I
108TH CONGRESS
1ST SESSION
H. R. 2179
To enhance the authority of the Securities and Exchange Commission to
investigate, punish, and deter securities laws violations, and to improve
its ability to return funds to defrauded investors, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 21, 2003
Mr. BAKER (for himself, Mr. OXLEY, Mr. TIBERI, Mr. OSE, and Mrs. KELLY)
introduced the following bill; which was referred to the Committee on Fi-
nancial Services
A BILL
To enhance the authority of the Securities and Exchange
Commission to investigate, punish, and deter securities
laws violations, and to improve its ability to return funds
to defrauded investors, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘The Securities Fraud
Deterrence and Investor Restitution Act of 2003’’.
SEC. 2. RECOVERY BY COMMISSION OF SECURITIES LAW
JUDGMENTS.
Title III of the Sarbanes-Oxley Act of 2002 is amend-
ed by adding after section 308 (15 U.S.C. 7246) the fol-
lowing new section:
‘‘SEC. 309. RECOVERY OF SECURITIES LAW JUDGMENTS;
REMOVAL OF STATE LAW IMPEDIMENTS.
‘‘If in any judicial or administrative action brought
by the Commission under the securities laws the Commis-
sion obtains a judgment or order (either by litigation or
settlement) against any person based upon an alleged
fraudulent, deceptive, or manipulative act or practice in
violation of such laws or the rules or regulations there-
under, the Commission may obtain the foreclosure and
forced sale of any property owned in whole or in part by
that person, or by any person to whom such ownership
was transferred without adequate consideration, to satisfy
that judgment or order in a Federal or State court not-
withstanding any homestead provision of any State con-
stitution or any other State law that exempts or protects
property from either foreclosure and forced sale under any
process of court or from any lien thereon for the payment
of debts.’’.
SEC. 3. CIVIL ENFORCEMENT PROVISIONS.
(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 fol-
lowing new subsection:
‘‘(g) AUTHORITY TO IMPOSE MONEY PENALTIES.—
‘‘(1) GROUNDS FOR IMPOSING.—In any cease-
and-desist proceeding under subsection (a), the
Commission may impose a civil penalty on a person
if it finds, on the record after notice and opportunity
for hearing, that—
‘‘(A) such person—
‘‘(i) is violating or has violated any
provision of this title, or any rule or regu-
lation thereunder; or
‘‘(ii) is or was a cause of the violation
of any provision of this title, or any rule or
regulation thereunder; and
‘‘(B) such penalty is in the public interest.
‘‘(2) MAXIMUM AMOUNT OF PENALTY.—
‘‘(A) FIRST TIER.—The maximum amount
of penalty for each act or omission described in
subsection (1) shall be $100,000 for a natural
person or $250,000 for any other person.
‘‘(B) 
SECOND
TIER.—Notwithstanding
paragraph (A), the maximum amount of pen-
alty for each such act or omission shall be
$500,000 for a natural person or $1,000,000
for any other person if the act or omission de-
scribed in subsection (1) involved fraud, deceit,
manipulation, or deliberate or reckless dis-
regard of a regulatory requirement.
‘‘(C) THIRD TIER.—Notwithstanding para-
graphs (A) and (B), the maximum amount of
penalty for each such act or omission shall be
$1,000,000 for a natural person or $2,000,000
for any other person if—
‘‘(i) the act or omission described in
subsection (1) involved fraud, deceit, ma-
nipulation, or deliberate or reckless dis-
regard of a regulatory requirement; and
‘‘(ii) such act or omission directly or
indirectly resulted in substantial losses or
created a significant risk of substantial
losses to other persons or resulted in sub-
stantial pecuniary gain to the person who
committed the act or omission.
‘‘(3) EVIDENCE
CONCERNING
ABILITY
TO
PAY.—In any proceeding in which the Commission
may impose a penalty under this section, a respond-
ent may present evidence of the respondent’s ability
to pay such penalty. The Commission may, in its
discretion, consider such evidence in determining
whether such penalty is in the public interest. Such
evidence may relate to the extent of such person’s
ability to continue in business and the collectability
of a penalty, taking into account any other claims of
the United States or third parties upon such per-
son’s assets and the amount of such person’s as-
sets.’’.
(2) UNDER THE SECURITIES EXCHANGE ACT
OF 1934.—Subsection (a) of section 21B of the Secu-
rities Exchange Act of 1934 (15 U.S.C. 78u–2(a))
is amended—
(A) by striking ‘‘(a) COMMISSION AUTHOR-
ITY TO ASSESS MONEY PENALTIES.—In any
proceeding’’ and inserting the following:
‘‘(a) COMMISSION AUTHORITY TO ASSESS MONEY
PENALTIES.—
‘‘(1) IN GENERAL.—In any proceeding’’;
(B) 
by 
redesignating 
paragraphs 
(1)
through (4) of such subsection as subpara-
graphs (A) through (D), respectively; and
(C) by adding at the end of such sub-
section the following new paragraph:
‘‘(2) 
CEASE-AND-DESIST
PROCEEDINGS.—In
any proceeding instituted pursuant to section 21C of
this title against any person, the Commission may
impose a civil penalty if it finds, on the record after
notice and opportunity for hearing, that such
person—
‘‘(A) is violating or has violated any provi-
sion of this title, or any rule or regulation
thereunder; or
‘‘(B) is or was a cause of the violation of
any provision of this title, or any rule or regula-
tion thereunder.’’.
(3) UNDER THE INVESTMENT COMPANY ACT OF
1940.—Paragraph (1) of section 9(d) of the Invest-
ment Company Act of 1940 (15 U.S.C. 80a–
9(d)(1))) is amended—
(A) by striking ‘‘(1) AUTHORITY OF COM-
MISSION.—In any proceeding’’ and inserting the
following:
‘‘(1) AUTHORITY OF COMMISSION.—
‘‘(A) IN GENERAL.—In any proceeding’’;
(B) by redesignating subparagraphs (A)
through (D) of such paragraph as clauses (i)
through (iv), respectively; and
(C) by adding at the end of such para-
graph the following new subparagraph:
‘‘(B) CEASE-AND-DESIST PROCEEDINGS.—
In any proceeding instituted pursuant to sub-
section (f) against any person, the Commission
may impose a civil penalty if it finds, on the
record after notice and opportunity for hearing,
that such person—
‘‘(i) is violating or has violated any
provision of this title, or any rule or regu-
lation thereunder; or
‘‘(ii) is or was a cause of the violation
of any provision of this title, or any rule or
regulation thereunder.’’.
(4) UNDER THE INVESTMENT ADVISERS ACT OF
1940.—Paragraph (1) of section 203(i) of the Invest-
ment Advisers Act of 1940 (15 U.S.C. 80b–3(i)(1))
is amended—
(A) by striking ‘‘(1) AUTHORITY OF COM-
MISSION.—In any proceeding’’ and inserting the
following:
‘‘(1) AUTHORITY OF COMMISSION.—
‘‘(A) IN GENERAL.—In any proceeding’’;
(B) by redesignating subparagraphs (A)
through (D) of such paragraph as clauses (i)
through (iv), respectively; and
(C) by adding at the end of such para-
graph the following new subparagraph:
‘‘(B) CEASE-AND-DESIST PROCEEDINGS.—
In any proceeding instituted pursuant to sub-
section (k) against any person, the Commission
may impose a civil penalty if it finds, on the
record after notice and opportunity for hearing,
that such person—
‘‘(i) is violating or has violated any
provision of this title, or any rule or regu-
lation thereunder; or
‘‘(ii) is or was a cause of the violation
of any provision of this title, or any rule or
regulation thereunder.’’.
(b) INCREASED
MAXIMUM
CIVIL
MONEY
PEN-
ALTIES.—
(1) SECURITIES ACT OF 1933.—Section 20(d)(2)
of the Securities Act of 1933 (15 U.S.C. 77t(d)(2))
is amended—
(A) in subparagraph (A)(i)—
(i) by striking ‘‘$5,000’’ and inserting
‘‘$100,000’’; and
(ii) by striking ‘‘$50,000’’ and insert-
ing ‘‘$250,000’’;
(B) in subparagraph (B)(i)—
(i) by striking ‘‘$50,000’’ and insert-
ing ‘‘$500,000’’; and
(ii) by striking ‘‘$250,000’’ and in-
serting ‘‘$1,000,000’’; and
(C) in subparagraph (C)(i)—
(i) by striking ‘‘$100,000’’ and insert-
ing ‘‘$1,000,000’’; and
(ii) by striking ‘‘$500,000’’ and in-
serting ‘‘$2,000,000’’.
(2) SECURITIES EXCHANGE ACT OF 1934.—
(A) PENALTIES.—Section 32 of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78ff) is
amended—
(i) in subsection (b), by striking
‘‘$100’’ and inserting ‘‘$10,000’’; and
(ii) in subsection (c)—
(I) in paragraph (1)(B), by strik-
ing 
‘‘$10,000’’ 
and 
inserting
‘‘$500,000’’; and
(II) in paragraph (2)(B), by
striking 
‘‘$10,000’’ 
and 
inserting
‘‘$500,000’’.
(B) INSIDER TRADING.—Section 21A(a)(3)
of the Securities Exchange Act of 1934 (15
U.S.C. 78u–1(a)(3)) is amended by striking
‘‘$1,000,000’’ and inserting ‘‘$2,000,000’’.
(C) ADMINISTRATIVE PROCEEDINGS.—Sec-
tion 21B(b) of the Securities Exchange Act of
1934 (15 U.S.C. 78u–2(b)) is amended—
(i) in paragraph (1)—
(I) by striking ‘‘$5,000’’ and in-
serting ‘‘$100,000’’; and
(II) by striking ‘‘$50,000’’ and
inserting ‘‘$250,000’’;
(ii) in paragraph (2)—
(I) by striking ‘‘$50,000’’ and in-
serting ‘‘$500,000’’; and
(II) by striking ‘‘$250,000’’ and
inserting ‘‘$1,000,000’’; and
(iii) in paragraph (3)—
(I) by striking ‘‘$100,000’’ and
inserting ‘‘$1,000,000’’; and
(II) by striking ‘‘$500,000’’ and
inserting ‘‘$2,000,000’’.
(D) CIVIL ACTIONS.—Section 21(d)(3)(B)
of the Securities Exchange Act of 1934 (15
U.S.C. 78u(d)(3)(B)) is amended—
(i) in clause (i)—
(I) by striking ‘‘$5,000’’ and in-
serting ‘‘$100,000’’; and
(II) by striking ‘‘$50,000’’ and
inserting ‘‘$250,000’’;
(ii) in clause (ii)—
(I) by striking ‘‘$50,000’’ and in-
serting ‘‘$500,000’’; and
(II) by striking ‘‘$250,000’’ and
inserting ‘‘$1,000,000’’; and
(iii) in clause (iii)—
(I) by striking ‘‘$100,000’’ and
inserting ‘‘$1,000,000’’; and
(II) by striking ‘‘$500,000’’ and
inserting ‘‘$2,000,000’’.
(3) INVESTMENT COMPANY ACT OF 1940.—
(A) INELIGIBILITY.—Section 9(d)(2) of the
Investment Company Act of 1940 (15 U.S.C.
80a–9(d)(2)) is amended—
(i) in subparagraph (A)—
(I) by striking ‘‘$5,000’’ and in-
serting ‘‘$100,000’’; and
(II) by striking ‘‘$50,000’’ and
inserting ‘‘$250,000’’;
(ii) in subparagraph (B)—
(I) by striking ‘‘$50,000’’ and in-
serting ‘‘$500,000’’; and
(II) by striking ‘‘$250,000’’ and
inserting ‘‘$1,000,000’’; and
(iii) in subparagraph (C)—
(I) by striking ‘‘$100,000’’ and
inserting ‘‘$1,000,000’’; and
(II) by striking ‘‘$500,000’’ and
inserting ‘‘$2,000,000’’.
(B) ENFORCEMENT OF INVESTMENT COM-
PANY ACT.—Section 42(e)(2) of the Investment
Company Act of 1940 (15 U.S.C. 80a–
41(e)(2)) is amended—
(i) in subparagraph (A)—
(I) by striking ‘‘$5,000’’ and in-
serting ‘‘$100,000’’; and
(II) by striking ‘‘$50,000’’ and
inserting ‘‘$250,000’’;
(ii) in subparagraph (B)—
(I) by striking ‘‘$50,000’’ and in-
serting ‘‘$500,000’’; and
(II) by striking ‘‘$250,000’’ and
inserting ‘‘$1,000,000’’; and
(iii) in subparagraph (C)—
(I) by striking ‘‘$100,000’’ and
inserting ‘‘$1,000,000’’; and
(II) by striking ‘‘$500,000’’ and
inserting ‘‘$2,000,000’’.
(4) INVESTMENT ADVISERS ACT OF 1940.—
(A) REGISTRATION.—Section 203(i)(2) of
the Investment advisers Act of 1940 (15 U.S.C.
80b–3(i)(2)) is amended—
(i) in subparagraph (A)—
(I) by striking ‘‘$5,000’’ and in-
serting ‘‘$100,000’’; and
(II) by striking ‘‘$50,000’’ and
inserting ‘‘$250,000’’;
(ii) in subparagraph (B)—
(I) by striking ‘‘$50,000’’ and in-
serting ‘‘$500,000’’; and
(II) by striking ‘‘$250,000’’ and
inserting ‘‘$1,000,000’’; and
(iii) in subparagraph (C)—
(I) by striking ‘‘$100,000’’ and
inserting ‘‘$1,000,000’’; and
(II) by striking ‘‘$500,000’’ and
inserting ‘‘$2,000,000’’.
(B) ENFORCEMENT OF INVESTMENT AD-
VISERS ACT.—Section 209(e)(2) of the Invest-
ment advisers Act of 1940 (15 U.S.C. 80b–
9(e)(2)) is amended—
(i) in subparagraph (A)—
(I) by striking ‘‘$5,000’’ and in-
serting ‘‘$100,000’’; and
(II) by striking ‘‘$50,000’’ and
inserting ‘‘$250,000’’;
(ii) in subparagraph (B)—
(I) by striking ‘‘$50,000’’ and in-
serting ‘‘$500,000’’; and
(II) by striking ‘‘$250,000’’ and
inserting ‘‘$1,000,000’’; and
(iii) in subparagraph (C)—
(I) by striking ‘‘$100,000’’ and
inserting ‘‘$1,000,000’’; and
(II) by striking ‘‘$500,000’’ and
inserting ‘‘$2,000,000’’.
(c) AUTHORITY TO OBTAIN FINANCIAL RECORDS.—
Section 21(h) of the Securities Exchange Act of 1934 (15
U.S.C. 78u(h)) is amended—
(1) by striking paragraphs (2) through (8);
(2) in paragraph (9), by striking ‘‘(9)(A)’’ and
all that follows through ‘‘(B) The’’ and inserting
‘‘(3) The’’;
(3) by inserting after paragraph (1), the fol-
lowing:
‘‘(2) ACCESS TO FINANCIAL RECORDS.—
‘‘(A) IN GENERAL.—Notwithstanding sec-
tion 1105 or 1107 of the Right to Financial
Privacy Act of 1978, the Commission may ob-
tain access to and copies of, or the information
contained in, financial records of any person
held by a financial institution, including the fi-
nancial records of a customer, without notice to
that person, when it acts pursuant to a sub-
poena authorized by a formal order of investiga-
tion of the Commission and issued under the
securities laws or pursuant to an administrative
or judicial subpoena issued in a proceeding or
action to enforce the securities laws.
‘‘(B) NONDISCLOSURE OF REQUESTS.—If
the Commission so directs in its subpoena, no
financial institution, or officer, director, part-
ner, employee, shareholder, representative or
agent of such financial institution, shall, di-
rectly or indirectly, disclose that records have
been requested or provided in accordance with
subparagraph (A), if the Commission finds rea-
son to believe that such disclosure may—
‘‘(i) result in the transfer of assets or
records outside the territorial limits of the
United States;
‘‘(ii) result in improper conversion of
investor assets;
‘‘(iii) impede the ability of the Com-
mission to identify, trace, or freeze funds
involved in any securities transaction;
‘‘(iv) endanger the life or physical
safety of an individual;
‘‘(v) result in flight from prosecution;
‘‘(vi) result in destruction of or tam-
pering with evidence;
‘‘(vii) result in intimidation of poten-
tial witnesses; or
‘‘(viii) otherwise seriously jeopardize
an investigation or unduly delay a trial.
‘‘(C) TRANSFER OF RECORDS TO GOVERN-
MENT
AUTHORITIES.—The Commission may
transfer financial records or the information
contained therein to any government authority,
if the Commission proceeds as a transferring
agency in accordance with section 1112 of the
Right to Financial Privacy Act of 1978 (12
U.S.C. 3412), except that a customer notice
shall not be required under subsection (b) or (c)
of that section 1112, if the Commission deter-
mines that there is reason to believe that such
notification may result in or lead to any of the
factors identified under clauses (i) through
(viii) of subparagraph (B) of this paragraph.’’;
(4) by striking paragraph (10); and
(5) by redesignating paragraphs (11), (12), and
(13) as paragraphs (4), (5), and (6), respectively.
SEC. 4. AUTHORITY TO ACCEPT PRIVILEGED AND PRO-
TECTED INFORMATION.
Section 24 of the Securities Exchange Act of 1934
(15 U.S.C. 78x) is amended—
(1) by redesignating subsection (e) as sub-
section (f); and
(2) by inserting after subsection (d) the fol-
lowing new subsection:
‘‘(e) AUTHORITY TO ACCEPT PRIVILEGED AND PRO-
TECTED INFORMATION.—Notwithstanding any other pro-
vision of law, whenever the Commission and any person
agree in writing to terms pursuant to which such person
will produce or disclose to the Commission any document
or information that is subject to any Federal or State law
privilege, or to the protection provided by the work prod-
uct doctrine, such production or disclosure shall not con-
stitute a waiver of the privilege or protection as to any
person other than the Commission.’’.
SEC. 5. ACCESS TO GRAND JURY INFORMATION.
Title VI of the Sarbanes-Oxley Act of 2002 is amend-
ed by adding at the end thereof the following new section:
‘‘SEC. 605. ACCESS TO GRAND JURY INFORMATION.
‘‘(a) DISCLOSURE OF CERTAIN MATTERS OCCUR-
RING BEFORE GRAND JURY FOR USE IN ENFORCING SE-
CURITIES LAWS.—
‘‘(1) IN GENERAL.—Upon motion of an attor-
ney for the government, a court may direct disclo-
sure of matters occurring before a grand jury during
an investigation of conduct that may constitute a
violation of any provision of the securities laws to
identified personnel of the Commission for use in re-
lation to any matter within the jurisdiction of the
Commission.
‘‘(2) FINDING
OF
SUBSTANTIAL
NEED
RE-
QUIRED.—A court may issue an order under para-
graph (1) only upon a finding of a substantial need
in the public interest.
‘‘(b) RESTRICTED USE OF INFORMATION.—A person
to whom a matter has been disclosed under this section
shall not use such matter other than for the purpose for
which such disclosure was authorized.
‘‘(c) DEFINITION.—As used in this section, the terms
‘attorney for the government’ and ‘grand jury information’
have the meanings given to those terms in section 3322
of title 18, United States Code.’’.
SEC. 6. NATIONWIDE SERVICE OF PROCESS.
(a) SECURITIES ACT OF 1933.—Section 22(a) of the
Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by
inserting after the second sentence the following: ‘‘In any
action or proceeding instituted by the Commission under
this title in a United States district court for any judicial
district, subpoenas issued by or on behalf of such court
to compel the attendance of witnesses or the production
of documents or tangible things (or both) may be served
in any other district. Such subpoenas may be served and
enforced without application to the court or a showing of
cause, notwithstanding the provisions of rule 45(b)(2),
(c)(3)(A)(ii), and (c)(3)(B)(iii) of the Federal Rules of
Civil Procedure.’’.
(b) SECURITIES EXCHANGE ACT OF 1934.—Section
27 of the Securities Exchange Act of 1934 (15 U.S.C.
78aa) is amended by inserting after the second sentence
the following: ‘‘In any action or proceeding instituted by
the Commission under this title in a United States district
court for any judicial district, subpoenas issued by or on
behalf of such court to compel the attendance of witnesses
or the production of documents or tangible things (or
both) may be served in any other district. Such subpoenas
may be served and enforced without application to the
court or a showing of cause, notwithstanding the provi-
sions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of
the Federal Rules of Civil Procedure.’’.
(c) INVESTMENT COMPANY ACT OF 1940.—Section
44 of the Investment Company Act of 1940 (15 U.S.C.
80a–43) is amended by inserting after the fourth sentence
the following: ‘‘In any action or proceeding instituted by
the Commission under this title in a United States district
court for any judicial district, subpoenas issued by or on
behalf of such court to compel the attendance of witnesses
or the production of documents or tangible things (or
both) may be served in any other district. Such subpoenas
may be served and enforced without application to the
court or a showing of cause, notwithstanding the provi-
sions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of
the Federal Rules of Civil Procedure.’’.
(d) INVESTMENT ADVISERS ACT OF 1940.—Section
214 of the Investment Advisers Act of 1940 (15 U.S.C.
80b–14) is amended by inserting after the third sentence
the following: ‘‘In any action or proceeding instituted by
the Commission under this title in a United States district
court for any judicial district, subpoenas issued by or on
behalf of such court to compel the attendance of witnesses
or the production of documents or tangible things (or
both) may be served in any other district. Such subpoenas
may be served and enforced without application to the
court or a showing of cause, notwithstanding the provi-
sions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of
the Federal Rules of Civil Procedure.’’.
SEC. 7. AUTHORITY TO CONTRACT WITH PRIVATE COUN-
SEL FOR LEGAL SERVICES TO COLLECT DE-
LINQUENT JUDGMENTS AND ORDERS.
Subsection (b) of section 4 of the Securities Exchange
Act of 1934 (15 U.S.C. 78d(b)) is amended—
(1) in the subsection heading by striking ‘‘AND
LEASING AUTHORITY.—’’ and inserting ‘‘, LEASING
AUTHORITY, AND CONTRACTING AUTHORITY.—’’;
and
(2) by adding at the end of such subsection the
following new paragraph:
‘‘(4) CONTRACTING AUTHORITY.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of law, the Commission is au-
thorized to enter into contracts to retain private
legal counsel to furnish legal services, including
representation in litigation, negotiation, com-
promise, and settlement, in the case of any
claim of indebtedness resulting from any judg-
ment or order (either by litigation or settle-
ment) obtained by the Commission in any judi-
cial action or administrative proceeding brought
by or on behalf of the Commission. Private
counsel retained under this paragraph may rep-
resent the Commission in such debt collection
matters to the same extent as the Commission
may represent itself.
‘‘(B) TERMS
AND
CONDITIONS
OF
CON-
TRACT.—Each such contract shall include such
terms and conditions as the Commission con-
siders necessary and appropriate, and shall in-
clude provisions specifying—
‘‘(i) the amount of the fee to be paid
to the private counsel under such contract
or the method for calculating that fee;
‘‘(ii) that the Commission retains the
authority to represent itself, resolve a dis-
pute, compromise a claim, end collection
efforts, and refer a matter to other private
counsel or to the Attorney General; and
‘‘(iii) that the Commission may termi-
nate either the contract or the private
counsel’s representation of the Commission
in particular cases for any reason, includ-
ing for the convenience of the Commission.
‘‘(C) 
PAYMENT
OF
FEES.—Notwith-
standing section 3302(b) of title 31, United
States Code, a contract under this paragraph
may provide that fees and costs incurred by pri-
vate counsel under such contracts are payable
from the amounts recovered.
‘‘(D) 
COMPETITION
REQUIREMENTS.—
Nothing in this paragraph shall relieve the
Commission of the competition requirements set
forth in title III of the Federal Property and
Administrative Services Act of 1949 (41 U.S.C.
251 et seq.).
‘‘(E) COUNTERCLAIMS.—In any action to
recover indebtedness which is brought on behalf
of the Commission by private counsel retained
under this paragraph, no counterclaim may be
asserted against the Commission unless the
counterclaim is served directly on the Commis-
sion. Such service shall be made in accordance
with the rules of procedure of the court in
which the action is brought.’’.
SEC. 8. FAIR ACT AMENDMENTS.
(a) CIVIL PENALTIES.—Section 308(a) of the Sar-
banes-Oxley Act of 2002 (15 U.S.C. 7246(a)) is amended
to read as follows;
‘‘(a) CIVIL PENALTIES TO BE USED FOR THE RE-
LIEF OF VICTIMS.—If in any judicial or administrative ac-
tion brought by the Commission under the securities laws
(as such term is defined in section 3(a)(47) of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78c(a)(47))) the
Commission obtains pursuant to such laws a civil penalty
against any person, such civil penalty monies shall, on the
motion or at the direction of the Commission, be added
to and become part of a fund for the benefit of the victims
of such violation.’’.
(b) ADDITIONAL PROVISIONS.—Section 308 of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246) is further
amended—
(1) by redesignation subsections (c), (d), and
(e) as subsections (e), (f), and (g), respectively; and
(2) by inserting the following after subsection
(b):
‘‘(c) CIVIL PENALTIES AND DISGORGEMENT FUNDS
IN ACTIONS BROUGHT BY STATES.—If a State or political
subdivision of a State establishes, as a result of an agree-
ment or judgment obtained by such State or political sub-
division, any requirements for brokers or dealers (includ-