IIB 

108TH CONGRESS 

1ST SESSION H. R. 657

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 27, 2003

Received; read twice and referred to the Committee on Banking, Housing, and 

Urban Affairs 

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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HR 657 RFS 

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) 

20 or a market therein (or significant portion or segment of 

21 that market).’’.

Passed the House of Representatives February 26, 

2003. 

Attest: JEFF TRANDAHL, 

Clerk.