108TH CONGRESS

1ST SESSION H. R. 657

AN ACT

To amend the Securities Exchange Act of 1934 to

augment the emergency authority of the Securities and Exchange Commission.

108TH CONGRESS

1ST SESSION H. R. 657

AN ACT

To amend the Securities Exchange Act of 1934 to augment

the emergency authority of the Securities and Exchange

Commission.

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 ‘‘Emergency Securities

3 Response Act of 2003’’.

4 SEC. 2. EXTENSION OF EMERGENCY ORDER AUTHORITY OF

5 THE SECURITIES EXCHANGE COMMISSION.

6 (a) EXTENSION OF AUTHORITY.—Paragraph (2) of

7 section 12(k) of the Securities Exchange Act of 1934 (15

8 U.S.C. 78l(k)(2)) is amended to read as follows:

9 ‘‘(2) EMERGENCY ORDERS.—(A) The Commis10 sion, in an emergency, may by order summarily take

11 such action to alter, supplement, suspend, or impose

12 requirements or restrictions with respect to any mat13 ter or action subject to regulation by the Commis14 sion or a self-regulatory organization under the secu15 rities laws, as the Commission determines is nec16 essary in the public interest and for the protection

17 of investors—

18 ‘‘(i) to maintain or restore fair and orderly

19 securities markets (other than markets in ex20 empted securities);

21 ‘‘(ii) to ensure prompt, accurate, and safe

22 clearance and settlement of transactions in se23 curities (other than exempted securities); or

24 ‘‘(iii) to reduce, eliminate, or prevent the

25 substantial disruption by the emergency of (I)

26 securities markets (other than markets in ex-
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1 empted securities), investment companies, or

2 any other significant portion or segment of such

3 markets, or (II) the transmission or processing

4 of securities transactions (other than trans5 actions in exempted securities).

6 ‘‘(B) An order of the Commission under this

7 paragraph (2) shall continue in effect for the period

8 specified by the Commission, and may be extended.

9 Except as provided in subparagraph (C), the Com10 mission’s action may not continue in effect for more

11 than 30 business days, including extensions.

12 ‘‘(C) An order of the Commission under this

13 paragraph (2) may be extended to continue in effect

14 for more than 30 business days if, at the time of the

15 extension, the Commission finds that the emergency

16 still exists and determines that the continuation of

17 the order beyond 30 business days is necessary in

18 the public interest and for the protection of investors

19 to attain an objective described in clause (i), (ii), or

20 (iii) of subparagraph (A). In no event shall an order

21 of the Commission under this paragraph (2) con22 tinue in effect for more than 90 calendar days.

23 ‘‘(D) If the actions described in subparagraph

24 (A) involve a security futures product, the Commis25 sion shall consult with and consider the views of the
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1 Commodity Futures Trading Commission. In exer2 cising its authority under this paragraph, the Com3 mission shall not be required to comply with the pro4 visions of section 553 of title 5, United States Code,

5 or with the provisions of section 19(c) of this title.

6 ‘‘(E) Notwithstanding the exclusion of exempt7 ed securities (and markets therein) from the Com8 mission’s authority under subparagraph (A), the

9 Commission may use such authority to take action

10 to alter, supplement, suspend, or impose require11 ments or restrictions with respect to clearing agen12 cies for transactions in such exempted securities. In

13 taking any action under this subparagraph, the

14 Commission shall consult with and consider the

15 views of the Secretary of the Treasury.’’.

16 (b) CONSULTATION; DEFINITION OF EMERGENCY.—

17 Section 12(k) of the Securities Exchange Act of 1934 (15

18 U.S.C. 78l(k)) is further amended by striking paragraph

19 (6) and inserting the following:

20 ‘‘(6) CONSULTATION.—Prior to taking any ac21 tion described in paragraph (1)(B), the Commission

22 shall consult with and consider the views of the Sec23 retary of the Treasury, Board of Governors of the

24 Federal Reserve System, and the Commodity Fu-
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1 tures Trading Commission, unless such consultation

2 is impracticable in light of the emergency.

3 ‘‘(7) DEFINITIONS.—

4 ‘‘(A) EMERGENCY.—For purposes of this

5 subsection, the term ‘emergency’ means—

6 ‘‘(i) a major market disturbance char7 acterized by or constituting—

8 ‘‘(I) sudden and excessive fluc9 tuations of securities prices generally,

10 or a substantial threat thereof, that

11 threaten fair and orderly markets; or

12 ‘‘(II) a substantial disruption of

13 the safe or efficient operation of the

14 national system for clearance and set15 tlement of transactions in securities,

16 or a substantial threat thereof; or

17 ‘‘(ii) a major disturbance that sub18 stantially disrupts, or threatens to substan19 tially disrupt—

20 ‘‘(I) the functioning of securities

21 markets, investment companies, or

22 any other significant portion or seg23 ment of the securities markets; or

24 ‘‘(II) the transmission or proc25 essing of securities transactions.
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1 ‘‘(B) SECURITIES LAWS.—Notwithstanding

2 section 3(a)(47), for purposes of this sub3 section, the term ‘securities laws’ does not in4 clude the Public Utility Holding Company Act

5 of 1935 (15 U.S.C. 79a et seq.).’’.

6 SEC. 3. PARALLEL AUTHORITY OF THE SECRETARY OF THE

7 TREASURY WITH RESPECT TO GOVERNMENT

8 SECURITIES.

9 Section 15C of the Securities Exchange Act of 1934

10 (15 U.S.C. 78o–5) is amended by adding at the end the

11 following new subsection:

12 ‘‘(h) EMERGENCY AUTHORITY.—The Secretary may

13 by order take any action with respect to a matter or action

14 subject to regulation by the Secretary under this section,

15 or the rules of the Secretary thereunder, involving a gov16 ernment security or a market therein (or significant por17 tion or segment of that market), that the Commission may

18 take under section 12(k)(2) of this title with respect to

19 transactions in securities (other than exempted securities)
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1 or a market therein (or significant portion or segment of

2 that market).’’.

Passed the House of Representatives February 26,

2003.

Attest:

Clerk.