H. R. 4173—421 
on behalf of such security-based swap dealer or major security- 
based swap participant, the Commission, by order, shall cen-
sure, place limitations on the activities or functions of such 
person, or suspend for a period not exceeding 12 months, or 
bar such person from being associated with a security-based 
swap dealer or major security-based swap participant, if the 
Commission finds, on the record after notice and opportunity 
for a hearing, that such censure, placing of limitations, suspen-
sion, or bar is in the public interest and that such person— 
‘‘(A) has committed or omitted any act, or is subject 
to an order or finding, enumerated in subparagraph (A), 
(D), or (E) of paragraph (4) of section 15(b); 
‘‘(B) has been convicted of any offense specified in 
subparagraph (B) of such paragraph (4) within 10 years 
of the commencement of the proceedings under this sub-
section; 
‘‘(C) is enjoined from any action, conduct, or practice 
specified in subparagraph (C) of such paragraph (4); 
‘‘(D) is subject to an order or a final order specified 
in subparagraph (F) or (H), respectively, of such paragraph 
(4); or 
‘‘(E) has been found by a foreign financial regulatory 
authority to have committed or omitted any act, or violated 
any foreign statute or regulation, enumerated in subpara-
graph (G) of such paragraph (4). 
‘‘(4) UNLAWFUL CONDUCT.—It shall be unlawful— 
‘‘(A) for any person as to whom an order under para-
graph (3) is in effect, without the consent of the Commis-
sion, willfully to become, or to be, associated with a secu-
rity-based swap dealer or major security-based swap 
participant in contravention of such order; or 
‘‘(B) for any security-based swap dealer or major secu-
rity-based swap participant to permit such a person, with-
out the consent of the Commission, to become or remain 
a person associated with the security-based swap dealer 
or major security-based swap participant in contravention 
of such order, if such security-based swap dealer or major 
security-based swap participant knew, or in the exercise 
of reasonable care should have known, of such order.’’. 
(b) SAVINGS CLAUSE.—Notwithstanding any other provision of 
this title, nothing in this subtitle shall be construed as divesting 
any appropriate Federal banking agency of any authority it may 
have to establish or enforce, with respect to a person for which 
such agency is the appropriate Federal banking agency, prudential 
or other standards pursuant to authority by Federal law other 
than this title. 
SEC. 765. RULEMAKING ON CONFLICT OF INTEREST. 
(a) IN GENERAL.—In order to mitigate conflicts of interest, 
not later than 180 days after the date of enactment of the Wall 
Street Transparency and Accountability Act of 2010, the Securities 
and Exchange Commission shall adopt rules which may include 
numerical limits on the control of, or the voting rights with respect 
to, any clearing agency that clears security-based swaps, or on 
the control of any security-based swap execution facility or national 
securities exchange that posts or makes available for trading secu-
rity-based swaps, by a bank holding company (as defined in section
H. R. 4173—422 
2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841)) 
with total consolidated assets of $50,000,000,000 or more, a nonbank 
financial company (as defined in section 102) supervised by the 
Board of Governors of the Federal Reserve System, affiliate of 
such a bank holding company or nonbank financial company, a 
security-based swap dealer, major security-based swap participant, 
or person associated with a security-based swap dealer or major 
security-based swap participant. 
(b) PURPOSES.—The Securities and Exchange Commission shall 
adopt rules if the Commission determines, after the review 
described in subsection (a), that such rules are necessary or appro-
priate to improve the governance of, or to mitigate systemic risk, 
promote competition, or mitigate conflicts of interest in connection 
with a security-based swap dealer or major security-based swap 
participant’s conduct of business with, a clearing agency, national 
securities exchange, or security-based swap execution facility that 
clears, posts, or makes available for trading security-based swaps 
and in which such security-based swap dealer or major security- 
based swap participant has a material debt or equity investment. 
(c) CONSIDERATIONS.—In adopting rules pursuant to this sec-
tion, the Securities and Exchange Commission shall consider any 
conflicts of interest arising from the amount of equity owned by 
a single investor, the ability to vote, cause the vote of, or withhold 
votes entitled to be cast on any matters by the holders of the 
ownership interest, and the governance arrangements of any deriva-
tives clearing organization that clears swaps, or swap execution 
facility or board of trade designated as a contract market that 
posts swaps or makes swaps available for trading. 
SEC. 766. REPORTING AND RECORDKEEPING. 
(a) IN GENERAL.—The Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.) is amended by inserting after section 13 the 
following: 
‘‘SEC. 13A. REPORTING AND RECORDKEEPING FOR CERTAIN SECU-
RITY-BASED SWAPS. 
‘‘(a) REQUIRED REPORTING
OF SECURITY-BASED SWAPS NOT 
ACCEPTED BY ANY CLEARING AGENCY OR DERIVATIVES CLEARING 
ORGANIZATION.— 
‘‘(1) IN GENERAL.—Each security-based swap that is not 
accepted for clearing by any clearing agency or derivatives 
clearing organization shall be reported to— 
‘‘(A) a security-based swap data repository described 
in section 13(n); or 
‘‘(B) in the case in which there is no security-based 
swap data repository that would accept the security-based 
swap, to the Commission pursuant to this section within 
such time period as the Commission may by rule or regula-
tion prescribe. 
‘‘(2) TRANSITION RULE FOR PREENACTMENT SECURITY-BASED 
SWAPS.— 
‘‘(A) SECURITY-BASED SWAPS ENTERED INTO BEFORE THE 
DATE OF ENACTMENT OF THE WALL STREET TRANSPARENCY 
AND
ACCOUNTABILITY
ACT
OF
2010.—Each security-based 
swap entered into before the date of enactment of the 
Wall Street Transparency and Accountability Act of 2010, 
the terms of which have not expired as of the date of 
enactment of that Act, shall be reported to a registered
H. R. 4173—423 
security-based swap data repository or the Commission 
by a date that is not later than— 
‘‘(i) 30 days after issuance of the interim final 
rule; or 
‘‘(ii) such other period as the Commission deter-
mines to be appropriate. 
‘‘(B) COMMISSION RULEMAKING.—The Commission shall 
promulgate an interim final rule within 90 days of the 
date of enactment of this section providing for the reporting 
of each security-based swap entered into before the date 
of enactment as referenced in subparagraph (A). 
‘‘(C) 
EFFECTIVE
DATE.—The 
reporting 
provisions 
described in this section shall be effective upon the date 
of the enactment of this section. 
‘‘(3) REPORTING OBLIGATIONS.— 
‘‘(A) 
SECURITY-BASED
SWAPS
IN
WHICH
ONLY
COUNTERPARTY
IS
A
SECURITY-BASED
SWAP
DEALER
OR 
MAJOR SECURITY-BASED SWAP PARTICIPANT.—With respect 
to a security-based swap in which only 1 counterparty 
is a security-based swap dealer or major security-based 
swap participant, the security-based swap dealer or major 
security-based swap participant shall report the security- 
based swap as required under paragraphs (1) and (2). 
‘‘(B) SECURITY-BASED SWAPS IN WHICH 1 COUNTERPARTY 
IS A SECURITY-BASED SWAP DEALER AND THE OTHER A MAJOR 
SECURITY-BASED
SWAP
PARTICIPANT.—With respect to a 
security-based swap in which 1 counterparty is a security- 
based swap dealer and the other a major security-based 
swap participant, the security-based swap dealer shall 
report the security-based swap as required under para-
graphs (1) and (2). 
‘‘(C) OTHER SECURITY-BASED SWAPS.—With respect to 
any other security-based swap not described in subpara-
graph (A) or (B), the counterparties to the security-based 
swap shall select a counterparty to report the security- 
based swap as required under paragraphs (1) and (2). 
‘‘(b) DUTIES OF CERTAIN INDIVIDUALS.—Any individual or entity 
that enters into a security-based swap shall meet each requirement 
described in subsection (c) if the individual or entity did not— 
‘‘(1) clear the security-based swap in accordance with sec-
tion 3C(a)(1); or 
‘‘(2) have the data regarding the security-based swap 
accepted by a security-based swap data repository in accordance 
with rules (including timeframes) adopted by the Commission 
under this title. 
‘‘(c) REQUIREMENTS.—An individual or entity described in sub-
section (b) shall— 
‘‘(1) upon written request from the Commission, provide 
reports regarding the security-based swaps held by the indi-
vidual or entity to the Commission in such form and in such 
manner as the Commission may request; and 
‘‘(2) maintain books and records pertaining to the security- 
based swaps held by the individual or entity in such form, 
in such manner, and for such period as the Commission may 
require, which shall be open to inspection by— 
‘‘(A) any representative of the Commission; 
‘‘(B) an appropriate prudential regulator;
H. R. 4173—424 
‘‘(C) the Commodity Futures Trading Commission; 
‘‘(D) the Financial Stability Oversight Council; and 
‘‘(E) the Department of Justice. 
‘‘(d) IDENTICAL DATA.—In prescribing rules under this section, 
the Commission shall require individuals and entities described 
in subsection (b) to submit to the Commission a report that contains 
data that is not less comprehensive than the data required to 
be collected by security-based swap data repositories under this 
title.’’. 
(b) BENEFICIAL OWNERSHIP REPORTING.—Section 13 of the Secu-
rities Exchange Act of 1934 (15 U.S.C. 78m) is amended— 
(1) in subsection (d)(1), by inserting ‘‘or otherwise becomes 
or is deemed to become a beneficial owner of any of the foregoing 
upon the purchase or sale of a security-based swap that the 
Commission may define by rule, and’’ after ‘‘Alaska Native 
Claims Settlement Act,’’; and 
(2) in subsection (g)(1), by inserting ‘‘or otherwise becomes 
or is deemed to become a beneficial owner of any security 
of a class described in subsection (d)(1) upon the purchase 
or sale of a security-based swap that the Commission may 
define by rule’’ after ‘‘subsection (d)(1) of this section’’. 
(c) REPORTS BY INSTITUTIONAL INVESTMENT MANAGERS.—Sec-
tion 13(f)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 
78m(f)(1)) is amended by inserting ‘‘or otherwise becomes or is 
deemed to become a beneficial owner of any security of a class 
described in subsection (d)(1) upon the purchase or sale of a secu-
rity-based swap that the Commission may define by rule,’’ after 
‘‘subsection (d)(1) of this section’’. 
(d) ADMINISTRATIVE PROCEEDING AUTHORITY.—Section 15(b)(4) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(4)) is 
amended— 
(1) in subparagraph (C), by inserting ‘‘security-based swap 
dealer, major security-based swap participant,’’ after ‘‘govern-
ment securities dealer,’’; and 
(2) in subparagraph (F), by striking ‘‘broker or dealer’’ 
and inserting ‘‘broker, dealer, security-based swap dealer, or 
a major security-based swap participant’’. 
(e) SECURITY-BASED SWAP BENEFICIAL OWNERSHIP.—Section 13 
of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended 
by adding at the end the following: 
‘‘(o) BENEFICIAL OWNERSHIP.—For purposes of this section and 
section 16, a person shall be deemed to acquire beneficial ownership 
of an equity security based on the purchase or sale of a security- 
based swap, only to the extent that the Commission, by rule, 
determines after consultation with the prudential regulators and 
the Secretary of the Treasury, that the purchase or sale of the 
security-based swap, or class of security-based swap, provides 
incidents of ownership comparable to direct ownership of the equity 
security, and that it is necessary to achieve the purposes of this 
section that the purchase or sale of the security-based swaps, or 
class of security-based swap, be deemed the acquisition of beneficial 
ownership of the equity security.’’. 
SEC. 767. STATE GAMING AND BUCKET SHOP LAWS. 
Section 28(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78bb(a)) is amended to read as follows: 
‘‘(a) LIMITATION ON JUDGMENTS.—
H. R. 4173—425 
‘‘(1) IN GENERAL.—No person permitted to maintain a suit 
for damages under the provisions of this title shall recover, 
through satisfaction of judgment in 1 or more actions, a total 
amount in excess of the actual damages to that person on 
account of the act complained of. Except as otherwise specifi-
cally provided in this title, nothing in this title shall affect 
the jurisdiction of the securities commission (or any agency 
or officer performing like functions) of any State over any 
security or any person insofar as it does not conflict with 
the provisions of this title or the rules and regulations under 
this title. 
‘‘(2) RULE OF CONSTRUCTION.—Except as provided in sub-
section (f), the rights and remedies provided by this title shall 
be in addition to any and all other rights and remedies that 
may exist at law or in equity. 
‘‘(3) STATE BUCKET SHOP LAWS.—No State law which pro-
hibits or regulates the making or promoting of wagering or 
gaming contracts, or the operation of ‘bucket shops’ or other 
similar or related activities, shall invalidate— 
‘‘(A) any put, call, straddle, option, privilege, or other 
security subject to this title (except any security that has 
a pari-mutuel payout or otherwise is determined by the 
Commission, acting by rule, regulation, or order, to be 
appropriately subject to such laws), or apply to any activity 
which is incidental or related to the offer, purchase, sale, 
exercise, settlement, or closeout of any such security; 
‘‘(B) any security-based swap between eligible contract 
participants; or 
‘‘(C) any security-based swap effected on a national 
securities exchange registered pursuant to section 6(b). 
‘‘(4) OTHER STATE PROVISIONS.—No provision of State law 
regarding the offer, sale, or distribution of securities shall apply 
to any transaction in a security-based swap or a security futures 
product, except that this paragraph may not be construed as 
limiting any State antifraud law of general applicability. A 
security-based swap may not be regulated as an insurance 
contract under any provision of State law.’’. 
SEC. 768. AMENDMENTS TO THE SECURITIES ACT OF 1933; TREATMENT 
OF SECURITY-BASED SWAPS. 
(a) DEFINITIONS.—Section 2(a) of the Securities Act of 1933 
(15 U.S.C. 77b(a)) is amended— 
(1) in paragraph (1), by inserting ‘‘security-based swap,’’ 
after ‘‘security future,’’; 
(2) in paragraph (3), by adding at the end the following: 
‘‘Any offer or sale of a security-based swap by or on behalf 
of the issuer of the securities upon which such security-based 
swap is based or is referenced, an affiliate of the issuer, or 
an underwriter, shall constitute a contract for sale of, sale 
of, offer for sale, or offer to sell such securities.’’; and 
(3) by adding at the end the following: 
‘‘(17) The terms ‘swap’ and ‘security-based swap’ have the 
same meanings as in section 1a of the Commodity Exchange 
Act (7 U.S.C. 1a). 
‘‘(18) The terms ‘purchase’ or ‘sale’ of a security-based swap 
shall be deemed to mean the execution, termination (prior 
to its scheduled maturity date), assignment, exchange, or
H. R. 4173—426 
similar transfer or conveyance of, or extinguishing of rights 
or obligations under, a security-based swap, as the context 
may require.’’. 
(b) REGISTRATION OF SECURITY-BASED SWAPS.—Section 5 of the 
Securities Act of 1933 (15 U.S.C. 77e) is amended by adding at 
the end the following: 
‘‘(d) Notwithstanding the provisions of section 3 or 4, unless 
a registration statement meeting the requirements of section 10(a) 
is in effect as to a security-based swap, it shall be unlawful for 
any person, directly or indirectly, to make use of any means or 
instruments of transportation or communication in interstate com-
merce or of the mails to offer to sell, offer to buy or purchase 
or sell a security-based swap to any person who is not an eligible 
contract participant as defined in section 1a(18) of the Commodity 
Exchange Act (7 U.S.C. 1a(18)).’’. 
SEC. 769. DEFINITIONS UNDER THE INVESTMENT COMPANY ACT OF 
1940. 
Section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 
80a–2) is amended by adding at the end the following: 
‘‘(54) The terms ‘commodity pool’, ‘commodity pool operator’, 
‘commodity trading advisor’, ‘major swap participant’, ‘swap’, 
‘swap dealer’, and ‘swap execution facility’ have the same 
meanings as in section 1a of the Commodity Exchange Act 
(7 U.S.C. 1a).’’. 
SEC. 770. DEFINITIONS UNDER THE INVESTMENT ADVISERS ACT OF 
1940. 
Section 202(a) of the Investment Advisers Act of 1940 (15 
U.S.C. 80b–2) is amended by adding at the end the following: 
‘‘(29) The terms ‘commodity pool’, ‘commodity pool operator’, 
‘commodity trading advisor’, ‘major swap participant’, ‘swap’, 
‘swap dealer’, and ‘swap execution facility’ have the same 
meanings as in section 1a of the Commodity Exchange Act 
(7 U.S.C. 1a).’’. 
SEC. 771. OTHER AUTHORITY. 
Unless otherwise provided by its terms, this subtitle does not 
divest any appropriate Federal banking agency, the Securities and 
Exchange Commission, the Commodity Futures Trading Commis-
sion, or any other Federal or State agency, of any authority derived 
from any other provision of applicable law. 
SEC. 772. JURISDICTION. 
(a) IN GENERAL.—Section 36 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78mm) is amended by adding at the end the 
following: 
‘‘(c) DERIVATIVES.—Unless the Commission is expressly author-
ized by any provision described in this subsection to grant exemp-
tions, the Commission shall not grant exemptions, with respect 
to amendments made by subtitle B of the Wall Street Transparency 
and Accountability Act of 2010, with respect to paragraphs (65), 
(66), (68), (69), (70), (71), (72), (73), (74), (75), (76), and (79) of 
section 3(a), and sections 10B(a), 10B(b), 10B(c), 13A, 15F, 17A(g), 
17A(h), 17A(i), 17A(j), 17A(k), and 17A(l); provided that the Commis-
sion shall have exemptive authority under this title with respect 
to security-based swaps as to the same matters that the Commodity
H. R. 4173—427 
Futures Trading Commission has under the Wall Street Trans-
parency and Accountability Act of 2010 with respect to swaps, 
including under section 4(c) of the Commodity Exchange Act.’’. 
(b) RULE
OF CONSTRUCTION.—Section 30 of the Securities 
Exchange Act of 1934 (15 U.S.C. 78dd) is amended by adding 
at the end the following: 
‘‘(c) RULE OF CONSTRUCTION.—No provision of this title that 
was added by the Wall Street Transparency and Accountability 
Act of 2010, or any rule or regulation thereunder, shall apply 
to any person insofar as such person transacts a business in secu-
rity-based swaps without the jurisdiction of the United States, 
unless such person transacts such business in contravention of 
such rules and regulations as the Commission may prescribe as 
necessary or appropriate to prevent the evasion of any provision 
of this title that was added by the Wall Street Transparency and 
Accountability Act of 2010. This subsection shall not be construed 
to limit the jurisdiction of the Commission under any provision 
of this title, as in effect prior to the date of enactment of the 
Wall Street Transparency and Accountability Act of 2010.’’. 
SEC. 773. CIVIL PENALTIES. 
Section 21B of the Securities Exchange Act of 1934 (15 U.S.C. 
78p-2) is amended by adding at the end the following: 
‘‘(f) SECURITY-BASED SWAPS.— 
‘‘(1) CLEARING AGENCY.—Any clearing agency that know-
ingly or recklessly evades or participates in or facilitates an 
evasion of the requirements of section 3C shall be liable for 
a civil money penalty in twice the amount otherwise available 
for a violation of section 3C. 
‘‘(2) SECURITY-BASED
SWAP
DEALER
OR
MAJOR
SECURITY- 
BASED SWAP PARTICIPANT.—Any security-based swap dealer or 
major security-based swap participant that knowingly or reck-
lessly evades or participates in or facilitates an evasion of 
the requirements of section 3C shall be liable for a civil money 
penalty in twice the amount otherwise available for a violation 
of section 3C.’’. 
SEC. 774. EFFECTIVE DATE. 
Unless otherwise provided, the provisions of this subtitle shall 
take effect on the later of 360 days after the date of the enactment 
of this subtitle or, to the extent a provision of this subtitle requires 
a rulemaking, not less than 60 days after publication of the final 
rule or regulation implementing such provision of this subtitle. 
TITLE VIII—PAYMENT, CLEARING, AND 
SETTLEMENT SUPERVISION 
SEC. 801. SHORT TITLE. 
This title may be cited as the ‘‘Payment, Clearing, and Settle-
ment Supervision Act of 2010’’. 
SEC. 802. FINDINGS AND PURPOSES. 
(a) FINDINGS.—Congress finds the following: 
(1) The proper functioning of the financial markets is 
dependent upon safe and efficient arrangements for the clearing
H. R. 4173—428 
and settlement of payment, securities, and other financial trans-
actions. 
(2) Financial market utilities that conduct or support multi-
lateral payment, clearing, or settlement activities may reduce 
risks for their participants and the broader financial system, 
but such utilities may also concentrate and create new risks 
and thus must be well designed and operated in a safe and 
sound manner. 
(3) Payment, clearing, and settlement activities conducted 
by financial institutions also present important risks to the 
participating financial institutions and to the financial system. 
(4) Enhancements to the regulation and supervision of 
systemically important financial market utilities and the con-
duct of systemically important payment, clearing, and settle-
ment activities by financial institutions are necessary— 
(A) to provide consistency; 
(B) to promote robust risk management and safety 
and soundness; 
(C) to reduce systemic risks; and 
(D) to support the stability of the broader financial 
system. 
(b) PURPOSE.—The purpose of this title is to mitigate systemic 
risk in the financial system and promote financial stability by— 
(1) authorizing the Board of Governors to promote uniform 
standards for the— 
(A) management of risks by systemically important 
financial market utilities; and 
(B) conduct of systemically important payment, 
clearing, and settlement activities by financial institutions; 
(2) providing the Board of Governors an enhanced role 
in the supervision of risk management standards for system-
ically important financial market utilities; 
(3) strengthening the liquidity of systemically important 
financial market utilities; and 
(4) providing the Board of Governors an enhanced role 
in the supervision of risk management standards for system-
ically important payment, clearing, and settlement activities 
by financial institutions. 
SEC. 803. DEFINITIONS. 
In this title, the following definitions shall apply: 
(1) APPROPRIATE FINANCIAL REGULATOR.—The term ‘‘appro-
priate financial regulator’’ means— 
(A) the primary financial regulatory agency, as defined 
in section 2 of this Act; 
(B) the National Credit Union Administration, with 
respect to any insured credit union under the Federal 
Credit Union Act (12 U.S.C. 1751 et seq.); and 
(C) the Board of Governors, with respect to organiza-
tions operating under section 25A of the Federal Reserve 
Act (12 U.S.C. 611), and any other financial institution 
engaged in a designated activity. 
(2) DESIGNATED ACTIVITY.—The term ‘‘designated activity’’ 
means a payment, clearing, or settlement activity that the 
Council has designated as systemically important under section 
804.
H. R. 4173—429 
(3) DESIGNATED CLEARING ENTITY.—The term ‘‘designated 
clearing entity’’ means a designated financial market utility 
that is a derivatives clearing organization registered under 
section 5b of the Commodity Exchange Act (7 U.S.C. 7a-1) 
or a clearing agency registered with the Securities and 
Exchange Commission under section 17A of the Securities 
Exchange Act of 1934 (15 U.S.C. 78q-1). 
(4) DESIGNATED
FINANCIAL
MARKET
UTILITY.—The term 
‘‘designated financial market utility’’ means a financial market 
utility that the Council has designated as systemically impor-
tant under section 804. 
(5) FINANCIAL INSTITUTION.— 
(A) IN
GENERAL.—The term ‘‘financial institution’’ 
means— 
(i) a depository institution, as defined in section 
3 of the Federal Deposit Insurance Act (12 U.S.C. 
1813); 
(ii) a branch or agency of a foreign bank, as defined 
in section 1(b) of the International Banking Act of 
1978 (12 U.S.C. 3101); 
(iii) an organization operating under section 25 
or 25A of the Federal Reserve Act (12 U.S.C. 601– 
604a and 611 through 631); 
(iv) a credit union, as defined in section 101 of 
the Federal Credit Union Act (12 U.S.C. 1752); 
(v) a broker or dealer, as defined in section 3 
of the Securities Exchange Act of 1934 (15 U.S.C. 78c); 
(vi) an investment company, as defined in section 
3 of the Investment Company Act of 1940 (15 U.S.C. 
80a–3); 
(vii) an insurance company, as defined in section 
2 of the Investment Company Act of 1940 (15 U.S.C. 
80a–2); 
(viii) an investment adviser, as defined in section 
202 of the Investment Advisers Act of 1940 (15 U.S.C. 
80b–2); 
(ix) a futures commission merchant, commodity 
trading advisor, or commodity pool operator, as defined 
in section 1a of the Commodity Exchange Act (7 U.S.C. 
1a); and 
(x) any company engaged in activities that are 
financial in nature or incidental to a financial activity, 
as described in section 4 of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1843(k)). 
(B) EXCLUSIONS.—The term ‘‘financial institution’’ does 
not include designated contract markets, registered futures 
associations, swap data repositories, and swap execution 
facilities registered under the Commodity Exchange Act 
(7 U.S.C. 1 et seq.), or national securities exchanges, 
national securities associations, alternative trading sys-
tems, securities information processors solely with respect 
to the activities of the entity as a securities information 
processor, security-based swap data repositories, and swap 
execution 
facilities 
registered 
under 
the 
Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.), or designated 
clearing entities, provided that the exclusions in this
H. R. 4173—430 
subparagraph apply only with respect to the activities that 
require the entity to be so registered. 
(6) FINANCIAL MARKET UTILITY.— 
(A) INCLUSION.—The term ‘‘financial market utility’’ 
means any person that manages or operates a multilateral 
system for the purpose of transferring, clearing, or settling 
payments, securities, or other financial transactions among 
financial institutions or between financial institutions and 
the person. 
(B) EXCLUSIONS.—The term ‘‘financial market utility’’ 
does not include— 
(i) designated contract markets, registered futures 
associations, swap data repositories, and swap execu-
tion 
facilities 
registered 
under 
the 
Commodity 
Exchange Act (7 U.S.C. 1 et seq.), or national securities 
exchanges, national securities associations, alternative 
trading systems, security-based swap data repositories, 
and swap execution facilities registered under the Secu-
rities Exchange Act of 1934 (15 U.S.C. 78a et seq.), 
solely by reason of their providing facilities for compari-
son of data respecting the terms of settlement of securi-
ties or futures transactions effected on such exchange 
or by means of any electronic system operated or con-
trolled by such entities, provided that the exclusions 
in this clause apply only with respect to the activities 
that require the entity to be so registered; and 
(ii) any broker, dealer, transfer agent, or invest-
ment company, or any futures commission merchant, 
introducing broker, commodity trading advisor, or com-
modity pool operator, solely by reason of functions 
performed by such institution as part of brokerage, 
dealing, transfer agency, or investment company activi-
ties, or solely by reason of acting on behalf of a finan-
cial market utility or a participant therein in connec-
tion with the furnishing by the financial market utility 
of services to its participants or the use of services 
of the financial market utility by its participants, pro-
vided that services performed by such institution do 
not constitute critical risk management or processing 
functions of the financial market utility. 
(7) PAYMENT, CLEARING, OR SETTLEMENT ACTIVITY.— 
(A) IN
GENERAL.—The term ‘‘payment, clearing, or 
settlement activity’’ means an activity carried out by 1 
or more financial institutions to facilitate the completion 
of financial transactions, but shall not include any offer 
or sale of a security under the Securities Act of 1933 
(15 U.S.C. 77a et seq.), or any quotation, order entry, 
negotiation, or other pre-trade activity or execution activity. 
(B) FINANCIAL
TRANSACTION.—For the purposes of 
subparagraph 
(A), 
the 
term 
‘‘financial 
transaction’’ 
includes— 
(i) funds transfers; 
(ii) securities contracts; 
(iii) contracts of sale of a commodity for future 
delivery; 
(iv) forward contracts; 
(v) repurchase agreements;
H. R. 4173—431 
(vi) swaps; 
(vii) security-based swaps; 
(viii) swap agreements; 
(ix) security-based swap agreements; 
(x) foreign exchange contracts; 
(xi) financial derivatives contracts; and 
(xii) any similar transaction that the Council deter-
mines to be a financial transaction for purposes of 
this title. 
(C) INCLUDED
ACTIVITIES.—When conducted with 
respect to a financial transaction, payment, clearing, and 
settlement activities may include— 
(i) the calculation and communication of unsettled 
financial transactions between counterparties; 
(ii) the netting of transactions; 
(iii) provision and maintenance of trade, contract, 
or instrument information; 
(iv) the management of risks and activities associ-
ated with continuing financial transactions; 
(v) transmittal and storage of payment instruc-
tions; 
(vi) the movement of funds; 
(vii) the final settlement of financial transactions; 
and 
(viii) other similar functions that the Council may 
determine. 
(D) EXCLUSION.—Payment, clearing, and settlement 
activities shall not include public reporting of swap trans-
action data under section 727 or 763(i) of the Wall Street 
Transparency and Accountability Act of 2010. 
(8) SUPERVISORY AGENCY.— 
(A) IN
GENERAL.—The term ‘‘Supervisory Agency’’ 
means the Federal agency that has primary jurisdiction 
over a designated financial market utility under Federal 
banking, securities, or commodity futures laws, as follows: 
(i) The Securities and Exchange Commission, with 
respect to a designated financial market utility that 
is a clearing agency registered with the Securities and 
Exchange Commission. 
(ii) The Commodity Futures Trading Commission, 
with respect to a designated financial market utility 
that is a derivatives clearing organization registered 
with the Commodity Futures Trading Commission. 
(iii) The appropriate Federal banking agency, with 
respect to a designated financial market utility that 
is an institution described in section 3(q) of the Federal 
Deposit Insurance Act. 
(iv) The Board of Governors, with respect to a 
designated financial market utility that is otherwise 
not subject to the jurisdiction of any agency listed 
in clauses (i), (ii), and (iii). 
(B) MULTIPLE AGENCY JURISDICTION.—If a designated 
financial market utility is subject to the jurisdictional 
supervision of more than 1 agency listed in subparagraph 
(A), then such agencies should agree on 1 agency to act 
as the Supervisory Agency, and if such agencies cannot 
agree on which agency has primary jurisdiction, the Council
H. R. 4173—432 
shall decide which agency is the Supervisory Agency for 
purposes of this title. 
(9) SYSTEMICALLY IMPORTANT AND SYSTEMIC IMPORTANCE.— 
The terms ‘‘systemically important’’ and ‘‘systemic importance’’ 
mean a situation where the failure of or a disruption to the 
functioning of a financial market utility or the conduct of a 
payment, clearing, or settlement activity could create, or 
increase, the risk of significant liquidity or credit problems 
spreading among financial institutions or markets and thereby 
threaten the stability of the financial system of the United 
States. 
SEC. 804. DESIGNATION OF SYSTEMIC IMPORTANCE. 
(a) DESIGNATION.— 
(1) FINANCIAL STABILITY OVERSIGHT COUNCIL.—The Council, 
on a nondelegable basis and by a vote of not fewer than 2⁄3 
of members then serving, including an affirmative vote by 
the Chairperson of the Council, shall designate those financial 
market utilities or payment, clearing, or settlement activities 
that the Council determines are, or are likely to become, 
systemically important. 
(2) CONSIDERATIONS.—In determining whether a financial 
market utility or payment, clearing, or settlement activity is, 
or is likely to become, systemically important, the Council 
shall take into consideration the following: 
(A) The aggregate monetary value of transactions proc-
essed by the financial market utility or carried out through 
the payment, clearing, or settlement activity. 
(B) The aggregate exposure of the financial market 
utility or a financial institution engaged in payment, 
clearing, or settlement activities to its counterparties. 
(C) The relationship, interdependencies, or other inter-
actions of the financial market utility or payment, clearing, 
or settlement activity with other financial market utilities 
or payment, clearing, or settlement activities. 
(D) The effect that the failure of or a disruption to 
the financial market utility or payment, clearing, or settle-
ment activity would have on critical markets, financial 
institutions, or the broader financial system. 
(E) Any other factors that the Council deems appro-
priate. 
(b) RESCISSION OF DESIGNATION.— 
(1) IN
GENERAL.—The Council, on a nondelegable basis 
and by a vote of not fewer than 2⁄3 of members then serving, 
including an affirmative vote by the Chairperson of the Council, 
shall rescind a designation of systemic importance for a des-
ignated financial market utility or designated activity if the 
Council determines that the utility or activity no longer meets 
the standards for systemic importance. 
(2) EFFECT OF RESCISSION.—Upon rescission, the financial 
market utility or financial institutions conducting the activity 
will no longer be subject to the provisions of this title or 
any rules or orders prescribed under this title. 
(c) 
CONSULTATION
AND
NOTICE
AND
OPPORTUNITY
FOR 
HEARING.—
H. R. 4173—433 
(1) CONSULTATION.—Before making any determination 
under subsection (a) or (b), the Council shall consult with 
the relevant Supervisory Agency and the Board of Governors. 
(2) ADVANCE NOTICE AND OPPORTUNITY FOR HEARING.— 
(A) IN
GENERAL.—Before making any determination 
under subsection (a) or (b), the Council shall provide the 
financial market utility or, in the case of a payment, 
clearing, or settlement activity, financial institutions with 
advance notice of the proposed determination of the 
Council. 
(B) NOTICE IN FEDERAL REGISTER.—The Council shall 
provide such advance notice to financial institutions by 
publishing a notice in the Federal Register. 
(C) REQUESTS FOR HEARING.—Within 30 days from the 
date of any notice of the proposed determination of the 
Council, the financial market utility or, in the case of 
a payment, clearing, or settlement activity, a financial 
institution engaged in the designated activity may request, 
in writing, an opportunity for a written or oral hearing 
before the Council to demonstrate that the proposed des-
ignation or rescission of designation is not supported by 
substantial evidence. 
(D) WRITTEN SUBMISSIONS.—Upon receipt of a timely 
request, the Council shall fix a time, not more than 30 
days after receipt of the request, unless extended at the 
request of the financial market utility or financial institu-
tion, and place at which the financial market utility or 
financial institution may appear, personally or through 
counsel, to submit written materials, or, at the sole discre-
tion of the Council, oral testimony or oral argument. 
(3) EMERGENCY EXCEPTION.— 
(A) WAIVER
OR
MODIFICATION
BY
VOTE
OF
THE 
COUNCIL.—The Council may waive or modify the require-
ments of paragraph (2) if the Council determines, by an 
affirmative vote of not fewer than 2⁄3 of members then 
serving, including an affirmative vote by the Chairperson 
of the Council, that the waiver or modification is necessary 
to prevent or mitigate an immediate threat to the financial 
system posed by the financial market utility or the pay-
ment, clearing, or settlement activity. 
(B) NOTICE OF WAIVER OR MODIFICATION.—The Council 
shall provide notice of the waiver or modification to the 
financial market utility concerned or, in the case of a 
payment, clearing, or settlement activity, to financial 
institutions, as soon as practicable, which shall be no later 
than 24 hours after the waiver or modification in the 
case of a financial market utility and 3 business days 
in the case of financial institutions. The Council shall pro-
vide the notice to financial institutions by posting a notice 
on the website of the Council and by publishing a notice 
in the Federal Register. 
(d) NOTIFICATION OF FINAL DETERMINATION.— 
(1) AFTER HEARING.—Within 60 days of any hearing under 
subsection (c)(2), the Council shall notify the financial market 
utility or financial institutions of the final determination of 
the Council in writing, which shall include findings of fact 
upon which the determination of the Council is based.
H. R. 4173—434 
(2) WHEN NO HEARING REQUESTED.—If the Council does 
not receive a timely request for a hearing under subsection 
(c)(2), the Council shall notify the financial market utility or 
financial institutions of the final determination of the Council 
in writing not later than 30 days after the expiration of the 
date by which a financial market utility or a financial institu-
tion could have requested a hearing. All notices to financial 
institutions under this subsection shall be published in the 
Federal Register. 
(e) EXTENSION
OF TIME PERIODS.—The Council may extend 
the time periods established in subsections (c) and (d) as the Council 
determines to be necessary or appropriate. 
SEC. 805. STANDARDS FOR SYSTEMICALLY IMPORTANT FINANCIAL 
MARKET UTILITIES AND PAYMENT, CLEARING, OR SETTLE-
MENT ACTIVITIES. 
(a) AUTHORITY TO PRESCRIBE STANDARDS.— 
(1) BOARD OF GOVERNORS.—Except as provided in para-
graph (2), the Board of Governors, by rule or order, and in 
consultation with the Council and the Supervisory Agencies, 
shall prescribe risk management standards, taking into consid-
eration relevant international standards and existing pruden-
tial requirements, governing— 
(A) the operations related to the payment, clearing, 
and settlement activities of designated financial market 
utilities; and 
(B) the conduct of designated activities by financial 
institutions. 
(2) SPECIAL PROCEDURES FOR DESIGNATED CLEARING ENTI-
TIES AND DESIGNATED ACTIVITIES OF CERTAIN FINANCIAL INSTITU-
TIONS.— 
(A) CFTC AND COMMISSION.—The Commodity Futures 
Trading Commission and the Commission may each pre-
scribe regulations, in consultation with the Council and 
the Board of Governors, containing risk management stand-
ards, taking into consideration relevant international 
standards and existing prudential requirements, for those 
designated clearing entities and financial institutions 
engaged in designated activities for which each is the 
Supervisory Agency or the appropriate financial regulator, 
governing— 
(i) the operations related to payment, clearing, and 
settlement activities of such designated clearing enti-
ties; and 
(ii) the conduct of designated activities by such 
financial institutions. 
(B) REVIEW AND DETERMINATION.—The Board of Gov-
ernors may determine that existing prudential require-
ments of the Commodity Futures Trading Commission, the 
Commission, or both (including requirements prescribed 
pursuant to subparagraph (A)) with respect to designated 
clearing entities and financial institutions engaged in des-
ignated activities for which the Commission or the Com-
modity Futures Trading Commission is the Supervisory 
Agency or the appropriate financial regulator are insuffi-
cient to prevent or mitigate significant liquidity, credit,
H. R. 4173—435 
operational, or other risks to the financial markets or to 
the financial stability of the United States. 
(C) WRITTEN DETERMINATION.—Any determination by 
the Board of Governors under subparagraph (B) shall be 
provided in writing to the Commodity Futures Trading 
Commission or the Commission, as applicable, and the 
Council, and shall explain why existing prudential require-
ments, considered as a whole, are insufficient to ensure 
that the operations and activities of the designated clearing 
entities or the activities of financial institutions described 
in subparagraph (B) will not pose significant liquidity, 
credit, operational, or other risks to the financial markets 
or to the financial stability of the United States. The Board 
of Governors’ determination shall contain a detailed anal-
ysis supporting its findings and identify the specific pruden-
tial requirements that are insufficient. 
(D) CFTC AND
COMMISSION
RESPONSE.—The Com-
modity Futures Trading Commission or the Commission, 
as applicable, shall within 60 days either object to the 
Board of Governors’ determination with a detailed analysis 
as to why existing prudential requirements are sufficient, 
or submit an explanation to the Council and the Board 
of Governors describing the actions to be taken in response 
to the Board of Governors’ determination. 
(E) AUTHORIZATION.—Upon an affirmative vote by not 
fewer than 2/3 of members then serving on the Council, 
the Council shall either find that the response submitted 
under subparagraph (D) is sufficient, or require the Com-
modity Futures Trading Commission, or the Commission, 
as applicable, to prescribe such risk management standards 
as the Council determines is necessary to address the spe-
cific prudential requirements that are determined to be 
insufficient.’’ 
(b) OBJECTIVES AND PRINCIPLES.—The objectives and principles 
for the risk management standards prescribed under subsection 
(a) shall be to— 
(1) promote robust risk management; 
(2) promote safety and soundness; 
(3) reduce systemic risks; and 
(4) support the stability of the broader financial system. 
(c) SCOPE.—The standards prescribed under subsection (a) may 
address areas such as— 
(1) risk management policies and procedures; 
(2) margin and collateral requirements; 
(3) participant or counterparty default policies and proce-
dures; 
(4) the ability to complete timely clearing and settlement 
of financial transactions; 
(5) capital and financial resource requirements for des-
ignated financial market utilities; and 
(6) other areas that are necessary to achieve the objectives 
and principles in subsection (b). 
(d) LIMITATION ON SCOPE.—Except as provided in subsections 
(e) and (f) of section 807, nothing in this title shall be construed 
to permit the Council or the Board of Governors to take any action 
or exercise any authority granted to the Commodity Futures 
Trading Commission under section 2(h) of the Commodity Exchange
H. R. 4173—436 
Act or the Securities and Exchange Commission under section 3C(a) 
of the Securities Exchange Act of 1934, including— 
(1) the approval of, disapproval of, or stay of the clearing 
requirement for any group, category, type, or class of swaps 
that a designated clearing entity may accept for clearing; 
(2) the determination that any group, category, type, or 
class of swaps shall be subject to the mandatory clearing 
requirement of section 2(h)(1) of the Commodity Exchange Act 
or section 3C(a)(1) of the Securities Exchange Act of 1934; 
(3) the determination that any person is exempt from the 
mandatory clearing requirement of section 2(h)(1) of the Com-
modity Exchange Act or section 3C(a)(1) of the Securities 
Exchange Act of 1934; or 
(4) any authority granted to the Commodity Futures 
Trading Commission or the Securities and Exchange Commis-
sion with respect to transaction reporting or trade execution. 
(e) THRESHOLD LEVEL.—The standards prescribed under sub-
section (a) governing the conduct of designated activities by financial 
institutions shall, where appropriate, establish a threshold as to 
the level or significance of engagement in the activity at which 
a financial institution will become subject to the standards with 
respect to that activity. 
(f) COMPLIANCE REQUIRED.—Designated financial market utili-
ties and financial institutions subject to the standards prescribed 
under subsection (a) for a designated activity shall conduct their 
operations in compliance with the applicable risk management 
standards. 
SEC. 806. OPERATIONS OF DESIGNATED FINANCIAL MARKET UTILI-
TIES. 
(a) FEDERAL RESERVE ACCOUNT
AND SERVICES.—The Board 
of Governors may authorize a Federal Reserve Bank to establish 
and maintain an account for a designated financial market utility 
and provide the services listed in section 11A(b) of the Federal 
Reserve Act (12 U.S.C. 248a(b)) and deposit accounts under the 
first undesignated paragraph of section 13 of the Federal Reserve 
Act (12 U.S.C. 342) to the designated financial market utility that 
the Federal Reserve Bank is authorized under the Federal Reserve 
Act to provide to a depository institution, subject to any applicable 
rules, orders, standards, or guidelines prescribed by the Board 
of Governors. 
(b) ADVANCES.—The Board of Governors may authorize a Fed-
eral Reserve bank under section 10B of the Federal Reserve Act 
(12 U.S.C. 347b) to provide to a designated financial market utility 
discount and borrowing privileges only in unusual or exigent cir-
cumstances, upon the affirmative vote of a majority of the Board 
of Governors then serving (or such other number in accordance 
with the provisions of section 11(r)(2) of the Federal Reserve Act 
(12 U.S.C. 248(r)(2)) after consultation with the Secretary, and 
upon a showing by the designated financial market utility that 
it is unable to secure adequate credit accommodations from other 
banking institutions. All such discounts and borrowing privileges 
shall be subject to such other limitations, restrictions, and regula-
tions as the Board of Governors may prescribe. Access to discount 
and borrowing privileges under section 10B of the Federal Reserve 
Act as authorized in this section does not require a designated
H. R. 4173—437 
financial market utility to be or become a bank or bank holding 
company. 
(c) EARNINGS
ON FEDERAL RESERVE BALANCES.—A Federal 
Reserve Bank may pay earnings on balances maintained by or 
on behalf of a designated financial market utility in the same 
manner and to the same extent as the Federal Reserve Bank 
may pay earnings to a depository institution under the Federal 
Reserve Act, subject to any applicable rules, orders, standards, 
or guidelines prescribed by the Board of Governors. 
(d) RESERVE REQUIREMENTS.—The Board of Governors may 
exempt a designated financial market utility from, or modify any, 
reserve requirements under section 19 of the Federal Reserve Act 
(12 U.S.C. 461) applicable to a designated financial market utility. 
(e) CHANGES TO RULES, PROCEDURES, OR OPERATIONS.— 
(1) ADVANCE NOTICE.— 
(A) 
ADVANCE
NOTICE
OF
PROPOSED
CHANGES 
REQUIRED.—A designated financial market utility shall pro-
vide notice 60 days in advance notice to its Supervisory 
Agency of any proposed change to its rules, procedures, 
or operations that could, as defined in rules of each Super-
visory Agency, materially affect, the nature or level of 
risks presented by the designated financial market utility. 
(B) TERMS AND STANDARDS PRESCRIBED BY THE SUPER-
VISORY AGENCIES.—Each Supervisory Agency, in consulta-
tion with the Board of Governors, shall prescribe regula-
tions that define and describe the standards for deter-
mining when notice is required to be provided under 
subparagraph (A). 
(C) CONTENTS OF NOTICE.—The notice of a proposed 
change shall describe— 
(i) the nature of the change and expected effects 
on risks to the designated financial market utility, 
its participants, or the market; and 
(ii) how the designated financial market utility 
plans to manage any identified risks. 
(D) 
ADDITIONAL
INFORMATION.—The 
Supervisory 
Agency may require a designated financial market utility 
to provide any information necessary to assess the effect 
the proposed change would have on the nature or level 
of risks associated with the designated financial market 
utility’s payment, clearing, or settlement activities and the 
sufficiency of any proposed risk management techniques. 
(E) NOTICE OF OBJECTION.—The Supervisory Agency 
shall notify the designated financial market utility of any 
objection regarding the proposed change within 60 days 
from the later of— 
(i) the date that the notice of the proposed change 
is received; or 
(ii) the date any further information requested 
for consideration of the notice is received. 
(F) CHANGE NOT ALLOWED IF OBJECTION.—A designated 
financial market utility shall not implement a change to 
which the Supervisory Agency has an objection. 
(G) CHANGE
ALLOWED
IF
NO
OBJECTION
WITHIN
DAYS.—A designated financial market utility may imple-
ment a change if it has not received an objection to the 
proposed change within 60 days of the later of—
H. R. 4173—438 
(i) the date that the Supervisory Agency receives 
the notice of proposed change; or 
(ii) the date the Supervisory Agency receives any 
further information it requests for consideration of the 
notice. 
(H) REVIEW
EXTENSION
FOR
NOVEL
OR
COMPLEX 
ISSUES.—The Supervisory Agency may, during the 60-day 
review period, extend the review period for an additional 
60 days for proposed changes that raise novel or complex 
issues, subject to the Supervisory Agency providing the 
designated financial market utility with prompt written 
notice of the extension. Any extension under this subpara-
graph will extend the time periods under subparagraphs 
(E) and (G). 
(I) CHANGE ALLOWED EARLIER IF NOTIFIED OF NO OBJEC-
TION.—A designated financial market utility may imple-
ment a change in less than 60 days from the date of 
receipt of the notice of proposed change by the Supervisory 
Agency, or the date the Supervisory Agency receives any 
further information it requested, if the Supervisory Agency 
notifies the designated financial market utility in writing 
that it does not object to the proposed change and author-
izes the designated financial market utility to implement 
the change on an earlier date, subject to any conditions 
imposed by the Supervisory Agency. 
(2) EMERGENCY CHANGES.— 
(A) IN GENERAL.—A designated financial market utility 
may implement a change that would otherwise require 
advance notice under this subsection if it determines that— 
(i) an emergency exists; and 
(ii) immediate implementation of the change is 
necessary for the designated financial market utility 
to continue to provide its services in a safe and sound 
manner. 
(B) NOTICE
REQUIRED
WITHIN
HOURS.—The des-
ignated financial market utility shall provide notice of any 
such emergency change to its Supervisory Agency, as soon 
as practicable, which shall be no later than 24 hours after 
implementation of the change. 
(C) CONTENTS OF EMERGENCY NOTICE.—In addition to 
the information required for changes requiring advance 
notice, the notice of an emergency change shall describe— 
(i) the nature of the emergency; and 
(ii) the reason the change was necessary for the 
designated financial market utility to continue to pro-
vide its services in a safe and sound manner. 
(D) MODIFICATION OR RESCISSION OF CHANGE MAY BE 
REQUIRED.—The Supervisory Agency may require modifica-
tion or rescission of the change if it finds that the change 
is not consistent with the purposes of this Act or any 
applicable rules, orders, or standards prescribed under sec-
tion 805(a). 
(3) COPYING THE BOARD OF GOVERNORS.—The Supervisory 
Agency shall provide the Board of Governors concurrently with 
a complete copy of any notice, request, or other information 
it issues, submits, or receives under this subsection.
H. R. 4173—439 
(4) CONSULTATION
WITH
BOARD
OF
GOVERNORS.—Before 
taking any action on, or completing its review of, a change 
proposed by a designated financial market utility, the Super-
visory Agency shall consult with the Board of Governors. 
SEC. 807. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST 
DESIGNATED FINANCIAL MARKET UTILITIES. 
(a) EXAMINATION.—Notwithstanding any other provision of law 
and subject to subsection (d), the Supervisory Agency shall conduct 
examinations of a designated financial market utility at least once 
annually in order to determine the following: 
(1) The nature of the operations of, and the risks borne 
by, the designated financial market utility. 
(2) The financial and operational risks presented by the 
designated financial market utility to financial institutions, 
critical markets, or the broader financial system. 
(3) The resources and capabilities of the designated finan-
cial market utility to monitor and control such risks. 
(4) The safety and soundness of the designated financial 
market utility. 
(5) The designated financial market utility’s compliance 
with— 
(A) this title; and 
(B) the rules and orders prescribed under this title. 
(b) SERVICE PROVIDERS.—Whenever a service integral to the 
operation of a designated financial market utility is performed 
for the designated financial market utility by another entity, 
whether an affiliate or non-affiliate and whether on or off the 
premises of the designated financial market utility, the Supervisory 
Agency may examine whether the provision of that service is in 
compliance with applicable law, rules, orders, and standards to 
the same extent as if the designated financial market utility were 
performing the service on its own premises. 
(c) ENFORCEMENT.—For purposes of enforcing the provisions 
of this title, a designated financial market utility shall be subject 
to, and the appropriate Supervisory Agency shall have authority 
under the provisions of subsections (b) through (n) of section 8 
of the Federal Deposit Insurance Act (12 U.S.C. 1818) in the same 
manner and to the same extent as if the designated financial 
market utility was an insured depository institution and the Super-
visory Agency was the appropriate Federal banking agency for 
such insured depository institution. 
(d) BOARD OF GOVERNORS INVOLVEMENT IN EXAMINATIONS.— 
(1) BOARD OF GOVERNORS CONSULTATION ON EXAMINATION 
PLANNING.—The Supervisory Agency shall consult annually 
with the Board of Governors regarding the scope and method-
ology of any examination conducted under subsections (a) and 
(b). The Supervisory Agency shall lead all examinations con-
ducted under subsections (a) and (b) 
(2) BOARD OF GOVERNORS PARTICIPATION IN EXAMINATION.— 
The Board of Governors may, in its discretion, participate in 
any examination led by a Supervisory Agency and conducted 
under subsections (a) and (b). 
(e) BOARD OF GOVERNORS ENFORCEMENT RECOMMENDATIONS.— 
(1) RECOMMENDATION.—The Board of Governors may, after 
consulting with the Council and the Supervisory Agency, at 
any time recommend to the Supervisory Agency that such
H. R. 4173—440 
agency take enforcement action against a designated financial 
market utility in order to prevent or mitigate significant 
liquidity, credit, operational, or other risks to the financial 
markets or to the financial stability of the United States. Any 
such recommendation for enforcement action shall provide a 
detailed analysis supporting the recommendation of the Board 
of Governors. 
(2) CONSIDERATION.—The Supervisory Agency shall con-
sider the recommendation of the Board of Governors and submit 
a response to the Board of Governors within 60 days. 
(3) BINDING
ARBITRATION.—If the Supervisory Agency 
rejects, in whole or in part, the recommendation of the Board 
of Governors, the Board of Governors may refer the rec-
ommendation to the Council for a binding decision on whether 
an enforcement action is warranted. 
(4) ENFORCEMENT ACTION.—Upon an affirmative vote by 
a majority of the Council in favor of the Board of Governors’ 
recommendation under paragraph (3), the Council may require 
the Supervisory Agency to— 
(A) exercise the enforcement authority referenced in 
subsection (c); and 
(B) take enforcement action against the designated 
financial market utility. 
(f) EMERGENCY ENFORCEMENT ACTIONS BY THE BOARD OF GOV-
ERNORS.— 
(1) IMMINENT RISK OF SUBSTANTIAL HARM.—The Board of 
Governors may, after consulting with the Supervisory Agency 
and upon an affirmative vote by a majority the Council, take 
enforcement action against a designated financial market utility 
if the Board of Governors has reasonable cause to conclude 
that— 
(A) either— 
(i) an action engaged in, or contemplated by, a 
designated financial market utility (including any 
change proposed by the designated financial market 
utility to its rules, procedures, or operations that would 
otherwise be subject to section 806(e)) poses an 
imminent risk of substantial harm to financial institu-
tions, critical markets, or the broader financial system 
of the United States; or 
(ii) the condition of a designated financial market 
utility poses an imminent risk of substantial harm 
to financial institutions, critical markets, or the 
broader financial system; and 
(B) the imminent risk of substantial harm precludes 
the Board of Governors’ use of the procedures in subsection 
(e). 
(2) ENFORCEMENT
AUTHORITY.—For purposes of taking 
enforcement action under paragraph (1), a designated financial 
market utility shall be subject to, and the Board of Governors 
shall have authority under the provisions of subsections (b) 
through (n) of section 8 of the Federal Deposit Insurance Act 
(12 U.S.C. 1818) in the same manner and to the same extent 
as if the designated financial market utility was an insured 
depository institution and the Board of Governors was the 
appropriate Federal banking agency for such insured depository 
institution.
H. R. 4173—441 
SEC. 808. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST 
FINANCIAL INSTITUTIONS SUBJECT TO STANDARDS FOR 
DESIGNATED ACTIVITIES. 
(a) EXAMINATION.—The appropriate financial regulator is 
authorized to examine a financial institution subject to the stand-
ards prescribed under section 805(a) for a designated activity in 
order to determine the following: 
(1) The nature and scope of the designated activities 
engaged in by the financial institution. 
(2) The financial and operational risks the designated 
activities engaged in by the financial institution may pose 
to the safety and soundness of the financial institution. 
(3) The financial and operational risks the designated 
activities engaged in by the financial institution may pose 
to other financial institutions, critical markets, or the broader 
financial system. 
(4) The resources available to and the capabilities of the 
financial institution to monitor and control the risks described 
in paragraphs (2) and (3). 
(5) The financial institution’s compliance with this title 
and the rules and orders prescribed under section 805(a). 
(b) ENFORCEMENT.—For purposes of enforcing the provisions 
of this title, and the rules and orders prescribed under this section, 
a financial institution subject to the standards prescribed under 
section 805(a) for a designated activity shall be subject to, and 
the appropriate financial regulator shall have authority under the 
provisions of subsections (b) through (n) of section 8 of the Federal 
Deposit Insurance Act (12 U.S.C. 1818) in the same manner and 
to the same extent as if the financial institution was an insured 
depository institution and the appropriate financial regulator was 
the appropriate Federal banking agency for such insured depository 
institution. 
(c) TECHNICAL ASSISTANCE.—The Board of Governors shall con-
sult with and provide such technical assistance as may be required 
by the appropriate financial regulators to ensure that the rules 
and orders prescribed under this title are interpreted and applied 
in as consistent and uniform a manner as practicable. 
(d) DELEGATION.— 
(1) EXAMINATION.— 
(A) REQUEST TO BOARD OF GOVERNORS.—The appro-
priate financial regulator may request the Board of Gov-
ernors to conduct or participate in an examination of a 
financial institution subject to the standards prescribed 
under section 805(a) for a designated activity in order 
to assess the compliance of such financial institution with— 
(i) this title; or 
(ii) the rules or orders prescribed under this title. 
(B) EXAMINATION
BY
BOARD
OF
GOVERNORS.—Upon 
receipt of an appropriate written request, the Board of 
Governors will conduct the examination under such terms 
and conditions to which the Board of Governors and the 
appropriate financial regulator mutually agree. 
(2) ENFORCEMENT.— 
(A) REQUEST TO BOARD OF GOVERNORS.—The appro-
priate financial regulator may request the Board of Gov-
ernors to enforce this title or the rules or orders prescribed
H. R. 4173—442 
under this title against a financial institution that is sub-
ject to the standards prescribed under section 805(a) for 
a designated activity. 
(B) ENFORCEMENT
BY
BOARD
OF
GOVERNORS.—Upon 
receipt of an appropriate written request, the Board of 
Governors shall determine whether an enforcement action 
is warranted, and, if so, it shall enforce compliance with 
this title or the rules or orders prescribed under this title 
and, if so, the financial institution shall be subject to, 
and the Board of Governors shall have authority under 
the provisions of subsections (b) through (n) of section 
8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) 
in the same manner and to the same extent as if the 
financial institution was an insured depository institution 
and the Board of Governors was the appropriate Federal 
banking agency for such insured depository institution. 
(e) BACK-UP AUTHORITY OF THE BOARD OF GOVERNORS.— 
(1) EXAMINATION
AND
ENFORCEMENT.—Notwithstanding 
any other provision of law, the Board of Governors may— 
(A) conduct an examination of the type described in 
subsection (a) of any financial institution that is subject 
to the standards prescribed under section 805(a) for a des-
ignated activity; and 
(B) enforce the provisions of this title or any rules 
or orders prescribed under this title against any financial 
institution that is subject to the standards prescribed under 
section 805(a) for a designated activity. 
(2) LIMITATIONS.— 
(A) EXAMINATION.—The Board of Governors may exer-
cise the authority described in paragraph (1)(A) only if 
the Board of Governors has— 
(i) reasonable cause to believe that a financial 
institution is not in compliance with this title or the 
rules or orders prescribed under this title with respect 
to a designated activity; 
(ii) notified, in writing, the appropriate financial 
regulator and the Council of its belief under clause 
(i) with supporting documentation included; 
(iii) requested the appropriate financial regulator 
to conduct a prompt examination of the financial 
institution; 
(iv) either— 
(I) not been afforded a reasonable opportunity 
to participate in an examination of the financial 
institution by the appropriate financial regulator 
within 30 days after the date of the Board’s 
notification under clause (ii); or 
(II) reasonable cause to believe that the finan-
cial institution’s noncompliance with this title or 
the rules or orders prescribed under this title poses 
a substantial risk to other financial institutions, 
critical markets, or the broader financial system, 
subject to the Board of Governors affording the 
appropriate financial regulator a reasonable oppor-
tunity to participate in the examination; and 
(v) obtained the approval of the Council upon an 
affirmative vote by a majority of the Council.
H. R. 4173—443 
(B) ENFORCEMENT.—The Board of Governors may exer-
cise the authority described in paragraph (1)(B) only if 
the Board of Governors has— 
(i) reasonable cause to believe that a financial 
institution is not in compliance with this title or the 
rules or orders prescribed under this title with respect 
to a designated activity; 
(ii) notified, in writing, the appropriate financial 
regulator and the Council of its belief under clause 
(i) with supporting documentation included and with 
a recommendation that the appropriate financial regu-
lator take 1 or more specific enforcement actions 
against the financial institution; 
(iii) either— 
(I) not been notified, in writing, by the appro-
priate financial regulator of the commencement 
of an enforcement action recommended by the 
Board of Governors against the financial institu-
tion within 60 days from the date of the notifica-
tion under clause (ii); or 
(II) reasonable cause to believe that the finan-
cial institution’s noncompliance with this title or 
the rules or orders prescribed under this title poses 
significant liquidity, credit, operational, or other 
risks to the financial markets or to the financial 
stability of the United States, subject to the Board 
of Governors notifying the appropriate financial 
regulator of the Board’s enforcement action; and 
(iv) obtained the approval of the Council upon 
an affirmative vote by a majority of the Council. 
(3) ENFORCEMENT
PROVISIONS.—For purposes of taking 
enforcement action under paragraph (1), the financial institu-
tion shall be subject to, and the Board of Governors shall 
have authority under the provisions of subsections (b) through 
(n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C. 
1818) in the same manner and to the same extent as if the 
financial institution was an insured depository institution and 
the Board of Governors was the appropriate Federal banking 
agency for such insured depository institution. 
SEC. 809. REQUESTS FOR INFORMATION, REPORTS, OR RECORDS. 
(a) INFORMATION TO ASSESS SYSTEMIC IMPORTANCE.— 
(1) FINANCIAL MARKET UTILITIES.—The Council is author-
ized to require any financial market utility to submit such 
information as the Council may require for the sole purpose 
of assessing whether that financial market utility is system-
ically important, but only if the Council has reasonable cause 
to believe that the financial market utility meets the standards 
for systemic importance set forth in section 804. 
(2) 
FINANCIAL
INSTITUTIONS
ENGAGED
IN
PAYMENT, 
CLEARING, OR SETTLEMENT ACTIVITIES.—The Council is author-
ized to require any financial institution to submit such informa-
tion as the Council may require for the sole purpose of assessing 
whether any payment, clearing, or settlement activity engaged 
in or supported by a financial institution is systemically impor-
tant, but only if the Council has reasonable cause to believe
H. R. 4173—444 
that the activity meets the standards for systemic importance 
set forth in section 804. 
(b) REPORTING AFTER DESIGNATION.— 
(1) DESIGNATED FINANCIAL MARKET UTILITIES.—The Board 
of Governors and the Council may each require a designated 
financial market utility to submit reports or data to the Board 
of Governors and the Council in such frequency and form 
as deemed necessary by the Board of Governors or the Council 
in order to assess the safety and soundness of the utility 
and the systemic risk that the utility’s operations pose to the 
financial system. 
(2) FINANCIAL INSTITUTIONS SUBJECT TO STANDARDS FOR 
DESIGNATED
ACTIVITIES.—The Board of Governors and the 
Council may each require 1 or more financial institutions sub-
ject to the standards prescribed under section 805(a) for a 
designated activity to submit, in such frequency and form as 
deemed necessary by the Board of Governors or the Council, 
reports and data to the Board of Governors and the Council 
solely with respect to the conduct of the designated activity 
and solely to assess whether— 
(A) the rules, orders, or standards prescribed under 
section 805(a) with respect to the designated activity appro-
priately address the risks to the financial system presented 
by such activity; and 
(B) the financial institutions are in compliance with 
this title and the rules and orders prescribed under section 
805(a) with respect to the designated activity. 
(3) LIMITATION.—The Board of Governors may, upon an 
affirmative vote by a majority of the Council, prescribe regula-
tions under this section that impose a recordkeeping or 
reporting requirement on designated clearing entities or finan-
cial institutions engaged in designated activities that are sub-
ject to standards that have been prescribed under section 
805(a)(2). 
(c) COORDINATION WITH APPROPRIATE FEDERAL SUPERVISORY 
AGENCY.— 
(1) ADVANCE COORDINATION.—Before requesting any mate-
rial information from, or imposing reporting or recordkeeping 
requirements on, any financial market utility or any financial 
institution engaged in a payment, clearing, or settlement 
activity, the Board of Governors or the Council shall coordinate 
with the Supervisory Agency for a financial market utility 
or the appropriate financial regulator for a financial institution 
to determine if the information is available from or may be 
obtained by the agency in the form, format, or detail required 
by the Board of Governors or the Council. 
(2) SUPERVISORY
REPORTS.—Notwithstanding any other 
provision of law, the Supervisory Agency, the appropriate finan-
cial regulator, and the Board of Governors are authorized to 
disclose to each other and the Council copies of its examination 
reports or similar reports regarding any financial market utility 
or any financial institution engaged in payment, clearing, or 
settlement activities. 
(d) TIMING OF RESPONSE FROM APPROPRIATE FEDERAL SUPER-
VISORY
AGENCY.—If the information, report, records, or data 
requested by the Board of Governors or the Council under sub-
section (c)(1) are not provided in full by the Supervisory Agency
H. R. 4173—445 
or the appropriate financial regulator in less than 15 days after 
the date on which the material is requested, the Board of Governors 
or the Council may request the information or impose recordkeeping 
or reporting requirements directly on such persons as provided 
in subsections (a) and (b) with notice to the agency. 
(e) SHARING OF INFORMATION.— 
(1) MATERIAL
CONCERNS.—Notwithstanding any other 
provision of law, the Board of Governors, the Council, the 
appropriate financial regulator, and any Supervisory Agency 
are authorized to— 
(A) promptly notify each other of material concerns 
about a designated financial market utility or any financial 
institution engaged in designated activities; and 
(B) share appropriate reports, information, or data 
relating to such concerns. 
(2) OTHER
INFORMATION.—Notwithstanding any other 
provision of law, the Board of Governors, the Council, the 
appropriate financial regulator, or any Supervisory Agency may, 
under such terms and conditions as it deems appropriate, pro-
vide confidential supervisory information and other information 
obtained under this title to each other, and to the Secretary, 
Federal Reserve Banks, State financial institution supervisory 
agencies, foreign financial supervisors, foreign central banks, 
and foreign finance ministries, subject to reasonable assurances 
of confidentiality, provided, however, that no person or entity 
receiving information pursuant to this section may disseminate 
such information to entities or persons other than those listed 
in this paragraph without complying with applicable law, 
including section 8 of the Commodity Exchange Act (7 U.S.C. 
12). 
(f) PRIVILEGE
MAINTAINED.—The Board of Governors, the 
Council, the appropriate financial regulator, and any Supervisory 
Agency providing reports or data under this section shall not be 
deemed to have waived any privilege applicable to those reports 
or data, or any portion thereof, by providing the reports or data 
to the other party or by permitting the reports or data, or any 
copies thereof, to be used by the other party. 
(g) DISCLOSURE
EXEMPTION.—Information obtained by the 
Board of Governors, the Supervisory Agencies, or the Council under 
this section and any materials prepared by the Board of Governors, 
the Supervisory Agencies, or the Council regarding their assessment 
of the systemic importance of financial market utilities or any 
payment, clearing, or settlement activities engaged in by financial 
institutions, and in connection with their supervision of designated 
financial market utilities and designated activities, shall be con-
fidential supervisory information exempt from disclosure under sec-
tion 552 of title 5, United States Code. For purposes of such section 
552, this subsection shall be considered a statute described in 
subsection (b)(3) of such section 552. 
SEC. 810. RULEMAKING. 
The Board of Governors, the Supervisory Agencies, and the 
Council are authorized to prescribe such rules and issue such orders 
as may be necessary to administer and carry out their respective 
authorities and duties granted under this title and prevent evasions 
thereof.
H. R. 4173—446 
SEC. 811. OTHER AUTHORITY. 
Unless otherwise provided by its terms, this title does not 
divest any appropriate financial regulator, any Supervisory Agency, 
or any other Federal or State agency, of any authority derived 
from any other applicable law, except that any standards prescribed 
by the Board of Governors under section 805 shall supersede any 
less stringent requirements established under other authority to 
the extent of any conflict. 
SEC. 812. CONSULTATION. 
(a) CFTC.—The Commodity Futures Trading Commission shall 
consult with the Board of Governors— 
(1) prior to exercising its authorities under sections 
2(h)(2)(C), 2(h)(3)(A), 2(h)(3)(C), 2(h)(4)(A), and 2(h)(4)(B) of 
the Commodity Exchange Act, as amended by the Wall Street 
Transparency and Accountability Act of 2010; 
(2) with respect to any rule or rule amendment of a deriva-
tives clearing organization for which a stay of certification 
has been issued under section 745(b)(3) of the Wall Street 
Transparency and Accountability Act of 2010; and 
(3) prior to exercising its rulemaking authorities under 
section 728 of the Wall Street Transparency and Accountability 
Act of 2010. 
(b) SEC.—The Commission shall consult with the Board of 
Governors— 
(1) prior to exercising its authorities under sections 
3C(a)(2)(C), 3C(a)(3)(A), 3C(a)(3)(C), 3C(a)(4)(A), and 3C(a)(4)(B) 
of the Securities Exchange Act of 1934, as amended by the 
Wall Street Transparency and Accountability Act of 2010; 
(2) with respect to any proposed rule change of a clearing 
agency for which an extension of the time for review has 
been designated under section 19(b)(2) of the Securities 
Exchange Act of 1934; and 
(3) prior to exercising its rulemaking authorities under 
section 13(n) of the Securities Exchange Act of 1934, as added 
by section 763(i) of the Wall Street Transparency and Account-
ability Act of 2010. 
SEC. 813. COMMON FRAMEWORK FOR DESIGNATED CLEARING ENTITY 
RISK MANAGEMENT. 
The Commodity Futures Trading Commission and the Commis-
sion shall coordinate with the Board of Governors to jointly develop 
risk management supervision programs for designated clearing enti-
ties. Not later than 1 year after the date of enactment of this 
Act, the Commodity Futures Trading Commission, the Commission, 
and the Board of Governors shall submit a joint report to the 
Committee on Banking, Housing, and Urban Affairs and the Com-
mittee on Agriculture, Nutrition, and Forestry of the Senate, and 
the Committee on Financial Services and the Committee on Agri-
culture of the House of Representatives recommendations for— 
(1) improving consistency in the designated clearing entity 
oversight programs of the Commission and the Commodity 
Futures Trading Commission; 
(2) promoting robust risk management by designated 
clearing entities; 
(3) promoting robust risk management oversight by regu-
lators of designated clearing entities; and
H. R. 4173—447 
(4) improving regulators’ ability to monitor the potential 
effects of designated clearing entity risk management on the 
stability of the financial system of the United States. 
SEC. 814. EFFECTIVE DATE. 
This title is effective as of the date of enactment of this Act. 
TITLE 
IX—INVESTOR 
PROTECTIONS 
AND IMPROVEMENTS TO THE REGU-
LATION OF SECURITIES 
SEC. 901. SHORT TITLE. 
This title may be cited as the ‘‘Investor Protection and Securi-
ties Reform Act of 2010’’. 
Subtitle A—Increasing Investor Protection 
SEC. 911. INVESTOR ADVISORY COMMITTEE ESTABLISHED. 
Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by adding at the end the following: 
‘‘SEC. 39. INVESTOR ADVISORY COMMITTEE. 
‘‘(a) ESTABLISHMENT AND PURPOSE.— 
‘‘(1) ESTABLISHMENT.—There is established within the 
Commission the Investor Advisory Committee (referred to in 
this section as the ‘Committee’). 
‘‘(2) PURPOSE.—The Committee shall— 
‘‘(A) advise and consult with the Commission on— 
‘‘(i) regulatory priorities of the Commission; 
‘‘(ii) issues relating to the regulation of securities 
products, trading strategies, and fee structures, and 
the effectiveness of disclosure; 
‘‘(iii) initiatives to protect investor interest; and 
‘‘(iv) initiatives to promote investor confidence and 
the integrity of the securities marketplace; and 
‘‘(B) submit to the Commission such findings and rec-
ommendations as the Committee determines are appro-
priate, including recommendations for proposed legislative 
changes. 
‘‘(b) MEMBERSHIP.— 
‘‘(1) IN GENERAL.—The members of the Committee shall 
be— 
‘‘(A) the Investor Advocate; 
‘‘(B) a representative of State securities commissions; 
‘‘(C) a representative of the interests of senior citizens; 
and 
‘‘(D) not fewer than 10, and not more than 20, members 
appointed by the Commission, from among individuals 
who— 
‘‘(i) represent the interests of individual equity 
and debt investors, including investors in mutual 
funds; 
‘‘(ii) represent the interests of institutional inves-
tors, including the interests of pension funds and reg-
istered investment companies;
H. R. 4173—448 
‘‘(iii) are knowledgeable about investment issues 
and decisions; and 
‘‘(iv) have reputations of integrity. 
‘‘(2) TERM.—Each member of the Committee appointed 
under paragraph (1)(B) shall serve for a term of 4 years. 
‘‘(3) MEMBERS
NOT
COMMISSION
EMPLOYEES.—Members 
appointed under paragraph (1)(B) shall not be deemed to be 
employees or agents of the Commission solely because of mem-
bership on the Committee. 
‘‘(c) CHAIRMAN; VICE CHAIRMAN; SECRETARY; ASSISTANT SEC-
RETARY.— 
‘‘(1) IN GENERAL.—The members of the Committee shall 
elect, from among the members of the Committee— 
‘‘(A) a chairman, who may not be employed by an 
issuer; 
‘‘(B) a vice chairman, who may not be employed by 
an issuer; 
‘‘(C) a secretary; and 
‘‘(D) an assistant secretary. 
‘‘(2) TERM.—Each member elected under paragraph (1) 
shall serve for a term of 3 years in the capacity for which 
the member was elected under paragraph (1). 
‘‘(d) MEETINGS.— 
‘‘(1) FREQUENCY
OF
MEETINGS.—The Committee shall 
meet— 
‘‘(A) not less frequently than twice annually, at the 
call of the chairman of the Committee; and 
‘‘(B) from time to time, at the call of the Commission. 
‘‘(2) NOTICE.—The chairman of the Committee shall give 
the members of the Committee written notice of each meeting, 
not later than 2 weeks before the date of the meeting. 
‘‘(e) COMPENSATION AND TRAVEL EXPENSES.—Each member of 
the Committee who is not a full-time employee of the United States 
shall— 
‘‘(1) be entitled to receive compensation at a rate not to 
exceed the daily equivalent of the annual rate of basic pay 
in effect for a position at level V of the Executive Schedule 
under section 5316 of title 5, United States Code, for each 
day during which the member is engaged in the actual perform-
ance of the duties of the Committee; and 
‘‘(2) while away from the home or regular place of business 
of the member in the performance of services for the Committee, 
be allowed travel expenses, including per diem in lieu of subsist-
ence, in the same manner as persons employed intermittently 
in the Government service are allowed expenses under section 
5703(b) of title 5, United States Code. 
‘‘(f) STAFF.—The Commission shall make available to the Com-
mittee such staff as the chairman of the Committee determines 
are necessary to carry out this section. 
‘‘(g) REVIEW BY COMMISSION.—The Commission shall— 
‘‘(1) review the findings and recommendations of the Com-
mittee; and 
‘‘(2) each time the Committee submits a finding or rec-
ommendation to the Commission, promptly issue a public state-
ment— 
‘‘(A) assessing the finding or recommendation of the 
Committee; and
H. R. 4173—449 
‘‘(B) disclosing the action, if any, the Commission 
intends to take with respect to the finding or recommenda-
tion. 
‘‘(h) COMMITTEE
FINDINGS.—Nothing in this section shall 
require the Commission to agree to or act upon any finding or 
recommendation of the Committee. 
‘‘(i) FEDERAL ADVISORY COMMITTEE ACT.—The Federal Advisory 
Committee Act (5 U.S.C. App.) shall not apply with respect to 
the Committee and its activities. 
‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There is authorized 
to be appropriated to the Commission such sums as are necessary 
to carry out this section.’’. 
SEC. 912. CLARIFICATION OF AUTHORITY OF THE COMMISSION TO 
ENGAGE IN INVESTOR TESTING. 
Section 19 of the Securities Act of 1933 (15 U.S.C. 77s) is 
amended by adding at the end the following: 
‘‘(e) EVALUATION OF RULES OR PROGRAMS.—For the purpose 
of evaluating any rule or program of the Commission issued or 
carried out under any provision of the securities laws, as defined 
in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 
78c), and the purposes of considering, proposing, adopting, or 
engaging in any such rule or program or developing new rules 
or programs, the Commission may— 
‘‘(1) gather information from and communicate with inves-
tors or other members of the public; 
‘‘(2) engage in such temporary investor testing programs 
as the Commission determines are in the public interest or 
would protect investors; and 
‘‘(3) consult with academics and consultants, as necessary 
to carry out this subsection. 
‘‘(f) RULE OF CONSTRUCTION.—For purposes of the Paperwork 
Reduction Act (44 U.S.C. 3501 et seq.), any action taken under 
subsection (e) shall not be construed to be a collection of informa-
tion.’’. 
SEC. 913. STUDY AND RULEMAKING REGARDING OBLIGATIONS OF 
BROKERS, DEALERS, AND INVESTMENT ADVISERS. 
(a) DEFINITION.—For purposes of this section, the term ‘‘retail 
customer’’ means a natural person, or the legal representative of 
such natural person, who— 
(1) receives personalized investment advice about securities 
from a broker or dealer or investment adviser; and 
(2) uses such advice primarily for personal, family, or 
household purposes. 
(b) STUDY.—The Commission shall conduct a study to 
evaluate— 
(1) the effectiveness of existing legal or regulatory stand-
ards of care for brokers, dealers, investment advisers, persons 
associated with brokers or dealers, and persons associated with 
investment advisers for providing personalized investment 
advice and recommendations about securities to retail cus-
tomers imposed by the Commission and a national securities 
association, and other Federal and State legal or regulatory 
standards; and 
(2) whether there are legal or regulatory gaps, short-
comings, or overlaps in legal or regulatory standards in the 
protection of retail customers relating to the standards of care
H. R. 4173—450 
for brokers, dealers, investment advisers, persons associated 
with brokers or dealers, and persons associated with investment 
advisers for providing personalized investment advice about 
securities to retail customers that should be addressed by rule 
or statute. 
(c) CONSIDERATIONS.—In conducting the study required under 
subsection (b), the Commission shall consider— 
(1) the effectiveness of existing legal or regulatory stand-
ards of care for brokers, dealers, investment advisers, persons 
associated with brokers or dealers, and persons associated with 
investment advisers for providing personalized investment 
advice and recommendations about securities to retail cus-
tomers imposed by the Commission and a national securities 
association, and other Federal and State legal or regulatory 
standards; 
(2) whether there are legal or regulatory gaps, short-
comings, or overlaps in legal or regulatory standards in the 
protection of retail customers relating to the standards of care 
for brokers, dealers, investment advisers, persons associated 
with brokers or dealers, and persons associated with investment 
advisers for providing personalized investment advice about 
securities to retail customers that should be addressed by rule 
or statute; 
(3) whether retail customers understand that there are 
different standards of care applicable to brokers, dealers, invest-
ment advisers, persons associated with brokers or dealers, and 
persons associated with investment advisers in the provision 
of personalized investment advice about securities to retail 
customers; 
(4) whether the existence of different standards of care 
applicable to brokers, dealers, investment advisers, persons 
associated with brokers or dealers, and persons associated with 
investment advisers is a source of confusion for retail customers 
regarding the quality of personalized investment advice that 
retail customers receive; 
(5) the regulatory, examination, and enforcement resources 
devoted to, and activities of, the Commission, the States, and 
a national securities association to enforce the standards of 
care for brokers, dealers, investment advisers, persons associ-
ated with brokers or dealers, and persons associated with 
investment advisers when providing personalized investment 
advice and recommendations about securities to retail cus-
tomers, including— 
(A) the effectiveness of the examinations of brokers, 
dealers, and investment advisers in determining compli-
ance with regulations; 
(B) the frequency of the examinations; and 
(C) the length of time of the examinations; 
(6) the substantive differences in the regulation of brokers, 
dealers, and investment advisers, when providing personalized 
investment advice and recommendations about securities to 
retail customers; 
(7) the specific instances related to the provision of 
personalized investment advice about securities in which— 
(A) the regulation and oversight of investment advisers 
provide greater protection to retail customers than the 
regulation and oversight of brokers and dealers; and
H. R. 4173—451 
(B) the regulation and oversight of brokers and dealers 
provide greater protection to retail customers than the 
regulation and oversight of investment advisers; 
(8) the existing legal or regulatory standards of State secu-
rities regulators and other regulators intended to protect retail 
customers; 
(9) the potential impact on retail customers, including the 
potential impact on access of retail customers to the range 
of products and services offered by brokers and dealers, of 
imposing upon brokers, dealers, and persons associated with 
brokers or dealers— 
(A) the standard of care applied under the Investment 
Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) for providing 
personalized investment advice about securities to retail 
customers of investment advisers, as interpreted by the 
Commission and the courts; and 
(B) other requirements of the Investment Advisers Act 
of 1940 (15 U.S.C. 80b–1 et seq.); 
(10) the potential impact of eliminating the broker and 
dealer exclusion from the definition of ‘‘investment adviser’’ 
under section 202(a)(11)(C) of the Investment Advisers Act 
of 1940 (15 U.S.C. 80b–2(a)(11)(C)), in terms of— 
(A) the impact and potential benefits and harm to 
retail customers that could result from such a change, 
including any potential impact on access to personalized 
investment advice and recommendations about securities 
to retail customers or the availability of such advice and 
recommendations; 
(B) the number of additional entities and individuals 
that would be required to register under, or become subject 
to, the Investment Advisers Act of 1940 (15 U.S.C. 80b– 
1 et seq.), and the additional requirements to which bro-
kers, dealers, and persons associated with brokers and 
dealers would become subject, including— 
(i) any potential additional associated person 
licensing, registration, and examination requirements; 
and 
(ii) the additional costs, if any, to the additional 
entities and individuals; and 
(C) the impact on Commission and State resources 
to— 
(i) conduct examinations of registered investment 
advisers and the representatives of registered invest-
ment advisers, including the impact on the examina-
tion cycle; and 
(ii) enforce the standard of care and other 
applicable requirements imposed under the Investment 
Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.); 
(11) the varying level of services provided by brokers, 
dealers, investment advisers, persons associated with brokers 
or dealers, and persons associated with investment advisers 
to retail customers and the varying scope and terms of retail 
customer relationships of brokers, dealers, investment advisers, 
persons associated with brokers or dealers, and persons associ-
ated with investment advisers with such retail customers; 
(12) the potential impact upon retail customers that could 
result from potential changes in the regulatory requirements
H. R. 4173—452 
or legal standards of care affecting brokers, dealers, investment 
advisers, persons associated with brokers or dealers, and per-
sons associated with investment advisers relating to their 
obligations to retail customers regarding the provision of invest-
ment advice, including any potential impact on— 
(A) protection from fraud; 
(B) access to personalized investment advice, and rec-
ommendations about securities to retail customers; or 
(C) the availability of such advice and recommenda-
tions; 
(13) the potential additional costs and expenses to— 
(A) retail customers regarding and the potential impact 
on the profitability of their investment decisions; and 
(B) brokers, dealers, and investment advisers resulting 
from potential changes in the regulatory requirements or 
legal standards affecting brokers, dealers, investment 
advisers, persons associated with brokers or dealers, and 
persons associated with investment advisers relating to 
their obligations, including duty of care, to retail customers; 
and 
(14) any other consideration that the Commission considers 
necessary and appropriate in determining whether to conduct 
a rulemaking under subsection (f). 
(d) REPORT.— 
(1) IN GENERAL.—Not later than 6 months after the date 
of enactment of this Act, the Commission shall submit a report 
on the study required under subsection (b) to— 
(A) the Committee on Banking, Housing, and Urban 
Affairs of the Senate; and 
(B) the Committee on Financial Services of the House 
of Representatives. 
(2) CONTENT REQUIREMENTS.—The report required under 
paragraph (1) shall describe the findings, conclusions, and rec-
ommendations of the Commission from the study required 
under subsection (b), including— 
(A) a description of the considerations, analysis, and 
public and industry input that the Commission considered, 
as required under subsection (b), to make such findings, 
conclusions, and policy recommendations; and 
(B) an analysis of whether any identified legal or regu-
latory gaps, shortcomings, or overlap in legal or regulatory 
standards in the protection of retail customers relating 
to the standards of care for brokers, dealers, investment 
advisers, persons associated with brokers or dealers, and 
persons associated with investment advisers for providing 
personalized investment advice about securities to retail 
customers. 
(e) PUBLIC COMMENT.—The Commission shall seek and consider 
public input, comments, and data in order to prepare the report 
required under subsection (d). 
(f) RULEMAKING.—The Commission may commence a rule-
making, as necessary or appropriate in the public interest and 
for the protection of retail customers (and such other customers 
as the Commission may by rule provide), to address the legal 
or regulatory standards of care for brokers, dealers, investment 
advisers, persons associated with brokers or dealers, and persons 
associated with investment advisers for providing personalized
H. R. 4173—453 
investment advice about securities to such retail customers. The 
Commission shall consider the findings conclusions, and rec-
ommendations of the study required under subsection (b). 
(g) AUTHORITY TO ESTABLISH A FIDUCIARY DUTY FOR BROKERS 
AND DEALERS.— 
(1) SECURITIES EXCHANGE ACT OF 1934.—Section 15 of the 
Securities Exchange Act of 1934 (15 U.S.C. 78o) is amended 
by adding at the end the following: 
‘‘(k) STANDARD OF CONDUCT.— 
‘‘(1) IN GENERAL.—Notwithstanding any other provision of 
this Act or the Investment Advisers Act of 1940, the Commis-
sion may promulgate rules to provide that, with respect to 
a broker or dealer, when providing personalized investment 
advice about securities to a retail customer (and such other 
customers as the Commission may by rule provide), the 
standard of conduct for such broker or dealer with respect 
to such customer shall be the same as the standard of conduct 
applicable to an investment adviser under section 211 of the 
Investment Advisers Act of 1940. The receipt of compensation 
based on commission or other standard compensation for the 
sale of securities shall not, in and of itself, be considered 
a violation of such standard applied to a broker or dealer. 
Nothing in this section shall require a broker or dealer or 
registered representative to have a continuing duty of care 
or loyalty to the customer after providing personalized invest-
ment advice about securities. 
‘‘(2) DISCLOSURE OF RANGE OF PRODUCTS OFFERED.—Where 
a broker or dealer sells only proprietary or other limited range 
of products, as determined by the Commission, the Commission 
may by rule require that such broker or dealer provide notice 
to each retail customer and obtain the consent or acknowledg-
ment of the customer. The sale of only proprietary or other 
limited range of products by a broker or dealer shall not, 
in and of itself, be considered a violation of the standard set 
forth in paragraph (1). 
‘‘(l) OTHER MATTERS.—The Commission shall— 
‘‘(1) facilitate the provision of simple and clear disclosures 
to investors regarding the terms of their relationships with 
brokers, dealers, and investment advisers, including any mate-
rial conflicts of interest; and 
‘‘(2) examine and, where appropriate, promulgate rules 
prohibiting or restricting certain sales practices, conflicts of 
interest, and compensation schemes for brokers, dealers, and 
investment advisers that the Commission deems contrary to 
the public interest and the protection of investors.’’. 
(2) INVESTMENT ADVISERS ACT OF 1940.—Section 211 of the 
Investment Advisers Act of 1940, is further amended by adding 
at the end the following new subsections: 
‘‘(g) STANDARD OF CONDUCT.— 
‘‘(1) IN GENERAL.—The Commission may promulgate rules 
to provide that the standard of conduct for all brokers, dealers, 
and investment advisers, when providing personalized invest-
ment advice about securities to retail customers (and such 
other customers as the Commission may by rule provide), shall 
be to act in the best interest of the customer without regard 
to the financial or other interest of the broker, dealer, or invest-
ment adviser providing the advice. In accordance with such
H. R. 4173—454 
rules, any material conflicts of interest shall be disclosed and 
may be consented to by the customer. Such rules shall provide 
that such standard of conduct shall be no less stringent than 
the standard applicable to investment advisers under section 
206(1) and (2) of this Act when providing personalized invest-
ment advice about securities, except the Commission shall not 
ascribe a meaning to the term ‘customer’ that would include 
an investor in a private fund managed by an investment 
adviser, where such private fund has entered into an advisory 
contract with such adviser. The receipt of compensation based 
on commission or fees shall not, in and of itself, be considered 
a violation of such standard applied to a broker, dealer, or 
investment adviser. 
‘‘(2) RETAIL CUSTOMER DEFINED.—For purposes of this sub-
section, the term ‘retail customer’ means a natural person, 
or the legal representative of such natural person, who— 
‘‘(A) receives personalized investment advice about 
securities from a broker, dealer, or investment adviser; 
and 
‘‘(B) uses such advice primarily for personal, family, 
or household purposes. 
‘‘(h) OTHER MATTERS.—The Commission shall— 
‘‘(1) facilitate the provision of simple and clear disclosures 
to investors regarding the terms of their relationships with 
brokers, dealers, and investment advisers, including any mate-
rial conflicts of interest; and 
‘‘(2) examine and, where appropriate, promulgate rules 
prohibiting or restricting certain sales practices, conflicts of 
interest, and compensation schemes for brokers, dealers, and 
investment advisers that the Commission deems contrary to 
the public interest and the protection of investors.’’. 
(h) HARMONIZATION OF ENFORCEMENT.— 
(1) SECURITIES EXCHANGE ACT OF 1934.—Section 15 of the 
Securities Exchange Act of 1934, as amended by subsection 
(g)(1), is further amended by adding at the end the following 
new subsection: 
‘‘(m) HARMONIZATION
OF
ENFORCEMENT.—The enforcement 
authority of the Commission with respect to violations of the 
standard of conduct applicable to a broker or dealer providing 
personalized investment advice about securities to a retail customer 
shall include— 
‘‘(1) the enforcement authority of the Commission with 
respect to such violations provided under this Act; and 
‘‘(2) the enforcement authority of the Commission with 
respect to violations of the standard of conduct applicable to 
an investment adviser under the Investment Advisers Act of 
1940, including the authority to impose sanctions for such 
violations, and 
the Commission shall seek to prosecute and sanction violators of 
the standard of conduct applicable to a broker or dealer providing 
personalized investment advice about securities to a retail customer 
under this Act to same extent as the Commission prosecutes and 
sanctions violators of the standard of conduct applicable to an 
investment advisor under the Investment Advisers Act of 1940.’’. 
(2) INVESTMENT ADVISERS ACT OF 1940.—Section 211 of the 
Investment Advisers Act of 1940, as amended by subsection
H. R. 4173—455 
(g)(2), is further amended by adding at the end the following 
new subsection: 
‘‘(i) HARMONIZATION
OF
ENFORCEMENT.—The enforcement 
authority of the Commission with respect to violations of the 
standard of conduct applicable to an investment adviser shall 
include— 
‘‘(1) the enforcement authority of the Commission with 
respect to such violations provided under this Act; and 
‘‘(2) the enforcement authority of the Commission with 
respect to violations of the standard of conduct applicable to 
a broker or dealer providing personalized investment advice 
about securities to a retail customer under the Securities 
Exchange Act of 1934, including the authority to impose sanc-
tions for such violations, and 
the Commission shall seek to prosecute and sanction violators of 
the standard of conduct applicable to an investment adviser under 
this Act to same extent as the Commission prosecutes and sanctions 
violators of the standard of conduct applicable to a broker or dealer 
providing personalized investment advice about securities to a retail 
customer under the Securities Exchange Act of 1934.’’. 
SEC. 914. STUDY ON ENHANCING INVESTMENT ADVISER EXAMINA-
TIONS. 
(a) STUDY REQUIRED.— 
(1) IN GENERAL.—The Commission shall review and analyze 
the need for enhanced examination and enforcement resources 
for investment advisers. 
(2) AREAS OF CONSIDERATION.—The study required by this 
subsection shall examine— 
(A) the number and frequency of examinations of 
investment advisers by the Commission over the 5 years 
preceding the date of the enactment of this subtitle; 
(B) the extent to which having Congress authorize 
the Commission to designate one or more self-regulatory 
organizations to augment the Commission’s efforts in over-
seeing investment advisers would improve the frequency 
of examinations of investment advisers; and 
(C) current and potential approaches to examining the 
investment advisory activities of dually registered broker- 
dealers and investment advisers or affiliated broker-dealers 
and investment advisers. 
(b) REPORT
REQUIRED.—The Commission shall report its 
findings to the Committee on Financial Services of the House of 
Representatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate, not later than 180 days after the 
date of enactment of this subtitle, and shall use such findings 
to revise its rules and regulations, as necessary. The report shall 
include a discussion of regulatory or legislative steps that are 
recommended or that may be necessary to address concerns identi-
fied in the study. 
SEC. 915. OFFICE OF THE INVESTOR ADVOCATE. 
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 
78d) is amended by adding at the end the following: 
‘‘(g) OFFICE OF THE INVESTOR ADVOCATE.— 
‘‘(1) OFFICE ESTABLISHED.—There is established within the 
Commission the Office of the Investor Advocate (in this sub-
section referred to as the ‘Office’).
H. R. 4173—456 
‘‘(2) INVESTOR ADVOCATE.— 
‘‘(A) IN
GENERAL.—The head of the Office shall be 
the Investor Advocate, who shall— 
‘‘(i) report directly to the Chairman; and 
‘‘(ii) be appointed by the Chairman, in consultation 
with the Commission, from among individuals having 
experience in advocating for the interests of investors 
in securities and investor protection issues, from the 
perspective of investors. 
‘‘(B) COMPENSATION.—The annual rate of pay for the 
Investor Advocate shall be equal to the highest rate of 
annual pay for other senior executives who report to the 
Chairman of the Commission. 
‘‘(C) LIMITATION
ON
SERVICE.—An individual who 
serves as the Investor Advocate may not be employed by 
the Commission— 
‘‘(i) during the 2-year period ending on the date 
of appointment as Investor Advocate; or 
‘‘(ii) during the 5-year period beginning on the 
date on which the person ceases to serve as the 
Investor Advocate. 
‘‘(3) STAFF OF OFFICE.—The Investor Advocate, after con-
sultation with the Chairman of the Commission, may retain 
or employ independent counsel, research staff, and service staff, 
as the Investor Advocate deems necessary to carry out the 
functions, powers, and duties of the Office. 
‘‘(4) FUNCTIONS OF THE INVESTOR ADVOCATE.—The Investor 
Advocate shall— 
‘‘(A) assist retail investors in resolving significant prob-
lems such investors may have with the Commission or 
with self-regulatory organizations; 
‘‘(B) identify areas in which investors would benefit 
from changes in the regulations of the Commission or the 
rules of self-regulatory organizations; 
‘‘(C) identify problems that investors have with finan-
cial service providers and investment products; 
‘‘(D) analyze the potential impact on investors of— 
‘‘(i) proposed regulations of the Commission; and 
‘‘(ii) proposed rules of self-regulatory organizations 
registered under this title; and 
‘‘(E) to the extent practicable, propose to the Commis-
sion changes in the regulations or orders of the Commission 
and to Congress any legislative, administrative, or per-
sonnel changes that may be appropriate to mitigate prob-
lems identified under this paragraph and to promote the 
interests of investors. 
‘‘(5) ACCESS TO DOCUMENTS.—The Commission shall ensure 
that the Investor Advocate has full access to the documents 
of the Commission and any self-regulatory organization, as 
necessary to carry out the functions of the Office. 
‘‘(6) ANNUAL REPORTS.— 
‘‘(A) REPORT ON OBJECTIVES.— 
‘‘(i) IN GENERAL.—Not later than June 30 of each 
year after 2010, the Investor Advocate shall submit 
to the Committee on Banking, Housing, and Urban 
Affairs of the Senate and the Committee on Financial 
Services of the House of Representatives a report on
H. R. 4173—457 
the objectives of the Investor Advocate for the following 
fiscal year. 
‘‘(ii) CONTENTS.—Each report required under 
clause (i) shall contain full and substantive analysis 
and explanation. 
‘‘(B) REPORT ON ACTIVITIES.— 
‘‘(i) IN GENERAL.—Not later than December 31 of 
each year after 2010, the Investor Advocate shall 
submit to the Committee on Banking, Housing, and 
Urban Affairs of the Senate and the Committee on 
Financial Services of the House of Representatives a 
report on the activities of the Investor Advocate during 
the immediately preceding fiscal year. 
‘‘(ii) CONTENTS.—Each report required under 
clause (i) shall include— 
‘‘(I) appropriate statistical information and full 
and substantive analysis; 
‘‘(II) information on steps that the Investor 
Advocate has taken during the reporting period 
to improve investor services and the responsive-
ness of the Commission and self-regulatory 
organizations to investor concerns; 
‘‘(III) a summary of the most serious problems 
encountered by investors during the reporting 
period; 
‘‘(IV) an inventory of the items described in 
subclause (III) that includes— 
‘‘(aa) identification of any action taken by 
the 
Commission 
or 
the 
self-regulatory 
organization and the result of such action; 
‘‘(bb) the length of time that each item 
has remained on such inventory; and 
‘‘(cc) for items on which no action has 
been taken, the reasons for inaction, and an 
identification of any official who is responsible 
for such action; 
‘‘(V) recommendations for such administrative 
and legislative actions as may be appropriate to 
resolve problems encountered by investors; and 
‘‘(VI) any other information, as determined 
appropriate by the Investor Advocate. 
‘‘(iii) INDEPENDENCE.—Each report required under 
this paragraph shall be provided directly to the 
Committees listed in clause (i) without any prior review 
or comment from the Commission, any commissioner, 
any other officer or employee of the Commission, or 
the Office of Management and Budget. 
‘‘(iv) CONFIDENTIALITY.—No report required under 
clause (i) may contain confidential information. 
‘‘(7) REGULATIONS.—The Commission shall, by regulation, 
establish procedures requiring a formal response to all rec-
ommendations submitted to the Commission by the Investor 
Advocate, not later than 3 months after the date of such submis-
sion.’’.
H. R. 4173—458 
SEC. 916. STREAMLINING OF FILING PROCEDURES FOR SELF-REGU-
LATORY ORGANIZATIONS. 
(a) FILING
PROCEDURES.—Section 19(b) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by striking 
paragraph (2) (including the undesignated matter immediately fol-
lowing subparagraph (B)) and inserting the following: 
‘‘(2) APPROVAL PROCESS.— 
‘‘(A) APPROVAL PROCESS ESTABLISHED.— 
‘‘(i) IN
GENERAL.—Except as provided in clause 
(ii), not later than 45 days after the date of publication 
of a proposed rule change under paragraph (1), the 
Commission shall— 
‘‘(I) by order, approve or disapprove the pro-
posed rule change; or 
‘‘(II) institute proceedings under subparagraph 
(B) to determine whether the proposed rule change 
should be disapproved. 
‘‘(ii) EXTENSION OF TIME PERIOD.—The Commission 
may extend the period established under clause (i) 
by not more than an additional 45 days, if— 
‘‘(I) the Commission determines that a longer 
period is appropriate and publishes the reasons 
for such determination; or 
‘‘(II) the self-regulatory organization that filed 
the proposed rule change consents to the longer 
period. 
‘‘(B) PROCEEDINGS.— 
‘‘(i) NOTICE AND HEARING.—If the Commission does 
not approve or disapprove a proposed rule change 
under subparagraph (A), the Commission shall provide 
to the self-regulatory organization that filed the pro-
posed rule change— 
‘‘(I) notice of the grounds for disapproval under 
consideration; and 
‘‘(II) opportunity for hearing, to be concluded 
not later than 180 days after the date of publica-
tion of notice of the filing of the proposed rule 
change. 
‘‘(ii) ORDER OF APPROVAL OR DISAPPROVAL.— 
‘‘(I) IN GENERAL.—Except as provided in sub-
clause (II), not later than 180 days after the date 
of publication under paragraph (1), the Commis-
sion shall issue an order approving or disapproving 
the proposed rule change. 
‘‘(II) 
EXTENSION
OF
TIME
PERIOD.—The 
Commission may extend the period for issuance 
under clause (I) by not more than 60 days, if— 
‘‘(aa) the Commission determines that a 
longer period is appropriate and publishes the 
reasons for such determination; or 
‘‘(bb) the self-regulatory organization that 
filed the proposed rule change consents to the 
longer period. 
‘‘(C) STANDARDS FOR APPROVAL AND DISAPPROVAL.— 
‘‘(i) APPROVAL.—The Commission shall approve a 
proposed rule change of a self-regulatory organization 
if it finds that such proposed rule change is consistent
H. R. 4173—459 
with the requirements of this title and the rules and 
regulations issued under this title that are applicable 
to such organization. 
‘‘(ii) DISAPPROVAL.—The Commission shall dis-
approve a proposed rule change of a self-regulatory 
organization if it does not make a finding described 
in clause (i). 
‘‘(iii) TIME FOR APPROVAL.—The Commission may 
not approve a proposed rule change earlier than 30 
days after the date of publication under paragraph 
(1), unless the Commission finds good cause for so 
doing and publishes the reason for the finding. 
‘‘(D) RESULT OF FAILURE TO INSTITUTE OR CONCLUDE 
PROCEEDINGS.—A proposed rule change shall be deemed 
to have been approved by the Commission, if— 
‘‘(i) the Commission does not approve or disapprove 
the proposed rule change or begin proceedings under 
subparagraph (B) within the period described in 
subparagraph (A); or 
‘‘(ii) the Commission does not issue an order 
approving or disapproving the proposed rule change 
under subparagraph (B) within the period described 
in subparagraph (B)(ii). 
‘‘(E) PUBLICATION DATE BASED ON FEDERAL REGISTER 
PUBLISHING.—For purposes of this paragraph, if, after filing 
a proposed rule change with the Commission pursuant 
to paragraph (1), a self-regulatory organization publishes 
a notice of the filing of such proposed rule change, together 
with the substantive terms of such proposed rule change, 
on a publicly accessible website, the Commission shall 
thereafter send the notice to the Federal Register for 
publication thereof under paragraph (1) within 15 days 
of the date on which such website publication is made. 
If the Commission fails to send the notice for publication 
thereof within such 15 day period, then the date of publica-
tion shall be deemed to be the date on which such website 
publication was made. 
‘‘(F) RULEMAKING.— 
‘‘(i) IN GENERAL.—Not later than 180 days after 
the date of enactment of the Investor Protection and 
Securities Reform Act of 2010, after consultation with 
other regulatory agencies, the Commission shall 
promulgate rules setting forth the procedural require-
ments of the proceedings required under this para-
graph. 
‘‘(ii) NOTICE AND COMMENT NOT REQUIRED.—The 
rules promulgated by the Commission under clause 
(i) are not required to include republication of proposed 
rule changes or solicitation of public comment.’’. 
(b) CLARIFICATION OF FILING DATE.— 
(1) RULE OF CONSTRUCTION.—Section 19(b) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by adding 
at the end the following: 
‘‘(10) RULE OF CONSTRUCTION RELATING TO FILING DATE 
OF PROPOSED RULE CHANGES.— 
‘‘(A) IN GENERAL.—For purposes of this subsection, the 
date of filing of a proposed rule change shall be deemed
H. R. 4173—460 
to be the date on which the Commission receives the pro-
posed rule change. 
‘‘(B) EXCEPTION.—A proposed rule change has not been 
received by the Commission for purposes of subparagraph 
(A) if, not later than 7 business days after the date of 
receipt by the Commission, the Commission notifies the 
self-regulatory organization that such proposed rule change 
does not comply with the rules of the Commission relating 
to the required form of a proposed rule change, except 
that if the Commission determines that the proposed rule 
change is unusually lengthy and is complex or raises novel 
regulatory issues, the Commission shall inform the self- 
regulatory organization of such determination not later 
than 7 business days after the date of receipt by the 
Commission and, for the purposes of subparagraph (A), 
a proposed rule change has not been received by the 
Commission, if, not later than 21 days after the date of 
receipt by the Commission, the Commission notifies the 
self-regulatory organization that such proposed rule change 
does not comply with the rules of the Commission relating 
to the required form of a proposed rule change.’’. 
(2) PUBLICATION.—Section 19(b)(1) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78s(b)(1)) is amended by 
striking ‘‘upon’’ and inserting ‘‘as soon as practicable after 
the date of’’. 
(c) EFFECTIVE DATE OF PROPOSED RULES.—Section 19(b)(3) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(3)) is 
amended— 
(1) in subparagraph (A)— 
(A) by striking ‘‘may take effect’’ and inserting ‘‘shall 
take effect’’; and 
(B) by inserting ‘‘on any person, whether or not the 
person is a member of the self-regulatory organization’’ 
after ‘‘charge imposed by the self-regulatory organization’’; 
and 
(2) in subparagraph (C)— 
(A) by amending the second sentence to read as follows: 
‘‘At any time within the 60-day period beginning on the 
date of filing of such a proposed rule change in accordance 
with the provisions of paragraph (1), the Commission sum-
marily may temporarily suspend the change in the rules 
of the self-regulatory organization made thereby, if it 
appears to the Commission that such action is necessary 
or appropriate in the public interest, for the protection 
of investors, or otherwise in furtherance of the purposes 
of this title.’’; 
(B) by inserting after the second sentence the following: 
‘‘If the Commission takes such action, the Commission 
shall institute proceedings under paragraph (2)(B) to deter-
mine whether the proposed rule should be approved or 
disapproved.’’; and 
(C) in the third sentence, by striking ‘‘the preceding 
sentence’’ and inserting ‘‘this subparagraph’’. 
(d) CONFORMING CHANGE.—Section 19(b)(4)(D) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78s(b)(4)(D)) is amended to read 
as follows:
H. R. 4173—461 
‘‘(D)(i) The Commission shall order the temporary 
suspension of any change in the rules of a clearing agency 
made by a proposed rule change that has taken effect 
under paragraph (3), if the appropriate regulatory agency 
for the clearing agency notifies the Commission not later 
than 30 days after the date on which the proposed rule 
change was filed of— 
‘‘(I) the determination by the appropriate regu-
latory agency that the rules of such clearing agency, 
as so changed, may be inconsistent with the safe-
guarding of securities or funds in the custody or control 
of such clearing agency or for which it is responsible; 
and 
‘‘(II) the reasons for the determination described 
in subclause (I). 
‘‘(ii) If the Commission takes action under clause (i), 
the Commission shall institute proceedings under para-
graph (2)(B) to determine if the proposed rule change 
should be approved or disapproved.’’. 
SEC. 917. STUDY REGARDING FINANCIAL LITERACY AMONG INVES-
TORS. 
(a) IN GENERAL.—The Commission shall conduct a study to 
identify— 
(1) the existing level of financial literacy among retail 
investors, including subgroups of investors identified by the 
Commission; 
(2) methods to improve the timing, content, and format 
of disclosures to investors with respect to financial inter-
mediaries, investment products, and investment services; 
(3) the most useful and understandable relevant informa-
tion that retail investors need to make informed financial 
decisions before engaging a financial intermediary or pur-
chasing an investment product or service that is typically sold 
to retail investors, including shares of open-end companies, 
as that term is defined in section 5 of the Investment Company 
Act of 1940 (15 U.S.C. 80a–5) that are registered under section 
8 of that Act; 
(4) methods to increase the transparency of expenses and 
conflicts of interests in transactions involving investment serv-
ices and products, including shares of open-end companies 
described in paragraph (3); 
(5) the most effective existing private and public efforts 
to educate investors; and 
(6) in consultation with the Financial Literacy and Edu-
cation Commission, a strategy (including, to the extent prac-
ticable, measurable goals and objectives) to increase the finan-
cial literacy of investors in order to bring about a positive 
change in investor behavior. 
(b) REPORT.—Not later than 2 years after the date of enactment 
of this Act, the Commission shall submit a report on the study 
required under subsection (a) to— 
(1) the Committee on Banking, Housing, and Urban Affairs 
of the Senate; and 
(2) the Committee on Financial Services of the House of 
Representatives.
H. R. 4173—462 
SEC. 918. STUDY REGARDING MUTUAL FUND ADVERTISING. 
(a) IN GENERAL.—The Comptroller General of the United States 
shall conduct a study on mutual fund advertising to identify— 
(1) existing and proposed regulatory requirements for open- 
end investment company advertisements; 
(2) current marketing practices for the sale of open-end 
investment company shares, including the use of past perform-
ance data, funds that have merged, and incubator funds; 
(3) the impact of such advertising on consumers; and 
(4) recommendations to improve investor protections in 
mutual fund advertising and additional information necessary 
to ensure that investors can make informed financial decisions 
when purchasing shares. 
(b) REPORT.—Not later than 18 months after the date of enact-
ment of this Act, the Comptroller General of the United States 
shall submit a report on the results of the study conducted under 
subsection (a) to— 
(1) the Committee on Banking, Housing, and Urban Affairs 
of the United States Senate; and 
(2) the Committee on Financial Services of the House of 
Representatives. 
SEC. 919. CLARIFICATION OF COMMISSION AUTHORITY TO REQUIRE 
INVESTOR DISCLOSURES BEFORE PURCHASE OF INVEST-
MENT PRODUCTS AND SERVICES. 
Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 
78o) is amended by adding at the end the following: 
‘‘(n) DISCLOSURES TO RETAIL INVESTORS.— 
‘‘(1) IN GENERAL.—Notwithstanding any other provision of 
the securities laws, the Commission may issue rules designating 
documents or information that shall be provided by a broker 
or dealer to a retail investor before the purchase of an invest-
ment product or service by the retail investor. 
‘‘(2) CONSIDERATIONS.—In developing any rules under para-
graph (1), the Commission shall consider whether the rules 
will promote investor protection, efficiency, competition, and 
capital formation. 
‘‘(3) FORM AND CONTENTS OF DOCUMENTS AND INFORMA-
TION.—Any documents or information designated under a rule 
promulgated under paragraph (1) shall— 
‘‘(A) be in a summary format; and 
‘‘(B) contain clear and concise information about— 
‘‘(i) investment objectives, strategies, costs, and 
risks; and 
‘‘(ii) any compensation or other financial incentive 
received by a broker, dealer, or other intermediary 
in connection with the purchase of retail investment 
products.’’. 
SEC. 919A. STUDY ON CONFLICTS OF INTEREST. 
(a) IN GENERAL.—The Comptroller General of the United States 
shall conduct a study— 
(1) to identify and examine potential conflicts of interest 
that exist between the staffs of the investment banking and 
equity and fixed income securities analyst functions within 
the same firm; and
H. R. 4173—463 
(2) to make recommendations to Congress designed to pro-
tect investors in light of such conflicts. 
(b) CONSIDERATIONS.—In conducting the study under subsection 
(a), the Comptroller General shall— 
(1) consider— 
(A) the potential for investor harm resulting from con-
flicts, including consideration of the forms of misconduct 
engaged in by the several securities firms and individuals 
that entered into the Global Analyst Research Settlements 
in 2003 (also known as the ‘‘Global Settlement’’); 
(B) the nature and benefits of the undertakings to 
which those firms agreed in enforcement proceedings, 
including firewalls between research and investment 
banking, separate reporting lines, dedicated legal and 
compliance staffs, allocation of budget, physical separation, 
compensation, employee performance evaluations, coverage 
decisions, limitations on soliciting investment banking busi-
ness, disclosures, transparency, and other measures; 
(C) whether any such undertakings should be codified 
and applied permanently to securities firms, or whether 
the Commission should adopt rules applying any such 
undertakings to securities firms; and 
(D) whether to recommend regulatory or legislative 
measures designed to mitigate possible adverse con-
sequences to investors arising from the conflicts of interest 
or to enhance investor protection or confidence in the integ-
rity of the securities markets; and 
(2) consult with State attorneys general, State securities 
officials, the Commission, the Financial Industry Regulatory 
Authority (‘‘FINRA’’), NYSE Regulation, investor advocates, 
brokers, dealers, retail investors, institutional investors, and 
academics. 
(c) REPORT.—The Comptroller General shall submit a report 
on the results of the study required by this section to the Committee 
on Banking, Housing, and Urban Affairs of the Senate and the 
Committee on Financial Services of the House of Representatives, 
not later than 18 months after the date of enactment of this Act. 
SEC. 919B. STUDY ON IMPROVED INVESTOR ACCESS TO INFORMATION 
ON INVESTMENT ADVISERS AND BROKER-DEALERS. 
(a) STUDY.— 
(1) IN GENERAL.—Not later than 6 months after the date 
of enactment of this Act, the Commission shall complete a 
study, including recommendations, of ways to improve the 
access of investors to registration information (including dis-
ciplinary actions, regulatory, judicial, and arbitration pro-
ceedings, and other information) about registered and pre-
viously registered investment advisers, associated persons of 
investment advisers, brokers and dealers and their associated 
persons on the existing Central Registration Depository and 
Investment Adviser Registration Depository systems, as well 
as identify additional information that should be made publicly 
available. 
(2) CONTENTS.—The study required by subsection (a) shall 
include an analysis of the advantages and disadvantages of 
further centralizing access to the information contained in the 
2 systems, including—
H. R. 4173—464 
(A) identification of those data pertinent to investors; 
and 
(B) the identification of the method and format for 
displaying and publishing such data to enhance accessi-
bility by and utility to investors. 
(b) IMPLEMENTATION.—Not later than 18 months after the date 
of completion of the study required by subsection (a), the Commis-
sion shall implement any recommendations of the study. 
SEC. 919C. STUDY ON FINANCIAL PLANNERS AND THE USE OF FINAN-
CIAL DESIGNATIONS. 
(a) IN GENERAL.—The Comptroller General of the United States 
shall conduct a study to evaluate— 
(1) the effectiveness of State and Federal regulations to 
protect investors and other consumers from individuals who 
hold themselves out as financial planners through the use 
of misleading titles, designations, or marketing materials; 
(2) current State and Federal oversight structure and regu-
lations for financial planners; and 
(3) legal or regulatory gaps in the regulation of financial 
planners and other individuals who provide or offer to provide 
financial planning services to consumers. 
(b) CONSIDERATIONS.—In conducting the study required under 
subsection (a), the Comptroller General shall consider— 
(1) the role of financial planners in providing advice 
regarding the management of financial resources, including 
investment planning, income tax planning, education planning, 
retirement planning, estate planning, and risk management; 
(2) whether current regulations at the State and Federal 
level provide adequate ethical and professional standards for 
financial planners; 
(3) the possible risk posed to investors and other consumers 
by individuals who hold themselves out as financial planners 
or as otherwise providing financial planning services in connec-
tion with the sale of financial products, including insurance 
and securities; 
(4) the possible risk posed to investors and other consumers 
by individuals who otherwise use titles, designations, or mar-
keting materials in a misleading way in connection with the 
delivery of financial advice; 
(6) the ability of investors and other consumers to under-
stand licensing requirements and standards of care that apply 
to individuals who hold themselves out as financial planners 
or as otherwise providing financial planning services; 
(7) the possible benefits to investors and other consumers 
of regulation and professional oversight of financial planners; 
and 
(8) any other consideration that the Comptroller General 
deems necessary or appropriate to effectively execute the study 
required under subsection (a). 
(c) RECOMMENDATIONS.—In providing recommendations for the 
appropriate regulation of financial planners and other individuals 
who provide or offer to provide financial planning services, in order 
to protect investors and other consumers of financial planning serv-
ices, the Comptroller General shall consider—
H. R. 4173—465 
(1) the appropriate structure for regulation of financial 
planners and individuals providing financial planning services; 
and 
(2) the appropriate scope of the regulations needed to pro-
tect investors and other consumers, including but not limited 
to the need to establish competency standards, practice stand-
ards, ethical guidelines, disciplinary authority, and trans-
parency to investors and other consumers. 
(d) REPORT.— 
(1) IN GENERAL.—Not later than 180 days after the date 
of enactment of this Act, the Comptroller General shall submit 
a report on the study required under subsection (a) to— 
(A) the Committee on Banking, Housing, and Urban 
Affairs of the Senate; 
(B) the Special Committee on Aging of the Senate; 
and 
(C) the Committee on Financial Services of the House 
of Representatives. 
(2) CONTENT REQUIREMENTS.—The report required under 
paragraph (1) shall describe the findings and determinations 
made by the Comptroller General in carrying out the study 
required under subsection (a), including a description of the 
considerations, analysis, and government, public, industry, non-
profit and consumer input that the Comptroller General consid-
ered to make such findings, conclusions, and legislative, regu-
latory, or other recommendations. 
SEC. 919D. OMBUDSMAN. 
Section 4(g) of the Securities Exchange Act of 1934, as added 
by section 914, is amended by adding at the end the following: 
‘‘(8) OMBUDSMAN.— 
‘‘(A) APPOINTMENT.—Not later than 180 days after the 
date on which the first Investor Advocate is appointed 
under paragraph (2)(A)(i), the Investor Advocate shall 
appoint an Ombudsman, who shall report directly to the 
Investor Advocate. 
‘‘(B) 
DUTIES.—The 
Ombudsman 
appointed 
under 
subparagraph (A) shall— 
‘‘(i) act as a liaison between the Commission and 
any retail investor in resolving problems that retail 
investors may have with the Commission or with self- 
regulatory organizations; 
‘‘(ii) review and make recommendations regarding 
policies and procedures to encourage persons to present 
questions to the Investor Advocate regarding compli-
ance with the securities laws; and 
‘‘(iii) establish safeguards to maintain the confiden-
tiality 
of 
communications 
between 
the 
persons 
described in clause (ii) and the Ombudsman. 
‘‘(C) LIMITATION.—In carrying out the duties of the 
Ombudsman under subparagraph (B), the Ombudsman 
shall utilize personnel of the Commission to the extent 
practicable. Nothing in this paragraph shall be construed 
as replacing, altering, or diminishing the activities of any 
ombudsman or similar office of any other agency. 
‘‘(D) REPORT.—The Ombudsman shall submit a semi-
annual report to the Investor Advocate that describes the
H. R. 4173—466 
activities and evaluates the effectiveness of the Ombuds-
man during the preceding year. The Investor Advocate 
shall include the reports required under this section in 
the reports required to be submitted by the Inspector Advo-
cate under paragraph (6).’’. 
Subtitle B—Increasing Regulatory 
Enforcement and Remedies 
SEC. 921. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE 
ARBITRATION. 
(a) AMENDMENT TO SECURITIES EXCHANGE ACT OF 1934.—Sec-
tion 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o), 
as amended by this title, is further amended by adding at the 
end the following new subsection: 
‘‘(o) AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRA-
TION.—The Commission, by rule, may prohibit, or impose conditions 
or limitations on the use of, agreements that require customers 
or clients of any broker, dealer, or municipal securities dealer 
to arbitrate any future dispute between them arising under the 
Federal securities laws, the rules and regulations thereunder, or 
the rules of a self-regulatory organization if it finds that such 
prohibition, imposition of conditions, or limitations are in the public 
interest and for the protection of investors.’’. 
(b) AMENDMENT TO INVESTMENT ADVISERS ACT OF 1940.—Sec-
tion 205 of the Investment Advisers Act of 1940 (15 U.S.C. 80b– 
5) is amended by adding at the end the following new subsection: 
‘‘(f) AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRA-
TION.—The Commission, by rule, may prohibit, or impose conditions 
or limitations on the use of, agreements that require customers 
or clients of any investment adviser to arbitrate any future dispute 
between them arising under the Federal securities laws, the rules 
and regulations thereunder, or the rules of a self-regulatory 
organization if it finds that such prohibition, imposition of condi-
tions, or limitations are in the public interest and for the protection 
of investors.’’. 
SEC. 922. WHISTLEBLOWER PROTECTION. 
(a) IN GENERAL.—The Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.) is amended by inserting after section 21E 
the following: 
‘‘SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND PROTEC-
TION. 
‘‘(a) DEFINITIONS.—In this section the following definitions shall 
apply: 
‘‘(1) COVERED JUDICIAL OR ADMINISTRATIVE ACTION.—The 
term ‘covered judicial or administrative action’ means any 
judicial or administrative action brought by the Commission 
under the securities laws that results in monetary sanctions 
exceeding $1,000,000. 
‘‘(2) FUND.—The term ‘Fund’ means the Securities and 
Exchange Commission Investor Protection Fund. 
‘‘(3) ORIGINAL INFORMATION.—The term ‘original informa-
tion’ means information that—
H. R. 4173—467 
‘‘(A) is derived from the independent knowledge or 
analysis of a whistleblower; 
‘‘(B) is not known to the Commission from any other 
source, unless the whistleblower is the original source of 
the information; and 
‘‘(C) is not exclusively derived from an allegation made 
in a judicial or administrative hearing, in a governmental 
report, hearing, audit, or investigation, or from the news 
media, unless the whistleblower is a source of the informa-
tion. 
‘‘(4) MONETARY SANCTIONS.—The term ‘monetary sanctions’, 
when used with respect to any judicial or administrative action, 
means— 
‘‘(A) any monies, including penalties, disgorgement, 
and interest, ordered to be paid; and 
‘‘(B) any monies deposited into a disgorgement fund 
or other fund pursuant to section 308(b) of the Sarbanes- 
Oxley Act of 2002 (15 U.S.C. 7246(b)), as a result of such 
action or any settlement of such action. 
‘‘(5) RELATED ACTION.—The term ‘related action’, when used 
with respect to any judicial or administrative action brought 
by the Commission under the securities laws, means any 
judicial or administrative action brought by an entity described 
in subclauses (I) through (IV) of subsection (h)(2)(D)(i) that 
is based upon the original information provided by a whistle-
blower pursuant to subsection (a) that led to the successful 
enforcement of the Commission action. 
‘‘(6) WHISTLEBLOWER.—The term ‘whistleblower’ means any 
individual who provides, or 2 or more individuals acting jointly 
who provide, information relating to a violation of the securities 
laws to the Commission, in a manner established, by rule 
or regulation, by the Commission. 
‘‘(b) AWARDS.— 
‘‘(1) IN GENERAL.—In any covered judicial or administrative 
action, or related action, the Commission, under regulations 
prescribed by the Commission and subject to subsection (c), 
shall pay an award or awards to 1 or more whistleblowers 
who voluntarily provided original information to the Commis-
sion that led to the successful enforcement of the covered 
judicial or administrative action, or related action, in an aggre-
gate amount equal to— 
‘‘(A) not less than 10 percent, in total, of what has 
been collected of the monetary sanctions imposed in the 
action or related actions; and 
‘‘(B) not more than 30 percent, in total, of what has 
been collected of the monetary sanctions imposed in the 
action or related actions. 
‘‘(2) PAYMENT OF AWARDS.—Any amount paid under para-
graph (1) shall be paid from the Fund. 
‘‘(c) DETERMINATION
OF
AMOUNT
OF
AWARD; DENIAL
OF 
AWARD.— 
‘‘(1) DETERMINATION OF AMOUNT OF AWARD.— 
‘‘(A) DISCRETION.—The determination of the amount 
of an award made under subsection (b) shall be in the 
discretion of the Commission. 
‘‘(B) CRITERIA.—In determining the amount of an 
award made under subsection (b), the Commission—
H. R. 4173—468 
‘‘(i) shall take into consideration— 
‘‘(I) the significance of the information pro-
vided by the whistleblower to the success of the 
covered judicial or administrative action; 
‘‘(II) the degree of assistance provided by the 
whistleblower and any legal representative of the 
whistleblower in a covered judicial or administra-
tive action; 
‘‘(III) 
the 
programmatic 
interest 
of 
the 
Commission in deterring violations of the securi-
ties laws by making awards to whistleblowers who 
provide information that lead to the successful 
enforcement of such laws; and 
‘‘(IV) such additional relevant factors as the 
Commission may establish by rule or regulation; 
and 
‘‘(ii) shall not take into consideration the balance 
of the Fund. 
‘‘(2) DENIAL OF AWARD.—No award under subsection (b) 
shall be made— 
‘‘(A) to any whistleblower who is, or was at the time 
the whistleblower acquired the original information sub-
mitted to the Commission, a member, officer, or employee 
of— 
‘‘(i) an appropriate regulatory agency; 
‘‘(ii) the Department of Justice; 
‘‘(iii) a self-regulatory organization; 
‘‘(iv) the Public Company Accounting Oversight 
Board; or 
‘‘(v) a law enforcement organization; 
‘‘(B) to any whistleblower who is convicted of a criminal 
violation related to the judicial or administrative action 
for which the whistleblower otherwise could receive an 
award under this section; 
‘‘(C) to any whistleblower who gains the information 
through the performance of an audit of financial statements 
required under the securities laws and for whom such 
submission would be contrary to the requirements of section 
10A of the Securities Exchange Act of 1934 (15 U.S.C. 
78j–1); or 
‘‘(D) to any whistleblower who fails to submit informa-
tion to the Commission in such form as the Commission 
may, by rule, require. 
‘‘(d) REPRESENTATION.— 
‘‘(1) PERMITTED REPRESENTATION.—Any whistleblower who 
makes a claim for an award under subsection (b) may be 
represented by counsel. 
‘‘(2) REQUIRED REPRESENTATION.— 
‘‘(A) IN
GENERAL.—Any whistleblower who anony-
mously makes a claim for an award under subsection (b) 
shall be represented by counsel if the whistleblower anony-
mously submits the information upon which the claim is 
based. 
‘‘(B) DISCLOSURE OF IDENTITY.—Prior to the payment 
of an award, a whistleblower shall disclose the identity 
of the whistleblower and provide such other information
H. R. 4173—469 
as the Commission may require, directly or through counsel 
for the whistleblower. 
‘‘(e) NO CONTRACT NECESSARY.—No contract with the Commis-
sion is necessary for any whistleblower to receive an award under 
subsection (b), unless otherwise required by the Commission by 
rule or regulation. 
‘‘(f) APPEALS.—Any determination made under this section, 
including whether, to whom, or in what amount to make awards, 
shall be in the discretion of the Commission. Any such determina-
tion, except the determination of the amount of an award if the 
award was made in accordance with subsection (b), may be appealed 
to the appropriate court of appeals of the United States not more 
than 30 days after the determination is issued by the Commission. 
The court shall review the determination made by the Commission 
in accordance with section 706 of title 5, United States Code. 
‘‘(g) INVESTOR PROTECTION FUND.— 
‘‘(1) FUND
ESTABLISHED.—There is established in the 
Treasury of the United States a fund to be known as the 
‘Securities and Exchange Commission Investor Protection 
Fund’. 
‘‘(2) USE OF FUND.—The Fund shall be available to the 
Commission, without further appropriation or fiscal year limita-
tion, for— 
‘‘(A) paying awards to whistleblowers as provided in 
subsection (b); and 
‘‘(B) funding the activities of the Inspector General 
of the Commission under section 4(i). 
‘‘(3) DEPOSITS AND CREDITS.— 
‘‘(A) IN GENERAL.—There shall be deposited into or 
credited to the Fund an amount equal to— 
‘‘(i) any monetary sanction collected by the 
Commission in any judicial or administrative action 
brought by the Commission under the securities laws 
that is not added to a disgorgement fund or other 
fund under section 308 of the Sarbanes-Oxley Act of 
2002 (15 U.S.C. 7246) or otherwise distributed to vic-
tims of a violation of the securities laws, or the rules 
and regulations thereunder, underlying such action, 
unless the balance of the Fund at the time the mone-
tary sanction is collected exceeds $300,000,000; 
‘‘(ii) 
any 
monetary 
sanction 
added 
to 
a 
disgorgement fund or other fund under section 308 
of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246) 
that is not distributed to the victims for whom the 
Fund was established, unless the balance of the 
disgorgement fund at the time the determination is 
made not to distribute the monetary sanction to such 
victims exceeds $200,000,000; and 
‘‘(iii) all income from investments made under 
paragraph (4). 
‘‘(B) ADDITIONAL AMOUNTS.—If the amounts deposited 
into or credited to the Fund under subparagraph (A) are 
not sufficient to satisfy an award made under subsection 
(b), there shall be deposited into or credited to the Fund 
an amount equal to the unsatisfied portion of the award 
from any monetary sanction collected by the Commission
H. R. 4173—470 
in the covered judicial or administrative action on which 
the award is based. 
‘‘(4) INVESTMENTS.— 
‘‘(A) AMOUNTS
IN
FUND
MAY
BE
INVESTED.—The 
Commission may request the Secretary of the Treasury 
to invest the portion of the Fund that is not, in the discre-
tion of the Commission, required to meet the current needs 
of the Fund. 
‘‘(B) ELIGIBLE
INVESTMENTS.—Investments shall be 
made by the Secretary of the Treasury in obligations of 
the United States or obligations that are guaranteed as 
to principal and interest by the United States, with matu-
rities suitable to the needs of the Fund as determined 
by the Commission on the record. 
‘‘(C) INTEREST AND PROCEEDS CREDITED.—The interest 
on, and the proceeds from the sale or redemption of, any 
obligations held in the Fund shall be credited to the Fund. 
‘‘(5) REPORTS TO CONGRESS.—Not later than October 30 
of each fiscal year beginning after the date of enactment of 
this subsection, the Commission shall submit to the Committee 
on Banking, Housing, and Urban Affairs of the Senate, and 
the Committee on Financial Services of the House of Represent-
atives a report on— 
‘‘(A) the whistleblower award program, established 
under this section, including— 
‘‘(i) a description of the number of awards granted; 
and 
‘‘(ii) the types of cases in which awards were 
granted during the preceding fiscal year; 
‘‘(B) the balance of the Fund at the beginning of the 
preceding fiscal year; 
‘‘(C) the amounts deposited into or credited to the 
Fund during the preceding fiscal year; 
‘‘(D) the amount of earnings on investments made 
under paragraph (4) during the preceding fiscal year; 
‘‘(E) the amount paid from the Fund during the pre-
ceding fiscal year to whistleblowers pursuant to subsection 
(b); 
‘‘(F) the balance of the Fund at the end of the preceding 
fiscal year; and 
‘‘(G) a complete set of audited financial statements, 
including— 
‘‘(i) a balance sheet; 
‘‘(ii) income statement; and 
‘‘(iii) cash flow analysis. 
‘‘(h) PROTECTION OF WHISTLEBLOWERS.— 
‘‘(1) PROHIBITION AGAINST RETALIATION.— 
‘‘(A) IN
GENERAL.—No employer may discharge, 
demote, suspend, threaten, harass, directly or indirectly, 
or in any other manner discriminate against, a whistle-
blower in the terms and conditions of employment because 
of any lawful act done by the whistleblower— 
‘‘(i) in providing information to the Commission 
in accordance with this section; 
‘‘(ii) in initiating, testifying in, or assisting in any 
investigation or judicial or administrative action of
H. R. 4173—471 
the Commission based upon or related to such informa-
tion; or 
‘‘(iii) in making disclosures that are required or 
protected under the Sarbanes-Oxley Act of 2002 (15 
U.S.C. 7201 et seq.), the Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.), including section 10A(m) 
of such Act (15 U.S.C. 78f(m)), section 1513(e) of title 
18, United States Code, and any other law, rule, or 
regulation subject to the jurisdiction of the Commis-
sion. 
‘‘(B) ENFORCEMENT.— 
‘‘(i) CAUSE OF ACTION.—An individual who alleges 
discharge or other discrimination in violation of 
subparagraph (A) may bring an action under this sub-
section in the appropriate district court of the United 
States for the relief provided in subparagraph (C). 
‘‘(ii) 
SUBPOENAS.—A 
subpoena 
requiring 
the 
attendance of a witness at a trial or hearing conducted 
under this section may be served at any place in the 
United States. 
‘‘(iii) STATUTE OF LIMITATIONS.— 
‘‘(I) IN GENERAL.—An action under this sub-
section may not be brought— 
‘‘(aa) more than 6 years after the date 
on which the violation of subparagraph (A) 
occurred; or 
‘‘(bb) more than 3 years after the date 
when facts material to the right of action are 
known or reasonably should have been known 
by the employee alleging a violation of 
subparagraph (A). 
‘‘(II) REQUIRED ACTION WITHIN 10 YEARS.—Not-
withstanding subclause (I), an action under this 
subsection may not in any circumstance be brought 
more than 10 years after the date on which the 
violation occurs. 
‘‘(C) RELIEF.—Relief for an individual prevailing in an 
action brought under subparagraph (B) shall include— 
‘‘(i) reinstatement with the same seniority status 
that the individual would have had, but for the 
discrimination; 
‘‘(ii) 2 times the amount of back pay otherwise 
owed to the individual, with interest; and 
‘‘(iii) compensation for litigation costs, expert wit-
ness fees, and reasonable attorneys’ fees. 
‘‘(2) CONFIDENTIALITY.— 
‘‘(A) IN
GENERAL.—Except as provided in subpara-
graphs (B) and (C), the Commission and any officer or 
employee of the Commission shall not disclose any informa-
tion, including information provided by a whistleblower 
to the Commission, which could reasonably be expected 
to reveal the identity of a whistleblower, except in accord-
ance with the provisions of section 552a of title 5, United 
States Code, unless and until required to be disclosed to 
a defendant or respondent in connection with a public 
proceeding instituted by the Commission or any entity 
described in subparagraph (C). For purposes of section
H. R. 4173—472 
552 of title 5, United States Code, this paragraph shall 
be considered a statute described in subsection (b)(3)(B) 
of such section. 
‘‘(B) EXEMPTED STATUTE.—For purposes of section 552 
of title 5, United States Code, this paragraph shall be 
considered a statute described in subsection (b)(3)(B) of 
such section 552. 
‘‘(C) RULE OF CONSTRUCTION.—Nothing in this section 
is intended to limit, or shall be construed to limit, the 
ability of the Attorney General to present such evidence 
to a grand jury or to share such evidence with potential 
witnesses or defendants in the course of an ongoing 
criminal investigation. 
‘‘(D) AVAILABILITY TO GOVERNMENT AGENCIES.— 
‘‘(i) IN GENERAL.—Without the loss of its status 
as confidential in the hands of the Commission, all 
information referred to in subparagraph (A) may, in 
the discretion of the Commission, when determined 
by the Commission to be necessary to accomplish the 
purposes of this Act and to protect investors, be made 
available to— 
‘‘(I) the Attorney General of the United States; 
‘‘(II) an appropriate regulatory authority; 
‘‘(III) a self-regulatory organization; 
‘‘(IV) a State attorney general in connection 
with any criminal investigation; 
‘‘(V) 
any 
appropriate 
State 
regulatory 
authority; 
‘‘(VI) the Public Company Accounting Over-
sight Board; 
‘‘(VII) a foreign securities authority; and 
‘‘(VIII) a foreign law enforcement authority. 
‘‘(ii) CONFIDENTIALITY.— 
‘‘(I) 
IN
GENERAL.—Each 
of 
the 
entities 
described in subclauses (I) through (VI) of clause 
(i) shall maintain such information as confidential 
in accordance with the requirements established 
under subparagraph (A). 
‘‘(II) FOREIGN AUTHORITIES.—Each of the enti-
ties described in subclauses (VII) and (VIII) of 
clause (i) shall maintain such information in 
accordance with such assurances of confidentiality 
as the Commission determines appropriate. 
‘‘(3) RIGHTS RETAINED.—Nothing in this section shall be 
deemed to diminish the rights, privileges, or remedies of any 
whistleblower under any Federal or State law, or under any 
collective bargaining agreement. 
‘‘(i) PROVISION OF FALSE INFORMATION.—A whistleblower shall 
not be entitled to an award under this section if the whistleblower— 
‘‘(1) knowingly and willfully makes any false, fictitious, 
or fraudulent statement or representation; or 
‘‘(2) uses any false writing or document knowing the writing 
or document contains any false, fictitious, or fraudulent state-
ment or entry. 
‘‘(j) RULEMAKING AUTHORITY.—The Commission shall have the 
authority to issue such rules and regulations as may be necessary
H. R. 4173—473 
or appropriate to implement the provisions of this section consistent 
with the purposes of this section.’’. 
(b) PROTECTION FOR EMPLOYEES OF NATIONALLY RECOGNIZED 
STATISTICAL RATING ORGANIZATIONS.—Section 1514A(a) of title 18, 
United States Code, is amended— 
(1) by inserting ‘‘or nationally recognized statistical rating 
organization (as defined in section 3(a) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c),’’ after ‘‘78o(d)),’’; and 
(2) by inserting ‘‘or nationally recognized statistical rating 
organization’’ after ‘‘such company’’. 
(c) SECTION 1514A OF TITLE 18, UNITED STATES CODE.— 
(1) 
STATUTE
OF
LIMITATIONS; 
JURY
TRIAL.—Section 
1514A(b)(2) of title 18, United States Code, is amended— 
(A) in subparagraph (D)— 
(i) by striking ‘‘90’’ and inserting ‘‘180’’; and 
(ii) by striking the period at the end and inserting 
‘‘, or after the date on which the employee became 
aware of the violation.’’; and 
(B) by adding at the end the following: 
‘‘(E) JURY TRIAL.—A party to an action brought under 
paragraph (1)(B) shall be entitled to trial by jury.’’. 
(2) PRIVATE
SECURITIES
LITIGATION
WITNESSES; 
NON-
ENFORCEABILITY; INFORMATION.—Section 1514A of title 18, 
United States Code, is amended by adding at the end the 
following: 
‘‘(e) NONENFORCEABILITY
OF
CERTAIN
PROVISIONS
WAIVING 
RIGHTS AND REMEDIES OR REQUIRING ARBITRATION OF DISPUTES.— 
‘‘(1) WAIVER OF RIGHTS AND REMEDIES.—The rights and 
remedies provided for in this section may not be waived by 
any agreement, policy form, or condition of employment, 
including by a predispute arbitration agreement. 
‘‘(2) PREDISPUTE ARBITRATION AGREEMENTS.—No predispute 
arbitration agreement shall be valid or enforceable, if the agree-
ment requires arbitration of a dispute arising under this sec-
tion.’’. 
(d) STUDY OF WHISTLEBLOWER PROTECTION PROGRAM.— 
(1) STUDY.—The Inspector General of the Commission shall 
conduct a study of the whistleblower protections established 
under the amendments made by this section, including— 
(A) whether the final rules and regulation issued under 
the amendments made by this section have made the 
whistleblower protection program (referred to in this sub-
section as the ‘‘program’’) clearly defined and user-friendly; 
(B) whether the program is promoted on the website 
of the Commission and has been widely publicized; 
(C) whether the Commission is prompt in— 
(i) responding to— 
(I) information provided by whistleblowers; 
and 
(II) applications for awards filed by whistle-
blowers; 
(ii) updating whistleblowers about the status of 
their applications; and 
(iii) otherwise communicating with the interested 
parties; 
(D) whether the minimum and maximum reward levels 
are adequate to entice whistleblowers to come forward with
H. R. 4173—474 
information and whether the reward levels are so high 
as to encourage illegitimate whistleblower claims; 
(E) whether the appeals process has been unduly 
burdensome for the Commission; 
(F) whether the funding mechanism for the Investor 
Protection Fund is adequate; 
(G) whether, in the interest of protecting investors 
and identifying and preventing fraud, it would be useful 
for Congress to consider empowering whistleblowers or 
other individuals, who have already attempted to pursue 
the case through the Commission, to have a private right 
of action to bring suit based on the facts of the same 
case, on behalf of the Government and themselves, against 
persons who have committee securities fraud; 
(H)(i) whether the exemption under section 552(b)(3) 
of title 5 (known as the Freedom of Information Act) estab-
lished in section 21F(h)(2)(A) of the Securities Exchange 
Act of 1934, as added by this Act, aids whistleblowers 
in disclosing information to the Commission; 
(ii) what impact the exemption described in clause 
(i) has had on the ability of the public to access information 
about the regulation and enforcement by the Commission 
of securities; and 
(iii) any recommendations on whether the exemption 
described in clause (i) should remain in effect; and 
(I) such other matters as the Inspector General deems 
appropriate. 
(2) REPORT.—Not later than 30 months after the date of 
enactment of this Act, the Inspector General shall— 
(A) submit a report on the findings of the study 
required under paragraph (1) to the Committee on Banking, 
Housing, and Urban Affairs of the Senate and the Com-
mittee on Financial Services of the House; and 
(B) make the report described in subparagraph (A) 
available to the public through publication of the report 
on the website of the Commission. 
SEC. 923. CONFORMING AMENDMENTS FOR WHISTLEBLOWER PROTEC-
TION. 
(a) IN GENERAL.— 
(1) SECURITIES ACT OF 1933.—Section 20(d)(3)(A) of the Secu-
rities Act of 1933 (15 U.S.C. 77t(d)(3)(A)) is amended by 
inserting ‘‘and section 21F of the Securities Exchange Act of 
1934’’ after ‘‘the Sarbanes-Oxley Act of 2002’’. 
(2) INVESTMENT COMPANY ACT OF 1940.—Section 42(e)(3)(A) 
of the Investment Company Act of 1940 (15 U.S.C. 80a– 
41(e)(3)(A)) is amended by inserting ‘‘and section 21F of the 
Securities Exchange Act of 1934’’ after ‘‘the Sarbanes-Oxley 
Act of 2002’’. 
(3) INVESTMENT ADVISERS ACT OF 1940.—Section 209(e)(3)(A) 
of the Investment Advisers Act of 1940 (15 U.S.C. 80b– 
9(e)(3)(A)) is amended by inserting ‘‘and section 21F of the 
Securities Exchange Act of 1934’’ after ‘‘the Sarbanes-Oxley 
Act of 2002’’. 
(b) SECURITIES EXCHANGE ACT.— 
(1) SECTION
21.—Section 21(d)(3)(C)(i) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78u(d)(3)(C)(i)) is amended
H. R. 4173—475 
by inserting ‘‘and section 21F of this title’’ after ‘‘the Sarbanes- 
Oxley Act of 2002’’. 
(2) SECTION 21A.—Section 21A of the Securities Exchange 
Act of 1934 (15 U.S.C. 78u–1) is amended— 
(A) in subsection (d)(1) by— 
(i) striking ‘‘(subject to subsection (e))’’; and 
(ii) inserting ‘‘and section 21F of this title’’ after 
‘‘the Sarbanes-Oxley Act of 2002’’; 
(B) by striking subsection (e); and 
(C) by redesignating subsections (f) and (g) as sub-
sections (e) and (f), respectively. 
SEC. 924. IMPLEMENTATION AND TRANSITION PROVISIONS FOR 
WHISTLEBLOWER PROTECTION. 
(a) IMPLEMENTING RULES.—The Commission shall issue final 
regulations implementing the provisions of section 21F of the Secu-
rities Exchange Act of 1934, as added by this subtitle, not later 
than 270 days after the date of enactment of this Act. 
(b) ORIGINAL
INFORMATION.—Information provided to the 
Commission in writing by a whistleblower shall not lose the status 
of original information (as defined in section 21F(a)(3) of the Securi-
ties Exchange Act of 1934, as added by this subtitle) solely because 
the whistleblower provided the information prior to the effective 
date of the regulations, if the information is provided by the whistle-
blower after the date of enactment of this subtitle. 
(c) AWARDS.—A whistleblower may receive an award pursuant 
to section 21F of the Securities Exchange Act of 1934, as added 
by this subtitle, regardless of whether any violation of a provision 
of the securities laws, or a rule or regulation thereunder, underlying 
the judicial or administrative action upon which the award is based, 
occurred prior to the date of enactment of this subtitle. 
(d) ADMINISTRATION AND ENFORCEMENT.—The Securities and 
Exchange Commission shall establish a separate office within the 
Commission to administer and enforce the provisions of section 
21F of the Securities Exchange Act of 1934 (as add by section 
922(a)). Such office shall report annually to the Committee on 
Banking, Housing, and Urban Affairs of the Senate and the Com-
mittee on Financial Services of the House of Representatives on 
its activities, whistleblower complaints, and the response of the 
Commission to such complaints. 
SEC. 925. COLLATERAL BARS. 
(a) SECURITIES EXCHANGE ACT OF 1934.— 
(1) SECTION
15.—Section 15(b)(6)(A) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is amended by 
striking ‘‘12 months, or bar such person from being associated 
with a broker or dealer,’’ and inserting ‘‘12 months, or bar 
any such person from being associated with a broker, dealer, 
investment adviser, municipal securities dealer, municipal 
advisor, transfer agent, or nationally recognized statistical 
rating organization,’’. 
(2) SECTION
15B.—Section 15B(c)(4) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o–4(c)(4)) is amended by 
striking ‘‘twelve months or bar any such person from being 
associated with a municipal securities dealer,’’ and inserting 
‘‘12 months or bar any such person from being associated with 
a broker, dealer, investment adviser, municipal securities
H. R. 4173—476 
dealer, municipal advisor, transfer agent, or nationally recog-
nized statistical rating organization,’’. 
(3) SECTION
17A.—Section 17A(c)(4)(C) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78q–1(c)(4)(C)) is amended 
by striking ‘‘twelve months or bar any such person from being 
associated with the transfer agent,’’ and inserting ‘‘12 months 
or bar any such person from being associated with any transfer 
agent, broker, dealer, investment adviser, municipal securities 
dealer, municipal advisor, or nationally recognized statistical 
rating organization,’’. 
(b) INVESTMENT ADVISERS ACT OF 1940.—Section 203(f) of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b–3(f)) is amended 
by striking ‘‘twelve months or bar any such person from being 
associated with an investment adviser,’’ and inserting ‘‘12 months 
or bar any such person from being associated with an investment 
adviser, broker, dealer, municipal securities dealer, municipal 
advisor, transfer agent, or nationally recognized statistical rating 
organization,’’. 
SEC. 926. DISQUALIFYING FELONS AND OTHER ‘‘BAD ACTORS’’ FROM 
REGULATION D OFFERINGS. 
Not later than 1 year after the date of enactment of this 
Act, the Commission shall issue rules for the disqualification of 
offerings and sales of securities made under section 230.506 of 
title 17, Code of Federal Regulations, that— 
(1) are substantially similar to the provisions of section 
230.262 of title 17, Code of Federal Regulations, or any suc-
cessor thereto; and 
(2) disqualify any offering or sale of securities by a person 
that— 
(A) is subject to a final order of a State securities 
commission (or an agency or officer of a State performing 
like functions), a State authority that supervises or exam-
ines banks, savings associations, or credit unions, a State 
insurance commission (or an agency or officer of a State 
performing like functions), an appropriate Federal banking 
agency, or the National Credit Union Administration, 
that— 
(i) bars the person from— 
(I) association with an entity regulated by such 
commission, authority, agency, or officer; 
(II) engaging in the business of securities, 
insurance, or banking; or 
(III) engaging in savings association or credit 
union activities; or 
(ii) constitutes a final order based on a violation 
of any law or regulation that prohibits fraudulent, 
manipulative, or deceptive conduct within the 10-year 
period ending on the date of the filing of the offer 
or sale; or 
(B) has been convicted of any felony or misdemeanor 
in connection with the purchase or sale of any security 
or involving the making of any false filing with the Commis-
sion.
H. R. 4173—477 
SEC. 927. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION 
RULES. 
Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78cc(a)) is amended by striking ‘‘an exchange required thereby’’ 
and inserting ‘‘a self-regulatory organization,’’. 
SEC. 928. CLARIFICATION THAT SECTION 205 OF THE INVESTMENT 
ADVISERS ACT OF 1940 DOES NOT APPLY TO STATE-REG-
ISTERED ADVISERS. 
Section 205(a) of the Investment Advisers Act of 1940 (15 
U.S.C. 80b–5(a)) is amended, in the matter preceding paragraph 
(1)— 
(1) by striking ‘‘, unless exempt from registration pursuant 
to section 203(b),’’ and inserting ‘‘registered or required to be 
registered with the Commission’’; 
(2) by striking ‘‘make use of the mails or any means or 
instrumentality of interstate commerce, directly or indirectly, 
to’’; and 
(3) by striking ‘‘to’’ after ‘‘in any way’’. 
SEC. 929. UNLAWFUL MARGIN LENDING. 
Section 7(c)(1)(A) of the Securities Exchange Act of 1934 (15 
U.S.C. 78g(c)(1)(A)) is amended by striking ‘‘; and’’ and inserting 
‘‘; or’’. 
SEC. 929A. PROTECTION FOR EMPLOYEES OF SUBSIDIARIES AND 
AFFILIATES OF PUBLICLY TRADED COMPANIES. 
Section 1514A of title 18, United States Code, is amended 
by inserting ‘‘including any subsidiary or affiliate whose financial 
information is included in the consolidated financial statements 
of such company’’ after ‘‘the Securities Exchange Act of 1934 (15 
U.S.C. 78o(d))’’. 
SEC. 929B. FAIR FUND AMENDMENTS. 
Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
7246(a)) is amended— 
(1) by striking subsection (a) and inserting the following: 
‘‘(a) CIVIL PENALTIES TO BE USED FOR THE RELIEF OF VICTIMS.— 
If, in any judicial or administrative action brought by the Commis-
sion under the securities laws, the Commission obtains a civil 
penalty against any person for a violation of such laws, or such 
person agrees, in settlement of any such action, to such civil penalty, 
the amount of such civil penalty shall, on the motion or at the 
direction of the Commission, be added to and become part of a 
disgorgement fund or other fund established for the benefit of 
the victims of such violation.’’; 
(2) in subsection (b)— 
(A) by striking ‘‘for a disgorgement fund described in 
subsection (a)’’ and inserting ‘‘for a disgorgement fund or 
other fund described in subsection (a)’’; and 
(B) by striking ‘‘in the disgorgement fund’’ and 
inserting ‘‘in such fund’’; and 
(3) by striking subsection (e). 
SEC. 929C. INCREASING THE BORROWING LIMIT ON TREASURY LOANS. 
Section 4(h) of the Securities Investor Protection Act of 1970 
(15 U.S.C. 78ddd(h)) is amended in the first sentence, by striking 
‘‘$1,000,000,000’’ and inserting ‘‘$2,500,000,000’’.
H. R. 4173—478 
SEC. 929D. LOST AND STOLEN SECURITIES. 
Section 17(f)(1) of the Securities Exchange Act of 1934 (15 
U.S.C. 78q(f)(1)) is amended— 
(1) in subparagraph (A), by striking ‘‘missing, lost, counter-
feit, or stolen securities’’ and inserting ‘‘securities that are 
missing, lost, counterfeit, stolen, or cancelled’’; and 
(2) in subparagraph (B), by striking ‘‘or stolen’’ and 
inserting ‘‘stolen, cancelled, or reported in such other manner 
as the Commission, by rule, may prescribe’’. 
SEC. 929E. NATIONWIDE SERVICE OF SUBPOENAS. 
(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, a subpoena issued to compel 
the attendance of a witness or the production of documents or 
tangible things (or both) at a hearing or trial may be served at 
any place within the United States. Rule 45(c)(3)(A)(ii) of the Fed-
eral Rules of Civil Procedure shall not apply to a subpoena issued 
under the preceding sentence.’’. 
(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 third 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, a subpoena 
issued to compel the attendance of a witness or the production 
of documents or tangible things (or both) at a hearing or trial 
may be served at any place within the United States. Rule 
45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not 
apply to a subpoena issued under the preceding sentence.’’. 
(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, a subpoena 
issued to compel the attendance of a witness or the production 
of documents or tangible things (or both) at a hearing or trial 
may be served at any place within the United States. Rule 
45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not 
apply to a subpoena issued under the preceding sentence.’’. 
(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 following: ‘‘In any action 
or proceeding instituted by the Commission under this title in 
a United States district court for any judicial district, a subpoena 
issued to compel the attendance of a witness or the production 
of documents or tangible things (or both) at a hearing or trial 
may be served at any place within the United States. Rule 
45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not 
apply to a subpoena issued under the preceding sentence.’’. 
SEC. 929F. FORMERLY ASSOCIATED PERSONS. 
(a) MEMBER OR EMPLOYEE OF THE MUNICIPAL SECURITIES RULE-
MAKING BOARD.—Section 15B(c)(8) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78o–4(c)(8)) is amended by striking ‘‘any member
H. R. 4173—479 
or employee’’ and inserting ‘‘any person who is, or at the time 
of the alleged violation or abuse was, a member or employee’’. 
(b) PERSON ASSOCIATED WITH
A GOVERNMENT SECURITIES 
BROKER OR DEALER.—Section 15C(c) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78o–5(c)) is amended— 
(1) in paragraph (1)(C), by striking ‘‘any person associated, 
or seeking to become associated,’’ and inserting ‘‘any person 
who is, or at the time of the alleged misconduct was, associated 
or seeking to become associated’’; and 
(2) in paragraph (2)— 
(A) in subparagraph (A), by inserting ‘‘, seeking to 
become associated, or, at the time of the alleged misconduct, 
associated or seeking to become associated’’ after ‘‘any per-
son associated’’; and 
(B) in subparagraph (B), by inserting ‘‘, seeking to 
become associated, or, at the time of the alleged misconduct, 
associated or seeking to become associated’’ after ‘‘any per-
son associated’’. 
(c) PERSON ASSOCIATED WITH A MEMBER OF A NATIONAL SECU-
RITIES EXCHANGE OR REGISTERED SECURITIES ASSOCIATION.—Sec-
tion 21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 
78u(a)(1)) is amended, in the first sentence, by inserting ‘‘, or, 
as to any act or practice, or omission to act, while associated 
with a member, formerly associated’’ after ‘‘member or a person 
associated’’. 
(d) PARTICIPANT OF A REGISTERED CLEARING AGENCY.—Section 
21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) 
is amended, in the first sentence, by inserting ‘‘or, as to any act 
or practice, or omission to act, while a participant, was a partici-
pant,’’ after ‘‘in which such person is a participant,’’. 
(e) OFFICER OR DIRECTOR OF A SELF-REGULATORY ORGANIZA-
TION.—Section 19(h)(4) of the Securities Exchange Act of 1934 (15 
U.S.C. 78s(h)(4)) is amended— 
(1) by striking ‘‘any officer or director’’ and inserting ‘‘any 
person who is, or at the time of the alleged misconduct was, 
an officer or director’’; and 
(2) by striking ‘‘such officer or director’’ and inserting ‘‘such 
person’’. 
(f) OFFICER OR DIRECTOR OF AN INVESTMENT COMPANY.—Sec-
tion 36(a) of the Investment Company Act of 1940 (15 U.S.C. 
80a–35(a)) is amended— 
(1) by striking ‘‘a person serving or acting’’ and inserting 
‘‘a person who is, or at the time of the alleged misconduct 
was, serving or acting’’; and 
(2) by striking ‘‘such person so serves or acts’’ and inserting 
‘‘such person so serves or acts, or at the time of the alleged 
misconduct, so served or acted’’. 
(g) PERSON ASSOCIATED WITH A PUBLIC ACCOUNTING FIRM.— 
(1) SARBANES-OXLEY
ACT
OF
2002
AMENDMENT.—Section 
2(a)(9) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(9)) 
is amended by adding at the end the following: 
‘‘(C) INVESTIGATIVE AND ENFORCEMENT AUTHORITY.— 
For purposes of sections 3(c), 101(c), 105, and 107(c) and 
the rules of the Board and Commission issued thereunder, 
except to the extent specifically excepted by such rules, 
the terms defined in subparagraph (A) shall include any
H. R. 4173—480 
person associated, seeking to become associated, or formerly 
associated with a public accounting firm, except that— 
‘‘(i) the authority to conduct an investigation of 
such person under section 105(b) shall apply only with 
respect to any act or practice, or omission to act, by 
the person while such person was associated or seeking 
to 
become 
associated 
with 
a 
registered 
public 
accounting firm; and 
‘‘(ii) the authority to commence a disciplinary pro-
ceeding under section 105(c)(1), or impose sanctions 
under section 105(c)(4), against such person shall apply 
only with respect to— 
‘‘(I) conduct occurring while such person was 
associated or seeking to become associated with 
a registered public accounting firm; or 
‘‘(II) non-cooperation, as described in section 
105(b)(3), with respect to a demand in a Board 
investigation for testimony, documents, or other 
information relating to a period when such person 
was associated or seeking to become associated 
with a registered public accounting firm.’’. 
(2) SECURITIES EXCHANGE ACT OF 1934 AMENDMENT.—Sec-
tion 21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 
78u(a)(1)) is amended by striking ‘‘or a person associated with 
such a firm’’ and inserting ‘‘, a person associated with such 
a firm, or, as to any act, practice, or omission to act, while 
associated with such firm, a person formerly associated with 
such a firm’’. 
(h) SUPERVISORY PERSONNEL
OF
AN AUDIT FIRM.—Section 
105(c)(6) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(c)(6)) 
is amended— 
(1) in subparagraph (A), by striking ‘‘the supervisory per-
sonnel’’ and inserting ‘‘any person who is, or at the time of 
the alleged failure reasonably to supervise was, a supervisory 
person’’; and 
(2) in subparagraph (B)— 
(A) by striking ‘‘No associated person’’ and inserting 
‘‘No current or former supervisory person’’; and 
(B) by striking ‘‘any other person’’ and inserting ‘‘any 
associated person’’. 
(i) MEMBER OF THE PUBLIC COMPANY ACCOUNTING OVERSIGHT 
BOARD.—Section 107(d)(3) of the Sarbanes-Oxley Act of 2002 (15 
U.S.C. 7217(d)(3)) is amended by striking ‘‘any member’’ and 
inserting ‘‘any person who is, or at the time of the alleged mis-
conduct was, a member’’. 
SEC. 929G. STREAMLINED HIRING AUTHORITY FOR MARKET SPECIAL-
ISTS. 
(a) APPOINTMENT AUTHORITY.—Section 3114 of title 5, United 
States Code, is amended by striking the section heading and all 
that follows through the end of subsection (a) and inserting the 
following:
H. R. 4173—481 
‘‘§ 3114. Appointment of candidates to certain positions in 
the competitive service by the Securities and 
Exchange Commission 
‘‘(a) APPLICABILITY.—This section applies with respect to any 
position of accountant, economist, and securities compliance exam-
iner at the Commission that is in the competitive service, and 
any position at the Commission in the competitive service that 
requires specialized knowledge of financial and capital market 
formation or regulation, financial market structures or surveillance, 
or information technology.’’. 
(b) CLERICAL AMENDMENT.—The table of sections for chapter 
31 of title 5, United States Code, is amended by striking the 
item relating to section 3114 and inserting the following: 
‘‘3114. Appointment of candidates to positions in the competitive service by the Se-
curities and Exchange Commission.’’. 
(c) PAY AUTHORITY.—The Commission may set the rate of pay 
for experts and consultants appointed under the authority of section 
3109 of title 5, United States Code, in the same manner in which 
it sets the rate of pay for employees of the Commission. 
SEC. 929H. SIPC REFORMS. 
(a) INCREASING THE CASH LIMIT OF PROTECTION.—Section 9 
of the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff– 
3) is amended— 
(1) in subsection (a)(1), by striking ‘‘$100,000 for each such 
customer’’ and inserting ‘‘the standard maximum cash advance 
amount for each such customer, as determined in accordance 
with subsection (d)’’; and 
(2) by adding the following new subsections: 
‘‘(d) STANDARD MAXIMUM CASH ADVANCE AMOUNT DEFINED.— 
For purposes of this section, the term ‘standard maximum cash 
advance amount’ means $250,000, as such amount may be adjusted 
after December 31, 2010, as provided under subsection (e). 
‘‘(e) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—Not later than January 1, 2011, and 
every 5 years thereafter, and subject to the approval of the 
Commission as provided under section 3(e)(2), the Board of 
Directors of SIPC shall determine whether an inflation adjust-
ment to the standard maximum cash advance amount is appro-
priate. If the Board of Directors of SIPC determines such an 
adjustment is appropriate, then the standard maximum cash 
advance amount shall be an amount equal to— 
‘‘(A) $250,000 multiplied by— 
‘‘(B) the ratio of the annual value of the Personal 
Consumption Expenditures Chain-Type Price Index (or any 
successor index thereto), published by the Department of 
Commerce, for the calendar year preceding the year in 
which such determination is made, to the published annual 
value of such index for the calendar year preceding the 
year in which this subsection was enacted. 
The index values used in calculations under this paragraph 
shall be, as of the date of the calculation, the values most 
recently published by the Department of Commerce. 
‘‘(2) ROUNDING.—If the standard maximum cash advance 
amount determined under paragraph (1) for any period is not
H. R. 4173—482 
a multiple of $10,000, the amount so determined shall be 
rounded down to the nearest $10,000. 
‘‘(3) PUBLICATION AND REPORT TO THE CONGRESS.—Not later 
than April 5 of any calendar year in which a determination 
is required to be made under paragraph (1)— 
‘‘(A) the Commission shall publish in the Federal Reg-
ister the standard maximum cash advance amount; and 
‘‘(B) the Board of Directors of SIPC shall submit a 
report to the Congress stating the standard maximum cash 
advance amount. 
‘‘(4) IMPLEMENTATION
PERIOD.—Any adjustment to the 
standard maximum cash advance amount shall take effect on 
January 1 of the year immediately succeeding the calendar 
year in which such adjustment is made. 
‘‘(5) INFLATION ADJUSTMENT CONSIDERATIONS.—In making 
any determination under paragraph (1) to increase the standard 
maximum cash advance amount, the Board of Directors of 
SIPC shall consider— 
‘‘(A) the overall state of the fund and the economic 
conditions affecting members of SIPC; 
‘‘(B) the potential problems affecting members of SIPC; 
and 
‘‘(C) such other factors as the Board of Directors of 
SIPC may determine appropriate.’’. 
(b) LIQUIDATION
OF
A
CARRYING
BROKER-DEALER.—Section 
5(a)(3) of the Securities Investor Protection Act of 1970 (15 U.S.C. 
78eee(a)(3)) is amended— 
(1) by striking the undesignated matter immediately fol-
lowing subparagraph (B); 
(2) in subparagraph (A), by striking ‘‘any member of SIPC’’ 
and inserting ‘‘the member’’; 
(3) in subparagraph (B), by striking the comma at the 
end and inserting a period; 
(4) by striking ‘‘If SIPC’’ and inserting the following: 
‘‘(A) IN GENERAL.—SIPC may, upon notice to a member 
of SIPC, file an application for a protective decree with 
any court of competent jurisdiction specified in section 21(e) 
or 27 of the Securities Exchange Act of 1934, except that 
no such application shall be filed with respect to a member, 
the only customers of which are persons whose claims 
could not be satisfied by SIPC advances pursuant to section 
9, if SIPC’’; and 
(5) by adding at the end the following: 
‘‘(B) CONSENT REQUIRED.—No member of SIPC that 
has a customer may enter into an insolvency, receivership, 
or bankruptcy proceeding, under Federal or State law, with-
out the specific consent of SIPC, except as provided in 
title II of the Dodd-Frank Wall Street Reform and Con-
sumer Protection Act.’’. 
SEC. 929I. PROTECTING CONFIDENTIALITY OF MATERIALS SUBMITTED 
TO THE COMMISSION. 
(a) SECURITIES EXCHANGE ACT
OF 1934.—Section 24 of the 
Securities Exchange Act of 1934 (15 U.S.C. 78x) is amended— 
(1) in subsection (d), by striking ‘‘subsection (e)’’ and 
inserting ‘‘subsection (f)’’; 
(2) by redesignating subsection (e) as subsection (f); and
H. R. 4173—483 
(3) by inserting after subsection (d) the following: 
‘‘(e) RECORDS OBTAINED FROM REGISTERED PERSONS.— 
‘‘(1) IN
GENERAL.—Except as provided in subsection (f), 
the Commission shall not be compelled to disclose records or 
information obtained pursuant to section 17(b), or records or 
information based upon or derived from such records or 
information, if such records or information have been obtained 
by the Commission for use in furtherance of the purposes 
of this title, including surveillance, risk assessments, or other 
regulatory and oversight activities. 
‘‘(2) TREATMENT OF INFORMATION.—For purposes of section 
552 of title 5, United States Code, this subsection shall be 
considered a statute described in subsection (b)(3)(B) of such 
section 552. Collection of information pursuant to section 17 
shall be an administrative action involving an agency against 
specific individuals or agencies pursuant to section 3518(c)(1) 
of title 44, United States Code.’’. 
(b) INVESTMENT COMPANY ACT
OF 1940.—Section 31 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-30) is amended— 
(1) by striking subsection (c) and inserting the following: 
‘‘(c) LIMITATIONS
ON DISCLOSURE
BY COMMISSION.—Notwith-
standing any other provision of law, the Commission shall not 
be compelled to disclose any records or information provided to 
the Commission under this section, or records or information based 
upon or derived from such records or information, if such records 
or information have been obtained by the Commission for use 
in furtherance of the purposes of this title, including surveillance, 
risk assessments, or other regulatory and oversight activities. 
Nothing in this subsection authorizes the Commission to withhold 
information from the Congress or prevent the Commission from 
complying with a request for information from any other Federal 
department or agency requesting the information for purposes 
within the scope of jurisdiction of that department or agency, or 
complying with an order of a court of the United States in an 
action brought by the United States or the Commission. For pur-
poses of section 552 of title 5, United States Code, this section 
shall be considered a statute described in subsection (b)(3)(B) of 
such section 552. Collection of information pursuant to section 
31 shall be an administrative action involving an agency against 
specific individuals or agencies pursuant to section 3518(c)(1) of 
title 44, United States Code.’’; 
(2) by striking subsection (d); and 
(3) by redesignating subsections (e) and (f) as subsections 
(d) and (e), respectively. 
(c) INVESTMENT ADVISERS ACT OF 1940.—Section 210 of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-10) is amended 
by adding at the end the following: 
‘‘(d) LIMITATIONS ON DISCLOSURE BY THE COMMISSION.—Not-
withstanding any other provision of law, the Commission shall 
not be compelled to disclose any records or information provided 
to the Commission under section 204, or records or information 
based upon or derived from such records or information, if such 
records or information have been obtained by the Commission for 
use in furtherance of the purposes of this title, including surveil-
lance, risk assessments, or other regulatory and oversight activities. 
Nothing in this subsection authorizes the Commission to withhold 
information from the Congress or prevent the Commission from
H. R. 4173—484 
complying with a request for information from any other Federal 
department or agency requesting the information for purposes 
within the scope of jurisdiction of that department or agency, or 
complying with an order of a court of the United States in an 
action brought by the United States or the Commission. For pur-
poses of section 552 of title 5, United States Code, this subsection 
shall be considered a statute described in subsection (b)(3)(B) of 
such section 552. Collection of information pursuant to section 
204 shall be an administrative action involving an agency against 
specific individuals or agencies pursuant to section 3518(c)(1) of 
title 44, United States Code.’’. 
SEC. 929J. EXPANSION OF AUDIT INFORMATION TO BE PRODUCED 
AND EXCHANGED. 
Section 106 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216) 
is amended— 
(1) by striking subsection (b) and inserting the following: 
‘‘(b) PRODUCTION OF DOCUMENTS.— 
‘‘(1) PRODUCTION BY FOREIGN FIRMS.—If a foreign public 
accounting firm performs material services upon which a reg-
istered public accounting firm relies in the conduct of an audit 
or interim review, issues an audit report, performs audit work, 
or conducts interim reviews, the foreign public accounting firm 
shall— 
‘‘(A) produce the audit work papers of the foreign public 
accounting firm and all other documents of the firm related 
to any such audit work or interim review to the Commission 
or the Board, upon request of the Commission or the Board; 
and 
‘‘(B) be subject to the jurisdiction of the courts of the 
United States for purposes of enforcement of any request 
for such documents. 
‘‘(2) OTHER PRODUCTION.—Any registered public accounting 
firm that relies, in whole or in part, on the work of a foreign 
public accounting firm in issuing an audit report, performing 
audit work, or conducting an interim review, shall— 
‘‘(A) produce the audit work papers of the foreign public 
accounting firm and all other documents related to any 
such work in response to a request for production by the 
Commission or the Board; and 
‘‘(B) secure the agreement of any foreign public 
accounting firm to such production, as a condition of the 
reliance by the registered public accounting firm on the 
work of that foreign public accounting firm.’’; 
(2) by redesignating subsection (d) as subsection (g); and 
(3) by inserting after subsection (c) the following: 
‘‘(d) SERVICE OF REQUESTS OR PROCESS.— 
‘‘(1) IN GENERAL.—Any foreign public accounting firm that 
performs work for a domestic registered public accounting firm 
shall furnish to the domestic registered public accounting firm 
a written irrevocable consent and power of attorney that des-
ignates the domestic registered public accounting firm as an 
agent upon whom may be served any request by the Commis-
sion or the Board under this section or upon whom may be 
served any process, pleadings, or other papers in any action 
brought to enforce this section.
H. R. 4173—485 
‘‘(2) SPECIFIC AUDIT WORK.—Any foreign public accounting 
firm that performs material services upon which a registered 
public accounting firm relies in the conduct of an audit or 
interim review, issues an audit report, performs audit work, 
or, performs interim reviews, shall designate to the Commission 
or the Board an agent in the United States upon whom may 
be served any request by the Commission or the Board under 
this section or upon whom may be served any process, pleading, 
or other papers in any action brought to enforce this section. 
‘‘(e) SANCTIONS.—A willful refusal to comply, in whole in or 
in part, with any request by the Commission or the Board under 
this section, shall be deemed a violation of this Act. 
‘‘(f) OTHER MEANS OF SATISFYING PRODUCTION OBLIGATIONS.— 
Notwithstanding any other provisions of this section, the staff of 
the Commission or the Board may allow a foreign public accounting 
firm that is subject to this section to meet production obligations 
under this section through alternate means, such as through foreign 
counterparts of the Commission or the Board.’’. 
SEC. 
929K. 
SHARING 
PRIVILEGED 
INFORMATION 
WITH 
OTHER 
AUTHORITIES. 
Section 24 of the Securities Exchange Act of 1934 (15 U.S.C. 
78x) is amended— 
(1) in subsection (d), as amended by subsection (d)(1)(A), 
by striking ‘‘subsection (f)’’ and inserting ‘‘subsection (g)’’; 
(2) in subsection (e), as added by subsection (d)(1)(C), by 
striking ‘‘subsection (f)’’ and inserting ‘‘subsection (g)’’; 
(3) by redesignating subsection (f) as subsection (g); and 
(4) by inserting after subsection (e) the following: 
‘‘(f) SHARING PRIVILEGED INFORMATION WITH OTHER AUTHORI-
TIES.— 
‘‘(1) PRIVILEGED INFORMATION PROVIDED BY THE COMMIS-
SION.—The Commission shall not be deemed to have waived 
any privilege applicable to any information by transferring 
that information to or permitting that information to be used 
by— 
‘‘(A) any agency (as defined in section 6 of title 18, 
United States Code); 
‘‘(B) the Public Company Accounting Oversight Board; 
‘‘(C) any self-regulatory organization; 
‘‘(D) any foreign securities authority; 
‘‘(E) any foreign law enforcement authority; or 
‘‘(F) any State securities or law enforcement authority. 
‘‘(2) NONDISCLOSURE OF PRIVILEGED INFORMATION PROVIDED 
TO THE COMMISSION.—The Commission shall not be compelled 
to disclose privileged information obtained from any foreign 
securities authority, or foreign law enforcement authority, if 
the authority has in good faith determined and represented 
to the Commission that the information is privileged. 
‘‘(3) NONWAIVER OF PRIVILEGED INFORMATION PROVIDED TO 
THE COMMISSION.— 
‘‘(A) IN GENERAL.—Federal agencies, State securities 
and law enforcement authorities, self-regulatory organiza-
tions, and the Public Company Accounting Oversight Board 
shall not be deemed to have waived any privilege applicable 
to any information by transferring that information to or 
permitting that information to be used by the Commission.
H. R. 4173—486 
‘‘(B) EXCEPTION.—The provisions of subparagraph (A) 
shall not apply to a self-regulatory organization or the 
Public Company Accounting Oversight Board with respect 
to information used by the Commission in an action against 
such organization. 
‘‘(4) DEFINITIONS.—For purposes of this subsection— 
‘‘(A) the term ‘privilege’ includes any work-product 
privilege, attorney-client privilege, governmental privilege, 
or other privilege recognized under Federal, State, or for-
eign law; 
‘‘(B) the term ‘foreign law enforcement authority’ 
means any foreign authority that is empowered under for-
eign law to detect, investigate or prosecute potential viola-
tions of law; and 
‘‘(C) the term ‘State securities or law enforcement 
authority’ means the authority of any State or territory 
that is empowered under State or territory law to detect, 
investigate, or prosecute potential violations of law.’’. 
SEC. 929L. ENHANCED APPLICATION OF ANTIFRAUD PROVISIONS. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
is amended— 
(1) in section 9— 
(A) by striking ‘‘registered on a national securities 
exchange’’ each place that term appears and inserting 
‘‘other than a government security’’; 
(B) in subsection (b), by striking ‘‘by use of any facility 
of a national securities exchange,’’; and 
(C) in subsection (c), by inserting after ‘‘unlawful for 
any’’ the following: ‘‘broker, dealer, or’’; 
(2) in section 10(a)(1), by striking ‘‘registered on a national 
securities exchange’’ and inserting ‘‘other than a government 
security’’; and 
(3) in section 15(c)(1)(A), by striking ‘‘otherwise than on 
a national securities exchange of which it is a member’’. 
SEC. 929M. AIDING AND ABETTING AUTHORITY UNDER THE SECURI-
TIES ACT AND THE INVESTMENT COMPANY ACT. 
(a) UNDER THE SECURITIES ACT OF 1933.—Section 15 of the 
Securities Act of 1933 (15 U.S.C. 77o) is amended— 
(1) by striking ‘‘Every person who’’ and inserting ‘‘(a) 
CONTROLLING PERSONS.—Every person who’’; and 
(2) by adding at the end the following: 
‘‘(b) PROSECUTION
OF PERSONS WHO AID
AND ABET VIOLA-
TIONS.—For purposes of any action brought by the Commission 
under subparagraph (b) or (d) of section 20, any person that know-
ingly or recklessly provides substantial assistance to another person 
in violation of a provision of this Act, or of any rule or regulation 
issued under this Act, shall be deemed to be in violation of such 
provision to the same extent as the person to whom such assistance 
is provided.’’. 
(b) UNDER THE INVESTMENT COMPANY ACT OF 1940.—Section 
48 of the Investment Company Act of 1940 (15 U.S.C. 80a–48) 
is amended by redesignating subsection (b) as subsection (c) and 
inserting after subsection (a) the following: 
‘‘(b) For purposes of any action brought by the Commission 
under subsection (d) or (e) of section 42, any person that knowingly 
or recklessly provides substantial assistance to another person in
H. R. 4173—487 
violation of a provision of this Act, or of any rule or regulation 
issued under this Act, shall be deemed to be in violation of such 
provision to the same extent as the person to whom such assistance 
is provided.’’. 
SEC. 929N. AUTHORITY TO IMPOSE PENALTIES FOR AIDING AND ABET-
TING VIOLATIONS OF THE INVESTMENT ADVISERS ACT. 
Section 209 of the Investment Advisers Act of 1940 (15 U.S.C. 
80b–9) is amended by inserting at the end the following new sub-
section: 
‘‘(f) AIDING AND ABETTING.—For purposes of any action brought 
by the Commission under subsection (e), any person that knowingly 
or recklessly has aided, abetted, counseled, commanded, induced, 
or procured a violation of any provision of this Act, or of any 
rule, regulation, or order hereunder, shall be deemed to be in 
violation of such provision, rule, regulation, or order to the same 
extent as the person that committed such violation.’’. 
SEC. 929O. AIDING AND ABETTING STANDARD OF KNOWLEDGE SATIS-
FIED BY RECKLESSNESS. 
Section 20(e) of the Securities Exchange Act of 1934 (15 U.S.C. 
78t(e)) is amended by inserting ‘‘or recklessly’’ after ‘‘knowingly’’. 
SEC. 929P. STRENGTHENING ENFORCEMENT BY THE COMMISSION. 
(a) AUTHORITY
TO IMPOSE CIVIL PENALTIES
IN CEASE
AND 
DESIST PROCEEDINGS.— 
(1) UNDER THE SECURITIES ACT OF 1933.—Section 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.—In any cease-and-desist proceeding under 
subsection (a), the Commission may impose a civil penalty 
on a person if the Commission 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 regulation issued under this 
title; or 
‘‘(ii) is or was a cause of the violation of any 
provision of this title, or any rule or regulation there-
under; and 
‘‘(B) such penalty is in the public interest. 
‘‘(2) MAXIMUM AMOUNT OF PENALTY.— 
‘‘(A) FIRST TIER.—The maximum amount of a penalty 
for each act or omission described in paragraph (1) shall 
be $7,500 for a natural person or $75,000 for any other 
person. 
‘‘(B) SECOND
TIER.—Notwithstanding subparagraph 
(A), the maximum amount of penalty for each such act 
or omission shall be $75,000 for a natural person or 
$375,000 for any other person, if the act or omission 
described in paragraph (1) involved fraud, deceit, manipula-
tion, or deliberate or reckless disregard of a regulatory 
requirement. 
‘‘(C) THIRD TIER.—Notwithstanding subparagraphs (A) 
and (B), the maximum amount of penalty for each such 
act or omission shall be $150,000 for a natural person 
or $725,000 for any other person, if—
H. R. 4173—488 
‘‘(i) the act or omission described in paragraph 
(1) involved fraud, deceit, manipulation, or deliberate 
or reckless disregard of a regulatory requirement; and 
‘‘(ii) such act or omission directly or indirectly 
resulted in— 
‘‘(I) substantial losses or created a significant 
risk of substantial losses to other persons; or 
‘‘(II) substantial pecuniary gain to the person 
who committed the act or omission. 
‘‘(3) EVIDENCE CONCERNING ABILITY TO PAY.—In any pro-
ceeding in which the Commission may impose a penalty under 
this section, a respondent may present evidence of the ability 
of the respondent 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 the ability of the respondent to continue in 
business and the collectability of a penalty, taking into account 
any other claims of the United States or third parties upon 
the assets of the respondent and the amount of the assets 
of the respondent.’’. 
(2) UNDER THE SECURITIES EXCHANGE ACT OF 1934.—Section 
21B(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78u– 
2(a)) is amended— 
(A) by striking the matter following paragraph (4); 
(B) in the matter preceding paragraph (1), by inserting 
after ‘‘opportunity for hearing,’’ the following: ‘‘that such 
penalty is in the public interest and’’; 
(C) by redesignating paragraphs (1) through (4) as 
subparagraphs (A) through (D), respectively, and adjusting 
the margins accordingly; 
(D) by striking ‘‘In any proceeding’’ and inserting the 
following: 
‘‘(1) IN GENERAL.—In any proceeding’’; and 
(E) by adding at the end the following: 
‘‘(2) CEASE-AND-DESIST PROCEEDINGS.—In any proceeding 
instituted under section 21C against any person, the Commis-
sion may impose a civil penalty, if the Commission finds, on 
the record after notice and opportunity for hearing, that such 
person— 
‘‘(A) is violating or has violated any provision of this 
title, or any rule or regulation issued under this title; 
or 
‘‘(B) is or was a cause of the violation of any provision 
of this title, or any rule or regulation issued under this 
title.’’. 
(3) UNDER THE INVESTMENT COMPANY ACT OF 1940.—Section 
9(d)(1) of the Investment Company Act of 1940 (15 U.S.C. 
80a–9(d)(1)) is amended— 
(A) by striking the matter following subparagraph (C); 
(B) in the matter preceding subparagraph (A), by 
inserting after ‘‘opportunity for hearing,’’ the following: 
‘‘that such penalty is in the public interest, and’’; 
(C) by redesignating subparagraphs (A) through (C) 
as clauses (i) through (iii), respectively, and adjusting the 
margins accordingly; 
(D) by striking ‘‘In any proceeding’’ and inserting the 
following:
H. R. 4173—489 
‘‘(A) IN GENERAL.—In any proceeding’’; and 
(E) by adding at the end the following: 
‘‘(B) CEASE-AND-DESIST
PROCEEDINGS.—In any pro-
ceeding instituted pursuant to subsection (f) against any 
person, the Commission may impose a civil penalty if the 
Commission finds, on the record, after notice and oppor-
tunity for hearing, that such person— 
‘‘(i) is violating or has violated any provision of 
this title, or any rule or regulation issued under this 
title; or 
‘‘(ii) is or was a cause of the violation of any 
provision of this title, or any rule or regulation issued 
under this title.’’. 
(4) UNDER THE INVESTMENT ADVISERS ACT OF 1940.—Section 
203(i)(1) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b–3(i)(1)) is amended— 
(A) by striking the matter following subparagraph (D); 
(B) in the matter preceding subparagraph (A), by 
inserting after ‘‘opportunity for hearing,’’ the following: 
‘‘that such penalty is in the public interest and’’; 
(C) by redesignating subparagraphs (A) through (D) 
as clauses (i) through (iv), respectively, and adjusting the 
margins accordingly; 
(D) by striking ‘‘In any proceeding’’ and inserting the 
following: 
‘‘(A) IN GENERAL.—In any proceeding’’; and 
(E) by adding at the end the following new subpara-
graph: 
‘‘(B) CEASE-AND-DESIST
PROCEEDINGS.—In any pro-
ceeding instituted pursuant to subsection (k) against any 
person, the Commission may impose a civil penalty if the 
Commission finds, on the record, after notice and oppor-
tunity for hearing, that such person— 
‘‘(i) is violating or has violated any provision of 
this title, or any rule or regulation issued under this 
title; or 
‘‘(ii) is or was a cause of the violation of any 
provision of this title, or any rule or regulation issued 
under this title.’’. 
(b) EXTRATERRITORIAL JURISDICTION OF THE ANTIFRAUD PROVI-
SIONS OF THE FEDERAL SECURITIES LAWS.— 
(1) UNDER
THE
SECURITIES
ACT
OF
1933.—Section 22 of 
the Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by 
adding at the end the following new subsection: 
‘‘(c) EXTRATERRITORIAL JURISDICTION.—The district courts of 
the United States and the United States courts of any Territory 
shall have jurisdiction of an action or proceeding brought or 
instituted by the Commission or the United States alleging a viola-
tion of section 17(a) involving— 
‘‘(1) conduct within the United States that constitutes 
significant steps in furtherance of the violation, even if the 
securities transaction occurs outside the United States and 
involves only foreign investors; or 
‘‘(2) conduct occurring outside the United States that has 
a foreseeable substantial effect within the United States.’’.