IB 
Union Calendar No. 298 
108TH CONGRESS 
2D SESSION 
H. R. 2179 
[Report No. 108–475, Part I] 
To enhance the authority of the Securities and Exchange Commission to 
investigate, punish, and deter securities laws violations, and to improve 
its ability to return funds to defrauded investors, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 21, 2003 
Mr. BAKER (for himself, Mr. OXLEY, Mr. TIBERI, Mr. OSE, and Mrs. KELLY) 
introduced the following bill; which was referred to the Committee on Fi-
nancial Services 
APRIL 27, 2004 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
JUNE 1, 2004 
Additional sponsor: Mr. SCOTT of Georgia 
JUNE 1, 2004 
The Committee on the Judiciary discharged; committed to the Committee of 
the Whole House on the State of the Union and ordered to be printed 
[For text of introduced bill, see copy of bill as introduced on May 21, 2003] 
A BILL 
To enhance the authority of the Securities and Exchange 
Commission to investigate, punish, and deter securities
laws violations, and to improve its ability to return funds 
to defrauded investors, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Securities Fraud Deter-
rence and Investor Restitution Act of 2004’’. 
SEC. 2. RECOVERY BY COMMISSION OF SECURITIES LAW 
JUDGMENTS. 
(a) AMENDMENT.—Title III of the Sarbanes-Oxley Act 
of 2002 is amended by adding after section 308 (15 U.S.C. 
7246) the following new section: 
‘‘SEC. 309. RECOVERY OF SECURITIES LAW JUDGMENTS; RE-
MOVAL OF STATE LAW IMPEDIMENTS. 
‘‘(a) REMOVAL OF STATE LAW IMPEDIMENTS.—The 
Commission’s authority to enforce, collect upon, or other-
wise satisfy in a Federal or State court a judgment or order 
obtained, either by litigation or settlement, in any judicial 
action or administrative proceeding under the securities 
laws against any person based upon an alleged fraudulent, 
deceptive, or manipulative act or practice in violation of 
such laws, or the rules and regulations thereunder, or 
against any gratuitous or fraudulent transferee, shall not 
be subject to—
‘‘(1) a debtor’s election to exempt property under 
State or local law pursuant to section 3014(a)(2) of 
title 28, United States Code; or 
‘‘(2) any homestead provision of any State con-
stitution or any other State law that exempts or pro-
tects property from foreclosure, forced sale, or any 
other procedure to satisfy a judgment or order under 
any process of court for the payment of debts. 
‘‘(b) DEFINITIONS.—For purposes of subsection (a)— 
‘‘(1) a ‘gratuitous transferee’ is any person to 
whom an ownership interest in property is trans-
ferred without adequate consideration; and 
‘‘(2) a ‘fraudulent transferee’ is any person liable 
to the Commission under applicable fraudulent trans-
fer laws.’’. 
(b) CONFORMING AMENDMENT.—The table of contents 
in section 1(b) of the Sarbanes-Oxley Act of 2002 is amend-
ed by inserting after the item relating to section 308 the 
following: 
‘‘Sec. 309. Recovery of securities law judgments; removal of state law impedi-
ments.’’. 
SEC. 3. CIVIL ENFORCEMENT PROVISIONS. 
(a) AUTHORITY TO IMPOSE CIVIL PENALTIES
IN 
CEASE AND DESIST PROCEEDINGS.— 
(1) UNDER THE SECURITIES ACT OF 1934.—Sec-
tion 8A of the Securities Act of 1933 (15 U.S.C. 77h–
1) is amended by adding at the end the following new 
subsection: 
‘‘(g) AUTHORITY TO IMPOSE MONEY PENALTIES.— 
‘‘(1) GROUNDS FOR IMPOSING.—In any cease- 
and-desist proceeding under subsection (a), the Com-
mission may impose a civil penalty on a person if it 
finds, on the record after notice and opportunity for 
hearing, that— 
‘‘(A) such person— 
‘‘(i) is violating or has violated any 
provision of this title, or any rule or regula-
tion thereunder; or 
‘‘(ii) is or was a cause of the violation 
of any provision of this title, or any rule or 
regulation thereunder; and 
‘‘(B) such penalty is in the public interest. 
‘‘(2) MAXIMUM AMOUNT OF PENALTY.— 
‘‘(A) FIRST TIER.—The maximum amount 
of penalty for each act or omission described in 
paragraph (1) shall be $100,000 for a natural 
person or $250,000 for any other person. 
‘‘(B) 
SECOND
TIER.—Notwithstanding 
paragraph (A), the maximum amount of penalty 
for each such act or omission shall be $500,000 
for a natural person or $1,000,000 for any other
person if the act or omission described in para-
graph (1) involved fraud, deceit, manipulation, 
or deliberate or reckless disregard of a regulatory 
requirement. 
‘‘(C) THIRD TIER.—Notwithstanding para-
graphs (A) and (B), the maximum amount of 
penalty for each such act or omission shall be 
$1,000,000 for a natural person or $2,000,000 for 
any other person if— 
‘‘(i) the act or omission described in 
paragraph (1) involved fraud, deceit, ma-
nipulation, or deliberate or reckless dis-
regard of a regulatory requirement; and 
‘‘(ii) such act or omission directly or 
indirectly resulted in substantial losses or 
created a significant risk of substantial 
losses to other persons or resulted in sub-
stantial pecuniary gain to the person who 
committed the act or omission. 
‘‘(3) EVIDENCE CONCERNING ABILITY TO PAY.— 
In any proceeding in which the Commission may im-
pose a penalty under this section, a respondent may 
present evidence of the respondent’s ability to pay 
such penalty. The Commission may, in its discretion, 
consider such evidence in determining whether such
penalty is in the public interest. Such evidence may 
relate to the extent of such person’s ability to continue 
in business and the collectability of a penalty, taking 
into account any other claims of the United States or 
third parties upon such person’s assets and the 
amount of such person’s assets.’’. 
(2) UNDER THE SECURITIES EXCHANGE ACT OF 
1934.—Subsection (a) of section 21B of the Securities 
Exchange Act of 1934 (15 U.S.C. 78u–2(a)) is 
amended— 
(A) by striking ‘‘(a) COMMISSION AUTHOR-
ITY TO ASSESS MONEY PENALTIES.—In any 
proceeding’’ and inserting the following: 
‘‘(a) COMMISSION AUTHORITY TO ASSESS MONEY 
PENALTIES.— 
‘‘(1) IN GENERAL.—In any proceeding’’; 
(B) 
by 
redesignating 
paragraphs 
(1) 
through (4) of such subsection as subparagraphs 
(A) through (D), respectively and moving such 
redesignated subparagraphs and the matter fol-
lowing such subparagraphs 2 ems to the right; 
and 
(C) by adding at the end of such subsection 
the following new paragraph:
‘‘(2) CEASE-AND-DESIST PROCEEDINGS.—In any 
proceeding instituted pursuant to section 21C of this 
title against any person, the Commission may impose 
a civil penalty if it finds, on the record after notice 
and opportunity for hearing, that such person— 
‘‘(A) is violating or has violated any provi-
sion of this title, or any rule or regulation there-
under; or 
‘‘(B) is or was a cause of the violation of 
any provision of this title, or any rule or regula-
tion thereunder.’’. 
(3) UNDER THE INVESTMENT COMPANY ACT OF 
1940.—Paragraph (1) of section 9(d) of the Investment 
Company Act of 1940 (15 U.S.C. 80a–9(d)(1))) is 
amended— 
(A) by striking ‘‘(1) AUTHORITY OF COM-
MISSION.—In any proceeding’’ and inserting the 
following: 
‘‘(1) AUTHORITY OF COMMISSION.— 
‘‘(A) IN GENERAL.—In any proceeding’’; 
(B) by redesignating subparagraphs (A) 
through (C) of such paragraph as clauses (i) 
through (iii), respectively and by moving such 
redesignated clauses and the matter following 
such subparagraphs 2 ems to the right; and
(C) by adding at the end of such paragraph 
the following new subparagraph: 
‘‘(B) CEASE-AND-DESIST
PROCEEDINGS.— 
In any proceeding instituted pursuant to sub-
section (f) against any person, the Commission 
may impose a civil penalty if it finds, on the 
record after notice and opportunity for hearing, 
that such person— 
‘‘(i) is violating or has violated any 
provision of this title, or any rule or regula-
tion thereunder; or 
‘‘(ii) is or was a cause of the violation 
of any provision of this title, or any rule or 
regulation thereunder.’’. 
(4) UNDER THE INVESTMENT ADVISERS ACT OF 
1940.—Paragraph (1) of section 203(i) of the Invest-
ment Advisers Act of 1940 (15 U.S.C. 80b–3(i)(1)) is 
amended— 
(A) by striking ‘‘(1) AUTHORITY OF COM-
MISSION.—In any proceeding’’ and inserting the 
following: 
‘‘(1) AUTHORITY OF COMMISSION.— 
‘‘(A) IN GENERAL.—In any proceeding’’; 
(B) by redesignating subparagraphs (A) 
through (D) of such paragraph as clauses (i)
through (iv), respectively and moving such redes-
ignated clauses and the matter following such 
subparagraphs 2 ems to the right; and 
(C) by adding at the end of such paragraph 
the following new subparagraph: 
‘‘(B) CEASE-AND-DESIST
PROCEEDINGS.— 
In any proceeding instituted pursuant to sub-
section (k) against any person, the Commission 
may impose a civil penalty if it finds, on the 
record after notice and opportunity for hearing, 
that such person— 
‘‘(i) is violating or has violated any 
provision of this title, or any rule or regula-
tion thereunder; or 
‘‘(ii) is or was a cause of the violation 
of any provision of this title, or any rule or 
regulation thereunder.’’. 
(b) INCREASED MAXIMUM CIVIL MONEY PENALTIES.— 
(1) SECURITIES ACT OF 1933.—Section 20(d)(2) 
of the Securities Act of 1933 (15 U.S.C. 77t(d)(2)) is 
amended— 
(A) in subparagraph (A)(i)— 
(i) by striking ‘‘$5,000’’ and inserting 
‘‘$100,000’’; and
(ii) by striking ‘‘$50,000’’ and insert-
ing ‘‘$250,000’’; 
(B) in subparagraph (B)(i)— 
(i) by striking ‘‘$50,000’’ and inserting 
‘‘$500,000’’; and 
(ii) by striking ‘‘$250,000’’ and insert-
ing ‘‘$1,000,000’’; and 
(C) in subparagraph (C)(i)— 
(i) by striking ‘‘$100,000’’ and insert-
ing ‘‘$1,000,000’’; and 
(ii) by striking ‘‘$500,000’’ and insert-
ing ‘‘$2,000,000’’. 
(2) SECURITIES EXCHANGE ACT OF 1934.— 
(A) PENALTIES.—Section 32 of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78ff) is 
amended— 
(i) in subsection (b), by striking 
‘‘$100’’ and inserting ‘‘$10,000’’; and 
(ii) in subsection (c)— 
(I) in paragraph (1)(B), by strik-
ing 
‘‘$10,000’’ 
and 
inserting 
‘‘$500,000’’; and 
(II) in paragraph (2)(B), by 
striking 
‘‘$10,000’’ 
and 
inserting 
‘‘$500,000’’.
(B) INSIDER TRADING.—Section 21A(a)(3) 
of the Securities Exchange Act of 1934 (15 
U.S.C. 78u–1(a)(3)) is amended by striking 
‘‘$1,000,000’’ and inserting ‘‘$2,000,000’’. 
(C) ADMINISTRATIVE
PROCEEDINGS.—Sec-
tion 21B(b) of the Securities Exchange Act of 
1934 (15 U.S.C. 78u–2(b)) is amended— 
(i) in paragraph (1)— 
(I) by striking ‘‘$5,000’’ and in-
serting ‘‘$100,000’’; and 
(II) by striking ‘‘$50,000’’ and in-
serting ‘‘$250,000’’; 
(ii) in paragraph (2)— 
(I) by striking ‘‘$50,000’’ and in-
serting ‘‘$500,000’’; and 
(II) by striking ‘‘$250,000’’ and 
inserting ‘‘$1,000,000’’; and 
(iii) in paragraph (3)— 
(I) by striking ‘‘$100,000’’ and 
inserting ‘‘$1,000,000’’; and 
(II) by striking ‘‘$500,000’’ and 
inserting ‘‘$2,000,000’’. 
(D) CIVIL ACTIONS.—Section 21(d)(3)(B) of 
the Securities Exchange Act of 1934 (15 U.S.C. 
78u(d)(3)(B)) is amended—
(i) in clause (i)(I)— 
(I) by striking ‘‘$5,000’’ and in-
serting ‘‘$100,000’’; and 
(II) by striking ‘‘$50,000’’ and in-
serting ‘‘$250,000’’; 
(ii) in clause (ii)(I)— 
(I) by striking ‘‘$50,000’’ and in-
serting ‘‘$500,000’’; and 
(II) by striking ‘‘$250,000’’ and 
inserting ‘‘$1,000,000’’; and 
(iii) in clause (iii)(I)— 
(I) by striking ‘‘$100,000’’ and 
inserting ‘‘$1,000,000’’; and 
(II) by striking ‘‘$500,000’’ and 
inserting ‘‘$2,000,000’’. 
(3) INVESTMENT COMPANY ACT OF 1940.— 
(A) INELIGIBILITY.—Section 9(d)(2) of the 
Investment Company Act of 1940 (15 U.S.C. 
80a–9(d)(2)) is amended— 
(i) in subparagraph (A)— 
(I) by striking ‘‘$5,000’’ and in-
serting ‘‘$100,000’’; and 
(II) by striking ‘‘$50,000’’ and in-
serting ‘‘$250,000’’; 
(ii) in subparagraph (B)—
(I) by striking ‘‘$50,000’’ and in-
serting ‘‘$500,000’’; and 
(II) by striking ‘‘$250,000’’ and 
inserting ‘‘$1,000,000’’; and 
(iii) in subparagraph (C)— 
(I) by striking ‘‘$100,000’’ and 
inserting ‘‘$1,000,000’’; and 
(II) by striking ‘‘$500,000’’ and 
inserting ‘‘$2,000,000’’. 
(B) ENFORCEMENT
OF
INVESTMENT
COM-
PANY ACT.—Section 42(e)(2) of the Investment 
Company Act of 1940 (15 U.S.C. 80a–41(e)(2)) 
is amended— 
(i) in subparagraph (A)(i)— 
(I) by striking ‘‘$5,000’’ and in-
serting ‘‘$100,000’’; and 
(II) by striking ‘‘$50,000’’ and in-
serting ‘‘$250,000’’; 
(ii) in subparagraph (B)(i)— 
(I) by striking ‘‘$50,000’’ and in-
serting ‘‘$500,000’’; and 
(II) by striking ‘‘$250,000’’ and 
inserting ‘‘$1,000,000’’; and 
(iii) in subparagraph (C)(i)—
(I) by striking ‘‘$100,000’’ and 
inserting ‘‘$1,000,000’’; and 
(II) by striking ‘‘$500,000’’ and 
inserting ‘‘$2,000,000’’. 
(4) INVESTMENT ADVISERS ACT OF 1940.— 
(A) REGISTRATION.—Section 203(i)(2) of 
the Investment Advisers Act of 1940 (15 U.S.C. 
80b–3(i)(2)) is amended— 
(i) in subparagraph (A)— 
(I) by striking ‘‘$5,000’’ and in-
serting ‘‘$100,000’’; and 
(II) by striking ‘‘$50,000’’ and in-
serting ‘‘$250,000’’; 
(ii) in subparagraph (B)— 
(I) by striking ‘‘$50,000’’ and in-
serting ‘‘$500,000’’; and 
(II) by striking ‘‘$250,000’’ and 
inserting ‘‘$1,000,000’’; and 
(iii) in subparagraph (C)— 
(I) by striking ‘‘$100,000’’ and 
inserting ‘‘$1,000,000’’; and 
(II) by striking ‘‘$500,000’’ and 
inserting ‘‘$2,000,000’’. 
(B) ENFORCEMENT OF INVESTMENT ADVIS-
ERS ACT.—Section 209(e)(2) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b–9(e)(2)) is 
amended— 
(i) in subparagraph (A)(i)— 
(I) by striking ‘‘$5,000’’ and in-
serting ‘‘$100,000’’; and 
(II) by striking ‘‘$50,000’’ and in-
serting ‘‘$250,000’’; 
(ii) in subparagraph (B)(i)— 
(I) by striking ‘‘$50,000’’ and in-
serting ‘‘$500,000’’; and 
(II) by striking ‘‘$250,000’’ and 
inserting ‘‘$1,000,000’’; and 
(iii) in subparagraph (C)(i)— 
(I) by striking ‘‘$100,000’’ and 
inserting ‘‘$1,000,000’’; and 
(II) by striking ‘‘$500,000’’ and 
inserting ‘‘$2,000,000’’. 
(c) AUTHORITY TO OBTAIN FINANCIAL RECORDS.— 
Section 21(h) of the Securities Exchange Act of 1934 (15 
U.S.C. 78u(h)) is amended— 
(1) by striking paragraphs (2) through (8); 
(2) in paragraph (9), by striking ‘‘(9)(A)’’ and 
all that follows through ‘‘(B) The’’ and inserting ‘‘(3) 
The’’;
(3) by inserting after paragraph (1), the fol-
lowing: 
‘‘(2) ACCESS TO FINANCIAL RECORDS.— 
‘‘(A) IN
GENERAL.—Notwithstanding sec-
tion 1105 or 1107 of the Right to Financial Pri-
vacy Act of 1978, the Commission may obtain 
access to and copies of, or the information con-
tained in, financial records of any person held 
by a financial institution, including the finan-
cial records of a customer, without notice to that 
person, when it acts pursuant to a subpoena au-
thorized by a formal order of investigation of the 
Commission and issued under the securities laws 
or pursuant to an administrative or judicial 
subpoena issued in a proceeding or action to en-
force the securities laws. 
‘‘(B) NONDISCLOSURE
OF
REQUESTS.—If 
the Commission so directs in its subpoena, no fi-
nancial institution, or officer, director, partner, 
employee, shareholder, representative or agent of 
such financial institution, shall, directly or indi-
rectly, disclose that records have been requested 
or provided in accordance with subparagraph 
(A), if the Commission finds reason to believe 
that such disclosure may—
not be required under subsection (b) or (c) of 
that section 1112, if the Commission determines 
that there is reason to believe that such notifica-
tion may result in or lead to any of the factors 
identified under clauses (i) through (viii) of sub-
paragraph (B) of this paragraph.’’; 
(4) by striking paragraph (10); and 
(5) by redesignating paragraphs (11), (12), and 
(13) as paragraphs (4), (5), and (6), respectively. 
SEC. 4. AUTHORITY TO ACCEPT PRIVILEGED AND PRO-
TECTED INFORMATION. 
Section 24 of the Securities Exchange Act of 1934 (15 
U.S.C. 78x) is amended— 
(1) by redesignating subsection (e) as subsection 
(f); and 
(2) by inserting after subsection (d) the following 
new subsection: 
‘‘(e) AUTHORITY TO ACCEPT PRIVILEGED AND PRO-
TECTED INFORMATION.— 
‘‘(1) AUTHORITY.—Notwithstanding any other 
provision of law, whenever the Commission or an ap-
propriate regulatory agency and any person agree in 
writing to terms pursuant to which such person will 
produce or disclose to the Commission or the appro-
priate regulatory agency any document or informa-
tion that is subject to any Federal or State law privi-
lege, or to the protection provided by the work product 
doctrine, such production or disclosure shall not con-
stitute a waiver of the privilege or protection as to 
any person other than the Commission or the appro-
priate regulatory agency to which the document or in-
formation is provided. 
‘‘(2) DEFINITION.—For purposes of this sub-
section, the term ‘appropriate regulatory agency’ 
means the Federal Deposit Insurance Corporation, the 
Office of the Comptroller of the Currency, the Office 
of Thrift Supervision, or the Board of Governors of 
the Federal Reserve System.’’. 
SEC. 5. ACCESS TO GRAND JURY INFORMATION. 
(a) AMENDMENT.—Title VI of the Sarbanes-Oxley Act 
of 2002 is amended by adding at the end thereof the fol-
lowing new section: 
‘‘SEC. 605. ACCESS TO GRAND JURY INFORMATION. 
‘‘(a) DISCLOSURE OF CERTAIN MATTERS OCCURRING 
BEFORE GRAND JURY FOR USE IN ENFORCING SECURITIES 
LAWS.— 
‘‘(1) IN GENERAL.—Upon motion of an attorney 
for the government, a court may direct disclosure of 
matters occurring before a grand jury during an in-
vestigation of conduct that may constitute a violation
of any provision of the securities laws to identified 
personnel of the Commission for use in relation to 
any matter within the jurisdiction of the Commission. 
‘‘(2) FINDING
OF
SUBSTANTIAL
NEED
RE-
QUIRED.—A court may issue an order under para-
graph (1) only upon a finding of a substantial need 
in the public interest. 
‘‘(b) RESTRICTED USE OF INFORMATION.—A person to 
whom a matter has been disclosed under this section shall 
not use such matter other than for the purpose for which 
such disclosure was authorized. 
‘‘(c) DEFINITIONS.—As used in this section, the terms 
‘attorney for the government’ and ‘grand jury information’ 
have the meanings given to those terms in section 3322 of 
title 18, United States Code.’’. 
(b) CONFORMING AMENDMENT.—The table of contents 
in section 1(b) of the Sarbanes-Oxley Act of 2002 is amend-
ed by inserting after the item relating to section 604 the 
following: 
‘‘Sec. 605. Access to grand jury information.’’. 
SEC. 6. NATIONWIDE SERVICE OF PROCESS. 
(a) SECURITIES ACT OF 1933.—Section 22(a) of the 
Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by 
inserting after the second sentence the following: ‘‘In any 
action or proceeding instituted by the Commission under 
this title in a United States district court for any judicial
district, subpoenas issued by or on behalf of such court to 
compel the attendance of witnesses or the production of doc-
uments or tangible things (or both) may be served in any 
other district. Such subpoenas may be served and enforced 
without application to the court or a showing of cause, not-
withstanding the provisions of rule 45(b)(2), (c)(3)(A)(ii), 
and (c)(3)(B)(iii) of the Federal Rules of Civil Procedure.’’. 
(b) SECURITIES EXCHANGE ACT OF 1934.—Section 27 
of the Securities Exchange Act of 1934 (15 U.S.C. 78aa) 
is amended by inserting after the second sentence the fol-
lowing: ‘‘In any action or proceeding instituted by the Com-
mission under this title in a United States district court 
for any judicial district, subpoenas issued by or on behalf 
of such court to compel the attendance of witnesses or the 
production of documents or tangible things (or both) may 
be served in any other district. Such subpoenas may be 
served and enforced without application to the court or a 
showing of cause, notwithstanding the provisions of rule 
45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of the Federal 
Rules of Civil Procedure.’’. 
(c) INVESTMENT COMPANY ACT OF 1940.—Section 44 
of the Investment Company Act of 1940 (15 U.S.C. 80a– 
43) is amended by inserting after the fourth sentence the 
following: ‘‘In any action or proceeding instituted by the 
Commission under this title in a United States district
court for any judicial district, subpoenas issued by or on 
behalf of such court to compel the attendance of witnesses 
or the production of documents or tangible things (or both) 
may be served in any other district. Such subpoenas may 
be served and enforced without application to the court or 
a showing of cause, notwithstanding the provisions of rule 
45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of the Federal 
Rules of Civil Procedure.’’. 
(d) INVESTMENT ADVISERS ACT OF 1940.—Section 
214 of the Investment Advisers Act of 1940 (15 U.S.C. 80b– 
14) is amended by inserting after the third sentence the fol-
lowing: ‘‘In any action or proceeding instituted by the Com-
mission under this title in a United States district court 
for any judicial district, subpoenas issued by or on behalf 
of such court to compel the attendance of witnesses or the 
production of documents or tangible things (or both) may 
be served in any other district. Such subpoenas may be 
served and enforced without application to the court or a 
showing of cause, notwithstanding the provisions of rule 
45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of the Federal 
Rules of Civil Procedure.’’.