the Administrator may, by writ21 ten notice served upon that management official,

22 suspend that management official from office or

23 prohibit that management official from further

24 participation in any manner in the management

25 or conduct of the affairs of the licensee, or both.
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1 ‘‘(2) EFFECTIVENESS.—A suspension or

2 prohibition under paragraph (1) shall remain in

3 effect until the subject information, indictment,

4 or complaint is finally disposed of, or until ter5 minated by the Administrator.

6 ‘‘(3) AUTHORITY UPON CONVICTION.—If a

7 judgment of conviction with respect to an offense

8 described in paragraph (1) is entered against a

9 management official, then at such time as the

10 judgment is not subject to further appellate re11 view, the Administrator may issue and serve

12 upon the management official an order removing

13 that management official, which removal shall

14 become effective upon service of a copy of the

15 order upon the licensee.

16 ‘‘(4) AUTHORITY UPON DISMISSAL OR

17 OTHER DISPOSITION.—A finding of not guilty or

18 other disposition of charges described in para19 graph (1) shall not preclude the Administrator

20 from thereafter instituting proceedings to sus21 pend or remove the management official from of22 fice, or to prohibit the management official from

23 participation in the management or conduct of

24 the affairs of the licensee, or both, pursuant to

25 subsection (b) or (c).
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1 ‘‘(e) NOTIFICATION TO LICENSEES.—Copies of each no2 tice required to be served on a management official under

3 this section shall also be served upon the interested licensee.

4 ‘‘(f) PROCEDURAL PROVISIONS; JUDICIAL REVIEW.—

5 ‘‘(1) HEARING VENUE.—Any hearing provided

6 for in this section shall be—

7 ‘‘(A) held in the Federal judicial district or

8 in the territory in which the principal office of

9 the licensee is located, unless the party afforded

10 the hearing consents to another place; and

11 ‘‘(B) conducted in accordance with the pro12 visions of chapter 5 of title 5, United States

13 Code.

14 ‘‘(2) ISSUANCE OF ORDERS.—After a hearing

15 provided for in this section, and not later than 90

16 days after the Administrator has notified the parties

17 that the case has been submitted for final decision, the

18 Administrator shall render a decision in the matter

19 (which shall include findings of fact upon which its

20 decision is predicated), and shall issue and cause to

21 be served upon each party to the proceeding an order

22 or orders consistent with the provisions of this section.

23 ‘‘(3) AUTHORITY TO MODIFY ORDERS.—The Ad24 ministrator may modify, terminate, or set aside any

25 order issued under this section—
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1 ‘‘(A) at any time, upon such notice, and in

2 such manner as the Administrator deems proper,

3 unless a petition for review is timely filed in a

4 court of appeals of the United States, as pro5 vided in paragraph (4)(B), and thereafter until

6 the record in the proceeding has been filed in ac7 cordance with paragraph (4)(C); and

8 ‘‘(B) upon such filing of the record, with

9 permission of the court.

10 ‘‘(4) JUDICIAL REVIEW.—

11 ‘‘(A) IN GENERAL.—Judicial review of an

12 order issued under this section shall be exclu13 sively as provided in this subsection.

14 ‘‘(B) PETITION FOR REVIEW.—Any party to

15 a hearing provided for in this section may ob16 tain a review of any order issued pursuant to

17 paragraph (2) (other than an order issued with

18 the consent of the management official concerned,

19 or an order issued under subsection (d)), by fil20 ing in the court of appeals of the United States

21 for the circuit in which the principal office of the

22 licensee is located, or in the United States Court

23 of Appeals for the District of Columbia Circuit,

24 not later than 30 days after the date of service

25 of such order, a written petition praying that the
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1 order of the Administrator be modified, termi2 nated, or set aside.

3 ‘‘(C) NOTIFICATION TO ADMINISTRATION.—

4 A copy of a petition filed under subparagraph

5 (B) shall be forthwith transmitted by the clerk of

6 the court to the Administrator, and thereupon

7 the Administrator shall file in the court the

8 record in the proceeding, as provided in section

9 2112 of title 28, United States Code.

10 ‘‘(D) COURT JURISDICTION.—Upon the fil11 ing of a petition under subparagraph (A)—

12 ‘‘(i) the court shall have jurisdiction,

13 which, upon the filing of the record under

14 subparagraph (C), shall be exclusive, to af15 firm, modify, terminate, or set aside, in

16 whole or in part, the order of the Adminis17 trator, except as provided in the last sen18 tence of paragraph (3)(B);

19 ‘‘(ii) review of such proceedings shall

20 be had as provided in chapter 7 of title 5,

21 United States Code; and

22 ‘‘(iii) the judgment and decree of the

23 court shall be final, except that the judg24 ment and decree shall be subject to review

25 by the Supreme Court of the United States
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1 upon certiorari, as provided in section 1254

2 of title 28, United States Code.

3 ‘‘(E) JUDICIAL REVIEW NOT A STAY.—The

4 commencement of proceedings for judicial review

5 under this paragraph shall not, unless specifi6 cally ordered by the court, operate as a stay of

7 any order issued by the Administrator under

8 this section.’’.

9 SEC. 6. REDUCTION OF FEES.

10 (a) TWO-YEAR REDUCTION OF SECTION 7(a) FEES.—

11 (1) GUARANTEE FEES.—Section 7(a)(18) of the

12 Small Business Act (15 U.S.C. 636(a)(18)) is amend13 ed by adding at the end the following:

14 ‘‘(C) TWO-YEAR REDUCTION IN FEES.—

15 With respect to loans approved during the 2-year

16 period beginning on October 1, 2002, the guar17 antee fee under subparagraph (A) shall be as fol18 lows:

19 ‘‘(i) A guarantee fee equal to 2 percent

20 of the deferred participation share of a total

21 loan amount that is not more than

22 $250,000.

23 ‘‘(ii) A guarantee fee equal to 3 percent

24 of the deferred participation share of a total

25 loan amount that is more than $250,000.’’.
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1 (2) ANNUAL FEES.—Section 7(a)(23)(A) of the

2 Small Business Act (15 U.S.C. 636(a)(23)(A)) is

3 amended by adding at the end the following: ‘‘With

4 respect to loans approved during the 2-year period be5 ginning on October 1, 2002, the annual fee assessed

6 and collected under the preceding sentence shall be in

7 an amount equal to 0.25 percent of the outstanding

8 balance of the deferred participation share of the

9 loan.’’.

10 (b) REDUCTION OF SECTION 504 FEES.—Section 503

11 of the Small Business Investment Act of 1958 (15 U.S.C.

12 697) is amended—

13 (1) in subsection (b)(7)(A)—

14 (A) by redesignating clauses (i) and (ii) as

15 subclauses (I) and (II), respectively, and moving

16 the margins 2 ems to the right;

17 (B) by striking ‘‘not exceed the lesser’’ and

18 inserting ‘‘not exceed—

19 ‘‘(i) the lesser’’; and

20 (C) by adding at the end the following:

21 ‘‘(ii) 50 percent of the amount estab22 lished under clause (i) in the case of a loan

23 made during the 2-year period beginning on

24 October 1, 2002, for the life of the loan;

25 and’’; and
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1 (2) by adding at the end the following:

2 ‘‘(i) TWO-YEAR WAIVER OF FEES.—The Administra3 tion may not assess or collect any up front guarantee fee

4 with respect to loans made under this title during the 2-

5 year period beginning on October 1, 2002.’’.

6 (c) BUDGETARY TREATMENT OF LOANS AND

7 FINANCINGS.—Assistance made available under any loan

8 made or approved by the Small Business Administration

9 under section 7(a) of the Small Business Act (15 U.S.C.

10 636(a)) or financings made under title III or V of the Small

11 Business Investment Act of 1958 (15 U.S.C. 697a), during

12 the 2-year period beginning on October 1, 2002, shall be

13 treated as separate programs of the Small Business Admin14 istration for purposes of the Federal Credit Reform Act of

15 1990 only.

16 (d) USE OF FUNDS.—The amendments made by this

17 section shall be effective only to the extent that funds are

18 made available under appropriations Acts, which funds

19 shall be utilized by the Administrator to offset the cost (as

20 such term is defined in section 502 of the Federal Credit

21 Reform Act of 1990) of such amendments.
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1 (e) EFFECTIVE DATE.—The amendments made by this

2 section shall become effective on October 1, 2002.

Attest:

Clerk.
107TH CONGRESS

1ST SESSION S. 1196

AMENDMENT