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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 618 Reported in House (RH)]

                                                 Union Calendar No. 145

103d CONGRESS

  1st Session

                               H. R. 618

                          [Report No. 103-255]

_______________________________________________________________________

                                 A BILL

 To extend and revise rulemaking authority with respect to government 
 securities under the Federal securities laws, and for other purposes.

_______________________________________________________________________

                           September 23, 1993

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed

                                                 Union Calendar No. 145
103d CONGRESS
  1st Session
                                H. R. 618

                          [Report No. 103-255]

 To extend and revise rulemaking authority with respect to government 
 securities under the Federal securities laws, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            January 26, 1993

 Mr. Markey (for himself, Mr. Fields of Texas, Mr. Dingell, Mr. Wyden, 
  Mr. Synar, and Mr. Cooper) introduced the following bill; which was 
            referred to the Committee on Energy and Commerce

                           September 23, 1993

                   Additional sponsor: Mr. Moorhead.

                           September 23, 1993

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
[For text of introduced bill, see copy of bill as introduced on January 
                               26, 1993]

_______________________________________________________________________

                                 A BILL

 
 To extend and revise rulemaking authority with respect to government 
 securities under the Federal securities laws, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Government Securities Reform Act of 
1993''.

SEC. 2. EXTENSION OF GOVERNMENT SECURITIES RULEMAKING AUTHORITY.

    Section 15C of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
5) is amended by striking subsection (g).

SEC. 3. TRANSACTION RECORDS.

    (a) Amendment.--Section 15C(d) of the Securities Exchange Act of 
1934 (15 U.S.C. 78o-5(d)) is amended by adding at the end thereof the 
following new paragraph:
    ``(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. 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).
            ``(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. 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 the date of the 
        enactment of this paragraph, 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, United States Code, this 
        subparagraph shall be considered a statute described in 
        subsection (b)(3)(B) of such section 552.''.
    (b) Conforming Amendments.--(1) Section 15C(a)(4) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o-5(a)(4)) is amended by inserting 
``, other than subsection (d)(3),'' after ``subsection (a), (b), or (d) 
of this section''.
    (2) Section 15C(f)(2) of such Act is amended--
            (A) in the first sentence, by inserting ``, other than 
        subsection (d)(3)'', after ``threatened violation of the 
        provisions of this section''; and
            (B) in the second sentence, by inserting ``(except 
        subsection (d)(3))'' after ``other than this section''.

SEC. 4. LARGE POSITION REPORTING.

    Section 15C of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
5) is amended--
            (1) by redesignating subsection (f) as subsection (h); and
            (2) by inserting after subsection (e) the following new 
        subsection:
    ``(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 or 
        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 title. Reports 
        required under this subsection shall be filed with the Federal 
        Reserve Bank of New York, acting as agent for the Secretary, 
        and shall be provided by that Federal Reserve Bank to the 
        Commission on a timely basis.
            ``(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 3 of this title.
                    ``(B) Rules under this subsection shall specify--
                            ``(i) the minimum size of positions subject 
                        to reporting under this subsection, taking into 
                        account the purposes of this subsection and the 
                        potential for price distortions or other 
                        anomalies resulting from large positions;
                            ``(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) 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, United States Code, this subsection 
        shall be considered a statute described in subsection (b)(3)(B) 
        of such section 552.''.

SEC. 5. AUTHORITY OF THE COMMISSION TO REGULATE TRANSACTIONS IN 
              EXEMPTED SECURITIES.

    (a) Prevention of Fraudulent and Manipulative Acts and Practices.--
Section 15(c)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o(c)(2)) is amended--
            (1) by inserting ``(A)'' after ``(2)'';
            (2) by striking ``fictitious quotation, and no municipal 
        securities dealer'' and inserting the following:
``fictitious quotation.
    ``(B) No municipal securities dealer'';
            (3) by striking ``fictitious quotation. The Commission 
        shall'' and inserting the following:
``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''; and
            (4) by inserting at the end thereof the following:
    ``(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.''.
    (b) Fraudulent and Manipulative Devices and Contrivances.--Section 
15(c)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(c)(1)) 
is amended--
            (1) by inserting ``(A)'' after ``(c)(1)'';
            (2) by striking ``contrivance, and no municipal securities 
        dealer'' and inserting the following:
``contrivance.
    ``(B) No municipal securities dealer'';
            (3) by striking ``contrivance. The Commission shall'' and 
        inserting the following:
``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 
attempt to induce the purchase or sale of, any government security by 
means of any manipulative, deceptive, or other fraudulent device or 
contrivance.
    ``(D) The Commission shall''; and
            (4) by inserting at the end thereof the following:
    ``(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.''.

SEC. 6. BROKER/DEALER SUPERVISION RESPONSIBILITIES.

    Section 15C of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
5) is amended by inserting after subsection (f) (as added by section 4 
of this Act) the following new subsection:
    ``(g) Policies and Procedures to Prevent and Detect Violations.--
Every government securities broker and government securities dealer 
shall establish, maintain, and enforce written policies and procedures 
reasonably designed, taking into consideration the nature of such 
person's business, to prevent and detect in connection with the 
purchase or sale of government securities, insofar as practicable, 
fraud and manipulation in violation of this title and the rules and 
regulations thereunder and violations of such other provisions of this 
title and the rules and regulations thereunder as the appropriate 
regulatory agency for such government securities broker or government 
securities dealer shall designate by rule.''.

SEC. 7. SALES PRACTICE RULEMAKING AUTHORITY.

    (a) Rules for Financial Institutions.--Section 15C(b) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78o-5(b)) is amended--
            (1) by redesignating paragraphs (3), (4), (5), and (6) as 
        paragraphs (4), (5), (6), and (7), respectively; and
            (2) by inserting after paragraph (2) the following new 
        paragraph:
    ``(3) Sales Practice Rules.--(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 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.
    ``(B) Each appropriate regulatory agency shall consult with the 
other appropriate regulatory agencies for the purpose of ensuring the 
consistency of the rules prescribed by such agencies under this 
paragraph. The appropriate regulatory agencies shall consult with and 
consider the views of the Secretary and the Commission with respect to 
the impact of such rules on the operations of the market for government 
securities, consistency with analogous rules of self-regulatory 
organizations, and the enforcement and administration of such rules. 
The consultation required by this paragraph shall be conducted prior to 
the appropriate regulatory agency adopting a rule under this paragraph, 
unless the appropriate regulatory agency determines that an emergency 
exists requiring expeditious and summary action and publishes its 
reasons therefor. If the Secretary or the Commission comments in 
writing to the appropriate regulatory agency on a proposed rule that 
has been published for comment, the appropriate regulatory agency shall 
respond in writing to such written comment before adopting the rule.''.
    (b) Rules by Registered Securities Associations.--
            (1) Removal of limitations on authority.--(A) Section 15A 
        of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3) is 
        amended--
                    (i) by striking subsections (f)(1) and (f)(2); and
                    (ii) by redesignating subsection (f)(3) as 
                subsection (f).
            (B) Section 15A(g) of such Act is amended--
                    (i) by striking ``exempted securities'' in 
                paragraph (3)(D) and inserting ``municipal 
                securities'';
                    (ii) by striking paragraph (4); and
                    (iii) by redesignating paragraph (5) as paragraph 
                (4).
            (2) Oversight of registered securities associations.--
        Section 19 of the Securities Exchange Act of 1934 (15 U.S.C. 
        78s) is amended--
                    (A) in subsection (b), by adding at the end thereof 
                the following new paragraph:
    ``(5) The Commission shall consult with and consider the views of 
the Secretary of the Treasury prior to approving a proposed rule change 
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 comments in writing to the Commission on such proposed 
rule change that has been published for comment, the Commission shall 
respond in writing to such written comment before approving the 
proposed rule change.'';
                    (B) in subsection (c), by adding at the end thereof 
                the following new paragraph:
            ``(5) Before adopting a rule to amend a rule of a 
        registered securities association that primarily concerns 
        conduct related to transactions in government securities, the 
        Commission shall consult with and consider the views of the 
        Secretary, except where the Commission determines that an 
        emergency exists requiring expeditious or summary action and 
        publishes its reasons therefor. If the Secretary comments in 
        writing to the Commission on such proposed rule change that has 
        been published for comment, the Commission shall respond in 
        writing to such written comment before approving the proposed 
        rule change.''.
            (3) Conforming amendment.--
                    (A) Section 3(a)(12)(B)(ii) of such Act (15 U.S.C. 
                78b(a)(12)(B)(ii)) is amended by striking ``15, 15A 
                (other than subsection (g)(3)), and 17A'' and inserting 
                ``15 and 17A''.
                    (B) Section 15(b)(7) of such Act (15 U.S.C. 
                78o(b)(7)) is amended by inserting ``or government 
                securities broker or government securities dealer 
                registered (or required to register) under section 
                15C(a)(1)(A)'' after ``No registered broker or 
                dealer''.

SEC. 8. MARKET INFORMATION.

    Section 23(b)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 
78w) is amended--
            (1) by striking subparagraphs (C), (D), and (H);
            (2) by redesignating subparagraphs (E), (F), and (G) as 
        subparagraphs (C), (D), and (E), respectively;
            (3) by redesignating subparagraphs (I), (J), and (K) as 
        subparagraphs (F), (G), and (H), respectively;
            (4) by striking ``and'' at the end of such redesignated 
        subparagraph (G);
            (5) by striking the period at the end of such redesignated 
        subparagraph (H) and inserting ``; and''; and
            (6) by inserting after such redesignated subparagraph (H) 
        the following new subparagraph:
            ``(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).''.

SEC. 9. STUDY OF REGULATORY SYSTEM FOR GOVERNMENT SECURITIES.

    (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) evaluate the effectiveness of any rules promulgated or 
        amended after October 1, 1991, pursuant to section 15C of the 
        Securities Exchange Act of 1934 or any amendment made by this 
        title, and any national securities association rule changes 
        applicable principally to government securities transactions 
        approved after October 1, 1991, in carrying out the purposes of 
        such Act;
            (2) evaluate the effectiveness of surveillance and 
        enforcement with respect to government securities, and the 
        impact on such surveillance and enforcement of defects in any 
        available audit trails with respect to transactions 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) GAO Study.--The Comptroller General shall--
            (1) conduct a study of the effectiveness of regulation of 
        government securities brokers and government securities dealers 
        pursuant to section 15C of the Securities Exchange Act of 1934 
        and the effectiveness of the amendments made by this title; and
            (2) submit to the Congress, not later than March 31, 1997, 
        the Comptroller General's recommendations for change, if any, 
        or such other recommendations as the Comptroller General 
        considers appropriate.
    (c) 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; 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, the Secretary's 
        recommendations for change, if any, or such other 
        recommendations as the Secretary considers appropriate.

SEC. 10. TECHNICAL AMENDMENTS.

    (a) Amendments to Definitions.--Section 3(a) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended--
            (1) in paragraph (34)(G) (relating to the definition of 
        appropriate regulatory agency), by amending clauses (ii), 
        (iii), and (iv) to 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, 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;
                            ``(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) the deposits of 
                        which are insured by the Federal Deposit 
                        Insurance Corporation;'';
            (2) by amending paragraph (46) (relating to the definition 
        of financial institution) to read as follows:
            ``(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) the deposits 
                of which are insured by the Federal Deposit Insurance 
                Corporation.''; and
            (3) by redesignating paragraph (51) (as added by section 
        204 of the International Securities Enforcement Cooperation Act 
        of 1990) as paragraph (52).
    (b) Effective Date of Broker/Dealer Registration.--
            (1) Government securities brokers and dealers.--Section 
        15C(a)(2)(ii) of the Securities Exchange Act of 1934 (15 U.S.C. 
        78o-5(a)(2)(ii)) is amended by inserting before ``At the 
        conclusion'' the following: ``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 6 of this 
        title, or a securities association registered under section 15A 
        of this title, unless the Commission has exempted such 
        government securities broker or government securities dealer, 
        by rule or order, from such membership.''.
            (2) Other brokers and dealers.--Section 15(b)(1)(B) of such 
        Act (15 U.S.C. 78o(b)(1)(B)) is amended by inserting before 
        ``At the conclusion'' the following: ``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.''.
    (c) Information Sharing.--Section 15C(d)(2) of such Act is amended 
to read as follows:
    ``(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.''.

SEC. 11. OFFERINGS OF CERTAIN GOVERNMENT SECURITIES.

    Section 15(c) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o(c)) is amended by adding at the end the following new paragraph:
    ``(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. For purposes of the preceding sentence, 
the term `government security' shall not include any obligation subject 
to the public debt limit established in section 3101 of title 31, 
United States Code.''.

SEC. 12. RULE OF CONSTRUCTION.

    (a) In General.--No provision of, or amendment made by, this Act 
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) 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.
```