SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Military Personnel Fi-
nancial Services Protection Act’’.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds the following:
(1) Our military personnel perform great sac-
rifices in protecting our Nation in the War on Ter-
ror and promoting democracy abroad.
(2) Our brave men and women in uniform de-
serve to be offered first-rate financial products in
order to provide for their families and to save and
invest for retirement.
(3) Our military personnel are being offered
high-cost securities and life insurance products by
some financial services companies engaging in abu-
sive and misleading sales practices.
(4) One securities product being offered to our
service members, the contractual plan, has largely
disappeared from the civilian market since the 1980s
due to its excessive sales charges and the emergence
of low-cost products. A 50-percent sales commission
is typically assessed against the first year of con-
tributions made under a contractual plan, even
though the average commission on other securities
products such as mutual funds is less than 6 percent
on each sale.
(5) The excessive sales charge of the contrac-
tual plan makes it susceptible to abusive and mis-
leading sales practices.
(6) Certain life insurance products being of-
fered to our service members are being improperly
marketed as investment products. These products
provide very low death benefits for very high pre-
miums that are front-loaded in the first few years,
making them completely inappropriate for most mili-
tary personnel.
(7) Regulation of these securities and life insur-
ance products and their sale on military bases has
been clearly inadequate and requires Congressional
legislation to address.
SEC. 3. PROHIBITION ON FUTURE SALES OF PERIODIC PAY-
MENT PLANS.
(a) AMENDMENT.—Section 27 of the Investment
Company Act of 1940 (15 U.S.C. 80a-27) is amended by
adding at the end the following new subsection:
‘‘(j) TERMINATION OF SALES.—
‘‘(1) TERMINATION.—Effective 30 days after
the date of enactment of the Military Personnel Fi-
nancial Services Protection Act, it shall be unlawful,
subject to subsection (i)—
‘‘(A) for any registered investment com-
pany to issue any periodic payment plan certifi-
cate; or
‘‘(B) for such company, or any depositor of
or underwriter for any such company, or any
other person, to sell such a certificate.
‘‘(2) NO INVALIDATION OF EXISTING CERTIFI-
CATES.—Paragraph (1) shall not be construed to
alter, invalidate, or otherwise affect any rights or ob-
ligations, including rights of redemption, under any
periodic payment plan certificate issued and sold be-
fore 30 days after such date of enactment.’’.
(b) TECHNICAL AMENDMENT.—Section 27(i)(2)(B)
of such Act is amended by striking ‘‘section 26(e)’’ each
place it appears and inserting ‘‘section 26(f)’’.
(c) REPORT ON REFUNDS, SALES PRACTICES, AND
REVENUES FROM PERIODIC PAYMENT PLANS.—Within 6
months after the date of enactment of this Act, the Securi-
ties and Exchange Commission shall submit to the Com-
mittee on Financial Services of the House of Representa-
tives and the Committee on Banking, Housing, and Urban
Affairs of the Senate, a report describing—
(1) any measures taken by a broker or dealer
registered with the Securities and Exchange Com-
mission pursuant to section 15(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o(b)) to volun-
tarily refund payments made by military service
members on any periodic payment plan certificate,
and the amounts of such refunds;
(2) after such consultation with the Secretary
of Defense as the Commission considers appropriate,
the sales practices of such brokers or dealers on
military installations over the past 5 years and any
legislative or regulatory recommendations to improve
such practices; and
(3) the revenues generated by such brokers or
dealers in the sales of periodic payment plan certifi-
cates over the past 5 years and what products such
brokers or dealers market to replace the revenue
generated from the sales of periodic payment plan
certificates prohibited under subsection (a) of this
section.
SEC. 4. METHOD OF MAINTAINING BROKER/DEALER REG-
ISTRATION, 
DISCIPLINARY, 
AND 
OTHER
DATA.
Subsection (i) of section 15A of the Securities Ex-
change Act of 1934 (15 U.S.C. 78o–3(i)) is amended to
read as follows:
‘‘(i) OBLIGATION TO MAINTAIN REGISTRATION, DIS-
CIPLINARY AND OTHER DATA.—
‘‘(1) MAINTENANCE OF SYSTEM TO RESPOND
TO INQUIRIES.—A registered securities association
shall—
‘‘(A) establish and maintain a system for
collecting and retaining registration informa-
tion;
‘‘(B) establish and maintain a toll-free
telephone listing, and a readily accessible elec-
tronic or other process, to receive and promptly
respond to inquiries regarding—
‘‘(i) registration information on its
members and their associated persons; and
‘‘(ii) registration information on the
members and their associated persons of
any registered national securities exchange
that uses the system described in subpara-
graph (A) for the registration of its mem-
bers and their associated persons; and
‘‘(C) adopt rules governing the process for
making inquiries and the type, scope, and pres-
entation of information to be provided in re-
sponse to such inquiries in consultation with
any registered national securities exchange pro-
viding information pursuant to subparagraph
(B)(ii).