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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3817 Reported in House (RH)]

                                                 Union Calendar No. 408
111th CONGRESS
  2d Session
                                H. R. 3817

                      [Report No. 111-687, Part I]

   To provide the Securities and Exchange Commission with additional 
  authorities to protect investors from violations of the securities 
                     laws, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            October 15, 2009

Mr. Kanjorski introduced the following bill; which was referred to the 
                    Committee on Financial Services

                           December 16, 2010

   Reported with an amendment, and referred to the Committee on the 
  Judiciary for a period ending not later than December 17, 2010, for 
  consideration of such provisions of the bill and amendment as fall 
 within the jurisdiction of that committee pursuant to clause 1(k) of 
                                 rule X
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                           December 17, 2010

  Committee on the Judiciary discharged; committed to the Committee of 
  the Whole House on the State of the Union and ordered to be printed
[For text of introduced bill, see copy of bill as introduced on October 
                               15, 2009]

_______________________________________________________________________

                                 A BILL

 
   To provide the Securities and Exchange Commission with additional 
  authorities to protect investors from violations of the 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 ``Investor Protection Act of 2009''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.

                          TITLE I--DISCLOSURE

Sec. 101. Investor Advisory Committee established.
Sec. 102. Clarification of the commission's authority to engage in 
                            consumer testing.
Sec. 103. Establishment of a fiduciary duty for brokers, dealers, and 
                            investment advisers, and harmonization of 
                            regulation.
Sec. 104. Commission study on disclosure to retail customers before 
                            purchase of products or services.
Sec. 105. Beneficial ownership and short-swing profit reporting.
Sec. 106. Revision to recordkeeping rules.
Sec. 107. Study on enhancing investment advisor examinations.
Sec. 108. GAO study of financial planning.

                   TITLE II--ENFORCEMENT AND REMEDIES

Sec. 201. Authority to restrict mandatory pre-dispute arbitration.
Sec. 202. Comptroller General study to review securities arbitration 
                            system.
Sec. 203. Whistleblower protection.
Sec. 204. Conforming amendments for whistleblower protection.
Sec. 205. Implementation and transition provisions for whistleblower 
                            protections.
Sec. 206. Collateral bars.
Sec. 207. Aiding and abetting authority under the Securities Act and 
                            the Investment Company Act.
Sec. 208. Authority to impose penalties for aiding and abetting 
                            violations of the Investment Advisers Act.
Sec. 209. Deadline for completing examinations, inspections and 
                            enforcement actions.
Sec. 210. Nationwide service of subpoenas.
Sec. 211. Authority to impose civil penalties in cease and desist 
                            proceedings.
Sec. 212. Formerly associated persons.
Sec. 213. Sharing privileged information with other authorities.
Sec. 214. Expanded access to grand jury material.
Sec. 215. Aiding and abetting standard of knowledge satisfied by 
                            recklessness.
Sec. 216. Extraterritorial jurisdiction of the antifraud provisions of 
                            the Federal securities laws.
Sec. 217. Fidelity bonding.
Sec. 218. Enhanced SEC authority to conduct surveillance and risk 
                            assessment.
Sec. 219. Investment company examinations.
Sec. 220. Control person liability under the Securities Exchange Act.
Sec. 221. Enhanced application of anti-fraud provisions.
Sec. 222. SEC Authority to Issue Rules on Proxy Access.

             TITLE III--COMMISSION FUNDING AND ORGANIZATION

Sec. 301. Authorization of appropriations.
Sec. 302. Investment adviser regulation funding.
Sec. 303. Amendments to section 31 of the Securities Exchange Act of 
                            1934.
Sec. 304. Commission organizational study and reform.
Sec. 305. Capital Markets Safety Board.
Sec. 306. Report on implementation of ``post-Madoff reforms''.
Sec. 307. Joint Advisory Committee.

                TITLE IV--ADDITIONAL COMMISSION REFORMS

Sec. 401. Regulation of securities lending.
Sec. 402. Lost and stolen securities.
Sec. 403. Fingerprinting.
Sec. 404. Equal treatment of self-regulatory organization rules.
Sec. 405. Clarification that section 205 of the Investment Advisers Act 
                            of 1940 does not apply to State-registered 
                            advisers.
Sec. 406. Conforming amendments for the repeal of the Public Utility 
                            Holding Company Act of 1935.
Sec. 407. Promoting transparency in financial reporting.
Sec. 408. Unlawful margin lending.
Sec. 409. Protecting confidentiality of materials submitted to the 
                            Commission.
Sec. 410. Technical corrections.
Sec. 411. Municipal securities.
Sec. 412. Interested person definition.
Sec. 413. Rulemaking authority to protect redeeming investors.
Sec. 414. Study on SEC revolving door.
Sec. 415. Study on internal control evaluation and reporting cost 
                            burdens on smaller issuers.
Sec. 416. Analysis of rule regarding smaller reporting companies.
Sec. 417. Financial Reporting Forum.
Sec. 418. Investment advisers subject to State authorities.
Sec. 419. Custodial requirements.
Sec. 420. Ombudsman.

         TITLE V--SECURITIES INVESTOR PROTECTION ACT AMENDMENTS

Sec. 501. Increasing the minimum assessment paid by SIPC members.
Sec. 502. Increasing the borrowing limit on treasury loans.
Sec. 503. Increasing the cash limit of protection.
Sec. 504. SIPC as trustee in SIPA liquidation proceedings.
Sec. 505. Insiders ineligible for SIPC advances.
Sec. 506. Eligibility for direct payment procedure.
Sec. 507. Increasing the fine for prohibited acts under SIPA.
Sec. 508. Penalty for misrepresentation of SIPC membership or 
                            protection.
Sec. 509. Futures held in a portfolio margin securities account 
                            protection.
Sec. 510. Study and report on the feasibility of risk-based assessments 
                            SIPC members.
Sec. 511. Budgetary treatment of Commission loans to SIPC.

                TITLE VI--SARBANES-OXLEY ACT AMENDMENTS

Sec. 601. Public Company Accounting Oversight Board oversight of 
                            auditors of brokers and dealers.
Sec. 602. Foreign regulatory information sharing.
Sec. 603. Expansion of audit information to be produced and exchanged 
                            with foreign counterparts.
Sec. 604. Conforming amendment related to registration.
Sec. 605. Fair fund amendments.
Sec. 606. Exemption for nonaccelerated filers.
Sec. 607. Whistleblower protection against retaliation by a subsidiary 
                            of an issuer.
Sec. 608. Congressional access to information.
Sec. 609. Creation of ombudsman for the PCAOB.
Sec. 610. Auditing Oversight Board.

                TITLE VII--SENIOR INVESTMENT PROTECTION

Sec. 701. Findings.
Sec. 702. Definitions.
Sec. 703. Grants to States for enhanced protection of seniors from 
                            being mislead by false designations.
Sec. 704. Applications.
Sec. 705. Length of participation.
Sec. 706. Authorization of appropriations.

        TITLE VIII--REGISTRATION OF MUNICIPAL FINANCIAL ADVISORS

Sec. 801. Municipal financial adviser registration requirement.
Sec. 802. Conforming amendments.
Sec. 803. Effective dates.

                          TITLE I--DISCLOSURE

SEC. 101. INVESTOR ADVISORY COMMITTEE ESTABLISHED.

    The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 
amended by adding after section 4C the following new section:

``SEC. 4D. INVESTOR ADVISORY COMMITTEE.

    ``(a) Establishment and Purpose.--There is established an Investor 
Advisory Committee (in this section referred to as the `Committee') to 
advise and consult with the Commission on--
            ``(1) regulatory priorities and issues regarding new 
        products, trading strategies, fee structures and the 
        effectiveness of disclosures;
            ``(2) initiatives to protect investor interest; and
            ``(3) initiatives to promote investor confidence in the 
        integrity of the marketplace.
    ``(b) Membership.--
            ``(1) Appointment.--The Chairman of the Commission shall 
        appoint the members of the Committee, which members shall--
                    ``(A) represent the interests of individual 
                investors;
                    ``(B) represent the interests of institutional 
                investors; and
                    ``(C) use a wide range of investment approaches.
            ``(2) Members not commission employees.--Members shall not 
        be considered employees or agents of the Commission solely 
        because of membership on the Committee.
    ``(c) Meetings.--The Committee shall meet from time to time at the 
call of the Commission, but, at a minimum, shall meet at least twice 
each year.
    ``(d) Compensation and Travel Expenses.--Members of the Committee 
who are not full-time employees of the United States shall--
            ``(1) be entitled to receive compensation at a rate fixed 
        by the Commission while attending meetings of the Committee, 
        including travel time; and
            ``(2) be allowed travel expenses, including transportation 
        and subsistence, while away from their homes or regular places 
        of business.
    ``(e) Committee Findings.--Nothing in this section requires the 
Commission to accept, agree, or act upon the findings or 
recommendations of the Committee.
    ``(f) Authorization of Appropriations.--There is authorized to be 
appropriated to the Commission such sums as are necessary for the 
activities of the Committee.''.

SEC. 102. CLARIFICATION OF THE COMMISSION'S AUTHORITY TO ENGAGE IN 
              CONSUMER TESTING.

    (a) Amendment to Securities Act of 1933.--Section 19 of the 
Securities Act of 1933 (15 U.S.C. 77s) is amended by adding at the end 
the following new subsection:
    ``(e) For the purposes of evaluating its rules and programs and for 
considering, proposing, adopting, or engaging in rules or programs, the 
Commission is authorized to gather information, communicate with 
investors or other members of the public, and engage in such temporary 
or experimental programs as the Commission in its discretion determines 
is in the public interest or for the protection of investors. The 
Commission may delegate to its staff some or all of the authority 
conferred by this subsection.''.
    (b) Amendment to Securities Exchange Act of 1934.--Section 23 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78w) is amended by 
redesignating subsections (b), (c), and (d) as subsections (c), (d), 
and (e), respectively, and inserting after subsection (a) the 
following:
    ``(b) For the purposes of evaluating its rules and programs and for 
considering proposing, adopting, or engaging in rules or programs, the 
Commission is authorized to gather information, communicate with 
investors or other members of the public, and engage in such temporary 
or experimental programs as the Commission in its discretion determines 
is in the public interest or for the protection of investors. The 
Commission may delegate to its staff some or all of the authority 
conferred by this subsection.''.
    (c) Amendment to Investment Company Act of 1940.--Section 38 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-38) is amended by adding 
at the end the following new subsection:
    ``(d) Gathering Information.--For the purposes of evaluating its 
rules and programs and for considering proposing, adopting, or engaging 
in rules or programs, the Commission is authorized to gather 
information, communicate with investors or other members of the public, 
and engage in such temporary or experimental programs as the Commission 
in its discretion determines is in the public interest or for the 
protection of investors. The Commission may delegate to its staff some 
or all of the authority conferred by this subsection.''.
    (d) Amendment to the Investment Advisers Act of 1940.--Section 211 
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-11) is amended by 
adding at the end the following new subsections:
    ``(e) For the purposes of evaluating its rules and programs and for 
considering proposing, adopting, or engaging in rules or programs, the 
Commission is authorized to gather information, communicate with 
investors or other members of the public, and engage in such temporary 
or experimental programs as the Commission in its discretion determines 
is in the public interest or for the protection of investors. The 
Commission may delegate to its staff some or all of the authority 
conferred by this subsection.''.

SEC. 103. ESTABLISHMENT OF A FIDUCIARY DUTY FOR BROKERS, DEALERS, AND 
              INVESTMENT ADVISERS, AND HARMONIZATION OF REGULATION.

    (a) In General.--
            (1) Securities exchange act of 1934.--Section 15 of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78o) is amended--
                    (A) by redesignating the second subsection (i) as 
                subsection (j); and
                    (B) by adding at the end the following new 
                subsections:
    ``(k) Standard of Conduct.--
            ``(1) In general.--Notwithstanding any other provision of 
        this Act or the Investment Advisers Act of 1940, the Commission 
        shall promulgate rules to provide that, with respect to a 
        broker or dealer, when providing personalized investment advice 
        about securities to a retail customer (and such other customers 
        as the Commission may by rule provide), the standard of conduct 
        for such broker or dealer with respect to such customer shall 
        be the same as the standard of conduct applicable to an 
        investment adviser under the Investment Advisers Act of 1940. 
        The receipt of compensation based on commission or other 
        standard compensation for the sale of securities shall not, in 
        and of itself, be considered a violation of such standard 
        applied to a broker or dealer.
            ``(2) Disclosure of range of products offered.--Where a 
        broker or dealer sells only proprietary or other limited range 
        of products, as determined by the Commission, the Commission 
        shall by rule require that such broker or dealer provide notice 
        to each retail customer and obtain the consent or 
        acknowledgment of the customer. The sale of only proprietary or 
        other limited range of products by a broker or dealer shall 
        not, in and of itself, be considered a violation of the 
        standard set forth in paragraph (1).
            ``(3) Retail customer defined.--For purposes of this 
        subsection, the term `retail customer' means a natural person, 
        or the legal representative of such natural person, who--
                    ``(A) receives personalized investment advice about 
                securities from a broker or dealer; and
                    ``(B) uses such advice primarily for personal, 
                family, or household purposes.
    ``(l) Other Matters.--The Commission shall--
            ``(1) facilitate the provision of simple and clear 
        disclosures to investors regarding the terms of their 
        relationships with brokers, dealers, and investment advisers, 
        including any material conflicts of interest; and
            ``(2) examine and, where appropriate, promulgate rules 
        prohibiting or restricting certain sales practices, conflicts 
        of interest, and compensation schemes for brokers, dealers, and 
        investment advisers that the Commission deems contrary to the 
        public interest and the protection of investors.''.
            (2) Investment advisers act of 1940.--Section 211 of the 
        Investment Advisers Act of 1940, as amended by section 102(d), 
        is further amended by adding at the end the following new 
        subsections:
    ``(f) Standard of Conduct.--
            ``(1) In general.--The Commission shall promulgate rules to 
        provide that the standard of conduct for all brokers, dealers, 
        and investment advisers, when providing personalized investment 
        advice about securities to retail customers (and such other 
        customers as the Commission may by rule provide), shall be to 
        act in the best interest of the customer without regard to the 
        financial or other interest of the broker, dealer, or 
        investment adviser providing the advice. In accordance with 
        such rules, any material conflicts of interest shall be 
        disclosed and may be consented to by the customer. Such rules 
        shall provide that such standard of conduct shall be no less 
        stringent than the standard applicable to investment advisers 
        under section 206(1) and (2) of this Act when providing 
        personalized investment advice about securities, except the 
        Commission shall not ascribe a meaning to the term `customer' 
        that would include an investor in a private fund managed by an 
        investment adviser, where such private fund has entered into an 
        advisory contract with such adviser. The receipt of 
        compensation based on commission or fees shall not, in and of 
        itself, be considered a violation of such standard applied to a 
        broker, dealer, or investment adviser.
            ``(2) Retail customer defined.--For purposes of this 
        subsection, the term `retail customer' means a natural person, 
        or the legal representative of such natural person, who--
                    ``(A) receives personalized investment advice about 
                securities from a broker, dealer, or investment 
                adviser; and
                    ``(B) uses such advice primarily for personal, 
                family, or household purposes.
    ``(g) Other Matters.--The Commission shall--
            ``(1) facilitate the provision of simple and clear 
        disclosures to investors regarding the terms of their 
        relationships with brokers, dealers, and investment advisers, 
        including any material conflicts of interest; and
            ``(2) examine and, where appropriate, promulgate rules 
        prohibiting or restricting certain sales practices, conflicts 
        of interest, and compensation schemes for brokers, dealers, and 
        investment advisers that the Commission deems contrary to the 
        public interest and the protection of investors.''.
    (b) Harmonization of Enforcement.--
            (1) Securities exchange act of 1934.--Section 15 of the 
        Securities Exchange Act of 1934, as amended by subsection 
        (a)(1), is further amended by adding at the end the following 
        new subsection:
    ``(m) Harmonization of Enforcement.--The enforcement authority of 
the Commission with respect to violations of the standard of conduct 
applicable to a broker or dealer providing personalized investment 
advice about securities to a retail customer shall include--
            ``(1) the enforcement authority of the Commission with 
        respect to such violations provided under this Act, and
            ``(2) the enforcement authority of the Commission with 
        respect to violations of the standard of conduct applicable to 
        an investment advisor under the Investment Advisers Act of 
        1940, including the authority to impose sanctions for such 
        violations, and
the Commission shall seek to prosecute and sanction violators of the 
standard of conduct applicable to a broker or dealer providing 
personalized investment advice about securities to a retail customer 
under this Act to same extent as the Commission prosecutes and 
sanctions violators of the standard of conduct applicable to an 
investment advisor under the Investment Advisers Act of 1940.''.
            (2) Investment advisers act of 1940.--Section 211 of the 
        Investment Advisers Act of 1940, as amended by section (a)(2), 
        is further amended by adding at the end the following new 
        subsection:
    ``(h) Harmonization of Enforcement.--The enforcement authority of 
the Commission with respect to violations of the standard of conduct 
applicable to an investment adviser shall include--
            ``(1) the enforcement authority of the Commission with 
        respect to such violations provided under this Act, and
            ``(2) the enforcement authority of the Commission with 
        respect to violations of the standard of conduct applicable to 
        a broker or dealer providing personalized investment advice 
        about securities to a retail customer under the Securities 
        Exchange Act of 1934, including the authority to impose 
        sanctions for such violations, and
the Commission shall seek to prosecute and sanction violators of the 
standard of conduct applicable to an investment advisor under this Act 
to same extent as the Commission prosecutes and sanctions violators of 
the standard of conduct applicable to a broker or dealer providing 
personalized investment advice about securities to a retail customer 
under the Securities Exchange Act of 1934.''.

SEC. 104. COMMISSION STUDY ON DISCLOSURE TO RETAIL CUSTOMERS BEFORE 
              PURCHASE OF PRODUCTS OR SERVICES.

    (a) Study Required.--Prior to proposing any rules or regulations 
pursuant to subsection (b)(1) regarding the manner in which investment 
products or services are sold or provided in the United States to 
retail customers or the information that must be provided to retail 
customers prior to the purchase of such products or services, and 
within 180 days after the date of the enactment of this Act, the 
Securities and Exchange Commission shall publish a study that 
examines--
            (1) the nature of a ``retail customer'', taking into 
        consideration the definition in section 15(k) of the Securities 
        Exchange Act of 1934 (15 U.S.C. 78o), as amended by section 103 
        of this Act;
            (2) the range of products and services sold or provided to 
        retail customers, and the sellers or providers of such products 
        and services, that are within the Commission's jurisdiction;
            (3) how such products and services are sold or provided to 
        retail customers, the fees charged for such products and 
        services, and the conflicts of interest that may arise during 
        the sales process or provision of services;
            (4) information that retail customers should receive prior 
        to purchasing each product or service, and the appropriate 
        person or entity to provide such information; and
            (5) ways to ensure that, where possible, reasonably similar 
        products and services are subject to similar regulatory 
        treatment, including with respect to information that must be 
        provided to retail customers prior to the purchase of such 
        products or services and how such information is provided.
    (b) Rulemaking.--
            (1) Notwithstanding any other provision of the Securities 
        Act of 1933 (15 U.S.C. 77a et seq.) or the Investment Company 
        Act of 1940 (15 U.S.C. 80a-1 et seq.), following completion of 
        the study required by subsection (a), the Commission is 
        authorized to promulgate rules to require that the appropriate 
        persons or entities provide designated documents or information 
        to retail customers prior to the purchase of identified 
        investment products or services. Any such rules shall--
                    (A) take into account the findings of the study 
                conducted pursuant to subsection (a);
                    (B) take into consideration, to the extent 
                possible, the need for such documents and information 
                to be consistent and comparable across investment 
                products or services sold or provided to retail 
                customers; and
                    (C) reduce, to the extent possible, disruptions to 
                the purchase process for investment products and 
                services sold or provided to retail customers, by means 
                such as permitting required disclosures to be made via 
                the Internet.
            (2) Notwithstanding paragraph (1), the Commission is 
        authorized to promulgate rules in connection with--
                    (A) the implementation of section 103; and
                    (B) disclosure to retail customers other than in 
                connection with the purchase of investment products or 
                services.

SEC. 105. BENEFICIAL OWNERSHIP AND SHORT-SWING PROFIT REPORTING.

    (a) Beneficial Ownership Reporting.--Section 13 of the Securities 
Exchange Act of 1934 (15 U.S.C. 78m) is amended--
            (1) in subsection (d)(1)--
                    (A) by inserting after ``within ten days after such 
                acquisition'' the following: ``or within such shorter 
                time as the Commission may establish by rule''; and
                    (B) by striking ``send to the issuer of the 
                security at its principal executive office, by 
                registered or certified mail, send to each exchange 
                where the security is traded, and'';
            (2) in subsection (d)(2)--
                    (A) by striking ``in the statements to the issuer 
                and the exchange, and''; and
                    (B) by striking ``shall be transmitted to the 
                issuer and the exchange and'';
            (3) in subsection (g)(1), by striking ``shall send to the 
        issuer of the security and''; and
            (4) in subsection (g)(2)--
                    (A) by striking ``sent to the issuer and''; and
                    (B) by striking ``shall be transmitted to the 
                issuer and''.
    (b) Short-swing Profit Reporting.--Section 16(a) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78p(a)) is amended--
            (1) in paragraph (1), by striking ``(and, if such security 
        is registered on a national securities exchange, also with the 
        exchange)''; and
            (2) in paragraph (2)(B), by inserting after ``officer'' the 
        following: ``, or within such shorter time as the Commission 
        may establish by rule''.

SEC. 106. REVISION TO RECORDKEEPING RULES.

    (a) Investment Company Act of 1940 Amendments.--Section 31 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-30) is amended--
            (1) in subsection (a)(1), by adding at the end the 
        following: ``Each person with custody or use of a registered 
        investment company's securities, deposits, or credits shall 
        maintain and preserve all records that relate to the person's 
        custody or use of the registered investment company's 
        securities, deposits, or credits for such period or periods as 
        the Commission, by rules and regulations, may prescribe as 
        necessary or appropriate in the public interest or for the 
        protection of investors.''; and
            (2) in subsection (b), by adding at the end the following 
        new paragraph:
            ``(4) Records of persons with custody or use.--
                    ``(A) In general.--Notwithstanding paragraph (1), 
                records of persons with custody or use of a registered 
                investment company's securities, deposits, or credits, 
                that relate to such custody or use, are subject at any 
                time, or from time to time, to such reasonable 
                periodic, special, or other examinations and other 
                information and document requests by representatives of 
                the Commission as the Commission deems necessary or 
                appropriate in the public interest or for the 
                protection of investors.
                    ``(B) Certain persons subject to other 
                regulation.--Persons subject to regulation and 
                examination by a Federal financial institution 
                regulatory agency (as such term is defined under 
                section 212(c)(2) of title 18, United States Code) may 
                satisfy any examination request, information request, 
                or document request described under subparagraph (A), 
                by providing the Commission with a detailed listing, in 
                writing, of the registered investment company's 
                securities, deposits, or credits within such person's 
                custody or use.''.
    (b) Investment Advisers Act of 1940 Amendment.--Section 204 of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-4) is amended by adding 
at the end the following new subsection:
    ``(d) Records of Persons With Custody or Use.--
            ``(1) In general.--Records of persons with custody or use 
        of a client's securities, deposits, or credits, that relate to 
        such custody or use, are subject at any time, or from time to 
        time, to such reasonable periodic, special, or other 
        examinations and other information and document requests by 
        representatives of the Commission as the Commission deems 
        necessary or appropriate in the public interest or for the 
        protection of investors.
            ``(2) Certain persons subject to other regulation.--Persons 
        subject to regulation and examination by a Federal financial 
        institution regulatory agency (as such term is defined under 
        section 212(c)(2) of title 18, United States Code) may satisfy 
        any examination request, information request, or document 
        request described under paragraph (1), by providing the 
        Commission with a detailed listing, in writing, of the client's 
        securities, deposits, or credits within such person's custody 
        or use.''.

SEC. 107. STUDY ON ENHANCING INVESTMENT ADVISOR EXAMINATIONS.

    (a) Study Required.--
            (1) In general.--The Commission shall review and analyze 
        the need for enhanced examination and enforcement resources for 
        investment advisers.
            (2) Areas of consideration.--The study required by this 
        subsection shall examine--
                    (A) the number and frequency of examinations of 
                investment advisers by the Commission over the 5 years 
                preceding the date of the enactment of this Act;
                    (B) the extent to which having Congress authorize 
                the Commission to designate one or more self-regulatory 
                organizations to augment the Commission's efforts in 
                overseeing investment advisers would improve the 
                frequency of examinations of investment advisers; and
                    (C) current and potential approaches to examining 
                the investment advisory activities of dually registered 
                broker-dealers and investment advisers or affiliated 
                broker-dealers and investment advisers.
    (b) Report Required.--The Commission shall report its findings to 
the Committee on Financial Services of the House of Representatives and 
the Committee on Banking, Housing, and Urban Affairs of the Senate, not 
later than 180 days after the date of enactment of this Act, and shall 
use such findings to revise its rules and regulations, as necessary. 
The report shall include a discussion of regulatory or legislative 
steps that are recommended or that may be necessary to address concerns 
identified in the study.

SEC. 108. GAO STUDY OF FINANCIAL PLANNING.

    (a) Study Required.--The Comptroller General of the United States 
shall conduct a study on the regulation and oversight of financial 
planning.   The study shall consider--
            (1) the unique role of financial planners in providing 
        comprehensive advice in investment planning, income tax 
        planning, education planning, retirement planning, estate 
        planning, risk management, and other areas with respect to the 
        management of financial resources; and
            (2) any gaps in the regulation of financial planners given 
        existing State and Federal regulation of financial planning 
        activities and the need to provide related consumer protections 
        for such financial planning activities.
    (b) Report.--Not later than the end of the 180-day period beginning 
on the date of the enactment of this Act, the Comptroller General of 
the United States shall submit to the Congress a report containing the 
findings and determinations made by the Comptroller General in carrying 
out the study required under subsection (a), including recommendations 
for the appropriate regulation of, or standards for, financial planners 
as a profession and how such regulations or standards should be 
established.

                   TITLE II--ENFORCEMENT AND REMEDIES

SEC. 201. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.

    (a) Amendment to Securities Exchange Act of 1934.--Section 15 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78o), as amended by 
section 103, is further amended by adding at the end the following new 
subsection:
    ``(n) Authority to Restrict Mandatory Pre-dispute Arbitration.--The 
Commission, by rule, may prohibit, or impose conditions or limitations 
on the use of, agreements that require customers or clients of any 
broker, dealer, or municipal securities dealer to arbitrate any future 
dispute between them arising under the Federal securities laws, the 
rules and regulations thereunder, or the rules of a self-regulatory 
organization if it finds that such prohibition, imposition of 
conditions, or limitations are in the public interest and for the 
protection of investors.''.
    (b) Amendment to Investment Advisers Act of 1940.--Section 205 of 
the Investment Advisers Act of 1940 (15 U.S.C. 80b-5) is amended by 
adding at the end the following new subsection:
    ``(f) Authority to Restrict Mandatory Pre-dispute Arbitration.--The 
Commission, by rule, may prohibit, or impose conditions or limitations 
on the use of, agreements that require customers or clients of any 
investment adviser to arbitrate any future dispute between them arising 
under the Federal securities laws, the rules and regulations 
thereunder, or the rules of a self-regulatory organization if it finds 
that such prohibition, imposition of conditions, or limitations are in 
the public interest and for the protection of investors.''.

SEC. 202. COMPTROLLER GENERAL STUDY TO REVIEW SECURITIES ARBITRATION 
              SYSTEM.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study to review--
            (1) the costs to parties of an arbitration proceeding using 
        the arbitration system operated by the Financial Industry 
        Regulatory Authority and overseen by the Securities and 
        Exchange Commission as compared to litigation;
            (2) the percentage of recovery of the total amount of a 
        claim in an arbitration proceeding using the arbitration system 
        operated by the Financial Industry Regulatory Authority and 
        overseen by the Securities and Exchange Commission; and
            (3) other additional issues as may be raised during the 
        course of the study conducted under this subsection.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Comptroller General of the United States shall submit to 
the Committee on Financial Services of the House of Representatives and 
the Committee on Banking, Housing, and Urban Affairs of the Senate a 
report on the results of the study required by subsection (a), 
including in such report recommendations for improvements to the 
arbitration system referenced in such subsection.

SEC. 203. WHISTLEBLOWER PROTECTION.

    (a) In General.--The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by adding after section 21E the following new 
section:

``SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND PROTECTION.

    ``(a) In General.--In any judicial or administrative action brought 
by the Commission under the securities laws that results in monetary 
sanctions exceeding $1,000,000, the Commission, under regulations 
prescribed by the Commission and subject to subsection (b), may pay an 
award or awards not exceeding an amount equal to 30 percent, in total, 
of the monetary sanctions imposed in the action or related actions to 
one or more whistleblowers who voluntarily provided original 
information to the Commission that led to the successful enforcement of 
the action. Any amount payable under the preceding sentence shall be 
paid from the fund described in subsection (f).
    ``(b) Determination of Amount of Award; Denial of Award.--
            ``(1) Determination of amount of award.--The determination 
        of the amount of an award, within the limit specified in 
        subsection (a), shall be in the sole discretion of the 
        Commission. The Commission may take into account the 
        significance of the whistleblower's information to the success 
        of the judicial or administrative action described in 
        subsection (a), the degree of assistance provided by the 
        whistleblower and any legal representative of the whistleblower 
        in such action, the Commission's programmatic interest in 
        deterring violations of the securities laws by making awards to 
        whistleblowers who provide information that leads to the 
        successful enforcement of such laws, and such additional 
        factors as the Commission may establish by rules or 
        regulations.
            ``(2) Denial of award.--No award under subsection (a) shall 
        be made--
                    ``(A) to any whistleblower who is, or was at the 
                time he or she acquired the original information 
                submitted to the Commission, a member, officer, or 
                employee of any appropriate regulatory agency, the 
                Department of Justice, the Public Company Accounting 
                Oversight Board, or a self-regulatory organization;
                    ``(B) to any whistleblower who is convicted of a 
                criminal violation related to the judicial or 
                administrative action for which the whistleblower 
                otherwise could receive an award under this section; or
                    ``(C) to any whistleblower who fails to submit 
                information to the Commission in such form as the 
                Commission may, by rule, require.
    ``(c) Representation.--
            ``(1) Permitted representation.--Any whistleblower who 
        makes a claim for an award under subsection (a) may be 
        represented by counsel.
            ``(2) Required representation.--Any whistleblower who makes 
        a claim for an award under subsection (a) must be represented 
        by counsel if the whistleblower submits the information upon 
        which the claim is based anonymously. Prior to the payment of 
        an award, the whistleblower must disclose his or her identity 
        and provide such other information as the Commission may 
        require.
    ``(d) No Contract Necessary.--No contract with the Commission is 
necessary for any whistleblower to receive an award under subsection 
(a), unless the Commission, by rule or regulation, so requires.
    ``(e) Appeals.--Any determinations under this section, including 
whether, to whom, or in what amounts to make awards, shall be in the 
sole discretion of the Commission, and any such determinations shall be 
final and not subject to judicial review.
    ``(f) Investor Protection Fund.--
            ``(1) Fund established.--There is established in the 
        Treasury of the United States a fund to be known as the 
        `Securities and Exchange Commission Investor Protection Fund' 
        (referred to in this section as the `Fund').
            ``(2) Use of fund.--The Fund shall be available to the 
        Commission, without further appropriation or fiscal year 
        limitation, for the following purposes:
                    ``(A) Paying awards to whistleblowers as provided 
                in subsection (a).
                    ``(B) Funding investor education initiatives 
                designed to help investors protect themselves against 
                securities fraud or other violations of the securities 
                laws, or the rules and regulations thereunder.
            ``(3) Deposits and credits.--There shall be deposited into 
        or credited to the Fund--
                    ``(A) any monetary sanction collected by the 
                Commission in any judicial or administrative action 
                brought by the Commission under the securities laws 
                that is not added to a disgorgement fund or other fund 
                pursuant to section 308 of the Sarbanes-Oxley Act of 
                2002 or otherwise distributed to victims of a violation 
                of the securities laws, or the rules and regulations 
                thereunder, underlying such action, unless the balance 
                of the Fund at the time the monetary sanction is 
                collected exceeds $100,000,000;
                    ``(B) any monetary sanction added to a disgorgement 
                fund or other fund pursuant to section 308 of the 
                Sarbanes-Oxley Act of 2002 that is not distributed to 
                the victims for whom the disgorgement fund or other 
                fund was established, unless the balance of the Fund at 
                the time the determination is made not to distribute 
                the monetary sanction to such victims exceeds 
                $100,000,000; and
                    ``(C) all income from investments made under 
                paragraph (4).
            ``(4) Investments.--
                    ``(A) Amounts in fund may be invested.--The 
                Commission may request the Secretary of the Treasury to 
                invest the portion of the Fund that is not, in the 
                Commission's judgment, required to meet the current 
                needs of the Fund.
                    ``(B) Eligible investments.--Investments shall be 
                made by the Secretary of the Treasury in obligations of 
                the United States or obligations that are guaranteed as 
                to principal and interest by the United States, with 
                maturities suitable to the needs of the Fund as 
                determined by the Commission.
                    ``(C) Interest and proceeds credited.--The interest 
                on, and the proceeds from the sale or redemption of, 
                any obligations held in the Fund shall be credited to, 
                and form a part of, the Fund.
            ``(5) Reports to congress.--Not later than October 30 of 
        each year, the Commission shall transmit to the Committee on 
        Banking, Housing, and Urban Affairs of the Senate, and the 
        Committee on Financial Services of the House of Representatives 
        a report on--
                    ``(A) the Commission's whistleblower award program 
                under this section, including a description of the 
                number of awards that were granted and the types of 
                cases in which awards were granted during the preceding 
                fiscal year;
                    ``(B) investor education initiatives described in 
                paragraph (2)(B) that were funded by the Fund during 
                the preceding fiscal year;
                    ``(C) the balance of the Fund at the beginning of 
                the preceding fiscal year;
                    ``(D) the amounts deposited into or credited to the 
                Fund during the preceding fiscal year;
                    ``(E) the amount of earnings on investments of 
                amounts in the Fund during the preceding fiscal year;
                    ``(F) the amount paid from the Fund during the 
                preceding fiscal year to whistleblowers pursuant to 
                subsection (a);
                    ``(G) the amount paid from the Fund during the 
                preceding fiscal year for investor education 
                initiatives described in paragraph (1)(B);
                    ``(H) the balance of the Fund at the end of the 
                preceding fiscal year; and
                    ``(I) a complete set of audited financial 
                statements, including a balance sheet, income 
                statement, and cash flow analysis.
    ``(g) Protection of Whistleblowers.--
            ``(1) Prohibition against retaliation.--
                    ``(A) In general.--No employer may discharge, 
                demote, suspend, threaten, harass, or in any other 
                manner discriminate against an employee, contractor, or 
                agent in the terms and conditions of employment because 
                of any lawful act done by the employee, contractor, or 
                agent in providing information to the Commission in 
                accordance with subsection (a), or in assisting in any 
                investigation or judicial or administrative action of 
                the Commission based upon or related to such 
                information.
                    ``(B) Enforcement.--
                            ``(i) Cause of action.--An individual who 
                        alleges discharge or other discrimination in 
                        violation of subparagraph (A) may bring an 
                        action under this subsection in the appropriate 
                        district court of the United States for the 
                        relief provided in subparagraph (C).
                            ``(ii) Subpoenas.--A subpoena requiring the 
                        attendance of a witness at a trial or hearing 
                        conducted under this section may be served at 
                        any place in the United States.
                            ``(iii) Statute of limitations.--An action 
                        under this subsection may not be brought more 
                        than 6 years after the date on which the 
                        violation of subparagraph (A) occurred, or more 
                        than 3 years after the date when facts material 
                        to the right of action are known or reasonably 
                        should have been known by the employee alleging 
                        a violation of subparagraph (A), but in no 
                        event after 10 years after the date on which 
                        the violation occurs.
                    ``(C) Relief.--An employee, contractor, or agent 
                prevailing in any action brought under subparagraph (B) 
                shall be entitled to all relief necessary to make that 
                employee, contractor, or agent whole, including 
                reinstatement with the same seniority status that the 
                employee, contractor, or agent would have had, but for 
                the discrimination, 2 times the amount of back pay, 
                with interest, and compensation for any special damages 
                sustained as a result of the discrimination, including 
                litigation costs, expert witness fees, and reasonable 
                attorneys' fees.
            ``(2) Confidentiality.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), all information provided to the 
                Commission by a whistleblower shall be confidential and 
                privileged as an evidentiary matter (and shall not be 
                subject to civil discovery or other legal process) in 
                any proceeding in any Federal or State court or 
                administrative agency, and shall be exempt from 
                disclosure, in the hands of an agency or establishment 
                of the Federal Government, under the Freedom of 
                Information Act (5 U.S.C. 552), or otherwise, unless 
                and until required to be disclosed to a defendant or 
                respondent in connection with a proceeding instituted 
                by the Commission or any entity described in 
                subparagraph (B). For purposes of section 552 of title 
                5, United States Code, this paragraph shall be 
                considered a statute described in subsection (b)(3)(B) 
                of such section 552. Nothing herein is intended to 
                limit the Attorney General's ability to present such 
                evidence to a grand jury or to share such evidence with 
                potential witnesses or defendants in the course of an 
                ongoing criminal investigation.
                    ``(B) Availability to government agencies.--Without 
                the loss of its status as confidential and privileged 
                in the hands of the Commission, all information 
                referred to in subparagraph (A) may, in the discretion 
                of the Commission, when determined by the Commission to 
                be necessary to accomplish the purposes of this Act and 
                protect investors, be made available to--
                            ``(i) the Attorney General of the United 
                        States,
                            ``(ii) an appropriate regulatory authority,
                            ``(iii) a self-regulatory organization,
                            ``(iv) the Public Company Accounting 
                        Oversight Board,
                            ``(v) State attorneys general in connection 
                        with any criminal investigation, and
                            ``(vi) any appropriate State regulatory 
                        authority,
                each of which shall maintain such information as 
                confidential and privileged, in accordance with the 
                requirements in subparagraph (A).
            ``(3) Rights retained.--Nothing in this section shall be 
        deemed to diminish the rights, privileges, or remedies of any 
        whistleblower under any Federal or State law, or under any 
        collective bargaining agreement.
    ``(h) Provision of False Information.--Any whistleblower who 
knowingly and willfully makes any false, fictitious, or fraudulent 
statement or representation, or makes or uses any false writing or 
document knowing the same to contain any false, fictitious, or 
fraudulent statement or entry, shall not be entitled to an award under 
this section and shall be subject to prosecution under section 1001 of 
title 18, United States Code.
    ``(i) Rulemaking Authority.--The Commission shall have the 
authority to issue such rules and regulations as may be necessary or 
appropriate to implement the provisions of this section.
    ``(j) Definitions.--For purposes of this section, the following 
terms have the following meanings:
            ``(1) Original information.--The term `original 
        information' means information that--
                    ``(A) is based on the direct and independent 
                knowledge or analysis of a whistleblower;
                    ``(B) is not known to the Commission from any other 
                source, unless the whistleblower is the initial source 
                of the information; and
                    ``(C) is not based on allegations in a judicial or 
                administrative hearing, in a governmental report, 
                hearing, audit, or investigation, or from the news 
                media, unless the whistleblower is the initial source 
                of the information that resulted in the judicial or 
                administrative hearing, governmental report, hearing, 
                audit, or investigation, or the news media's report on 
                the allegations.
            ``(2) Monetary sanctions.--The term `monetary sanctions', 
        when used with respect to any judicial or administrative 
        action, means any monies, including but not limited to 
        penalties, disgorgement, and interest, ordered to be paid, and 
        any monies deposited into a disgorgement fund or other fund 
        pursuant to section 308(b) of the Sarbanes-Oxley Act of 2002 
        (15 U.S.C. 7246(b)), as a result of such action or any 
        settlement of such action.
            ``(3) Related action.--The term `related action', when used 
        with respect to any judicial or administrative action brought 
        by the Commission under the securities laws, means any judicial 
        or administrative action brought by an entity described in 
        subsection (g)(2)(B) that is based upon the same original 
        information provided by a whistleblower pursuant to subsection 
        (a) that led to the successful enforcement of the Commission 
        action.
            ``(4) Whistleblower.--The term `whistleblower' means an 
        individual, or two or more individuals acting jointly, who 
        submit information to the Commission as provided in this 
        section.''.
    (b) Administration and Enforcement.--The Securities and Exchange 
Commission shall establish a separate office within the Commission to 
administer and enforce the provisions of section 21F of the Securities 
Exchange Act of 1934, as added by subsection (a). Such office shall 
report annually to Congress on its activities, whistleblower 
complaints, and the response of the Commission to such complaints.

SEC. 204. CONFORMING AMENDMENTS FOR WHISTLEBLOWER PROTECTION.

    (a) In General.--Each of the following provisions is amended by 
inserting ``and section 21F of the Securities Exchange Act of 1934'' 
after ``the Sarbanes-Oxley Act of 2002'':
            (1) Section 20(d)(3)(A) of the Securities Act of 1933 (15 
        U.S.C. 77t(d)(3)(A)).
            (2) Section 42(e)(3)(A) of the Investment Company Act of 
        1940 (15 U.S.C. 80a-41(e)(3)(A)).
            (3) Section 209(e)(3)(A) of the Investment Advisers Act of 
        1940 (15 U.S.C. 80b-9(e)(3)(A)).
    (b) Securities Exchange Act.--The Securities Exchange Act of 1934 
(15 U.S.C. 78a et seq.) is amended--
            (1) in section 21(d)(3)(C)(i) (15 U.S.C. 78u(d)(3)(C)(i)), 
        by inserting ``and section 21F of this title'' after ``the 
        Sarbanes-Oxley Act of 2002'';
            (2) in section 21A(d)(1) (15 U.S.C. 78u-1(d)(1))--
                    (A) by striking ``(subject to subsection (e))''; 
                and
                    (B) by inserting ``and section 21F of this title'' 
                after ``the Sarbanes-Oxley Act of 2002''; and
            (3) in section 21A, by striking subsection (e) and 
        redesignating subsections (f) and (g) as subsection (e) and 
        (f), respectively.

SEC. 205. IMPLEMENTATION AND TRANSITION PROVISIONS FOR WHISTLEBLOWER 
              PROTECTIONS.

    (a) Implementing Rules.--The Securities and Exchange Commission 
shall issue final regulations implementing the provisions of section 
21F of the Securities Exchange Act of 1934, as added by this title, no 
later than 270 days after the date of enactment of this Act.
    (b) Original Information.--Information submitted to the Commission 
by a whistleblower in accordance with regulations implementing the 
provisions of section 21F of the Securities Exchange Act of 1934, as 
added by this title, shall not lose its status as original information, 
as defined in subsection (i)(1) of such section, solely because the 
whistleblower submitted such information prior to the effective date of 
such regulations, provided such information was submitted after the 
date of enactment of this Act, or related to insider trading violations 
for which a bounty could have been paid at the time such information 
was submitted.
    (c) Awards.--A whistleblower may receive an award pursuant to 
section 21F of the Securities Exchange Act of 1934, as added by this 
title, regardless of whether any violation of a provision of the 
securities laws, or a rule or regulation thereunder, underlying the 
judicial or administrative action upon which the award is based 
occurred prior to the date of enactment of this Act.

SEC. 206. COLLATERAL BARS.

    (a) Section 15 of the Securities Exchange Act of 1934.--Section 
15(b)(6)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o(b)(6)(A)) is amended by striking ``12 months, or bar such person 
from being associated with a broker or dealer,'' and inserting ``12 
months, or bar any such person from being associated with a broker, 
dealer, investment adviser, municipal securities dealer, transfer 
agent, or nationally recognized statistical rating organization,''.
    (b) Section 15B of the Securities Exchange Act of 1934.--Section 
15B(c)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
4(c)(4)) is amended by striking ``twelve months or bar any such person 
from being associated with a municipal securities dealer,'' and 
inserting ``12 months or bar any such person from being associated with 
a broker, dealer, investment adviser, municipal securities dealer, 
transfer agent, or nationally recognized statistical rating 
organization,''.
    (c) Section 17A of the Securities Exchange Act of 1934.--Section 
17A(c)(4)(C) of the Securities Exchange Act of 1934 (15 U.S.C. 78q-
1(c)(4)(C)) is amended by striking ``twelve months or bar any such 
person from being associated with the transfer agent,'' and inserting 
``12 months or bar any such person from being associated with any 
transfer agent, broker, dealer, investment adviser, municipal 
securities dealer, or nationally recognized statistical rating 
organization,''.
    (d) Section 203 of the Investment Advisers Act of 1940.--Section 
203(f) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(f)) is 
amended by striking ``twelve months or bar any such person from being 
associated with an investment adviser,'' and inserting ``12 months or 
bar any such person from being associated with an investment adviser, 
broker, dealer, municipal securities dealer, transfer agent, or 
nationally recognized statistical rating organization,''.

SEC. 207. AIDING AND ABETTING AUTHORITY UNDER THE SECURITIES ACT AND 
              THE INVESTMENT COMPANY ACT.

    (a) Under the Securities Act of 1933.--Section 15 of the Securities 
Act of 1933 (15 U.S.C. 77o) is amended--
            (1) by striking ``Every person who'' and inserting ``(a) 
        Controlling Persons.--Every person who''; and
            (2) by adding at the end the following:
    ``(b) Prosecution of Persons Who Aid and Abet Violations.--For 
purposes of any action brought by the Commission under subparagraph (b) 
or (d) of section 20, any person that knowingly or recklessly provides 
substantial assistance to another person in violation of a provision of 
this Act, or of any rule or regulation issued under this Act, shall be 
deemed to be in violation of such provision to the same extent as the 
person to whom such assistance is provided.''.
    (c) Under the Investment Company Act of 1940.--Section 48 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-48) is amended by 
redesignating subsection (b) as subsection (c) and inserting after 
subsection (a) the following:
    ``(b) For purposes of any action brought by the Commission under 
subsection (d) or (e) of section 42, any person that knowingly or 
recklessly provides substantial assistance to another person in 
violation of a provision of this Act, or of any rule or regulation 
issued under this Act, shall be deemed to be in violation of such 
provision to the same extent as the person to whom such assistance is 
provided.''.

SEC. 208. AUTHORITY TO IMPOSE PENALTIES FOR AIDING AND ABETTING 
              VIOLATIONS OF THE INVESTMENT ADVISERS ACT.

    Section 209 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
9) is amended by inserting at the end the following new subsections:
    ``(f) Aiding and Abetting.--For purposes of any action brought by 
the Commission under subsection (e), any person that knowingly or 
recklessly has aided, abetted, counseled, commanded, induced, or 
procured a violation of any provision of this Act, or of any rule, 
regulation, or order hereunder, shall be deemed to be in violation of 
such provision, rule, regulation, or order to the same extent as the 
person that committed such violation.
    ``(g) Enforcement by National Securities Associations.--The 
Commission may permit or require a national securities association 
registered under the Securities Exchange Act of 1934 to enforce 
compliance by its members and persons associated with its members with 
the provisions of this Act, the rules and regulations thereunder, and 
to adopt such rules (subject to any rule or order of the Commission 
pursuant to the Securities Exchange Act of 1934) as the association may 
deem necessary and in the public interest to further the purposes of 
this Act.''.

SEC. 209. DEADLINE FOR COMPLETING EXAMINATIONS, INSPECTIONS AND 
              ENFORCEMENT ACTIONS.

    The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 
amended by inserting after section 4D (as added by section 101) the 
following new section:

``SEC. 4E. DEADLINE FOR COMPLETING ENFORCEMENT INVESTIGATIONS AND 
              COMPLIANCE EXAMINATIONS AND INSPECTIONS.

    ``(a) Enforcement Investigations.--
            ``(1) In general.--Not later than 180 days after the date 
        on which Commission staff provide a written Wells notification 
        to any person, the Commission staff shall either file an action 
        against such person or provide notice to the Director of the 
        Division of Enforcement of its intent to not file an action.
            ``(2) Exceptions for certain complex actions.--
        Notwithstanding paragraph (1), if the head of any division or 
        office within the Commission or his designee determines that a 
        particular enforcement investigation is sufficiently complex 
        such that a determination regarding the filing of an action 
        against a person cannot be completed within the deadline 
        specified in paragraph (1), the head of any division or office 
        within the Commission or his designee may, after providing 
        notice to the Chairman of the Commission, extend such deadline 
        as needed for one additional 180-day period. If after the 
        additional 180-day period the head of any division or office 
        within the Commission or his designee determines that a 
        particular enforcement investigation is sufficiently complex 
        such that a determination regarding the filing of an action 
        against a person cannot be completed within the additional 180-
        day period, the head of any division or office within the 
        Commission or his designee may, after providing notice to and 
        receiving approval of the Commission, extend such deadline as 
        needed for one or more additional successive 180-day periods.
    ``(b) Compliance Examinations and Inspections.--
            ``(1) In general.--Not later than 180 days after the date 
        on which Commission staff completes the on-site portion of its 
        compliance examination or inspection or receives all records 
        requested from the entity being examined or inspected, 
        whichever is later, Commission staff shall provide the entity 
        being examined or inspected with written notification 
        indicating either that the examination or inspection has 
        concluded without findings or that the staff requests the 
        entity undertake corrective action.
            ``(2) Exception for certain complex actions.--
        Notwithstanding paragraph (1), if the head of any division or 
        office within the Commission or his designee determines that a 
        particular compliance examination or inspection is sufficiently 
        complex such that a determination regarding concluding the 
        examination or inspection or regarding the staff requests the 
        entity undertake corrective action cannot be completed within 
        the deadline specified in paragraph (1), the head of any 
        division or office within the Commission or his designee may, 
        after providing notice to the Chairman of the Commission, 
        extend such deadline as needed for one additional 180-day 
        period.''.

SEC. 210. NATIONWIDE SERVICE OF SUBPOENAS.

    (a) Securities Act of 1933.--Section 22(a) of the Securities Act of 
1933 (15 U.S.C. 77v(a)) is amended by inserting after the second 
sentence the following: ``In any action or proceeding instituted by the 
Commission under this title in a United States district court for any 
judicial district, subpoenas issued to compel the attendance of 
witnesses or the production of documents or tangible things (or both) 
at a hearing or trial may be served at any place within the United 
States.''.
    (b) Securities Exchange Act of 1934.--Section 27 of the Securities 
Exchange Act of 1934 (15 U.S.C. 78aa) is amended by inserting after the 
third sentence the following: ``In any action or proceeding instituted 
by the Commission under this title in a United States district court 
for any judicial district, subpoenas issued to compel the attendance of 
witnesses or the production of documents or tangible things (or both) 
at a hearing or trial may be served at any place within the United 
States.''.
    (c) Investment Company Act of 1940.--Section 44 of the Investment 
Company Act of 1940 (15 U.S.C. 80a-43) is amended by inserting after 
the fourth sentence the following: ``In any action or proceeding 
instituted by the Commission under this title in a United States 
district court for any judicial district, subpoenas issued to compel 
the attendance of witnesses or the production of documents or tangible 
things (or both) at a hearing or trial may be served at any place 
within the United States.''.
    (d) Investment Advisers Act of 1940.--Section 214 of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-14) is amended by inserting after 
the third sentence the following: ``In any action or proceeding 
instituted by the Commission under this title in a United States 
district court for any judicial district, subpoenas issued to compel 
the attendance of witnesses or the production of documents or tangible 
things (or both) at a hearing or trial may be served at any place 
within the United States.''.

SEC. 211. AUTHORITY TO IMPOSE CIVIL PENALTIES IN CEASE AND DESIST 
              PROCEEDINGS.

    (a) Under the Securities Act of 1933.--Section 8A of the Securities 
Act of 1933 (15 U.S.C. 77h-1) is amended by adding at the end the 
following new subsection:
    ``(g) Authority to Impose Money Penalties.--
            ``(1) Grounds for imposing.--In any cease-and-desist 
        proceeding under subsection (a), the Commission may impose a 
        civil penalty on a person if it finds, on the record after 
        notice and opportunity for hearing, that--
                    ``(A) such person--
                            ``(i) is violating or has violated any 
                        provision of this title, or any rule or 
                        regulation thereunder; or
                            ``(ii) is or was a cause of the violation 
                        of any provision of this title, or any rule or 
                        regulation thereunder; and
                    ``(B) such penalty is in the public interest.
            ``(2) Maximum amount of penalty.--
                    ``(A) First tier.--The maximum amount of penalty 
                for each act or omission described in paragraph (1) 
                shall be $7,500 for a natural person or $75,000 for any 
                other person.
                    ``(B) Second tier.--Notwithstanding paragraph (A), 
                the maximum amount of penalty for each such act or 
                omission shall be $75,000 for a natural person or 
                $375,000 for any other person if the act or omission 
                described in paragraph (1) involved fraud, deceit, 
                manipulation, or deliberate or reckless disregard of a 
                regulatory requirement.
                    ``(C) Third tier.--Notwithstanding paragraphs (A) 
                and (B), the maximum amount of penalty for each such 
                act or omission shall be $150,000 for a natural person 
                or $725,000 for any other person if--
                            ``(i) the act or omission described in 
                        paragraph (1) involved fraud, deceit, 
                        manipulation, or deliberate or reckless 
                        disregard of a regulatory requirement; and
                            ``(ii) such act or omission directly or 
                        indirectly resulted in substantial losses or 
                        created a significant risk of substantial 
                        losses to other persons or resulted in 
                        substantial pecuniary gain to the person who 
                        committed the act or omission.
            ``(3) Evidence concerning ability to pay.--In any 
        proceeding in which the Commission may impose a penalty under 
        this section, a respondent may present evidence of the 
        respondent's ability to pay such penalty. The Commission may, 
        in its discretion, consider such evidence in determining 
        whether such penalty is in the public interest. Such evidence 
        may relate to the extent of such person's ability to continue 
        in business and the collectability of a penalty, taking into 
        account any other claims of the United States or third parties 
        upon such person's assets and the amount of such person's 
        assets.''.
    (b) Under the Securities Exchange Act of 1934.--Subsection (a) of 
section 21B of the Securities Exchange Act of 1934 (15 U.S.C. 78u-2(a)) 
is amended--
            (1) by striking ``(a) Commission Authority To Assess Money 
        Penalties.--In any proceeding'' and inserting the following:
    ``(a) Commission Authority To Assess Money Penalties.--
            ``(1) In general.--In any proceeding'';
            (2) by redesignating paragraphs (1) through (4) of such 
        subsection as subparagraphs (A) through (D), respectively, and 
        moving such redesignated subparagraphs and the matter following 
        such subparagraphs 2 ems to the right; and
            (3) by adding at the end of such subsection the following 
        new paragraph:
            ``(2) Cease-and-desist proceedings.--In any proceeding 
        instituted pursuant to section 21C of this title against any 
        person, the Commission may impose a civil penalty if it finds, 
        on the record after notice and opportunity for hearing, that 
        such person--
                    ``(A) is violating or has violated any provision of 
                this title, or any rule or regulation thereunder; or
                    ``(B) is or was a cause of the violation of any 
                provision of this title, or any rule or regulation 
                thereunder.''.
    (c) Under the Investment Company Act of 1940.--Paragraph (1) of 
section 9(d) of the Investment Company Act of 1940 (15 U.S.C. 80a-
9(d)(1)) is amended--
            (1) by striking ``(1) Authority of commission.--In any 
        proceeding'' and inserting the following:
            ``(1) Authority of commission.--
                    ``(A) In general.--In any proceeding'';
            (2) by redesignating subparagraphs (A) through (C) of such 
        paragraph as clauses (i) through (iii), respectively, and by 
        moving such redesignated clauses and the matter following such 
        subparagraphs 2 ems to the right; and
            (3) by adding at the end of such paragraph the following 
        new subparagraph:
                    ``(B) Cease-and-desist proceedings.--In any 
                proceeding instituted pursuant to subsection (f) 
                against any person, the Commission may impose a civil 
                penalty if it finds, on the record after notice and 
                opportunity for hearing, that such person--
                            ``(i) is violating or has violated any 
                        provision of this title, or any rule or 
                        regulation thereunder; or
                            ``(ii) is or was a cause of the violation 
                        of any provision of this title, or any rule or 
                        regulation thereunder.''.
    (d) Under the Investment Advisers Act of 1940.--Paragraph (1) of 
section 203(i) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3(i)(1)) is amended--
            (1) by striking ``(1) Authority of commission.--In any 
        proceeding'' and inserting the following:
            ``(1) Authority of commission.--
                    ``(A) In general.--In any proceeding'';
            (2) by redesignating subparagraphs (A) through (D) of such 
        paragraph as clauses (i) through (iv), respectively, and moving 
        such redesignated clauses and the matter following such 
        subparagraphs 2 ems to the right; and
            (3) by adding at the end of such paragraph the following 
        new subparagraph:
                    ``(B) Cease-and-desist proceedings.--In any 
                proceeding instituted pursuant to subsection (k) 
                against any person, the Commission may impose a civil 
                penalty if it finds, on the record after notice and 
                opportunity for hearing, that such person--
                            ``(i) is violating or has violated any 
                        provision of this title, or any rule or 
                        regulation thereunder; or
                            ``(ii) is or was a cause of the violation 
                        of any provision of this title, or any rule or 
                        regulation thereunder.''.

SEC. 212. FORMERLY ASSOCIATED PERSONS.

    (a) Member or Employee of the Municipal Securities Rulemaking 
Board.--Section 15B(c)(8) of the Securities Exchange Act of 1934 (15 
U.S.C. 78o-4(c)(8)) is amended by striking ``any member or employee'' 
and inserting ``any person who is, or at the time of the alleged 
misconduct was, a member or employee''.
    (b) Person Associated With a Government Securities Broker or 
Dealer.--Section 15C of the Securities Exchange Act of 1934 (15 U.S.C. 
78o-5) is amended--
            (1) in subsection (c)(1)(C), by striking ``or seeking to 
        become associated,'' and inserting ``seeking to become 
        associated, or, at the time of the alleged misconduct, 
        associated or seeking to become associated'';
            (2) in subsection (c)(2)(A), by inserting ``, seeking to 
        become associated, or, at the time of the alleged misconduct, 
        associated or seeking to become associated'' after ``any person 
        associated''; and
            (3) in subsection (c)(2)(B), by inserting ``, seeking to 
        become associated, or, at the time of the alleged misconduct, 
        associated or seeking to become associated'' after ``any person 
        associated''.
    (c) Person Associated With a Member of a National Securities 
Exchange or Registered Securities Association.--Section 21(a)(1) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is amended by 
inserting ``, or, as to any act or practice, or omission to act, while 
associated with a member, formerly associated'' after ``member or a 
person associated''.
    (d) Participant of a Registered Clearing Agency.--Section 21(a)(1) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is amended 
by inserting ``or, as to any act or practice, or omission to act, while 
a participant, was a participant,'' after ``in which such person is a 
participant,''.
    (e) Officer or Director of a Self-regulatory Organization.--Section 
19(h)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(h)(4)) 
is amended--
            (1) by striking ``any officer or director'' and inserting 
        ``any person who is, or at the time of the alleged misconduct 
        was, an officer or director''; and
            (2) by striking ``such officer or director'' and inserting 
        ``such person''.
    (f) Officer or Director of an Investment Company.--Section 36(a) of 
the Investment Company Act of 1940 (15 U.S.C. 80a-35(a)) is amended--
            (1) by striking ``a person serving or acting'' and 
        inserting ``a person who is, or at the time of the alleged 
        misconduct was, serving or acting''; and
            (2) by striking ``such person so serves or acts'' and 
        inserting ``such person so serves or acts, or at the time of 
        the alleged misconduct, so served or acted''.
    (g) Person Associated With a Public Accounting Firm.--
            (1) Sarbanes-oxley act of 2002 amendment.--Section 2(a)(9) 
        of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(9)) is 
        amended by adding at the end the following new subparagraph:
                    ``(C) Investigative and enforcement authority.--For 
                purposes of the provisions of sections 3(c), 101(c), 
                105, and 107(c) and Board or Commission rules 
                thereunder, except to the extent specifically excepted 
                by such rules, the terms defined in subparagraph (A) 
                shall include any person associated, seeking to become 
                associated, or formerly associated with a public 
                accounting firm, except--
                            ``(i) the authority to conduct an 
                        investigation of such person under section 
                        105(b) shall apply only with respect to any act 
                        or practice, or omission to act, while such 
                        person was associated or seeking to become 
                        associated with a registered public accounting 
                        firm; and
                            ``(ii) the authority to commence a 
                        proceeding under section 105(c)(1), or impose 
                        disciplinary sanctions under section 105(c)(4), 
                        against such person shall apply only on--
                                    ``(I) the basis of conduct 
                                occurring while such person was 
                                associated or seeking to become 
                                associated with a registered public 
                                accounting firm; or
                                    ``(II) non-cooperation as described 
                                in section 105(b)(3) with respect to a 
                                demand in a Board investigation for 
                                testimony, documents, or other 
                                information relating to a period when 
                                such person was associated or seeking 
                                to become associated with a registered 
                                public accounting firm.''.
            (2) Securities exchange act of 1934 amendment.--Section 
        21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 
        78u(a)(1)) is amended by striking ``or a person associated with 
        such a firm'' and inserting ``, 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''.
    (h) Supervisory Personnel of an Audit Firm.--Section 105(c)(6) of 
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(c)(6)) is amended--
            (1) in subparagraph (A), by striking ``the supervisory 
        personnel'' and inserting ``any person who is, or at the time 
        of the alleged failure reasonably to supervise was, a 
        supervisory person''; and
            (2) in subparagraph (B)--
                    (A) by striking ``No associated person'' and 
                inserting ``No current or former supervisory person''; 
                and
                    (B) by striking ``any other person'' and inserting 
                ``any associated person''.
    (i) Member of the Public Company Accounting Oversight Board.--
Section 107(d)(3) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
7217(d)(3)) is amended by striking ``any member'' and inserting ``any 
person who is, or at the time of the alleged misconduct was, a 
member''.

SEC. 213. SHARING PRIVILEGED INFORMATION WITH OTHER AUTHORITIES.

    Section 24 of the Securities Exchange Act of 1934 (15 U.S.C. 78x) 
is amended--
            (1) by redesignating subsections (d) and (e) as subsections 
        (e) and (f), respectively;
            (2) in subsection (e), as redesignated, by striking ``as 
        provided in subsection (e)'' and inserting ``as provided in 
        subsection (f)''; and
            (3) by inserting after subsection (c) the following new 
        subsection:
    ``(d) Sharing Privileged Information With Other Authorities.--
            ``(1) Privileged information provided by the commission.--
        The Commission shall not be deemed to have waived any privilege 
        applicable to any information by transferring that information 
        to or permitting that information to be used by--
                    ``(A) any agency (as defined in section 6 of title 
                18, United States Code);
                    ``(B) any foreign securities authority;
                    ``(C) the Public Company Accounting Oversight 
                Board;
                    ``(D) any self-regulatory organization;
                    ``(E) any foreign law enforcement authority; or
                    ``(F) any State securities or law enforcement 
                authority.
            ``(2) Non-disclosure of privileged information provided to 
        the commission.--Except as provided in subsection (f), the 
        Commission shall not be compelled to disclose privileged 
        information obtained from any foreign securities authority, or 
        foreign law enforcement authority, if the authority has in good 
        faith determined and represented to the Commission that the 
        information is privileged.
            ``(3) Non-waiver of privileged information provided to the 
        commission.--
                    ``(A) In general.--Federal agencies, State 
                securities and law enforcement authorities, self-
                regulatory organizations, and the Public Company 
                Accounting Oversight Board shall not be deemed to have 
                waived any privilege applicable to any information by 
                transferring that information to or permitting that 
                information to be used by the Commission.
                    ``(B) Exception with respect to certain actions.--
                The provisions of subparagraph (A) shall not apply to a 
                self-regulatory organization or the Public Company 
                Accounting Oversight Board with respect to information 
                used by the Commission in an action against such 
                organization.
            ``(4) Definitions.--For purposes of this subsection:
                    ``(A) The term `privilege' includes any work-
                product privilege, attorney-client privilege, 
                governmental privilege, or other privilege recognized 
                under Federal, foreign, or State law.
                    ``(B) The term `foreign law enforcement authority' 
                means any foreign authority that is empowered under 
                foreign law to detect, investigate or prosecute 
                potential violations of law.
                    ``(C) The term `State securities or law enforcement 
                authority' means the authority of any State or 
                territory that is empowered under State or territory 
                law to detect, investigate or prosecute potential 
                violations of law.''.

SEC. 214. EXPANDED ACCESS TO GRAND JURY MATERIAL.

    (a) In General.--Title VI of the Sarbanes-Oxley Act of 2002 is 
amended by adding at the end the following new section:

``SEC. 605. ACCESS TO GRAND JURY INFORMATION.

    ``(a) Disclosure.--
            ``(1) In general.--Upon motion of an attorney for the 
        government, a court may direct disclosure of matters occurring 
        before a grand jury during an investigation of conduct that may 
        constitute a violation of any provision of the securities laws 
        to the Commission for use in relation to any matter within the 
        jurisdiction of the Commission.
            ``(2) Substantial need required.--A court may issue an 
        order under paragraph (1) only upon a finding of a substantial 
        need in the public interest.
    ``(b) Use of Matter.--A person to whom a matter has been disclosed 
under this section shall not use such matter other than for the purpose 
for which such disclosure was authorized.
    ``(c) Definitions.--As used in this section, the terms `attorney 
for the government' and `grand jury information' have the meanings 
given to those terms in section 3322 of title 18, United States 
Code.''.
    (b) Conforming Amendment.--The table of contents in section 1(b) of 
the Sarbanes-Oxley Act of 2002 is amended by inserting after the item 
relating to section 604 the following:

``Sec. 605. Access to grand jury information.''.

SEC. 215. AIDING AND ABETTING STANDARD OF KNOWLEDGE SATISFIED BY 
              RECKLESSNESS.

    Section 20(e) of the Securities Exchange Act of 1934 (15 U.S.C. 
78t(e)) is amended by inserting ``or recklessly'' after ``knowingly''.

SEC. 216. EXTRATERRITORIAL JURISDICTION OF THE ANTIFRAUD PROVISIONS OF 
              THE FEDERAL SECURITIES LAWS.

    (a) Under the Securities Act of 1933.--Section 22 of the Securities 
Act of 1933 (15 U.S.C. 77v(a)) is amended by adding at the end the 
following new subsection:
    ``(c) Extraterritorial Jurisdiction.--The jurisdiction of the 
district courts of the United States and the United States courts of 
any Territory described under subsection (a) includes violations of 
section 17(a), and all suits in equity and actions at law under that 
section, involving--
            ``(1) conduct within the United States that constitutes 
        significant steps in furtherance of the violation, even if the 
        securities transaction occurs outside the United States and 
        involves only foreign investors; or
            ``(2) conduct occurring outside the United States that has 
        a foreseeable substantial effect within the United States.''.
    (b) Under the Securities Exchange Act of 1934.--Section 27 of the 
Securities Exchange Act of 1934 (15 U.S.C. 78aa) is amended--
            (1) by striking ``The district'' and inserting the 
        following:
    ``(a) In General.--The district''; and
            (2) by inserting at the end the following new subsection:
    ``(b) Extraterritorial Jurisdiction.--The jurisdiction of 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 described under subsection (a) includes violations of the 
antifraud provisions of this title, and all suits in equity and actions 
at law under those provisions, involving--
            ``(1) conduct within the United States that constitutes 
        significant steps in furtherance of the violation, even if the 
        securities transaction occurs outside the United States and 
        involves only foreign investors; or
            ``(2) conduct occurring outside the United States that has 
        a foreseeable substantial effect within the United States.''.
    (c) Under the Investment Advisers Act of 1940.--Section 214 of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-14) is amended--
            (1) by striking ``The district'' and inserting the 
        following:
    ``(a) In General.--The district''; and
            (2) by inserting at the end the following new subsection:
    ``(b) Extraterritorial Jurisdiction.--The jurisdiction of 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 described under subsection (a) includes violations of section 
206, and all suits in equity and actions at law under that section, 
involving--
            ``(1) conduct within the United States that constitutes 
        significant steps in furtherance of the violation, even if the 
        violation is committed by a foreign adviser and involves only 
        foreign investors; or
            ``(2) conduct occurring outside the United States that has 
        a foreseeable substantial effect within the United States.''.

SEC. 217. FIDELITY BONDING.

    Section 17(g) of the Investment Company Act of 1940 (15 U.S.C. 80a-
17(g)) is amended to read as follows:
    ``(g) Fidelity Bonding.--
            ``(1) In general.--The Commission is authorized to require 
        that a registered management company provide and maintain a 
        fidelity bond against loss as to any officer or employee who 
        has access to securities or funds of the company, either 
        directly or through authority to draw upon such funds or to 
        direct generally the disposition of such securities (unless the 
        officer or employee has such access solely through his position 
        as an officer or employee of a bank), in such form and amount 
        as the Commission may prescribe by rule, regulation, or order 
        for the protection of investors.
            ``(2) Definitions.--For purposes of this subsection:
                    ``(A) Management company.--The term `management 
                company' has the meaning given such term under section 
                4 of the Investment Company Act of 1940.
                    ``(B) Officer or employee.--The term `officer or 
                employee' means--
                            ``(i) any officer or employee of the 
                        management company; and;
                            ``(ii) any officer or employee of any 
                        investment adviser to the management company, 
                        or of any affiliated company of any such 
                        investment adviser, as the Commission may 
                        prescribe by rule, regulation, or order for the 
                        protection of investors.
                    ``(C) Other definitions.--The terms `affiliated 
                company' and `investment adviser' shall have the 
                meaning given such terms under section 2 of the 
                Investment Company Act of 1940.''.

SEC. 218. ENHANCED SEC AUTHORITY TO CONDUCT SURVEILLANCE AND RISK 
              ASSESSMENT.

    (a) Securities Exchange Act of 1934 Amendments.--Section 17(b) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78q(b)) is amended by 
adding at the end the following new paragraph:
            ``(5) Surveillance and risk assessment.--All persons 
        described in subsection (a) of this section are subject at any 
        time, or from time to time, to such reasonable periodic, 
        special, or other information and document requests by 
        representatives of the Commission as the Commission by rule or 
        order deems necessary or appropriate to conduct surveillance or 
        risk assessments of the securities markets, persons registered 
        with the Commission under this title, or otherwise in 
        furtherance of the purposes of this title.''.
    (b) Investment Company Act of 1940 Amendments.--Section 31(b) of 
the Investment Company Act of 1940 (15 U.S.C. 80a-30(b)), as amended by 
section 106(a)(2), is further amended by adding at the end the 
following new paragraph:
            ``(5) Surveillance and risk assessment.--All persons 
        described in paragraph (1) are subject at any time, or from 
        time to time, to such reasonable periodic, special, or other 
        information and document requests by representatives of the 
        Commission as the Commission by rule or order deems necessary 
        or appropriate to conduct surveillance or risk assessments of 
        the securities markets, persons registered with the Commission 
        under this title, or otherwise in furtherance of the purposes 
        of this title.''.
    (c) Investment Advisers Act of 1940 Amendments.--Section 204 of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-4), as amended by 
section 106(b), is further amended by adding at the end the following 
new subsection:
    ``(e) Surveillance and Risk Assessment.--All persons described in 
subsection (a) are subject at any time, or from time to time, to such 
reasonable periodic, special, or other information and document 
requests by representatives of the Commission as the Commission by rule 
or order deems necessary or appropriate to conduct surveillance or risk 
assessments of the securities markets, persons registered with the 
Commission under this title, or otherwise in furtherance of the 
purposes of this title.''.

SEC. 219. INVESTMENT COMPANY EXAMINATIONS.

    Section 31(b)(1) of the Investment Company Act of 1940 (15 U.S.C. 
80a-30) is amended to read as follows:
            ``(1) In general.--All records of each registered 
        investment company, and each underwriter, broker, dealer, or 
        investment adviser that is a majority-owned subsidiary of such 
        a company, shall be subject at any time, or from time to time, 
        to such reasonable periodic, special, or other examinations by 
        representatives of the Commission as the Commission deems 
        necessary or appropriate in the public interest or for the 
        protection of investors.''.

SEC. 220. CONTROL PERSON LIABILITY UNDER THE SECURITIES EXCHANGE ACT.

    Section 20(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78t(a)) is amended by inserting after ``controlled person is liable,'' 
the following: ``including to the Commission in any action brought 
under paragraph (1) or (3) of section 21(d),''.

SEC. 221. ENHANCED APPLICATION OF ANTI-FRAUD PROVISIONS.

    The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 
amended--
            (1) in section 9--
                    (A) by striking ``registered on a national 
                securities exchange'' each place it appears and 
                inserting ``other than a government security'';
                    (B) in subsection (b), by striking ``by use of any 
                facility of a national securities exchange,''; and
                    (C) in subsection (c), by inserting after 
                ``unlawful for any'' the following: ``broker, dealer, 
                or'';
            (2) in section 10(a)(1), by striking ``registered on a 
        national securities exchange'' and inserting ``other than a 
        government security''; and
            (3) in section 15(c)(1)(A), by striking ``otherwise than on 
        a national securities exchange of which it is a member''.

SEC. 222. SEC AUTHORITY TO ISSUE RULES ON PROXY ACCESS.

    Section 14(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78n(a)) is amended--
            (1) by inserting ``(1)'' after ``(a)''; and
            (2) by adding at the end the following:
    ``(2) The authority of the Commission to prescribe rules and 
regulations under paragraph (1) includes rules and regulations that 
require the inclusion and set procedures relating to the inclusion, in 
a solicitation of a proxy or consent or authorization by or on behalf 
of an issuer, of a nominee or nominees submitted by shareholders to 
serve on the issuer's board of directors.''.

             TITLE III--COMMISSION FUNDING AND ORGANIZATION

SEC. 301. AUTHORIZATION OF APPROPRIATIONS.

    Section 35 of the Securities Exchange Act of 1934 (15 U.S.C. 78kk) 
is amended to read as follows:

``SEC. 35. AUTHORIZATION OF APPROPRIATIONS.

    ``In addition to any other funds authorized to be appropriated to 
the Commission, there are authorized to be appropriated to carry out 
the functions, powers, and duties of the Commission--
            ``(1) for fiscal year 2010, $1,115,000,000;
            ``(2) for fiscal year 2011, $1,300,000,000;
            ``(3) for fiscal year 2012, $1,500,000,000;
            ``(4) for fiscal year 2013, $1,750,000,000;
            ``(5) for fiscal year 2014, $2,000,000,000; and
            ``(6) for fiscal year 2015, $2,250,000,000.''.

SEC. 302. INVESTMENT ADVISER REGULATION FUNDING.

    Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3) is amended by adding at the end the following new subsection:
    ``(l) Annual Assessment.--
            ``(1) In general.--The Commission shall, in accordance with 
        this subsection, promulgate rules pursuant to which it may 
        collect from investment advisers required to register with the 
        Commission under this title, fees designed to help recover the 
        cost of inspections and examinations of registered investment 
        advisers conducted by the Commission pursuant to this title.
            ``(2) Fee payment required.--An investment adviser shall, 
        at the time of registration with the Commission, and each 
        fiscal year thereafter during which such adviser is so 
        registered, pay to the Commission a fair and reasonable fee 
        determined by the Commission. In determining such fee, the 
        Commission shall consider objective factors such as--
                    ``(A) the investment adviser's size;
                    ``(B) the number of clients of the investment 
                adviser;
                    ``(C) the types of clients of the investment 
                adviser; and
                    ``(D) such other relevant factors as the Commission 
                determines to be appropriate.
            ``(3) Amount and use of fees.--
                    ``(A) Minimum aggregate amount.--The aggregate 
                amount of fees determined by the Commission under this 
                subsection for any fiscal year shall be greater than 
                the amount the Commission spent on inspections and 
                examinations of registered investment advisers during 
                the 2009 fiscal year.
                    ``(B) Excess fees.--The Commission may retain any 
                excess fees collected under this subsection during a 
                fiscal year for application towards the costs of 
                inspections and examinations of investment advisers in 
                future fiscal years.
            ``(4) Review and adjustment of fees.--The Commission may 
        review fee rates established pursuant to this section before 
        the end of any fiscal year and make any appropriate adjustments 
        prior to collecting any such fee in the following fiscal year.
            ``(5) Penalty fee.--The Commission shall prescribe by rule 
        or regulation an additional fee to be assessed as a penalty for 
        late payment of fees required by this subsection.
            ``(6) Judicial review.--Increases or decreases in fees made 
        pursuant to this section shall not be subject to judicial 
        review.''.

SEC. 303. AMENDMENTS TO SECTION 31 OF THE SECURITIES EXCHANGE ACT OF 
              1934.

    Section 31 of the Securities Exchange Act of 1934 (15 U.S.C. 78ee) 
is amended--
            (1) in subsection (e)(2), by striking ``September 30'' and 
        inserting ``September 25'';
            (2) in subsection (g), by striking ``April 30'' and 
        inserting ``August 31''; and
            (3) in subsection (j)(2)--
                    (A) by striking ``5 months'' and inserting ``4 
                months''; and
                    (B) by striking ``(including fees collected during 
                such 5-month period and assessments collected under 
                subsection (d))'' and inserting ``(including fees 
                estimated to be collected under subsections (b) and (c) 
                prior to the effective date of the uniform adjusted 
                rate and assessments estimated to be collected under 
                subsection (d))''.

SEC. 304. COMMISSION ORGANIZATIONAL STUDY AND REFORM.

    (a) Study Required.--
            (1) In general.--Not later than the end of the 90-day 
        period beginning on the date of the enactment of this Act, the 
        Securities and Exchange Commission (hereinafter in this section 
        referred to as the ``SEC'') shall hire an independent 
        consultant of high caliber and with expertise in organizational 
        restructuring and the operations of capital markets to examine 
        the internal operations, structure, funding, and the need for 
        comprehensive reform of the SEC, as well as the SEC's 
        relationship with the reliance on self-regulatory organizations 
        and other entities relevant to the regulation of securities and 
        the protection of securities investors that are under the SEC's 
        oversight.
            (2) Specific areas for study.--The study required under 
        paragraph (1) shall, at a minimum, include the study of--
                    (A) the possible elimination of unnecessary or 
                redundant units at the SEC;
                    (B) improving communications between SEC offices 
                and divisions;
                    (C) the need to put in place a clear chain-of-
                command structure, particularly for enforcement 
                examinations and compliance inspections;
                    (D) the effect of high-frequency trading and other 
                technological advances on the market and what the SEC 
                requires to monitor the effect of such trading and 
                advances on the market;
                    (E) the SEC's hiring authorities, workplace 
                policies, and personal practices, including--
                            (i) whether there is a need to further 
                        streamline hiring authorities for those who are 
                        not lawyers, accountants, compliance examiners, 
                        or economists;
                            (ii) whether there is a need for further 
                        pay reforms;
                            (iii) the diversity of skill sets of SEC 
                        employees and whether the present skill set 
                        diversity efficiently and effectively fosters 
                        the SEC's mission of investor protection; and
                            (iv) the application of civil service laws 
                        by the SEC;
                    (F) whether the SEC's oversight and reliance on 
                self-regulatory organizations promotes efficient and 
                effective governance for the securities markets; and
                    (G) whether adjusting the SEC's reliance on self-
                regulatory organizations is necessary to promote more 
                efficient and effective governance for the securities 
                markets.
    (b) Consultant Report.--Not later than the end of the 150-day 
period after being retained, the independent consultant hired pursuant 
to subsection (a)(1) shall issue a report to the SEC and the Congress 
containing--
            (1) a detailed description of any findings and conclusions 
        made while carrying out the study required under subsection 
        (a)(1);
            (2) recommendations for legislative, regulatory, or 
        administrative action that the consultant determines 
        appropriate to enable the SEC and other entities on which it 
        reports to perform their statutorily or otherwise mandated 
        missions.
    (c) SEC Report.--Not later than the end of the 6-month period 
beginning on the date the consultant issues the report under subsection 
(b), and every 6-months thereafter during the 2-year period following 
the date on which the consultant issues such report, the SEC shall 
issue a report to the Committee on Financial Services of the House of 
Representatives and the Committee on Banking, Housing, and Urban 
Affairs of the Senate describing the SEC's implementation of the 
regulatory and administrative recommendations contained in the 
consultant's report.

SEC. 305. CAPITAL MARKETS SAFETY BOARD.

    There is established within the Securities and Exchange Commission 
an office to be known as the Capital Markets Safety Board whose purpose 
shall be to conduct investigations, at the direction of the Commission, 
of failed institutions registered with the Commission, to determine 
what caused such institutions to fail. Upon the conclusion of an 
investigation, the Board shall make available on the Commission's 
website a report of its findings, including recommendations regarding 
how others can avoid similar mistakes. No information that may 
compromise an ongoing Federal investigation shall be made available in 
any such report.

SEC. 306. REPORT ON IMPLEMENTATION OF ``POST-MADOFF REFORMS''.

    (a) In General.--Not later than 6 months after the date of the 
enactment of this Act, the Securities and Exchange Commission shall 
provide to the Committee on Financial Services of the House of 
Representatives and the Committee on Banking, Housing, and Urban 
Affairs of the Senate a report describing the implementation of reforms 
outlined by the Commission in the wake of the discovery of fraud by 
Bernie Madoff.
    (b) Contents of Report.--The report required by subsection (a) 
shall include an analysis of--
            (1) how many of the post-Madoff reforms have been 
        implemented and to what extent; and
            (2) whether there is overlap between any of the 
        Commission's reform proposals and those recommended by the 
        Inspector General of the Commission.
    (c) Publication of Report.--The Commission and the Committees 
referred to in subsection (a) shall publish the report required by such 
subsection on their Web sites.

SEC. 307. JOINT ADVISORY COMMITTEE.

    The Securities and Exchange Commission and the Commodities Futures 
Trading Commission may jointly form and operate a joint advisory 
committee composed of members of each Commission and industry experts 
and participants. The purposes of such an advisory committee include--
            (1) considering and developing solutions to emerging and 
        ongoing issues of common interest in the futures and securities 
        markets;
            (2) identifying emerging regulatory risks and assess and 
        quantify their implications for investors and other market 
        participants, and provide recommendations for solutions;
            (3) serving as a vehicle for discussion and communication 
        on regulatory issues of mutual concerns affecting each 
        Commission, the regulated markets, and the industry generally; 
        and
            (4) reporting regularly to each Commission and to Congress 
        on its activities.

                TITLE IV--ADDITIONAL COMMISSION REFORMS

SEC. 401. REGULATION OF SECURITIES LENDING.

    Section 10 of the Securities Exchange Act of 1934 (15 U.S.C. 78j) 
is amended by adding at the end the following new subsection:
    ``(c)(1) To effect, accept, or facilitate a transaction involving 
the loan or borrowing of securities in contravention of such rules and 
regulations as the Commission may prescribe as necessary or appropriate 
in the public interest or for the protection of investors.
    ``(2) Nothing in paragraph (1) shall be construed to limit the 
authority of an appropriate Federal banking agency (as defined in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), 
the National Credit Union Administration, or any other Federal 
department or agency identified under law as having a systemic risk 
responsibility from prescribing rules or regulations to impose 
restrictions on transactions involving the loan or borrowing of 
securities in order to protect the safety and soundness of a financial 
institution or to protect the financial system from systemic risk.''.

SEC. 402. LOST AND STOLEN SECURITIES.

    Section 17(f)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 
78q(f)(1)) is amended--
            (1) in subparagraph (A), by striking ``missing, lost, 
        counterfeit, or stolen securities'' and inserting ``securities 
        that are missing, lost, counterfeit, stolen, cancelled, or any 
        other category of securities as the Commission, by rule, may 
        prescribe''; and
            (2) in subparagraph (B), by striking ``or stolen'' and 
        inserting ``stolen, cancelled, or reported in such other manner 
        as the Commission, by rule, may prescribe''.

SEC. 403. FINGERPRINTING.

    Section 17(f)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 
78q(f)(2)) is amended--
            (1) by striking ``and registered clearing agency,'' and 
        inserting ``registered clearing agency, registered securities 
        information processor, national securities exchange, and 
        national securities association''; and
            (2) by striking ``or clearing agency,'' and inserting 
        ``clearing agency, securities information processor, national 
        securities exchange, or national securities association,''.

SEC. 404. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION RULES.

    Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78cc(a)) is amended by striking ``an exchange required thereby'' and 
inserting ``a self-regulatory organization,''.

SEC. 405. CLARIFICATION THAT SECTION 205 OF THE INVESTMENT ADVISERS ACT 
              OF 1940 DOES NOT APPLY TO STATE-REGISTERED ADVISERS.

    Section 205(a) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-5(a)) is amended--
            (1) by striking ``, unless exempt from registration 
        pursuant to section 203(b),'' and inserting ``registered or 
        required to be registered with the Commission'';
            (2) by striking ``make use of the mails or any means or 
        instrumentality of interstate commerce, directly or indirectly, 
        to''; and
            (3) by striking ``to'' after ``in any way''.

SEC. 406. CONFORMING AMENDMENTS FOR THE REPEAL OF THE PUBLIC UTILITY 
              HOLDING COMPANY ACT OF 1935.

    (a) Securities Exchange Act of 1934.--The Securities Exchange Act 
of 1934 (15 U.S.C. 78 et seq.) is amended--
            (1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), by striking 
        ``the Public Utility Holding Company Act of 1935 (15 U.S.C. 79a 
        et seq.),''; and
            (2) in section 12(k) (15 U.S.C. 78l(k)), by amending 
        paragraph (7) to read as follows:  
            ``(7) Definition.--For purposes of this subsection, the 
        term `emergency' means--
                    ``(A) a major market disturbance characterized by 
                or constituting--
                            ``(i) sudden and excessive fluctuations of 
                        securities prices generally, or a substantial 
                        threat thereof, that threaten fair and orderly 
                        markets; or
                            ``(ii) a substantial disruption of the safe 
                        or efficient operation of the national system 
                        for clearance and settlement of transactions in 
                        securities, or a substantial threat thereof; or
                    ``(B) a major disturbance that substantially 
                disrupts, or threatens to substantially disrupt--
                            ``(i) the functioning of securities 
                        markets, investment companies, or any other 
                        significant portion or segment of the 
                        securities markets; or
                            ``(ii) the transmission or processing of 
                        securities transactions.''.
            (3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), by striking 
        ``section 18(c) of the Public Utility Holding Company Act of 
        1935,''.
    (b) Trust Indenture Act of 1939.--The Trust Indenture Act of 1939 
(15 U.S.C. 77aaa et seq.) is amended--
            (1) in section 303 (15 U.S.C. 77ccc), by amending paragraph 
        (17) to read as follows:
            ``(17) The terms `Securities Act of 1933' and `Securities 
        Exchange Act of 1934' shall be deemed to refer, respectively, 
        to such Acts, as amended, whether amended prior to or after the 
        enactment of this title.'';
            (2) in section 308 (15 U.S.C. 77hhh), by striking 
        ``Securities Act of 1933, the Securities Exchange Act of 1934, 
        or the Public Utility Holding Company Act of 1935'' each place 
        it appears and inserting ``Securities Act of 1933 or the 
        Securities Exchange Act of 1934'';
            (3) in section 310 (15 U.S.C. 77jjj), by striking 
        subsection (c);
            (4) in section 311 (15 U.S.C. 77kkk) by striking subsection 
        (c);
            (5) in section 323(b) (15 U.S.C. 77www(b)), by striking 
        ``Securities Act of 1933, or the Securities Exchange Act of 
        1934, or the Public Utility Holding Company Act of 1935'' and 
        inserting ``Securities Act of 1933 or the Securities Exchange 
        Act of 1934''; and
            (6) in section 326 (15 U.S.C. 77zzz), by striking 
        ``Securities Act of 1933, or the Securities Exchange Act of 
        1934, or the Public Utility Holding Company Act of 1935,'' and 
        inserting ``Securities Act of 1933 or the Securities Exchange 
        Act of 1934''.
    (c) Investment Company Act of 1940.--The Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.) is amended--
            (1) in section 2(a)(44) (15 U.S.C. 80a-2(a)(44)), by 
        striking ```Public Utility Holding Company Act of 1935','';
            (2) in section 3(c) (15 U.S.C. 80a-3(c)), by amending 
        paragraph (8) to read as follows:
            ``(8) [Repealed]'';
            (3) in section 38(b) (15 U.S.C. 80a-37(b)), by striking 
        ``the Public Utility Holding Company Act of 1935,''; and
            (4) in section 50 (15 U.S.C. 80a-49), by striking ``the 
        Public Utility Holding Company Act of 1935,''.
    (d) Investment Advisers Act of 1940.--Section 202(a)(21) of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(21)) is amended by 
striking ```Public Utility Holding Company Act of 1935',''.

SEC. 407. PROMOTING TRANSPARENCY IN FINANCIAL REPORTING.

    (a) Findings.--Congress finds the following:
            (1) Transparent and clear financial reporting is integral 
        to the continued growth and strength of our capital markets and 
        the confidence of investors.
            (2) The increasing detail and volume of accounting, 
        auditing, and reporting guidance pose a major challenge.
            (3) The complexity of accounting and auditing standards in 
        the United States has added to the costs and effort involved in 
        financial reporting.
    (b) Testimony Required on Reducing Complexity in Financial 
Reporting.--The Securities and Exchange Commission, the Public Company 
Accounting Oversight Board, and the standard setting body designated 
pursuant to section 19(b) of the Securities Act of 1933 shall annually 
provide oral testimony by their respective Chairpersons or a designee 
of the Chairperson, beginning in 2010, and for 5 years thereafter, to 
the Committee on Financial Services of the House of Representatives on 
their efforts to reduce the complexity in financial reporting to 
provide more accurate and clear financial information to investors, 
including--
            (1) reassessing complex and outdated accounting standards;
            (2) improving the understandability, consistency, and 
        overall usability of the existing accounting and auditing 
        literature;
            (3) developing principles-based accounting standards;
            (4) encouraging the use and acceptance of interactive data; 
        and
            (5) promoting disclosures in ``plain English''.

SEC. 408. UNLAWFUL MARGIN LENDING.

    Section 7(c)(1)(A) of the Securities Exchange Act of 1934 (15 
U.S.C. 78g(c)(1)(A)) is amended by striking ``; and'' and inserting ``; 
or''.

SEC. 409. PROTECTING CONFIDENTIALITY OF MATERIALS SUBMITTED TO THE 
              COMMISSION.

    (a) Securities Exchange Act of 1934.--Section 17(j) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78q(j)) is amended to read 
as follows:
    ``(j) Authority To Limit Disclosure of Information.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, the Commission shall not be compelled to disclose any 
        information, documents, records, or reports that relate to an 
        examination, surveillance, or risk assessment of a person 
        subject to or described in this section, including subsection 
        (i)(5)(A), or the financial or operational condition of such 
        persons, or any information supplied to the Commission by any 
        domestic or foreign regulatory agency or self-regulatory 
        organization that relates to the financial or operational 
        condition of such persons, of any associated person of such 
        persons, or any affiliate of an investment bank holding 
        company.
            ``(2) Certain exceptions.--Nothing in this subsection shall 
        authorize the Commission to withhold information from the 
        Congress, prevent the Commission from complying with a request 
        for information from any other Federal department or agency, 
        the Public Company Accounting Oversight Board, or any self-
        regulatory organization requesting the information for purposes 
        within the scope of its jurisdiction, or prevent the Commission 
        from complying with an order of a court of the United States in 
        an action brought by the United States or the Commission 
        against a person subject to or described in this section to 
        produce information, documents, records, or reports relating 
        directly to the examination, surveillance, or risk assessment 
        of that person or the financial or operational condition of 
        that person or an associated or affiliated person of that 
        person.
            ``(3) Treatment under section 552 of title 5, united states 
        code.--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 that section.
            ``(4) Certain information to be confidential.--In 
        prescribing regulations to carry out the requirements of this 
        subsection, the Commission shall designate information 
        described in or obtained pursuant to subparagraphs (A), (B), 
        and (C) of subsection (i)(3) as confidential information for 
        purposes of section 24(b)(2) of this title.''.
    (b) Investment Company Act of 1940.--Section 31(b) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-30(b)), as amended by 
sections 106(a)(2) and 218(b)(4), is further amended by adding at the 
end the following new paragraph:
            ``(6) Confidentiality.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, the Commission shall not be compelled 
                to disclose any information, documents, records, or 
                reports that relate to an examination, surveillance, or 
                risk assessment of a person subject to or described in 
                this section.
                    ``(B) Certain exceptions.--Nothing in this 
                subsection shall authorize the Commission to withhold 
                information from the Congress, prevent the Commission 
                from complying with a request for information from any 
                other Federal department or agency, or the Public 
                Company Accounting Oversight Board requesting the 
                information for purposes within the scope of its 
                jurisdiction, or prevent the Commission from complying 
                with an order of a court of the United States in an 
                action brought by the United States or the Commission 
                against a person subject to or described in this 
                section to produce information, documents, records, or 
                reports relating directly to the examination of that 
                person or the financial or operational condition of 
                that person or an associated or affiliated person of 
                that person.
                    ``(C) Treatment under section 552 of title 5, 
                united states code.--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 that section.''.
    (c) Investment Advisers Act of 1940.--Section 204 of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-4), as amended by sections 106(b) 
and 218(c), is further amended by adding at the end the following new 
subsection:
    ``(f) Confidentiality.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, the Commission shall not be compelled to disclose any 
        information, documents, records, or reports that relate to an 
        examination of a person subject to or described in this 
        section.
            ``(2) Certain exceptions.--Nothing in this subsection shall 
        authorize the Commission to withhold information from Congress, 
        prevent the Commission from complying with a request for 
        information from any other Federal department or agency, the 
        Public Company Accounting Oversight Board, or a self-regulatory 
        organization requesting the information for purposes within the 
        scope of its jurisdiction, or prevent the Commission from 
        complying with an order of a court of the United States in an 
        action brought by the United States or the Commission against a 
        person subject to or described in this section to produce 
        information, documents, records, or reports relating directly 
        to the examination of that person or the financial or 
        operational condition of that person or an associated or 
        affiliated person of that person.
            ``(3) Treatment under section 552 of title 5, united states 
        code.--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 that section.''.

SEC. 410. TECHNICAL CORRECTIONS.

    (a) Securities Act of 1933.--The Securities Act of 1933 (15 U.S.C. 
77a et seq.) is amended--
            (1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by striking 
        ``individual;'' and inserting ``individual,'';
            (2) in the matter following paragraph (5) of section 11(a), 
        by striking ``earning statement'' and inserting ``earnings 
        statement''.
            (3) in section 18(b)(1)(C) (15 U.S.C. 77r(b)(1)(C)), by 
        striking ``is a security'' and inserting ``a security'';
            (4) in section 18(c)(2)(B)(i) (15 U.S.C. 77r(c)(2)(B)(i)), 
        by striking ``State, or'' and inserting ``State or'';
            (5) in section 19(d)(6)(A) (15 U.S.C. 77s(d)(6)(A)), by 
        striking ``in paragraph (1) of (3)'' and inserting ``in 
        paragraph (1) or (3)''; and
            (6) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z-
        2(c)(1)(B)(ii)), by striking ``business entity;'' and inserting 
        ``business entity,''.
    (b) Securities Exchange Act of 1934.--The Securities Exchange Act 
of 1934 (15 U.S.C. 78 et seq.) is amended--
            (1) in section 2(1)(a) (15 U.S.C. 78b(1)(a)), by striking 
        ``affected'' and inserting ``effected'';
            (2) in section 3(a)(55)(A) (15 U.S.C. 78c(a)(55)(A)), by 
        striking ``section 3(a)(12) of the Securities Exchange Act of 
        1934'' and inserting ``section 3(a)(12) of this Act'';
            (3) in section 3(g) (15 U.S.C. 78c(g)), by striking 
        ``company, account person, or entity'' and inserting ``company, 
        account, person, or entity'';
            (4) in section 10A(i)(1)(B)(i) (15 U.S.C. 78j-
        1(i)(1)(B)(i)), by striking ``nonaudit'' and inserting ``non-
        audit'';
            (5) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by striking 
        ``earning statement'' and inserting ``earnings statement'';
            (6) in section 15(b)(1) (15 U.S.C. 78o(b)(1))--
                    (A) by striking the sentence beginning ``The order 
                granting'' and ending ``from such membership.'' in 
                subparagraph (B); and
                    (B) by inserting such sentence in the matter 
                following such subparagraph after ``are satisfied.'';
            (7) in section 15C(a)(2) (15 U.S.C. 78o-5(a)(2))--
                    (A) by redesignating clauses (i) and (ii) as 
                subparagraphs (A) and (B), respectively;
                    (B) by striking the sentence beginning ``The order 
                granting'' and ending ``from such membership.'' in such 
                subparagraph (B), as redesignated; and
                    (C) by inserting such sentence in the matter 
                following such redesignated subparagraph after ``are 
                satisfied.'';
            (8) in section 16(a)(2)(C) (15 U.S.C. 78p(a)(2)(C)), by 
        striking ``section 206(b)'' and inserting ``section 206B'';
            (9) in section 17(b)(1)(B) (15 U.S.C. 78q(b)(1)(B)), by 
        striking ``15A(k) gives'' and inserting ``15A(k), give''; and
            (10) in section 21C(c)(2) (15 U.S.C. 78u-3(c)(2)), by 
        striking ``paragraph (1) subsection'' and inserting ``Paragraph 
        (1)''.
    (c) Trust Indenture Act of 1939.--The Trust Indenture Act of 1939 
(15 U.S.C. 77aaa et seq.) is amended--
            (1) in section 304(b) (15 U.S.C. 77ddd(b)), by striking 
        ``section 2 of such Act'' and inserting ``section 2(a) of such 
        Act'';
            (2) in section 313(a)(4) (15 U.S.C. 77mmm(a)(4)) by 
        striking ``subsection (b) of section 311'' and inserting 
        ``section 311(b)''; and
            (3) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), by 
        striking ``(1),'' and inserting ``(1)''.
    (d) Investment Company Act of 1940.--The Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.) is amended--
            (1) in section 2(a)(19)(B) (15 U.S.C. 80a-2(a)(19)(B)) by 
        striking ``clause (vi)'' both places it appears in the last two 
        sentences and inserting ``clause (vii)'';
            (2) in section 9(b)(4)(B) (15 U.S.C. 80a-9(b)(4)(B)), by 
        inserting ``or'' after the semicolon at the end;
            (3) in section 12(d)(1)(J) (15 U.S.C. 80a-12(d)(1)(J)), by 
        striking ``any provision of this subsection'' and inserting 
        ``any provision of this paragraph'';
            (4) in section 13(a)(3) (15 U.S.C. 80a-13(a)(3)), by 
        inserting ``or'' after the semicolon at the end;
            (5) in section 17(f)(4) (15 U.S.C. 80a-17(f)(4)), by 
        striking ``No such member'' and inserting ``No member of a 
        national securities exchange'';
            (6) in section 17(f)(6) (15 U.S.C. 80a-17(f)(6)), by 
        striking ``company may serve'' and inserting ``company, may 
        serve''; and
            (7) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a-
        60(a)(3)(B)(iii))--
                    (A) by striking ``paragraph (1) of section 205'' 
                and inserting ``section 205(a)(1)''; and
                    (B) by striking ``clause (A) or (B) of that 
                section'' and inserting ``section 205(b)(1) or (2)''.
    (e) Investment Advisers Act of 1940.--The Investment Advisers Act 
of 1940 (15 U.S.C. 80b-1 et seq.) is amended--
            (1) in each of the following sections, by striking 
        ``principal business office'' or ``principal place of 
        business'' (whichever and wherever it appears) and inserting 
        ``principal office and place of business'': sections 
        203(c)(1)(A), 203(k)(4)(B), 213(a), 222(b), and 222(c) (15 
        U.S.C. 80b-3(c)(1)(A), 80b-3(k)(4)(B), 80b-13(a), 80b-18a(b), 
        and 80b-18a(c)); and
            (2) in section 206(3) (15 U.S.C. 80b-6(3)), by inserting 
        ``or'' after the semicolon at the end.

SEC. 411. MUNICIPAL SECURITIES.

    Section 15B(b) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o-4(b)) is amended--
            (1) by amending paragraph (1) to read as follows:(1) Not 
        later than October 1, 2010, the Municipal Securities Rulemaking 
        Board (hereinafter in this section referred to as the `Board'), 
        shall be composed of members which shall perform the duties set 
        forth in this section and shall consist of--
                    ``(A) a majority of independent public 
                representatives, at least one of whom shall be 
                representative of investors in municipal securities and 
                at least one of whom shall be representative of issuers 
                of municipal securities (which members are hereinafter 
                referred to as `public representatives');
                    ``(B) at least one individual who is representative 
                of municipal securities brokers and municipal 
                securities dealers which are not banks or subsidiaries 
                or departments or divisions of banks (which members are 
                hereinafter referred to as `broker-dealer 
                representatives'); and
                    ``(C) at least one individual who is representative 
                of municipal securities dealers which are banks or 
                subsidiaries or departments or divisions of banks 
                (which members are hereinafter referred to as `bank 
                representatives').''; and
            (2) by amending paragraph (2)(B) to read as follows:
            ``(B) Establish fair procedures for the nomination and 
        election of members of the Board and assure fair representation 
        in such nominations and elections of municipal securities 
        brokers and municipal securities dealers. Such rules--
                    ``(i) shall establish requirements regarding the 
                independence of public representatives;
                    ``(ii) shall provide that the number of public 
                representatives of the Board shall at all times exceed 
                the total number of broker-dealer representatives and 
                bank representatives;
                    ``(iii) shall establish minimum knowledge, 
                experience, and other appropriate qualifications for 
                individuals to serve as public representatives, which 
                may include, among other things, prior work experience 
                in the securities, municipal finance, or municipal 
                securities industries;
                    ``(iv) shall specify the term members shall serve; 
                and
                    ``(v) may increase or decrease the number of 
                members which shall constitute the whole Board, but in 
                no case may such number be an even number.''.

SEC. 412. INTERESTED PERSON DEFINITION.

    Section 2(a)(19)(A) of the Investment Company Act of 1940 (15 
U.S.C. 80a-2(a)(19)(A)) is amended--
            (1) by striking clauses (v) and (vi);
            (2) by inserting after clause (iv) the following new 
        clause:
                            ``(v) any natural person who is a member of 
                        a class of persons who the Commission, by rule 
                        or regulation, determines are unlikely to 
                        exercise an appropriate degree of independence 
                        as a result of--
                                    ``(I) a material business or 
                                professional relationship with such 
                                company or any affiliated person of 
                                such company; or
                                    ``(II) a close familial 
                                relationship with any natural person 
                                who is an affiliated person of such 
                                company;'';
            (3) by redesignating clause (vii) as clause (vi); and
            (4) in clause (vi), as redesignated, by striking ``two 
        completed fiscal years'' and inserting ``five completed fiscal 
        years''.

SEC. 413. RULEMAKING AUTHORITY TO PROTECT REDEEMING INVESTORS.

    Section 22(e) of the Investment Company Act of 1940 (15 U.S.C. 80a-
22(e)) is amended by adding at the end the following: ``The Commission 
may, by rules and regulations, limit the extent to which a registered 
open-end investment company may own, hold, or invest in illiquid 
securities or other illiquid property.''.

SEC. 414. STUDY ON SEC REVOLVING DOOR.

    (a) Government Accountability Office Study.--The Comptroller 
General of the United States shall conduct a study that will--
            (1) review the number of employees who leave the Securities 
        and Exchange Commission to work for financial institutions 
        regulated by such Commission;
            (2) determine how many employees who leave the Securities 
        and Exchange Commission worked on cases that involved financial 
        institutions regulated by such Commission;
            (3) review the length of time employees work for the 
        Securities and Exchange Commission before leaving to be 
        employed by financial institutions regulated by such 
        Commission;
            (4) review existing internal controls and make 
        recommendations on strengthening such controls to ensure that 
        employees of the Securities and Exchange Commission who are 
        later employed by financial institutions did not assist such 
        institutions in violating any rules or regulations of the 
        Commission during the course of their employment with such 
        Commission;
            (5) determine if greater post-employment restrictions are 
        necessary to prevent employees of the Securities and Exchange 
        Commission from being employed by financial institutions after 
        employment with such Commission;
            (6) determine if the volume of employees of the Securities 
        and Exchange Commission who are later employed by financial 
        institutions has led to inefficiencies in enforcement;
            (7) determine if employees of the Securities and Exchange 
        Commission who are later employed by financial institutions 
        have engaged in information sharing or assisted such 
        institutions in circumventing Federal rules and regulations 
        while employed by such Commission;
            (8) review any information that may address the volume of 
        employees of the Securities and Exchange Commission who are 
        later employed by financial institutions, and make 
        recommendations to Congress; and
            (9) review other additional issues as may be raised during 
        the course of the study conducted under this subsection.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Comptroller General of the United States shall submit 
to the Committee on Financial Services of the House of Representatives 
and the Committee on Banking, Housing, and Urban Affairs of the Senate 
a report on the results of the study required by subsection (a).

SEC. 415. STUDY ON INTERNAL CONTROL EVALUATION AND REPORTING COST 
              BURDENS ON SMALLER ISSUERS.

    (a) Study Required.--The Government Accountability Office and the 
Securities and Exchange Commission shall each conduct a study 
evaluating the costs and benefits of complying with section 404(b) of 
the Sarbanes-Oxley Act of 2002 (15 U.S.C. Sec.  7262(b)) on issuers who 
are not accelerated or large accelerated filers as defined by 
Commission Rule 12b-2. The study shall--
            (1) include recommendations, administrative reforms, and 
        legislative proposals on implementation steps that could be 
        taken to reduce compliance burdens on these issuers; and
            (2) determine the efficacy of the Securities and Exchange 
        Commission's measures to limit the cost of compliance on 
        smaller issuers.
    (b) Reports Required.--On or before June 1, 2010, the Government 
Accountability Office and the Securities and Exchange Commission shall 
submit separate reports to Congress containing the findings and 
conclusions of the studies required under subsection (a), together with 
such recommendations for regulatory, legislative, or administrative 
action as may be appropriate.
    (c) Effective Date Contingent on Reports.--Requirements under 
section 404(b) of the Sarbanes-Oxley Act of 2002 on issuers described 
under subsection (a) shall not become effective until the results of 
the report are delivered, but in no case before June 1, 2011.

SECTION 416. ANALYSIS OF RULE REGARDING SMALLER REPORTING COMPANIES.

    (a) Findings.--Congress finds the following:
            (1) Many small businesses in cutting-edge technology 
        sectors require significant capital investment to develop new 
        technologies related to clean energy, drug treatments for 
        terminal diseases and food production in hunger-stricken areas 
        of the World.
            (2) Many technology companies conducting research do not 
        meet the definition of ``smaller reporting company'' under the 
        Securities and Exchange Commission's Rule 12b-2 due to 
        unusually high public floats despite low or zero revenue.
            (3) The Final Report of the Advisory Committee on Smaller 
        Public Companies to the Securities and Exchange Commission 
        recommended that a company with a market capitalization of less 
        than about $787,000,000 be considered a smallcap company and 
        that the Commission provide exemptions from section 404(b) of 
        the Sarbanes-Oxley Act to companies with less than $250,000,000 
        in annual revenues.
    (b) Study of Using Revenue as Criteria to Define Smaller Reporting 
Company.--The Securities and Exchange Commission shall conduct a study 
of the inclusion of revenue as a criteria used in defining smaller 
reporting company as defined under the Commission's Rule 12b-2 to 
account for smaller public companies with public floats less than 
$700,000,000 and revenues less than $250,000,000. Not later than 180 
days after the date of enactment of this Act, the Commission shall 
provide the Committee on Financial Services of the House of 
Representatives and the Committee on Banking, Housing and Urban Affairs 
of the Senate a report of the findings of the study.

SEC. 417. FINANCIAL REPORTING FORUM.

    (a) Establishment.--There is hereby established a Financial 
Reporting Forum (hereinafter referred to as the ``Forum''), which shall 
consist of--
            (1) the Chairman of the Securities Exchange Commission 
        (hereinafter referred to as the ``SEC'');
            (2) the head of the Financial Accounting Standards Board;
            (3) the Chairman of the Public Company Accounting Oversight 
        Board;
            (4) the head of each appropriate Federal banking agency, as 
        such term is defined under section 3(q) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1813(q));
            (5) the Administrator of the National Credit Union 
        Administration;
            (6) the Secretary of the Treasury;
            (7) a representative of a non-financial institution, 
        appointed by the SEC;
            (8) a representative of a financial institution, appointed 
        by the SEC;
            (9) a representative of auditors, appointed by the SEC; and
            (10) a representative of investors, appointed by the SEC.
    (b) Meetings.--The Forum shall meet no less often than quarterly.
    (c) Duties.--The Forum shall meet to discuss immediate and long-
term issues critical to financial reporting.
    (d) Reporting.--The Forum shall issue an annual report to the 
Congress detailing any determinations or findings made by the Forum 
during the previous year, including any legislative recommendations the 
Forum may have related to financial reporting matters.

SEC. 418. INVESTMENT ADVISERS SUBJECT TO STATE AUTHORITIES.

    Section 203A(a) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-3a(a)) is amended--
            (1) by redesignating paragraph (2) as paragraph (3); and
            (2) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) Treatment of certain mid-sized investment advisers.--
        Notwithstanding paragraph (1), an investment adviser that--
                    ``(A) is regulated and examined, or required to be 
                regulated and examined, by a State; and
                    ``(B) has assets under management between--
                            ``(i) the amount specified under 
                        subparagraph (A) of paragraph (1), as such 
                        amount may have been adjusted by the Commission 
                        pursuant to that subparagraph, and
                            ``(ii) $100,000,000, or such higher amount 
                        as the Commission may, by rule, deem 
                        appropriate in accordance with the purposes of 
                        this title,
                shall register with, and be subject to examination by, 
                such State. The Commission shall publish a list of the 
                States that regulate and examine, or require regulation 
                and examination of, investment advisers to which the 
                requirements of this paragraph apply.''.

SEC. 419. CUSTODIAL REQUIREMENTS.

    Not later than 180 days after the date of the enactment of this 
Act, the Securities and Exchange Commission shall adopt a rule pursuant 
to its authority under section 211(a) of the Investment Advisers Act of 
1940 making it unlawful under section 206(4) of such Act for an 
investment adviser registered under the Act to have custody of funds or 
securities of a client the value of which exceeds $10,000,000, subject 
to such exception the Commission determines in such rule are in the 
public interest and consistent with the protection of investors, 
unless--
            (1) the funds and securities are maintained with a 
        qualified custodian either in a separate account for each 
        client under the client's name, or in accounts that contain 
        only client funds and securities under the name of the 
        investment adviser as agent or trustee for the client; and
            (2) the qualified custodian does not directly or indirectly 
        provide investment advice with respect to such funds or 
        securities.

SEC. 420. OMBUDSMAN.

    (a) Appointment.--Not later than 180 days after the date of the 
enactment of this Act, the Chairman of the Securities and Exchange 
Commission shall appoint an Ombudsman who shall report directly to the 
Chairman.
    (b) Duties.--The Ombudsman appointed under subsection (a) shall--
            (1) act as a liaison between the Commission and any 
        affected person with respect to any problem such person may 
        have in dealing with the Commission resulting from the 
        regulatory activities of the Commission;
            (2) review and make recommendations regarding Commission 
        policies and procedures to encourage persons to present 
        questions to the Commission regarding compliance with Federal 
        securities laws; and
            (3) maintain confidentiality of communications between such 
        persons and the Ombudsman.
    (c) Limitation.--In carrying out the duties under subsection (b), 
the Ombudsman shall utilize personnel of the Commission to the extent 
practicable. Nothing in this section shall be construed as replacing, 
altering, or diminishing the activities of any ombudsman or similar 
office in any other agency.
    (d) Report.--Each year, the Ombudsman shall submit a report to the 
Commission for inclusion in the annual report that describes the 
activities and evaluates the effectiveness of the Ombudsman during the 
preceding year. In that report, the Ombudsman shall include solicited 
comments and evaluations from registrants in regards to the 
effectiveness of the Ombudsman.

         TITLE V--SECURITIES INVESTOR PROTECTION ACT AMENDMENTS

SEC. 501. INCREASING THE MINIMUM ASSESSMENT PAID BY SIPC MEMBERS.

    Section 4(d)(1)(C) of the Securities Investor Protection Act of 
1970 (15 U.S.C. 78ddd(d)(1)(C)) is amended by striking ``$150 per 
annum'' and inserting the following: ``0.02 percent of the gross 
revenues from the securities business of such member of SIPC''.

SEC. 502. INCREASING THE BORROWING LIMIT ON TREASURY LOANS.

    Section 4(h) of the Securities Investor Protection Act of 1970 (15 
U.S.C. 78ddd(h)) is amended by striking ``of not to exceed 
$1,000,000,000'' and inserting ``the lesser of $2,500,000,000 or the 
target amount of the SIPC Fund specified in the bylaws of SIPC''.

SEC. 503. INCREASING THE CASH LIMIT OF PROTECTION.

    Section 9 of the Securities Investor Protection Act of 1970 (15 
U.S.C. 78fff-3) is amended--
            (1) in subsection (a)(1), by striking ``$100,000 for each 
        such customer'' and inserting ``the standard maximum cash 
        advance amount for each such customer, as determined in 
        accordance with subsection (d)''; and
            (2) by adding the following new subsections:
    ``(d) Standard Maximum Cash Advance Amount Defined.--For purposes 
of this section, the term `standard maximum cash advance amount' means 
$250,000, as such amount may be adjusted after March 31, 2010, as 
provided under subsection (e).
    ``(e) Inflation Adjustment.--
            ``(1) In general.--No later than April 1, 2010, and every 5 
        years thereafter, and subject to the approval of the Commission 
        as provided under section 3(e)(2), the Board of Directors of 
        SIPC shall determine whether an inflation adjustment to the 
        standard maximum cash advance amount is appropriate. If the 
        Board of Directors of SIPC determines such an adjustment is 
        appropriate, then the standard maximum cash advance amount 
        shall be an amount equal to--
                    ``(A) $250,000 multiplied by,
                    ``(B) the ratio of the annual value of the Personal 
                Consumption Expenditures Chain-Type Price Index (or any 
                successor index thereto), published by the Department 
                of Commerce, for the calendar year preceding the year 
                in which such determination is made, to the published 
                annual value of such index for the calendar year 
                preceding the year in which this subsection was 
                enacted.
        The index values used in calculations under this paragraph 
        shall be, as of the date of the calculation, the values most 
        recently published by the Department of Commerce.
            ``(2) Rounding.--If the standard maximum cash advance 
        amount determined under paragraph (1) for any period is not a 
        multiple of $10,000, the amount so determined shall be rounded 
        down to the nearest $10,000.
            ``(3) Publication and report to the congress.--Not later 
        than April 5 of any calendar year in which a determination is 
        required to be made under paragraph (1)--
                    ``(A) the Commission shall publish in the Federal 
                Register the standard maximum cash advance amount; and
                    ``(B) the Board of Directors of SIPC shall submit a 
                report to the Congress containing stating the standard 
                maximum cash advance amount.
            ``(4) Implementation period.--Any adjustment to the 
        standard maximum cash advance amount shall take effect on 
        January 1 of the year immediately succeeding the calendar year 
        in which such adjustment is made.
            ``(5) Inflation adjustment considerations.--In making any 
        determination under paragraph (1) to increase the standard 
        maximum cash advance amount, the Board of Directors of SIPC 
        shall consider--
                    ``(A) the overall state of the fund and the 
                economic conditions affecting members of SIPC;
                    ``(B) the potential problems affecting members of 
                SIPC; and
                    ``(C) such other factors as the Board of Directors 
                of SIPC may determine appropriate.''.

SEC. 504. SIPC AS TRUSTEE IN SIPA LIQUIDATION PROCEEDINGS.

    Section 5(b)(3) of the Securities Investor Protection Act of 1970 
(15 U.S.C. 78eee(b)(3)) is amended--
            (1) by striking ``SIPC has determined that the liabilities 
        of the debtor to unsecured general creditors and to 
        subordinated lenders appear to aggregate less than $750,000 and 
        that''; and
            (2) by striking ``five hundred'' and inserting ``five 
        thousand''.

SEC. 505. INSIDERS INELIGIBLE FOR SIPC ADVANCES.

    Section 9(a)(4) of the Securities Investor Protection Act of 1970 
(15 U.S.C. 78fff-3(a)(4)) is amended by inserting ``an insider,'' after 
``or net profits of the debtor,''.

SEC. 506. ELIGIBILITY FOR DIRECT PAYMENT PROCEDURE.

    Section 10(a)(4) of the Securities Investor Protection Act of 1970 
(15 U.S.C. 78fff-4(a)(4)) is amended by striking ``$250,000'' and 
inserting ``$850,000''.

SEC. 507. INCREASING THE FINE FOR PROHIBITED ACTS UNDER SIPA.

    Section 14(c) of the Securities Investor Protection Act of 1970 (15 
U.S.C. 78jjj(c)) is amended--
            (1) in paragraph (1), by striking ``$50,000'' and inserting 
        ``$250,000''; and
            (2) in paragraph (2), by striking ``$50,000'' and inserting 
        ``$250,000''.

SEC. 508. PENALTY FOR MISREPRESENTATION OF SIPC MEMBERSHIP OR 
              PROTECTION.

    Section 14 of the Securities Investor Protection Act of 1970 (15 
U.S.C. 78jjj) is amended by adding at the end the following new 
subsection:
    ``(d) Misrepresentation of SIPC Membership or Protection.--
            ``(1) In general.--Any person who falsely represents by any 
        means (including, without limitation, through the Internet or 
        any other medium of mass communication), with actual knowledge 
        of the falsity of the representation and with an intent to 
        deceive or cause injury to another, that such person, or 
        another person, is a member of SIPC or that any person or 
        account is protected or is eligible for protection under this 
        Act or by SIPC, shall be liable for any damages caused thereby 
        and shall be fined not more than $250,000 or imprisoned for not 
        more than five years.
            ``(2) Internet service providers.--Any Internet service 
        provider that, on or through a system or network controlled or 
        operated by the Internet service provider, transmits, routes, 
        provides connections for, or stores any material containing any 
        misrepresentation of the kind prohibited in paragraph (1) shall 
        be liable for any damages caused thereby, including damages 
        suffered by SIPC, if the Internet service provider--
                    ``(A) has actual knowledge that the material 
                contains a misrepresentation of the kind prohibited in 
                paragraph (1), or
                    ``(B) in the absence of actual knowledge, is aware 
                of facts or circumstances from which it is apparent 
                that the material contains a misrepresentation of the 
                kind prohibited in paragraph (1), and
        upon obtaining such knowledge or awareness, fails to act 
        expeditiously to remove, or disable access to, the material.
            ``(3) Injunctions.--Any court having jurisdiction of a 
        civil action arising under this Act may grant temporary 
        injunctions and final injunctions on such terms as the court 
        deems reasonable to prevent or restrain any violation of 
        paragraph (1) or (2). Any such injunction may be served 
        anywhere in the United States on the person enjoined, shall be 
        operative throughout the United States, and shall be 
        enforceable, by proceedings in contempt or otherwise, by any 
        United States court having jurisdiction over that person. The 
        clerk of the court granting the injunction shall, when 
        requested by any other court in which enforcement of the 
        injunction is sought, transmit promptly to the other court a 
        certified copy of all papers in the case on file in such 
        clerk's office.''.

SEC. 509. FUTURES HELD IN A PORTFOLIO MARGIN SECURITIES ACCOUNT 
              PROTECTION.

    (a) SIPC Advances.--Section 9(a)(1) of the Securities Investor 
Protection Act of 1970 (15 U.S.C. 78fff-3(a)(1)) is amended by 
inserting ``or options on futures contracts'' after ``claim for 
securities''.
    (b) Definitions.--Section 16 of such Act (15 U.S.C. 78lll) is 
amended--
            (1) by amending paragraph (2) to read as follows:
            ``(2) Customer.--
                    ``(A) In general.--The term `customer' of a debtor 
                means any person (including any person with whom the 
                debtor deals as principal or agent) who has a claim on 
                account of securities received, acquired, or held by 
                the debtor in the ordinary course of its business as a 
                broker or dealer from or for the securities accounts of 
                such person for safekeeping, with a view to sale, to 
                cover consummated sales, pursuant to purchases, as 
                collateral, security, or for purposes of effecting 
                transfer. The term `customer' includes any person who 
                has a claim against the debtor arising out of sales or 
                conversions of such securities.
                    ``(B) Included persons.--The term `customer' 
                includes--
                            ``(i) any person who has deposited cash 
                        with the debtor for the purpose of purchasing 
                        securities; and
                            ``(ii) any person who has a claim against 
                        the debtor for, or a claim against the debtor 
                        arising out of sales or conversions of, cash, 
                        securities, futures contracts, or options on 
                        futures contracts received, acquired, or held 
                        in a portfolio margining account carried as a 
                        securities account pursuant to a portfolio 
                        margining program approved by the Commission.
                    ``(C) Excluded persons.--The term `customer' does 
                not include--
                            ``(i) any person to the extent that the 
                        claim of such person arises out of transactions 
                        with a foreign subsidiary of a member of SIPC;
                            ``(ii) any person to the extent that such 
                        person has a claim for cash or securities which 
                        by contract, agreement, or understanding, or by 
                        operation of law, is part of the capital of the 
                        debtor, or is subordinated to the claims of any 
                        or all creditors of the debtor, notwithstanding 
                        that some ground exists for declaring such 
                        contract, agreement, or understanding void or 
                        voidable in a suit between the claimant and the 
                        debtor; or
                            ``(iii) any person to the extent such 
                        person has a claim relating to any open 
                        repurchase or open reverse repurchase 
                        agreement.
                For purposes of this paragraph, the term `repurchase 
                agreement' means the sale of a security at a specified 
                price with a simultaneous agreement or obligation to 
                repurchase the security at a specified price on a 
                specified future date.'';
            (2) in paragraph (4), by inserting after the first sentence 
        the following new sentence: ``In the case of portfolio 
        margining accounts of customers that are carried as securities 
        accounts pursuant to a portfolio margining program approved by 
        the Commission, such term shall also include futures contracts 
        and options on futures contracts received, acquired, or held by 
        or for the account of a debtor from or for such accounts, and 
        the proceeds thereof.'';
            (3) in paragraph (9), by inserting before ``Such term'' in 
        the matter following subparagraph (L) the following: ``The term 
        includes revenues earned by a broker or dealer in connection 
        with transactions in customers' portfolio margining accounts 
        carried as securities accounts pursuant to a portfolio 
        margining program approved by the Commission.''; and
            (4) in paragraph (11)--
                    (A) by amending subparagraph (A) to read as 
                follows:
                    ``(A) calculating the sum which would have been 
                owed by the debtor to such customer if the debtor had 
                liquidated, by sale or purchase on the filing date--
                            ``(i) all securities positions of such 
                        customer (other than customer name securities 
                        reclaimed by such customer); and
                            ``(ii) all positions in futures contracts 
                        and options on futures contracts held in a 
                        portfolio margining account carried as a 
                        securities account pursuant to a portfolio 
                        margining program approved by the Commission; 
                        minus''; and
                    (B) by inserting before ``In determining'' in the 
                matter following subparagraph (C) the following: ``A 
                claim for a commodity futures contract received, 
                acquired, or held in a portfolio margining account 
                pursuant to a portfolio margining program approved by 
                the Commission, or a claim for a security futures 
                contract, shall be deemed to be a claim for the mark-
                to-market (variation) payments due with respect to such 
                contract as of the filing date, and such claim shall be 
                treated as a claim for cash.''.

SEC. 510. STUDY AND REPORT ON THE FEASIBILITY OF RISK-BASED ASSESSMENTS 
              FOR SIPC MEMBERS.

    (a) Study Required.--The Comptroller General of the United States 
shall conduct a study on whether the Securities Investor Protection 
Corporation (hereafter in this section referred to as ``SIPC'') should 
be required to impose assessments, on its member brokers and dealers, 
based on risk for the purpose of adequately maintaining the SIPC Fund.
    (b) Content.--The Comptroller General in conducting this study 
shall--
            (1) identify and examine available approaches, including 
        modeling, to measure broker and dealer operational risk;
            (2) analyze whether the available approaches to measure 
        broker and dealer operational risk can be used in managing the 
        aggregate risk to the SIPC Fund;
            (3) explore whether objective measures like the volume of 
        assets of the SIPC member, previous enforcement and compliance 
        actions taken by regulatory bodies against the SIPC member, or 
        the number of years the SIPC member has been in operation, 
        among other factors, can be used to assess the probability the 
        fund will incur a loss with respect to the SIPC member;
            (4) examine the impact that risk-based assessments could 
        have on large and small brokers and dealers; and
            (5) examine the impact that risk-based assessments could 
        have on institutional and retail brokers and dealers.
    (c) Consultation.--The Comptroller General in planning and 
conducting this study shall consult with the Securities and Exchange 
Commission, the Federal Deposit Insurance Corporation, SIPC, the 
Financial Industry Regulatory Authority, and any other public or 
private sector organization that the Comptroller General considers 
appropriate.
    (d) Report Required.--Not later than one year after the date of 
enactment of this Act, the Comptroller general shall submit a report of 
the results of the study required by this section to the Committee on 
Banking, Housing, and Urban Affairs of the Senate and the Committee on 
Financial Services of the House of Representatives.

SEC. 511. BUDGETARY TREATMENT OF COMMISSION LOANS TO SIPC.

    Section 4(g) of the Securities Investor Protection Act of 1970 (15 
U.S.C. 78ddd(g)) is amended by adding at the end the following: ``Any 
loan made by the Commission to SIPC under this subsection shall not be 
considered to result in a new direct loan obligation or a new loan 
guarantee commitment for purposes of section 504 of the Federal Credit 
Reform Act of 1990.''.

                TITLE VI--SARBANES-OXLEY ACT AMENDMENTS

SEC. 601. PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD OVERSIGHT OF 
              AUDITORS OF BROKERS AND DEALERS.

    (a) Definitions.--(1) Title I of the Sarbanes-Oxley Act of 2002 is 
amended by adding at the end the following new section:

``SEC. 110. DEFINITIONS.

    ``For the purposes of this title, and notwithstanding section 2:
            ``(1) Audit.--The term `audit' means an examination of the 
        financial statements, reports, documents, procedures or 
        controls, or notices, of any issuer, broker, or dealer by an 
        independent public accounting firm in accordance with the rules 
        of the Board or the Commission (or, for the period preceding 
        the adoption of applicable rules of the Board under section 
        103, in accordance with then-applicable generally accepted 
        auditing and related standards for such purposes), for the 
        purpose of expressing an opinion on such financial statements, 
        reports, documents, procedures or controls, or notices.
            ``(2) Audit report.--The term `audit report' means a 
        document, report, notice, or other record--
                    ``(A) prepared following an audit performed for 
                purposes of compliance by an issuer, broker, or dealer 
                with the requirements of the securities laws; and
                    ``(B) in which a public accounting firm either--
                            ``(i) sets forth the opinion of that firm 
                        regarding a financial statement, report, 
                        notice, other document, procedures, or 
                        controls; or
                            ``(ii) asserts that no such opinion can be 
                        expressed.
            ``(3) Professional standards.--The term `professional 
        standards' means--
                    ``(A) accounting principles that are--
                            ``(i) established by the standard setting 
                        body described in section 19(b) of the 
                        Securities Act of 1933, as amended by this Act, 
                        or prescribed by the Commission under section 
                        19(a) of that Act (15 U.S.C. 17a(s)) or section 
                        13(b) of the Securities Exchange Act of 1934 
                        (15 U.S.C. 78a(m)); and
                            ``(ii) relevant to audit reports for 
                        particular issuers, brokers, or dealers, or 
                        dealt with in the quality control system of a 
                        particular registered public accounting firm; 
                        and
                    ``(B) auditing standards, standards for attestation 
                engagements, quality control policies and procedures, 
                ethical and competency standards, and independence 
                standards (including rules implementing title II) that 
                the Board or the Commission determines--
                            ``(i) relate to the preparation or issuance 
                        of audit reports for issuers, brokers, or 
                        dealers; and
                            ``(ii) are established or adopted by the 
                        Board under section 103(a), or are promulgated 
                        as rules of the Commission.
            ``(4) Broker.--The term `broker' means a broker (as such 
        term is defined in section 3(a)(4) of the Securities Exchange 
        Act of 1934 (15 U.S.C. 78c(a)(4))) that is required to file a 
        balance sheet, income statement, or other financial statement 
        under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), 
        where such balance sheet, income statement, or financial 
        statement is required to be certified by a registered public 
        accounting firm.
            ``(5) Dealer.--The term `dealer' means a dealer (as such 
        term is defined in section 3(a)(5) of the Securities Exchange 
        Act of 1934 (15 U.S.C. 78c(a)(5))) that is required to file a 
        balance sheet, income statement, or other financial statement 
        under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), 
        where such balance sheet, income statement, or financial 
        statement is required to be certified by a registered public 
        accounting firm.
            ``(6) Self-regulatory organization.--The term `self-
        regulatory organization' has the same meaning as in section 
        3(a)(26) of the Securities Exchange Act of 1934 (15 U.S.C. 
        78c(a)(26)).''.
    (2) The table of sections in section 1(b) of such Act is amended, 
by inserting after the item relating to section 109 the following new 
item:

``Sec. 110. Definitions.''.
    (b) Establishment and Administration of the Public Company 
Accounting Oversight Board.--Section 101 of such Act is amended--
            (1) by striking ``issuers'' each place it appears and 
        inserting ``issuers, brokers, and dealers'';
            (2) in subsection (a), by striking ``public companies'' and 
        inserting ``companies''; and
            (3) in subsection (a), by striking ``for companies the 
        securities of which are sold to, and held by and for, public 
        investors''.
    (c) Registration With the Board.--Section 102 of such Act is 
amended--
            (1) in subsection (a), by striking ``Beginning 180 days 
        after the date of the determination of the Commission under 
        section 101(d), it'' and inserting ``It'';
            (2) in subsections (a) and (b)(2)(G), by striking 
        ``issuer'' each place it appears and inserting ``issuer, 
        broker, or dealer''; and
            (3) in subsection (b)(2)(A), by striking ``issuers'' and 
        inserting ``issuers, brokers, and dealers''.
    (d) Auditing and Independence.--Section 103(a) of such Act is 
amended--
            (1) in paragraph (1), by striking ``and such ethics 
        standards'' and inserting ``such ethics standards, and such 
        independence standards'';
            (2) in paragraph (2)(A)(iii), by striking ``describe in 
        each audit report'' and inserting ``in each audit report for an 
        issuer, describe''; and
            (3) in paragraph (2)(B)(i), by striking ``issuers'' and 
        inserting ``issuers, brokers, and dealers''.
    (e) Inspections of Registered Public Accounting Firms.--Section 104 
of such Act is amended--
            (1) in subsection (a), by striking ``issuers'' and 
        inserting ``issuers, brokers, and dealers'';
            (2) in subsection (b)(1)(A)--
                    (A) by striking ``audit reports'' and inserting 
                ``audit reports on annual financial statements''; and
                    (B) by striking ``and'';
            (3) in subsection (b)(1)(B)--
                    (A) by striking ``audit reports'' and inserting 
                ``audit reports on annual financial statements''; and
                    (B) by striking the period at the end and inserting 
                ``; and''; and
            (4) by adding at the end of subsection (b)(1) the following 
        new subparagraph:
                    ``(C) with respect to each registered public 
                accounting firm that regularly provides audit reports 
                and is not described under subparagraph (A) or (B), on 
                a basis to be determined by the Board, by rule, 
                consistent with the public interest and protection of 
                investors.''.
    (f) Investigations and Disciplinary Proceedings.--Section 
105(c)(7)(B) of such Act is amended--
            (1) in the subparagraph heading, by inserting ``, broker, 
        or dealer'' after ``issuer'';
            (2) by striking ``any issuer'' each place it appears and 
        inserting ``any issuer, broker, or dealer''; and
            (3) by striking ``an issuer under this subsection'' and 
        inserting ``a registered public accounting firm under this 
        subsection''.
    (g) Foreign Public Accounting Firms.--Section 106 of such Act is 
amended--
            (1) in subsection (a)(1), by striking ``issuer'' and 
        inserting ``issuer, broker, or dealer''; and
            (2) in subsection (a)(2), by striking ``issuers'' and 
        inserting ``issuers, brokers, or dealers''.
    (h) Funding.--Section 109 of such Act is amended--
            (1) in subsection (c)(2), by striking ``subsection (i)'' 
        and inserting ``subsection (j)'';
            (2) in subsection (d)(2), by striking ``allowing for 
        differentiation among classes of issuers, as appropriate'' and 
        inserting ``and among brokers and dealers in accordance with 
        subsection (h), and allowing for differentiation among classes 
        of issuers and brokers and dealers, as appropriate'';
            (3) in subsection (d), by inserting at the end the 
        following new paragraph:
            ``(3) Brokers and dealers.--The rules of the Board under 
        paragraph (1) shall provide that the allocation, assessment, 
        and collection by the Board (or an agent appointed by the 
        Board) of the fee established under paragraph (1) with respect 
        to brokers and dealers shall not begin until the first day of 
        the first full fiscal year beginning after the date of the 
        enactment of this paragraph.'';
            (4) by redesignating subsections (h), (i), and (j) as 
        subsections (i), (j), and (k), respectively; and
            (5) by inserting after subsection (g) the following new 
        subsection:
    ``(h) Allocation of Accounting Support Fees Among Brokers and 
Dealers.--
            ``(1) In general.--Any amount due from brokers and dealers 
        (or a particular class of such brokers and dealers) under this 
        section to fund the budget of the Board shall be allocated 
        among and payable by such brokers and dealers (or such brokers 
        and dealers in a particular class, as applicable). A broker or 
        dealer's allocation shall be in proportion to the broker or 
        dealer's net capital compared to the total net capital of all 
        brokers and dealer, in accordance with the rules of the Board.
            ``(2) Obligation to pay.--Every broker or dealer shall pay 
        the share of a reasonable annual accounting support fee or fees 
        allocated to such broker or dealer under this section.''.
    (i) Referral of Investigations to a Self-regulatory Organization.--
Section 105(b)(4)(B) of the Sarbanes-Oxley Act of 2002 is amended--
            (1) by redesignating clauses (ii) and (iii) as clauses 
        (iii) and (iv), respectively; and
            (2) by inserting after clause (i) the following new clause:
                            ``(ii) to a self-regulatory organization, 
                        in the case of an investigation that concerns 
                        an audit report for a broker or dealer that is 
                        subject to the jurisdiction of such self-
                        regulatory organization;''.
    (j) Use of Documents Related to an Inspection or Investigation.--
Section 105(b)(5)(B)(ii) of such Act is amended--
            (1) in subclause (III), by striking ``and'';
            (2) in subclause (IV), by striking the comma and inserting 
        ``; and''; and
            (3) by inserting after subclause (IV) the following new 
        subclause:
                                    ``(V) a self-regulatory 
                                organization, with respect to an audit 
                                report for a broker or dealer that is 
                                subject to the jurisdiction of such 
                                self-regulatory organization,''.

SEC. 602. FOREIGN REGULATORY INFORMATION SHARING.

    (a) Definition.--Section 2(a) of the Sarbanes-Oxley Act of 2002 (15 
U.S.C. 7201(a)) is amended by inserting after paragraph (16) the 
following:
            ``(17) Foreign auditor oversight authority.--The term 
        `foreign auditor oversight authority' means any governmental 
        body or other entity empowered by a foreign government to 
        conduct inspections of public accounting firms or otherwise to 
        administer or enforce laws related to the regulation of public 
        accounting firms.''.
    (b) Availability To Share Information.--Section 105(b)(5) of the 
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)) is amended by adding 
at the end the following:
                    ``(C) Availability to foreign oversight 
                authorities.--When in the Board's discretion it is 
                necessary to accomplish the purposes of this Act or to 
                protect investors, and without the loss of its status 
                as confidential and privileged in the hands of the 
                Board, all information referred to in subparagraph (A) 
                that relates to a public accounting firm within the 
                inspection authority, or other regulatory or law 
                enforcement jurisdiction, of a foreign auditor 
                oversight authority may be made available to the 
                foreign auditor oversight authority if the foreign 
                auditor oversight authority provides such assurances of 
                confidentiality as the Board determines appropriate.''.
    (c) Conforming Amendment.--Section 105(b)(5)(A) of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(A)) is amended by striking 
``subparagraph (B)'' and inserting ``subparagraphs (B) and (C)''.

SEC. 603. EXPANSION OF AUDIT INFORMATION TO BE PRODUCED AND EXCHANGED 
              WITH FOREIGN COUNTERPARTS.

    Section 106 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216) is 
amended--
            (1) by amending subsection (b) to read as follows:
    ``(b) Production of Documents.--
            ``(1) Production by foreign firms.--If a foreign public 
        accounting firm issues an audit report, performs audit work, 
        conducts interim reviews, or performs material services upon 
        which a registered public accounting firm relies in the conduct 
        of an audit or interim review, the foreign public accounting 
        firm shall produce its audit work papers and all other 
        documents related to any such audit work or interim review to 
        the Commission or the Board when requested by the Commission or 
        the Board and the foreign public accounting firm shall be 
        subject to the jurisdiction of the courts of the United States 
        for purposes of enforcement of any request of such documents.
            ``(2) Other production.--Any registered public accounting 
        firm that relies, in whole or in part, on the work of a foreign 
        public accounting firm in issuing an audit report, performing 
        audit work, or conducting an interim review, shall--
                    ``(A) produce the foreign public accounting firm's 
                audit work papers and all other documents related to 
                any such work in response to a request for production 
                by the Commission or the Board; and
                    ``(B) secure the agreement of any foreign public 
                accounting firm to such production, as a condition of 
                its reliance on the work of that foreign public 
                accounting firm.'';
            (2) by redesignating subsection (d) as subsection (g); and
            (3) by inserting after subsection (c) the following new 
        subsections:
    ``(d) Service of Requests or Process.--Any foreign public 
accounting firm that performs work for a domestic registered public 
accounting firm shall furnish to the domestic firm a written 
irrevocable consent and power of attorney that designates the domestic 
firm as an agent upon whom may be served any process, pleadings, or 
other papers in any action brought to enforce this section. Any foreign 
public accounting firm that issues an audit report, performs audit 
work, performs interim reviews, or performs other material services 
upon which a registered public accounting firm relies in the conduct of 
an audit or interim review, shall designate to the Commission or the 
Board an agent in the United States upon whom may be served any 
process, pleading, or other papers in any action brought to enforce 
this section or any request by the Commission or the Board under this 
section.
    ``(e) Sanctions.--A willful refusal to comply, in whole in or in 
part, with any request by the Commission or the Board under this 
section, shall be a violation of this Act.
    ``(f) Other Means of Satisfying Production Obligations.--
Notwithstanding any other provision of this section, the staff of the 
Commission or Board may allow foreign public accounting firms subject 
to this section to meet production obligations under this section 
though alternate means, such as through foreign counterparts of the 
Commission or Board.''.

SEC. 604. CONFORMING AMENDMENT RELATED TO REGISTRATION.

    Section 102(b)(3)(A) of the Sarbanes-Oxley Act of 2002 (15 U.S. 
Code 7212(b)(3)(A)) is amended by striking ``by the Board'' and 
inserting ``by the Commission or the Board''.

SEC. 605. FAIR FUND AMENDMENTS.

    Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(a)) 
is amended--
            (1) by amending subsection (a) to read as follows:
    ``(a) Civil Penalties to Be Used for the Relief of Victims.--If in 
any judicial or administrative action brought by the Commission under 
the securities laws (as such term is defined in section 3(a)(47) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47)), the Commission 
obtains a civil penalty against any person for a violation of such laws 
or the rules and regulations thereunder, or such person agrees in 
settlement of any such action to such civil penalty, the amount of such 
civil penalty or settlement shall, on the motion or at the direction of 
the Commission, be added to and become part of a disgorgement fund or 
other fund established for the benefit of the victims of such 
violation.'';
            (2) in subsection (b), by--
                    (A) striking ``for a disgorgement fund described in 
                subsection (a)'' and inserting ``for a disgorgement 
                fund or other fund described in subsection (a)''; and
                    (B) striking ``in the disgorgement fund'' and 
                inserting ``in such fund''; and
            (3) by striking subsection (e).

SEC. 606. EXEMPTION FOR NONACCELERATED FILERS.

    (a) Exemption.--Section 404 of the Sarbanes-Oxley Act of 2002 is 
amended by adding at the end the following:
    ``(c) Exemption for Smaller Issuers.--Subsection (b) shall not 
apply with respect to any audit report prepared for an issuer that is 
not an accelerated filer within the meaning Rule 12b-2 of the 
Commission (17 C.F.R. 240.12b-2).''.
    (b) Study.--The Securities and Exchange Commission and the 
Comptroller General shall jointly conduct a study to determine how the 
Commission could reduce the burden of complying with section 404(b) of 
the Sarbanes-Oxley Act of 2002 for companies whose market 
capitalization is between $75,000,000 and $250,000,000 for the relevant 
reporting period while maintaining investor protections for such 
companies. The study shall also consider whether any such methods of 
reducing the compliance burden or a complete exemption for such 
companies from compliance with such section would encourage companies 
to list on exchanges in the United States in their initial public 
offerings. Not later than 180 days after the date of the enactment of 
this Act, the Commission and the Comptroller General shall transmit a 
report of such study to Congress.

SEC. 607. WHISTLEBLOWER PROTECTION AGAINST RETALIATION BY A SUBSIDIARY 
              OF AN ISSUER.

    Section 1514A(a) of title 18, United States Code, is amended by 
inserting ``including any subsidiary or affiliate whose financial 
information is included in the consolidated financial statements of 
such company,'' after ``(15 U.S.C. 78o(d)),''.

SEC. 608. CONGRESSIONAL ACCESS TO INFORMATION.

    Section 101 of the Sarbanes-Oxley Act of 2002 is amended by adding 
at the end the following:
    ``(i) Congressional Access to Information.--Nothing in this section 
shall--
            ``(1) affect the Boards obligations, if any, to provide 
        access to records under the Right to Financial Privacy Act; or
            ``(2) authorize the Board to withhold information from 
        Congress or prevent the Board from complying with an order of a 
        court of the United States in an action commenced by the United 
        States or the Board.''.

SEC. 609. CREATION OF OMBUDSMAN FOR THE PCAOB.

    (a) Ombudsman.--Title I of the Sarbanes-Oxley Act of 2002 (15 
U.S.C. 7211 et seq.), as amended by section 601(a)(1), is further 
amended by adding at the end the following new section:

``SEC. 111. OMBUDSMAN.

    ``(a) Establishment Required.--Not later than 180 days after the 
date of enactment of the Investor Protection Act, the Board shall 
appoint an ombudsman for the Board. The Ombudsman shall report directly 
to the Chairman.
    ``(b) Duties of Ombudsman.--The ombudsman appointed in accordance 
with subsection (a) for the Board shall--
            ``(1) act as a liaison between the Board and--
                    ``(A) any registered public accounting firm or 
                issuer with respect to issues or disputes concerning 
                the preparation or issuance of any audit report with 
                respect to that issuer; and
                    ``(B) any affected registered public accounting 
                firm or issuer with respect to--
                            ``(i) any problem such firm or issuer may 
                        have in dealing with the Board resulting from 
                        the regulatory activities of the Board, 
                        particularly with regard to the implementation 
                        of section 404; and
                            ``(ii) issues caused by the relationships 
                        of registered public accounting firms and 
                        issuers generally; and
            ``(2) assure that safeguards exist to encourage 
        complainants to come forward and to preserve confidentiality; 
        and
            ``(3) carry out such activities, and any other activities 
        assigned by the Board, in accordance with guidelines prescribed 
        by the Board.''.
    (b) Conforming Amendment.--The table of sections in section 1(b) of 
such Act is amended, by inserting after the item relating to section 
110 (as added by section 601(a)(2)) the following new item:

``Sec. 111. Ombudsman.''.

SEC. 610. AUDITING OVERSIGHT BOARD.

    The Sarbanes-Oxley Act of 2002 is amended--
            (1) in section 2(a)(5), by striking ``Public Company 
        Accounting Oversight Board'' and inserting ``Auditing Oversight 
        Board'';
            (2) in section 101(a), by striking ``Public Company 
        Accounting Oversight Board'' and inserting ``Auditing Oversight 
        Board''; and
            (3) in the heading of title I, by striking ``PUBLIC COMPANY 
        ACCOUNTING OVERSIGHT BOARD'' and inserting ``AUDITING OVERSIGHT 
        BOARD''.

                TITLE VII--SENIOR INVESTMENT PROTECTION

SEC. 701. FINDINGS.

    Congress finds that--
            (1) many seniors are targeted by salespersons and advisers 
        using misleading certifications and professional designations;
            (2) many certifications and professional designations used 
        by salespersons and advisers represent limited training or 
        expertise, and may in fact be of no value with respect to 
        advising seniors on financial and estate planning matters, and 
        far too often, such designations are obtained simply by 
        attending a weekend seminar and passing an open book, multiple 
        choice test;
            (3) many seniors have lost their life savings because 
        salespersons and advisers holding a misleading designation have 
        steered them toward products that were unsuitable for them, 
        given their retirement needs and life expectancies;
            (4) seniors have a right to clearly know whether they are 
        working with a qualified adviser who understands the products 
        and is working in their best interest or a self-interested 
        salesperson or adviser advocating particular products; and
            (5) many existing State laws and enforcement measures 
        addressing the use of certifications, professional 
        designations, and suitability standards in selling financial 
        products to seniors are inadequate to protect senior investors 
        from salespersons and advisers using such designations.

SEC. 702. DEFINITIONS.

    For purposes of this title:
            (1) Misleading designation.--The term ``misleading 
        designation''--
                    (A) means the use of a purported certification, 
                professional designation, or other credential, that 
                indicates or implies that a salesperson or adviser has 
                special certification or training in advising or 
                servicing seniors; and
                    (B) does not include any legitimate certification, 
                professional designation, license, or other credential, 
                if--
                            (i) it has been offered by an academic 
                        institution having regional accreditation; or
                            (ii) it meets the standards for 
                        certifications, licenses, and professional 
                        designations outlined by the North American 
                        Securities Administrators Association (in this 
                        title referred to as the ``NASAA'') Model Rule 
                        on the Use of Senior-Specific Certifications 
                        and Professional Designations, as in effect on 
                        the date of the enactment of this Act, or any 
                        successor thereto, or it was issued by or 
                        obtained from any State.
            (2) Financial product.--The term ``financial product'' 
        means securities, insurance products (including insurance 
        products which pay a return, whether fixed or variable), and 
        bank and loan products.
            (3) Misleading or fraudulent marketing.--The term 
        ``misleading or fraudulent marketing'' means the use of a 
        misleading designation when selling to or advising a senior 
        about the sale of a financial product.
            (4) Senior.--The term ``senior'' means any individual who 
        has attained the age of 62 years or more.
            (5) State.--The term ``State'' means each of the 50 States, 
        the District of Columbia, and the unincorporated territories of 
        Puerto Rico and the U.S. Virgin Islands.

SEC. 703. GRANTS TO STATES FOR ENHANCED PROTECTION OF SENIORS FROM 
              BEING MISLEAD BY FALSE DESIGNATIONS.

    (a) Grant Program.--The Securities and Exchange Commission (in this 
title referred to as the ``Commission'')--
            (1) shall establish a program in accordance with this title 
        to provide grants to States--
                    (A) to investigate and prosecute misleading and 
                fraudulent marketing practices; or
                    (B) to develop educational materials and training 
                aimed at reducing misleading and fraudulent marketing 
                of financial products toward seniors; and
            (2) may establish such performance objectives, reporting 
        requirements, and application procedures for States and State 
        agencies receiving grants under this title as the Commission 
        determines are necessary to carry out and assess the 
        effectiveness of the program under this title.
    (b) Use of Grant Amounts.--A grant under this title may be used 
(including through subgrants) by the State or the appropriate State 
agency designated by the State--
            (1) to fund additional staff to identify, investigate, and 
        prosecute (through civil, administrative, or criminal 
        enforcement actions) cases involving misleading or fraudulent 
        marketing of financial products to seniors;
            (2) to fund technology, equipment, and training for 
        regulators, prosecutors, and law enforcement in order to 
        identify salespersons and advisers who target seniors through 
        the use of misleading designations;
            (3) to fund technology, equipment, and training for 
        prosecutors to increase the successful prosecution of those 
        targeting seniors with the use of misleading designations;
            (4) to provide educational materials and training to 
        regulators on the appropriateness of the use of designations by 
        salespersons and advisers of financial products;
            (5) to provide educational materials and training to 
        seniors to increase their awareness and understanding of 
        designations; and
            (6) to develop comprehensive plans to combat misleading or 
        fraudulent marketing of financial products to seniors.
    (c) Grant Requirements.--
            (1) Maximum.--The amount of a grant under this title may 
        not exceed $500,000 per fiscal year per State, if all 
        requirements of paragraphs (2), (3), (4), and (5) are met. Such 
        amount shall be limited to $100,000 per fiscal year per State 
        in any case in which the State meets the requirements of--
                    (A) paragraphs (2) and (3), but not each of 
                paragraphs (4) and (5); or
                    (B) paragraphs (4) and (5), but not each of 
                paragraphs (2) and (3).
            (2) Standard designation rules for securities.--A State 
        shall have adopted rules on the appropriate use of designations 
        in the offer or sale of securities or investment advice, which 
        shall meet or exceed the minimum requirements of the NASAA 
        Model Rule on the Use of Senior-Specific Certifications and 
        Professional Designations, as in effect on the date of the 
        enactment of this Act, or any successor thereto.
            (3) Suitability rules for securities.--A State shall have 
        adopted standard rules on the suitability requirements in the 
        sale of securities, which shall, to the extent practicable, 
        conform to the minimum requirements on suitability imposed by 
        self-regulatory organization rules under the securities laws 
        (as defined in section 3 of the Securities Exchange Act of 
        1934).
            (4) Standard designation rules for insurance products.--A 
        State shall have adopted standard rules on the appropriate use 
        of designations in the sale of insurance products, which shall, 
        to the extent practicable, conform to the minimum requirements 
        of the National Association of Insurance Commissioners Model 
        Regulation on the Use of Senior-Specific Certifications and 
        Professional Designations in the Sale of Life Insurance and 
        Annuities, as in effect on the date of the enactment of this 
        Act, or any successor thereto.
            (5) Suitability and supervision rules for annuity 
        products.--
                    (A) In general.--A State shall have adopted rules 
                governing insurer supervision of, suitability of, and 
                insurer and insurance producer conduct relating to, the 
                sale of annuity products, including fixed and index 
                annuities.
                    (B) Annuity products criteria.--The rules required 
                by subparagraph (A) shall, to the extent practicable, 
                provide--
                            (i) that insurers, and insurance producers 
                        are responsible for, and liable for penalties 
                        for, the suitability of each recommended 
                        annuity transaction;
                            (ii) that insurers and insurance producers 
                        are required to apply a standard for 
                        determining the suitability of each recommended 
                        annuity transaction, including fixed and index 
                        annuities, that is at least as protective of 
                        the interests of the consumer as rule 2821(b) 
                        of the Financial Industry Regulatory Authority 
                        (in this paragraph referred to as ``FINRA''), 
                        as in effect on the date of the enactment of 
                        this Act, or any successor to such rule;
                            (iii) that insurers and insurance producers 
                        are required to maintain a process for review 
                        of the suitability, and approval or 
                        disapproval, of each recommended annuity 
                        transaction that is at least as protective of 
                        the interests of the consumer as the principal 
                        review required under rule 2821(c) of FINRA, as 
                        in effect on the date of the enactment of this 
                        Act, or any successor to such rule;
                            (iv) that insurers and insurance producers 
                        are required to maintain processes for the 
                        supervision of direct annuity sales and 
                        insurance producer-recommended annuity sales 
                        (including procedures for the insurer to obtain 
                        and confirm consumer suitability information 
                        and for the insurer to confirm consumer 
                        understanding of the annuity transaction) that 
                        are at least as protective of the interests of 
                        the consumer as member broker and dealer 
                        supervision requirements of FINRA, as in effect 
                        on the date of the enactment of this Act, or 
                        any successor to such requirements;
                            (v) that insurers are required to verify 
                        that each insurance producer successfully 
                        completes, and each insurance producer is 
                        required to receive, training designed to 
                        ensure that the insurance producer is competent 
                        to recommend each class of annuity;
                            (vi) that insurers are required to verify 
                        that insurance producers receive, and insurance 
                        producers are required to receive, training 
                        regarding the features of each offered annuity 
                        product, to an extent that is at least as 
                        protective of the interests of the consumer as 
                        the FINRA firm element training requirements, 
                        as in effect on the date of the enactment of 
                        this Act, or any successor to such 
                        requirements;
                            (vii) for coordination of such rules with 
                        the rules of FINRA governing member brokers, 
                        dealers, and security representatives, to the 
                        extent appropriate, consistent with protecting 
                        the interests of consumers, for State insurance 
                        regulators to rely on, or to avoid duplication 
                        of FINRA rules; and
                            (viii) for exemption from such rules only 
                        if such exemption is consistent with the 
                        protection of consumers.

SEC. 704. APPLICATIONS.

    To be eligible for a grant under this title, the State or 
appropriate State agency shall submit to the Commission a proposal to 
use the grant money to protect seniors from misleading or fraudulent 
marketing techniques in the offer and sale of financial products, which 
application shall--
            (1) identify the scope of the problem;
            (2) describe how the proposed program will help to protect 
        seniors from misleading or fraudulent marketing in the sale of 
        financial products, including, at a minimum--
                    (A) by proactively identifying senior victims of 
                misleading and fraudulent marketing in the offer and 
                sale of financial products;
                    (B) how the proposed program can assist in the 
                investigation and prosecution of those using misleading 
                or fraudulent marketing in the offer and sale of 
                financial products to seniors; and
                    (C) how the proposed program can help discourage 
                and reduce future cases of misleading or fraudulent 
                marketing in the offer and sale of financial products 
                to seniors; and
            (3) describe how the proposed program is to be integrated 
        with other existing State efforts.

SEC. 705. LENGTH OF PARTICIPATION.

    A State receiving a grant under this title shall be provided 
assistance funds for a period of 3 years, after which the State may 
reapply for additional funding.

SEC. 706. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to carry out this title, 
$8,000,000 for each of the fiscal years 2011 through 2015.

        TITLE VIII--REGISTRATION OF MUNICIPAL FINANCIAL ADVISORS

SEC. 801. MUNICIPAL FINANCIAL ADVISER REGISTRATION REQUIREMENT.

    (a) In General.--The Securities Exchange Act of 1934 is amended by 
inserting after section 15E (15 U.S.C. 78o-7) the following new 
section:

``SEC. 15F. MUNICIPAL FINANCIAL ADVISER REGISTRATION REQUIREMENT.

    ``(a)(1)(A) It shall be unlawful for any person to make use of the 
mails or any means or instrumentality of interstate commerce to act as 
a municipal financial adviser unless such person is registered as a 
municipal financial adviser in accordance with subsection (b).
    ``(B) Subparagraph (A) shall not apply to a natural person 
associated with a municipal financial adviser, as long as such adviser 
is registered in accordance with subsection (b) and is not a natural 
person.
    ``(2) The Commission, by rule or order, as it deems consistent with 
the public interest and the protection of investors, may conditionally 
or unconditionally exempt from paragraph (1) of this section any 
municipal financial adviser or class of municipal financial advisers 
specified in such rule or order.
    ``(b)(1) A municipal financial adviser may be registered by filing 
with the Commission an application for registration in such form and 
containing such information and documents concerning such municipal 
financial adviser and any persons associated with such municipal 
financial adviser as the Commission, by rule, may prescribe as 
necessary or appropriate in the public interest or for the protection 
of investors. Within 45 days of the date of the filing of such 
application (or within such longer period as to which the applicant 
consents), the Commission shall--
            ``(A) by order grant registration, or
            ``(B) institute proceedings to determine whether 
        registration should be denied. Such proceedings shall include 
        notice of the grounds for denial under consideration and 
        opportunity for hearing and shall be concluded within 120 days 
        of the date of the filing of the application for registration. 
        At the conclusion of such proceedings, the Commission, by 
        order, shall grant or deny such registration. The Commission 
        may extend the time for conclusion of such proceedings for up 
        to 90 days if it finds good cause for such extension and 
        publishes its reasons for so finding or for such longer period 
        as to which the applicant consents.
        The Commission shall grant such registration if the Commission 
        finds that the requirements of this section are satisfied. The 
        Commission shall deny such registration if it does not make 
        such a finding or if it finds that if the applicant were so 
        registered, its registration would be subject to suspension or 
        revocation under paragraph (4).
    ``(2) An application for registration of a municipal financial 
adviser to be formed or organized may be made by a municipal financial 
adviser to which the municipal financial adviser to be formed or 
organized is to be the successor. Such application, in such form as the 
Commission, by rule, may prescribe, shall contain such information and 
documents concerning the applicant, the successor, and any persons 
associated with the applicant or the successor, as the Commission, by 
rule, may prescribe as necessary or appropriate in the public interest 
or for the protection of investors. The grant or denial of registration 
to such an applicant shall be in accordance with the procedures set 
forth in paragraph (1) of this subsection. If the Commission grants 
such registration, the registration shall terminate on the 45th day 
after the effective date thereof, unless prior thereto the successor 
shall, in accordance with such rules and regulations as the Commission 
may prescribe, adopt the application for registration as its own.
    ``(3) Any provision of this title (other than section 5 and 
subsection (a) of this section) which prohibits any act, practice, or 
course of business if the mails or any means or instrumentality of 
interstate commerce is used in connection therewith shall also prohibit 
any such act, practice, or course of business by any registered 
municipal financial adviser or any person acting on behalf of such a 
municipal financial adviser, irrespective of any use of the mails or 
any means or instrumentality of interstate commerce in connection 
therewith.
    ``(4) The Commission, by order, shall censure, place limitations on 
the activities, functions, or operations of, suspend for a period not 
exceeding 12 months, or revoke the registration of any municipal 
financial adviser if it finds, on the record after notice and 
opportunity for hearing, that such censure, placing of limitations, 
suspension, or revocation is in the public interest and that such 
municipal financial adviser, whether prior or subsequent to becoming 
such, or any person associated with such municipal financial adviser, 
whether prior or subsequent to becoming so associated--
            ``(A) has willfully made or caused to be made in any 
        application for registration or report required to be filed 
        with the Commission or with any other appropriate regulatory 
        agency under this title, or in any proceeding before the 
        Commission with respect to registration, any statement which 
        was at the time and in the light of the circumstances under 
        which it was made false or misleading with respect to any 
        material fact, or has omitted to state in any such application 
        or report any material fact which is required to be stated 
        therein;
            ``(B) has been convicted within 10 years preceding the 
        filing of any application for registration or at any time 
        thereafter of any felony or misdemeanor or of a substantially 
        equivalent crime by a foreign court of competent jurisdiction 
        which the Commission finds--
                    ``(i) involves the purchase or sale of any 
                security, the taking of a false oath, the making of a 
                false report, bribery, perjury, burglary, any 
                substantially equivalent activity however denominated 
                by the laws of the relevant foreign government, or 
                conspiracy to commit any such offense;
                    ``(ii) arises out of the conduct of the business of 
                a municipal financial adviser, broker, dealer, 
                municipal securities dealer, government securities 
                broker, government securities dealer, investment 
                adviser, bank, insurance company, fiduciary, transfer 
                agent, nationally recognized statistical rating 
                organization, foreign person performing a function 
                substantially equivalent to any of the above, or entity 
                or person required to be registered under the Commodity 
                Exchange Act (7 U.S.C. 1 et seq.) or any substantially 
                equivalent foreign statute or regulation;
                    ``(iii) involves the larceny, theft, robbery, 
                extortion, forgery, counterfeiting, fraudulent 
                concealment, embezzlement, fraudulent conversion, or 
                misappropriation of funds, or securities, or 
                substantially equivalent activity however denominated 
                by the laws of the relevant foreign government; or
                    ``(iv) involves the violation of section 152, 1341, 
                1342, or 1343 or chapter 25 or 47 of title 18, or a 
                violation of a substantially equivalent foreign 
                statute;
            ``(C) is permanently or temporarily enjoined by order, 
        judgment, or decree of any court of competent jurisdiction from 
        acting as a municipal financial adviser, investment adviser, 
        underwriter, broker, dealer, municipal securities dealer, 
        government securities broker, government securities dealer, 
        transfer agent, nationally recognized statistical rating 
        organization, foreign person performing a function 
        substantially equivalent to any of the above, or entity or 
        person required to be registered under the Commodity Exchange 
        Act or any substantially equivalent foreign statute or 
        regulation, or as an affiliated person or employee of any 
        investment company, bank, insurance company, foreign entity 
        substantially equivalent to any of the above, or entity or 
        person required to be registered under the Commodity Exchange 
        Act or any substantially equivalent foreign statute or 
        regulation or from engaging in or continuing any conduct or 
        practice in connection with any such activity, or in connection 
        with the purchase or sale of any security;
            ``(D) has willfully violated any provision of the 
        Securities Act of 1933, the Investment Advisers Act of 1940, 
        the Investment Company Act of 1940, the Commodity Exchange Act, 
        this title, the rules or regulations under any of such 
        statutes, or is unable to comply with any such provision;
            ``(E) has willfully aided, abetted, counseled, commanded, 
        induced, or procured the violation by any other person of any 
        provision of the Securities Act of 1933, the Investment 
        Advisers Act of 1940, the Investment Company Act of 1940, the 
        Commodity Exchange Act, this title, the rules or regulations 
        under any of such statutes, or has failed reasonably to 
        supervise, with a view to preventing violations of the 
        provisions of such statutes, rules, and regulations, another 
        person who commits such a violation, if such other person is 
        subject to his supervision. For the purposes of this 
        subparagraph, no person shall be deemed to have failed 
        reasonably to supervise any other person, if--
                    ``(i) there have been established procedures, and a 
                system for applying such procedures, which would 
                reasonably be expected to prevent and detect, insofar 
                as practicable, any such violation by such other 
                person, and
                    ``(ii) such person has reasonably discharged the 
                duties and obligations incumbent upon him by reason of 
                such procedures and system without reasonable cause to 
                believe that such procedures and system were not being 
                complied with;
            ``(F) is subject to any order of the Commission barring or 
        suspending the right of the person to be associated with a 
        municipal financial adviser;
            ``(G) has been found by a foreign financial regulatory 
        authority to have--
                    ``(i) made or caused to be made in any application 
                for registration or report required to be filed with a 
                foreign financial regulatory authority, or in any 
                proceeding before a foreign financial regulatory 
                authority with respect to registration, any statement 
                that was at the time and in the light of the 
                circumstances under which it was made false or 
                misleading with respect to any material fact, or has 
                omitted to state in any application or report to the 
                foreign financial regulatory authority any material 
                fact that is required to be stated therein;
                    ``(ii) violated any foreign statute or regulation 
                regarding transactions in securities, or contracts of 
                sale of a commodity for future delivery, traded on or 
                subject to the rules of a contract market or any board 
                of trade; or
                    ``(iii) aided, abetted, counseled, commanded, 
                induced, or procured the violation by any person of any 
                provision of any statutory provisions enacted by a 
                foreign government, or rules or regulations thereunder, 
                empowering a foreign financial regulatory authority 
                regarding transactions in securities, or contracts of 
                sale of a commodity for future delivery, traded on or 
                subject to the rules of a contract market or any board 
                of trade, or has been found, by a foreign financial 
                regulatory authority, to have failed reasonably to 
                supervise, with a view to preventing violations of such 
                statutory provisions, rules, and regulations, another 
                person who commits such a violation, if such other 
                person is subject to his supervision; or
            ``(H) is subject to any final order of a State securities 
        commission (or any agency or officer performing like 
        functions), State authority that supervises or examines banks, 
        savings associations, or credit unions, State insurance 
        commission (or any agency or office performing like functions), 
        an appropriate Federal banking agency (as defined in section 3 
        of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), or 
        the National Credit Union Administration, that--
                    ``(i) bars such person from association with an 
                entity regulated by such commission, authority, agency, 
                or officer, or from engaging in the business of 
                securities, insurance, banking, savings association 
                activities, or credit union activities; or
                    ``(ii) constitutes a final order based on 
                violations of any laws or regulations that prohibit 
                fraudulent, manipulative, or deceptive conduct.
    ``(5) Pending final determination whether any registration under 
this subsection shall be revoked, the Commission, by order, may suspend 
such registration, if such suspension appears to the Commission, after 
notice and opportunity for hearing, to be necessary or appropriate in 
the public interest or for the protection of investors. Any registered 
municipal financial adviser may, upon such terms and conditions as the 
Commission deems necessary or appropriate in the public interest or for 
the protection of investors, withdraw from registration by filing a 
written notice of withdrawal with the Commission. If the Commission 
finds that any registered municipal financial adviser is no longer in 
existence or has ceased to do business as a municipal financial 
adviser, the Commission, by order, shall cancel the registration of 
such municipal financial adviser.
    ``(6)(A) With respect to any person who is associated, who is 
seeking to become associated, or, at the time of the alleged 
misconduct, who was associated or was seeking to become associated with 
a municipal financial adviser, the Commission, by order, shall censure, 
place limitations on the activities or functions of such person, or 
suspend for a period not exceeding 12 months, or bar such person from 
being associated with a municipal financial adviser, if the Commission 
finds, on the record after notice and opportunity for a hearing, that 
such censure, placing of limitations, suspension, or bar is in the 
public interest and that such person--
            ``(i) has committed or omitted any act, or is subject to an 
        order or finding, enumerated in subparagraph (A), (D), or (E) 
        of paragraph (4) of this subsection;
            ``(ii) has been convicted of any offense specified in 
        subparagraph (B) of such paragraph (4) within 10 years of the 
        commencement of the proceedings under this paragraph; or
            ``(iii) is enjoined from any action, conduct, or practice 
        specified in subparagraph (C) of such paragraph (4).
    ``(B) It shall be unlawful--
            ``(i) for any person as to whom an order under subparagraph 
        (A) is in effect, without the consent of the Commission, 
        willfully to become, or to be, associated with a municipal 
        financial adviser in contravention of such order; or
            ``(ii) for any municipal financial adviser to permit such a 
        person, without the consent of the Commission, to become or 
        remain, a person associated with the municipal financial 
        adviser in contravention of such order, if such municipal 
        financial adviser knew, or in the exercise of reasonable care 
        should have known, of such order.
    ``(7) No registered municipal financial adviser shall act as such 
unless it meets such standards of operational capability and such 
municipal financial adviser and all natural persons associated with 
such municipal financial adviser meet such standards of training, 
experience, competence, and such other qualifications as the Commission 
finds necessary or appropriate in the public interest or for the 
protection of investors. The Commission shall establish such standards 
by rules and regulations, which may--
            ``(A) specify that all or any portion of such standards 
        shall be applicable to any class of municipal financial 
        advisers and persons associated with municipal financial 
        advisers;
            ``(B) require persons in any such class to pass tests 
        prescribed in accordance with such rules and regulations, which 
        tests shall, with respect to any class of partners, officers, 
        or supervisory employees (which latter term may be defined by 
        the Commission's rules and regulations) engaged in the 
        management of the municipal financial adviser, include 
        questions relating to bookkeeping, accounting, supervision of 
        employees, maintenance of records, and other appropriate 
        matters; and
            ``(C) provide that persons in any such class other than 
        municipal financial advisers and partners, officers, and 
        supervisory employees of municipal financial advisers, may be 
        qualified solely on the basis of compliance with such standards 
        of training and such other qualifications as the Commission 
        finds appropriate.
The Commission, by rule, may prescribe reasonable fees and charges to 
defray its costs in carrying out this paragraph, including, but not 
limited to, fees for any test administered by it or under its 
direction.
    ``(c)(1)(A) No municipal financial adviser shall make use of the 
mails or any means or instrumentality of interstate commerce in 
connection with which such municipal financial adviser engages in any 
fraudulent, deceptive, or manipulative act or practice or violates such 
rules and regulations regarding conflicts of interest or fair 
practices, including but not limited to rules and regulations related 
to political contributions, as the Commission shall prescribe in the 
public interest or for the protection of investors or to maintain fair 
and orderly markets.
    ``(B) The Commission shall, for the purposes of this paragraph as 
the Commission finds necessary or appropriate in the public interest or 
for the protection of investors, by rules and regulations define, and 
prescribe means reasonably designed to prevent, such acts and practices 
as are fraudulent, deceptive, or manipulative.
    ``(2) If the Commission finds, after notice and opportunity for a 
hearing, that any person subject to the provisions of this section or 
any rule or regulation thereunder has failed to comply with any such 
provision, rule, or regulation in any material respect, the Commission 
may publish its findings and issue an order requiring such person, and 
any person who was a cause of the failure to comply due to an act or 
omission the person knew or should have known would contribute to the 
failure to comply, to comply, or to take steps to effect compliance, 
with such provision or such rule or regulation thereunder upon such 
terms and conditions and within such time as the Commission may specify 
in such order.
    ``(d) Every registered municipal financial adviser shall establish, 
maintain, and enforce written policies and procedures reasonably 
designed, taking into consideration the nature of such municipal 
financial adviser's business, to prevent the misuse in violation of 
this title, or the rules or regulations thereunder, of material, 
nonpublic information by such municipal financial adviser or any person 
associated with such municipal financial adviser. The Commission, as it 
deems necessary or appropriate in the public interest or for the 
protection of investors, shall adopt rules or regulations to require 
specific policies or procedures reasonably designed to prevent misuse 
in violation of this title (or the rules or regulations thereunder) of 
material, nonpublic information.
    ``(e) A municipal financial adviser and any person associated with 
such municipal financial adviser shall be deemed to have a fiduciary 
duty to any municipal securities issuer for whom such municipal 
financial adviser acts as a municipal financial adviser. A municipal 
financial adviser may not engage in any act, practice, or course of 
business which is not consistent with a municipal financial adviser's 
fiduciary duty. The Commission shall, for the purposes of this 
paragraph, by rules and regulations define, and prescribe means 
reasonably designed to prevent, such acts, practices, and courses of 
business as are not consistent with a municipal financial adviser's 
fiduciary duty to its clients.''.
    (b) Definition.--Section 3(a) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a)) is amended by adding at the end the following 
new paragraphs:
            ``(65) Municipal financial adviser.--
                    ``(A) The term `municipal financial adviser' means 
                a person who, for compensation, engages in the business 
                of--
                            ``(i) providing advice to a municipal 
                        securities issuer with respect to--
                                    ``(I) the issuance or proposed 
                                issuance of securities, including any 
                                remarketing of municipal securities 
                                directly or indirectly by or on behalf 
                                of a municipal securities issuer;
                                    ``(II) the investment of proceeds 
                                from securities issued by such 
                                municipal securities issuer;
                                    ``(III) the hedging of any risks 
                                associated with subclauses (I) or (II), 
                                including advice as to swap agreements 
                                (as defined in section 206A of the 
                                Gramm-Leach-Bliley Act regardless of 
                                whether the counterparties constitute 
                                eligible contract participants); or
                                    ``(IV) preparation of disclosure 
                                documents in connection with the 
                                issuance, proposed issuance, or 
                                previous issuance of securities issued 
                                by a municipal securities issuer, 
                                including, without limitation, official 
                                statements and documents prepared in 
                                connection with a written agreement or 
                                contract for the benefit of holders of 
                                such securities described in section 
                                240.15c2-12 of title 17, Code of 
                                Federal Regulations;
                            ``(ii) assisting a municipal securities 
                        issuer in selecting or negotiating guaranteed 
                        investment contracts or other investment 
                        products; or
                            ``(iii) assisting any municipal securities 
                        issuer in the primary offering of securities 
                        not involving a public offering.
                    ``(B) Such term does not include--
                            ``(i) an attorney, if the attorney is 
                        offering advice or providing services that are 
                        of a traditional legal nature;
                            ``(ii) a nationally recognized statistical 
                        rating organization to the extent it is 
                        involved in the process of developing credit 
                        ratings;
                            ``(iii) a registered broker-dealer when 
                        acting as an underwriter, as such term is 
                        defined in section 2(a)(11) of the Securities 
                        Act of 1933 (15 U.S.C. section 77b(a)(11)); or
                            ``(iv) a State or any political subdivision 
                        thereof.
            ``(66) Municipal securities issuer.--The term `municipal 
        securities issuer' means--
                    ``(A) any entity that has the ability to issue a 
                security the interest on which is excludable from gross 
                income under section 103 of the Internal Revenue Code 
                of 1986 and the regulations thereunder; or
                    ``(B) any person who receives the proceeds 
                generated from the issuance of municipal securities.
            ``(67) Person associated with a municipal financial 
        adviser; associated person of a municipal financial adviser.--
        The term `person associated with a municipal financial adviser' 
        or `associated person of a municipal financial adviser' means 
        any partner, officer, director, or branch manager of such 
        municipal financial adviser (or any person occupying a similar 
        status or performing similar functions), any person directly or 
        indirectly controlling, controlled by, or under common control 
        with such municipal financial adviser, or any employee of such 
        municipal financial adviser, except that any person associated 
        with a municipal financial adviser whose functions are solely 
        clerical or ministerial shall not be included in the meaning of 
        such term for purposes of section 15F(b) (other than paragraph 
        (6) thereof).''.

SEC. 802. CONFORMING AMENDMENTS.

    (a) Securities Exchange Act of 1934 .--The Securities Exchange Act 
of 1934 is amended--
            (1) in section 15(b)(4)(B)(ii) (15 U.S.C. 
        78o(b)(4)(B)(ii)), by inserting ``municipal finance adviser,'' 
        after ``nationally recognized statistical rating 
        organization,'';
            (2) in section 15(b)(4)(C) (15 U.S.C. 78o(b)(4)(C)), by 
        inserting ``municipal finance adviser,'' after ``nationally 
        recognized statistical rating organization,''; and
            (3) in section 17(a)(1) (15 U.S.C. 78q(a)(1)), by inserting 
        ``registered municipal financial adviser,'' after ``nationally 
        recognized statistical rating organization,''.
    (b) Investment Company Act of 1940.--The Investment Company Act of 
1940 is amended--
            (1) in section 2(a) (15 U.S.C. 80a-2(a)), by inserting at 
        the end the following new paragraph:
            ``(54) The term `municipal finance adviser' has the same 
        meaning as in section 3 of the Securities Exchange Act of 
        1934.'';
            (2) in section 9(a)(1) (15 U.S.C. 80a-9(a)(1)), by 
        inserting ``municipal finance adviser,'' after ``credit rating 
        agency,''; and
            (3) in section 9(a)(2) (15 U.S.C. 80a-9(a)(2)), by 
        inserting ``municipal finance adviser,'' after ``credit rating 
        agency,''.
    (c) Investment Advisers Act of 1940.--The Investment Advisers Act 
of 1940 is amended--
            (1) in section 202(a) (15 U.S.C. 80b-2(a)), by inserting at 
        the end the following new paragraph:
            ``(29) The term `municipal finance adviser' has the same 
        meaning as in section 3 of the Securities Exchange Act of 
        1934.'';
            (2) in section 203(e)(2)(B) (15 U.S.C. 80b-3(e)(2)(B)), by 
        inserting ``municipal finance adviser,'' after ``credit rating 
        agency,''; and
            (3) in section 203(e)(4) (15 U.S.C. 80b-3(e)(4)) is amended 
        by inserting ``municipal finance adviser,'' after ``credit 
        rating agency,''.

SEC. 803. EFFECTIVE DATES.

    (a) In General.--The amendments made by this title shall take 
effect 30 days after the date of the enactment of this Act.
    (b) Effective Date and Requirements for Regulations.--
Notwithstanding subsection (a), the Securities and Exchange Commission 
shall, within 120 days after the date of the enactment of this Act, 
publish for notice and public comment such regulations as are initially 
required to implement this title, and shall take final action with 
respect to such regulations not later than 270 days after the date of 
enactment of this Act.
    (c) Registration Date.--No person may continue to act as a 
municipal financial adviser, as such term is defined in section 
3(a)(65) of the Securities Exchange Act of 1934 (as added by this 
title), after 30 days after the date the regulations described in 
subsection (b) become effective unless such person has been registered 
as required by the amendment made by section 701 of this title.
                                                 Union Calendar No. 408

111th CONGRESS

  2d Session

                               H. R. 3817

                      [Report No. 111-687, Part I]

_______________________________________________________________________

                                 A BILL

   To provide the Securities and Exchange Commission with additional 
  authorities to protect investors from violations of the securities 
                     laws, and for other purposes.

_______________________________________________________________________

                           December 17, 2010

  Committee on the Judiciary discharged; committed to the Committee of 
  the Whole House on the State of the Union and ordered to be printed
```