107TH CONGRESS

1ST SESSION H. R. 1088

AN ACT

To amend the Securities Exchange Act of 1934 to reduce

fees collected by the Securities and Exchange Commission, and for other purposes.

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

2 This Act may be cited as the ‘‘Investor and Capital

3 Markets Fee Relief Act’’.

4 SEC. 2. IMMEDIATE TRANSACTION FEE REDUCTIONS.

5 Section 31 of the Securities Exchange Act of 1934

6 (15 U.S.C. 78ee) is amended—

(1) by striking ‘‘1 7 ⁄300 of one percent’’ each place

8 it appears in subsections (b) and (d) and inserting

9 ‘‘$15 per $1,000,000’’;

10 (2) by striking ‘‘and security futures products’’

11 each place it appears in such subsections and insert12 ing ‘‘security futures products, and options on secu13 rities indexes (excluding a narrow-based security

14 index)’’;

15 (3) in the first sentence of subsection (b), by

16 striking ‘‘, except that’’ and all that follows through

17 the end of such sentence and inserting a period;

18 (4) in paragraph (1) of subsection (d), by strik19 ing ‘‘, except that’’ and all that follows through the

20 end of such paragraph and inserting a period;

21 (5) in subsection (e), by striking ‘‘$0.02’’ and

22 inserting ‘‘$0.009’’; and

23 (6) by adding at the end the following new sub24 section:
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1 ‘‘(i) PRO RATA APPLICATION.—The rates per

2 $1,000,000 required by this section shall be applied pro

3 rata to amounts and balances of less than $1,000,000.’’.

4 SEC. 3. REVISION OF SECURITIES TRANSACTION FEE PRO5 VISIONS; ADDITIONAL FEE REDUCTIONS.

6 (a) POOLING AND ALLOCATION OF COLLECTIONS.—

7 Section 31 of the Securities Exchange Act of 1934 (15

8 U.S.C. 78ee) is further amended—

9 (1) in subsection (b)—

10 (A) by striking ‘‘Every’’ and inserting

11 ‘‘Subject to subsection (j), each’’; and

12 (B) by striking the last sentence;

13 (2) by striking subsection (c);

14 (3) in subsection (d)—

15 (A) by striking paragraphs (2) and (3);

16 (B) by striking the following:

17 ‘‘(d) OFF-EXCHANGE TRADES OF LAST-SALE-RE18 PORTED SECURITIES.—

19 ‘‘(1) COVERED TRANSACTIONS.—Each national

20 securities’’

21 and inserting the following:

22 ‘‘(c) OFF-EXCHANGE TRADES OF EXCHANGE REG23 ISTERED AND LAST-SALE-REPORTED SECURITIES.—Sub24 ject to subsection (j), each national securities’’;
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1 (C) by inserting ‘‘registered on a national

2 securities exchange or’’ after ‘‘narrow-based se3 curity index))’’ (as added by section 2(2)); and

4 (D) by striking ‘‘, excluding any sales for

5 which a fee is paid under subsection (c)’’;

6 (4) in subsection (e), by striking ‘‘except that

7 for fiscal year 2007’’ and all that follows through

8 the end of such subsection and inserting the fol9 lowing: ‘‘except that for fiscal year 2007 and each

10 succeeding fiscal year such assessment shall be equal

11 to $0.0042 for each such transaction.’’;

12 (5) in subsection (f), by striking ‘‘DATES FOR

13 PAYMENT OF FEES.—The fees required’’ and insert14 ing ‘‘DATES FOR PAYMENTS.—The fees and assess15 ments required’’;

16 (6) by redesignating subsections (e) through (i)

17 (as added by section 2(5)) as subsections (d)

18 through (h), respectively;

19 (7) by adding at the end the following new sub20 section:

21 ‘‘(i) DEPOSIT OF FEES.—

22 ‘‘(1) OFFSETTING COLLECTIONS.—Fees col23 lected pursuant to subsections (b), (c), and (d) for

24 any fiscal year—
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1 ‘‘(A) shall be deposited and credited as off2 setting collections to the account providing ap3 propriations to the Commission; and

4 ‘‘(B) except as provided in subsection (k),

5 shall not be collected for any fiscal year except

6 to the extent provided in advance in appropria7 tion Acts.

8 ‘‘(2) GENERAL REVENUES PROHIBITED.—No

9 fees collected pursuant to subsections (b), (c), and

10 (d) for fiscal year 2002 or any succeeding fiscal year

11 shall be deposited and credited as general revenue of

12 the Treasury.’’.

13 (b) ADDITIONAL REDUCTIONS OF FEES.—

14 (1) AMENDMENT.—Section 31 of the Securities

15 Exchange Act of 1934 (15 U.S.C. 78ee) is further

16 amended by adding after subsection (i) (as added by

17 subsection (a)(7)) the following new subsections:

18 ‘‘(j) RECAPTURE OF PROJECTION WINDFALLS FOR

19 FURTHER RATE REDUCTIONS.—

20 ‘‘(1) ANNUAL ADJUSTMENT.—For each of the

21 fiscal years 2003 through 2011, the Commission

22 shall by order adjust each of the rates applicable

23 under subsections (b) and (c) for such fiscal year to

24 a uniform adjusted rate that, when applied to the

25 baseline estimate of the aggregate dollar amount of
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1 sales for such fiscal year, is reasonably likely to

2 produce aggregate fee collections under this section

3 (including assessments collected under subsection

4 (d)) that are equal to the target offsetting collection

5 amount for such fiscal year.

6 ‘‘(2) MID-YEAR ADJUSTMENT.—For each of the

7 fiscal years 2002 through 2011, the Commission

8 shall determine, by March 1 of such fiscal year,

9 whether, based on the actual aggregate dollar vol10 ume of sales during the first 5 months of such fiscal

11 year, the baseline estimate of the aggregate dollar

12 volume of sales used under paragraph (1) for such

13 fiscal year (or $48,800,000,000,000 in the case of

14 fiscal year 2002) is reasonably likely to be 10 per15 cent (or more) greater or less than the actual aggre16 gate dollar volume of sales for such fiscal year. If

17 the Commission so determines, the Commission shall

18 by order, no later than such March 1, adjust each

19 of the rates applicable under subsections (b) and (c)

20 for such fiscal year to a uniform adjusted rate that,

21 when applied to the revised estimate of the aggre22 gate dollar amount of sales for the remainder of

23 such fiscal year, is reasonably likely to produce ag24 gregate fee collections under this section (including

25 fees collected during such 5-month period and as-
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1 sessments collected under subsection (d)) that are

2 equal to the target offsetting collection amount for

3 such fiscal year. In making such revised estimate,

4 the Commission shall, after consultation with the

5 Congressional Budget Office and the Office of Man6 agement and Budget, use the same methodology re7 quired by subsection (l)(2).

8 ‘‘(3) FINAL RATE ADJUSTMENT.—For fiscal

9 year 2012 and all of the succeeding fiscal years, the

10 Commission shall by order adjust each of the rates

11 applicable under subsections (b) and (c) for all of

12 such fiscal years to a uniform adjusted rate that,

13 when applied to the baseline estimate of the aggre14 gate dollar amount of sales for fiscal year 2012, is

15 reasonably likely to produce aggregate fee collections

16 under this section in fiscal year 2012 (including as17 sessments collected under subsection (d)) equal to

18 the target offsetting collection amount for fiscal year

19 2011.

20 ‘‘(4) REVIEW AND EFFECTIVE DATE.— In exer21 cising its authority under this subsection, the Com22 mission shall not be required to comply with the pro23 visions of section 553 of title 5, United States Code.

24 An adjusted rate prescribed under paragraph (1),

25 (2), or (3) and published under subsection (g) shall
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1 not be subject to judicial review. Subject to sub2 sections (i)(1)(B) and (k)—

3 ‘‘(A) an adjusted rate prescribed under

4 paragraph (1) shall take effect on the later of—

5 ‘‘(i) the first day of the fiscal year to

6 which such rate applies; or

7 ‘‘(ii) 30 days after the date on which

8 a regular appropriation to the Commission

9 for such fiscal year is enacted;

10 ‘‘(B) an adjusted rate prescribed under

11 paragraph (2) shall take effect on April 1 of the

12 fiscal year to which such rate applies; and

13 ‘‘(C) an adjusted rate prescribed under

14 paragraph (3) shall take effect on the later of—

15 ‘‘(i) the first day of fiscal year 2012;

16 or

17 ‘‘(ii) 30 days after the date on which

18 a regular appropriation to the Commission

19 for fiscal year 2012 is enacted.

20 ‘‘(k) LAPSE OF APPROPRIATION.—If on the first day

21 of a fiscal year a regular appropriation to the Commission

22 has not been enacted, the Commission shall continue to

23 collect (as offsetting collections) the fees and assessments

24 under subsections (b), (c), and (d) at the rate in effect
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1 during the preceding fiscal year, until 30 days after the

2 date such a regular appropriation is enacted.

3 ‘‘(l) DEFINITIONS.—For purposes of this section:

4 ‘‘(1) TARGET OFFSETTING COLLECTION

5 AMOUNT.—The target offsetting collection amount

6 for each of the fiscal years 2002 through 2011 is de7 termined according to the following table:

Target offsetting

‘‘Fiscal year: collection amount

2002 ...................................................................................... $732,000,000

2003 ...................................................................................... $849,000,000

2004 ...................................................................................... $1,028,000,000

2005 ...................................................................................... $1,220,000,000

2006 ...................................................................................... $1,435,000,000

2007 ...................................................................................... $881,000,000

2008 ...................................................................................... $892,000,000

2009 ...................................................................................... $1,023,000,000

2010 ...................................................................................... $1,161,000,000

2011 ...................................................................................... $1,321,000,000

8 ‘‘(2) BASELINE ESTIMATE OF THE AGGREGATE

9 DOLLAR AMOUNT OF SALES.—The baseline estimate

10 of the aggregate dollar amount of sales for any fiscal

11 year is the baseline estimate of the aggregate dollar

12 amount of sales of securities (other than bonds, de13 bentures, other evidences of indebtedness, security

14 futures products, and options on securities indexes

15 (excluding a narrow-based security index)) to be

16 transacted on each national securities exchange and

17 by or through any member of each national securi18 ties association (otherwise than on a national securi19 ties exchange) during such fiscal year as determined
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1 by the Commission, after consultation with the Con2 gressional Budget Office and the Office of Manage3 ment and Budget, using the methodology required

4 for making projections pursuant to section 257 of

5 the Balanced Budget and Emergency Deficit Control

6 Act of 1985.’’.

7 (2) CONFORMING AMENDMENT.—Section 31(g)

8 of such Act (as redesignated by subsection (a)(6) of

9 this section) is amended by inserting before the pe10 riod at the end the following: ‘‘not later than April

11 30 of the fiscal year preceding the fiscal year to

12 which such rate applies, together with any estimates

13 or projections on which such fees are based’’.

14 SEC. 4. REDUCTION OF REGISTRATION FEES.

15 Section 6(b) of the Securities Act of 1933 (15 U.S.C.

16 77f(b)) is amended by striking paragraphs (2) through (5)

17 and inserting the following:

18 ‘‘(2) FEE PAYMENT REQUIRED.—At the time of

19 filing a registration statement, the applicant shall

20 pay to the Commission a fee at a rate that shall be

21 equal to $92 per $1,000,000 of the maximum aggre22 gate price at which such securities are proposed to

23 be offered, except that during fiscal year 2003 and

24 any succeeding fiscal year such fee shall be adjusted

25 pursuant to paragraph (5) or (6).
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1 ‘‘(3) OFFSETTING COLLECTIONS.—Fees col2 lected pursuant to this subsection for any fiscal

3 year—

4 ‘‘(A) shall be deposited and credited as off5 setting collections to the account providing ap6 propriations to the Commission; and

7 ‘‘(B) except as provided in paragraph (9),

8 shall not be collected for any fiscal year except

9 to the extent provided in advance in appropria10 tion Acts.

11 ‘‘(4) GENERAL REVENUES PROHIBITED.—No

12 fees collected pursuant to this subsection for fiscal

13 year 2002 or any succeeding fiscal year shall be de14 posited and credited as general revenue of the

15 Treasury.

16 ‘‘(5) ANNUAL ADJUSTMENT.—For each of the

17 fiscal years 2003 through 2011, the Commission

18 shall by order adjust the rate required by paragraph

19 (2) for such fiscal year to a rate that, when applied

20 to the baseline estimate of the aggregate maximum

21 offering prices for such fiscal year, is reasonably

22 likely to produce aggregate fee collections under this

23 subsection that are equal to the target offsetting col24 lection amount for such fiscal year.
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1 ‘‘(6) FINAL RATE ADJUSTMENT.—For fiscal

2 year 2012 and all of the succeeding fiscal years, the

3 Commission shall by order adjust the rate required

4 by paragraph (2) for all of such fiscal years to a

5 rate that, when applied to the baseline estimate of

6 the aggregate maximum offering prices for fiscal

7 year 2012, is reasonably likely to produce aggregate

8 fee collections under this subsection in fiscal year

9 2012 equal to the target offsetting collection amount

10 for fiscal year 2011.

11 ‘‘(7) PRO RATA APPLICATION.—The rates per

12 $1,000,000 required by this subsection shall be ap13 plied pro rata to amounts and balances of less than

14 $1,000,000.

15 ‘‘(8) REVIEW AND EFFECTIVE DATE.— In exer16 cising its authority under this subsection, the Com17 mission shall not be required to comply with the pro18 visions of section 553 of title 5, United States Code.

19 An adjusted rate prescribed under paragraph (5) or

20 (6) and published under paragraph (10) shall not be

21 subject to judicial review. Subject to paragraphs

22 (3)(B) and (9)—

23 ‘‘(A) an adjusted rate prescribed under

24 paragraph (5) shall take effect on the later of—
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1 ‘‘(i) the first day of the fiscal year to

2 which such rate applies; or

3 ‘‘(ii) 5 days after the date on which a

4 regular appropriation to the Commission

5 for such fiscal year is enacted; and

6 ‘‘(B) an adjusted rate prescribed under

7 paragraph (6) shall take effect on the later of—

8 ‘‘(i) the first day of fiscal year 2012;

9 or

10 ‘‘(ii) 5 days after the date on which a

11 regular appropriation to the Commission

12 for fiscal year 2012 is enacted.

13 ‘‘(9) LAPSE OF APPROPRIATION.—If on the

14 first day of a fiscal year a regular appropriation to

15 the Commission has not been enacted, the Commis16 sion shall continue to collect fees (as offsetting col17 lections) under this subsection at the rate in effect

18 during the preceding fiscal year, until 5 days after

19 the date such a regular appropriation is enacted.

20 ‘‘(10) PUBLICATION.—The Commission shall

21 publish in the Federal Register notices of the rate

22 applicable under this subsection and under sections

23 13(e) and 14(g) for each fiscal year not later than

24 April 30 of the fiscal year preceding the fiscal year
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1 to which such rate applies, together with any esti2 mates or projections on which such rate is based.

3 ‘‘(11) DEFINITIONS.—For purposes of this sub4 section:

5 ‘‘(A) TARGET OFFSETTING COLLECTION

6 AMOUNT.—The target offsetting collection

7 amount for each of the fiscal years 2002

8 through 2011 is determined according to the

9 following table:

Target offsetting

‘‘Fiscal year: collection amount

2002 ...................................................................................... $337,000,000

2003 ...................................................................................... $435,000,000

2004 ...................................................................................... $467,000,000

2005 ...................................................................................... $570,000,000

2006 ...................................................................................... $689,000,000

2007 ...................................................................................... $214,000,000

2008 ...................................................................................... $234,000,000

2009 ...................................................................................... $284,000,000

2010 ...................................................................................... $334,000,000

2011 ...................................................................................... $394,000,000

10 ‘‘(B) BASELINE ESTIMATE OF THE AGGRE11 GATE MAXIMUM OFFERING PRICES.—The base12 line estimate of the aggregate maximum offer13 ing prices for any fiscal year is the baseline es14 timate of the aggregate maximum offering price

15 at which securities are proposed to be offered

16 pursuant to registration statements filed with

17 the Commission during such fiscal year as de18 termined by the Commission, after consultation

19 with the Congressional Budget Office and the
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1 Office of Management and Budget, using the

2 methodology required for projections pursuant

3 to section 257 of the Balanced Budget and

4 Emergency Deficit Control Act of 1985.’’.

5 SEC. 5. FEES FOR STOCK REPURCHASE STATEMENTS.

6 Section 13(e) of the Securities Exchange Act of 1934

7 (15 U.S.C. 78m(e)) is amended

(1) in paragraph (3), by striking ‘‘a fee of 1 8 ⁄50

9 of 1 per centum of the value of securities proposed

10 to be purchased’’ and inserting ‘‘a fee at a rate that,

11 subject to paragraphs (5) and (6), is equal to $92

12 per $1,000,000 of the value of securities proposed to

13 be purchased’’;

14 (2) by inserting after paragraph (3) the fol15 lowing new paragraphs:

16 ‘‘(4) OFFSETTING COLLECTIONS.—Fees col17 lected pursuant to this subsection for any fiscal year

18 shall be deposited and credited as offsetting collec19 tions to the account providing appropriations to the

20 Commission, and, except as provided in paragraph

21 (9), shall not be collected for any fiscal year except

22 to the extent provided in advance in appropriation

23 Acts. No fees collected pursuant to this subsection

24 for fiscal year 2002 or any succeeding fiscal year
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1 shall be deposited and credited as general revenue of

2 the Treasury.

3 ‘‘(5) ANNUAL ADJUSTMENT.—For each of the

4 fiscal years 2003 through 2011, the Commission

5 shall by order adjust the rate required by paragraph

6 (3) for such fiscal year to a rate that is equal to the

7 rate (expressed in dollars per million) that is appli8 cable under section 6(b) of the Securities Act of

9 1933 for such fiscal year.

10 ‘‘(6) FINAL RATE ADJUSTMENT.—For fiscal

11 year 2012 and all of the succeeding fiscal years, the

12 Commission shall by order adjust the rate required

13 by paragraph (3) for all of such fiscal years to a

14 rate that is equal to the rate (expressed in dollars

15 per million) that is applicable under section 6(b) of

16 the Securities Act of 1933 for all of such fiscal

17 years.

18 ‘‘(7) PRO RATA APPLICATION.—The rates per

19 $1,000,000 required by this subsection shall be ap20 plied pro rata to amounts and balances of less than

21 $1,000,000.

22 ‘‘(8) REVIEW AND EFFECTIVE DATE.— In exer23 cising its authority under this subsection, the Com24 mission shall not be required to comply with the pro25 visions of section 553 of title 5, United States Code.
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1 An adjusted rate prescribed under paragraph (5) or

2 (6) and published under paragraph (10) shall not be

3 subject to judicial review. Subject to paragraphs (4)

4 and (9)—

5 ‘‘(A) an adjusted rate prescribed under

6 paragraph (5) shall take effect on the later of—

7 ‘‘(i) the first day of the fiscal year to

8 which such rate applies; or

9 ‘‘(ii) 5 days after the date on which a

10 regular appropriation to the Commission

11 for such fiscal year is enacted; and

12 ‘‘(B) an adjusted rate prescribed under

13 paragraph (6) shall take effect on the later of—

14 ‘‘(i) the first day of fiscal year 2012;

15 or

16 ‘‘(ii) 5 days after the date on which a

17 regular appropriation to the Commission

18 for fiscal year 2012 is enacted.

19 ‘‘(9) LAPSE OF APPROPRIATION.—If on the

20 first day of a fiscal year a regular appropriation to

21 the Commission has not been enacted, the Commis22 sion shall continue to collect fees (as offsetting col23 lections) under this subsection at the rate in effect

24 during the preceding fiscal year, until 5 days after

25 the date such a regular appropriation is enacted.
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1 ‘‘(10) PUBLICATION.—The rate applicable

2 under this subsection for each fiscal year is pub3 lished pursuant to section 6(b)(10) of the Securities

4 Act of 1933.’’.

5 SEC. 6. FEES FOR PROXY SOLICITATIONS AND STATE6 MENTS IN CORPORATE CONTROL TRANS7 ACTIONS.

8 Section 14(g) of the Securities Exchange Act of 1934

9 (15 U.S.C. 78m(e)(3)) is amended—

10 (1) in paragraphs (1) and (3), by striking ‘‘a

fee of 1 11 ⁄50 of 1 per centum of’’ each place it appears

12 and inserting ‘‘a fee at a rate that, subject to para13 graphs (5) and (6), is equal to $92 per $1,000,000

14 of’’;

15 (2) by redesignating paragraph (4) as para16 graph (11); and

17 (3) by inserting after paragraph (3) the fol18 lowing new paragraphs:

19 ‘‘(4) OFFSETTING COLLECTIONS.—Fees col20 lected pursuant to this subsection for any fiscal year

21 shall be deposited and credited as offsetting collec22 tions to the account providing appropriations to the

23 Commission, and, except as provided in paragraph

24 (9), shall not be collected for any fiscal year except

25 to the extent provided in advance in appropriation
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1 Acts. No fees collected pursuant to this subsection

2 for fiscal year 2002 or any succeeding fiscal year

3 shall be deposited and credited as general revenue of

4 the Treasury.

5 ‘‘(5) ANNUAL ADJUSTMENT.—For each of the

6 fiscal years 2003 through 2011, the Commission

7 shall by order adjust each of the rates required by

8 paragraphs (1) and (3) for such fiscal year to a rate

9 that is equal to the rate (expressed in dollars per

10 million) that is applicable under section 6(b) of the

11 Securities Act of 1933 for such fiscal year.

12 ‘‘(6) FINAL RATE ADJUSTMENT.—For fiscal

13 year 2012 and all of the succeeding fiscal years, the

14 Commission shall by order adjust each of the rates

15 required by paragraphs (1) and (3) for all of such

16 fiscal years to a rate that is equal to the rate (ex17 pressed in dollars per million) that is applicable

18 under section 6(b) of the Securities Act of 1933 for

19 all of such fiscal years.

20 ‘‘(7) PRO RATA APPLICATION.—The rates per

21 $1,000,000 required by this subsection shall be ap22 plied pro rata to amounts and balances of less than

23 $1,000,000.

24 ‘‘(8) REVIEW AND EFFECTIVE DATE.— In exer25 cising its authority under this subsection, the Com-
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1 mission shall not be required to comply with the pro2 visions of section 553 of title 5, United States Code.

3 An adjusted rate prescribed under paragraph (5) or

4 (6) and published under paragraph (10) shall not be

5 subject to judicial review. Subject to paragraphs (4)

6 and (9)—

7 ‘‘(A) an adjusted rate prescribed under

8 paragraph (5) shall take effect on the later of—

9 ‘‘(i) the first day of the fiscal year to

10 which such rate applies; or

11 ‘‘(ii) 5 days after the date on which a

12 regular appropriation to the Commission

13 for such fiscal year is enacted; and

14 ‘‘(B) an adjusted rate prescribed under

15 paragraph (6) shall take effect on the later of—

16 ‘‘(i) the first day of fiscal year 2012;

17 or

18 ‘‘(ii) 5 days after the date on which a

19 regular appropriation to the Commission

20 for fiscal year 2012 is enacted.

21 ‘‘(9) LAPSE OF APPROPRIATION.—If on the

22 first day of a fiscal year a regular appropriation to

23 the Commission has not been enacted, the Commis24 sion shall continue to collect fees (as offsetting col25 lections) under this subsection at the rate in effect
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1 during the preceding fiscal year, until 5 days after

2 the date such a regular appropriation is enacted.

3 ‘‘(10) PUBLICATION.—The rate applicable

4 under this subsection for each fiscal year is pub5 lished pursuant to section 6(b)(10) of the Securities

6 Act of 1933.’’.

7 SEC. 7. TRUST INDENTURE ACT FEE.

8 Section 307(b) of the Trust Indenture Act of 1939

9 (15 U.S.C. 77ggg(b)) is amended by striking ‘‘Commis10 sion, but, in the case’’ and all that follows and inserting

11 ‘‘Commission.’’.

12 SEC. 8. COMPARABILITY PROVISIONS.

13 (a) COMMISSION DEMONSTRATION PROJECT.—Sub14 part C of part III of title 5, United States Code, is amend15 ed by adding at the end the following:

16 ‘‘CHAPTER 48—AGENCY PERSONNEL

17 DEMONSTRATION PROJECT

‘‘Sec.

‘‘4801. Nonapplicability of chapter 47.

‘‘4802. Securities and Exchange Commission.

18 ‘‘§ 4801. Nonapplicability of chapter 47

19 ‘‘Chapter 47 shall not apply to this chapter.

20 ‘‘§ 4802. Securities and Exchange Commission

21 ‘‘(a) In this section, the term ‘Commission’ means the

22 Securities and Exchange Commission.
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1 ‘‘(b) The Commission may appoint and fix the com2 pensation of such officers, attorneys, economists, exam3 iners, and other employees as may be necessary for car4 rying out its functions under the securities laws as defined

5 under section 3 of the Securities Exchange Act of 1934

6 (15 U.S.C. 78c).

7 ‘‘(c) Rates of basic pay for all employees of the Com8 mission may be set and adjusted by the Commission with9 out regard to the provisions of chapter 51 or subchapter

10 III of chapter 53.

11 ‘‘(d) The Commission may provide additional com12 pensation and benefits to employees of the Commission if

13 the same type of compensation or benefits are then being

14 provided by any agency referred to under section 1206 of

15 the Financial Institutions Reform, Recovery, and Enforce16 ment Act of 1989 (12 U.S.C. 1833b) or, if not then being

17 provided, could be provided by such an agency under ap18 plicable provisions of law, rule, or regulation. In setting

19 and adjusting the total amount of compensation and bene20 fits for employees, the Commission shall consult with, and

21 seek to maintain comparability with, the agencies referred

22 to under section 1206 of the Financial Institutions Re23 form, Recovery, and Enforcement Act of 1989 (12 U.S.C.

24 1833b).
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1 ‘‘(e) The Commission shall consult with the Office of

2 Personnel Management in the implementation of this sec3 tion.

4 ‘‘(f) This section shall be administered consistent

5 with merit system principles.’’.

6 (b) EMPLOYEES REPRESENTED BY LABOR ORGANI7 ZATIONS.—To the extent that any employee of the Securi8 ties and Exchange Commission is represented by a labor

9 organization with exclusive recognition in accordance with

10 chapter 71 of title 5, United States Code, no reduction

11 in base pay of such employee shall be made by reason of

12 enactment of this section (including the amendments

13 made by this section).

14 (c) IMPLEMENTATION PLAN AND REPORT.—

15 (1) IMPLEMENTATION PLAN.—

16 (A) IN GENERAL.—The Securities and Ex17 change Commission shall develop a plan to im18 plement section 4802 of title 5, United States

19 Code, as added by this section.

20 (B) INCLUSION IN ANNUAL PERFORMANCE

21 PLAN AND REPORT.—The Securities and Ex22 change Commission shall include—

23 (i) the plan developed under this para24 graph in the annual program performance
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1 plan submitted under section 1115 of title

2 31, United States Code; and

3 (ii) the effects of implementing the

4 plan developed under this paragraph in the

5 annual program performance report sub6 mitted under section 1116 of title 31,

7 United States Code.

8 (2) IMPLEMENTATION REPORT.—

9 (A) IN GENERAL.—Before implementing

10 the plan developed under paragraph (1), the Se11 curities and Exchange Commission shall submit

12 a report to the Committee on Governmental Af13 fairs and the Committee on Banking, Housing,

14 and Urban Affairs of the Senate, the Com15 mittee on Government Reform and the Com16 mittee on Financial Services of the House of

17 Representatives, and the Office of Personnel

18 Management on the details of the plan.

19 (B) CONTENT.—The report under this

20 paragraph shall include—

21 (i) evidence and supporting docu22 mentation justifying the plan; and

23 (ii) budgeting projections on costs and

24 benefits resulting from the plan.

25 (d) TECHNICAL AND CONFORMING AMENDMENTS.—
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1 (1) AMENDMENTS TO TITLE 5, UNITED STATES

2 CODE.—

3 (A) The table of chapters for part III of

4 title 5, United States Code, is amended by add5 ing at the end of subpart C the following:

‘‘48. Agency Personnel Demonstration Project .................................. 4801.’’.

6 (B) Section 3132(a)(1) of title 5, United

7 States Code, is amended—

8 (i) in subparagraph (C), by striking

9 ‘‘or’’ after the semicolon;

10 (ii) in subparagraph (D), by inserting

11 ‘‘or’’ after the semicolon; and

12 (iii) by adding at the end the fol13 lowing:

14 ‘‘(E) the Securities and Exchange Commis15 sion;’’.

16 (C) Section 5373(a) of title 5, United

17 States Code, is amended—

18 (i) in paragraph (2), by striking ‘‘or’’

19 after the semicolon;

20 (ii) in paragraph (3), by striking the

21 period and inserting ‘‘; or’’; and

22 (iii) by adding at the end the fol23 lowing:

24 ‘‘(4) section 4802.’’.
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1 (2) AMENDMENT TO SECURITIES EXCHANGE

2 ACT OF 1934.—Section 4(b) of the Securities Ex3 change Act of 1934 (15 U.S.C. 78d(b)) is amended

4 by striking paragraphs (1) and (2) and inserting the

5 following:

6 ‘‘(1) APPOINTMENT AND COMPENSATION.—The

7 Commission shall appoint and compensate officers,

8 attorneys, economists, examiners, and other employ9 ees in accordance with section 4802 of title 5,

10 United States Code.

11 ‘‘(2) REPORTING OF INFORMATION.—In estab12 lishing and adjusting schedules of compensation and

13 benefits for officers, attorneys, economists, exam14 iners, and other employees of the Commission under

15 applicable provisions of law, the Commission shall

16 inform the heads of the agencies referred to under

17 section 1206 of the Financial Institutions Reform,

18 Recovery, and Enforcement Act of 1989 (12 U.S.C.

19 1833b) and Congress of such compensation and ben20 efits and shall seek to maintain comparability with

21 such agencies regarding compensation and bene22 fits.’’.

23 (3) AMENDMENT TO FIRREA OF 1989.—Section

24 1206 of the Financial Institutions Reform, Recov25 ery, and Enforcement Act of 1989 (12 U.S.C.
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1 1833b) is amended by striking ‘‘the Thrift Depositor

2 Protection Oversight Board of the Resolution Trust

3 Corporation’’.

4 SEC. 9. STUDY OF THE EFFECT OF FEE REDUCTIONS.

5 (a) STUDY.—The Office of Economic Analysis of the

6 Securities and Exchange Commission (hereinafter referred

7 to as the ‘‘Office’’) shall conduct a study of the extent

8 to which the benefits of reductions in fees effected as a

9 result of this Act are passed on to investors.

10 (b) FACTORS FOR CONSIDERATION.—In conducting

11 the study under subsection (a), the Office shall—

12 (1) consider the various elements of the securi13 ties industry directly and indirectly benefitting from

14 the fee reductions, including purchasers and sellers

15 of securities, members of national securities ex16 changes, issuers, broker-dealers, underwriters, par17 ticipants in investment companies, retirement pro18 grams, and others;

19 (2) consider the impact on different types of in20 vestors, such as individual equity holders, individual

21 investment company shareholders, businesses, and

22 other types of investors;

23 (3) include in the interpretation of the term

24 ‘‘investor’’ shareholders of entities subject to the fee

25 reductions; and
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1 (4) consider the economic benefits to investors

2 flowing from the fee reductions to include such fac3 tors as market efficiency, expansion of investment

4 opportunities, and enhanced liquidity and capital

5 formation.

6 (c) REPORT TO CONGRESS.—Not later than 2 years

7 after the date of enactment of this Act, the Securities and

8 Exchange Commission shall submit to the Congress the

9 report prepared by the Office on the findings of the study

10 conducted under subsection (a).

11 SEC. 10. STUDY OF CONVERSION TO SELF-FUNDING.

12 (a) GAO STUDY REQUIRED.—The Comptroller Gen13 eral shall conduct a study of the impact, implications, and

14 consequences of converting the Securities and Exchange

15 Commission to a self-funded basis. Such study shall in16 clude analysis of the following issues:

17 (1) SEC OPERATIONS.—The impact of such

18 conversion on the Commission’s operations, includ19 ing staff quality, recruitment, and retention.

20 (2) CONGRESSIONAL OVERSIGHT.—The implica21 tions for congressional oversight of the Commission,

22 including whether imposing annual expenditure limi23 tations would be beneficial to such oversight.
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1 (3) FEES.—The likely consequences of the con2 version on the rates, collection procedures, and pre3 dictability of fees collected by the Commission.

4 (4) APPROPRIATIONS.—The methods by which

5 the conversion may be accomplished without reduc6 ing the availability of offsetting collections for appro7 priations.

8 (5) OTHER MATTERS.—Such other impacts, im9 plications, and consequences as the Comptroller

10 General may consider relevant to congressional con11 sideration of the question of such conversion.

12 (b) SUBMISSION OF REPORT.—The Comptroller Gen13 eral shall submit to the Committees on Financial Services

14 and Government Reform of the House of Representatives

15 and the Committees on Banking, Housing, and Urban Af16 fairs and Governmental Affairs of the Senate a report on

17 the study required by subsection (a) no later than 180

18 after the date of enactment of this Act.

19 (c) DEFINITION.—For the purposes of this section,

20 the term ‘‘self-funded basis’’ means that—

21 (1) an agency is authorized to deposit the re22 ceipts of its collections in the Treasury of the United

23 States, or in a depository institution, but such de24 posits are not treated as Government funds or ap25 propriated monies, and are available for the salaries
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1 and other expenses of the Commission and its em2 ployees without annual appropriation or apportion3 ment; and

4 (2) the agency is authorized to employ and fix

5 the salaries and other compensation of its officers

6 and employees, and such salaries and other com7 pensation are paid without regard to the provisions

8 of other laws applicable to officers and employees of

9 the United States.

10 SEC. 11. EFFECTIVE DATES.

11 (a) IN GENERAL.—Except as provided in subsections

12 (b) and (c), the amendments made by this Act shall take

13 effect on October 1, 2001.

14 (b) IMMEDIATE TRANSACTION FEE REDUCTIONS.—

15 The amendments made by section 2 shall take effect on

16 the later of—

17 (1) the first day of fiscal year 2002; or

18 (2) 30 days after the date on which a regular

19 appropriation to the Commission for such fiscal year

20 is enacted.

21 (c) ADDITIONAL EXCEPTIONS.—The authorities pro22 vided by section 6(b)(9) of the Securities Act of 1933 and

23 sections 13(e)(9), 14(g)(9) and 31(k) of the Securities Ex-
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1 change Act of 1934, as so designated by this Act, shall

2 not apply until October 1, 2002.

Passed the House of Representatives June 14, 2001.

Attest:

Clerk.

107TH CONGRESS

1ST SESSION H. R. 1088

AN ACT

To amend the Securities Exchange Act of 1934 to

reduce fees collected by the Securities and Exchange Commission, and for other purposes.