deems necessary or appropriate to conduct surveillance or 
risk assessments of the securities markets, persons registered 
with the Commission under this title, or otherwise in fur-
therance of the purposes of this title.’’. 
SEC. 219. INVESTMENT COMPANY EXAMINATIONS. 
Section 31(b)(1) of the Investment Company Act of 
1940 (15 U.S.C. 80a–30) is amended to read as follows: 
‘‘(1) IN GENERAL.—All records of each registered 
investment company, and each underwriter, broker, 
dealer, or investment adviser that is a majority- 
owned subsidiary of such a company, shall be subject 
at any time, or from time to time, to such reasonable 
periodic, special, or other examinations by representa-
tives of the Commission as the Commission deems 
necessary or appropriate in the public interest or for 
the protection of investors.’’. 
SEC. 220. CONTROL PERSON LIABILITY UNDER THE SECURI-
TIES EXCHANGE ACT. 
Section 20(a) of the Securities Exchange Act of 1934 
(15 U.S.C. 78t(a)) is amended by inserting after ‘‘controlled 
person is liable,’’ the following: ‘‘including to the Commis-
sion in any action brought under paragraph (1) or (3) of 
section 21(d),’’. 
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SEC. 221. ENHANCED APPLICATION OF ANTI-FRAUD PROVI-
SIONS. 
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 se-
curities exchange’’ each place it appears and in-
serting ‘‘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, deal-
er, 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. 222. SEC AUTHORITY TO ISSUE RULES ON PROXY AC-
CESS. 
Section 14(a) of the Securities Exchange Act of 1934 
(15 U.S.C. 78n(a)) is amended— 
(1) by inserting ‘‘(1)’’ after ‘‘(a)’’; and 
(2) by adding at the end the following: 
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‘‘(2) The authority of the Commission to prescribe 
rules and regulations under paragraph (1) includes rules 
and regulations that require the inclusion and set proce-
dures relating to the inclusion, in a solicitation of a proxy 
or consent or authorization by or on behalf of an issuer, 
of a nominee or nominees submitted by shareholders to serve 
on the issuer’s board of directors.’’. 
TITLE III—COMMISSION 
FUNDING AND ORGANIZATION 
SEC. 301. AUTHORIZATION OF APPROPRIATIONS. 
Section 35 of the Securities Exchange Act of 1934 (15 
U.S.C. 78kk) is amended to read as follows: 
‘‘SEC. 35. AUTHORIZATION OF APPROPRIATIONS. 
‘‘In addition to any other funds authorized to be ap-
propriated to the Commission, there are authorized to be 
appropriated to carry out the functions, powers, and duties 
of the Commission— 
‘‘(1) for fiscal year 2010, $1,115,000,000; 
‘‘(2) for fiscal year 2011, $1,300,000,000; 
‘‘(3) for fiscal year 2012, $1,500,000,000; 
‘‘(4) for fiscal year 2013, $1,750,000,000; 
‘‘(5) for fiscal year 2014, $2,000,000,000; and 
‘‘(6) for fiscal year 2015, $2,250,000,000.’’. 
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SEC. 302. INVESTMENT ADVISER REGULATION FUNDING. 
Section 203 of the Investment Advisers Act of 1940 (15 
U.S.C. 80b–3) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(l) ANNUAL ASSESSMENT.— 
‘‘(1) IN
GENERAL.—The Commission shall, in 
accordance with this subsection, promulgate rules 
pursuant to which it may collect from investment ad-
visers required to register with the Commission under 
this title, fees designed to help recover the cost of in-
spections and examinations of registered investment 
advisers conducted by the Commission pursuant to 
this title. 
‘‘(2) FEE PAYMENT REQUIRED.—An investment 
adviser shall, at the time of registration with the 
Commission, and each fiscal year thereafter during 
which such adviser is so registered, pay to the Com-
mission a fair and reasonable fee determined by the 
Commission. In determining such fee, the Commission 
shall consider objective factors such as— 
‘‘(A) the investment adviser’s size; 
‘‘(B) the number of clients of the investment 
adviser; 
‘‘(C) the types of clients of the investment 
adviser; and 
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‘‘(D) such other relevant factors as the Com-
mission determines to be appropriate. 
‘‘(3) AMOUNT AND USE OF FEES.— 
‘‘(A) MINIMUM AGGREGATE AMOUNT.—The 
aggregate amount of fees determined by the Com-
mission under this subsection for any fiscal year 
shall be greater than the amount the Commission 
spent on inspections and examinations of reg-
istered investment advisers during the 2009 fis-
cal year. 
‘‘(B) EXCESS FEES.—The Commission may 
retain any excess fees collected under this sub-
section during a fiscal year for application to-
wards the costs of inspections and examinations 
of investment advisers in future fiscal years. 
‘‘(4) REVIEW AND ADJUSTMENT OF FEES.—The 
Commission may review fee rates established pursu-
ant to this section before the end of any fiscal year 
and make any appropriate adjustments prior to col-
lecting any such fee in the following fiscal year. 
‘‘(5) PENALTY FEE.—The Commission shall pre-
scribe by rule or regulation an additional fee to be as-
sessed as a penalty for late payment of fees required 
by this subsection. 
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‘‘(6) JUDICIAL REVIEW.—Increases or decreases 
in fees made pursuant to this section shall not be sub-
ject to judicial review.’’. 
SEC. 303. AMENDMENTS TO SECTION 31 OF THE SECURI-
TIES EXCHANGE ACT OF 1934. 
Section 31 of the Securities Exchange Act of 1934 (15 
U.S.C. 78ee) is amended— 
(1) in subsection (e)(2), by striking ‘‘September 
30’’ and inserting ‘‘September 25’’; 
(2) in subsection (g), by striking ‘‘April 30’’ and 
inserting ‘‘August 31’’; and 
(3) in subsection (j)(2)— 
(A) by striking ‘‘5 months’’ and inserting 
‘‘4 months’’; and 
(B) by striking ‘‘(including fees collected 
during such 5-month period and assessments col-
lected under subsection (d))’’ and inserting ‘‘(in-
cluding fees estimated to be collected under sub-
sections (b) and (c) prior to the effective date of 
the uniform adjusted rate and assessments esti-
mated to be collected under subsection (d))’’. 
SEC. 304. COMMISSION ORGANIZATIONAL STUDY AND RE-
FORM. 
(a) STUDY REQUIRED.— 
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(1) IN GENERAL.—Not later than the end of the 
90-day period beginning on the date of the enactment 
of this Act, the Securities and Exchange Commission 
(hereinafter in this section referred to as the ‘‘SEC’’) 
shall hire an independent consultant of high caliber 
and with expertise in organizational restructuring 
and the operations of capital markets to examine the 
internal operations, structure, funding, and the need 
for comprehensive reform of the SEC, as well as the 
SEC’s relationship with the reliance on self-regu-
latory organizations and other entities relevant to the 
regulation of securities and the protection of securities 
investors that are under the SEC’s oversight. 
(2) SPECIFIC AREAS FOR STUDY.—The study re-
quired under paragraph (1) shall, at a minimum, in-
clude the study of— 
(A) the possible elimination of unnecessary 
or redundant units at the SEC; 
(B) improving communications between 
SEC offices and divisions; 
(C) the need to put in place a clear chain- 
of-command structure, particularly for enforce-
ment examinations and compliance inspections; 
(D) the effect of high-frequency trading and 
other technological advances on the market and 
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what the SEC requires to monitor the effect of 
such trading and advances on the market; 
(E) the SEC’s hiring authorities, workplace 
policies, and personal practices, including— 
(i) whether there is a need to further 
streamline hiring authorities for those who 
are not lawyers, accountants, compliance 
examiners, or economists; 
(ii) whether there is a need for further 
pay reforms; 
(iii) the diversity of skill sets of SEC 
employees and whether the present skill set 
diversity efficiently and effectively fosters 
the SEC’s mission of investor protection; 
and 
(iv) the application of civil service 
laws by the SEC; 
(F) whether the SEC’s oversight and reli-
ance on self-regulatory organizations promotes 
efficient and effective governance for the securi-
ties markets; and 
(G) whether adjusting the SEC’s reliance on 
self-regulatory organizations is necessary to pro-
mote more efficient and effective governance for 
the securities markets. 
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(b) CONSULTANT REPORT.—Not later than the end of 
the 150-day period after being retained, the independent 
consultant hired pursuant to subsection (a)(1) shall issue 
a report to the SEC and the Congress containing— 
(1) a detailed description of any findings and 
conclusions made while carrying out the study re-
quired under subsection (a)(1); 
(2) recommendations for legislative, regulatory, 
or administrative action that the consultant deter-
mines appropriate to enable the SEC and other enti-
ties on which it reports to perform their statutorily 
or otherwise mandated missions. 
(c) SEC REPORT.—Not later than the end of the 6- 
month period beginning on the date the consultant issues 
the report under subsection (b), and every 6-months there-
after during the 2-year period following the date on which 
the consultant issues such report, the SEC shall issue a re-
port to the Committee on Financial Services of the House 
of Representatives and the Committee on Banking, Hous-
ing, and Urban Affairs of the Senate describing the SEC’s 
implementation of the regulatory and administrative rec-
ommendations contained in the consultant’s report. 
SEC. 305. CAPITAL MARKETS SAFETY BOARD. 
There is established within the Securities and Ex-
change Commission an office to be known as the Capital 
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Markets Safety Board whose purpose shall be to conduct 
investigations, at the direction of the Commission, of failed 
institutions registered with the Commission, to determine 
what caused such institutions to fail. Upon the conclusion 
of an investigation, the Board shall make available on the 
Commission’s website a report of its findings, including rec-
ommendations regarding how others can avoid similar mis-
takes. No information that may compromise an ongoing 
Federal investigation shall be made available in any such 
report. 
SEC. 306. REPORT ON IMPLEMENTATION OF ‘‘POST-MADOFF 
REFORMS’’. 
(a) IN GENERAL.—Not later than 6 months after the 
date of the enactment of this Act, the Securities and Ex-
change Commission shall provide to the Committee on Fi-
nancial Services of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs of the 
Senate a report describing the implementation of reforms 
outlined by the Commission in the wake of the discovery 
of fraud by Bernie Madoff. 
(b) CONTENTS OF REPORT.—The report required by 
subsection (a) shall include an analysis of— 
(1) how many of the post-Madoff reforms have 
been implemented and to what extent; and 
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(2) whether there is overlap between any of the 
Commission’s 
reform 
proposals 
and 
those 
rec-
ommended by the Inspector General of the Commis-
sion. 
(c) PUBLICATION OF REPORT.—The Commission and 
the Committees referred to in subsection (a) shall publish 
the report required by such subsection on their Web sites. 
SEC. 307. JOINT ADVISORY COMMITTEE. 
The Securities and Exchange Commission and the 
Commodities Futures Trading Commission may jointly 
form and operate a joint advisory committee composed of 
members of each Commission and industry experts and par-
ticipants. The purposes of such an advisory committee in-
clude— 
(1) considering and developing solutions to 
emerging and ongoing issues of common interest in 
the futures and securities markets; 
(2) identifying emerging regulatory risks and as-
sess and quantify their implications for investors and 
other market participants, and provide recommenda-
tions for solutions; 
(3) serving as a vehicle for discussion and com-
munication on regulatory issues of mutual concerns 
affecting each Commission, the regulated markets, and 
the industry generally; and 
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(4) reporting regularly to each Commission and 
to Congress on its activities. 
TITLE IV—ADDITIONAL 
COMMISSION REFORMS 
SEC. 401. REGULATION OF SECURITIES LENDING. 
Section 10 of the Securities Exchange Act of 1934 (15 
U.S.C. 78j) is amended by adding at the end the following 
new subsection: 
‘‘(c)(1) To effect, accept, or facilitate a transaction in-
volving the loan or borrowing of securities in contravention 
of such rules and regulations as the Commission may pre-
scribe as necessary or appropriate in the public interest or 
for the protection of investors. 
‘‘(2) Nothing in paragraph (1) shall be construed to 
limit the authority of an appropriate Federal banking 
agency (as defined in section 3 of the Federal Deposit Insur-
ance Act (12 U.S.C. 1813(q))), the National Credit Union 
Administration, or any other Federal department or agency 
identified under law as having a systemic risk responsi-
bility from prescribing rules or regulations to impose re-
strictions on transactions involving the loan or borrowing 
of securities in order to protect the safety and soundness 
of a financial institution or to protect the financial system 
from systemic risk.’’. 
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SEC. 402. 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, counterfeit, or stolen securities’’ and inserting 
‘‘securities that are missing, lost, counterfeit, stolen, 
cancelled, or any other category of securities as the 
Commission, by rule, may prescribe’’; 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 pre-
scribe’’. 
SEC. 403. FINGERPRINTING. 
Section 17(f)(2) of the Securities Exchange Act of 1934 
(15 U.S.C. 78q(f)(2)) is amended— 
(1) by striking ‘‘and registered clearing agency,’’ 
and inserting ‘‘registered clearing agency, registered 
securities information processor, national securities 
exchange, and national securities association’’; and 
(2) by striking ‘‘or clearing agency,’’ and insert-
ing ‘‘clearing agency, securities information processor, 
national securities exchange, or national securities as-
sociation,’’. 
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SEC. 404. EQUAL TREATMENT OF SELF-REGULATORY ORGA-
NIZATION 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 organiza-
tion,’’. 
SEC. 405. CLARIFICATION THAT SECTION 205 OF THE IN-
VESTMENT ADVISERS ACT OF 1940 DOES NOT 
APPLY TO STATE-REGISTERED ADVISERS. 
Section 205(a) of the Investment Advisers Act of 1940 
(15 U.S.C. 80b–5(a)) is amended— 
(1) by striking ‘‘, unless exempt from registra-
tion pursuant to section 203(b),’’ and inserting ‘‘reg-
istered or required to be registered with the Commis-
sion’’; 
(2) by striking ‘‘make use of the mails or any 
means or instrumentality of interstate commerce, di-
rectly or indirectly, to’’; and 
(3) by striking ‘‘to’’ after ‘‘in any way’’. 
SEC. 406. CONFORMING AMENDMENTS FOR THE REPEAL OF 
THE PUBLIC UTILITY HOLDING COMPANY ACT 
OF 1935. 
(a) SECURITIES EXCHANGE ACT OF 1934.—The Secu-
rities Exchange Act of 1934 (15 U.S.C. 78 et seq.) is amend-
ed— 
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(1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), 
by striking ‘‘the Public Utility Holding Company Act 
of 1935 (15 U.S.C. 79a et seq.),’’; and 
(2) in section 12(k) (15 U.S.C. 78l(k)), by 
amending paragraph (7) to read as follows:
‘‘(7) DEFINITION.—For purposes of this sub-
section, the term ‘emergency’ means— 
‘‘(A) a major market disturbance character-
ized by or constituting— 
‘‘(i) sudden and excessive fluctuations 
of securities prices generally, or a substan-
tial threat thereof, that threaten fair and 
orderly markets; or 
‘‘(ii) a substantial disruption of the 
safe or efficient operation of the national 
system for clearance and settlement of 
transactions in securities, or a substantial 
threat thereof; or 
‘‘(B) a major disturbance that substantially 
disrupts, or threatens to substantially disrupt— 
‘‘(i) the functioning of securities mar-
kets, investment companies, or any other 
significant portion or segment of the securi-
ties markets; or 
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‘‘(ii) the transmission or processing of 
securities transactions.’’. 
(3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), by 
striking ‘‘section 18(c) of the Public Utility Holding 
Company Act of 1935,’’. 
(b) TRUST INDENTURE ACT OF 1939.—The Trust In-
denture Act of 1939 (15 U.S.C. 77aaa et seq.) is amended— 
(1) in section 303 (15 U.S.C. 77ccc), by amend-
ing paragraph (17) to read as follows: 
‘‘(17) The terms ‘Securities Act of 1933’ and ‘Se-
curities Exchange Act of 1934’ shall be deemed to 
refer, respectively, to such Acts, as amended, whether 
amended prior to or after the enactment of this title.’’; 
(2) in section 308 (15 U.S.C. 77hhh), by striking 
‘‘Securities Act of 1933, the Securities Exchange Act 
of 1934, or the Public Utility Holding Company Act 
of 1935’’ each place it appears and inserting ‘‘Securi-
ties Act of 1933 or the Securities Exchange Act of 
1934’’; 
(3) in section 310 (15 U.S.C. 77jjj), by striking 
subsection (c); 
(4) in section 311 (15 U.S.C. 77kkk) by striking 
subsection (c); 
(5) in section 323(b) (15 U.S.C. 77www(b)), by 
striking ‘‘Securities Act of 1933, or the Securities Ex-
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change Act of 1934, or the Public Utility Holding 
Company Act of 1935’’ and inserting ‘‘Securities Act 
of 1933 or the Securities Exchange Act of 1934’’; and 
(6) in section 326 (15 U.S.C. 77zzz), by striking 
‘‘Securities Act of 1933, or the Securities Exchange 
Act of 1934, or the Public Utility Holding Company 
Act of 1935,’’ and inserting ‘‘Securities Act of 1933 
or the Securities Exchange Act of 1934’’. 
(c) INVESTMENT COMPANY ACT OF 1940.—The Invest-
ment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is 
amended— 
(1) in section 2(a)(44) (15 U.S.C. 80a–2(a)(44)), 
by striking ‘‘ ‘Public Utility Holding Company Act of 
1935’,’’; 
(2) in section 3(c) (15 U.S.C. 80a–3(c)), by 
amending paragraph (8) to read as follows: 
‘‘(8) [Repealed]’’; 
(3) in section 38(b) (15 U.S.C. 80a–37(b)), by 
striking ‘‘the Public Utility Holding Company Act of 
1935,’’; and 
(4) in section 50 (15 U.S.C. 80a–49), by striking 
‘‘the Public Utility Holding Company Act of 1935,’’. 
(d) INVESTMENT ADVISERS ACT OF 1940.—Section 
202(a)(21) of the Investment Advisers Act of 1940 (15 
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U.S.C. 80b–2(a)(21)) is amended by striking ‘‘ ‘Public Util-
ity Holding Company Act of 1935’,’’. 
SEC. 407. PROMOTING TRANSPARENCY IN FINANCIAL RE-
PORTING. 
(a) FINDINGS.—Congress finds the following: 
(1) Transparent and clear financial reporting is 
integral to the continued growth and strength of our 
capital markets and the confidence of investors. 
(2) The increasing detail and volume of account-
ing, auditing, and reporting guidance pose a major 
challenge. 
(3) The complexity of accounting and auditing 
standards in the United States has added to the costs 
and effort involved in financial reporting. 
(b) TESTIMONY REQUIRED ON REDUCING COMPLEXITY 
IN FINANCIAL REPORTING.—The Securities and Exchange 
Commission, the Public Company Accounting Oversight 
Board, and the standard setting body designated pursuant 
to section 19(b) of the Securities Act of 1933 shall annually 
provide oral testimony by their respective Chairpersons or 
a designee of the Chairperson, beginning in 2010, and for 
5 years thereafter, to the Committee on Financial Services 
of the House of Representatives on their efforts to reduce 
the complexity in financial reporting to provide more accu-
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rate and clear financial information to investors, includ-
ing— 
(1) reassessing complex and outdated accounting 
standards; 
(2) improving the understandability, consistency, 
and overall usability of the existing accounting and 
auditing literature; 
(3) 
developing 
principles-based 
accounting 
standards; 
(4) encouraging the use and acceptance of inter-
active data; and 
(5) promoting disclosures in ‘‘plain English’’. 
SEC. 408. 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. 409. PROTECTING CONFIDENTIALITY OF MATERIALS 
SUBMITTED TO THE COMMISSION. 
(a) SECURITIES EXCHANGE ACT OF 1934.—Section 
17(j) of the Securities Exchange Act of 1934 (15 U.S.C. 
78q(j)) is amended to read as follows: 
‘‘(j) AUTHORITY TO LIMIT DISCLOSURE OF INFORMA-
TION.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, the Commission shall not be com-
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pelled to disclose any information, documents, 
records, or reports that relate to an examination, sur-
veillance, or risk assessment of a person subject to or 
described 
in 
this 
section, 
including 
subsection 
(i)(5)(A), or the financial or operational condition of 
such persons, or any information supplied to the 
Commission by any domestic or foreign regulatory 
agency or self-regulatory organization that relates to 
the financial or operational condition of such persons, 
of any associated person of such persons, or any affil-
iate of an investment bank holding company. 
‘‘(2) CERTAIN
EXCEPTIONS.—Nothing in this 
subsection shall authorize the Commission to withhold 
information from the Congress, prevent the Commis-
sion from complying with a request for information 
from any other Federal department or agency, the 
Public Company Accounting Oversight Board, or any 
self-regulatory organization requesting the informa-
tion for purposes within the scope of its jurisdiction, 
or prevent the Commission from complying with an 
order of a court of the United States in an action 
brought by the United States or the Commission 
against a person subject to or described in this section 
to produce information, documents, records, or reports 
relating directly to the examination, surveillance, or 
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risk assessment of that person or the financial or 
operational condition of that person or an associated 
or affiliated person of that person. 
‘‘(3) TREATMENT UNDER SECTION 552 OF TITLE 
5, UNITED STATES CODE.—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 that section. 
‘‘(4) CERTAIN INFORMATION TO BE CONFIDEN-
TIAL.—In prescribing regulations to carry out the re-
quirements of this subsection, the Commission shall 
designate information described in or obtained pursu-
ant to subparagraphs (A), (B), and (C) of subsection 
(i)(3) as confidential information for purposes of sec-
tion 24(b)(2) of this title.’’. 
(b) INVESTMENT COMPANY ACT
OF 1940.—Section 
31(b) of the Investment Company Act of 1940 (15 U.S.C. 
80a–30(b)), as amended by sections 106(a)(2) and 
218(b)(4), is further amended by adding at the end the fol-
lowing new paragraph: 
‘‘(6) CONFIDENTIALITY.— 
‘‘(A) IN
GENERAL.—Notwithstanding any 
other provision of law, the Commission shall not 
be compelled to disclose any information, docu-
ments, records, or reports that relate to an exam-
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ination, surveillance, or risk assessment of a per-
son subject to or described in this section. 
‘‘(B) CERTAIN
EXCEPTIONS.—Nothing in 
this subsection shall authorize the Commission to 
withhold information from the Congress, prevent 
the Commission from complying with a request 
for information from any other Federal depart-
ment or agency, or the Public Company Ac-
counting Oversight Board requesting the infor-
mation for purposes within the scope of its juris-
diction, or prevent the Commission from com-
plying with an order of a court of the United 
States in an action brought by the United States 
or the Commission against a person subject to or 
described in this section to produce information, 
documents, records, or reports relating directly to 
the examination of that person or the financial 
or operational condition of that person or an as-
sociated or affiliated person of that person. 
‘‘(C) TREATMENT UNDER SECTION 552 OF 
TITLE 5, UNITED STATES CODE.—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 that section.’’. 
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(c) INVESTMENT ADVISERS ACT OF 1940.—Section 
204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b– 
4), as amended by sections 106(b) and 218(c), is further 
amended by adding at the end the following new subsection: 
‘‘(f) CONFIDENTIALITY.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, the Commission shall not be com-
pelled to disclose any information, documents, 
records, or reports that relate to an examination of a 
person subject to or described in this section. 
‘‘(2) CERTAIN
EXCEPTIONS.—Nothing in this 
subsection shall authorize the Commission to withhold 
information from Congress, prevent the Commission 
from complying with a request for information from 
any other Federal department or agency, the Public 
Company Accounting Oversight Board, or a self-regu-
latory organization requesting the information for 
purposes within the scope of its jurisdiction, or pre-
vent the Commission from complying with an order 
of a court of the United States in an action brought 
by the United States or the Commission against a 
person subject to or described in this section to 
produce information, documents, records, or reports 
relating directly to the examination of that person or 
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the financial or operational condition of that person 
or an associated or affiliated person of that person. 
‘‘(3) TREATMENT UNDER SECTION 552 OF TITLE 
5, UNITED STATES CODE.—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 that section.’’. 
SEC. 410. TECHNICAL CORRECTIONS. 
(a) SECURITIES ACT OF 1933.—The Securities Act of 
1933 (15 U.S.C. 77a et seq.) is amended— 
(1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by 
striking ‘‘individual;’’ and inserting ‘‘individual,’’; 
(2) in the matter following paragraph (5) of sec-
tion 11(a), by striking ‘‘earning statement’’ and in-
serting ‘‘earnings statement’’. 
(3) 
in 
section 
18(b)(1)(C) 
(15 
U.S.C. 
77r(b)(1)(C)), by striking ‘‘is a security’’ and insert-
ing ‘‘a security’’; 
(4) 
in 
section 
18(c)(2)(B)(i) 
(15 
U.S.C. 
77r(c)(2)(B)(i)), by striking ‘‘State, or’’ and inserting 
‘‘State or’’; 
(5) 
in 
section 
19(d)(6)(A) 
(15 
U.S.C. 
77s(d)(6)(A)), by striking ‘‘in paragraph (1) of (3)’’ 
and inserting ‘‘in paragraph (1) or (3)’’; and 
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(6) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z– 
2(c)(1)(B)(ii)), by striking ‘‘business entity;’’ and in-
serting ‘‘business entity,’’. 
(b) SECURITIES EXCHANGE ACT OF 1934.—The Secu-
rities Exchange Act of 1934 (15 U.S.C. 78 et seq.) is amend-
ed— 
(1) in section 2(1)(a) (15 U.S.C. 78b(1)(a)), by 
striking ‘‘affected’’ and inserting ‘‘effected’’; 
(2) 
in 
section 
3(a)(55)(A) 
(15 
U.S.C. 
78c(a)(55)(A)), by striking ‘‘section 3(a)(12) of the 
Securities Exchange Act of 1934’’ and inserting ‘‘sec-
tion 3(a)(12) of this Act’’; 
(3) in section 3(g) (15 U.S.C. 78c(g)), by strik-
ing ‘‘company, account person, or entity’’ and insert-
ing ‘‘company, account, person, or entity’’; 
(4) in section 10A(i)(1)(B)(i) (15 U.S.C. 78j– 
1(i)(1)(B)(i)), by striking ‘‘nonaudit’’ and inserting 
‘‘non-audit’’; 
(5) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by 
striking ‘‘earning statement’’ and inserting ‘‘earnings 
statement’’; 
(6) in section 15(b)(1) (15 U.S.C. 78o(b)(1))— 
(A) by striking the sentence beginning ‘‘The 
order granting’’ and ending ‘‘from such member-
ship.’’ in subparagraph (B); and 
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(B) by inserting such sentence in the matter 
following such subparagraph after ‘‘are satis-
fied.’’; 
(7) in section 15C(a)(2) (15 U.S.C. 78o– 
5(a)(2))— 
(A) by redesignating clauses (i) and (ii) as 
subparagraphs (A) and (B), respectively; 
(B) by striking the sentence beginning ‘‘The 
order granting’’ and ending ‘‘from such member-
ship.’’ in such subparagraph (B), as redesig-
nated; and 
(C) by inserting such sentence in the matter 
following such redesignated subparagraph after 
‘‘are satisfied.’’; 
(8) 
in 
section 
16(a)(2)(C) 
(15 
U.S.C. 
78p(a)(2)(C)), by striking ‘‘section 206(b)’’ and in-
serting ‘‘section 206B’’; 
(9) 
in 
section 
17(b)(1)(B) 
(15 
U.S.C. 
78q(b)(1)(B)), by striking ‘‘15A(k) gives’’ and insert-
ing ‘‘15A(k), give’’; and 
(10) in section 21C(c)(2) (15 U.S.C. 78u– 
3(c)(2)), by striking ‘‘paragraph (1) subsection’’ and 
inserting ‘‘Paragraph (1)’’. 
(c) TRUST INDENTURE ACT OF 1939.—The Trust In-
denture Act of 1939 (15 U.S.C. 77aaa et seq.) is amended— 
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(1) in section 304(b) (15 U.S.C. 77ddd(b)), by 
striking ‘‘section 2 of such Act’’ and inserting ‘‘section 
2(a) of such Act’’; 
(2) 
in 
section 
313(a)(4) 
(15 
U.S.C. 
77mmm(a)(4)) by striking ‘‘subsection (b) of section 
311’’ and inserting ‘‘section 311(b)’’; and 
(3) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), 
by striking ‘‘(1),’’ and inserting ‘‘(1)’’. 
(d) INVESTMENT COMPANY ACT OF 1940.—The Invest-
ment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is 
amended— 
(1) in section 2(a)(19)(B) (15 U.S.C. 80a– 
2(a)(19)(B)) by striking ‘‘clause (vi)’’ both places it 
appears in the last two sentences and inserting 
‘‘clause (vii)’’; 
(2) in section 9(b)(4)(B) (15 U.S.C. 80a– 
9(b)(4)(B)), by inserting ‘‘or’’ after the semicolon at 
the end; 
(3) in section 12(d)(1)(J) (15 U.S.C. 80a– 
12(d)(1)(J)), by striking ‘‘any provision of this sub-
section’’ and inserting ‘‘any provision of this para-
graph’’; 
(4) in section 13(a)(3) (15 U.S.C. 80a–13(a)(3)), 
by inserting ‘‘or’’ after the semicolon at the end; 
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(5) in section 17(f)(4) (15 U.S.C. 80a–17(f)(4)), 
by striking ‘‘No such member’’ and inserting ‘‘No 
member of a national securities exchange’’; 
(6) in section 17(f)(6) (15 U.S.C. 80a–17(f)(6)), 
by striking ‘‘company may serve’’ and inserting 
‘‘company, may serve’’; and 
(7) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a– 
60(a)(3)(B)(iii))— 
(A) by striking ‘‘paragraph (1) of section 
205’’ and inserting ‘‘section 205(a)(1)’’; and 
(B) by striking ‘‘clause (A) or (B) of that 
section’’ and inserting ‘‘section 205(b)(1) or (2)’’. 
(e) INVESTMENT ADVISERS ACT OF 1940.—The Invest-
ment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) is 
amended— 
(1) in each of the following sections, by striking 
‘‘principal business office’’ or ‘‘principal place of 
business’’ (whichever and wherever it appears) and 
inserting ‘‘principal office and place of business’’: sec-
tions 203(c)(1)(A), 203(k)(4)(B), 213(a), 222(b), and 
222(c) (15 U.S.C. 80b–3(c)(1)(A), 80b–3(k)(4)(B), 
80b–13(a), 80b–18a(b), and 80b–18a(c)); and 
(2) in section 206(3) (15 U.S.C. 80b–6(3)), by 
inserting ‘‘or’’ after the semicolon at the end. 
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SEC. 411. MUNICIPAL SECURITIES. 
Section 15B(b) of the Securities Exchange Act of 1934 
(15 U.S.C. 78o–4(b)) is amended— 
(1) by amending paragraph (1) to read as fol-
lows:(1) Not later than October 1, 2010, the Munic-
ipal Securities Rulemaking Board (hereinafter in this 
section referred to as the ‘Board’), shall be composed 
of members which shall perform the duties set forth in 
this section and shall consist of— 
‘‘(A) a majority of independent public rep-
resentatives, at least one of whom shall be rep-
resentative of investors in municipal securities 
and at least one of whom shall be representative 
of issuers of municipal securities (which mem-
bers are hereinafter referred to as ‘public rep-
resentatives’); 
‘‘(B) at least one individual who is rep-
resentative of municipal securities brokers and 
municipal securities dealers which are not banks 
or subsidiaries or departments or divisions of 
banks (which members are hereinafter referred to 
as ‘broker-dealer representatives’); and 
‘‘(C) at least one individual who is rep-
resentative of municipal securities dealers which 
are banks or subsidiaries or departments or divi-
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100 
sions of banks (which members are hereinafter 
referred to as ‘bank representatives’).’’; and 
(2) by amending paragraph (2)(B) to read as 
follows: 
‘‘(B) Establish fair procedures for the nomina-
tion and election of members of the Board and assure 
fair representation in such nominations and elections 
of municipal securities brokers and municipal securi-
ties dealers. Such rules— 
‘‘(i) shall establish requirements regarding 
the independence of public representatives; 
‘‘(ii) shall provide that the number of public 
representatives of the Board shall at all times ex-
ceed the total number of broker-dealer representa-
tives and bank representatives; 
‘‘(iii) shall establish minimum knowledge, 
experience, and other appropriate qualifications 
for individuals to serve as public representatives, 
which may include, among other things, prior 
work experience in the securities, municipal fi-
nance, or municipal securities industries; 
‘‘(iv) shall specify the term members shall 
serve; and 
‘‘(v) may increase or decrease the number of 
members which shall constitute the whole Board, 
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101 
but in no case may such number be an even 
number.’’. 
SEC. 412. INTERESTED PERSON DEFINITION. 
Section 2(a)(19)(A) of the Investment Company Act 
of 1940 (15 U.S.C. 80a–2(a)(19)(A)) is amended— 
(1) by striking clauses (v) and (vi); 
(2) by inserting after clause (iv) the following 
new clause: 
‘‘(v) any natural person who is a 
member of a class of persons who the Com-
mission, by rule or regulation, determines 
are unlikely to exercise an appropriate de-
gree of independence as a result of— 
‘‘(I) a material business or profes-
sional relationship with such company 
or any affiliated person of such com-
pany; or 
‘‘(II) a close familial relationship 
with any natural person who is an af-
filiated person of such company;’’; 
(3) by redesignating clause (vii) as clause (vi); 
and 
(4) in clause (vi), as redesignated, by striking 
‘‘two completed fiscal years’’ and inserting ‘‘five com-
pleted fiscal years’’. 
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102 
SEC. 413. RULEMAKING AUTHORITY TO PROTECT REDEEM-
ING INVESTORS. 
Section 22(e) of the Investment Company Act of 1940 
(15 U.S.C. 80a–22(e)) is amended by adding at the end 
the following: ‘‘The Commission may, by rules and regula-
tions, limit the extent to which a registered open-end invest-
ment company may own, hold, or invest in illiquid securi-
ties or other illiquid property.’’. 
SEC. 414. STUDY ON SEC REVOLVING DOOR. 
(a) GOVERNMENT ACCOUNTABILITY OFFICE STUDY.— 
The Comptroller General of the United States shall conduct 
a study that will— 
(1) review the number of employees who leave the 
Securities and Exchange Commission to work for fi-
nancial institutions regulated by such Commission; 
(2) determine how many employees who leave the 
Securities and Exchange Commission worked on cases 
that involved financial institutions regulated by such 
Commission; 
(3) review the length of time employees work for 
the Securities and Exchange Commission before leav-
ing to be employed by financial institutions regulated 
by such Commission; 
(4) review existing internal controls and make 
recommendations on strengthening such controls to 
ensure that employees of the Securities and Exchange 
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103 
Commission who are later employed by financial in-
stitutions did not assist such institutions in violating 
any rules or regulations of the Commission during the 
course of their employment with such Commission; 
(5) determine if greater post-employment restric-
tions are necessary to prevent employees of the Secu-
rities and Exchange Commission from being employed 
by financial institutions after employment with such 
Commission; 
(6) determine if the volume of employees of the 
Securities and Exchange Commission who are later 
employed by financial institutions has led to ineffi-
ciencies in enforcement; 
(7) determine if employees of the Securities and 
Exchange Commission who are later employed by fi-
nancial institutions have engaged in information 
sharing or assisted such institutions in circumventing 
Federal rules and regulations while employed by such 
Commission; 
(8) review any information that may address the 
volume of employees of the Securities and Exchange 
Commission who are later employed by financial in-
stitutions, and make recommendations to Congress; 
and 
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104 
(9) review other additional issues as may be 
raised during the course of the study conducted under 
this subsection. 
(b) REPORT.—Not later than 1 year after the date of 
the enactment of this Act, the Comptroller General of the 
United States shall submit to the Committee on Financial 
Services of the House of Representatives and the Committee 
on Banking, Housing, and Urban Affairs of the Senate a 
report on the results of the study required by subsection (a). 
SEC. 415. STUDY ON INTERNAL CONTROL EVALUATION AND 
REPORTING COST BURDENS ON SMALLER 
ISSUERS. 
(a) STUDY REQUIRED.—The Government Account-
ability Office and the Securities and Exchange Commission 
shall each conduct a study evaluating the costs and benefits 
of complying with section 404(b) of the Sarbanes-Oxley Act 
of 2002 (15 U.S.C. § 7262(b)) on issuers who are not accel-
erated or large accelerated filers as defined by Commission 
Rule 12b-2. The study shall— 
(1) include recommendations, administrative re-
forms, and legislative proposals on implementation 
steps that could be taken to reduce compliance bur-
dens on these issuers; and 
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105 
(2) determine the efficacy of the Securities and 
Exchange Commission’s measures to limit the cost of 
compliance on smaller issuers. 
(b) REPORTS REQUIRED.—On or before June 1, 2010, 
the Government Accountability Office and the Securities 
and Exchange Commission shall submit separate reports to 
Congress containing the findings and conclusions of the 
studies required under subsection (a), together with such 
recommendations for regulatory, legislative, or administra-
tive action as may be appropriate. 
(c) EFFECTIVE DATE CONTINGENT ON REPORTS.—Re-
quirements under section 404(b) of the Sarbanes-Oxley Act 
of 2002 on issuers described under subsection (a) shall not 
become effective until the results of the report are delivered, 
but in no case before June 1, 2011. 
SECTION 416. ANALYSIS OF RULE REGARDING SMALLER RE-
PORTING COMPANIES. 
(a) FINDINGS.—Congress finds the following: 
(1) Many small businesses in cutting-edge tech-
nology sectors require significant capital investment 
to develop new technologies related to clean energy, 
drug treatments for terminal diseases and food pro-
duction in hunger-stricken areas of the World. 
(2) Many technology companies conducting re-
search do not meet the definition of ‘‘smaller report-
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106 
ing company’’ under the Securities and Exchange 
Commission’s Rule 12b–2 due to unusually high pub-
lic floats despite low or zero revenue. 
(3) The Final Report of the Advisory Committee 
on Smaller Public Companies to the Securities and 
Exchange Commission recommended that a company 
with a market capitalization of less than about 
$787,000,000 be considered a smallcap company and 
that the Commission provide exemptions from section 
404(b) of the Sarbanes-Oxley Act to companies with 
less than $250,000,000 in annual revenues. 
(b) STUDY OF USING REVENUE AS CRITERIA TO DE-
FINE SMALLER REPORTING COMPANY.—The Securities and 
Exchange Commission shall conduct a study of the inclu-
sion of revenue as a criteria used in defining smaller report-
ing company as defined under the Commission’s Rule 12b- 
2 to account for smaller public companies with public floats 
less than $700,000,000 and revenues less than $250,000,000. 
Not later than 180 days after the date of enactment of this 
Act, the Commission shall provide the Committee on Finan-
cial Services of the House of Representatives and the Com-
mittee on Banking, Housing and Urban Affairs of the Sen-
ate a report of the findings of the study. 
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107 
SEC. 417. FINANCIAL REPORTING FORUM. 
(a) ESTABLISHMENT.—There is hereby established a 
Financial Reporting Forum (hereinafter referred to as the 
‘‘Forum’’), which shall consist of— 
(1) the Chairman of the Securities Exchange 
Commission (hereinafter referred to as the ‘‘SEC’’); 
(2) the head of the Financial Accounting Stand-
ards Board; 
(3) the Chairman of the Public Company Ac-
counting Oversight Board; 
(4) the head of each appropriate Federal banking 
agency, as such term is defined under section 3(q) of 
the Federal Deposit Insurance Act (12 U.S.C. 
1813(q)); 
(5) the Administrator of the National Credit 
Union Administration; 
(6) the Secretary of the Treasury; 
(7) a representative of a non-financial institu-
tion, appointed by the SEC; 
(8) a representative of a financial institution, 
appointed by the SEC; 
(9) a representative of auditors, appointed by the 
SEC; and 
(10) a representative of investors, appointed by 
the SEC. 
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108 
(b) MEETINGS.—The Forum shall meet no less often 
than quarterly. 
(c) DUTIES.—The Forum shall meet to discuss imme-
diate and long-term issues critical to financial reporting. 
(d) REPORTING.—The Forum shall issue an annual re-
port to the Congress detailing any determinations or find-
ings made by the Forum during the previous year, includ-
ing any legislative recommendations the Forum may have 
related to financial reporting matters. 
SEC. 418. INVESTMENT ADVISERS SUBJECT TO STATE AU-
THORITIES. 
Section 203A(a) of the Investment Advisers Act of 1940 
(15 U.S.C. 80b–3a(a)) is amended— 
(1) by redesignating paragraph (2) as para-
graph (3); and 
(2) by inserting after paragraph (1) the fol-
lowing new paragraph: 
‘‘(2) TREATMENT
OF
CERTAIN
MID-SIZED
IN-
VESTMENT
ADVISERS.—Notwithstanding paragraph 
(1), an investment adviser that— 
‘‘(A) is regulated and examined, or required 
to be regulated and examined, by a State; and 
‘‘(B) has assets under management be-
tween— 
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109 
‘‘(i) the amount specified under sub-
paragraph (A) of paragraph (1), as such 
amount may have been adjusted by the 
Commission pursuant to that subpara-
graph, and 
‘‘(ii) $100,000,000, or such higher 
amount as the Commission may, by rule, 
deem appropriate in accordance with the 
purposes of this title, 
shall register with, and be subject to examination 
by, such State. The Commission shall publish a 
list of the States that regulate and examine, or 
require regulation and examination of, invest-
ment advisers to which the requirements of this 
paragraph apply.’’. 
SEC. 419. CUSTODIAL REQUIREMENTS. 
Not later than 180 days after the date of the enactment 
of this Act, the Securities and Exchange Commission shall 
adopt a rule pursuant to its authority under section 211(a) 
of the Investment Advisers Act of 1940 making it unlawful 
under section 206(4) of such Act for an investment adviser 
registered under the Act to have custody of funds or securi-
ties of a client the value of which exceeds $10,000,000, sub-
ject to such exception the Commission determines in such 
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110 
rule are in the public interest and consistent with the pro-
tection of investors, unless— 
(1) the funds and securities are maintained with 
a qualified custodian either in a separate account for 
each client under the client’s name, or in accounts 
that contain only client funds and securities under 
the name of the investment adviser as agent or trustee 
for the client; and 
(2) the qualified custodian does not directly or 
indirectly provide investment advice with respect to 
such funds or securities. 
SEC. 420. OMBUDSMAN. 
(a) APPOINTMENT.—Not later than 180 days after the 
date of the enactment of this Act, the Chairman of the Secu-
rities and Exchange Commission shall appoint an Ombuds-
man who shall report directly to the Chairman. 
(b) DUTIES.—The Ombudsman appointed under sub-
section (a) shall— 
(1) act as a liaison between the Commission and 
any affected person with respect to any problem such 
person may have in dealing with the Commission re-
sulting from the regulatory activities of the Commis-
sion; 
(2) review and make recommendations regarding 
Commission policies and procedures to encourage per-
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sons to present questions to the Commission regarding 
compliance with Federal securities laws; and 
(3) maintain confidentiality of communications 
between such persons and the Ombudsman. 
(c) LIMITATION.—In carrying out the duties under 
subsection (b), the Ombudsman shall utilize personnel of the 
Commission to the extent practicable. Nothing in this sec-
tion shall be construed as replacing, altering, or dimin-
ishing the activities of any ombudsman or similar office 
in any other agency. 
(d) REPORT.—Each year, the Ombudsman shall sub-
mit a report to the Commission for inclusion in the annual 
report that describes the activities and evaluates the effec-
tiveness of the Ombudsman during the preceding year. In 
that report, the Ombudsman shall include solicited com-
ments and evaluations from registrants in regards to the 
effectiveness of the Ombudsman. 
TITLE V—SECURITIES INVESTOR 
PROTECTION ACT AMENDMENTS 
SEC. 501. INCREASING THE MINIMUM ASSESSMENT PAID BY 
SIPC MEMBERS. 
Section 4(d)(1)(C) of the Securities Investor Protection 
Act of 1970 (15 U.S.C. 78ddd(d)(1)(C)) is amended by 
striking ‘‘$150 per annum’’ and inserting the following: 
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‘‘0.02 percent of the gross revenues from the securities busi-
ness of such member of SIPC’’. 
SEC. 502. INCREASING THE BORROWING LIMIT ON TREAS-
URY LOANS. 
Section 4(h) of the Securities Investor Protection Act 
of 1970 (15 U.S.C. 78ddd(h)) is amended by striking ‘‘of 
not to exceed $1,000,000,000’’ and inserting ‘‘the lesser of 
$2,500,000,000 or the target amount of the SIPC Fund 
specified in the bylaws of SIPC’’. 
SEC. 503. 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 cus-
tomer, 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 March 31, 2010, as provided 
under subsection (e). 
‘‘(e) INFLATION ADJUSTMENT.— 
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‘‘(1) IN GENERAL.—No later than April 1, 2010, 
and every 5 years thereafter, and subject to the ap-
proval of the Commission as provided under section 
3(e)(2), the Board of Directors of SIPC shall deter-
mine whether an inflation adjustment to the standard 
maximum cash advance amount is appropriate. If the 
Board of Directors of SIPC determines such an ad-
justment 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 an-
nual 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 
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(1) for any period is not a multiple of $10,000, the 
amount so determined shall be rounded down to the 
nearest $10,000. 
‘‘(3) PUBLICATION AND REPORT TO THE CON-
GRESS.—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 Register the standard maximum cash 
advance amount; and 
‘‘(B) the Board of Directors of SIPC shall 
submit a report to the Congress containing stat-
ing the standard maximum cash advance 
amount. 
‘‘(4) IMPLEMENTATION
PERIOD.—Any adjust-
ment to the standard maximum cash advance amount 
shall take effect on January 1 of the year immediately 
succeeding the calendar year in which such adjust-
ment is made. 
‘‘(5) 
INFLATION
ADJUSTMENT
CONSIDER-
ATIONS.—In making any determination under para-
graph (1) to increase the standard maximum cash ad-
vance amount, the Board of Directors of SIPC shall 
consider— 
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‘‘(A) the overall state of the fund and the 
economic conditions affecting members of SIPC; 
‘‘(B) the potential problems affecting mem-
bers of SIPC; and 
‘‘(C) such other factors as the Board of Di-
rectors of SIPC may determine appropriate.’’. 
SEC. 504. SIPC AS TRUSTEE IN SIPA LIQUIDATION PRO-
CEEDINGS. 
Section 5(b)(3) of the Securities Investor Protection 
Act of 1970 (15 U.S.C. 78eee(b)(3)) is amended— 
(1) by striking ‘‘SIPC has determined that the 
liabilities of the debtor to unsecured general creditors 
and to subordinated lenders appear to aggregate less 
than $750,000 and that’’; and 
(2) by striking ‘‘five hundred’’ and inserting 
‘‘five thousand’’. 
SEC. 505. INSIDERS INELIGIBLE FOR SIPC ADVANCES. 
Section 9(a)(4) of the Securities Investor Protection 
Act of 1970 (15 U.S.C. 78fff–3(a)(4)) is amended by insert-
ing ‘‘an insider,’’ after ‘‘or net profits of the debtor,’’. 
SEC. 506. ELIGIBILITY FOR DIRECT PAYMENT PROCEDURE. 
Section 10(a)(4) of the Securities Investor Protection 
Act of 1970 (15 U.S.C. 78fff–4(a)(4)) is amended by strik-
ing ‘‘$250,000’’ and inserting ‘‘$850,000’’. 
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116 
SEC. 507. INCREASING THE FINE FOR PROHIBITED ACTS 
UNDER SIPA. 
Section 14(c) of the Securities Investor Protection Act 
of 1970 (15 U.S.C. 78jjj(c)) is amended— 
(1) in paragraph (1), by striking ‘‘$50,000’’ and 
inserting ‘‘$250,000’’; and 
(2) in paragraph (2), by striking ‘‘$50,000’’ and 
inserting ‘‘$250,000’’. 
SEC. 508. PENALTY FOR MISREPRESENTATION OF SIPC 
MEMBERSHIP OR PROTECTION. 
Section 14 of the Securities Investor Protection Act of 
1970 (15 U.S.C. 78jjj) is amended by adding at the end 
the following new subsection: 
‘‘(d) MISREPRESENTATION OF SIPC MEMBERSHIP OR 
PROTECTION.— 
‘‘(1) IN GENERAL.—Any person who falsely rep-
resents by any means (including, without limitation, 
through the Internet or any other medium of mass 
communication), with actual knowledge of the falsity 
of the representation and with an intent to deceive or 
cause injury to another, that such person, or another 
person, is a member of SIPC or that any person or 
account is protected or is eligible for protection under 
this Act or by SIPC, shall be liable for any damages 
caused thereby and shall be fined not more than 
$250,000 or imprisoned for not more than five years. 
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‘‘(2) 
INTERNET
SERVICE
PROVIDERS.—Any 
Internet service provider that, on or through a system 
or network controlled or operated by the Internet serv-
ice provider, transmits, routes, provides connections 
for, or stores any material containing any misrepre-
sentation of the kind prohibited in paragraph (1) 
shall be liable for any damages caused thereby, in-
cluding damages suffered by SIPC, if the Internet 
service provider— 
‘‘(A) has actual knowledge that the material 
contains a misrepresentation of the kind prohib-
ited in paragraph (1), or 
‘‘(B) in the absence of actual knowledge, is 
aware of facts or circumstances from which it is 
apparent that the material contains a misrepre-
sentation of the kind prohibited in paragraph 
(1), and 
upon obtaining such knowledge or awareness, fails to 
act expeditiously to remove, or disable access to, the 
material. 
‘‘(3) INJUNCTIONS.—Any court having jurisdic-
tion of a civil action arising under this Act may 
grant temporary injunctions and final injunctions on 
such terms as the court deems reasonable to prevent 
or restrain any violation of paragraph (1) or (2). 
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Any such injunction may be served anywhere in the 
United States on the person enjoined, shall be opera-
tive throughout the United States, and shall be en-
forceable, by proceedings in contempt or otherwise, by 
any United States court having jurisdiction over that 
person. The clerk of the court granting the injunction 
shall, when requested by any other court in which en-
forcement of the injunction is sought, transmit 
promptly to the other court a certified copy of all pa-
pers in the case on file in such clerk’s office.’’. 
SEC. 509. FUTURES HELD IN A PORTFOLIO MARGIN SECURI-
TIES ACCOUNT PROTECTION. 
(a) SIPC ADVANCES.—Section 9(a)(1) of the Securi-
ties Investor Protection Act of 1970 (15 U.S.C. 78fff– 
3(a)(1)) is amended by inserting ‘‘or options on futures con-
tracts’’ after ‘‘claim for securities’’. 
(b) DEFINITIONS.—Section 16 of such Act (15 U.S.C. 
78lll) is amended— 
(1) by amending paragraph (2) to read as fol-
lows: 
‘‘(2) CUSTOMER.— 
‘‘(A) IN GENERAL.—The term ‘customer’ of 
a debtor means any person (including any per-
son with whom the debtor deals as principal or 
agent) who has a claim on account of securities 
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received, acquired, or held by the debtor in the 
ordinary course of its business as a broker or 
dealer from or for the securities accounts of such 
person for safekeeping, with a view to sale, to 
cover consummated sales, pursuant to purchases, 
as collateral, security, or for purposes of effecting 
transfer. The term ‘customer’ includes any per-
son who has a claim against the debtor arising 
out of sales or conversions of such securities. 
‘‘(B) INCLUDED PERSONS.—The term ‘cus-
tomer’ includes— 
‘‘(i) any person who has deposited cash 
with the debtor for the purpose of pur-
chasing securities; and 
‘‘(ii) any person who has a claim 
against the debtor for, or a claim against 
the debtor arising out of sales or conversions 
of, cash, securities, futures contracts, or op-
tions on futures contracts received, acquired, 
or held in a portfolio margining account 
carried as a securities account pursuant to 
a portfolio margining program approved by 
the Commission. 
‘‘(C) EXCLUDED PERSONS.—The term ‘cus-
tomer’ does not include— 
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‘‘(i) any person to the extent that the 
claim of such person arises out of trans-
actions with a foreign subsidiary of a mem-
ber of SIPC; 
‘‘(ii) any person to the extent that such 
person has a claim for cash or securities 
which by contract, agreement, or under-
standing, or by operation of law, is part of 
the capital of the debtor, or is subordinated 
to the claims of any or all creditors of the 
debtor, notwithstanding that some ground 
exists for declaring such contract, agree-
ment, or understanding void or voidable in 
a suit between the claimant and the debtor; 
or 
‘‘(iii) any person to the extent such 
person has a claim relating to any open re-
purchase or open reverse repurchase agree-
ment. 
For purposes of this paragraph, the term ‘repur-
chase agreement’ means the sale of a security at 
a specified price with a simultaneous agreement 
or obligation to repurchase the security at a 
specified price on a specified future date.’’; 
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(2) in paragraph (4), by inserting after the first 
sentence the following new sentence: ‘‘In the case of 
portfolio margining accounts of customers that are 
carried as securities accounts pursuant to a portfolio 
margining program approved by the Commission, 
such term shall also include futures contracts and op-
tions on futures contracts received, acquired, or held 
by or for the account of a debtor from or for such ac-
counts, and the proceeds thereof.’’; 
(3) in paragraph (9), by inserting before ‘‘Such 
term’’ in the matter following subparagraph (L) the 
following: ‘‘The term includes revenues earned by a 
broker or dealer in connection with transactions in 
customers’ portfolio margining accounts carried as se-
curities accounts pursuant to a portfolio margining 
program approved by the Commission.’’; and 
(4) in paragraph (11)— 
(A) by amending subparagraph (A) to read 
as follows: 
‘‘(A) calculating the sum which would have 
been owed by the debtor to such customer if the 
debtor had liquidated, by sale or purchase on the 
filing date— 
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‘‘(i) all securities positions of such cus-
tomer (other than customer name securities 
reclaimed by such customer); and 
‘‘(ii) all positions in futures contracts 
and options on futures contracts held in a 
portfolio margining account carried as a se-
curities account pursuant to a portfolio 
margining program approved by the Com-
mission; minus’’; and 
(B) by inserting before ‘‘In determining’’ in 
the matter following subparagraph (C) the fol-
lowing: ‘‘A claim for a commodity futures con-
tract received, acquired, or held in a portfolio 
margining account pursuant to a portfolio mar-
gining program approved by the Commission, or 
a claim for a security futures contract, shall be 
deemed to be a claim for the mark-to-market 
(variation) payments due with respect to such 
contract as of the filing date, and such claim 
shall be treated as a claim for cash.’’. 
SEC. 510. STUDY AND REPORT ON THE FEASIBILITY OF 
RISK-BASED ASSESSMENTS FOR SIPC MEM-
BERS. 
(a) STUDY REQUIRED.—The Comptroller General of 
the United States shall conduct a study on whether the Se-
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curities Investor Protection Corporation (hereafter in this 
section referred to as ‘‘SIPC’’) should be required to impose 
assessments, on its member brokers and dealers, based on 
risk for the purpose of adequately maintaining the SIPC 
Fund. 
(b) CONTENT.—The Comptroller General in con-
ducting this study shall— 
(1) identify and examine available approaches, 
including modeling, to measure broker and dealer 
operational risk; 
(2) analyze whether the available approaches to 
measure broker and dealer operational risk can be 
used in managing the aggregate risk to the SIPC 
Fund; 
(3) explore whether objective measures like the 
volume of assets of the SIPC member, previous en-
forcement and compliance actions taken by regulatory 
bodies against the SIPC member, or the number of 
years the SIPC member has been in operation, among 
other factors, can be used to assess the probability the 
fund will incur a loss with respect to the SIPC mem-
ber; 
(4) examine the impact that risk-based assess-
ments could have on large and small brokers and 
dealers; and 
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(5) examine the impact that risk-based assess-
ments could have on institutional and retail brokers 
and dealers. 
(c) CONSULTATION.—The Comptroller General in 
planning and conducting this study shall consult with the 
Securities and Exchange Commission, the Federal Deposit 
Insurance Corporation, SIPC, the Financial Industry Reg-
ulatory Authority, and any other public or private sector 
organization that the Comptroller General considers appro-
priate. 
(d) REPORT REQUIRED.—Not later than one year 
after the date of enactment of this Act, the Comptroller gen-
eral shall submit a report of 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 Finan-
cial Services of the House of Representatives. 
SEC. 511. BUDGETARY TREATMENT OF COMMISSION LOANS 
TO SIPC. 
Section 4(g) of the Securities Investor Protection Act 
of 1970 (15 U.S.C. 78ddd(g)) is amended by adding at the 
end the following: ‘‘Any loan made by the Commission to 
SIPC under this subsection shall not be considered to result 
in a new direct loan obligation or a new loan guarantee 
commitment for purposes of section 504 of the Federal Cred-
it Reform Act of 1990.’’. 
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TITLE VI—SARBANES-OXLEY ACT 
AMENDMENTS 
SEC. 601. PUBLIC COMPANY ACCOUNTING OVERSIGHT 
BOARD OVERSIGHT OF AUDITORS OF BRO-
KERS AND DEALERS. 
(a) DEFINITIONS.—(1) Title I of the Sarbanes-Oxley 
Act of 2002 is amended by adding at the end the following 
new section: 
‘‘SEC. 110. DEFINITIONS. 
‘‘For the purposes of this title, and notwithstanding 
section 2: 
‘‘(1) AUDIT.—The term ‘audit’ means an exam-
ination of the financial statements, reports, docu-
ments, procedures or controls, or notices, of any 
issuer, broker, or dealer by an independent public ac-
counting firm in accordance with the rules of the 
Board or the Commission (or, for the period pre-
ceding the adoption of applicable rules of the Board 
under section 103, in accordance with then-applicable 
generally accepted auditing and related standards for 
such purposes), for the purpose of expressing an opin-
ion on such financial statements, reports, documents, 
procedures or controls, or notices. 
‘‘(2) AUDIT REPORT.—The term ‘audit report’ 
means a document, report, notice, or other record— 
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‘‘(A) prepared following an audit performed 
for purposes of compliance by an issuer, broker, 
or dealer with the requirements of the securities 
laws; and 
‘‘(B) in which a public accounting firm ei-
ther— 
‘‘(i) sets forth the opinion of that firm 
regarding a financial statement, report, no-
tice, other document, procedures, or controls; 
or 
‘‘(ii) asserts that no such opinion can 
be expressed. 
‘‘(3) PROFESSIONAL
STANDARDS.—The term 
‘professional standards’ means— 
‘‘(A) accounting principles that are— 
‘‘(i) established by the standard setting 
body described in section 19(b) of the Secu-
rities Act of 1933, as amended by this Act, 
or prescribed by the Commission under sec-
tion 19(a) of that Act (15 U.S.C. 17a(s)) or 
section 13(b) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78a(m)); and 
‘‘(ii) relevant to audit reports for par-
ticular issuers, brokers, or dealers, or dealt 
with in the quality control system of a par-
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ticular registered public accounting firm; 
and 
‘‘(B) auditing standards, standards for at-
testation engagements, quality control policies 
and procedures, ethical and competency stand-
ards, and independence standards (including 
rules implementing title II) that the Board or 
the Commission determines— 
‘‘(i) relate to the preparation or 
issuance of audit reports for issuers, bro-
kers, or dealers; and 
‘‘(ii) are established or adopted by the 
Board under section 103(a), or are promul-
gated as rules of the Commission. 
‘‘(4) BROKER.—The term ‘broker’ means a 
broker (as such term is defined in section 3(a)(4) of 
the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(4))) that is required to file a balance sheet, in-
come statement, or other financial statement under 
section 
17(e)(1)(A) 
of 
such 
Act 
(15 
U.S.C. 
78q(e)(1)(A)), where such balance sheet, income state-
ment, or financial statement is required to be certified 
by a registered public accounting firm. 
‘‘(5) DEALER.—The term ‘dealer’ means a dealer 
(as such term is defined in section 3(a)(5) of the Se-
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curities Exchange Act of 1934 (15 U.S.C. 78c(a)(5))) 
that is required to file a balance sheet, income state-
ment, or other financial statement under section 
17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), 
where such balance sheet, income statement, or finan-
cial statement is required to be certified by a reg-
istered public accounting firm. 
‘‘(6) SELF-REGULATORY
ORGANIZATION.—The 
term ‘self-regulatory organization’ has the same 
meaning as in section 3(a)(26) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)(26)).’’. 
(2) The table of sections in section 1(b) of such Act 
is amended, by inserting after the item relating to section 
109 the following new item: 
‘‘Sec. 110. Definitions.’’. 
(b) ESTABLISHMENT AND ADMINISTRATION OF THE 
PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD.—Sec-
tion 101 of such Act is amended— 
(1) by striking ‘‘issuers’’ each place it appears 
and inserting ‘‘issuers, brokers, and dealers’’; 
(2) in subsection (a), by striking ‘‘public compa-
nies’’ and inserting ‘‘companies’’; and 
(3) in subsection (a), by striking ‘‘for companies 
the securities of which are sold to, and held by and 
for, public investors’’. 
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(c) REGISTRATION WITH THE BOARD.—Section 102 of 
such Act is amended— 
(1) in subsection (a), by striking ‘‘Beginning 180 
days after the date of the determination of the Com-
mission under section 101(d), it’’ and inserting ‘‘It’’; 
(2) in subsections (a) and (b)(2)(G), by striking 
‘‘issuer’’ each place it appears and inserting ‘‘issuer, 
broker, or dealer’’; and 
(3) in subsection (b)(2)(A), by striking ‘‘issuers’’ 
and inserting ‘‘issuers, brokers, and dealers’’. 
(d) AUDITING AND INDEPENDENCE.—Section 103(a) of 
such Act is amended— 
(1) in paragraph (1), by striking ‘‘and such eth-
ics standards’’ and inserting ‘‘such ethics standards, 
and such independence standards’’; 
(2) in paragraph (2)(A)(iii), by striking ‘‘de-
scribe in each audit report’’ and inserting ‘‘in each 
audit report for an issuer, describe’’; and 
(3) in paragraph (2)(B)(i), by striking ‘‘issuers’’ 
and inserting ‘‘issuers, brokers, and dealers’’. 
(e) INSPECTIONS OF REGISTERED PUBLIC ACCOUNT-
ING FIRMS.—Section 104 of such Act is amended— 
(1) in subsection (a), by striking ‘‘issuers’’ and 
inserting ‘‘issuers, brokers, and dealers’’; 
(2) in subsection (b)(1)(A)— 
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130 
(A) by striking ‘‘audit reports’’ and insert-
ing ‘‘audit reports on annual financial state-
ments’’; and 
(B) by striking ‘‘and’’; 
(3) in subsection (b)(1)(B)— 
(A) by striking ‘‘audit reports’’ and insert-
ing ‘‘audit reports on annual financial state-
ments’’; and 
(B) by striking the period at the end and 
inserting ‘‘; and’’; and 
(4) by adding at the end of subsection (b)(1) the 
following new subparagraph: 
‘‘(C) with respect to each registered public 
accounting firm that regularly provides audit re-
ports and is not described under subparagraph 
(A) or (B), on a basis to be determined by the 
Board, by rule, consistent with the public inter-
est and protection of investors.’’. 
(f) 
INVESTIGATIONS
AND
DISCIPLINARY
PRO-
CEEDINGS.—Section 105(c)(7)(B) of such Act is amended— 
(1) in the subparagraph heading, by inserting ‘‘, 
BROKER, OR DEALER’’ after ‘‘ISSUER’’; 
(2) by striking ‘‘any issuer’’ each place it ap-
pears and inserting ‘‘any issuer, broker, or dealer’’; 
and 
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131 
(3) by striking ‘‘an issuer under this subsection’’ 
and inserting ‘‘a registered public accounting firm 
under this subsection’’. 
(g) FOREIGN PUBLIC ACCOUNTING FIRMS.—Section 
106 of such Act is amended— 
(1) in subsection (a)(1), by striking ‘‘issuer’’ and 
inserting ‘‘issuer, broker, or dealer’’; and 
(2) in subsection (a)(2), by striking ‘‘issuers’’ 
and inserting ‘‘issuers, brokers, or dealers’’. 
(h) FUNDING.—Section 109 of such Act is amended— 
(1) in subsection (c)(2), by striking ‘‘subsection 
(i)’’ and inserting ‘‘subsection (j)’’; 
(2) in subsection (d)(2), by striking ‘‘allowing 
for differentiation among classes of issuers, as appro-
priate’’ and inserting ‘‘and among brokers and deal-
ers in accordance with subsection (h), and allowing 
for differentiation among classes of issuers and bro-
kers and dealers, as appropriate’’; 
(3) in subsection (d), by inserting at the end the 
following new paragraph: 
‘‘(3) BROKERS AND DEALERS.—The rules of the 
Board under paragraph (1) shall provide that the al-
location, assessment, and collection by the Board (or 
an agent appointed by the Board) of the fee estab-
lished under paragraph (1) with respect to brokers 
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132 
and dealers shall not begin until the first day of the 
first full fiscal year beginning after the date of the en-
actment of this paragraph.’’; 
(4) by redesignating subsections (h), (i), and (j) 
as subsections (i), (j), and (k), respectively; and 
(5) by inserting after subsection (g) the following 
new subsection: 
‘‘(h) ALLOCATION
OF ACCOUNTING SUPPORT FEES 
AMONG BROKERS AND DEALERS.— 
‘‘(1) IN GENERAL.—Any amount due from bro-
kers and dealers (or a particular class of such brokers 
and dealers) under this section to fund the budget of 
the Board shall be allocated among and payable by 
such brokers and dealers (or such brokers and dealers 
in a particular class, as applicable). A broker or deal-
er’s allocation shall be in proportion to the broker or 
dealer’s net capital compared to the total net capital 
of all brokers and dealer, in accordance with the rules 
of the Board. 
‘‘(2) OBLIGATION TO PAY.—Every broker or deal-
er shall pay the share of a reasonable annual account-
ing support fee or fees allocated to such broker or 
dealer under this section.’’. 
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133 
(i) REFERRAL OF INVESTIGATIONS TO A SELF-REGU-
LATORY ORGANIZATION.—Section 105(b)(4)(B) of the Sar-
banes-Oxley Act of 2002 is amended— 
(1) by redesignating clauses (ii) and (iii) as 
clauses (iii) and (iv), respectively; and 
(2) by inserting after clause (i) the following new 
clause: 
‘‘(ii) to a self-regulatory organization, 
in the case of an investigation that concerns 
an audit report for a broker or dealer that 
is subject to the jurisdiction of such self-reg-
ulatory organization;’’. 
(j) USE OF DOCUMENTS RELATED TO AN INSPECTION 
OR INVESTIGATION.—Section 105(b)(5)(B)(ii) of such Act 
is amended— 
(1) in subclause (III), by striking ‘‘and’’; 
(2) in subclause (IV), by striking the comma and 
inserting ‘‘; and’’; and 
(3) by inserting after subclause (IV) the fol-
lowing new subclause: 
‘‘(V) a self-regulatory organiza-
tion, with respect to an audit report 
for a broker or dealer that is subject to 
the jurisdiction of such self-regulatory 
organization,’’. 
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134 
SEC. 602. FOREIGN REGULATORY INFORMATION SHARING. 
(a) DEFINITION.—Section 2(a) of the Sarbanes-Oxley 
Act of 2002 (15 U.S.C. 7201(a)) is amended by inserting 
after paragraph (16) the following: 
‘‘(17) FOREIGN
AUDITOR
OVERSIGHT
AUTHOR-
ITY.—The term ‘foreign auditor oversight authority’ 
means any governmental body or other entity empow-
ered by a foreign government to conduct inspections 
of public accounting firms or otherwise to administer 
or enforce laws related to the regulation of public ac-
counting firms.’’. 
(b) AVAILABILITY TO SHARE INFORMATION.—Section 
105(b)(5) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
7215(b)(5)) is amended by adding at the end the following: 
‘‘(C) AVAILABILITY TO FOREIGN OVERSIGHT 
AUTHORITIES.—When in the Board’s discretion 
it is necessary to accomplish the purposes of this 
Act or to protect investors, and without the loss 
of its status as confidential and privileged in the 
hands of the Board, all information referred to 
in subparagraph (A) that relates to a public ac-
counting firm within the inspection authority, or 
other regulatory or law enforcement jurisdiction, 
of a foreign auditor oversight authority may be 
made available to the foreign auditor oversight 
authority if the foreign auditor oversight author-
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135 
ity provides such assurances of confidentiality as 
the Board determines appropriate.’’. 
(c) CONFORMING AMENDMENT.—Section 105(b)(5)(A) 
of 
the 
Sarbanes-Oxley 
Act 
of 
2002 
(15 
U.S.C. 
7215(b)(5)(A)) is amended by striking ‘‘subparagraph (B)’’ 
and inserting ‘‘subparagraphs (B) and (C)’’. 
SEC. 603. EXPANSION OF AUDIT INFORMATION TO BE PRO-
DUCED AND EXCHANGED WITH FOREIGN 
COUNTERPARTS. 
Section 106 of the Sarbanes-Oxley Act of 2002 (15 
U.S.C. 7216) is amended— 
(1) by amending subsection (b) to read as fol-
lows: 
‘‘(b) PRODUCTION OF DOCUMENTS.— 
‘‘(1) PRODUCTION BY FOREIGN FIRMS.—If a for-
eign public accounting firm issues an audit report, 
performs audit work, conducts interim reviews, or 
performs material services upon which a registered 
public accounting firm relies in the conduct of an 
audit or interim review, the foreign public accounting 
firm shall produce its audit work papers and all 
other documents related to any such audit work or in-
terim review to the Commission or the Board when 
requested by the Commission or the Board and the 
foreign public accounting firm shall be subject to the 
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136 
jurisdiction of the courts of the United States for pur-
poses of enforcement of any request of such documents. 
‘‘(2) OTHER PRODUCTION.—Any registered pub-
lic 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 foreign public accounting 
firm’s audit work papers and all other docu-
ments 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 its reliance on the work of that for-
eign public accounting firm.’’; 
(2) by redesignating subsection (d) as subsection 
(g); and 
(3) by inserting after subsection (c) the following 
new subsections: 
‘‘(d) SERVICE OF REQUESTS OR PROCESS.—Any for-
eign public accounting firm that performs work for a do-
mestic registered public accounting firm shall furnish to the 
domestic firm a written irrevocable consent and power of 
attorney that designates the domestic firm as an agent upon 
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whom may be served any process, pleadings, or other papers 
in any action brought to enforce this section. Any foreign 
public accounting firm that issues an audit report, per-
forms audit work, performs interim reviews, or performs 
other material services upon which a registered public ac-
counting firm relies in the conduct of an audit or interim 
review, shall designate to the Commission or the Board an 
agent in the United States upon whom may be served any 
process, pleading, or other papers in any action brought 
to enforce this section or any request by the Commission 
or the Board under 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 a violation of this 
Act. 
‘‘(f) OTHER MEANS OF SATISFYING PRODUCTION OB-
LIGATIONS.—Notwithstanding any other provision of this 
section, the staff of the Commission or Board may allow 
foreign public accounting firms subject to this section to 
meet production obligations under this section though alter-
nate means, such as through foreign counterparts of the 
Commission or Board.’’. 
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138 
SEC. 604. CONFORMING AMENDMENT RELATED TO REG-
ISTRATION. 
Section 102(b)(3)(A) of the Sarbanes-Oxley Act of 2002 
(15 U.S. Code 7212(b)(3)(A)) is amended by striking ‘‘by 
the Board’’ and inserting ‘‘by the Commission or the 
Board’’. 
SEC. 605. FAIR FUND AMENDMENTS. 
Section 308 of the Sarbanes-Oxley Act of 2002 (15 
U.S.C. 7246(a)) is amended— 
(1) by amending subsection (a) to read as fol-
lows: 
‘‘(a) CIVIL PENALTIES TO BE USED FOR THE RELIEF 
OF VICTIMS.—If in any judicial or administrative action 
brought by the Commission under the securities laws (as 
such term is defined in section 3(a)(47) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(47)), the Commis-
sion obtains a civil penalty against any person for a viola-
tion of such laws or the rules and regulations thereunder, 
or such person agrees in settlement of any such action to 
such civil penalty, the amount of such civil penalty or set-
tlement shall, on the motion or at the direction of the Com-
mission, 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), by— 
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139 
(A) striking ‘‘for a disgorgement fund de-
scribed in subsection (a)’’ and inserting ‘‘for a 
disgorgement fund or other fund described in 
subsection (a)’’; and 
(B) striking ‘‘in the disgorgement fund’’ 
and inserting ‘‘in such fund’’; and 
(3) by striking subsection (e). 
SEC. 606. EXEMPTION FOR NONACCELERATED FILERS. 
(a) EXEMPTION.—Section 404 of the Sarbanes-Oxley 
Act of 2002 is amended by adding at the end the following: 
‘‘(c) EXEMPTION FOR SMALLER ISSUERS.—Subsection 
(b) shall not apply with respect to any audit report pre-
pared for an issuer that is not an accelerated filer within 
the meaning Rule 12b–2 of the Commission (17 C.F.R. 
240.12b–2).’’. 
(b) STUDY.—The Securities and Exchange Commis-
sion and the Comptroller General shall jointly conduct a 
study to determine how the Commission could reduce the 
burden of complying with section 404(b) of the Sarbanes- 
Oxley Act of 2002 for companies whose market capitaliza-
tion is between $75,000,000 and $250,000,000 for the rel-
evant reporting period while maintaining investor protec-
tions for such companies. The study shall also consider 
whether any such methods of reducing the compliance bur-
den or a complete exemption for such companies from com-
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140 
pliance with such section would encourage companies to list 
on exchanges in the United States in their initial public 
offerings. Not later than 180 days after the date of the enact-
ment of this Act, the Commission and the Comptroller Gen-
eral shall transmit a report of such study to Congress. 
SEC. 607. WHISTLEBLOWER PROTECTION AGAINST RETAL-
IATION BY A SUBSIDIARY OF AN ISSUER. 
Section 1514A(a) 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 ‘‘(15 U.S.C. 
78o(d)),’’. 
SEC. 608. CONGRESSIONAL ACCESS TO INFORMATION. 
Section 101 of the Sarbanes-Oxley Act of 2002 is 
amended by adding at the end the following: 
‘‘(i) CONGRESSIONAL ACCESS
TO INFORMATION.— 
Nothing in this section shall— 
‘‘(1) affect the Boards obligations, if any, to pro-
vide access to records under the Right to Financial 
Privacy Act; or 
‘‘(2) authorize the Board to withhold informa-
tion from Congress or prevent the Board from com-
plying with an order of a court of the United States 
in an action commenced by the United States or the 
Board.’’. 
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141 
SEC. 609. CREATION OF OMBUDSMAN FOR THE PCAOB. 
(a) OMBUDSMAN.—Title I of the Sarbanes-Oxley Act 
of 2002 (15 U.S.C. 7211 et seq.), as amended by section 
601(a)(1), is further amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 111. OMBUDSMAN. 
‘‘(a) ESTABLISHMENT REQUIRED.—Not later than 180 
days after the date of enactment of the Investor Protection 
Act, the Board shall appoint an ombudsman for the Board. 
The Ombudsman shall report directly to the Chairman. 
‘‘(b) DUTIES OF OMBUDSMAN.—The ombudsman ap-
pointed in accordance with subsection (a) for the Board 
shall— 
‘‘(1) act as a liaison between the Board and— 
‘‘(A) any registered public accounting firm 
or issuer with respect to issues or disputes con-
cerning the preparation or issuance of any audit 
report with respect to that issuer; and 
‘‘(B) any affected registered public account-
ing firm or issuer with respect to— 
‘‘(i) any problem such firm or issuer 
may have in dealing with the Board result-
ing from the regulatory activities of the 
Board, particularly with regard to the im-
plementation of section 404; and 
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‘‘(ii) issues caused by the relationships 
of registered public accounting firms and 
issuers generally; and 
‘‘(2) assure that safeguards exist to encourage 
complainants to come forward and to preserve con-
fidentiality; and 
‘‘(3) carry out such activities, and any other ac-
tivities assigned by the Board, in accordance with 
guidelines prescribed by the Board.’’. 
(b) CONFORMING AMENDMENT.—The table of sections 
in section 1(b) of such Act is amended, by inserting after 
the item relating to section 110 (as added by section 
601(a)(2)) the following new item: 
‘‘Sec. 111. Ombudsman.’’. 
SEC. 610. AUDITING OVERSIGHT BOARD. 
The Sarbanes-Oxley Act of 2002 is amended— 
(1) in section 2(a)(5), by striking ‘‘Public Com-
pany Accounting Oversight Board’’ and inserting 
‘‘Auditing Oversight Board’’; 
(2) in section 101(a), by striking ‘‘Public Com-
pany Accounting Oversight Board’’ and inserting 
‘‘Auditing Oversight Board’’; and 
(3) in the heading of title I, by striking ‘‘PUB-
LIC 
COMPANY 
ACCOUNTING 
OVER-
SIGHT BOARD’’ and inserting ‘‘AUDITING 
OVERSIGHT BOARD’’. 
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cial regulatory authority with respect to reg-
istration, any statement that was at the time 
and in the light of the circumstances under 
which it was made false or misleading with re-
spect to any material fact, or has omitted to 
state in any application or report to the foreign 
financial regulatory authority any material fact 
that is required to be stated therein; 
‘‘(ii) violated any foreign statute or regula-
tion regarding transactions in securities, or con-
tracts of sale of a commodity for future delivery, 
traded on or subject to the rules of a contract 
market or any board of trade; or 
‘‘(iii) aided, abetted, counseled, commanded, 
induced, or procured the violation by any person 
of any provision of any statutory provisions en-
acted by a foreign government, or rules or regu-
lations thereunder, empowering a foreign finan-
cial regulatory authority regarding transactions 
in securities, or contracts of sale of a commodity 
for future delivery, traded on or subject to the 
rules of a contract market or any board of trade, 
or has been found, by a foreign financial regu-
latory authority, to have failed reasonably to su-
pervise, with a view to preventing violations of 
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