Union Calendar No. 145

103D CONGRESS

1ST SESSION H. R. 618

[Report No. 103–255]

A BILL

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

SEPTEMBER 23, 1993

Reported with an amendment, committed to the Commitordered to be printed tee of the Whole House on the State of the Union, and
IB

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Government Securities

3 Reform Act of 1993’’.

4 SEC. 2. EXTENSION OF GOVERNMENT SECURITIES RULE5 MAKING AUTHORITY.

6 Section 15C of the Securities Exchange Act of 1934

7 (15 U.S.C. 78o–5) is amended by striking subsection (g).

8 SEC. 3. TRANSACTION RECORDS.

9 (a) AMENDMENT.—Section 15C(d) of the Securities

10 Exchange Act of 1934 (15 U.S.C. 78o–5(d)) is amended by

11 adding at the end thereof the following new paragraph:

12 ‘‘(3) GOVERNMENT SECURITIES TRADE RECONSTRUC13 TION.—

14 ‘‘(A) FURNISHING RECORDS.—Every government

15 securities broker and government securities dealer

16 shall furnish to the Commission on request such

17 records of government securities transactions, includ18 ing records of the date and time of execution of

19 trades, as the Commission may require to reconstruct

20 trading in the course of a particular inquiry or inves21 tigation being conducted by the Commission. In re22 quiring information pursuant to this paragraph, the

23 Commission shall specify the information required,

24 the period for which it is required, the time and date

25 on which the information must be furnished, and

26 whether the information is to be furnished directly to
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1 the Commission, to the Federal Reserve Bank of New

2 York, or to an appropriate regulatory agency or self3 regulatory organization with responsibility for exam4 ining the government securities broker or government

5 securities dealer. The Commission may require that

6 such information be furnished in machine readable

7 form notwithstanding any limitation in subpara8 graph (B).

9 ‘‘(B) LIMITATION; CONSTRUCTION.—The Com10 mission shall not utilize its authority under this

11 paragraph to develop regular reporting requirements,

12 except that the Commission may require information

13 to be furnished under this paragraph as frequently as

14 necessary for particular inquiries or investigations.

15 This paragraph shall not be construed as requiring,

16 or as authorizing the Commission to require, any gov17 ernment securities broker or government securities

18 dealer to obtain or maintain any information for

19 purposes of this paragraph which is not otherwise

20 maintained by such broker or dealer in accordance

21 with any other provision of law or usual and cus22 tomary business practice. The Commission shall,

23 where feasible, avoid requiring any information to be

24 furnished under this paragraph that the Commission
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1 may obtain from the Federal Reserve Bank of New

2 York.

3 ‘‘(C) PROCEDURES FOR REQUIRING INFORMA4 TION.—At the time the Commission requests any in5 formation pursuant to subparagraph (A) with respect

6 to any government securities broker or government se7 curities dealer for which the Commission is not the

8 appropriate regulatory agency, the Commission shall

9 notify the appropriate regulatory agency for such gov10 ernment securities broker or government securities

11 dealer and, upon request, furnish to the appropriate

12 regulatory agency any information supplied to the

13 Commission.

14 ‘‘(D) CONSULTATION.—Within 90 days after the

15 date of the enactment of this paragraph, and annu16 ally thereafter, or upon the request of any other ap17 propriate regulatory agency, the Commission shall

18 consult with the other appropriate regulatory agencies

19 to determine the availability of records that may be

20 required to be furnished under this paragraph and,

21 for those records available directly from the other ap22 propriate regulatory agencies, to develop a procedure

23 for furnishing such records expeditiously upon the

24 Commission’s request.
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1 ‘‘(E) EXCLUSION FOR EXAMINATION REPORTS.—

2 Nothing in this paragraph shall be construed so as to

3 permit the Commission to require any government se4 curities broker or government securities dealer to ob5 tain, maintain, or furnish any examination report of

6 any appropriate regulatory agency other than the

7 Commission or any supervisory recommendations or

8 analysis contained in any such examination report.

9 ‘‘(F) AUTHORITY TO LIMIT DISCLOSURE OF IN10 FORMATION.—Notwithstanding any other provision of

11 law, the Commission and the appropriate regulatory

12 agencies shall not be compelled to disclose any infor13 mation required or obtained under this paragraph.

14 Nothing in this paragraph shall authorize the Com15 mission or any appropriate regulatory agency to

16 withhold information from Congress, or prevent the

17 Commission or any appropriate regulatory agency

18 from complying with a request for information from

19 any other Federal department or agency requesting

20 information for purposes within the scope of its juris21 diction, or from complying with an order of a court

22 of the United States in an action brought by the

23 United States, the Commission, or the appropriate

24 regulatory agency. For purposes of section 552 of title

25 5, United States Code, this subparagraph shall be
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1 considered a statute described in subsection (b)(3)(B)

2 of such section 552.’’.

3 (b) CONFORMING AMENDMENTS.—(1) Section

4 15C(a)(4) of the Securities Exchange Act of 1934 (15 U.S.C.

5 78o–5(a)(4)) is amended by inserting ‘‘, other than sub6 section (d)(3),’’ after ‘‘subsection (a), (b), or (d) of this sec7 tion’’.

8 (2) Section 15C(f)(2) of such Act is amended—

9 (A) in the first sentence, by inserting ‘‘, other

10 than subsection (d)(3)’’, after ‘‘threatened violation of

11 the provisions of this section’’; and

12 (B) in the second sentence, by inserting ‘‘(except

13 subsection (d)(3))’’ after ‘‘other than this section’’.

14 SEC. 4. LARGE POSITION REPORTING.

15 Section 15C of the Securities Exchange Act of 1934

16 (15 U.S.C. 78o–5) is amended—

17 (1) by redesignating subsection (f) as subsection

18 (h); and

19 (2) by inserting after subsection (e) the following

20 new subsection:

21 ‘‘(f) LARGE POSITION REPORTING.—

22 ‘‘(1) REPORTING REQUIREMENTS.—The Sec23 retary may adopt rules to require specified persons

24 holding, maintaining, or controlling large positions

25 in to-be-issued or recently issued Treasury securities
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1 to file such reports regarding such positions as the

2 Secretary determines to be necessary or appropriate

3 for the purpose of monitoring the impact in the

4 Treasury securities market of concentrations of posi5 tions in Treasury securities and for the purpose of

6 otherwise assisting the Commission in the enforcement

7 of this title. Reports required under this subsection

8 shall be filed with the Federal Reserve Bank of New

9 York, acting as agent for the Secretary, and shall be

10 provided by that Federal Reserve Bank to the Com11 mission on a timely basis.

12 ‘‘(2) RECORDKEEPING REQUIREMENTS.—Rules

13 under this subsection may require persons holding,

14 maintaining, or controlling large positions in Treas15 ury securities to make and keep for prescribed periods

16 such records as the Secretary determines are necessary

17 or appropriate to ensure that such persons can com18 ply with reporting requirements under this sub19 section.

20 ‘‘(3) AGGREGATION RULES.—Rules under this

21 subsection—

22 ‘‘(A) may prescribe the manner in which

23 positions and accounts shall be aggregated for

24 the purpose of this subsection, including aggrega-
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1 tion on the basis of common ownership or con2 trol; and

3 ‘‘(B) may define which persons (individ4 ually or as a group) hold, maintain, or control

5 large positions.

6 ‘‘(4) DEFINITIONAL AUTHORITY; DETERMINATION

7 OF REPORTING THRESHOLD.—

8 ‘‘(A) In prescribing rules under this sub9 section, the Secretary may, consistent with the

10 purpose of this subsection, define terms used in

11 this subsection that are not otherwise defined in

12 section 3 of this title.

13 ‘‘(B) Rules under this subsection shall speci14 fy—

15 ‘‘(i) the minimum size of positions sub16 ject to reporting under this subsection, tak17 ing into account the purposes of this sub18 section and the potential for price distor19 tions or other anomalies resulting from

20 large positions;

21 ‘‘(ii) the types of positions (which may

22 include financing arrangements) to be re23 ported;

24 ‘‘(iii) the securities to be covered; and
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1 ‘‘(iv) the form and manner in which

2 reports shall be transmitted, which may in3 clude transmission in machine readable

4 form.

5 ‘‘(5) LIMITATION ON DISCLOSURE OF INFORMA6 TION.—Notwithstanding any other provision of law,

7 the Secretary and the Commission shall not be com8 pelled to disclose any information required to be kept

9 or reported under this subsection. Nothing in this sub10 section shall authorize the Secretary or the Commis11 sion to withhold information from Congress, or pre12 vent the Secretary or the Commission from complying

13 with a request for information from any other Fed14 eral department or agency requesting information for

15 purposes within the scope of its jurisdiction, or from

16 complying with an order of a court of the United

17 States in an action brought by the United States, the

18 Secretary, or the Commission. For purposes of section

19 552 of title 5, United States Code, this subsection

20 shall be considered a statute described in subsection

21 (b)(3)(B) of such section 552.’’.
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1 SEC. 5. AUTHORITY OF THE COMMISSION TO REGULATE

2 TRANSACTIONS IN EXEMPTED SECURITIES.

3 (a) PREVENTION OF FRAUDULENT AND MANIPULATIVE

4 ACTS AND PRACTICES.—Section 15(c)(2) of the Securities

5 Exchange Act of 1934 (15 U.S.C. 78o(c)(2)) is amended—

6 (1) by inserting ‘‘(A)’’ after ‘‘(2)’’;

7 (2) by striking ‘‘fictitious quotation, and no mu8 nicipal securities dealer’’ and inserting the following:

9 ‘‘fictitious quotation.

10 ‘‘(B) No municipal securities dealer’’;

11 (3) by striking ‘‘fictitious quotation. The Com12 mission shall’’ and inserting the following:

13 ‘‘fictitious quotation.

14 ‘‘(C) No government securities broker or government

15 securities dealer shall make use of the mails or any means

16 or instrumentality of interstate commerce to effect any

17 transaction in, or induce or attempt to induce the purchase

18 or sale of, any government security in connection with

19 which such government securities broker or government se20 curities dealer engages in any fraudulent, deceptive, or ma21 nipulative act or practice, or makes any fictitious

22 quotation.

23 ‘‘(D) The Commission shall’’; and

24 (4) by inserting at the end thereof the following:

25 ‘‘(E) The Commission shall, prior to adopting any rule

26 or regulation under subparagraph (C), consult with and
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1 consider the views of the Secretary of the Treasury and each

2 appropriate regulatory agency. If the Secretary of the

3 Treasury or any appropriate regulatory agency comments

4 in writing on a proposed rule or regulation of the Commis5 sion under such subparagraph (C) that has been published

6 for comment, the Commission shall respond in writing to

7 such written comment before adopting the proposed rule.’’.

8 (b) FRAUDULENT AND MANIPULATIVE DEVICES AND

9 CONTRIVANCES.—Section 15(c)(1) of the Securities Ex10 change Act of 1934 (15 U.S.C. 78o(c)(1)) is amended—

11 (1) by inserting ‘‘(A)’’ after ‘‘(c)(1)’’;

12 (2) by striking ‘‘contrivance, and no municipal

13 securities dealer’’ and inserting the following:

14 ‘‘contrivance.

15 ‘‘(B) No municipal securities dealer’’;

16 (3) by striking ‘‘contrivance. The Commission

17 shall’’ and inserting the following:

18 ‘‘contrivance.

19 ‘‘(C) No government securities broker or government

20 securities dealer shall make use of the mails or any means

21 or instrumentality of interstate commerce to effect any

22 transaction in, or to induce or attempt to induce the pur23 chase or sale of, any government security by means of any

24 manipulative, deceptive, or other fraudulent device or con25 trivance.
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1 ‘‘(D) The Commission shall’’; and

2 (4) by inserting at the end thereof the following:

3 ‘‘(E) The Commission shall, prior to adopting any rule

4 or regulation under subparagraph (C), consult with and

5 consider the views of the Secretary of the Treasury and each

6 appropriate regulatory agency. If the Secretary of the

7 Treasury or any appropriate regulatory agency comments

8 in writing on a proposed rule or regulation of the Commis9 sion under such subparagraph (C) that has been published

10 for comment, the Commission shall respond in writing to

11 such written comment before adopting the proposed rule.’’.

12 SEC. 6. BROKER/DEALER SUPERVISION RESPONSIBILITIES.

13 Section 15C of the Securities Exchange Act of 1934

14 (15 U.S.C. 78o–5) is amended by inserting after subsection

15 (f) (as added by section 4 of this Act) the following new

16 subsection:

17 ‘‘(g) POLICIES AND PROCEDURES TO PREVENT AND

18 DETECT VIOLATIONS.—Every government securities broker

19 and government securities dealer shall establish, maintain,

20 and enforce written policies and procedures reasonably de21 signed, taking into consideration the nature of such person’s

22 business, to prevent and detect in connection with the pur23 chase or sale of government securities, insofar as prac24 ticable, fraud and manipulation in violation of this title

25 and the rules and regulations thereunder and violations of
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1 such other provisions of this title and the rules and regula2 tions thereunder as the appropriate regulatory agency for

3 such government securities broker or government securities

4 dealer shall designate by rule.’’.

5 SEC. 7. SALES PRACTICE RULEMAKING AUTHORITY.

6 (a) RULES FOR FINANCIAL INSTITUTIONS.—Section

7 15C(b) of the Securities Exchange Act of 1934 (15 U.S.C.

8 78o–5(b)) is amended—

9 (1) by redesignating paragraphs (3), (4), (5),

10 and (6) as paragraphs (4), (5), (6), and (7), respec11 tively; and

12 (2) by inserting after paragraph (2) the follow13 ing new paragraph:

14 ‘‘(3) SALES PRACTICE RULES.—(A) With respect to

15 any financial institution that has filed notice as a govern16 ment securities broker or government securities dealer or

17 that is required to file notice under subsection (a)(1)(B) of

18 this section, the appropriate regulatory agency for such gov19 ernment securities broker or government securities dealer

20 may issue such rules with respect to transactions in govern21 ment securities as may be necessary to prevent fraudulent

22 and manipulative acts and practices and to promote just

23 and equitable principles of trade.

24 ‘‘(B) Each appropriate regulatory agency shall consult

25 with the other appropriate regulatory agencies for the pur-
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1 pose of ensuring the consistency of the rules prescribed by

2 such agencies under this paragraph. The appropriate regu3 latory agencies shall consult with and consider the views

4 of the Secretary and the Commission with respect to the

5 impact of such rules on the operations of the market for

6 government securities, consistency with analogous rules of

7 self-regulatory organizations, and the enforcement and ad8 ministration of such rules. The consultation required by

9 this paragraph shall be conducted prior to the appropriate

10 regulatory agency adopting a rule under this paragraph,

11 unless the appropriate regulatory agency determines that

12 an emergency exists requiring expeditious and summary ac13 tion and publishes its reasons therefor. If the Secretary or

14 the Commission comments in writing to the appropriate

15 regulatory agency on a proposed rule that has been pub16 lished for comment, the appropriate regulatory agency shall

17 respond in writing to such written comment before adopting

18 the rule.’’.

19 (b) RULES BY REGISTERED SECURITIES ASSOCIA20 TIONS.—

21 (1) REMOVAL OF LIMITATIONS ON AUTHORITY.—

22 (A) Section 15A of the Securities Exchange Act of

23 1934 (15 U.S.C. 78o–3) is amended—

24 (i) by striking subsections (f)(1) and (f)(2);

25 and
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1 (ii) by redesignating subsection (f)(3) as

2 subsection (f).

3 (B) Section 15A(g) of such Act is amended—

4 (i) by striking ‘‘exempted securities’’ in

5 paragraph (3)(D) and inserting ‘‘municipal se6 curities’’;

7 (ii) by striking paragraph (4); and

8 (iii) by redesignating paragraph (5) as

9 paragraph (4).

10 (2) OVERSIGHT OF REGISTERED SECURITIES AS11 SOCIATIONS.—Section 19 of the Securities Exchange

12 Act of 1934 (15 U.S.C. 78s) is amended—

13 (A) in subsection (b), by adding at the end

14 thereof the following new paragraph:

15 ‘‘(5) The Commission shall consult with and consider

16 the views of the Secretary of the Treasury prior to approv17 ing a proposed rule change filed by a registered securities

18 association that primarily concerns conduct related to

19 transactions in government securities, except where the

20 Commission determines that an emergency exists requiring

21 expeditious or summary action and publishes its reasons

22 therefor. If the Secretary comments in writing to the Com23 mission on such proposed rule change that has been pub24 lished for comment, the Commission shall respond in writ-
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1 ing to such written comment before approving the proposed

2 rule change.’’;

3 (B) in subsection (c), by adding at the end

4 thereof the following new paragraph:

5 ‘‘(5) Before adopting a rule to amend a rule of

6 a registered securities association that primarily con7 cerns conduct related to transactions in government

8 securities, the Commission shall consult with and con9 sider the views of the Secretary, except where the

10 Commission determines that an emergency exists re11 quiring expeditious or summary action and publishes

12 its reasons therefor. If the Secretary comments in

13 writing to the Commission on such proposed rule

14 change that has been published for comment, the Com15 mission shall respond in writing to such written com16 ment before approving the proposed rule change.’’.

17 (3) CONFORMING AMENDMENT.—

18 (A) Section 3(a)(12)(B)(ii) of such Act (15

19 U.S.C. 78b(a)(12)(B)(ii)) is amended by striking

20 ‘‘15, 15A (other than subsection (g)(3)), and

21 17A’’ and inserting ‘‘15 and 17A’’.

22 (B) Section 15(b)(7) of such Act (15 U.S.C.

23 78o(b)(7)) is amended by inserting ‘‘or govern24 ment securities broker or government securities

25 dealer registered (or required to register) under
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1 section 15C(a)(1)(A)’’ after ‘‘No registered broker

2 or dealer’’.

3 SEC. 8. MARKET INFORMATION.

4 Section 23(b)(4) of the Securities Exchange Act of

5 1934 (15 U.S.C. 78w) is amended—

6 (1) by striking subparagraphs (C), (D), and (H);

7 (2) by redesignating subparagraphs (E), (F),

8 and (G) as subparagraphs (C), (D), and (E), respec9 tively;

10 (3) by redesignating subparagraphs (I), (J), and

11 (K) as subparagraphs (F), (G), and (H), respectively;

12 (4) by striking ‘‘and’’ at the end of such redesig13 nated subparagraph (G);

14 (5) by striking the period at the end of such re15 designated subparagraph (H) and inserting ‘‘; and’’;

16 and

17 (6) by inserting after such redesignated subpara18 graph (H) the following new subparagraph:

19 ‘‘(I) the steps that have been taken and the

20 progress that has been made in promoting the timely

21 public dissemination and availability for analytical

22 purposes (on a fair, reasonable, and nondiscrim23 inatory basis) of information concerning government

24 securities transactions and quotations, and its rec25 ommendations, if any, for legislation to assure timely
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1 dissemination of (i) information on transactions in

2 regularly traded government securities sufficient to

3 permit the determination of the prevailing market

4 price for such securities, and (ii) reports of the high5 est published bids and lowest published offers for gov6 ernment securities (including the size at which per7 sons are willing to trade with respect to such bids and

8 offers).’’.

9 SEC. 9. STUDY OF REGULATORY SYSTEM FOR GOVERNMENT

10 SECURITIES.

11 (a) JOINT STUDY.—The Secretary of the Treasury, the

12 Securities and Exchange Commission, and the Board of

13 Governors of the Federal Reserve System shall—

14 (1) evaluate the effectiveness of any rules pro15 mulgated or amended after October 1, 1991, pursuant

16 to section 15C of the Securities Exchange Act of 1934

17 or any amendment made by this title, and any na18 tional securities association rule changes applicable

19 principally to government securities transactions ap20 proved after October 1, 1991, in carrying out the pur21 poses of such Act;

22 (2) evaluate the effectiveness of surveillance and

23 enforcement with respect to government securities,

24 and the impact on such surveillance and enforcement
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1 of defects in any available audit trails with respect

2 to transactions in such securities; and

3 (3) submit to the Congress, not later than March

4 31, 1998, any recommendations they may consider

5 appropriate concerning—

6 (A) the regulation of government securities

7 brokers and government securities dealers,

8 (B) the dissemination of information con9 cerning quotations for and transactions in gov10 ernment securities,

11 (C) the prevention of sales practice abuses

12 in connection with transactions in government

13 securities, and

14 (D) such other matters as they consider ap15 propriate.

16 (b) GAO STUDY.—The Comptroller General shall—

17 (1) conduct a study of the effectiveness of regula18 tion of government securities brokers and government

19 securities dealers pursuant to section 15C of the Secu20 rities Exchange Act of 1934 and the effectiveness of

21 the amendments made by this title; and

22 (2) submit to the Congress, not later than March

23 31, 1997, the Comptroller General’s recommendations

24 for change, if any, or such other recommendations as

25 the Comptroller General considers appropriate.
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1 (c) TREASURY STUDY.—The Secretary of the Treasury,

2 in consultation with the Securities and Exchange Commis3 sion, shall—

4 (1) conduct a study of—

5 (A) the identity and nature of the business

6 of government securities brokers and government

7 securities dealers that are registered with the Se8 curities and Exchange Commission under section

9 15C of the Securities Exchange Act of 1934; and

10 (B) the continuing need for, and regulatory

11 and financial consequences of, a separate regu12 latory system for such government securities bro13 kers and government securities dealers; and

14 (2) submit to the Congress, not later than 18

15 months after the date of enactment of this Act, the

16 Secretary’s recommendations for change, if any, or

17 such other recommendations as the Secretary consid18 ers appropriate.

19 SEC. 10. TECHNICAL AMENDMENTS.

20 (a) AMENDMENTS TO DEFINITIONS.—Section 3(a) of

21 the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is

22 amended—

23 (1) in paragraph (34)(G) (relating to the defini24 tion of appropriate regulatory agency), by amending

25 clauses (ii), (iii), and (iv) to read as follows:
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1 ‘‘(ii) the Board of Governors of the

2 Federal Reserve System, in the case of a

3 State member bank of the Federal Reserve

4 System, a foreign bank, an uninsured State

5 branch or State agency of a foreign bank, a

6 commercial lending company owned or con7 trolled by a foreign bank (as such terms are

8 used in the International Banking Act of

9 1978), or a corporation organized or having

10 an agreement with the Board of Governors

11 of the Federal Reserve System pursuant to

12 section 25 or section 25A of the Federal Re13 serve Act;

14 ‘‘(iii) the Federal Deposit Insurance

15 Corporation, in the case of a bank insured

16 by the Federal Deposit Insurance Corpora17 tion (other than a member of the Federal

18 Reserve System or a Federal savings bank)

19 or an insured State branch of a foreign

20 bank (as such terms are used in the Inter21 national Banking Act of 1978);

22 ‘‘(iv) the Director of the Office of

23 Thrift Supervision, in the case of a savings

24 association (as defined in section 3(b) of the

25 Federal Deposit Insurance Act) the deposits
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1 of which are insured by the Federal Deposit

2 Insurance Corporation;’’;

3 (2) by amending paragraph (46) (relating to the

4 definition of financial institution) to read as follows:

5 ‘‘(46) The term ‘financial institution’ means—

6 ‘‘(A) a bank (as defined in paragraph (6)

7 of this subsection);

8 ‘‘(B) a foreign bank (as such term is used

9 in the International Banking Act of 1978); and

10 ‘‘(C) a savings association (as defined in

11 section 3(b) of the Federal Deposit Insurance

12 Act) the deposits of which are insured by the

13 Federal Deposit Insurance Corporation.’’; and

14 (3) by redesignating paragraph (51) (as added

15 by section 204 of the International Securities Enforce16 ment Cooperation Act of 1990) as paragraph (52).

17 (b) EFFECTIVE DATE OF BROKER/DEALER REGISTRA18 TION.—

19 (1) GOVERNMENT SECURITIES BROKERS AND

20 DEALERS.—Section 15C(a)(2)(ii) of the Securities

21 Exchange Act of 1934 (15 U.S.C. 78o–5(a)(2)(ii)) is

22 amended by inserting before ‘‘At the conclusion’’ the

23 following: ‘‘The order granting registration shall not

24 be effective until such government securities broker or

25 government securities dealer has become a member of
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1 a national securities exchange registered under section

2 6 of this title, or a securities association registered

3 under section 15A of this title, unless the Commission

4 has exempted such government securities broker or

5 government securities dealer, by rule or order, from

6 such membership.’’.

7 (2) OTHER BROKERS AND DEALERS.—Section

8 15(b)(1)(B) of such Act (15 U.S.C. 78o(b)(1)(B)) is

9 amended by inserting before ‘‘At the conclusion’’ the

10 following: ‘‘The order granting registration shall not

11 be effective until such broker or dealer has become a

12 member of a registered securities association, or until

13 such broker or dealer has become a member of a na14 tional securities exchange if such broker or dealer ef15 fects transactions solely on that exchange, unless the

16 Commission has exempted such broker or dealer, by

17 rule or order, from such membership.’’.

18 (c) INFORMATION SHARING.—Section 15C(d)(2) of

19 such Act is amended to read as follows:

20 ‘‘(2) Information received by an appropriate regu21 latory agency, the Secretary, or the Commission from or

22 with respect to any government securities broker, govern23 ment securities dealer, any person associated with a govern24 ment securities broker or government securities dealer, or

25 any other person subject to this section or rules promulgated
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1 thereunder, may be made available by the Secretary or the

2 recipient agency to the Commission, the Secretary, the De3 partment of Justice, the Commodity Futures Trading Com4 mission, any appropriate regulatory agency, any self-regu5 latory organization, or any Federal Reserve Bank.’’.

6 SEC. 11. OFFERINGS OF CERTAIN GOVERNMENT SECURI7 TIES.

8 Section 15(c) of the Securities Exchange Act of 1934

9 (15 U.S.C. 78o(c)) is amended by adding at the end the

10 following new paragraph:

11 ‘‘(7) In connection with any bid for or purchase of a

12 government security related to an offering of government

13 securities by or on behalf of an issuer, no government securi14 ties broker, government securities dealer, or bidder for or

15 purchaser of securities in such offering shall knowingly or

16 willfully make any false or misleading written statement

17 or omit any fact necessary to make any written statement

18 made not misleading. For purposes of the preceding sen19 tence, the term ‘government security’ shall not include any

20 obligation subject to the public debt limit established in sec21 tion 3101 of title 31, United States Code.’’.

22 SEC. 12. RULE OF CONSTRUCTION.

23 (a) IN GENERAL.—No provision of, or amendment

24 made by, this Act may be construed—
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1 (1) to govern the initial issuance of any public

2 debt obligation, or

3 (2) to grant any authority to (or extend any au4 thority of) the Securities and Exchange Commission,

5 any appropriate regulatory agency, or a self-regu6 latory organization—

7 (A) to prescribe any procedure, term, or

8 condition of such initial issuance,

9 (B) to promulgate any rule or regulation

10 governing such initial issuance, or

11 (C) to otherwise regulate in any manner

12 such initial issuance.

13 (b) PUBLIC DEBT OBLIGATION.—For purposes of this

14 section, the term ‘‘public debt obligation’’ means an obliga15 tion subject to the public debt limit established in section

16 3101 of title 31, United States Code.