209 
1853.07(c), D.C. Official Code), as redesignated by sub-
section (d)(2), is amended by striking ‘‘previously at-
tended’’ and all that follows through the period at the end 
and inserting ‘‘previously attended an elementary school 
or secondary school identified as one of the lowest-per-
forming schools under the District of Columbia’s account-
ability system.’’. 
SEC. 908. PROGRAM EVALUATION. 
(a) REVISION OF EVALUATION PROCEDURES AND 
REQUIREMENTS.— 
(1) IN GENERAL.—Section 3009(a) (sec. 38– 
1853.09(a), D.C. Official Code) is amended to read 
as follows: 
‘‘(a) IN GENERAL.— 
‘‘(1) DUTIES
OF
THE
SECRETARY
AND
THE 
MAYOR.—The Secretary and the Mayor of the Dis-
trict of Columbia shall— 
‘‘(A) jointly enter into an agreement with 
the Institute of Education Sciences of the De-
partment of Education to evaluate annually the 
opportunity scholarship program under this di-
vision; 
‘‘(B) jointly enter into an agreement to 
monitor and evaluate the use of funds author-
ized and appropriated for the District of Co-
210 
lumbia public schools and the District of Co-
lumbia public charter schools under this divi-
sion; and 
‘‘(C) make the evaluations described in 
subparagraphs (A) and (B) public in accord-
ance with subsection (c). 
‘‘(2) DUTIES OF THE SECRETARY.—The Sec-
retary, through a grant, contract, or cooperative 
agreement, shall— 
‘‘(A) ensure that the evaluation under 
paragraph (1)(A)— 
‘‘(i) is conducted using an acceptable 
quasi-experimental research design for de-
termining the effectiveness of the oppor-
tunity scholarship program under this divi-
sion that does not use a control study 
group consisting of students who applied 
for but did not receive opportunity scholar-
ships; and 
‘‘(ii) addresses the issues described in 
paragraph (4); and 
‘‘(B) disseminate information on the im-
pact of the program— 
‘‘(i) in increasing academic achieve-
ment and educational attainment of par-
211 
ticipating eligible students who use an op-
portunity scholarship; and 
‘‘(ii) on students and schools in the 
District of Columbia. 
‘‘(3) DUTIES
OF
THE
INSTITUTE
OF
EDU-
CATION
SCIENCES.—The Institute of Education 
Sciences of the Department of Education shall— 
‘‘(A) assess participating eligible students 
who use an opportunity scholarship in each of 
grades 3 through 8, as well as one of the grades 
at the high school level, by supervising the ad-
ministration of the same reading and mathe-
matics assessment used by the District of Co-
lumbia public schools to comply with section 
1111(b) of the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 6311(b)); 
‘‘(B) measure the academic achievement of 
all participating eligible students who use an 
opportunity scholarship in the grades described 
in subparagraph (A); and 
‘‘(C) work with eligible entities receiving a 
grant under this division to ensure that the par-
ents of each student who is a participating eli-
gible student that uses an opportunity scholar-
ship agrees to permit their child to participate
212 
in the evaluations and assessments carried out 
by the Institute of Education Sciences under 
this subsection. 
‘‘(4) ISSUES TO BE EVALUATED.—The issues to 
be evaluated under paragraph (1)(A) shall include 
the following: 
‘‘(A) A comparison of the academic 
achievement of participating eligible students 
who use an opportunity scholarship on the 
measurements described in paragraph (3)(B) to 
the academic achievement of a comparison 
group of students with similar backgrounds in 
the District of Columbia public schools. 
‘‘(B) The success of the program under 
this division in expanding choice options for 
parents of participating eligible students and 
increasing the satisfaction of such parents and 
students with their choice. 
‘‘(C) The reasons parents of participating 
eligible students choose for their children to 
participate in the program, including important 
characteristics for selecting schools. 
‘‘(D) A comparison of the retention rates, 
high school graduation rates, college enrollment 
rates, college persistence rates, and college
213 
graduation rates of participating eligible stu-
dents who use an opportunity scholarship with 
the rates of students in the comparison group 
described in subparagraph (A). 
‘‘(E) A comparison of the college enroll-
ment rates, college persistence rates, and col-
lege graduation rates of students who partici-
pated in the program in 2004, 2005, 2011, 
2012, 2013, 2014, and 2015 as the result of 
winning the Opportunity Scholarship Program 
lottery with such enrollment, persistence, and 
graduation rates for students who entered but 
did not win such lottery in those years and who, 
as a result, served as the control group for pre-
vious evaluations of the program under this di-
vision. Nothing in this subparagraph may be 
construed to waive section 3004(a)(3)(A)(iii) 
with respect to any such student. 
‘‘(F) A comparison of the safety of the 
schools attended by participating eligible stu-
dents who use an opportunity scholarship and 
the schools in the District of Columbia attended 
by students in the comparison group described 
in subparagraph (A), based on the perceptions 
of the students and parents.
214 
‘‘(G) An assessment of student academic 
achievement at participating schools in which 
85 percent of the total number of students en-
rolled at the school are participating eligible 
students who receive and use an opportunity 
scholarship. 
‘‘(H) Such other issues with respect to 
participating eligible students who use an op-
portunity scholarship as the Secretary considers 
appropriate for inclusion in the evaluation, such 
as the impact of the program on public elemen-
tary schools and secondary schools in the Dis-
trict of Columbia. 
‘‘(5) PROHIBITING DISCLOSURE OF PERSONAL 
INFORMATION.— 
‘‘(A) IN GENERAL.—Any disclosure of per-
sonally identifiable information obtained under 
this division shall be in compliance with section 
444 of the General Education Provisions Act 
(commonly known as the ‘Family Educational 
Rights and Privacy Act of 1974’) (20 U.S.C. 
1232g). 
‘‘(B) STUDENTS NOT ATTENDING PUBLIC 
SCHOOLS.—With respect to any student who is 
not attending a public elementary school or sec-
215 
ondary school, personally identifiable informa-
tion obtained under this division shall only be 
disclosed to— 
‘‘(i) individuals carrying out the eval-
uation described in paragraph (1)(A) for 
such student; 
‘‘(ii) the group of individuals pro-
viding information for carrying out the 
evaluation of such student; and 
‘‘(iii) the parents of such student.’’. 
(2) TRANSITION OF EVALUATION.— 
(A) TERMINATION OF PREVIOUS EVALUA-
TIONS.—The Secretary of Education shall— 
(i) terminate the evaluations con-
ducted under section 3009(a) of the Schol-
arships for Opportunity and Results Act 
(sec. 38–1853.09(a), D.C. Official Code), 
as in effect on the day before the date of 
enactment of this title, after obtaining 
data for the 2016–2017 school year; and 
(ii) submit any reports required for 
the 2016–2017 school year or preceding 
years with respect to the evaluations in ac-
cordance with section 3009(b) of such Act. 
(B) NEW EVALUATIONS.—
216 
(i) IN GENERAL.—Effective beginning 
with respect to the 2017–2018 school year, 
the Secretary shall conduct new evalua-
tions in accordance with the provisions of 
section 3009(a) of the Scholarships for Op-
portunity and Results Act (sec. 38– 
1853.09(a), D.C. Official Code), as amend-
ed by this title. 
(ii) MOST RECENT EVALUATION.—As 
a component of the new evaluations de-
scribed in clause (i), the Secretary shall 
continue to monitor and evaluate the stu-
dents who were evaluated in the most re-
cent evaluation under such section prior to 
the date of enactment of this title, includ-
ing by monitoring and evaluating the test 
scores and other information of such stu-
dents. 
(b) DUTY OF MAYOR TO ENSURE INSTITUTE HAS 
ALL INFORMATION NECESSARY TO CARRY OUT EVALUA-
TIONS.—Section 3011(a)(1) (sec. 38–1853.11(a)(1), D.C. 
Official Code) is amended to read as follows: 
‘‘(1) INFORMATION NECESSARY TO CARRY OUT 
EVALUATIONS.—Ensure that all District of Colum-
bia public schools and District of Columbia public
217 
charter schools make available to the Institute of 
Education Sciences of the Department of Education 
all of the information the Institute requires to carry 
out the assessments and perform the evaluations re-
quired under section 3009(a).’’. 
SEC. 909. FUNDING FOR DISTRICT OF COLUMBIA PUBLIC 
SCHOOLS AND PUBLIC CHARTER SCHOOLS. 
(a) MANDATORY WITHHOLDING
OF FUNDS
FOR 
FAILURE
TO
COMPLY
WITH
CONDITIONS.—Section 
3011(b) (sec. 38–1853.11(b), D.C. Official Code) is 
amended to read as follows: 
‘‘(b) ENFORCEMENT.—If, after reasonable notice and 
an opportunity for a hearing, the Secretary determines 
that the Mayor has failed to comply with any of the re-
quirements of subsection (a), the Secretary may withhold 
from the Mayor, in whole or in part— 
‘‘(1) the funds otherwise authorized to be ap-
propriated under section 3014(a)(2), if the failure to 
comply relates to the District of Columbia public 
schools; 
‘‘(2) the funds otherwise authorized to be ap-
propriated under section 3014(a)(3), if the failure to 
comply relates to the District of Columbia public 
charter schools; or
218 
‘‘(3) the funds otherwise authorized to be ap-
propriated under both paragraphs (2) and (3) of 
section 3014(a), if the failure relates to both the 
District of Columbia public schools and the District 
of Columbia public charter schools.’’. 
(b) RULES FOR USE OF FUNDS PROVIDED FOR SUP-
PORT
OF PUBLIC CHARTER SCHOOLS.—Section 3011 
(sec. 38–1853.11, D.C. Official Code), as amended by sec-
tion 7(b) and section 8(a), is further amended— 
(1) by redesignating subsection (c) as sub-
section (d); and 
(2) by inserting after subsection (b) the fol-
lowing new subsection: 
‘‘(c) SPECIFIC RULES REGARDING FUNDS PROVIDED 
FOR SUPPORT OF PUBLIC CHARTER SCHOOLS.—The fol-
lowing rules shall apply with respect to the funds provided 
under this division for the support of District of Columbia 
public charter schools: 
‘‘(1) The Secretary may direct the funds pro-
vided for any fiscal year, or any portion thereof, to 
the Office of the State Superintendent of Education 
of the District of Columbia. 
‘‘(2) The Office of the State Superintendent of 
Education of the District of Columbia may transfer 
the funds to subgrantees that are—
219 
‘‘(A) specific District of Columbia public 
charter schools or networks of such schools; or 
‘‘(B) District of Columbia-based nonprofit 
organizations with experience in successfully 
providing support or assistance to District of 
Columbia public charter schools or networks of 
such schools. 
‘‘(3) The funds provided under this division for 
the support of District of Columbia public charter 
schools shall be available to any District of Columbia 
public charter school in good standing with the Dis-
trict of Columbia Charter School Board, and the Of-
fice of the State Superintendent of Education of the 
District of Columbia and the District of Columbia 
Charter School Board may not restrict the avail-
ability of such funds to certain types of schools on 
the basis of the school’s location, governing body, or 
the school’s facilities.’’. 
SEC. 910. REVISION OF CURRENT MEMORANDUM OF UN-
DERSTANDING. 
Not later than the beginning of the 2017–2018 school 
year, the Secretary of Education and the Mayor of the 
District of Columbia shall revise the memorandum of un-
derstanding which is in effect under section 3012(d) of 
the Scholarships for Opportunity and Results Act as of
220 
the day before the date of the enactment of this title to 
address the following: 
(1) The amendments made by this title. 
(2) The need to ensure that participating 
schools under the Scholarships for Opportunity and 
Results Act meet fire code standards and maintain 
certificates of occupancy. 
(3) The need to ensure that District of Colum-
bia public schools and District of Columbia public 
charter schools meet the requirements under such 
Act to comply with all reasonable requests for infor-
mation necessary to carry out the evaluations re-
quired under section 3009(a) of such Act. 
SEC. 911. DEFINITIONS. 
Section 3013 (sec. 38–1853.13, D.C. Official Code) 
is amended— 
(1) by redesignating paragraphs (1) through 
(10) as paragraphs (2) through (11), respectively; 
(2) by inserting before paragraph (2), as redes-
ignated by paragraph (1), the following: 
‘‘(1) CORE SUBJECT MATTER.—The term ‘core 
subject matter’ means— 
‘‘(A) mathematics; 
‘‘(B) science; and
221 
‘‘(C) English, reading, or language arts.’’; 
and 
(3) in paragraph (4)(B)(ii), as redesignated by 
paragraph (1), by inserting ‘‘household with a’’ be-
fore ‘‘student’’. 
SEC. 912. EXTENSION OF AUTHORIZATION OF APPROPRIA-
TIONS. 
(a) IN GENERAL.—Section 3014 (sec. 38–1853.14, 
D.C. Official Code) is amended— 
(1) in subsection (a), by striking ‘‘and for each 
of the 4 succeeding fiscal years’’ and inserting ‘‘and 
for each fiscal year through fiscal year 2021’’; and 
(2) by adding at the end the following: 
‘‘(c) AVAILABILITY.—Amounts appropriated under 
subsection (a)(1), including amounts appropriated and 
available under such subsection before the date of enact-
ment of the SOAR Reauthorization Act, shall remain 
available until expended.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a)(2) shall take effect on the date of enact-
ment of this title. 
SEC. 913. EFFECTIVE DATE. 
Except as otherwise provided, the amendments made 
by this title shall apply with respect to school year 2017– 
2018 and each succeeding school year.
222 
TITLE X 
SEC SMALL BUSINESS ADVOCATE ACT 
SEC. 1001. SHORT TITLE. 
This title may be cited as the ‘‘SEC Small Business 
Advocate Act of 2016’’. 
SEC. 1002. ESTABLISHMENT OF OFFICE OF THE ADVOCATE 
FOR SMALL BUSINESS CAPITAL FORMATION 
AND SMALL BUSINESS CAPITAL FORMATION 
ADVISORY COMMITTEE. 
(a) OFFICE OF THE ADVOCATE FOR SMALL BUSI-
NESS CAPITAL FORMATION.—Section 4 of the Securities 
Exchange Act of 1934 (15 U.S.C. 78d) is amended by 
adding at the end the following: 
‘‘(j) OFFICE OF THE ADVOCATE FOR SMALL BUSI-
NESS CAPITAL FORMATION.— 
‘‘(1) OFFICE
ESTABLISHED.—There is estab-
lished within the Commission the Office of the Advo-
cate for Small Business Capital Formation (here-
after in this subsection referred to as the ‘Office’). 
‘‘(2) ADVOCATE FOR SMALL BUSINESS CAPITAL 
FORMATION.— 
‘‘(A) IN GENERAL.—The head of the Of-
fice shall be the Advocate for Small Business 
Capital Formation, who shall—
223 
‘‘(i) report directly to the Commission; 
and 
‘‘(ii) be appointed by the Commission, 
from among individuals having experience 
in advocating for the interests of small 
businesses and encouraging small business 
capital formation. 
‘‘(B) COMPENSATION.—The annual rate of 
pay for the Advocate for Small Business Cap-
ital Formation shall be equal to the highest rate 
of annual pay for other senior executives who 
report directly to the Commission. 
‘‘(C) NO
CURRENT
EMPLOYEE
OF
THE 
COMMISSION.—An individual may not be ap-
pointed as the Advocate for Small Business 
Capital Formation if the individual is currently 
employed by the Commission. 
‘‘(3) STAFF
OF
OFFICE.—The Advocate for 
Small Business Capital Formation, after consulta-
tion with the Commission, may retain or employ 
independent counsel, research staff, and service 
staff, as the Advocate for Small Business Capital 
Formation determines to be necessary to carry out 
the functions of the Office.
224 
‘‘(4) FUNCTIONS
OF
THE
ADVOCATE
FOR 
SMALL BUSINESS CAPITAL FORMATION.—The Advo-
cate for Small Business Capital Formation shall— 
‘‘(A) assist small businesses and small 
business investors in resolving significant prob-
lems such businesses and investors may have 
with the Commission or with self-regulatory or-
ganizations; 
‘‘(B) identify areas in which small busi-
nesses and small business investors would ben-
efit from changes in the regulations of the 
Commission or the rules of self-regulatory orga-
nizations; 
‘‘(C) identify problems that small busi-
nesses have with securing access to capital, in-
cluding any unique challenges to minority- 
owned and women-owned small businesses; 
‘‘(D) analyze the potential impact on small 
businesses and small business investors of— 
‘‘(i) proposed regulations of the Com-
mission that are likely to have a significant 
economic impact on small businesses and 
small business capital formation; and 
‘‘(ii) proposed rules that are likely to 
have a significant economic impact on
225 
small businesses and small business capital 
formation of self-regulatory organizations 
registered under this title; 
‘‘(E) conduct outreach to small businesses 
and small business investors, including through 
regional roundtables, in order to solicit views on 
relevant capital formation issues; 
‘‘(F) to the extent practicable, propose to 
the Commission changes in the regulations or 
orders of the Commission and to Congress any 
legislative, administrative, or personnel changes 
that may be appropriate to mitigate problems 
identified under this paragraph and to promote 
the interests of small businesses and small busi-
ness investors; 
‘‘(G) consult with the Investor Advocate on 
proposed recommendations made under sub-
paragraph (F); and 
‘‘(H) advise the Investor Advocate on 
issues related to small businesses and small 
business investors. 
‘‘(5) ACCESS TO DOCUMENTS.—The Commis-
sion shall ensure that the Advocate for Small Busi-
ness Capital Formation has full access to the docu-
ments and information of the Commission and any
226 
self-regulatory organization, as necessary to carry 
out the functions of the Office. 
‘‘(6) ANNUAL REPORT ON ACTIVITIES.— 
‘‘(A) IN
GENERAL.—Not later than De-
cember 31 of each year after 2015, the Advo-
cate for Small Business Capital Formation shall 
submit to the Committee on Banking, Housing, 
and Urban Affairs of the Senate and the Com-
mittee on Financial Services of the House of 
Representatives a report on the activities of the 
Advocate for Small Business Capital Formation 
during the immediately preceding fiscal year. 
‘‘(B) CONTENTS.—Each report required 
under subparagraph (A) shall include— 
‘‘(i) appropriate statistical information 
and full and substantive analysis; 
‘‘(ii) information on steps that the 
Advocate for Small Business Capital For-
mation has taken during the reporting pe-
riod to improve small business services and 
the responsiveness of the Commission and 
self-regulatory organizations to small busi-
ness and small business investor concerns; 
‘‘(iii) a summary of the most serious 
issues encountered by small businesses and
227 
small business investors, including any 
unique issues encountered by minority- 
owned and women-owned small businesses 
and their investors, during the reporting 
period; 
‘‘(iv) an inventory of the items sum-
marized under clause (iii) (including items 
summarized under such clause for any 
prior reporting period on which no action 
has been taken or that have not been re-
solved to the satisfaction of the Advocate 
for Small Business Capital Formation as 
of the beginning of the reporting period 
covered by the report) that includes— 
‘‘(I) identification of any action 
taken by the Commission or the self- 
regulatory organization and the result 
of such action; 
‘‘(II) the length of time that each 
item has remained on such inventory; 
and 
‘‘(III) for items on which no ac-
tion has been taken, the reasons for 
inaction, and an identification of any
228 
official who is responsible for such ac-
tion; 
‘‘(v) 
recommendations 
for 
such 
changes to the regulations, guidance and 
orders of the Commission and such legisla-
tive actions as may be appropriate to re-
solve problems with the Commission and 
self-regulatory organizations encountered 
by small businesses and small business in-
vestors and to encourage small business 
capital formation; and 
‘‘(vi) any other information, as deter-
mined appropriate by the Advocate for 
Small Business Capital Formation. 
‘‘(C) CONFIDENTIALITY.—No report re-
quired by subparagraph (A) may contain con-
fidential information. 
‘‘(D) INDEPENDENCE.—Each report re-
quired under subparagraph (A) shall be pro-
vided directly to the committees of Congress 
listed in such subparagraph without any prior 
review or comment from the Commission, any 
commissioner, any other officer or employee of 
the Commission, or the Office of Management 
and Budget.
229 
‘‘(7) REGULATIONS.—The Commission shall es-
tablish procedures requiring a formal response to all 
recommendations submitted to the Commission by 
the Advocate for Small Business Capital Formation, 
not later than 3 months after the date of such sub-
mission. 
‘‘(8) GOVERNMENT-BUSINESS FORUM ON SMALL 
BUSINESS CAPITAL FORMATION.—The Advocate for 
Small Business Capital Formation shall be respon-
sible for planning, organizing, and executing the an-
nual Government-Business Forum on Small Busi-
ness Capital Formation described in section 503 of 
the Small Business Investment Incentive Act of 
1980 (15 U.S.C. 80c–1). 
‘‘(9) RULE
OF
CONSTRUCTION.—Nothing in 
this subsection may be construed as replacing or re-
ducing the responsibilities of the Investor Advocate 
with respect to small business investors.’’. 
(b) SMALL BUSINESS CAPITAL FORMATION ADVI-
SORY COMMITTEE.—Title I of the Securities Exchange 
Act of 1934 (15 U.S.C. 78a et seq.) is amended by adding 
at the end the following: 
‘‘SEC. 40. SMALL BUSINESS CAPITAL FORMATION ADVISORY 
COMMITTEE. 
‘‘(a) ESTABLISHMENT AND PURPOSE.—
230 
‘‘(1) ESTABLISHMENT.—There is established 
within the Commission the Small Business Capital 
Formation Advisory Committee (hereafter in this 
section referred to as the ‘Committee’). 
‘‘(2) FUNCTIONS.— 
‘‘(A) IN GENERAL.—The Committee shall 
provide the Commission with advice on the 
Commission’s rules, regulations, and policies 
with regard to the Commission’s mission of pro-
tecting investors, maintaining fair, orderly, and 
efficient markets, and facilitating capital forma-
tion, as such rules, regulations, and policies re-
late to— 
‘‘(i) capital raising by emerging, pri-
vately held small businesses (‘emerging 
companies’) and publicly traded companies 
with less than $250,000,000 in public mar-
ket capitalization (‘smaller public compa-
nies’) through securities offerings, includ-
ing private and limited offerings and initial 
and other public offerings; 
‘‘(ii) trading in the securities of 
emerging companies and smaller public 
companies; and
231 
‘‘(iii) public reporting and corporate 
governance requirements of emerging com-
panies and smaller public companies. 
‘‘(B) LIMITATION.—The Committee shall 
not provide any advice with respect to any poli-
cies, practices, actions, or decisions concerning 
the Commission’s enforcement program. 
‘‘(b) MEMBERSHIP.— 
‘‘(1) IN GENERAL.—The members of the Com-
mittee shall be— 
‘‘(A) the Advocate for Small Business Cap-
ital Formation; 
‘‘(B) not fewer than 10, and not more than 
20, members appointed by the Commission, 
from among individuals— 
‘‘(i) who represent— 
‘‘(I) emerging companies engag-
ing in private and limited securities 
offerings or considering initial public 
offerings (‘IPO’) (including the com-
panies’ officers and directors); 
‘‘(II) the professional advisors of 
such companies (including attorneys, 
accountants, investment bankers, and 
financial advisors); and
232 
‘‘(III) the investors in such com-
panies (including angel investors, ven-
ture capital funds, and family offices); 
‘‘(ii) who are officers or directors of 
minority-owned 
small 
businesses 
or 
women-owned small businesses; 
‘‘(iii) who represent— 
‘‘(I) smaller public companies 
(including the companies’ officers and 
directors); 
‘‘(II) the professional advisors of 
such companies (including attorneys, 
auditors, underwriters, and financial 
advisors); and 
‘‘(III) the pre-IPO and post-IPO 
investors in such companies (both in-
stitutional, such as venture capital 
funds, and individual, such as angel 
investors); and 
‘‘(iv) who represent participants in the 
marketplace for the securities of emerging 
companies and smaller public companies, 
such as securities exchanges, alternative 
trading systems, analysts, information 
processors, and transfer agents; and
233 
‘‘(C) three non-voting members— 
‘‘(i) one of whom shall be appointed 
by the Investor Advocate; 
‘‘(ii) one of whom shall be appointed 
by the North American Securities Adminis-
trators Association; and 
‘‘(iii) one of whom shall be appointed 
by the Administrator of the Small Busi-
ness Administration. 
‘‘(2) TERM.—Each member of the Committee 
appointed under subparagraph (B), (C)(ii), or 
(C)(iii) of paragraph (1) shall serve for a term of 4 
years. 
‘‘(3) MEMBERS
NOT
COMMISSION
EMPLOY-
EES.—Members appointed under subparagraph (B), 
(C)(ii), or (C)(iii) of paragraph (1) shall not be 
treated as employees or agents of the Commission 
solely because of membership on the Committee. 
‘‘(c) CHAIRMAN; VICE CHAIRMAN; SECRETARY; AS-
SISTANT SECRETARY.— 
‘‘(1) IN GENERAL.—The members of the Com-
mittee shall elect, from among the members of the 
Committee— 
‘‘(A) a chairman; 
‘‘(B) a vice chairman;
234 
‘‘(C) a secretary; and 
‘‘(D) an assistant secretary. 
‘‘(2) TERM.—Each member elected under para-
graph (1) shall serve for a term of 3 years in the 
capacity for which the member was elected under 
paragraph (1). 
‘‘(d) MEETINGS.— 
‘‘(1) FREQUENCY
OF
MEETINGS.—The Com-
mittee shall meet— 
‘‘(A) not less frequently than four times 
annually, at the call of the chairman of the 
Committee; and 
‘‘(B) from time to time, at the call of the 
Commission. 
‘‘(2) NOTICE.—The chairman of the Committee 
shall give the members of the Committee written no-
tice of each meeting, not later than 2 weeks before 
the date of the meeting. 
‘‘(e) COMPENSATION
AND TRAVEL EXPENSES.— 
Each member of the Committee who is not a full-time em-
ployee of the United States shall— 
‘‘(1) be entitled to receive compensation at a 
rate not to exceed the daily equivalent of the annual 
rate of basic pay in effect for a position at level V 
of the Executive Schedule under section 5316 of title
235 
5, United States Code, for each day during which 
the member is engaged in the actual performance of 
the duties of the Committee; and 
‘‘(2) while away from the home or regular place 
of business of the member in the performance of 
services for the Committee, be allowed travel ex-
penses, including per diem in lieu of subsistence, in 
the same manner as persons employed intermittently 
in the Government service are allowed expenses 
under section 5703 of title 5, United States Code. 
‘‘(f) STAFF.—The Commission shall make available 
to the Committee such staff as the chairman of the Com-
mittee determines are necessary to carry out this section. 
‘‘(g) REVIEW
BY COMMISSION.—The Commission 
shall— 
‘‘(1) review the findings and recommendations 
of the Committee; and 
‘‘(2) each time the Committee submits a finding 
or recommendation to the Commission, promptly 
issue a public statement— 
‘‘(A) assessing the finding or recommenda-
tion of the Committee; and 
‘‘(B) disclosing the action, if any, the Com-
mission intends to take with respect to the find-
ing or recommendation.
236 
‘‘(h) FEDERAL ADVISORY COMMITTEE ACT.—The 
Federal Advisory Committee Act (5 U.S.C. App.) shall not 
apply with respect to the Committee and its activities.’’. 
(c) ANNUAL GOVERNMENT-BUSINESS FORUM
ON 
SMALL BUSINESS CAPITAL FORMATION.—Section 503(a) 
of the Small Business Investment Incentive Act of 1980 
(15 U.S.C. 80c–1(a)) is amended by inserting ‘‘(acting 
through the Office of the Advocate for Small Business 
Capital Formation and in consultation with the Small 
Business Capital Formation Advisory Committee)’’ after 
‘‘Securities and Exchange Commission’’. 
TITLE XI 
FINANCIAL INSTITUTION BANKRUPTCY ACT 
SEC. 1101. SHORT TITLE. 
This title may be cited as the ‘‘Financial Institution 
Bankruptcy Act of 2016’’. 
SEC. 1102. GENERAL PROVISIONS RELATING TO COVERED 
FINANCIAL CORPORATIONS. 
(a) DEFINITION.—Section 101 of title 11, United 
States Code, is amended by inserting the following after 
paragraph (9): 
‘‘(9A) The term ‘covered financial corporation’ 
means any corporation incorporated or organized 
under any Federal or State law, other than a stock-
broker, a commodity broker, or an entity of the kind
237 
specified in paragraph (2) or (3) of section 109(b), 
that is— 
‘‘(A) a bank holding company, as defined 
in section 2(a) of the Bank Holding Company 
Act of 1956; or 
‘‘(B) a corporation that exists for the pri-
mary purpose of owning, controlling and financ-
ing its subsidiaries, that has total consolidated 
assets of $50,000,000,000 or greater, and for 
which, in its most recently completed fiscal 
year— 
‘‘(i) annual gross revenues derived by 
the corporation and all of its subsidiaries 
from activities that are financial in nature 
(as defined in section 4(k) of the Bank 
Holding Company Act of 1956) and, if ap-
plicable, from the ownership or control of 
one or more insured depository institu-
tions, represents 85 percent or more of the 
consolidated annual gross revenues of the 
corporation; or 
‘‘(ii) the consolidated assets of the 
corporation and all of its subsidiaries re-
lated to activities that are financial in na-
ture (as defined in section 4(k) of the
238 
Bank Holding Company Act of 1956) and, 
if applicable, related to the ownership or 
control of one or more insured depository 
institutions, represents 85 percent or more 
of the consolidated assets of the corpora-
tion.’’. 
(b) APPLICABILITY OF CHAPTERS.—Section 103 of 
title 11, United States Code, is amended by adding at the 
end the following: 
‘‘(l) Subchapter V of chapter 11 of this title applies 
only in a case under chapter 11 concerning a covered fi-
nancial corporation.’’. 
(c) WHO MAY BE A DEBTOR.—Section 109 of title 
11, United States Code, is amended— 
(1) in subsection (b)— 
(A) in paragraph (2), by striking ‘‘or’’ at 
the end; 
(B) in paragraph (3)(B), by striking the 
period at the end and inserting ‘‘; or’’; and 
(C) by adding at the end the following: 
‘‘(4) a covered financial corporation.’’; and 
(2) in subsection (d)— 
(A) by striking ‘‘and’’ before ‘‘an unin-
sured State member bank’’;
239 
(B) by striking ‘‘or’’ before ‘‘a corpora-
tion’’; and 
(C) by inserting ‘‘, or a covered financial 
corporation’’ after ‘‘Federal Deposit Insurance 
Corporation Improvement Act of 1991’’. 
(d) CONVERSION TO CHAPTER 7.—Section 1112 of 
title 11, United States Code, is amended by adding at the 
end the following: 
‘‘(g) Notwithstanding section 109(b), the court may 
convert a case under subchapter V to a case under chapter 
7 if— 
‘‘(1) a transfer approved under section 1185 
has been consummated; 
‘‘(2) the court has ordered the appointment of 
a special trustee under section 1186; and 
‘‘(3) the court finds, after notice and a hearing, 
that conversion is in the best interest of the credi-
tors and the estate.’’. 
(e)(1) Section 726(a)(1) of title 11, United States 
Code, is amended by inserting after ‘‘first,’’ the following: 
‘‘in payment of any unpaid fees, costs, and expenses of 
a special trustee appointed under section 1186, and then’’. 
(2) Section 1129(a) of title 11, United States Code, 
is amended by inserting after paragraph (16) the fol-
lowing:
240 
‘‘(17) In a case under subchapter V, all payable 
fees, costs, and expenses of the special trustee have 
been paid or the plan provides for the payment of 
all such fees, costs, and expenses on the effective 
date of the plan. 
‘‘(18) In a case under subchapter V, confirma-
tion of the plan is not likely to cause serious adverse 
effects on financial stability in the United States.’’. 
(f) Section 322(b)(2) of title 11, United States Code, 
is amended by striking ‘‘The’’ and inserting ‘‘In cases 
under subchapter V, the United States trustee shall rec-
ommend to the court, and in all other cases, the’’. 
SEC. 1103. LIQUIDATION, REORGANIZATION, OR RECAPI-
TALIZATION OF A COVERED FINANCIAL COR-
PORATION. 
(a) IN GENERAL.—Chapter 11 of title 11, United 
States Code, is amended by adding at the end the fol-
lowing: 
‘‘SUBCHAPTER V—LIQUIDATION, REORGANIZA-
TION, OR RECAPITALIZATION OF A COV-
ERED FINANCIAL CORPORATION 
‘‘§ 1181. Inapplicability of other sections 
‘‘Sections 303 and 321(c) do not apply in a case 
under this subchapter concerning a covered financial cor-
241 
poration. Section 365 does not apply to a transfer under 
section 1185, 1187, or 1188. 
‘‘§ 1182. Definitions for this subchapter 
‘‘In this subchapter, the following definitions shall 
apply: 
‘‘(1) The term ‘Board’ means the Board of 
Governors of the Federal Reserve System. 
‘‘(2) The term ‘bridge company’ means a newly 
formed corporation to which property of the estate 
may be transferred under section 1185(a) and the 
equity securities of which may be transferred to a 
special trustee under section 1186(a). 
‘‘(3) The term ‘capital structure debt’ means all 
unsecured debt of the debtor for borrowed money for 
which the debtor is the primary obligor, other than 
a qualified financial contract and other than debt se-
cured by a lien on property of the estate that is to 
be transferred to a bridge company pursuant to an 
order of the court under section 1185(a). 
‘‘(4) The term ‘contractual right’ means a con-
tractual right of a kind defined in section 555, 556, 
559, 560, or 561. 
‘‘(5) The term ‘qualified financial contract’ 
means any contract of a kind defined in paragraph 
(25), (38A), (47), or (53B) of section 101, section
242 
741(7), or paragraph (4), (5), (11), or (13) of sec-
tion 761. 
‘‘(6) The term ‘special trustee’ means the trust-
ee of a trust formed under section 1186(a)(1). 
‘‘§ 1183. Commencement of a case concerning a cov-
ered financial corporation 
‘‘(a) A case under this subchapter concerning a cov-
ered financial corporation may be commenced by the filing 
of a petition with the court by the debtor under section 
301 only if the debtor states to the best of its knowledge 
under penalty of perjury in the petition that it is a covered 
financial corporation. 
‘‘(b) The commencement of a case under subsection 
(a) constitutes an order for relief under this subchapter. 
‘‘(c) The members of the board of directors (or body 
performing similar functions) of a covered financial com-
pany shall have no liability to shareholders, creditors, or 
other parties in interest for a good faith filing of a petition 
to commence a case under this subchapter, or for any rea-
sonable action taken in good faith in contemplation of or 
in connection with such a petition or a transfer under sec-
tion 1185 or section 1186, whether prior to or after com-
mencement of the case. 
‘‘(d) Counsel to the debtor shall provide, to the great-
est extent practicable without disclosing the identity of the
243 
potential debtor, sufficient confidential notice to the chief 
judge of the court of appeals for the circuit embracing the 
district in which such counsel intends to file a petition to 
commence a case under this subchapter regarding the po-
tential commencement of such case. The chief judge of 
such court shall randomly assign to preside over such case 
a bankruptcy judge selected from among the bankruptcy 
judges designated by the Chief Justice of the United 
States under section 298 of title 28. 
‘‘§ 1184. Regulators 
‘‘The Board, the Securities Exchange Commission, 
the Office of the Comptroller of the Currency of the De-
partment of the Treasury, the Commodity Futures Trad-
ing Commission, and the Federal Deposit Insurance Cor-
poration may raise and may appear and be heard on any 
issue in any case or proceeding under this subchapter. 
‘‘§ 1185. Special transfer of property of the estate 
‘‘(a) On request of the trustee, and after notice and 
a hearing that shall occur not less than 24 hours after 
the order for relief, the court may order a transfer under 
this section of property of the estate, and the assignment 
of executory contracts, unexpired leases, and qualified fi-
nancial contracts of the debtor, to a bridge company. 
Upon the entry of an order approving such transfer, any 
property transferred, and any executory contracts, unex-
244 
pired leases, and qualified financial contracts assigned 
under such order shall no longer be property of the estate. 
Except as provided under this section, the provisions of 
section 363 shall apply to a transfer and assignment under 
this section. 
‘‘(b) Unless the court orders otherwise, notice of a 
request for an order under subsection (a) shall consist of 
electronic or telephonic notice of not less than 24 hours 
to— 
‘‘(1) the debtor; 
‘‘(2) the holders of the 20 largest secured 
claims against the debtor; 
‘‘(3) the holders of the 20 largest unsecured 
claims against the debtor; 
‘‘(4) counterparties to any debt, executory con-
tract, unexpired lease, and qualified financial con-
tract requested to be transferred under this section; 
‘‘(5) the Board; 
‘‘(6) the Federal Deposit Insurance Corpora-
tion; 
‘‘(7) the Secretary of the Treasury and the Of-
fice of the Comptroller of the Currency of the Treas-
ury; 
‘‘(8) the Commodity Futures Trading Commis-
sion;
245 
‘‘(9) the Securities and Exchange Commission; 
‘‘(10) the United States trustee or bankruptcy 
administrator; and 
‘‘(11) each primary financial regulatory agency, 
as defined in section 2(12) of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act, with 
respect to any affiliate the equity securities of which 
are proposed to be transferred under this section. 
‘‘(c) The court may not order a transfer under this 
section unless the court determines, based upon a prepon-
derance of the evidence, that— 
‘‘(1) the transfer under this section is necessary 
to prevent serious adverse effects on financial sta-
bility in the United States; 
‘‘(2) the transfer does not provide for the as-
sumption of any capital structure debt by the bridge 
company; 
‘‘(3) the transfer does not provide for the trans-
fer to the bridge company of any property of the es-
tate that is subject to a lien securing a debt, execu-
tory contract, unexpired lease or agreement (includ-
ing a qualified financial contract) of the debtor un-
less— 
‘‘(A)(i) the bridge company assumes such 
debt, executory contract, unexpired lease or
246 
agreement (including a qualified financial con-
tract), including any claims arising in respect 
thereof that would not be allowed secured 
claims under section 506(a)(1) and after giving 
effect to such transfer, such property remains 
subject to the lien securing such debt, executory 
contract, unexpired lease or agreement (includ-
ing a qualified financial contract); and 
‘‘(ii) the court has determined that as-
sumption of such debt, executory contract, un-
expired lease or agreement (including a quali-
fied financial contract) by the bridge company 
is in the best interests of the estate; or 
‘‘(B) such property is being transferred to 
the bridge company in accordance with the pro-
visions of section 363; 
‘‘(4) the transfer does not provide for the as-
sumption by the bridge company of any debt, execu-
tory contract, unexpired lease or agreement (includ-
ing a qualified financial contract) of the debtor se-
cured by a lien on property of the estate unless the 
transfer provides for such property to be transferred 
to the bridge company in accordance with paragraph 
(3)(A) of this subsection;
247 
‘‘(5) the transfer does not provide for the trans-
fer of the equity of the debtor; 
‘‘(6) the trustee has demonstrated that the 
bridge company is not likely to fail to meet the obli-
gations of any debt, executory contract, qualified fi-
nancial contract, or unexpired lease assumed and as-
signed to the bridge company; 
‘‘(7) the transfer provides for the transfer to a 
special trustee all of the equity securities in the 
bridge company and appointment of a special trustee 
in accordance with section 1186; 
‘‘(8) after giving effect to the transfer, ade-
quate provision has been made for the fees, costs, 
and expenses of the estate and special trustee; and 
‘‘(9) the bridge company will have governing 
documents, and initial directors and senior officers, 
that are in the best interest of creditors and the es-
tate. 
‘‘(d) Immediately before a transfer under this section, 
the bridge company that is the recipient of the transfer 
shall— 
‘‘(1) not have any property, executory con-
tracts, unexpired leases, qualified financial contracts, 
or debts, other than any property acquired or execu-
tory contracts, unexpired leases, or debts assumed
248 
when acting as a transferee of a transfer under this 
section; and 
‘‘(2) have equity securities that are property of 
the estate, which may be sold or distributed in ac-
cordance with this title. 
‘‘§ 1186. Special trustee 
‘‘(a)(1) An order approving a transfer under section 
1185 shall require the trustee to transfer to a qualified 
and independent special trustee, who is appointed by the 
court, all of the equity securities in the bridge company 
that is the recipient of a transfer under section 1185 to 
hold in trust for the sole benefit of the estate, subject to 
satisfaction of the special trustee’s fees, costs, and ex-
penses. The trust of which the special trustee is the trust-
ee shall be a newly formed trust governed by a trust agree-
ment approved by the court as in the best interests of the 
estate, and shall exist for the sole purpose of holding and 
administering, and shall be permitted to dispose of, the 
equity securities of the bridge company in accordance with 
the trust agreement. 
‘‘(2) In connection with the hearing to approve a 
transfer under section 1185, the trustee shall confirm to 
the court that the Board has been consulted regarding the 
identity of the proposed special trustee and advise the 
court of the results of such consultation.
249 
‘‘(b) The trust agreement governing the trust shall 
provide— 
‘‘(1) for the payment of the fees, costs, ex-
penses, and indemnities of the special trustee from 
the assets of the debtor’s estate; 
‘‘(2) that the special trustee provide— 
‘‘(A) quarterly reporting to the estate, 
which shall be filed with the court; and 
‘‘(B) information about the bridge com-
pany reasonably requested by a party in inter-
est to prepare a disclosure statement for a plan 
providing for distribution of any securities of 
the bridge company if such information is nec-
essary to prepare such disclosure statement; 
‘‘(3) that for as long as the equity securities of 
the bridge company are held by the trust, the special 
trustee shall file a notice with the court in connec-
tion with— 
‘‘(A) any change in a director or senior of-
ficer of the bridge company; 
‘‘(B) any modification to the governing 
documents of the bridge company; and 
‘‘(C) any material corporate action of the 
bridge company, including— 
‘‘(i) recapitalization;
250 
‘‘(ii) a material borrowing; 
‘‘(iii) termination of an intercompany 
debt or guarantee; 
‘‘(iv) a transfer of a substantial por-
tion of the assets of the bridge company; 
or 
‘‘(v) the issuance or sale of any secu-
rities of the bridge company; 
‘‘(4) that any sale of any equity securities of 
the bridge company shall not be consummated until 
the special trustee consults with the Federal Deposit 
Insurance Corporation and the Board regarding 
such sale and discloses the results of such consulta-
tion with the court; 
‘‘(5) that, subject to reserves for payments per-
mitted under paragraph (1) provided for in the trust 
agreement, the proceeds of the sale of any equity se-
curities of the bridge company by the special trustee 
be held in trust for the benefit of or transferred to 
the estate; 
‘‘(6) the process and guidelines for the replace-
ment of the special trustee; and 
‘‘(7) that the property held in trust by the spe-
cial trustee is subject to distribution in accordance 
with subsection (c).
251 
‘‘(c)(1) The special trustee shall distribute the assets 
held in trust— 
‘‘(A) if the court confirms a plan in the case, 
in accordance with the plan on the effective date of 
the plan; or 
‘‘(B) if the case is converted to a case under 
chapter 7, as ordered by the court. 
‘‘(2) As soon as practicable after a final distribution 
under paragraph (1), the office of the special trustee shall 
terminate, except as may be necessary to wind up and con-
clude the business and financial affairs of the trust. 
‘‘(d) After a transfer to the special trustee under this 
section, the special trustee shall be subject only to applica-
ble nonbankruptcy law, and the actions and conduct of 
the special trustee shall no longer be subject to approval 
by the court in the case under this subchapter. 
‘‘§ 1187. Temporary and supplemental automatic stay; 
assumed debt 
‘‘(a)(1) A petition filed under section 1183 operates 
as a stay, applicable to all entities, of the termination, ac-
celeration, or modification of any debt, contract, lease, or 
agreement of the kind described in paragraph (2), or of 
any right or obligation under any such debt, contract, 
lease, or agreement, solely because of—
252 
‘‘(A) a default by the debtor under any such 
debt, contract, lease, or agreement; or 
‘‘(B) a provision in such debt, contract, lease, 
or agreement, or in applicable nonbankruptcy law, 
that is conditioned on— 
‘‘(i) the insolvency or financial condition of 
the debtor at any time before the closing of the 
case; 
‘‘(ii) the commencement of a case under 
this title concerning the debtor; 
‘‘(iii) the appointment of or taking posses-
sion by a trustee in a case under this title con-
cerning the debtor or by a custodian before the 
commencement of the case; or 
‘‘(iv) a credit rating agency rating, or ab-
sence or withdrawal of a credit rating agency 
rating— 
‘‘(I) of the debtor at any time after 
the commencement of the case; 
‘‘(II) of an affiliate during the period 
from the commencement of the case until 
48 hours after such order is entered; 
‘‘(III) of the bridge company while the 
trustee or the special trustee is a direct or
253 
indirect beneficial holder of more than 50 
percent of the equity securities of— 
‘‘(aa) the bridge company; or 
‘‘(bb) the affiliate, if all of the di-
rect or indirect interests in the affil-
iate that are property of the estate 
are transferred under section 1185; or 
‘‘(IV) of an affiliate while the trustee 
or the special trustee is a direct or indirect 
beneficial holder of more than 50 percent 
of the equity securities of— 
‘‘(aa) the bridge company; or 
‘‘(bb) the affiliate, if all of the di-
rect or indirect interests in the affil-
iate that are property of the estate 
are transferred under section 1185. 
‘‘(2) A debt, contract, lease, or agreement described 
in this paragraph is— 
‘‘(A) any debt (other than capital structure 
debt), executory contract, or unexpired lease of the 
debtor (other than a qualified financial contract); 
‘‘(B) any agreement under which the debtor 
issued or is obligated for debt (other than capital 
structure debt);
254 
‘‘(C) any debt, executory contract, or unexpired 
lease of an affiliate (other than a qualified financial 
contract); or 
‘‘(D) any agreement under which an affiliate 
issued or is obligated for debt. 
‘‘(3) The stay under this subsection terminates— 
‘‘(A) for the benefit of the debtor, upon the ear-
liest of— 
‘‘(i) 48 hours after the commencement of 
the case; 
‘‘(ii) assumption of the debt, contract, 
lease, or agreement by the bridge company 
under an order authorizing a transfer under 
section 1185; 
‘‘(iii) a final order of the court denying the 
request for a transfer under section 1185; or 
‘‘(iv) the time the case is dismissed; and 
‘‘(B) for the benefit of an affiliate, upon the 
earliest of— 
‘‘(i) the entry of an order authorizing a 
transfer under section 1185 in which the direct 
or indirect interests in the affiliate that are 
property of the estate are not transferred under 
section 1185;
255 
‘‘(ii) a final order by the court denying the 
request for a transfer under section 1185; 
‘‘(iii) 48 hours after the commencement of 
the case if the court has not ordered a transfer 
under section 1185; or 
‘‘(iv) the time the case is dismissed. 
‘‘(4) Subsections (d), (e), (f), and (g) of section 362 
apply to a stay under this subsection. 
‘‘(b) A debt, executory contract (other than a quali-
fied financial contract), or unexpired lease of the debtor, 
or an agreement under which the debtor has issued or is 
obligated for any debt, may be assumed by a bridge com-
pany in a transfer under section 1185 notwithstanding 
any provision in an agreement or in applicable nonbank-
ruptcy law that— 
‘‘(1) prohibits, restricts, or conditions the as-
signment of the debt, contract, lease, or agreement; 
or 
‘‘(2) accelerates, terminates, or modifies, or 
permits a party other than the debtor to terminate 
or modify, the debt, contract, lease, or agreement on 
account of— 
‘‘(A) the assignment of the debt, contract, 
lease, or agreement; or