```

[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1408 Reported in House (RH)]

                                                 Union Calendar No. 144
107th CONGRESS
  1st Session
                                H. R. 1408

                  [Report No. 107-192, Parts I and II]

To safeguard the public from fraud in the financial services industry, 
to streamline and facilitate the antifraud information-sharing efforts 
        of Federal and State regulators, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             April 4, 2001

Mr. Rogers of Michigan (for himself, Mr. Oxley, Mrs. Kelly, Mr. Bachus, 
 and Mr. Tiberi) introduced the following bill; which was referred to 
the Committee on Financial Services, and in addition to the Committees 
  on the Judiciary, and Agriculture, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

                             August 2, 2001

  Reported from the Committee on Financial Services with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                             August 2, 2001

 Referral to the Committee on Agriculture extended for a period ending 
                     not later than August 2, 2001

                             August 2, 2001

                The Committee on Agriculture discharged

                             August 2, 2001

Referral to the Committee on the Judiciary extended for a period ending 
                   not later than September 14, 2001

                           September 14, 2001

Referral to the Committee on the Judiciary extended for a period ending 
                     not later than October 5, 2001

                            October 5, 2001

Referral to the Committee on the Judiciary extended for a period ending 
                    not later than October 12, 2001

                            October 12, 2001

Referral to the Committee on the Judiciary extended for a period ending 
                    not later than October 16, 2001

                            October 16, 2001

 Additional sponsors: Mr. Shows, Mr. Sherman, Mr. Cantor, Mr. Hobson, 
   Mr. Gillmor, Mr. Ney, Mrs. Roukema, Ms. Kilpatrick, Mr. Weldon of 
   Florida, Mrs. Biggert, Mr. Norwood, Mr. King, Mr. Chambliss, Mrs. 
               Northup, Ms. Pryce of Ohio, and Mr. Cramer

                            October 16, 2001

    Reported from the Committee on the Judiciary with an amendment; 
   committed to the Committee of the Whole House on the State of the 
                    Union, and ordered to be printed
[Omit the part struck through in italic and insert the part printed in 
                            boldface roman]
 [For text of introduced bill, see copy of bill as introduced on April 
                                4, 2001]

_______________________________________________________________________

                                 A BILL

 
To safeguard the public from fraud in the financial services industry, 
to streamline and facilitate the antifraud information-sharing efforts 
        of Federal and State regulators, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Financial Services 
Antifraud Network Act of 2001''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes.

                       TITLE I--ANTIFRAUD NETWORK

             Subtitle A--Direction to Financial Regulators

Sec. 100. Creation and operation of the network.

     Subtitle B--Potential Establishment of Antifraud Subcommittee

Sec. 101. Establishment.
Sec. 102. Purposes of the Subcommittee.
Sec. 103. Chairperson; term of chairperson; meetings; officers and 
                            staff.
Sec. 104. Nonagency status.
Sec. 105. Powers of the Subcommittee.
Sec. 106. Agreement on cost structure.

                   Subtitle C--Regulatory Provisions

Sec. 111. Agency supervisory privilege.
Sec. 112. Confidentiality of information.
Sec. 113. Liability provisions.
Sec. 114. Authorization for identification and criminal background 
                            check.
Sec. 115. Definitions.
Sec. 116. Technical and conforming amendments to other acts.
Sec. 117. Audit of State insurance regulators.

               TITLE II--SECURITIES INDUSTRY COORDINATION

                  Subtitle A--Disciplinary Information

Sec. 201. Investment Advisers Act of 1940.
Sec. 202. Securities Exchange Act of 1934.

 Subtitle B--Preventing Migration of Rogue Financial Professionals to 
                        the Securities Industry

Sec. 211. Securities Exchange Act of 1934.
Sec. 212. Investment Advisers Act of 1940.

SEC. 2. PURPOSES.

    The purposes of this Act are--
            (1) to safeguard the public from fraud in the financial 
        services industry;
            (2) to streamline the antifraud coordination efforts of 
        Federal and State regulators and prevent failure to communicate 
        essential information;
            (3) to reduce duplicative information requests by, and 
        other inefficiencies of, financial services regulation;
            (4) to assist financial regulators in detecting patterns of 
        fraud, particularly patterns that only become apparent when 
        viewed across the full spectrum of the financial services 
        industry; and
            (5) to take advantage of Internet technology and other 
        advanced data-sharing technology to modernize the fight against 
        fraud in all of its evolving manifestations and permutations.

                       TITLE I--ANTIFRAUD NETWORK

             Subtitle A--Direction to Financial Regulators

SEC. 100. CREATION AND OPERATION OF THE NETWORK.

    (a) Sharing of Public Information.--The financial regulators shall, 
to the extent practicable and appropriate and in consultation with 
other relevant and appropriate agencies and parties--
            (1) develop procedures to provide for a network for the 
        sharing of antifraud information; and
            (2) coordinate to further improve upon the antifraud 
        efforts of the participants in the network as such participants 
        deem appropriate over time.
    (b) Minimum Requirements.--The procedures described in subsection 
(a) shall--
            (1) provide for the sharing of public final disciplinary 
        and formal enforcement actions taken by the financial 
        regulators that are accessible electronically relating to the 
        conduct of persons engaged in the business of conducting 
        financial activities that is fraudulent, dishonest, or involves 
        a breach of trust or relates to the failure to register with 
        the appropriate financial regulator as required by law;
            (2) include a plan for considering the sharing among the 
        participants of other relevant and useful antifraud information 
        relating to companies and other persons engaged in conducting 
        financial activities, to the extent practicable and appropriate 
        when adequate privacy, confidentiality, and security safeguards 
        governing access to, and the use of, such information have been 
        developed that--
                    (A) is accessible by the public; or
                    (B) pertains to information, that does not include 
                personally identifiable information on consumers, on--
                            (i) licenses and applications, financial 
                        affiliations and name-relationships, aggregate 
                        trend data, appraisals, or reports filed by a 
                        regulated entity with a participant; or
                            (ii) similar information generated by or 
                        for a participant if--
                                    (I) such information is being 
                                shared for the purpose of verifying an 
                                application or other report filed by a 
                                regulated entity; and
                                    (II) the participant determines 
                                such information is factual and 
                                substantiated; and
            (3) provide that, if a financial regulator takes an adverse 
        action against a person engaged in the business of conducting 
        financial activities on the basis of information described in 
        paragraph (1) or (2) that was received from another participant 
        through the network, the regulator shall--
                    (A) notify the person of the identity of the 
                participant from whom such information was received;
                    (B) provide the person with a specific and detailed 
                description of the information that was received from 
                the other participant through the network and would be 
                relied on in taking the adverse action; and
                    (C) notify the person of the right to a reasonable 
                opportunity to respond to such information.
    (c) Provisions Relating To Requirements.--
            (1) Time of notice.--The notice to any person, and the 
        opportunity to respond, under subsection (b)(3) shall be 
        provided to the person a reasonable period of time before any 
        final action against the person which is based on information 
        referred to in such paragraph is completed, unless the 
        financial regulator determines that such advance notice and 
        opportunity to respond is impracticable or inappropriate, in 
        which case the notice and opportunity to respond shall be 
        provided at the time of such final action.
            (2) Verification or substantiation of information.--With 
        respect to subsection (b)(3), a delay in the consideration of a 
        license, application, report, or other request for the purpose 
        of verifying or substantiating information relating to such 
        license, application, report, or other request shall not be 
        treated as an adverse action if the verification or 
        substantiation of such information is completed within a 
        reasonable time.
    (d) Implementation.--
            (1) Submission of plan.--Before the end of the 6-month 
        period beginning on the date of the enactment of this Act, the 
        Federal financial regulators shall submit to Congress a plan 
        detailing how the financial regulators (and any association 
        representing financial regulators) will meet the requirements 
        of subsections (a) and (b).
            (2) Deadline for implementation.--Before the end of the 2-
        year period beginning on the date of the enactment of this Act, 
        the financial regulators shall establish the network described 
        in subsections (a) and (b).
    (e) Financial Regulators Defined.--For the purposes of this 
section, the term ``financial regulators'' means the financial 
regulators described in subparagraphs (A) through (Q) of section 
115(3).
    (f) Determination of Implementation of Subtitle B.--
            (1) In general.--The provisions of subtitle B shall take 
        effect only if the Secretary of the Treasury, or a designee of 
        the Secretary, before the end of the 30-day period beginning at 
        the end of the period referred to in--
                    (A) subsection (d)(1), does not determine that the 
                Federal financial regulators have submitted a plan 
                which substantially meets the requirements of such 
                subsection; or
                    (B) subsection (d)(2), does not determine that the 
                financial regulators have established a network that 
                substantially complies with the requirements of 
                subsections (a) and (b).
            (2) Scope of application.--This subtitle shall cease to 
        apply as of the date subtitle B takes effect.
    (g) Use of Centralized Databases.--
            (1) In general.--A financial regulator shall be deemed to 
        have met the requirements of subsection (b)(1) if--
                    (A) the participants have access to a centralized 
                database that contains information on public final 
                disciplinary or formal enforcement actions similar to 
                that described in such subsection; or
                    (B) the financial regulator makes the information 
                described in such subsection available to the public 
                over the Internet.
            (2) State supervisors.--It is the sense of the Congress 
        that the National Association of Insurance Commissioners, the 
        Conference of State Bank Supervisors, the American Council of 
        State Savings Supervisors, the National Association of State 
        Credit Union Supervisors, and the North American Securities 
        Administrators Association should develop model guidelines for 
        regulators in their respective regulated financial industries, 
        where appropriate, to promote uniform standards for sharing 
        information with the network under this section.
    (h) Financial Regulator Control of Access.--
            (1) In general.--Except as provided in paragraph (4), each 
        participant that allows access to its databases or information 
        by other participants through the network may establish 
        parameters for controlling or limiting such access, including 
        the regulation of--
                    (A) the type or category of information that may be 
                accessed by other participants and the extent to which 
                any such type or category of information may be 
                accessed;
                    (B) the participants that may have access to the 
                database or any specific type or category of 
                information in the database (whether for reasons of 
                cost reimbursement, data security, efficiency, or 
                otherwise); and
                    (C) the disclosure by any other participant of any 
                type or category of information that may be accessed by 
                the participant.
            (2) Procedures.--A participant may establish the parameters 
        described in paragraph (1) by regulation, order, or guideline 
        or on a case-by-case basis.
            (3) Disclaimer.--
                    (A) In general.--Each participant shall ensure that 
                any transfer of information through the network under 
                this section, other than information described in 
                paragraphs (1) and (2) of subsection (b), from such 
                participant to another participant is subject to a 
                disclaimer that the information accessed may be 
                unsubstantiated and may not be relied on as the basis 
for denying any application or license.
                    (B) Regulatory flexibility.--Each financial 
                regulator may develop guidelines, as the regulator 
                determines to be appropriate, governing the location, 
                wording, and frequency of disclaimers under this 
                paragraph and the manner in which any such disclaimer 
                shall be made.
            (4) Final disciplinary and formal enforcement actions not 
        subject to limitation.--This subsection, and standards or 
        procedures adopted by any participant under this subsection, 
        shall not apply with respect to information described in 
        paragraphs (1) and (2) of subsection (b).
            (5) No effect on public or company access.--No provision of 
        this section shall replace, supersede, or otherwise affect 
        access to any databases maintained by any Federal or State 
        regulator, or any entity representing any such regulator, which 
        are accessible by the public or persons engaged in the business 
        of conducting financial activities.
    (i) Eligibility Requirements for State Securities Administrators.--
            (1) In general.--No State securities administrator shall be 
        eligible to be a participant and access the network unless--
                    (A) such State securities administrator 
                participates in a centralized database for broker-
                dealers, broker-dealer agents, investment advisers, and 
                investment advisor representatives, registered or 
                required to be registered, as designated by the North 
                American Securities Administrators Association; and
                    (B) such State securities administrator requires 
                the broker-dealer, broker-dealer agent, investment 
                adviser, or investment adviser representative, 
                currently registered or required to be registered, to 
                file any application, amendment to an application, or a 
                renewal of an application through the centralized 
                registration database.
            (2) Time delay for participation in databases.--The 
        provisions of paragraph (1) shall not become effective until 3 
        years after the date of enactment of this Act.
    (j) Eligibility Requirements for State Insurance Commissioners.--
            (1) Participation in databases.--No State insurance 
        commissioner shall be eligible to access the network unless 
        such commissioner participates with other State insurance 
        commissioners--
                    (A) in a centralized database addressing 
                disciplinary or enforcement actions taken against 
                persons engaged in the business of insurance, such as 
                the Regulatory Information Retrieval System maintained 
                by the National Association of Insurance Commissioners 
                or any network or database designated by such 
                Association as a successor to such System; and
                    (B) in centralized databases addressing, with 
                respect to persons engaged in the business of 
                insurance--
                            (i) corporate and other business 
                        affiliations or relationships, such as the 
                        Producer Database maintained by the National 
                        Association of Insurance Commissioners or any 
                        network or database designated by such 
                        Association as a successor to such Database; 
                        and
                            (ii) consumer complaints, such as the 
                        Complaints Database maintained by the National 
                        Association of Insurance Commissioners or any 
                        network or database designated by such 
                        Association as a successor to such Database.
            (2) Time delay for participation in databases.--The 
        provisions of subparagraph (1)(B) of this section shall not 
        become effective until 3 years after the date of enactment of 
        this Act.
            (3) Accreditation.--No State insurance commissioner shall 
        be eligible to access the network unless the State insurance 
        department which such commissioner represents meets 1 of the 
        following accreditation requirements at the time of access to 
        the network:
                    (A) Is accredited by the National Association of 
                Insurance Commissioners.
                    (B) Has an application for accredited status 
                pending with the National Association of Insurance 
                Commissioners.
                    (C) Has a determination by the Subcommittee in 
                effect that such State insurance department meets or 
                exceeds the standards established by the National 
                Association of Insurance Commissioners for 
                accreditation.
    (k) Standards.--Each financial regulator shall consider developing 
guidelines for participants on--
            (1) how to denote which types of information are to receive 
        different levels of confidentiality protection; and
            (2) how entities or associations that act as agents for 
        financial regulators should denote such agency status when 
        acting in that capacity.
    (l) Other Sharing Arrangements Not Affected.--No provision of this 
section shall be construed as limiting or otherwise affecting the 
authority of a financial regulator to provide any person, including 
another participant, access to any information in accordance with any 
provision of law other than this Act.

     Subtitle B--Potential Establishment of Antifraud Subcommittee

SEC. 101. ESTABLISHMENT.

    (a) In General.--Unless the determinations described in section 
100(f) are made, after the applicable date described in such section 
there shall be established within the President's Working Group on 
Financial Markets (as established by Executive Order No. 12631) a 
subcommittee to be known as the ``Antifraud Subcommittee'' (hereafter 
in this title referred to as the ``Subcommittee'') which shall consist 
of the following members:
            (1) The Secretary of the Treasury, or a designee of the 
        Secretary.
            (2) The Chairman of the Securities and Exchange Commission 
        or a designee of the Chairman.
            (3) A State insurance commissioner designated by the 
        National Association of Insurance Commissioners, or a designee 
        of such commissioner.
            (4) The Chairman of the Commodity Futures Trading 
        Commission or a designee of such Chairman.
            (5) A designee of the Chairman of the Federal Financial 
        Institutions Examination Council.
    (b) Financial Liaisons.--The following shall serve as liaisons 
between the Subcommittee and the agencies represented by each such 
liaison:
            (1) A representative of each Federal banking agency 
        appointed by the head of each such agency.
            (2) A representative of the National Credit Union 
        Administration appointed by the National Credit Union 
        Administration Board.
            (3) A representative of the Farm Credit Administration, 
        appointed by the Farm Credit Administration Board.
            (4) A representative of the Federal Housing Finance Board, 
        appointed by such Board.
            (5) A representative of the Office of Federal Housing 
        Enterprise Oversight of the Department of Housing and Urban 
Development appointed by the Director of such Office.
            (6) A representative of the Appraisal Subcommittee of the 
        Financial Institutions Examination Council.
            (7) A representative of State bank supervisors designated 
        by the Conference of State Bank Supervisors.
            (8) A representative of State savings association 
        supervisors designated by the American Council of State Savings 
        Supervisors.
            (9) A representative of State credit union supervisors 
        designated by the National Association of State Credit Union 
        Supervisors.
            (10) A representative of State securities administrators 
        designated by the North American Securities Administrators 
        Association.
            (11) A representative of the National Association of 
        Securities Dealers appointed by the National Association of 
        Securities Dealers.
            (12) A representative of the National Futures Association 
        appointed by the National Futures Association.
            (13) Any other financial liaison as the Subcommittee may 
        provide to represent any other financial regulator or foreign 
        financial regulator, including self-regulatory agencies or 
        organizations that maintain significant databases on persons 
        engaged in the business of conducting financial activities, 
        designated in the manner provided by the Subcommittee.
    (c) Other Liaisons.--
            (1) Law enforcement liaisons.--The following shall serve as 
        liaisons between the Subcommittee and the agencies represented 
        by each such liaison:
                    (A) A representative of the Department of Justice 
                appointed by the Attorney General.
                    (B) A representative of the Federal Bureau of 
                Investigation appointed by the Director of such Bureau.
                    (C) A representative of the United States Secret 
                Service appointed by the Director of such Service.
                    (D) A representative of the Financial Crimes 
                Enforcement Network (as established by the Secretary of 
                the Treasury) appointed by the Secretary of the 
                Treasury.
            (2) Subcommittee appointed liaisons.--The Subcommittee may 
        provide for any other liaison to represent any other regulator, 
        including self-regulatory agencies or organizations that 
        maintain databases on persons engaged in the business of 
        conducting financial activities, designated in the manner 
        provided by the Subcommittee.
    (d) Vacancy.--If, for any reason, the position of any member of or 
liaison to the Subcommittee is not filled within a reasonable period of 
time after being created or becoming vacant, the President shall 
appoint an individual to fill the position after consulting the agency 
or entity to be represented by such member or liaison, and to the 
extent possible, shall appoint such individual from a list of possible 
representatives submitted by such agency or entity.
    (e) Reorganization Authority.--
            (1) In general.--If the President disbands or otherwise 
        significantly modifies the Working Group referred to in 
        subsection (a), the President shall provide for the 
        continuation of the Subcommittee's coordination functions.
            (2) Member and liaison withdrawal.--If the President 
        materially alters the structure or duties of the Subcommittee, 
        any member of or liaison to the Subcommittee may withdraw from 
        the Subcommittee.

SEC. 102. PURPOSES OF THE SUBCOMMITTEE.

    (a) In General.--The purposes of the Subcommittee are as follows:
            (1) Coordinate access by the participants to antifraud 
        databases of various regulators, by facilitating the 
        establishment, maintenance, and use of a network of existing 
        antifraud information maintained by such regulators with 
        respect to persons engaged in the business of conducting 
        financial activities.
            (2) Coordinate access by each participant to such network 
        in a manner that allows the participant to review, at a minimal 
        cost, existing information in the databases of other 
        regulators, as a part of licensure, change of control, or 
        investigation, concerning any person engaged in the business of 
        conducting financial activities.
            (3) Coordinate information sharing, where appropriate, 
        among State, Federal, and foreign financial regulators, and law 
        enforcement agencies, where sufficient privacy and 
        confidentiality safeguards exist.
            (4) Consider coordinating development by participants of a 
        networked name-relationship index for persons engaged in the 
        business of conducting financial activities using information 
        from the databases of regulators, to the extent such 
        information is available.
            (5) Advise participants on coordinating their antifraud 
        databases with the network.
            (6) Coordinate development of guidelines by participants 
        for ensuring appropriate privacy, confidentiality, and security 
        of shared information, including tracking systems or testing 
        audits, as appropriate.
    (b) Criteria for Network With Respect to Any Person Engaged in the 
Business of Conducting Financial Activities.--
            (1) Final disciplinary and formal enforcement actions.--
        Each financial regulator that is represented by a member of the 
        Subcommittee under section 101(a) or by a financial liaison to 
        the Subcommittee under section 101(b) shall allow any 
        participant access, through the network, to any public final 
        disciplinary or formal enforcement action by such regulator 
        which is accessible electronically relating to the conduct of 
        persons engaged in the business of conducting financial 
        activities that is fraudulent or dishonest, involves a breach 
        of trust, or relates to the failure to register with the 
        appropriate financial regulator as required by law.
            (2) Sense of the congress on other information.--It is the 
        sense of the Congress that the financial regulators should 
        consider sharing through the network other relevant and useful 
        antifraud information relating to companies and other persons 
        engaged in conducting financial activities, to the extent 
        practicable and appropriate when adequate privacy, 
        confidentiality, and security safeguards governing access to 
        and the use of such information have been developed that--
                    (A) is accessible by the public; or
                    (B) consists of information, that does not include 
                personally identifiable information on consumers, on--
                            (i) licenses and applications, financial 
                        affiliations and name-relationships, aggregate 
                        trend data, or reports filed by a regulated 
                        entity with the participant; or
                            (ii) similar information generated by or 
                        for a participant if--
                                    (I) such information is being 
                                shared for the purpose of verifying an 
                                application or other report filed by a 
                                regulated entity; and
                                    (II) the participant determines 
                                such information is factual and 
                                substantiated; and
            (3) Notice and response.--If a financial regulator takes an 
        adverse action against a person engaged in the business of 
        conducting financial activities on the basis of information 
        described in paragraph (1) or (2) that was received from 
        another participant through the network, the regulator shall--
                    (A) notify the person of the identity of the 
                participant from whom such information was received;
                    (B) provide the person with a specific and detailed 
                description of the information that was received from 
                the other participant through the network and would be 
                relied on in taking the adverse action; and
                    (C) notify the person of the right to a reasonable 
                opportunity to respond to such information.
            (4) Provisions relating to requirements.--
                    (A) Time of notice.--Any notice to any person, and 
                an opportunity to respond, under paragraph (3) shall be 
                provided to the person a reasonable period of time 
                before any final action against the person which is 
                based on information referred to in such paragraph is 
                completed, unless the financial regulator determines 
                that such advance notice and opportunity to respond is 
                impracticable or inappropriate, in which case the 
                notice and opportunity to respond shall be provided at 
                the time of such final action.
                    (B) Verification or substantiation of 
                information.--With respect to information referred to 
                in paragraph (3), a delay in the consideration of a 
                license, application, report, or other request for the 
                purpose of verifying or substantiating information 
                relating to such license, application, report, or other 
                request shall not be treated as an adverse action if 
                the verification or substantiation of such information 
                is completed within a reasonable time.
            (5) Use of centralized databases.--
                    (A) In general.--A financial regulator shall be 
                deemed to have met the requirements of paragraph (1) if 
                the Subcommittee determines that the participants have 
                access to a centralized database that contains 
                information on public final disciplinary or formal 
                enforcement actions similar to that described in 
                paragraph (1) or if the financial regulator makes the 
                information described in paragraph (1) available to the 
                public over the Internet.
                    (B) Factors for determination.--The Subcommittee 
                shall make the determination under subparagraph (A) on 
                an ongoing basis, considering both short-term costs and 
                technological limitations, as well as the need for 
                long-term comprehensive coverage, and other appropriate 
                factors.
                    (C) State supervisors.--It is the sense of the 
                Congress that the National Association of Insurance 
                Commissioners, the Conference of State Bank 
                Supervisors, the American Council of State Savings 
                Supervisors, the National Association of State Credit 
                Union Supervisors, and the North American Securities 
                Administrators Association should develop model 
                guidelines for regulators in their respective regulated 
                financial industries, where appropriate, to promote 
                uniform standards for sharing information with the 
                network under this section.
    (c) Financial Regulator Control of Access.--
            (1) In general.--Except as provided in paragraph (4), each 
        participant that allows access to its databases or information 
        by other participants through the network may establish 
        parameters for controlling or limiting such access, including 
        the regulation of--
                    (A) the type or category of information that may be 
                accessed by other participants and the extent to which 
                any such type or category of information may be 
                accessed;
                    (B) the participants that may have access to the 
                database or any specific type or category of 
                information in the database (whether for reasons of 
                cost reimbursement, data security, efficiency, or 
                otherwise); and
                    (C) the disclosure by any other participant of any 
                type or category of information that may be accessed by 
                the participant.
            (2) Procedures.--A participant may establish the parameters 
        described in paragraph (1) by regulation, order, or guideline 
        or on a case-by-case basis.
            (3) Disclaimer.--
                    (A) In general.--Each participant shall ensure that 
                any transfer of information through the network under 
                this section, other than information described in 
                paragraphs (1) and (2) of subsection (b), from such 
                participant to another participant is subject to a 
                disclaimer that the information accessed may be 
                unsubstantiated and may not be relied on as the basis 
                for denying any application or license.
                    (B) Subcommittee flexibility.--The Subcommittee may 
                prescribe such guidelines as the Subcommittee 
                determines to be appropriate governing the location, 
                wording, and frequency of disclaimers under this 
                paragraph and the manner in which any such disclaimer 
                shall be made.
            (4) Final disciplinary and formal enforcement actions not 
        subject to limitation.--This subsection, and standards or 
        procedures adopted by any participant under this subsection, 
        shall not apply with respect to information described in 
        paragraphs (1) and (2) of subsection (b).
            (5) No effect on public or company access.--No provision of 
        this section shall replace, supersede, or otherwise affect 
        access to any databases maintained by any Federal or State 
        regulator, or any entity representing any such regulator, which 
        are accessible by the public or persons engaged in the business 
        of conducting financial activities.
    (d) Eligibility Requirements for State Securities Administrators.--
            (1) In general.--No State securities administrator shall be 
        eligible to be a participant and access the network unless--
                    (A) such State securities administrator 
                participates in a centralized database for broker-
                dealers, broker-dealer agents, investment advisers, and 
                investment advisor representatives, registered or 
                required to be registered, as designated by the North 
                American Securities Administrators Association; and
                    (B) such State securities administrator requires 
                the broker-dealer, broker-dealer agent, investment 
                adviser, or investment adviser representative, 
                currently registered or required to be registered, to 
                file any application, amendment to an application, or a 
                renewal of an application through the centralized 
                registration database.
            (2) Time delay for participation in databases.--The 
        provisions of paragraph (1) shall not become effective until 3 
        years after the date of enactment of this Act.
    (e) Eligibility Requirements for State Insurance Commissioners.--
            (1) Participation in databases.--No State insurance 
        commissioner shall be eligible to access the network unless 
        such commissioner participates with other State insurance 
        commissioners--
                    (A) in a centralized database addressing 
                disciplinary or enforcement actions taken against 
                persons engaged in the business of insurance, such as 
                the Regulatory Information Retrieval System maintained 
                by the National Association of Insurance Commissioners 
                or any network or database designated by such 
                Association as a successor to such System; and
                    (B) in centralized databases addressing, with 
                respect to persons engaged in the business of 
                insurance--
                            (i) corporate and other business 
                        affiliations or relationships, such as the 
                        Producer Database maintained by the National 
                        Association of Insurance Commissioners or any 
                        network or database designated by such 
                        Association as a successor to such Database; 
                        and
                            (ii) consumer complaints, such as the 
                        Complaints Database maintained by the National 
                        Association of Insurance Commissioners or any 
                        network or database designated by such 
                        Association as a successor to such Database.
            (2) Time delay for participation in databases.--The 
        provisions of subparagraph (1)(B) of this section shall not 
        become effective until 3 years after the date of enactment of 
        this Act.
            (3) Accreditation.--No State insurance commissioner shall 
        be eligible to access the network unless the State insurance 
        department which such commissioner represents meets 1 of the 
        following accreditation requirements at the time of access to 
        the network:
                    (A) Is accredited by the National Association of 
                Insurance Commissioners.
                    (B) Has an application for accredited status 
                pending with the National Association of Insurance 
                Commissioners.
                    (C) Has a determination by the Subcommittee in 
                effect that such State insurance department meets or 
                exceeds the standards established by the National 
                Association of Insurance Commissioners for 
                accreditation.
    (f) Subcommittee Standards.--The Subcommittee shall consider 
developing guidelines for participants on--
            (1) how to denote which types of information are to receive 
        different levels of confidentiality protection; and
            (2) how entities or associations that act as agents for 
        financial regulators should denote such agency status when 
        acting in that capacity.
    (g) Reporting and Feasibility Requirements and Review of Optimal 
Networking Methods.--
            (1) Report.--Before the end of the 180-day period beginning 
        on the date this subtitle takes effect in accordance with 
        section 101(a), and again before the end of the 2-year period 
        beginning on such date, the Subcommittee shall submit a report 
        to the Congress regarding the methods the regulators plan to 
        use to network information, and a description of any 
        impediments to (or recommended additional legislation for) 
        facilitating the appropriate sharing of such information.
            (2) Timeframe for networking.--
                    (A) In general.--The networking of information 
                required under subsection (b)(1) shall be established 
                before the end of the 2-year period beginning on the 
                date this subtitle takes effect, unless the 
                Subcommittee determines, in conjunction with the 
                liaisons, that such a network cannot be established 
                within such time period in a practicable and cost-
                effective manner.
                    (B) Reports on efforts if timeframe is not met.--If 
                the Subcommittee makes such a determination, the 
                Subcommittee shall report annually to the Congress on 
                its efforts to coordinate the sharing of appropriate 
                information among the regulators until the networking 
                requirements are fulfilled.
    (h) Other Sharing Arrangements Not Affected.--No provision of this 
section shall be construed as limiting or otherwise affecting the 
authority of a financial regulator or other member or liaison of the 
Subcommittee to provide any person, including another participant, 
access to any information in accordance with any provision of law other 
than this Act.
    (i) No New Databases or Expenditures Mandated.--In implementing 
this Act, the Subcommittee shall not have any authority to require a 
member or liaison to create a new database or otherwise incur 
significant costs in modifying existing databases for the networking of 
information.

SEC. 103. CHAIRPERSON; TERM OF CHAIRPERSON; MEETINGS; OFFICERS AND 
              STAFF.

    (a) Chairperson.--
            (1) Selection.--The members of the Subcommittee shall 
        select the Chairperson from among the members of the 
        Subcommittee.
            (2) Term.--The term of the Chairperson shall be 2 years.
    (b) Meetings.--The Subcommittee shall meet at the call of the 
Chairperson or a majority of the members when there is business to be 
conducted.
    (c) Quorum.--A majority of members of the Subcommittee shall 
constitute a quorum.
    (d) Majority Vote.--Decisions of the Subcommittee shall be made by 
the vote of a majority of the members of the Subcommittee.
    (e) Officers and Staff.--The Chairperson of the Subcommittee may 
appoint such officers and staff as may be necessary to carry out the 
purposes of the Subcommittee.

SEC. 104. NONAGENCY STATUS.

    The Subcommittee shall not be considered an advisory committee for 
purposes of the Federal Advisory Committee Act or as an agency for 
purposes of subchapter II of chapter 5 of title 5, United States Code.

SEC. 105. POWERS OF THE SUBCOMMITTEE.

    (a) In General.--The Subcommittee shall have such powers as are 
necessary to carry out the purposes of the Subcommittee under this 
title.
    (b) Information To Facilitate Coordination.--Each agency and entity 
represented by a member or liaison shall, to the extent permitted by 
law, provide the Subcommittee with a description of the types of 
databases maintained by the agency or entity to assist the Subcommittee 
in carrying out the purposes described in section 102(a).
    (c) Service of Members and Liaisons.--Members of and liaisons to 
the Subcommittee shall serve without additional compensation for their 
work on the Subcommittee.
    (d) Administrative and Technical Support.--The Subcommittee may 
request that any agency or entity represented by a member or liaison 
provide the Subcommittee with any administrative, technical, or other 
support service that the Subcommittee determines is necessary or 
appropriate for it to carry out the purposes described in section 
102(a).

SEC. 106. AGREEMENT ON COST STRUCTURE.

    (a) In General.--The Subcommittee shall determine, after 
consultation with the affected participants or their representatives, 
the means for providing for any costs the Subcommittee may incur in 
carrying out the purposes of this subtitle.
    (b) Consultation and Agreement on Fees and Contributions.--
Notwithstanding any other provision of this subtitle, the Subcommittee 
may not impose any fee or assessment on, or apportion any contribution 
against, any member or liaison under this section unless--
            (1) the Subcommittee consults with such member or liaison; 
        and
            (2) the member or liaison consents to the amounts, or to a 
        schedule, of such fees, assessments, or contributions.
    (c) Reimbursement of Participant Costs.--Before allowing access by 
the Subcommittee or a participant to any information described in 
section 102, other than access described in subsection (b)(1) of such 
section, a member or liaison may request the reimbursement of 
reasonable costs for providing such access.

                   Subtitle C--Regulatory Provisions

SEC. 111. AGENCY SUPERVISORY PRIVILEGE.

    (a) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Supervisory process.--The term ``supervisory process'' 
        means any activity engaged in by a financial regulator to carry 
        out the official responsibilities of the financial regulator 
        with regard to the regulation or supervision of persons engaged 
        in the business of conducting financial activities, including 
        examinations, inspections, visitations, investigations, 
        consumer complaints, or any other regulatory or supervisory 
        activities.
            (2) Confidential supervisory information.--Subject to 
        paragraph (3), the term ``confidential supervisory 
        information'' means any of the following information which is 
        treated as, or considered to be, confidential information by a 
        financial regulator, regardless of the form or format in which 
        the information is created, conveyed, or maintained:
                    (A) Any report of examination, inspection, 
                visitation, or investigation, and information prepared 
                or collected by the financial regulator in connection 
                with the supervisory process, including--
                            (i) any file, work paper, or similar 
                        information;
                            (ii) any correspondence, communication, or 
                        information exchanged, in connection with the 
                        supervisory process, between a financial 
                        regulator and a person engaged in the business 
                        of conducting financial activities; and
                            (iii) any information, including any 
                        report, created by or on behalf of a person 
                        engaged in the business of conducting financial 
                        activities that is required by, or is prepared 
                        at the request of, a financial regulator in 
                        connection with the supervisory process.
                    (B) Any record to the extent it contains 
                information derived from any report, correspondence, 
                communication or other information described in 
                subparagraph (A).
                    (C) Any consumer complaints filed with the 
                financial regulator by a consumer with respect to a 
                person engaged in the business of conducting financial 
                activities that have been identified by the financial 
                regulator as requiring confidential treatment to 
                protect the integrity of an investigation or the safety 
                of an individual.
            (3) Exclusions.--The term ``confidential supervisory 
        information'' shall not include--
                    (A) any book, record, or other information, in the 
                possession of, or maintained on behalf of, the person 
                engaged in the business of conducting financial 
                activities that--
                            (i) is not a report required by, or 
                        prepared at the request of, a financial 
                        regulator; and
                            (ii) is not, and is not derived from, 
                        confidential supervisory information that was 
                        created or prepared by a financial regulator; 
                        or
                    (B) any information required to be made publicly 
                available by--
                            (i) any applicable Federal law or 
                        regulation; or
                            (ii) in the case of confidential 
                        supervisory information created by a State 
                        financial regulator or requested from a person 
                        engaged in the business of conducting financial 
                        activities by a State financial regulator, any 
                        applicable State law or regulation that 
                        specifically refers to such type of 
                        information.
    (b) Financial Regulator Supervisory Privilege.--
            (1) Privilege established.--
                    (A) In general.--All confidential supervisory 
                information shall be privileged from disclosure to any 
                person except as provided in this section.
                    (B) Prohibition on unauthorized disclosures.--No 
                person in possession of confidential supervisory 
information may disclose such information, in whole or in part, without 
the prior authorization of the financial regulator that created the 
information, or requested the information from a person engaged in the 
business of conducting financial activities, except for a disclosure 
made in published statistical material that does not disclose, either 
directly or when used in conjunction with publicly available 
information, the affairs of any person or other personally identifiable 
information.
                    (C) Agency waiver.--The financial regulator that 
                created the confidential supervisory information, or 
                requested the confidential supervisory information from 
                a person engaged in the business of conducting 
                financial activities, may waive, in whole or in part, 
                in the discretion of the regulator, any privilege 
                established under this paragraph with respect to such 
                information.
            (2) Exceptions.--
                    (A) Access by governmental bodies.--
                            (i) Congress and general accounting 
                        office.--No provision of paragraph (1) shall be 
                        construed as preventing access to confidential 
                        supervisory information by duly authorized 
                        committees of the Congress or the Comptroller 
                        General of the United States.
                            (ii) Financial regulator oversight.--No 
                        financial regulator which is described in 
                        subparagraph (P), (Q), or (R) of section 115(3) 
                        and is subject to the oversight of a Federal 
                        financial regulator may assert the privilege 
                        described in paragraph (1) to prevent access to 
                        confidential supervisory information by such 
                        Federal financial regulator.
                    (B) Privilege not waived.--If a financial regulator 
                provides access to confidential supervisory information 
                to the Congress, the Comptroller General, or another 
                financial regulator, such action shall not affect the 
                ability of the financial regulator to assert any 
                privilege associated with such information against any 
                other person.
    (c) Treatment of Foreign Supervisory Information.--In any 
proceeding before a Federal or State court of the United States, in 
which a person seeks to compel production or disclosure by a financial 
regulator of information or documents prepared or collected by a 
foreign financial regulator that would, had the information or document 
been prepared or collected by a financial regulator, be confidential 
supervisory information for purposes of this section, the information 
or document shall be privileged to the same extent that the information 
and documents of financial regulators are privileged under this title.
    (d) Other Privileges Not Waived by Disclosure to Financial 
Regulator.--The submission by a person engaged in the business of 
conducting financial activities of any information to a financial 
regulator or a foreign financial regulator in connection with the 
supervisory process of such financial regulator or foreign financial 
regulator shall not waive, destroy, or otherwise affect any privilege 
such person may claim with respect to such information under Federal or 
State law as to a party other than such financial regulator or foreign 
financial regulator.
    (e) Discovery and Disclosure of Information.--
            (1) Information available only from financial regulator.--
                    (A) In general.--No person (other than the 
                financial regulator that created the information or 
                requested the information from a person engaged in the 
                business of conducting financial activities) may 
                disclose, in whole or in part, any confidential 
                supervisory information to any person who seeks such 
                information through subpoena, discovery procedures, or 
                otherwise.
                    (B) Procedure for requests submitted to financial 
                regulator.--
                            (i) In general.--Any request for discovery 
                        or disclosure of confidential supervisory 
                        information shall be made to the financial 
                        regulator that created the information, or 
                        requested the information from a person engaged 
                        in the business of conducting financial 
                        activities.
                            (ii) Procedure.--Upon receiving a request 
                        for confidential supervisory information, the 
                        financial regulator shall determine within a 
                        reasonable time period whether to disclose such 
                        information pursuant to procedures and criteria 
                        established by the financial regulator.
                    (C) Notification.--
                            (i) In general.--Before any financial 
                        regulator releases information that was 
                        requested from a person engaged in the business 
                        of conducting financial activities to a person 
                        under subparagraph (B), notice and a reasonable 
                        time for comment shall be provided to the 
                        person from whom such information was requested 
                        unless such information--
                                    (I) is being provided to another 
                                financial regulator, an agency or 
                                entity represented by a liaison to the 
                                Subcommittee, or a Federal, State, or 
                                foreign government (or any agency or 
                                instrumentality of any such government 
                                acting in any capacity);
                                    (II) is being sought for use in a 
                                criminal proceeding or investigation, 
                                or a regulatory, supervisory, 
                                enforcement, or disciplinary 
                                administrative proceeding, civil 
                                action, or investigation; or
                                    (III) was originally created, or 
                                included in information created, by the 
                                financial regulator.
                            (ii) Procedures and requirements.--A 
                        financial regulator may prescribe regulations, 
                        or issue orders, guidelines, or procedures, 
                        governing the notice and time period required 
                        by clause (i).
            (2) Federal court jurisdiction over disputes.--
                <DELETED>    (A) Removal authority.--In any action or 
                proceeding in which a party seeks to compel disclosure 
                of confidential supervisory information, a financial 
                regulator may, in its sole discretion, elect to remove 
                the matter relating to the disclosure issue to Federal 
                court, and, if the action is so removed, the 
                appropriate Federal court shall have exclusive 
                jurisdiction over such matter.</DELETED>
                    (A) Declaratory judgment.--If a party seeks in any 
                action or proceeding to compel disclosure of 
                confidential supervisory information, a financial 
                regulator may in a civil action for a declaratory 
                judgment seek to prevent such disclosure.
                    (B) Judicial review.--Judicial review of the final 
                action of a financial regulator with regard to the 
                disposition of a request for confidential supervisory 
                information shall be before a district court of the 
                United States of competent jurisdiction, subject to 
                chapter 7 of part I of title 5, United States Code.
    (f) Authority To Intervene.--In the case of any action or 
proceeding to compel compliance with a subpoena, order, discovery 
request, or other judicial or administrative process with respect to 
any confidential supervisory information of a financial regulator 
concerning any person engaged in the business of conducting financial 
activities, the financial regulator may intervene in such action or 
proceeding, and such person may intervene with such regulator, for the 
purpose of--
            (1) enforcing the limitations established in paragraph (1) 
        of subsections (b) and (e);
            (2) seeking the withdrawal of any compulsory process with 
        respect to such information; and
            (3) registering appropriate objections with respect to the 
        action or proceeding to the extent the action or proceeding 
        relates to or involves such information.
    (g) Right To Appeal.--Any court order that compels production of 
confidential supervisory information may be immediately appealed by the 
financial regulator and the order compelling production shall be 
automatically stayed, pending the outcome of such appeal.
    (h) Regulations.--
            (1) Authority to prescribe.--Each financial regulator may 
        prescribe such regulations as the regulator considers to be 
        appropriate, after consultation with the other financial 
        regulators (to the extent the prescribing financial regulator 
        considers appropriate and feasible), to carry out the purposes 
        of this section.
            (2) Authority to require notice.--Any regulations 
        prescribed by a financial regulator under paragraph (1) may 
        require any person in possession of confidential supervisory 
        information to notify the financial regulator whenever the 
        person is served with a subpoena, order, discovery request, or 
        other judicial or administrative process requiring the personal 
        attendance of such person as a witness or requiring the 
        production of such information in any proceeding.
    (i) Ability to Partially Waive Privilege Where No Other Privilege 
Applies.--A financial regulator may, to the extent permitted by 
applicable law governing the disclosure of information by the 
regulator, authorize a waiver of the privilege established by this 
section to allow access by a person to confidential supervisory 
information created by such regulator (or requested by such regulator 
from any person engaged in the business of conducting financial 
activities), except that--
            (1) the regulator may place appropriate limits on the use 
        and disclosure of the information shared, and may continue to 
        assert the privilege with respect to any other person that 
        seeks access to the information; and
            (2) such waiver shall not affect any other privilege or 
        confidentiality protection that any party may assert against 
        any person other than such financial regulator.
    (j) Sharing of Reports.--
            (1) In general.--Subject to subsection (k), no provision of 
        this section shall be construed as preventing a person engaged 
        in the business of conducting financial activities from 
        providing a report that is required by, or prepared at the 
        request of, a financial regulator (the originating financial 
        regulator) to another financial regulator that has the 
        authority to obtain the information from the person under any 
        other provision of law.
            (2) Privilege preserved.--If a person provides a report 
        referred to in paragraph (1) to a financial regulator other 
        than the originating financial regulator, such action shall not 
        affect the ability of the originating financial regulator to 
        assert any privilege that such financial regulator may claim 
        with respect to the report against any person that is not a 
        financial regulator.
    (k) Requests for Information Involving Another Financial 
Regulator.--
            (1) In general.--Before any financial regulator requests 
        information from a person engaged in the business of conducting 
        financial activities that is confidential supervisory 
        information contained in a report that was created by another 
        financial regulator, or that was derived from confidential 
        supervisory information that was created by another financial 
        regulator, (hereafter in this subsection referred to as the 
        ``originating financial regulator''), the financial regulator 
        seeking such information (hereafter in this subsection referred 
        to as the ``requesting financial regulator'') shall first 
        request such information directly from the originating 
        financial regulator.
            (2) Notice of intent to request information from financial 
        institution.--If, pursuant to a request from a requesting 
        financial regulator under paragraph (1), an originating 
        financial regulator refuses to provide the information 
        described in such paragraph, the requesting financial regulator 
        may not request or compel the production of such information 
        from a person engaged in the business of conducting financial 
        activities unless the requesting financial regulator first 
        provides notice of such regulator's intention (to make such 
        request or compel such production) to the originating financial 
        institution and provides the originating financial regulator 
        with reasonable opportunity to respond.
            (3) Declaratory judgment.--The opportunity to respond 
        described in paragraph (2) shall include the right of the 
        originating financial regulator to bring an action in the 
        United States District Court for the District of Columbia for a 
        declaratory judgment of the rights and privileges of the 
        requesting and originating financial regulators with respect to 
        the information described in paragraph (1), and such relief as 
        may be appropriate.
            (4) Standards.--In any action brought under paragraph (3), 
        the United States District Court for the District of Columbia 
        shall decide the matter de novo based on applicable law, other 
        than this title, including any protections or privileges that 
        would be available to the originating financial regulator if 
        such regulator were to intervene in an action brought by the 
        requesting financial regulator to compel the production of such 
        information from the person engaged in the business of 
        conducting financial activity referred to in paragraph (1).
            (5) Prohibition on requesting information while action is 
        pending.--While any action under paragraph (3) is pending with 
        respect to any information described in paragraph (1), the 
        requesting financial regulator may not make any request for 
        such information from any person engaged in the business of 
        conducting financial activity.
            (6) Rule of construction.--No provision of this subsection 
        may be construed as creating any new authority for any 
        financial regulator to request or compel the production of any 
        information from any person engaged in the business of 
        conducting financial activities.
    (l) No Waiver of Any Privilege of Any Other Party.--No provision of 
this Act shall provide a financial regulator with any new authority to 
disclose information in contravention of applicable law governing 
disclosure of information.

SEC. 112. CONFIDENTIALITY OF INFORMATION.

    (a) In General.--
            (1) Financial regulators.--Except as otherwise provided in 
        this section or section 111, any requirement under Federal or 
        State law regarding the privacy or confidentiality of any 
        information or material in the possession of any participant, 
        and any privilege arising under Federal or State law (including 
the rules of any Federal or State court) with respect to such 
information or material, shall continue to apply to such information or 
material after the information or material has been disclosed through 
the network to another participant or, if subtitle B has taken effect, 
the Subcommittee.
            (2) Certain insurance information.--Except as otherwise 
        provided in this section or section 111, any requirement under 
        Federal or State law regarding the privacy or confidentiality 
        of any information or material in the possession of the 
        National Association of Insurance Commissioners, or any member 
        or affiliate of the Association, and any privilege arising 
        under Federal or State law (including the rules of any Federal 
        or State court) with respect to such information or material, 
        shall continue to apply to such information or material after 
        the information has been disclosed to the Association, or any 
        other member or affiliate of the Association, through the 
        computer databases maintained by the Association.
            (3) Nonapplicability of certain requirements.--Information 
        or material that is subject to a privilege or confidentiality 
        under any other paragraph of this subsection shall not be 
        subject to--
                    (A) disclosure under any Federal or State law 
                governing the disclosure to the public of information 
                held by an officer or an agency of the Federal 
                Government or the respective State; or
                    (B) subpoena or discovery, or admission into 
                evidence, in any private civil action or administrative 
                process,
        unless with respect to any privilege held by a participant with 
        respect to such information or material, the participant 
        waives, in whole or in part, in the discretion of the 
        participant, such privilege.
    (b) Preemption of State Law.--Any State law, including any State 
open record law, relating to the disclosure of confidential supervisory 
information or any information or material to which subsection (a) 
applies that is inconsistent with any provision of section 111 or 
subsection (a) of this section shall be superseded by the requirements 
of such provision to the extent State law provides less confidentiality 
or a weaker privilege.
    (c) Duty of Financial Regulator to Maintain Confidentiality.--A 
participant may not receive, download, copy, or otherwise maintain any 
information or material from any other member of or liaison to the 
Subcommittee through the network unless--
            (1) the participant maintains a system that enables the 
        participant to maintain full compliance with the requirements 
        of sections 100, 102, and 111 and this section, with respect to 
        such information and material; and
            (2) if and to the extent required by the guidelines 
        established under sections 100 and 102, a record is maintained 
        of each attempt to access such information and material, and 
        the identity of the person making the attempt, in order to 
        prevent evasions of such requirements.

SEC. 113. LIABILITY PROVISIONS.

    (a) No Liability for Good Faith Disclosures.--Any financial 
regulator, and any officer or employee of any financial regulator, 
shall not be subject to any civil action or proceeding for monetary 
damages by reason of the good faith action or omission of any officer 
or employee, while acting within the scope of office or employment, 
relating to collecting, furnishing, or disseminating regulatory or 
supervisory information concerning persons engaged in the business of 
conducting financial activities, to or from another financial 
regulator, whether directly or through the network.
    (b) Criminal Liability for Intentional Unlawful Disclosures.--
            (1) In general.--It shall be unlawful to willfully disclose 
        to any person any information concerning any person engaged in 
        the business of conducting financial activities knowing the 
        disclosure to be in violation of any provision of this title--
                    (A) requiring the confidentiality of such 
                information; or
                    (B) establishing a privilege from disclosure for 
                such information that has not been waived by the 
                relevant financial regulator.
            (2) Penalty.--Notwithstanding section 3571 of title 18, 
        United States Code, any person who violates paragraph (1) shall 
        be fined an amount not to exceed the greater of $100,000 or the 
        amount of the actual damages sustained by any person as a 
        result of such violation, or imprisoned not more than 5 years, 
        or both.
    (c) Full, Continued Protection Under the So-Called ``Federal Tort 
Claims Act''.--No provision of this Act shall be construed as reducing 
or limiting any protection provided for any Federal agency, or any 
officer or employee of any Federal agency, under section 2679 of title 
28, United States Code.
    (d) Protection Applied to the Subcommittee.--For the purposes of 
this section, the term ``financial regulator'' includes the 
Subcommittee after subtitle B has taken effect.

SEC. 114. AUTHORIZATION FOR IDENTIFICATION AND CRIMINAL BACKGROUND 
              CHECK.

    (a) Sharing of Criminal Records.--
            (1) Attorney general authorization.--Upon receiving a 
        request from a financial regulator, the Attorney General 
        shall--
                    (A) search the records of the Criminal Justice 
                Information Services Division of the Federal Bureau of 
                Investigation, and any other similar database over 
                which the Attorney General has authority and deems 
                appropriate, for any criminal background records 
                (including wanted persons information) corresponding to 
                the identification information provided under 
                subsection (b); and
                    (B) either--
                            (i) shall provide any such records to any 
                        authorized agent of the financial regulator, 
                        which shall provide the relevant information to 
                        such regulator; or
                            (ii) may provide such records directly to 
                        the financial regulator if the Attorney General 
                        limits such provision of records to relevant 
                        information.
            (2) Authorized agent defined.--For purposes of this 
        section, the term ``authorized agent'' means--
                    (A) any agent which has been recognized by the 
                Attorney General for such purpose and authorized by at 
                least 3 other financial regulators to receive such 
                records and perform the information sharing 
                requirements of paragraph (3);
                    (B) the State attorney general for the State in 
                which the regulator is primarily located; and
                    (C) any law enforcement designee of the Attorney 
                General or such State attorney general.
            (3) Information shared.--
                    (A) In general.--The authorized agent shall provide 
                to the requesting financial regulator only any records 
                that are relevant information.
                    (B) Relevant information defined.--For purposes of 
                this section, the term ``relevant information'' means 
                any of the following records:
                            (i) All felony convictions.
                            (ii) All misdemeanor convictions 
                        involving--
                                    (I) violation of a law involving 
                                financial activities;
                                    (II) dishonesty or breach of trust, 
                                within the meaning of section 1033 of 
                                title 18, United States Code, including 
                                taking, withholding, misappropriating, 
                                or converting money or property;
                                    (III) failure to comply with child 
                                support obligations;
                                    (IV) failure to pay taxes; and
                                    (V) domestic violence, child abuse, 
                                or a crime of violence.
                    (C) Crime of violence defined.--For purposes of 
                subparagraph (B)(ii)(V), the term ``crime of violence'' 
                means a burglary of a dwelling and a criminal offense 
                that has as an element, the use or attempted use of 
                physical force, or threat of great bodily harm, or the 
                use, attempted use, or threatened use of a deadly 
                weapon, against an individual, including committing or 
                attempting to commit murder, manslaughter, kidnapping, 
                aggravated assault, forcible sex offenses, robbery, 
                arson, extortion, and extortionate extension of credit.
            (4) State uniform or reciprocity laws requirement.--
                    (A) In general.--The Attorney General may not 
                provide any records under this subsection to an 
                insurance regulator of a State, or agent of such 
                regulator, if such State does not have in effect 
                uniform or reciprocity laws and regulations governing 
                the licensure of individuals and entities authorized to 
                sell and solicit the purchase of insurance within the 
                State as set forth in section 321 of Public Law 106-
                102.
                    (B) Determination of reciprocity.--The 
                determination of whether or not a State has uniform or 
                reciprocity laws or regulations in effect for purposes 
                of subparagraph (A) shall be made by the Attorney 
                General, with the advice and counsel of the National 
                Association of Insurance Commissioners.
                    (C) Exception under certain circumstances.--
                Notwithstanding subparagraph (B), the Attorney General 
                may provide records under this section to an insurance 
                regulator of a State, or agent of such regulator, on 
                the basis of a specific determination by the National 
                Association of Insurance Commissioners that such State 
                has in effect uniform or reciprocity laws and 
                regulations referred to in subparagraph (A) if--
                            (i) a determination by the Attorney General 
                        under subparagraph (B) is pending; or
                            (ii) the Attorney General considers whether 
                        such State has in effect such uniform or 
                        reciprocity laws or regulations and fails to 
                        make a determination, unless the Attorney 
                        General subsequently determines that such State 
                        does not have in effect uniform or reciprocity 
                        laws or regulations.
    (b) Form of Request.--A request under subsection (a) shall include 
a copy of any necessary identification information required by the 
Attorney General, such as the name and fingerprints of the person about 
whom the record is requested and a statement signed by the person 
acknowledging that the regulator (or such regulator's designated agent 
under subsection (g)(1)) may request the search.
    (c) Limitation on Permissible Uses of Information.--Information 
obtained under this section may--
            (1) be used only for regulatory or law enforcement 
        purposes; and
            (2) be disclosed--
                    (A) only to other financial regulators or Federal 
                or State law enforcement agencies; and
                    (B) only if the recipient agrees to--
                            (i) maintain the confidentiality of such 
                        information; and
                            (ii) limit the use of such information to 
                        appropriate regulatory and law enforcement 
                        purposes.
    (d) Penalty for Improper Use.--
            (1) In general.--Whoever uses any information obtained 
        under this section knowingly and willfully for an unauthorized 
        purpose shall be fined under title 18, United States Code, 
        imprisoned for not more than 2 years, or both.
            (2) Additional penalties and waivers.--
                    (A) In general.--Any authorized agent who violates 
                paragraph (1), or any individual who directs such agent 
                to violate such paragraph, shall be barred from 
                engaging in or regulating any activities related to the 
                business of insurance.
                    (B) Waiver authorized.--The Attorney General, in 
                the discretion of the Attorney General, may waive the 
                bar in subparagraph (A), as appropriate.
    (e) Reliance on Information.--A financial regulator (or such 
regulator's designated agent under subsection (g)(1)) who reasonably 
relies on information provided under this section shall not be liable 
in any action for using information as permitted under this section in 
good faith.
    (f) Clarification of Section 1033.--With respect to any action 
brought under section 1033(e)(1)(B) of title 18, United States Code, no 
person engaged in the business of conducting financial activities shall 
be subject to any penalty resulting from such section if the individual 
who the person permitted to engage in the business of insurance is 
licensed, or approved (as part of an application or otherwise), by a 
State insurance regulator that performs criminal background checks 
under this section, unless such person knows that the individual is in 
violation of section 1033(e)(1)(A) of such title.
    (g) Designation of Agent.--
            (1) In general.--A financial regulator may designate an 
        agent for facilitating requests and exchanges of information 
        under this section between or among the financial regulator, 
        the Attorney General, and any other authorized agent.
            (2) Sense of congress regarding agents of insurance 
        regulators.--It is the sense of the Congress that--
                    (A) each State insurance commissioner should 
                designate the National Association of Insurance 
                Commissioners as an agent under paragraph (1);
                    (B) persons engaged in the business of insurance 
                should be able to use the National Association of 
                Insurance Commissioners to facilitate obtaining 
                fingerprints and supplying identification information 
                for use in background checks under this section on a 
                multijurisdictional basis;
                    (C) the National Association of Insurance 
                Commissioners should maintain a database to obtain 
                records under this section for use by State insurance 
                commissioners to reduce multiple or duplicative 
                fingerprinting requirements and criminal background 
                checks, except that any such record shall not be 
                maintained for more than 1 year without performing a 
                new background check to determine if the criminal 
                background record has changed;
                    (D) other financial regulators that require 
                fingerprints and criminal background checks should 
                similarly coordinate efforts to reduce duplication for 
                persons engaged in the business of conducting multiple 
                types of financial activities; and
                    (E) the National Association of Insurance 
                Commissioners, and other financial regulators that use 
                this section, should consult with the Attorney General 
                to consider the feasibility of developing an on-going 
                notification system that would allow the Attorney 
                General to notify such Association when a licensed or 
                approved insurance professional is convicted of a 
                relevant crime.
    (h) Fees.--The Attorney General may charge a reasonable fee for the 
provision of information under this section.
    (i) Rule of Construction.--This section shall not--
            (1) provide independent authorization for a financial 
        regulator to require fingerprinting as a part of a licensure or 
        other application;
            (2) require a financial regulator to perform criminal 
        background checks under this section; or
            (3) supersede or otherwise limit any other authority that 
        allows access to criminal background records.
    (j) Regulations.--The Attorney General may prescribe regulations to 
carry out this section.

SEC. 115. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Federal banking agency.--The term ``Federal banking 
        agency'' has the same meaning as given in section 3(z) of the 
        Federal Deposit Insurance Act.
            (2) Financial activities.--
                    (A) In general.--The term ``financial 
                activities''--
                            (i) means banking activities (including the 
                        ownership of a bank), securities activities, 
                        insurance activities, or commodities 
                        activities; and
                            (ii) includes all activities that are 
                        financial in nature or are incidental to a 
                        financial activity (as defined under section 
                        4(k) of the Bank Holding Company Act of 1956).
                    (B) Rule of construction.--Subparagraph (A) shall 
                not be construed as creating any inference, including 
                any negative inference, concerning the types or extent 
                of activities that are appropriately recognized as 
                activities that are financial in nature, or are 
                incidental to a financial activity, for purposes of 
                section 4 of the Bank Holding Company Act of 1956.
            (3) Financial regulator.--The term ``financial regulator'' 
        means--
                    (A) each Federal banking agency;
                    (B) the Securities and Exchange Commission;
                    (C) the Commodity Futures Trading Commission;
                    (D) the National Credit Union Administration;
                    (E) the Farm Credit Administration;
                    (F) the Federal Housing Finance Board;
                    (G) the Federal Trade Commission, to the extent the 
                Commission has jurisdiction over financial activities 
                being conducted by a person engaged in the business of 
                conducting financial activities;
                    (H) the Secretary of the Treasury, to the extent 
                the Secretary has jurisdiction over financial 
                activities being conducted by a person engaged in the 
                business of conducting financial activities;
                    (I) the Office of Federal Housing Enterprise 
                Oversight of the Department of Housing and Urban 
                Development;
                    (J) the Appraisal Subcommittee of the Financial 
                Institutions Examination Council;
                    (K) any State bank supervisor (as defined in 
                section 3(r) of the Federal Deposit Insurance Act), 
                including the Conference of State Bank Supervisors only 
                to the extent such conference is acting as an agent of, 
                and is subject to the oversight of, any such State bank 
                supervisor;
                    (L) any State savings association supervisor, 
                including the American Council of State Savings 
                Supervisors only to the extent such conference is 
                acting as an agent of, and is subject to the oversight 
                of, any such State savings association supervisor;
                    (M) any State insurance commissioner, including the 
                National Association of Insurance Commissioners only to 
                the extent such association is acting as the agent of, 
                and is subject to the oversight of, any such insurance 
                commissioner;
                    (N) any State securities administrator, including 
                the North American Securities Administrators 
                Association only to the extent such association is 
                acting as the agent of, and is subject to the oversight 
of, any such securities administrator;
                    (O) any State credit union supervisor, including 
                the National Association of State Credit Union 
                Supervisors only to the extent such association is 
                acting as the agent of, and is subject to the oversight 
                of, any such credit union supervisor;
                    (P) the National Association of Securities Dealers, 
                only to the extent that--
                            (i) such association is acting in 
                        connection with the financial services 
                        industry; and
                            (ii) the association and the relevant 
                        actions are subject to the oversight of the 
                        Securities and Exchange Commission;
                    (Q) the National Futures Association, only to the 
                extent that--
                            (i) such association is acting in 
                        connection with the financial services 
                        industry; and
                            (ii) the association and the relevant 
                        actions are subject to the oversight of the 
                        Commodity Futures Trading Commission or the 
                        Securities and Exchange Commission; and
                    (R) any other self-regulatory organization that 
                engages in or coordinates regulatory and supervisory 
                activities, with respect to any person engaged in the 
                business of conducting financial activities, and is 
                subject to the oversight of the Securities and Exchange 
                Commission or the Commodity Futures Trading Commission, 
                but only to the extent that the organization engages in 
                such activities and is subject to such oversight.
            (4) Foreign financial regulator.--The term ``foreign 
        financial regulator'' means any agency, entity, or body 
        (including a self-regulatory organization) that is empowered by 
        the laws of a foreign country to supervise and regulate persons 
        engaged in the business of conducting financial activities, but 
        only to the extent of such supervisory and regulatory 
        activities.
            (5) Participant.--The term ``participant'' means any entity 
        described in section 101 as being represented by a member of, 
        or a liaison to, the Subcommittee (regardless of whether 
        subtitle B has taken effect) but only to the extent the 
        regulator provides or obtains access to information through the 
        network.
            (6) Person.--The term ``person'' includes any financial 
        regulator.
            (7) Person engaged in the business of conducting financial 
        activities.--The term ``person engaged in the business of 
        conducting financial activities'' includes, to the extent 
        appropriate under the laws applicable to the jurisdiction of a 
        financial regulator over such person--
                    (A) any director, officer, employee, or controlling 
                stockholder of, or agent for, any such person;
                    (B) any other person who has filed or is required 
                to file a change-in-control notice with the appropriate 
                financial regulator before acquiring control of such 
                person; and
                    (C) any person who has sought approval from a 
                financial regulator to engage in the business of 
                conducting financial activities, or that was engaged in 
                such business and subject to the jurisdiction of a 
                financial regulator; and
                    (D) any shareholder, consultant, joint venture 
                partner, and any other person, including an independent 
                contractor, as determined by the appropriate financial 
                regulator (by regulation or case-by-case) who 
                participates in the conduct of the affairs of such 
                person.
            (8) State insurance commissioner.--The term ``State 
        insurance commissioner'' means any officer, agency, or other 
        entity of any State which has primary regulatory authority over 
        the business of insurance and over any person engaged in the 
        business of insurance to the extent of such activities, in such 
        State.
            (9) State securities administrator.--The term ``State 
        securities administrator'' means the securities commission (or 
        any agency or office performing like functions) of any State.

SEC. 116. TECHNICAL AND CONFORMING AMENDMENTS TO OTHER ACTS.

    (a) Subsection (b) of section 552a of title 5, United States Code, 
is amended--
            (1) by striking ``and'' at the end of paragraph (11);
            (2) by striking the period at the end of paragraph (12) and 
        inserting ``; or''; and
            (3) by inserting after paragraph (12) the following new 
        paragraph:
            ``(13) for recordkeeping, licensing, and other regulatory 
        and law enforcement purposes in accordance with title I of the 
        Financial Services Antifraud Network Act of 2001--
                    ``(A) through a network or name-relationship index 
                maintained under such title; or
                    ``(B) to a multistate database maintained by the 
                National Association of Insurance Commissioners and any 
                subsidiary or affiliate of such association, subject to 
                the requirements of such title.''.
    (b) Section 1113 of the Financial Institutions Regulatory and 
Interest Rate Control Act of 1978 (12 U.S.C. 3413) is amended by adding 
at the end the following new subsection:
    ``(r) This title shall not apply to disclosure by a financial 
regulator of information pursuant to subtitle A or B of the Financial 
Services Antifraud Network Act of 2001 to the extent the disclosure is 
made in accordance with the requirements of such Act.''.
    (c) Section 602 of the Consumer Credit Protection Act (15 U.S.C. 
1681) is amended by adding at the end the following new subsection:
    ``(c) This title shall not apply to a communication between 
participants, as defined in the Financial Services Antifraud Network 
Act of 2001, to the extent the communication is made in accordance with 
such Act.''.

SEC. 117. AUDIT OF STATE INSURANCE REGULATORS.

    (a) In General.--At the request of the Congress, the Comptroller 
General shall audit a State insurance regulator or any person who 
maintains information on behalf of such regulator.
    (b) Limitations on Disclosure of Information.--Except as provided 
in this subsection, an officer or employee of the General Accounting 
Office may not disclose information identifying an open insurance 
company or a customer of an open or closed insurance company. The 
Comptroller General may disclose information related to the affairs of 
a closed insurance company only if the Comptroller General believes the 
customer had a controlling influence in the management of the closed 
insurance company or was related to or affiliated with a person or 
group having a controlling influence.
    (c) Coordination With State Regulator.--An officer or employee of 
the Office may discuss a customer or insurance company with an official 
of a State insurance regulator and may report an apparent criminal 
violation to an appropriate law enforcement authority of the United 
States Government or a State.
    (d) Congressional Oversight.--This subsection shall not be 
construed as authorizing an officer or employee of a State insurance 
regulator to withhold information from a committee of the Congress 
authorized to have the information.
    (e) Administrative Aspects of Audit.--
            (1) In general.--To carry out this section, all records and 
        property of or used by a State insurance regulator, including 
        samples of reports of examinations of an insurance company the 
        Comptroller General considers statistically meaningful and 
        workpapers and correspondence related to the reports shall be 
        made available to the Comptroller General. The Comptroller 
        General shall give a State insurance regulator a current list 
        of officers and employees to whom, with proper identification, 
        records and property may be made available, and who may make 
        notes or copies necessary to carry out an audit.
            (2) Prevention of unauthorized access.--The Comptroller 
        General shall prevent unauthorized access to records or 
        property of or used by a State insurance regulator that the 
        Comptroller General obtains during an audit.
    (f) Confidentiality.--
            (1) In general.--The Comptroller General shall maintain the 
        same level of confidentiality for a record made available under 
        this section as is required of the head of the State insurance 
        regulator from which it is obtained.
            (2) Prevention of invasion of personal privacy.--The 
        Comptroller General shall keep information described in section 
        552(b)(6) of title 5, United States Code, that the Comptroller 
        General obtains in a way that prevents unwarranted invasions of 
        personal privacy.
            (3) Availability of information.--Except as provided in 
        subsection (b), no provision of this section shall be construed 
        as authorizing any information to be withheld from the 
        Congress.
    (g) Availability of Information and Inspection of Records.--The 
right of access of the Comptroller General to information under this 
section shall be enforceable under section 716 of title 31, United 
States Code.
    (h) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) State insurance regulator defined.--The term ``State 
        insurance regulator'' means the principal insurance regulatory 
        authority of a State, the District of Columbia, any territory 
        of the United States, Puerto Rico, Guam, American Samoa, the 
        Trust Territory of the Pacific Islands, the Virgin Islands, and 
        the Northern Mariana Islands.
            (2) Insurance company.--The term ``insurance company'' 
        includes any person engaged in the business of insurance to the 
        extent of such activities.

               TITLE II--SECURITIES INDUSTRY COORDINATION

                  Subtitle A--Disciplinary Information

SEC. 201. INVESTMENT ADVISERS ACT OF 1940.

    Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
4) is amended--
            (1) by striking ``Every investment'' and inserting the 
        following:
    ``(a) In General.--Every investment''; and
            (2) by adding at the end the following:
    ``(b) Filing Depositories.--The Commission, by rule, may require an 
investment adviser--
            ``(1) to file with the Commission any fee, application, 
        report, or notice required to be filed by this title or the 
        rules issued under this title through any entity designated by 
        the Commission for that purpose; and
            ``(2) to pay the reasonable costs associated with such 
        filing and the establishment and maintenance of the systems 
        required by subsection (c).
    ``(c) Access to Disciplinary and Other Information.--
            ``(1) Maintenance of system to respond to inquiries.--The 
        Commission shall require the entity designated by the 
        Commission under subsection (b)(1)--
                    ``(A) to establish and maintain a toll-free 
                telephone listing or other readily accessible 
                electronic process to receive inquiries regarding 
                disciplinary actions and proceedings and other 
                information involving investment advisers and persons 
                associated with investment advisers; and
                    ``(B) to respond promptly to such inquiries.
            ``(2) Recovery of costs.--An entity designated by the 
        Commission under subsection (b)(1) may charge persons, other 
        than individual investors, reasonable fees for responses to 
        inquiries made under paragraph (1).
            ``(3) Limitation on liability.--An entity designated by the 
        Commission under subsection (b)(1) shall not have any liability 
        to any person for any actions taken or omitted in good faith 
        under this subsection.''.

SEC. 202. SECURITIES EXCHANGE ACT OF 1934.

    Subsection (i) of section 15A of the Securities Exchange Act of 
1934 (15 U.S.C. 78o-3) is amended to read as follows:
    ``(i) Obligation to Maintain Disciplinary and Other Data.--
            ``(1) Maintenance of system to respond to inquiries.--A 
        registered securities association shall--
                    ``(A) establish and maintain a toll-free telephone 
                listing or other readily accessible electronic process 
                to receive inquiries regarding disciplinary actions and 
                proceedings and other information involving its members 
                and their associated persons and regarding disciplinary 
                actions and proceedings and other information that has 
                been reported to the Central Registration Depository by 
                any registered national securities exchange involving 
                its members and their associated persons; and
                    ``(B) promptly respond to such inquiries.
            ``(2) Recovery of costs.--Such association may charge 
        persons, other than individual investors, reasonable fees for 
        responses to such inquiries.
            ``(3) Limitation on liability.--Such an association or 
        exchange shall not have any liability to any person for any 
        actions taken or omitted in good faith under this 
        subsection.''.

 Subtitle B--Preventing Migration of Rogue Financial Professionals to 
                        the Securities Industry

SEC. 211. SECURITIES EXCHANGE ACT OF 1934.

    (a) Brokers and Dealers.--Section 15(b) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78o(b)) is amended--
            (1) in paragraph (4), by striking subparagraphs (F) and (G) 
        and inserting the following:
            ``(F) is subject to any order of the Commission barring or 
        suspending the right of the person to be associated with a 
        broker or dealer.
            ``(G) has been found by a foreign financial regulatory 
        authority to have--
                    ``(i) made or caused to be made in any application 
                for registration or report required to be filed with a 
                foreign financial regulatory authority, or in any 
                proceeding before a foreign financial regulatory 
                authority with respect to registration, any statement 
                that was at the time and in the light of the 
                circumstances under which it was made false or 
                misleading with respect to any material fact, or 
                omitted to state in any such application, report, or 
                proceeding any material fact that is required to be 
                stated therein;
                    ``(ii) violated any foreign statute or regulation 
                regarding securities, banking, thrift activities, 
                credit union activities, insurance, or contracts of 
                sale of a commodity for future delivery, traded on or 
                subject to the rules of a contract market or any board 
                of trade; or
                    ``(iii) aided, abetted, counseled, commanded, 
                induced, or procured the violation by any other person 
                of any provision of any statutory provisions enacted by 
                a foreign government, or rules or regulations 
                thereunder, regarding securities, banking, thrift 
                activities, credit union activities, insurance, or 
                contracts of sale of a commodity for future delivery 
                traded on or subject to the rules of a contract market 
                or any board of trade, or to have failed reasonably to 
                supervise, with a view to preventing violations of such 
                statutory provisions, rules, and regulations, another 
                person who commits such a violation, if such other 
                person is subject to his supervision.
            ``(H) is subject to any final order of a State securities 
        commission (or any agency or officer performing like 
        functions), State authority that supervises or examines banks, 
        thrifts, or credit unions, State insurance commission (or any 
        agency or office performing like functions), an appropriate 
        Federal banking agency (as defined in section 3 of the Federal 
        Deposit Insurance Act (12 U.S.C. 1813(q)), or the National 
        Credit Union Administration, that--
                    ``(i) bars such person from association with an 
                entity regulated by such commission, authority, agency, 
                or officer, or from engaging in the business of 
                securities, insurance, banking, thrift activities, or 
                credit union activities; or
                    ``(ii) constitutes a final order based on 
                violations of any laws or regulations that prohibit 
                fraudulent, manipulative, or deceptive conduct.''; and
            (2) in paragraph (6)(A)(i), by striking ``or omission 
        enumerated in subparagraph (A), (D), (E), or (G)'' and 
        inserting ``, or is subject to an order or finding, enumerated 
        in subparagraph (A), (D), (E), (G), or (H)''.
    (b) Municipal Securities Brokers and Dealers.--Section 15B(c) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(c)) is amended--
            (1) in paragraph (2)--
                    (A) by striking ``or omission enumerated in 
                subparagraph (A), (D), (E), or (G)'' and inserting ``, 
                or is subject to an order or finding, enumerated in 
                subparagraph (A), (D), (E), (G), or (H)''; and
                    (B) by striking ``ten'' and inserting ``10''; and
            (2) in paragraph (4) by striking ``or omission enumerated 
        in subparagraph (A), (D), (E), or (G)'' and inserting ``, or is 
        subject to an order or finding, enumerated in subparagraph (A), 
        (D), (E), (G), or (H)''.
    (c) Government Securities Brokers and Dealers.--Section 15C(c)(1) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78o-5(c)(1)) is 
amended--
            (1) in subparagraph (A), by striking ``or omission 
        enumerated in subparagraph (A), (D), (E), or (G)'' and 
        inserting ``, or is subject to an order or finding, enumerated 
        in subparagraph (A), (D), (E), (G), or (H)''; and
            (2) in subparagraph (C), by striking ``or omission 
        enumerated in subparagraph (A), (D), (E), or (G)'' and 
        inserting ``, or is subject to an order or finding, enumerated 
        in subparagraph (A), (D), (E), (G), or (H)''.
    (d) Clearance and Settlement.--Section 17A(c) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78q-1(c)) is amended--
            (1) in paragraph (3)(A), by striking ``enumerated in 
        subparagraph (A), (D), (E), or (G)'' and inserting ``, or is 
        subject to an order or finding, enumerated in subparagraph (A), 
        (D), (E), (G), or (H)''; and
            (2) in paragraph (4)(C)--
                    (A) by striking ``enumerated in subparagraph (A), 
                (D), (E), or (G)'' and inserting ``, or is subject to 
                an order or finding, enumerated in subparagraph (A), 
                (D), (E), (G), or (H)''; and
                    (B) by striking ``ten years'' and inserting ``10 
                years''.
    (e) Definition of Statutory Disqualification.--Section 3(a)(39)(F) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(39)(F)) is 
amended by striking ``has committed or omitted any act enumerated in 
subparagraph (D), (E), or (G)'' and inserting ``has committed or 
omitted any act, or is subject to an order or finding, enumerated in 
subparagraph (D), (E), (G), or (H)''.

SEC. 212. INVESTMENT ADVISERS ACT OF 1940.

    (a) Authority To Deny or Revoke Registration Based on State (and 
Other Governmental) Administrative Actions.--Section 203(e) of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-3(e)) is amended by 
striking paragraphs (7) and (8) and inserting the following:
            ``(7) is subject to any order of the Commission barring or 
        suspending the right of the person to be associated with an 
        investment adviser.
            ``(8) has been found by a foreign financial regulatory 
        authority to have--
                    ``(A) made or caused to be made in any application 
                for registration or report required to be filed with a 
                foreign securities authority, or in any proceeding 
                before a foreign securities authority with respect to 
                registration, any statement that was at the time and in 
                light of the circumstances under which it was made 
                false or misleading with respect to any material fact, 
                or has omitted to state in any such application, 
                report, or proceeding any material fact that is 
                required to be stated therein;
                    ``(B) violated any foreign statute or regulation 
                regarding securities, banking, thrift activities, 
                credit union activities, insurance, or contracts of 
                sale of a commodity for future delivery traded on or 
                subject to the rules of a contract market or any board 
                of trade;
                    ``(C) aided, abetted, counseled, commanded, 
                induced, or procured the violation by any other person 
                of any foreign statute or regulation regarding 
                securities, banking, thrift activities, credit union 
                activities, insurance, or contracts of sale of a 
                commodity for future delivery traded on or subject to 
                the rules of a contract market or any board of trade, 
                or to have failed reasonably to supervise, with a view 
                to preventing violations of statutory provisions, and 
                rules and regulations promulgated thereunder, another 
                person who commits such a violation, if such other 
                person is subject to his supervision.
            ``(9) is subject to any final order of a State securities 
        commission (or any agency or officer performing like 
        functions), State authority that supervises or examines banks, 
        thrifts, or credit unions, State insurance commission (or any 
        agency or office performing like functions), an appropriate 
        Federal banking agency (as defined in section 3 of the Federal 
        Deposit Insurance Act (12 U.S.C. 1813(q)), or the National 
        Credit Union Administration, that--
                    ``(A) bars such person from association with an 
                entity regulated by such commission, authority, agency, 
                or officer, or from engaging in the business of 
                securities, insurance, banking, thrift activities, or 
                credit union activities; or
                    ``(B) constitutes a final order based on violations 
                of any laws or regulations that prohibit fraudulent, 
                manipulative, or deceptive conduct.''.
    (b) Bars on Felons Associated With Investment Advisers.--Section 
203(f) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(f)) is 
amended--
                    (A) by striking ``or (8)'' and inserting ``(8), or 
                (9)''; and
                    (B) by inserting ``or (3)'' after ``paragraph 
                (2)''.

                                                 Union Calendar No. 144

107th CONGRESS

  1st Session

                               H.R. 1408

                  [Report No. 107-192, Parts I and II]

_______________________________________________________________________

                                 A BILL

To safeguard the public from fraud in the financial services industry, 
to streamline and facilitate the antifraud information-sharing efforts 
        of Federal and State regulators, and for other purposes.

_______________________________________________________________________

                            October 16, 2001

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