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

111th CONGRESS
  1st Session
                                H. R. 3817

   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

_______________________________________________________________________

                                 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. Clarification of commission authority to require investor 
                            disclosures before purchase of investment 
                            company shares.
Sec. 105. Beneficial ownership and short-swing profit reporting.
Sec. 106. Revision to recordkeeping rules.
                   TITLE II--ENFORCEMENT AND REMEDIES

Sec. 201. Authority to restrict mandatory pre-dispute arbitration.
Sec. 202. Whistleblower protection.
Sec. 203. Conforming amendments for whistleblower protection.
Sec. 204. Implementation and transition provisions for whistleblower 
                            protections.
Sec. 205. Collateral bars.
Sec. 206. Aiding and abetting authority under the Securities Act and 
                            the Investment Company Act.
Sec. 207. Authority to impose penalties for aiding and abetting 
                            violations of the Investment Advisers Act.
Sec. 208. Deadline for completing examinations, inspections and 
                            enforcement actions.
Sec. 209. Nationwide service of subpoenas.
Sec. 210. Authority to impose civil penalties in cease and desist 
                            proceedings.
Sec. 211. Formerly associated persons.
Sec. 212. Sharing privileged information with other authorities.
Sec. 213. Expanded access to grand jury material.
Sec. 214. Aiding and abetting standard of knowledge satisfied by 
                            recklessness.
Sec. 215. Extraterritorial jurisdiction of the antifraud provisions of 
                            the Federal securities laws.
Sec. 216. Fidelity bonding.
Sec. 217. Enhanced SEC authority to conduct surveillance and risk 
                            assessment.
Sec. 218. Investment company examinations.
Sec. 219. Control person liability under the Securities Exchange Act.
Sec. 220. Enhanced application of anti-fraud provisions.
             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.
                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.
         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. Limitations on customer status.
Sec. 510. Futures held in a portfolio margin securities account 
                            protection.
Sec. 511. Risk-based premiums.
Sec. 512. Budgetary treatment of Commission loans to SIPC.
                TITLE VI--SARBANES-OXLEY ACT AMENDMENTS

Sec. 601. Public Company Accounting Oversight Board oversight of 
                            auditors of non-public 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. Fair fund amendments.
Sec. 605. Whistleblower protection against retaliation by a subsidiary 
                            of an issuer.

                          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 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.''.

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) Standards 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 that is providing investment advice 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 shall not, in and of itself, 
        be considered a violation of such standard applied to a broker 
        or dealer.
            ``(2) Retail customer defined.--For purposes of this 
        subsection, the term `retail customer' means an individual, or 
        the legal representative of such individual, who--
                    ``(A) receives personalized investment advice 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; 
        and
            ``(2) examine and, where appropriate, promulgate rules 
        prohibiting sales practices, conflicts of interest, and 
        compensation schemes for financial intermediaries (including 
        brokers, dealers, and investment advisers) that it deems 
        contrary to the public interest and the interests 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 
        subsection:
    ``(f) Standards of Conduct.--
            ``(1) In general.--Notwithstanding any other provision of 
        this Act or the Securities Exchange Act of 1934, the Commission 
        shall promulgate rules to provide that the standards of conduct 
        for all brokers, dealers, and investment advisers, in providing 
        investment advice 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.
            ``(2) Retail customer defined.--For purposes of this 
        subsection, the term `retail customer' means an individual, or 
        the legal representative of such individual, who--
                    ``(A) receives personalized investment advice 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; 
        and
            ``(2) examine and, where appropriate, promulgate rules 
        prohibiting sales practices, conflicts of interest, and 
        compensation schemes for financial intermediaries (including 
        brokers, dealers, and investment advisers) that it deems 
        contrary to the public interest and the interests of 
        investors.''.
    (b) Harmonization of Enforcement and Remedy Regulations.--Section 
15 of the Securities Exchange Act of 1934, as amended by subsection 
(a), is further amended by adding at the end the following new 
subsection:
    ``(m) Harmonization of Enforcement and Remedy Regulations.--The 
Commission shall issue regulations to ensure, to the extent 
practicable, that the enforcement options and remedies available for 
violations of the standard of conduct applicable to a broker or dealer 
providing investment advice to a retail customer are commensurate with 
those enforcement options and remedies available for violations of the 
standard of conduct applicable to investment advisers under the 
Investment Advisers Act of 1940.''.

SEC. 104. CLARIFICATION OF COMMISSION AUTHORITY TO REQUIRE INVESTOR 
              DISCLOSURES BEFORE PURCHASE OF INVESTMENT COMPANY SHARES.

    Section 24 of the Investment Company Act of 1940 (15 U.S.C. 80a-24) 
is amended by adding at the end the following new subsection:
    ``(h) Timing of Disclosure.--Notwithstanding any other provision of 
this Act or the Securities Act of 1933, the Commission is authorized to 
promulgate rules designating documents or information that must precede 
a sale to a purchaser of securities issued by a registered investment 
company.''.

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.''.

                   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:
    ``(m) 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 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 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. WHISTLEBLOWER PROTECTION.

    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, 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 pursuant to 
                section 308 of the Sarbanes-Oxley Act of 2002 or other 
                fund 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 pursuant to section 308 of the Sarbanes-Oxley Act 
                of 2002 or other fund that is not distributed to the 
                victims for whom the disgorgement 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 granted and the types of cases in 
                which awards 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).
                            ``(i) 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.
                            ``(ii) 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 public 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) State attorneys general in 
                        connection with any criminal investigation, and
                            ``(v) 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) 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.
    ``(i) 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; 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 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.''.

SEC. 203. 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. 204. 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. 205. 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. 206. 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. 207. 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 subsection:
    ``(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.''.

SEC. 208. 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 EXAMINATIONS, INVESTIGATIONS AND 
              ENFORCEMENT ACTIONS.

    ``(a) In General.--The Commission shall complete any examination, 
investigations, or enforcement action initiated by the Commission not 
later than 180 days after the date on which such examination, 
inspection, or enforcement action is commenced.
    ``(b) Exception for Certain Complex Actions.--Notwithstanding 
subsection (a), if the head of any division or office within the 
Commission determines that a particular examination, investigation, or 
enforcement action is sufficiently complex that it cannot be completed 
within the deadline provided under subsection (a), such head may, after 
providing notice to the Chairman of the Commission, extend such 
deadline by an additional 180 days.''.

SEC. 209. 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 by or on behalf of such court to 
compel the attendance of witnesses or the production of documents or 
tangible things (or both) may be served in any other district. Such 
subpoenas may be served and enforced without application to the court 
or a showing of cause, notwithstanding the provisions of rule 45(b)(2), 
(c)(3)(A)(ii), and (c)(3)(B)(iii) of the Federal Rules of Civil 
Procedure.''.
    (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 by or on behalf of such 
court to compel the attendance of witnesses or the production of 
documents or tangible things (or both) may be served in any other 
district. Such subpoenas may be served and enforced without application 
to the court or a showing of cause, notwithstanding the provisions of 
rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of the Federal Rules 
of Civil Procedure.''.
    (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 by or on 
behalf of such court to compel the attendance of witnesses or the 
production of documents or tangible things (or both) may be served in 
any other district. Such subpoenas may be served and enforced without 
application to the court or a showing of cause, notwithstanding the 
provisions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of the 
Federal Rules of Civil Procedure.''.
    (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 by or on 
behalf of such court to compel the attendance of witnesses or the 
production of documents or tangible things (or both) may be served in 
any other district. Such subpoenas may be served and enforced without 
application to the court or a showing of cause, notwithstanding the 
provisions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of the 
Federal Rules of Civil Procedure.''.

SEC. 210. 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. 211. 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 that firm; and
                            ``(ii) the authority to commence a 
                        disciplinary 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 misconduct 
                                occurring while such person was 
                                associated or seeking to become 
                                associated with that firm; or
                                    ``(II) on a violation of section 
                                105(b).''.
            (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'';
            (2) in subparagraph (A)(i), by inserting after ``failed 
        reasonably to supervise'' the following: ``any person who is, 
        or at the time of the alleged failure, was'';
            (3) in subparagraph (A)(ii), by striking ``associated'';
            (4) 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 current or former associated person''; and
            (5) in subparagraph (B)(i), by striking ``associated''.
    (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. 212. 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)--
    ``(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) any foreign law enforcement authority; or
                    ``(D) 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.--No Federal agency or State securities or law 
        enforcement authority shall 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.
            ``(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. 213. 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. 214. 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. 215. 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 
        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.''.

SEC. 216. 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 investment company provide and 
        maintain a bond against loss caused by any fraudulent act or 
        theft committed by any officer or employee of the company, 
        either alone or in collusion with others, 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, the 
        term `officer or employee' shall include the officers and 
        employees of the depositor, trustee, investment adviser, or any 
        other manager of the registered investment company, and any 
        affiliated person of any such person.''.

SEC. 217. 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)) is amended by 
adding at the end the following new paragraph:
            ``(4) 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) is amended by adding 
at the end the following new subsection:
    ``(d) 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. 218. 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. 219. 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. 220. 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'' each place it appears 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''.

             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, 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--
                    ``(A) the investment adviser's size;
                    ``(B) the risk profile 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)--
                    (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) of this section)'' 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 60-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 to examine the internal operations, structure, 
        funding, and need for comprehensive reform of the SEC, self-
        regulatory organizations, and other entities relevant to the 
        regulation of securities and the protection of securities 
        investors.
            (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 SEC's hiring 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 experiential mix of SEC employees 
                        and whether such mix efficiently and 
                        effectively permits the SEC to protect 
                        investors; and
                            (iv) the application of civil service laws 
                        by the SEC; and
                    (E) the present self-regulatory organizational 
                structure and a determination of whether the present 
                reliance on self-regulatory organizations promotes 
                efficient and effective governance for the securities 
                markets.
    (b) Consultant Report.--Not later than the end of the 180-day 
period beginning on the date of the enactment of this Act, 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.

                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) To effect or accept 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.''.

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) (including the preceding heading);
            (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 Financial 
Accounting Standards Board, and the Public Company Accounting Oversight 
Board 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 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 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 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 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)) is amended by 
adding at the end the following new paragraph:
            ``(4) 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 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 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) is amended by adding at the end 
the following new subsection:
    ``(d) 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 
        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 section 18(b)(1)(C) (15 U.S.C. 77r(b)(1)(C)), by 
        striking ``is a security'' and inserting ``a security'';
            (3) in section 18(c)(2)(B)(i) (15 U.S.C. 77r(c)(2)(B)(i)), 
        by striking ``State, or'' and inserting ``State or'';
            (4) 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
            (5) 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 15 (15 U.S.C. 78o), by redesignating 
        subsection (i), as added by section 303(f) of the Commodity 
        Futures Modernization Act of 2000 (114 Stat. 2763A-455), as 
        subsection (j);
            (8) 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.'';
            (9) in section 16(a)(2)(C) (15 U.S.C. 78p(a)(2)(C)), by 
        striking ``section 206(b)'' and inserting ``section 206B'';
            (10) 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
            (11) 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 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) (15 U.S.C. 80a-2(a)(19)) 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) Composition of the municipal securities rulemaking 
        board.--Not later than the end of the 120-day period beginning 
        on the date of the enactment of this paragraph, 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 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. 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 specify the term members 
                        shall serve; and
                            ``(iv) 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.''.

         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 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 ``not to exceed $2,500,000,000''.

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 (as such 
term is defined under section 101(31) of title 11, United States 
Code),'' 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. LIMITATIONS ON CUSTOMER STATUS.

    Section 16(2) of the Securities Investor Protection Act of 1970 (15 
U.S.C. 78lll(2)) is amended--
            (1) in subparagraph (A), by striking ``or'';
            (2) in subparagraph (B), by striking the period at the end 
        and inserting ``; or''; and
            (3) by adding at the end the following new subparagraph:
                    ``(C) any person to the extent such person has a 
                claim for cash or securities arising out of a 
                repurchase agreement or reverse repurchase agreement 
                (as such terms are defined under section 47 of title 
                11, United States Code).''.

SEC. 510. 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 commodity 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.
                    ``(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; 
                        or
                            ``(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.'';
            (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. 511. RISK-BASED PREMIUMS.

    Section 4(c) of the Securities Investor Protection Act of 1970 (15 
U.S.C. 78ddd(c)) is amended by adding at the end the following new 
paragraph:
            ``(4) Risk-based assessment system.--
                    ``(A) In general.--Assessments made pursuant to 
                paragraph (2) shall made using a risk-based assessment 
                system.
                    ``(B) Risk-based assessment system defined.--For 
                purposes of this paragraph, the term `risk-based 
                assessment system' means a system for calculating a 
                member's assessment based on--
                            ``(i) the probability that the fund will 
                        incur a loss with respect to the member, taking 
                        into consideration the risks attributable to--
                                    ``(I) the size of the member;
                                    ``(II) the number of enforcement 
                                and compliance actions taken against 
                                such member during the previous 5-year 
                                period by SIPC, the Commission, State 
                                securities regulators, and other 
                                Federal and State financial regulators;
                                    ``(III) the number of years such 
                                member has been in operation; and
                                    ``(IV) any other factors SIPC 
                                determines are relevant to assessing 
                                such probability;
                            ``(ii) the likely amount of any such loss; 
                        and
                            ``(iii) the revenue needs of the fund.
                    ``(C) Separate assessment systems.--SIPC may 
                establish separate risk-based assessment systems for 
                large and small members of SIPC.
                    ``(D) Modifications to the risk-based assessment 
                system allowed only after notice and comment.--In 
                revising or modifying the risk-based assessment system 
                at any time after the date of the enactment of this 
                paragraph, SIPC may implement such revisions or 
                modification in final form only after notice and 
                opportunity for comment.''.

SEC. 512. 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 NON-PUBLIC BROKERS AND DEALERS.

    (a) Definitions.--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, 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, 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)).''.
    (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) 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) 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 on 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) by striking ``any issuer'' each place it appears and 
        inserting ``any issuer, broker, or dealer''; and
            (2) 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) by striking ``issuer'' and inserting ``issuer, broker, 
        or dealer''; and
            (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 that are not issuers, 
        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 
        that are not issuers (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 dealers that are not 
        issuers, 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, with 
        respect to any issuer or its subsidiaries, the foreign public 
        accounting firm shall produce its audit documentation 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 in connection with any investigation 
        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, conducting an interim review, or performing 
        material services, with respect to any issuer or its 
        subsidiaries, shall--
                    ``(A) produce the foreign public accounting firm's 
                audit documentation 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 (f); 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 
firm that issues an audit report, performs audit work, performs interim 
reviews, or performs material services, 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.''.

SEC. 604. 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, the amount of such civil 
penalty 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. 605. WHISTLEBLOWER PROTECTION AGAINST RETALIATION BY A SUBSIDIARY 
              OF AN ISSUER.

    Section 1514A 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)),''.
                                 <all>
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