I 
111TH CONGRESS 
1ST SESSION H. R. 3817 
To provide the Securities and Exchange Commission with additional authori-
ties to protect investors from violations of the securities laws, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 15, 2009 
Mr. KANJORSKI introduced the following bill; which was referred to the 
Committee on Financial Services 
A BILL 
To provide the Securities and Exchange Commission with 
additional authorities to protect investors from violations 
of the securities laws, 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 ‘‘Investor Protection 
Act of 2009.’’. 
SEC. 2. TABLE OF CONTENTS. 
The table of contents for this Act is as follows: 
Sec. 1. Short title. 
Sec. 2. Table of contents. 
TITLE I—DISCLOSURE 
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Sec. 101. Investor Advisory Committee established. 
Sec. 102. Clarification of the commission’s authority to engage in consumer 
testing. 
Sec. 103. Establishment of a fiduciary duty for brokers, dealers, and invest-
ment advisers, and harmonization of regulation. 
Sec. 104. Clarification of commission authority to require investor disclosures 
before purchase of investment company shares. 
Sec. 105. Beneficial ownership and short-swing profit reporting. 
Sec. 106. Revision to recordkeeping rules. 
TITLE II—ENFORCEMENT AND REMEDIES 
Sec. 201. Authority to restrict mandatory pre-dispute arbitration. 
Sec. 202. Whistleblower protection. 
Sec. 203. Conforming amendments for whistleblower protection. 
Sec. 204. Implementation and transition provisions for whistleblower protec-
tions. 
Sec. 205. Collateral bars. 
Sec. 206. Aiding and abetting authority under the Securities Act and the In-
vestment Company Act. 
Sec. 207. Authority to impose penalties for aiding and abetting violations of the 
Investment Advisers Act. 
Sec. 208. Deadline for completing examinations, inspections and enforcement 
actions. 
Sec. 209. Nationwide service of subpoenas. 
Sec. 210. Authority to impose civil penalties in cease and desist proceedings. 
Sec. 211. Formerly associated persons. 
Sec. 212. Sharing privileged information with other authorities. 
Sec. 213. Expanded access to grand jury material. 
Sec. 214. Aiding and abetting standard of knowledge satisfied by recklessness. 
Sec. 215. Extraterritorial jurisdiction of the antifraud provisions of the Federal 
securities laws. 
Sec. 216. Fidelity bonding. 
Sec. 217. Enhanced SEC authority to conduct surveillance and risk assessment. 
Sec. 218. Investment company examinations. 
Sec. 219. Control person liability under the Securities Exchange Act. 
Sec. 220. Enhanced application of anti-fraud provisions. 
TITLE III—COMMISSION FUNDING AND ORGANIZATION 
Sec. 301. Authorization of appropriations. 
Sec. 302. Investment adviser regulation funding. 
Sec. 303. Amendments to section 31 of the Securities Exchange Act of 1934. 
Sec. 304. Commission organizational study and reform. 
TITLE IV—ADDITIONAL COMMISSION REFORMS 
Sec. 401. Regulation of securities lending. 
Sec. 402. Lost and stolen securities. 
Sec. 403. Fingerprinting. 
Sec. 404. Equal treatment of self-regulatory organization rules. 
Sec. 405. Clarification that section 205 of the Investment Advisers Act of 1940 
does not apply to State-registered advisers. 
Sec. 406. Conforming amendments for the repeal of the Public Utility Holding 
Company Act of 1935. 
Sec. 407. Promoting transparency in financial reporting. 
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Sec. 408. Unlawful margin lending. 
Sec. 409. Protecting confidentiality of materials submitted to the Commission. 
Sec. 410. Technical corrections. 
Sec. 411. Municipal securities. 
Sec. 412. Interested person definition. 
Sec. 413. Rulemaking authority to protect redeeming investors. 
TITLE V—SECURITIES INVESTOR PROTECTION ACT 
AMENDMENTS 
Sec. 501. Increasing the minimum assessment paid by SIPC members. 
Sec. 502. Increasing the borrowing limit on treasury loans. 
Sec. 503. Increasing the cash limit of protection. 
Sec. 504. SIPC as trustee in SIPA liquidation proceedings. 
Sec. 505. Insiders ineligible for SIPC advances. 
Sec. 506. Eligibility for direct payment procedure. 
Sec. 507. Increasing the fine for prohibited acts under SIPA. 
Sec. 508. Penalty for misrepresentation of SIPC membership or protection. 
Sec. 509. Limitations on customer status. 
Sec. 510. Futures held in a portfolio margin securities account protection. 
Sec. 511. Risk-based premiums. 
Sec. 512. Budgetary treatment of Commission loans to SIPC. 
TITLE VI—SARBANES-OXLEY ACT AMENDMENTS 
Sec. 601. Public Company Accounting Oversight Board oversight of auditors of 
non-public brokers and dealers. 
Sec. 602. Foreign regulatory information sharing. 
Sec. 603. Expansion of audit information to be produced and exchanged with 
foreign counterparts. 
Sec. 604. Fair fund amendments. 
Sec. 605. Whistleblower protection against retaliation by a subsidiary of an 
issuer. 
TITLE I—DISCLOSURE 
SEC. 101. INVESTOR ADVISORY COMMITTEE ESTABLISHED. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by adding after section 4C the fol-
lowing new section: 
‘‘SEC. 4D. INVESTOR ADVISORY COMMITTEE. 
‘‘(a) ESTABLISHMENT AND PURPOSE.—There is es-
tablished an Investor Advisory Committee (in this section 
referred to as the ‘Committee’) to advise and consult with 
the Commission on— 
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‘‘(1) regulatory priorities and issues regarding 
new products, trading strategies, fee structures and 
the effectiveness of disclosures; 
‘‘(2) initiatives to protect investor interest; and 
‘‘(3) initiatives to promote investor confidence 
in the integrity of the marketplace. 
‘‘(b) MEMBERSHIP.— 
‘‘(1) APPOINTMENT.—The Chairman of the 
Commission shall appoint the members of the Com-
mittee, which members shall— 
‘‘(A) represent the interests of individual 
investors; 
‘‘(B) represent the interests of institutional 
investors; and 
‘‘(C) use a wide range of investment ap-
proaches. 
‘‘(2) MEMBERS
NOT
COMMISSION
EMPLOY-
EES.—Members shall not be considered employees or 
agents of the Commission solely because of member-
ship on the Committee. 
‘‘(c) MEETINGS.—The Committee shall meet from 
time to time at the call of the Commission, but, at a min-
imum, shall meet at least twice each year. 
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‘‘(d) COMPENSATION
AND TRAVEL EXPENSES.— 
Members of the Committee who are not full-time employ-
ees of the United States shall— 
‘‘(1) be entitled to receive compensation at a 
rate fixed by the Commission while attending meet-
ings of the Committee, including travel time; and 
‘‘(2) be allowed travel expenses, including trans-
portation and subsistence, while away from their 
homes or regular places of business. 
‘‘(e) COMMITTEE FINDINGS.—Nothing in this section 
requires the Commission to accept, agree, or act upon the 
findings or recommendations of the Committee. 
‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There 
is authorized to be appropriated to the Commission such 
sums as are necessary for the activities of the Com-
mittee.’’. 
SEC. 102. CLARIFICATION OF THE COMMISSION’S AUTHOR-
ITY TO ENGAGE IN CONSUMER TESTING. 
(a) AMENDMENT TO SECURITIES ACT OF 1933.— 
Section 19 of the Securities Act of 1933 (15 U.S.C. 77s) 
is amended by adding at the end the following new sub-
section: 
‘‘(e) For the purposes of evaluating its rules and pro-
grams and for considering, proposing, adopting, or engag-
ing in rules or programs, the Commission is authorized 
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to gather information, communicate with investors or 
other members of the public, and engage in such tem-
porary or experimental programs as the Commission in its 
discretion determines is in the public interest or for the 
protection of investors. The Commission may delegate to 
its staff some or all of the authority conferred by this sub-
section.’’. 
(b) AMENDMENT TO SECURITIES EXCHANGE ACT OF 
1934.—Section 23 of the Securities Exchange Act of 1934 
(15 U.S.C. 78w) is amended by redesignating subsections 
(b), (c), and (d) as subsections (c), (d), and (e), respec-
tively, and inserting after subsection (a) the following: 
‘‘(b) For the purposes of evaluating its rules and pro-
grams and for considering proposing, adopting, or engag-
ing in rules or programs, the Commission is authorized 
to gather information, communicate with investors or 
other members of the public, and engage in such tem-
porary or experimental programs as the Commission in its 
discretion determines is in the public interest or for the 
protection of investors. The Commission may delegate to 
its staff some or all of the authority conferred by this sub-
section.’’. 
(c) AMENDMENT TO INVESTMENT COMPANY ACT OF 
1940.—Section 38 of the Investment Company Act of 
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1940 (15 U.S.C. 80a–38) is amended by adding at the 
end the following new subsection: 
‘‘(d) GATHERING INFORMATION.—For the purposes 
of evaluating its rules and programs and for considering 
proposing, adopting, or engaging in rules or programs, the 
Commission is authorized to gather information, commu-
nicate with investors or other members of the public, and 
engage in such temporary or experimental programs as 
the Commission in its discretion determines is in the pub-
lic interest or for the protection of investors. The Commis-
sion may delegate to its staff some or all of the authority 
conferred by this subsection.’’. 
(d) AMENDMENT TO THE INVESTMENT ADVISERS 
ACT OF 1940.—Section 211 of the Investment Advisers 
Act of 1940 (15 U.S.C. 80b–11) is amended by adding 
at the end the following new subsection: 
‘‘(e) For the purposes of evaluating its rules and pro-
grams and for considering proposing, adopting, or engag-
ing in rules or programs, the Commission is authorized 
to gather information, communicate with investors or 
other members of the public, and engage in such tem-
porary or experimental programs as the Commission in its 
discretion determines is in the public interest or for the 
protection of investors. The Commission may delegate to 
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its staff some or all of the authority conferred by this sub-
section.’’. 
SEC. 103. ESTABLISHMENT OF A FIDUCIARY DUTY FOR 
BROKERS, DEALERS, AND INVESTMENT AD-
VISERS, AND HARMONIZATION OF REGULA-
TION. 
(a) IN GENERAL.— 
(1) SECURITIES EXCHANGE ACT OF 1934.—Sec-
tion 15 of the Securities Exchange Act of 1934 (15 
U.S.C. 78o) is amended— 
(A) by redesignating the second subsection 
(i) as subsection (j); and 
(B) by adding at the end the following new 
subsections: 
‘‘(k) STANDARDS OF CONDUCT.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of this Act or the Investment Advisers Act 
of 1940, the Commission shall promulgate rules to 
provide that, with respect to a broker or dealer that 
is providing investment advice 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 the Investment Ad-
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visers Act of 1940. The receipt of compensation 
based on commission shall not, in and of itself, be 
considered a violation of such standard applied to a 
broker or dealer. 
‘‘(2) RETAIL CUSTOMER DEFINED.—For pur-
poses of this subsection, the term ‘retail customer’ 
means an individual, or the legal representative of 
such individual, who— 
‘‘(A) receives personalized investment ad-
vice from a broker or dealer; and 
‘‘(B) uses such advice primarily for per-
sonal, family, or household purposes. 
‘‘(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; and 
‘‘(2) examine and, where appropriate, promul-
gate rules prohibiting sales practices, conflicts of in-
terest, and compensation schemes for financial inter-
mediaries (including brokers, dealers, and invest-
ment advisers) that it deems contrary to the public 
interest and the interests of investors.’’. 
(2) INVESTMENT ADVISERS ACT OF 1940.—Sec-
tion 211 of the Investment Advisers Act of 1940, as 
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amended by section 102(d), is further amended by 
adding at the end the following new subsection: 
‘‘(f) STANDARDS OF CONDUCT.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of this Act or the Securities Exchange Act 
of 1934, the Commission shall promulgate rules to 
provide that the standards of conduct for all bro-
kers, dealers, and investment advisers, in providing 
investment advice to retail customers (and such 
other customers as the Commission may by rule pro-
vide), shall be to act in the best interest of the cus-
tomer without regard to the financial or other inter-
est of the broker, dealer, or investment adviser pro-
viding the advice. 
‘‘(2) RETAIL CUSTOMER DEFINED.—For pur-
poses of this subsection, the term ‘retail customer’ 
means an individual, or the legal representative of 
such individual, who— 
‘‘(A) receives personalized investment ad-
vice from a broker, dealer, or investment ad-
viser; and 
‘‘(B) uses such advice primarily for per-
sonal, family, or household purposes. 
‘‘(g) OTHER MATTERS.—The Commission shall— 
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‘‘(1) facilitate the provision of simple and clear 
disclosures to investors regarding the terms of their 
relationships with brokers, dealers, and investment 
advisers; and 
‘‘(2) examine and, where appropriate, promul-
gate rules prohibiting sales practices, conflicts of in-
terest, and compensation schemes for financial inter-
mediaries (including brokers, dealers, and invest-
ment advisers) that it deems contrary to the public 
interest and the interests of investors.’’. 
(b) HARMONIZATION OF ENFORCEMENT AND REM-
EDY REGULATIONS.—Section 15 of the Securities Ex-
change Act of 1934, as amended by subsection (a), is fur-
ther amended by adding at the end the following new sub-
section: 
‘‘(m) HARMONIZATION OF ENFORCEMENT AND REM-
EDY REGULATIONS.—The Commission shall issue regula-
tions to ensure, to the extent practicable, that the enforce-
ment options and remedies available for violations of the 
standard of conduct applicable to a broker or dealer pro-
viding investment advice to a retail customer are commen-
surate with those enforcement options and remedies avail-
able for violations of the standard of conduct applicable 
to investment advisers under the Investment Advisers Act 
of 1940.’’. 
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SEC. 104. CLARIFICATION OF COMMISSION AUTHORITY TO 
REQUIRE INVESTOR DISCLOSURES BEFORE 
PURCHASE 
OF 
INVESTMENT 
COMPANY 
SHARES. 
Section 24 of the Investment Company Act of 1940 
(15 U.S.C. 80a–24) is amended by adding at the end the 
following new subsection: 
‘‘(h) TIMING OF DISCLOSURE.—Notwithstanding any 
other provision of this Act or the Securities Act of 1933, 
the Commission is authorized to promulgate rules desig-
nating documents or information that must precede a sale 
to a purchaser of securities issued by a registered invest-
ment company.’’. 
SEC. 105. BENEFICIAL OWNERSHIP AND SHORT-SWING 
PROFIT REPORTING. 
(a) BENEFICIAL OWNERSHIP REPORTING.—Section 
13 of the Securities Exchange Act of 1934 (15 U.S.C. 
78m) is amended— 
(1) in subsection (d)(1)— 
(A) by inserting after ‘‘within ten days 
after such acquisition’’ the following: ‘‘or within 
such shorter time as the Commission may es-
tablish by rule’’; and 
(B) by striking ‘‘send to the issuer of the 
security at its principal executive office, by reg-
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istered or certified mail, send to each exchange 
where the security is traded, and’’; 
(2) in subsection (d)(2)— 
(A) by striking ‘‘in the statements to the 
issuer and the exchange, and’’; and 
(B) by striking ‘‘shall be transmitted to 
the issuer and the exchange and’’; 
(3) in subsection (g)(1), by striking ‘‘shall send 
to the issuer of the security and’’; and 
(4) in subsection (g)(2)— 
(A) by striking ‘‘sent to the issuer and’’; 
and 
(B) by striking ‘‘shall be transmitted to 
the issuer and’’. 
(b) SHORT-SWING
PROFIT
REPORTING.—Section 
16(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78p(a)) is amended— 
(1) in paragraph (1), by striking ‘‘(and, if such 
security is registered on a national securities ex-
change, also with the exchange)’’; and 
(2) in paragraph (2)(B), by inserting after ‘‘of-
ficer’’ the following: ‘‘, or within such shorter time 
as the Commission may establish by rule’’. 
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SEC. 106. REVISION TO RECORDKEEPING RULES. 
(a) INVESTMENT COMPANY ACT OF 1940 AMEND-
MENTS.—Section 31 of the Investment Company Act of 
1940 (15 U.S.C. 80a–30) is amended— 
(1) in subsection (a)(1), by adding at the end 
the following: ‘‘Each person with custody or use of 
a registered investment company’s securities, depos-
its, or credits shall maintain and preserve all records 
that relate to the person’s custody or use of the reg-
istered investment company’s securities, deposits, or 
credits for such period or periods as the Commis-
sion, by rules and regulations, may prescribe as nec-
essary or appropriate in the public interest or for 
the protection of investors.’’; and 
(2) in subsection (b), by adding at the end the 
following new paragraph: 
‘‘(4) RECORDS OF PERSONS WITH CUSTODY OR 
USE.— 
‘‘(A) IN GENERAL.—Notwithstanding para-
graph (1), records of persons with custody or 
use of a registered investment company’s secu-
rities, deposits, or credits, that relate to such 
custody or use, are subject at any time, or from 
time to time, to such reasonable periodic, spe-
cial, or other examinations and other informa-
tion and document requests by representatives 
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of the Commission as the Commission deems 
necessary or appropriate in the public interest 
or for the protection of investors. 
‘‘(B) CERTAIN
PERSONS
SUBJECT
TO 
OTHER REGULATION.—Persons subject to regu-
lation and examination by a Federal financial 
institution regulatory agency (as such term is 
defined under section 212(c)(2) of title 18, 
United States Code) may satisfy any examina-
tion request, information request, or document 
request described under subparagraph (A), by 
providing the Commission with a detailed list-
ing, in writing, of the registered investment 
company’s securities, deposits, or credits within 
such person’s custody or use.’’. 
(b) INVESTMENT ADVISERS ACT OF 1940 AMEND-
MENT.—Section 204 of the Investment Advisers Act of 
1940 (15 U.S.C. 80b–4) is amended by adding at the end 
the following new subsection: 
‘‘(d) RECORDS
OF PERSONS WITH CUSTODY
OR 
USE.— 
‘‘(1) IN
GENERAL.—Records of persons with 
custody or use of a client’s securities, deposits, or 
credits, that relate to such custody or use, are sub-
ject at any time, or from time to time, to such rea-
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sonable periodic, special, or other examinations and 
other information and document requests by rep-
resentatives of the Commission as the Commission 
deems necessary or appropriate in the public interest 
or for the protection of investors. 
‘‘(2) CERTAIN
PERSONS
SUBJECT
TO
OTHER 
REGULATION.—Persons subject to regulation and ex-
amination by a Federal financial institution regu-
latory agency (as such term is defined under section 
212(c)(2) of title 18, United States Code) may sat-
isfy any examination request, information request, 
or document request described under paragraph (1), 
by providing the Commission with a detailed listing, 
in writing, of the client’s securities, deposits, or 
credits within such person’s custody or use.’’. 
TITLE II—ENFORCEMENT AND 
REMEDIES 
SEC. 201. AUTHORITY TO RESTRICT MANDATORY PRE-DIS-
PUTE ARBITRATION. 
(a) AMENDMENT TO SECURITIES EXCHANGE ACT OF 
1934.—Section 15 of the Securities Exchange Act of 1934 
(15 U.S.C. 78o), as amended by section 103) is further 
amended by adding at the end the following new sub-
section: 
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‘‘(m) AUTHORITY TO RESTRICT MANDATORY PRE- 
DISPUTE ARBITRATION.—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 Fed-
eral securities laws or the rules of a self-regulatory organi-
zation if it finds that such prohibition, imposition of condi-
tions, or limitations are in the public interest and for the 
protection of investors.’’. 
(b) AMENDMENT TO INVESTMENT ADVISERS ACT OF 
1940.—Section 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 ARBITRATION.—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 or the rules 
of a self-regulatory organization if it finds that such prohi-
bition, imposition of conditions, or limitations are in the 
public interest and for the protection of investors.’’. 
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SEC. 202. WHISTLEBLOWER PROTECTION. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by adding after section 21E the fol-
lowing new section: 
‘‘SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND 
PROTECTION. 
‘‘(a) IN GENERAL.—In any judicial or administrative 
action brought by the Commission under the securities 
laws that results in monetary sanctions exceeding 
$1,000,000, the Commission, under regulations prescribed 
by the Commission and subject to subsection (b), may pay 
an award or awards not exceeding an amount equal to 30 
percent, in total, of the monetary sanctions imposed in the 
action or related actions to one or more whistleblowers 
who voluntarily provided original information to the Com-
mission that led to the successful enforcement of the ac-
tion. Any amount payable under the preceding sentence 
shall be paid from the fund described in subsection (f). 
‘‘(b) DETERMINATION OF AMOUNT OF AWARD; DE-
NIAL OF AWARD.— 
‘‘(1) 
DETERMINATION
OF
AMOUNT
OF 
AWARD.—The determination of the amount of an 
award, within the limit specified in subsection (a), 
shall be in the sole discretion of the Commission. 
The Commission may take into account the signifi-
cance of the whistleblower’s information to the suc-
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cess of the judicial or administrative action described 
in subsection (a), the degree of assistance provided 
by the whistleblower and any legal representative of 
the whistleblower in such action, the Commission’s 
programmatic interest in deterring violations of the 
securities laws by making awards to whistleblowers 
who provide information that leads to the successful 
enforcement of such laws, and such additional fac-
tors as the Commission may establish by rules or 
regulations. 
‘‘(2) DENIAL
OF
AWARD.—No award under 
subsection (a) shall be made— 
‘‘(A) to any whistleblower who is, or was at 
the time he or she acquired the original infor-
mation submitted to the Commission, a mem-
ber, officer, or employee of any appropriate reg-
ulatory agency, the Department of Justice, or a 
self-regulatory organization; 
‘‘(B) to any whistleblower who is convicted 
of a criminal violation related to the judicial or 
administrative action for which the whistle-
blower otherwise could receive an award under 
this section; or 
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‘‘(C) to any whistleblower who fails to sub-
mit information to the Commission in such 
form as the Commission may, by rule, require. 
‘‘(c) REPRESENTATION.— 
‘‘(1) 
PERMITTED
REPRESENTATION.—Any 
whistleblower who makes a claim for an award under 
subsection (a) may be represented by counsel. 
‘‘(2) REQUIRED REPRESENTATION.—Any whis-
tleblower who makes a claim for an award under 
subsection (a) must be represented by counsel if the 
whistleblower submits the information upon which 
the claim is based anonymously. Prior to the pay-
ment of an award, the whistleblower must disclose 
his or her identity and provide such other informa-
tion as the Commission may require. 
‘‘(d) NO CONTRACT NECESSARY.—No contract with 
the Commission is necessary for any whistleblower to re-
ceive an award under subsection (a), unless the Commis-
sion, by rule or regulation, so requires. 
‘‘(e) APPEALS.—Any determinations under this sec-
tion, including whether, to whom, or in what amounts to 
make awards, shall be in the sole discretion of the Com-
mission, and any such determinations shall be final and 
not subject to judicial review. 
‘‘(f) INVESTOR PROTECTION FUND.— 
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‘‘(1) FUND
ESTABLISHED.—There is estab-
lished in the Treasury of the United States a fund 
to be known as the ‘Securities and Exchange Com-
mission Investor Protection Fund’ (referred to in 
this section as the ‘Fund’). 
‘‘(2) USE OF FUND.—The Fund shall be avail-
able to the Commission, without further appropria-
tion or fiscal year limitation, for the following pur-
poses: 
‘‘(A) Paying awards to whistleblowers as 
provided in subsection (a). 
‘‘(B) Funding investor education initiatives 
designed to help investors protect themselves 
against securities fraud or other violations of 
the securities laws, or the rules and regulations 
thereunder. 
‘‘(3) DEPOSITS AND CREDITS.—There shall be 
deposited into or credited to the Fund— 
‘‘(A) any monetary sanction collected by 
the Commission in any judicial or administra-
tive action brought by the Commission under 
the securities laws that is not added to a 
disgorgement fund pursuant to section 308 of 
the Sarbanes-Oxley Act of 2002 or other fund 
or otherwise distributed to victims of a violation 
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of the securities laws, or the rules and regula-
tions thereunder, underlying such action, unless 
the balance of the Fund at the time the mone-
tary sanction is collected exceeds $100,000,000; 
‘‘(B) any monetary sanction added to a 
disgorgement fund pursuant to section 308 of 
the Sarbanes-Oxley Act of 2002 or other fund 
that is not distributed to the victims for whom 
the disgorgement fund was established, unless 
the balance of the Fund at the time the deter-
mination is made not to distribute the monetary 
sanction to such victims exceeds $100,000,000; 
and 
‘‘(C) all income from investments made 
under paragraph (4). 
‘‘(4) INVESTMENTS.— 
‘‘(A) AMOUNTS
IN
FUND
MAY
BE
IN-
VESTED.—The Commission may request the 
Secretary of the Treasury to invest the portion 
of the Fund that is not, in the Commission’s 
judgment, required to meet the current needs of 
the Fund. 
‘‘(B) 
ELIGIBLE
INVESTMENTS.—Invest-
ments shall be made by the Secretary of the 
Treasury in obligations of the United States or 
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obligations that are guaranteed as to principal 
and interest by the United States, with matu-
rities suitable to the needs of the Fund as de-
termined by the Commission. 
‘‘(C) INTEREST
AND
PROCEEDS
CRED-
ITED.—The interest on, and the proceeds from 
the sale or redemption of, any obligations held 
in the Fund shall be credited to, and form a 
part of, the Fund. 
‘‘(5) REPORTS TO CONGRESS.—Not later than 
October 30 of each year, the Commission shall 
transmit to the Committee on Banking, Housing, 
and Urban Affairs of the Senate, and the Committee 
on Financial Services of the House of Representa-
tives a report on— 
‘‘(A) 
the 
Commission’s 
whistleblower 
award program under this section, including a 
description of the number of awards granted 
and the types of cases in which awards granted 
during the preceding fiscal year; 
‘‘(B) investor education initiatives de-
scribed in paragraph (2)(B) that were funded 
by the Fund during the preceding fiscal year; 
‘‘(C) the balance of the Fund at the begin-
ning of the preceding fiscal year; 
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‘‘(D) the amounts deposited into or cred-
ited to the Fund during the preceding fiscal 
year; 
‘‘(E) the amount of earnings on invest-
ments of amounts in the Fund during the pre-
ceding fiscal year; 
‘‘(F) the amount paid from the Fund dur-
ing the preceding fiscal year to whistleblowers 
pursuant to subsection (a); 
‘‘(G) the amount paid from the Fund dur-
ing the preceding fiscal year for investor edu-
cation initiatives described in paragraph (1)(B); 
‘‘(H) the balance of the Fund at the end 
of the preceding fiscal year; and 
‘‘(I) a complete set of audited financial 
statements, including a balance sheet, income 
statement, and cash flow analysis. 
‘‘(g) PROTECTION OF WHISTLEBLOWERS.— 
‘‘(1) PROHIBITION AGAINST RETALIATION.— 
‘‘(A) IN GENERAL.—No employer may dis-
charge, demote, suspend, threaten, harass, or in 
any other manner discriminate against an em-
ployee, contractor, or agent in the terms and 
conditions of employment because of any lawful 
act done by the employee, contractor, or agent 
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in providing information to the Commission in 
accordance with subsection (a), or in assisting 
in any investigation or judicial or administrative 
action of the Commission based upon or related 
to such information. 
‘‘(B) ENFORCEMENT.— 
‘‘(i) CAUSE
OF
ACTION.—An indi-
vidual who alleges discharge or other dis-
crimination 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). 
‘‘(i) SUBPOENAS.—A subpoena requir-
ing the attendance of a witness at a trial 
or hearing conducted under this section 
may be served at any place in the United 
States. 
‘‘(ii) STATUTE OF LIMITATIONS.—An 
action under this subsection may not be 
brought more than 6 years after the date 
on which the violation of subparagraph (A) 
occurred, or more than 3 years after the 
date when facts material to the right of ac-
tion are known or reasonably should have 
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been known by the employee alleging a vio-
lation of subparagraph (A), but in no event 
after 10 years after the date on which the 
violation occurs. 
‘‘(C) RELIEF.—An employee, contractor, 
or agent prevailing in any action brought under 
subparagraph (B) shall be entitled to all relief 
necessary to make that employee, contractor, or 
agent whole, including reinstatement with the 
same seniority status that the employee, con-
tractor, or agent would have had, but for the 
discrimination, 2 times the amount of back pay, 
with interest, and compensation for any special 
damages sustained as a result of the discrimi-
nation, including litigation costs, expert witness 
fees, and reasonable attorneys’ fees. 
‘‘(2) CONFIDENTIALITY.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), all information provided to 
the Commission by a whistleblower shall be con-
fidential and privileged as an evidentiary matter 
(and shall not be subject to civil discovery or 
other legal process) in any proceeding in any 
Federal or State court or administrative agen-
cy, and shall be exempt from disclosure, in the 
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hands of an agency or establishment of the 
Federal Government, under the Freedom of In-
formation Act (5 U.S.C. 552), or otherwise, un-
less and until required to be disclosed to a de-
fendant or respondent in connection with a pub-
lic proceeding instituted by the Commission or 
any entity described in subparagraph (B). For 
purposes of section 552 of title 5, United States 
Code, this paragraph shall be considered a stat-
ute described in subsection (b)(3)(B) of such 
section 552. Nothing herein is intended to limit 
the Attorney General’s ability to present such 
evidence to a grand jury or to share such evi-
dence with potential witnesses or defendants in 
the course of an ongoing criminal investigation. 
‘‘(B) 
AVAILABILITY
TO
GOVERNMENT 
AGENCIES.—Without the loss of its status as 
confidential and privileged in the hands of the 
Commission, all information referred to in sub-
paragraph (A) may, in the discretion of the 
Commission, when determined by the Commis-
sion to be necessary to accomplish the purposes 
of this Act and protect investors, be made avail-
able to— 
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‘‘(i) the Attorney General of the 
United States, 
‘‘(ii) an appropriate regulatory au-
thority, 
‘‘(iii) a self-regulatory organization, 
‘‘(iv) State attorneys general in con-
nection with any criminal investigation, 
and 
‘‘(v) any appropriate State regulatory 
authority, 
each of which shall maintain such information 
as confidential and privileged, in accordance 
with the requirements in subparagraph (A). 
‘‘(3) RIGHTS RETAINED.—Nothing in this sec-
tion shall be deemed to diminish the rights, privi-
leges, or remedies of any whistleblower under any 
Federal or State law, or under any collective bar-
gaining agreement. 
‘‘(h) RULEMAKING AUTHORITY.—The Commission 
shall have the authority to issue such rules and regulations 
as may be necessary or appropriate to implement the pro-
visions of this section. 
‘‘(i) DEFINITIONS.—For purposes of this section, the 
following terms have the following meanings: 
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‘‘(1) 
ORIGINAL
INFORMATION.—The 
term 
‘original information’ means information that— 
‘‘(A) is based on the direct and inde-
pendent knowledge or analysis of a whistle-
blower; 
‘‘(B) is not known to the Commission from 
any other source; and 
‘‘(C) is not based on allegations in a judi-
cial or administrative hearing, in a govern-
mental report, hearing, audit, or investigation, 
or from the news media, unless the whistle-
blower is the initial source of the information 
that resulted in the judicial or administrative 
hearing, governmental report, hearing, audit, or 
investigation, or the news media’s report on the 
allegations. 
‘‘(2) MONETARY SANCTIONS.—The term ‘mone-
tary sanctions,’ when used with respect to any judi-
cial or administrative action, means any monies, in-
cluding but not limited to penalties, disgorgement, 
and interest, ordered to be paid, and any monies de-
posited into a disgorgement 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. 
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‘‘(3) RELATED ACTION.—The term ‘related ac-
tion,’ when used with respect to any judicial or ad-
ministrative action brought by the Commission 
under the securities laws, means any judicial or ad-
ministrative action brought by an entity described in 
subsection (g)(2)(B) that is based upon the same 
original information provided by a whistleblower 
pursuant to subsection (a) that led to the successful 
enforcement of the Commission action. 
‘‘(4) WHISTLEBLOWER.—The term ‘whistle-
blower’ means an individual, or two or more individ-
uals acting jointly, who submit information to the 
Commission as provided in this section.’’. 
SEC. 203. CONFORMING AMENDMENTS FOR WHISTLE-
BLOWER PROTECTION. 
(a) IN GENERAL.—Each of the following provisions 
is amended by inserting ‘‘and section 21F of the Securities 
Exchange Act of 1934’’ after ‘‘the Sarbanes-Oxley Act of 
2002’’: 
(1) Section 20(d)(3)(A) of the Securities Act of 
1933 (15 U.S.C. 77t(d)(3)(A)). 
(2) Section 42(e)(3)(A) of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–41(e)(3)(A)). 
(3) Section 209(e)(3)(A) of the Investment Ad-
visers Act of 1940 (15 U.S.C. 80b–9(e)(3)(A)). 
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(b) SECURITIES EXCHANGE ACT.—The Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amend-
ed— 
(1) in section 21(d)(3)(C)(i) (15 U.S.C. 
78u(d)(3)(C)(i)), by inserting ‘‘and section 21F of 
this title’’ after ‘‘the Sarbanes-Oxley Act of 2002’’; 
(2) in section 21A(d)(1) (15 U.S.C. 78u– 
1(d)(1))— 
(A) by striking ‘‘(subject to subsection 
(e))’’; and 
(B) by inserting ‘‘and section 21F of this 
title’’ after ‘‘the Sarbanes-Oxley Act of 2002’’; 
and 
(3) in section 21A, by striking subsection (e) 
and redesignating subsections (f) and (g) as sub-
section (e) and (f), respectively. 
SEC. 204. IMPLEMENTATION AND TRANSITION PROVISIONS 
FOR WHISTLEBLOWER PROTECTIONS. 
(a) IMPLEMENTING RULES.—The Securities and Ex-
change Commission shall issue final regulations imple-
menting the provisions of section 21F of the Securities 
Exchange Act of 1934, as added by this title, no later than 
270 days after the date of enactment of this Act. 
(b) ORIGINAL
INFORMATION.—Information sub-
mitted to the Commission by a whistleblower in accord-
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ance with regulations implementing the provisions of sec-
tion 21F of the Securities Exchange Act of 1934, as added 
by this title, shall not lose its status as original informa-
tion, as defined in subsection (i)(1) of such section, solely 
because the whistleblower submitted such information 
prior to the effective date of such regulations, provided 
such information was submitted after the date of enact-
ment of this Act, or related to insider trading violations 
for which a bounty could have been paid at the time such 
information was submitted. 
(c) AWARDS.—A whistleblower may receive an award 
pursuant to section 21F of the Securities Exchange Act 
of 1934, as added by this title, regardless of whether any 
violation of a provision of the securities laws, or a rule 
or regulation thereunder, underlying the judicial or admin-
istrative action upon which the award is based occurred 
prior to the date of enactment of this Act. 
SEC. 205. COLLATERAL BARS. 
(a) SECTION 15 OF THE SECURITIES EXCHANGE ACT 
OF 1934.—Section 15(b)(6)(A) of the Securities Ex-
change 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 
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