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‘‘(III) formal feedback from insti-
tutional investors; and 
‘‘(IV) information from subclauses 
(I) and (II) to implement a mecha-
nism which increases or decreases as-
signments based on past performance. 
‘‘(iii) PROHIBITION.—The Board, in 
choosing a selection method, may not use a 
method that would allow for the solicitation 
or consideration of the preferred national 
recognized statistical rating organizations 
of the issuer. 
‘‘(iv) ADJUSTMENT OF PROCESS.—The 
Board shall issue rules describing the proc-
ess by which it can modify the assignment 
process described in clause (i). 
‘‘(C) RIGHT OF REFUSAL.— 
‘‘(i) REFUSAL.—A qualified nationally 
recognized statistical rating organization 
selected under subparagraph (A) may refuse 
to accept a selection for a particular request 
by— 
‘‘(I) notifying the Board of such 
refusal; and
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‘‘(II) submitting to the Board a 
written explanation of the refusal. 
‘‘(ii) SELECTION.—Upon receipt of a 
notification under clause (i), the Board 
shall make an additional selection under 
subparagraph (A). 
‘‘(iii) 
INSPECTION
REPORTS.—The 
Board shall annually submit any expla-
nations of refusals received under clause 
(i)(II) to the Commission, and such explan-
atory submissions shall be published in the 
annual inspection reports required under 
subsection (p)(3)(C). 
‘‘(6) 
DISCLAIMER
REQUIRED.—Each 
initial 
credit rating issued under this subsection shall in-
clude, in writing, the following disclaimer: ‘This ini-
tial rating has not been evaluated, approved, or cer-
tified by the Government of the United States or by 
a Federal agency.’. 
‘‘(7) EVALUATION OF PERFORMANCE.— 
‘‘(A) IN GENERAL.—The Board shall pre-
scribe rules by which the Board will evaluate the 
performance of each qualified nationally recog-
nized statistical rating organization, including 
rules that require, at a minimum, an annual
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evaluation of each qualified nationally recog-
nized statistical rating organization. 
‘‘(B) CONSIDERATIONS.—The Board, in 
conducting an evaluation under subparagraph 
(A), shall consider— 
‘‘(i) the results of the annual examina-
tion conducted under subsection (p)(3); 
‘‘(ii) surveillance of credit ratings con-
ducted by the qualified nationally recog-
nized statistical rating organization after 
the credit ratings are issued, including— 
‘‘(I) how the rated instruments 
perform; 
‘‘(II) the accuracy of the ratings 
provided by the qualified nationally 
recognized statistical rating organiza-
tion as compared to the other nation-
ally recognized statistical rating orga-
nizations; and 
‘‘(III) the effectiveness of the 
methodologies used by the qualified na-
tionally recognized statistical rating 
organization; and 
‘‘(iii) any additional factors the Board 
determines to be relevant.
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‘‘(C) REQUEST FOR REEVALUATION.—Sub-
ject to rules prescribed by the Board, and not less 
frequently than once a year, a qualified nation-
ally recognized statistical rating organization 
may request that the Board conduct an evalua-
tion under this paragraph. 
‘‘(D) DISCLOSURE.—The Board shall make 
the evaluations conducted under this paragraph 
available to Congress. 
‘‘(8) RATING FEES CHARGED TO ISSUERS.— 
‘‘(A) LIMITED
TO
REASONABLE
FEES.—A 
qualified nationally recognized statistical rating 
organization shall charge an issuer a reasonable 
fee, as determined by the Commission, for an 
initial credit rating provided under this section. 
‘‘(B) FEES.—Fees may be determined by 
the qualified national recognized statistical rat-
ing organizations unless the Board determines it 
is necessary to issue rules on fees. 
‘‘(9) NO
PROHIBITION
ON
ADDITIONAL
RAT-
INGS.—Nothing in this section shall prohibit an 
issuer from requesting or receiving additional credit 
ratings with respect to a debt security, if the initial 
credit rating is provided in accordance with this sec-
tion.
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‘‘(10) NO PROHIBITION ON INDEPENDENT RAT-
INGS OFFERED BY NATIONALLY RECOGNIZED STATIS-
TICAL RATING ORGANIZATIONS.— 
‘‘(A) IN GENERAL.—Nothing in this section 
shall prohibit a nationally recognized statistical 
rating organization from independently pro-
viding a credit rating with respect to a debt se-
curity, if— 
‘‘(i) the nationally recognized statis-
tical rating organization does not enter into 
a contract with the issuer of the debt secu-
rity to provide the initial credit rating; and 
‘‘(ii) the nationally recognized statis-
tical rating organization is not paid by the 
issuer of the debt security to provide the ini-
tial credit rating. 
‘‘(B) RULE OF CONSTRUCTION.—For pur-
poses of this section, a credit rating described in 
subparagraph (A) may not be construed to be an 
initial credit rating. 
‘‘(11) PUBLIC COMMUNICATIONS.—Any commu-
nications made with the public by an issuer with re-
spect to the credit rating of a debt security shall 
clearly specify whether the credit rating was made 
by—
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‘‘(A) a qualified nationally recognized sta-
tistical rating organization selected under para-
graph (5)(A) to provide the initial credit rating 
for such debt security; or 
‘‘(B) a nationally recognized statistical rat-
ing organization not selected under paragraph 
(5)(A). 
‘‘(12) PROHIBITION ON MISREPRESENTATION.— 
With respect to a debt security, it shall be unlawful 
for any person to misrepresent any subsequent credit 
rating provided for such debt security as an initial 
credit rating provided for such debt security by a 
qualified nationally recognized statistical rating orga-
nization selected under paragraph (5)(A). 
‘‘(13) INITIAL CREDIT RATING REVISION AFTER 
MATERIAL CHANGE IN CIRCUMSTANCE.—If the Board 
determines that it is necessary or appropriate in the 
public interest or for the protection of investors, the 
Board may issue regulations requiring that an issuer 
that has received an initial credit rating under this 
subsection request a revised initial credit rating, 
using the same method as provided under paragraph 
(4), each time the issuer experiences a material 
change in circumstances, as defined by the Board. 
‘‘(14) CONFLICTS.—
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‘‘(A) MEMBERS
OR
EMPLOYEES
OF
THE 
BOARD.— 
‘‘(i) LOAN OF MONEY OR SECURITIES 
PROHIBITED.— 
‘‘(I) IN GENERAL.—A member or 
employee of the Board shall not accept 
any loan of money or securities, or 
anything above nominal value, from 
any nationally recognized statistical 
rating organization, issuer, or investor. 
‘‘(II) EXCEPTION.—The prohibi-
tion in subclause (I) does not apply to 
a loan made in the context of disclosed, 
routine banking and brokerage agree-
ments, or a loan that is clearly moti-
vated by a personal or family relation-
ship. 
‘‘(ii) 
EMPLOYMENT
NEGOTIATIONS 
PROHIBITION.—A member or employee of 
the Board shall not engage in employment 
negotiations with any nationally recognized 
statistical rating organization, issuer, or in-
vestor, unless the member or employee—
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‘‘(I) discloses the negotiations im-
mediately upon initiation of the nego-
tiations; and 
‘‘(II) recuses himself from all pro-
ceedings concerning the entity involved 
in the negotiations until termination 
of negotiations or until termination of 
his employment by the Board, if an 
offer of employment is accepted. 
‘‘(B) CREDIT ANALYSTS.— 
‘‘(i) IN GENERAL.—A credit analyst of 
a qualified nationally recognized statistical 
rating organization shall not accept any 
loan of money or securities, or anything 
above nominal value, from any issuer or in-
vestor. 
‘‘(ii) EXCEPTION.—The prohibition de-
scribed in clause (i) does not apply to a 
loan made in the context of disclosed, rou-
tine banking and brokerage agreements, or 
a loan that is clearly motivated by a per-
sonal or family relationship. 
‘‘(15) EVALUATION OF CREDIT RATING AGENCY 
BOARD.—Not later than 5 years after the date that 
the Board begins assigning qualified nationally recog-
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nized statistical rating organizations to provide ini-
tial ratings, the Commission shall submit to Congress 
a report that provides recommendations of— 
‘‘(A) the continuation of the Board; 
‘‘(B) any modification to the procedures of 
the Board; and 
‘‘(C) modifications to the provisions in this 
subsection.’’. 
Subtitle D—Improvements to the 
Asset-Backed Securitization Process 
SEC. 941. REGULATION OF CREDIT RISK RETENTION. 
(a) DEFINITION OF ASSET-BACKED SECURITY.—Sec-
tion 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)) is amended by adding at the end the following: 
‘‘(77) 
ASSET-BACKED
SECURITY.—The 
term 
‘asset-backed security’— 
‘‘(A) means a fixed-income or other security 
collateralized by any type of self-liquidating fi-
nancial asset (including a loan, a lease, a mort-
gage, or a secured or unsecured receivable) that 
allows the holder of the security to receive pay-
ments that depend primarily on cash flow from 
the asset, including— 
‘‘(i) a collateralized mortgage obliga-
tion;
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‘‘(ii) a collateralized debt obligation; 
‘‘(iii) a collateralized bond obligation; 
‘‘(iv) a collateralized debt obligation of 
asset-backed securities; 
‘‘(v) a collateralized debt obligation of 
collateralized debt obligations; and 
‘‘(vi) a security that the Commission, 
by rule, determines to be an asset-backed se-
curity for purposes of this section; and 
‘‘(B) does not include a security issued by 
a finance subsidiary held by the parent company 
or a company controlled by the parent company, 
if none of the securities issued by the finance 
subsidiary are held by an entity that is not con-
trolled by the parent company.’’. 
(b) CREDIT RISK RETENTION.—The Securities Ex-
change Act of 1934 (15 U.S.C. 78a et seq.) is amended by 
inserting after section 15F, as added by this Act, the fol-
lowing: 
‘‘SEC. 15G. CREDIT RISK RETENTION. 
‘‘(a) DEFINITIONS.—In this section— 
‘‘(1) the term ‘Federal banking agencies’ means 
the Office of the Comptroller of the Currency, the 
Board of Governors of the Federal Reserve System, 
and the Federal Deposit Insurance Corporation;
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‘‘(2) the term ‘insured depository institution’ has 
the same meaning as in section 3(c) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(c)); 
‘‘(3) the term ‘securitizer’ means— 
‘‘(A) an issuer of an asset-backed security; 
or 
‘‘(B) a person who organizes and initiates 
an asset-backed securities transaction by selling 
or transferring assets, either directly or indi-
rectly, including through an affiliate, to the 
issuer; and 
‘‘(4) the term ‘originator’ means a person who— 
‘‘(A) through the extension of credit or oth-
erwise, 
creates 
a 
financial 
asset 
that 
collateralizes an asset-backed security; and 
‘‘(B) sells an asset to a securitizer. 
‘‘(b) IN GENERAL.—Not later than 270 days after the 
date of enactment of this section, the Federal banking agen-
cies and the Commission shall jointly prescribe regulations 
to require any securitizer to retain an economic interest in 
a portion of the credit risk for any asset that the securitizer, 
through the issuance of an asset-backed security, transfers, 
sells, or conveys to a third party. 
‘‘(c) STANDARDS FOR REGULATIONS.—
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‘‘(1) STANDARDS.—The regulations prescribed 
under subsection (b) shall— 
‘‘(A) prohibit a securitizer from directly or 
indirectly hedging or otherwise transferring the 
credit risk that the securitizer is required to re-
tain with respect to an asset; 
‘‘(B) require a securitizer to retain— 
‘‘(i) not less than 5 percent of the cred-
it risk for any asset— 
‘‘(I) that is not a qualified resi-
dential mortgage that is transferred, 
sold, or conveyed through the issuance 
of an asset-backed security by the 
securitizer; or 
‘‘(II) that is a qualified residen-
tial mortgage that is transferred, sold, 
or conveyed through the issuance of an 
asset-backed security by the securitizer, 
if 1 or more of the assets that 
collateralize the asset-backed security 
are not qualified residential mortgages; 
or 
‘‘(ii) less than 5 percent of the credit 
risk for an asset that is not a qualified resi-
dential mortgage that is transferred, sold, or
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conveyed through the issuance of an asset- 
backed security by the securitizer, if the 
originator of the asset meets the under-
writing standards prescribed under para-
graph (2)(B); 
‘‘(C) specify— 
‘‘(i) the permissible forms of risk reten-
tion for purposes of this section; 
‘‘(ii) the minimum duration of the risk 
retention required under this section; and 
‘‘(iii) that a securitizer is not required 
to retain any part of the credit risk for an 
asset that is transferred, sold or conveyed 
through the issuance of an asset-backed se-
curity by the securitizer, if all of the assets 
that collateralize the asset-backed security 
are qualified residential mortgages; 
‘‘(D) apply, regardless of whether the 
securitizer is an insured depository institution; 
and 
‘‘(E) with respect to a commercial mort-
gage, specify the permissible types, forms, and 
amounts of risk retention that would meet the re-
quirements of subparagraph (B), such as—
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‘‘(i) retention of a specified amount or 
percentage of the total credit risk of the 
asset; 
‘‘(ii) retention of the first-loss position 
by a third-party purchaser that specifically 
negotiates for the purchase of such first-loss 
position and provides due diligence on all 
individual assets in the pool before the 
issuance of the asset-backed securities; 
‘‘(iii) a determination by a Federal 
banking agency or the Commission that the 
underwriting standards and controls for the 
asset are adequate; and 
‘‘(iv) provision of adequate representa-
tions and warranties and related enforce-
ment mechanisms; and 
‘‘(F) provide for— 
‘‘(i) a total or partial exemption of 
any securitization, as may be appropriate 
in the public interest and for the protection 
of investors; and 
‘‘(ii) the allocation of risk retention ob-
ligations between a securitizer and an origi-
nator in the case of a securitizer that pur-
chases assets from an originator, as the Fed-
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eral banking agencies and the Commission 
jointly determine appropriate. 
‘‘(2) ASSET CLASSES.— 
‘‘(A) ASSET CLASSES.—The regulations pre-
scribed under subsection (b) shall establish asset 
classes with separate rules for securitizers of dif-
ferent classes of assets, including residential 
mortgages, commercial mortgages, commercial 
loans, auto loans, and any other class of assets 
that the Federal banking agencies and the Com-
mission deem appropriate. 
‘‘(B) CONTENTS.—For each asset class es-
tablished under subparagraph (A), the regula-
tions prescribed under subsection (b) shall estab-
lish underwriting standards that specify the 
terms, conditions, and characteristics of a loan 
within the asset class that indicate a reduced 
credit risk with respect to the loan. 
‘‘(d) ORIGINATORS.—In determining how to allocate 
risk retention obligations between a securitizer and an 
originator under subsection (c)(1)(E)(ii), the Federal bank-
ing agencies and the Commission shall— 
‘‘(1) reduce the percentage of risk retention obli-
gations required of the securitizer by the percentage of
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risk retention obligations required of the originator; 
and 
‘‘(2) consider— 
‘‘(A) 
whether 
the 
assets 
sold 
to 
the 
securitizer have terms, conditions, and character-
istics that reflect reduced credit risk; 
‘‘(B) whether the form or volume of trans-
actions in securitization markets creates incen-
tives for imprudent origination of the type of 
loan or asset to be sold to the securitizer; and 
‘‘(C) the potential impact of the risk reten-
tion obligations on the access of consumers and 
businesses to credit on reasonable terms, which 
may not include the transfer of credit risk to a 
third party. 
‘‘(e) 
EXEMPTIONS, 
EXCEPTIONS, 
AND
ADJUST-
MENTS.— 
‘‘(1) IN GENERAL.—The Federal banking agen-
cies and the Commission may jointly adopt or issue 
exemptions, exceptions, or adjustments to the rules 
issued under this section, including exemptions, ex-
ceptions, or adjustments for classes of institutions or 
assets relating to the risk retention requirement and 
the prohibition on hedging under subsection (c)(1).
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‘‘(2) APPLICABLE STANDARDS.—Any exemption, 
exception, or adjustment adopted or issued by the 
Federal banking agencies and the Commission under 
this paragraph shall— 
‘‘(A) help ensure high quality underwriting 
standards for the securitizers and originators of 
assets that are securitized or available for 
securitization; and 
‘‘(B) encourage appropriate risk manage-
ment practices by the securitizers and origina-
tors of assets, improve the access of consumers 
and businesses to credit on reasonable terms, or 
otherwise be in the public interest and for the 
protection of investors. 
‘‘(3) FARM
CREDIT
SYSTEM
INSTITUTIONS.—A 
Farm Credit System institution, including the Fed-
eral Agricultural Mortgage Corporation, that is char-
tered and subject to the provisions of the Farm Credit 
Act of 1971, as amended (12 U.S.C. 2001 et seq.), 
shall be exempt from the risk retention provisions of 
this subsection. 
‘‘(4) EXEMPTION FOR QUALIFIED RESIDENTIAL 
MORTGAGES.— 
‘‘(A) IN
GENERAL.—The Federal banking 
agencies, the Commission, the Secretary of Hous-
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ing and Urban Development, and the Director of 
the Federal Housing Finance Agency shall joint-
ly issue regulations to exempt qualified residen-
tial mortgages from the risk retention require-
ments of this subsection. 
‘‘(B) 
QUALIFIED
RESIDENTIAL
MORT-
GAGE.—The Federal banking agencies, the Com-
mission, the Secretary of Housing and Urban 
Development, and the Director of the Federal 
Housing Finance Agency shall jointly define the 
term ‘qualified residential mortgage’ for purposes 
of this subsection, taking into consideration un-
derwriting and product features that historical 
loan performance data indicate result in a lower 
risk of default, such as— 
‘‘(i) documentation and verification of 
the financial resources relied upon to qual-
ify the mortgagor; 
‘‘(ii) standards with respect to— 
‘‘(I) the residual income of the 
mortgagor after all monthly obliga-
tions; 
‘‘(II) the ratio of the housing pay-
ments of the mortgagor to the monthly 
income of the mortgagor;
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‘‘(III) the ratio of total monthly 
installment payments of the mortgagor 
to the income of the mortgagor; 
‘‘(iii) mitigating the potential for pay-
ment shock on adjustable rate mortgages 
through product features and underwriting 
standards; 
‘‘(iv) mortgage guarantee insurance ob-
tained at the time of origination for loans 
with combined loan-to-value ratios of great-
er than 80 percent; and 
‘‘(v) prohibiting or restricting the use 
of balloon payments, negative amortization, 
prepayment penalties, interest-only pay-
ments, and other features that have been 
demonstrated to exhibit a higher risk of bor-
rower default. 
‘‘(5) CONDITION
FOR
QUALIFIED
RESIDENTIAL 
MORTGAGE
EXEMPTION.—The 
regulations 
issued 
under paragraph (4) shall provide that an asset- 
backed security that is collateralized by tranches of 
other asset-backed securities shall not be exempt from 
the risk retention requirements of this subsection. 
‘‘(6) CERTIFICATION.—The Commission shall re-
quire an issuer to certify, for each issuance of an
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asset-backed security collateralized exclusively by 
qualified residential mortgages, that the issuer has 
evaluated the effectiveness of the internal supervisory 
controls of the issuer with respect to the process for 
ensuring that all assets that collateralize the asset- 
backed security are qualified residential mortgages. 
‘‘(f) ENFORCEMENT.—The regulations issued under 
this section shall be enforced by— 
‘‘(1) the appropriate Federal banking agency, 
with respect to any securitizer that is an insured de-
pository institution; and 
‘‘(2) the Commission, with respect to any 
securitizer that is not an insured depository institu-
tion. 
‘‘(g) AUTHORITY OF COMMISSION.—The authority of 
the Commission under this section shall be in addition to 
the authority of the Commission to otherwise enforce the 
securities laws. 
‘‘(h) EFFECTIVE DATE OF REGULATIONS.—The regu-
lations issued under this section shall become effective— 
‘‘(1) with respect to securitizers and originators 
of asset-backed securities backed by residential mort-
gages, 1 year after the date on which final rules under 
this section are published in the Federal Register; and
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‘‘(2) with respect to securitizers and originators 
of all other classes of asset-backed securities, 2 years 
after the date on which final rules under this section 
are published in the Federal Register.’’. 
SEC. 942. DISCLOSURES AND REPORTING FOR ASSET- 
BACKED SECURITIES. 
(a) SECURITIES EXCHANGE ACT OF 1934.—Section 
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o(d)) is amended— 
(1) by striking ‘‘(d) Each’’ and inserting the fol-
lowing: 
‘‘(d) SUPPLEMENTARY
AND
PERIODIC
INFORMA-
TION.— 
‘‘(1) IN GENERAL.—Each’’; 
(2) in the third sentence, by inserting after ‘‘se-
curities of each class’’ the following: ‘‘, other than any 
class of asset-backed securities,’’; and 
(3) by adding at the end the following: 
‘‘(2) ASSET-BACKED SECURITIES.— 
‘‘(A) SUSPENSION OF DUTY TO FILE.—The 
Commission may, by rule or regulation, provide 
for the suspension or termination of the duty to 
file under this subsection for any class of asset- 
backed security, on such terms and conditions 
and for such period or periods as the Commis-
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sion deems necessary or appropriate in the pub-
lic interest or for the protection of investors. 
‘‘(B) CLASSIFICATION
OF
ISSUERS.—The 
Commission may, for purposes of this subsection, 
classify issuers and prescribe requirements ap-
propriate for each class of issuers of asset-backed 
securities.’’. 
(b) SECURITIES ACT OF 1933.—Section 7 of the Secu-
rities Act of 1933 (15 U.S.C. 77g) is amended by adding 
at the end the following: 
‘‘(c) DISCLOSURE REQUIREMENTS.— 
‘‘(1) IN GENERAL.—The Commission shall adopt 
regulations under this subsection requiring each 
issuer of an asset-backed security to disclose, for each 
tranche or class of security, information regarding the 
assets backing that security. 
‘‘(2) CONTENT OF REGULATIONS.—In adopting 
regulations under this subsection, the Commission 
shall— 
‘‘(A) set standards for the format of the 
data provided by issuers of an asset-backed secu-
rity, which shall, to the extent feasible, facilitate 
comparison of such data across securities in 
similar types of asset classes; and
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‘‘(B) require issuers of asset-backed securi-
ties, at a minimum, to disclose asset-level or 
loan-level data necessary for investors to inde-
pendently perform due diligence, including— 
‘‘(i) data having unique identifiers re-
lating to loan brokers or originators; 
‘‘(ii) the nature and extent of the com-
pensation of the broker or originator of the 
assets backing the security; and 
‘‘(iii) the amount of risk retention by 
the originator and the securitizer of such as-
sets.’’. 
SEC. 943. REPRESENTATIONS AND WARRANTIES IN ASSET- 
BACKED OFFERINGS. 
Not later than 180 days after the date of enactment 
of this Act, the Securities and Exchange Commission shall 
prescribe regulations on the use of representations and war-
ranties in the market for asset-backed securities (as that 
term is defined in section 3(a)(77) of the Securities Ex-
change Act of 1934, as added by this subtitle) that— 
(1) require each national recognized statistical 
rating organization to include in any report accom-
panying a credit rating a description of— 
(A) the representations, warranties, and en-
forcement mechanisms available to investors; and
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(B) how they differ from the representa-
tions, warranties, and enforcement mechanisms 
in issuances of similar securities; and 
(2) require any securitizer (as that term is de-
fined in section 15G(a) of the Securities Exchange 
Act of 1934, as added by this subtitle) to disclose ful-
filled and unfulfilled repurchase requests across all 
trusts aggregated by the securitizer, so that investors 
may identify asset originators with clear under-
writing deficiencies. 
SEC. 944. EXEMPTED TRANSACTIONS UNDER THE SECURI-
TIES ACT OF 1933. 
(a) EXEMPTION ELIMINATED.—Section 4 of the Secu-
rities Act of 1933 (15 U.S.C. 77d) is amended— 
(1) by striking paragraph (5); and 
(2) by striking ‘‘(6) transactions’’ and inserting 
the following: 
‘‘(5) transactions’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
3(a)(4)(B)(vii)(I) of the Securities Exchange Act of 1934 
(15 U.S.C. 78c(a)(4)(B)(vii)(I)) is amended by striking 
‘‘4(6)’’ and inserting ‘‘4(5)’’.
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SEC. 945. DUE DILIGENCE ANALYSIS AND DISCLOSURE IN 
ASSET-BACKED SECURITIES ISSUES. 
Section 7 of the Securities Act of 1933 (15 U.S.C. 77g), 
as amended by this subtitle, is amended by adding at the 
end the following: 
‘‘(d) REGISTRATION STATEMENT FOR ASSET-BACKED 
SECURITIES.—Not later than 180 days after the date of en-
actment of this subsection, the Commission shall issue rules 
relating to the registration statement required to be filed 
by any issuer of an asset-backed security (as that term is 
defined in section 3(a)(77) of the Securities Exchange Act 
of 1934) that require any issuer of an asset-backed secu-
rity— 
‘‘(1) to perform a due diligence analysis of the 
assets underlying the asset-backed security; and 
‘‘(2) to disclose the nature of the analysis under 
paragraph (1).’’. 
Subtitle E—Accountability and 
Executive Compensation 
SEC. 951. SHAREHOLDER VOTE ON EXECUTIVE COMPENSA-
TION DISCLOSURES. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by inserting after section 14 (15 U.S.C. 
78n) the following:
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‘‘SEC. 14A. ANNUAL SHAREHOLDER APPROVAL OF EXECU-
TIVE COMPENSATION. 
‘‘(a) SEPARATE RESOLUTION REQUIRED.—Any proxy 
or consent or authorization for an annual or other meeting 
of the shareholders occurring after the end of the 6-month 
period beginning on the date of enactment of this section, 
for which the proxy solicitation rules of the Commission 
require compensation disclosure, shall include a separate 
resolution subject to shareholder vote to approve the com-
pensation of executives, as disclosed pursuant to section 
229.402 of title 17, Code of Federal Regulations, or any 
successor thereto. 
‘‘(b) RULE OF CONSTRUCTION.—The shareholder vote 
referred to in subsection (a) shall not be binding on the 
issuer or the board of directors of an issuer, and may not 
be construed— 
‘‘(1) as overruling a decision by such issuer or 
board of directors; 
‘‘(2) to create or imply any change to the fidu-
ciary duties of such issuer or board of directors; 
‘‘(3) to create or imply any additional fiduciary 
duties for such issuer or board of directors; or 
‘‘(4) to restrict or limit the ability of share-
holders to make proposals for inclusion in proxy ma-
terials related to executive compensation.’’.
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SEC. 952. COMPENSATION COMMITTEE INDEPENDENCE. 
The Securities Exchange Act of 1934 (15 U.S.C. 78 
et seq.) is amended by inserting after section 10B, as added 
by section 753, the following: 
‘‘SEC. 10C. COMPENSATION COMMITTEES. 
‘‘(a) INDEPENDENCE
OF
COMPENSATION
COMMIT-
TEES.— 
‘‘(1) LISTING
STANDARDS.—The Commission 
shall, by rule, direct the national securities exchanges 
and national securities associations to prohibit the 
listing of any security of an issuer that does not com-
ply with the requirements of this subsection. 
‘‘(2) INDEPENDENCE OF COMPENSATION COMMIT-
TEES.—The rules of the Commission under paragraph 
(1) shall require that each member of the compensa-
tion committee of the board of directors of an issuer 
be— 
‘‘(A) a member of the board of directors of 
the issuer; and 
‘‘(B) independent. 
‘‘(3) INDEPENDENCE.—The rules of the Commis-
sion under paragraph (1) shall require that, in deter-
mining the definition of the term ‘independence’ for 
purposes of paragraph (2), the national securities ex-
changes and the national securities associations shall 
consider relevant factors, including—
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‘‘(A) the source of compensation of a mem-
ber of the board of directors of an issuer, includ-
ing any consulting, advisory, or other compen-
satory fee paid by the issuer to such member of 
the board of directors; and 
‘‘(B) whether a member of the board of di-
rectors of an issuer is affiliated with the issuer, 
a subsidiary of the issuer, or an affiliate of a 
subsidiary of the issuer. 
‘‘(4) EXEMPTION AUTHORITY.—The rules of the 
Commission under paragraph (1) shall permit a na-
tional securities exchange or a national securities as-
sociation to exempt a particular relationship from the 
requirements of paragraph (2), with respect to the 
members of a compensation committee, as the na-
tional securities exchange or national securities asso-
ciation determines is appropriate, taking into consid-
eration the size of an issuer and any other relevant 
factors. 
‘‘(b) INDEPENDENCE OF COMPENSATION CONSULTANTS 
AND OTHER COMPENSATION COMMITTEE ADVISERS.— 
‘‘(1) IN GENERAL.—The compensation committee 
of an issuer may only select a compensation consult-
ant, legal counsel, or other adviser to the compensa-
tion committee after taking into consideration the fac-
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tors identified by the Commission under paragraph 
(2). 
‘‘(2) RULES.—The Commission shall identify 
factors that affect the independence of a compensation 
consultant, legal counsel, or other adviser to a com-
pensation committee of an issuer, including— 
‘‘(A) the provision of other services to the 
issuer by the person that employs the compensa-
tion consultant, legal counsel, or other adviser; 
‘‘(B) the amount of fees received from the 
issuer by the person that employs the compensa-
tion consultant, legal counsel, or other adviser, 
as a percentage of the total revenue of the person 
that employs the compensation consultant, legal 
counsel, or other adviser; 
‘‘(C) the policies and procedures of the per-
son that employs the compensation consultant, 
legal counsel, or other adviser that are designed 
to prevent conflicts of interest; 
‘‘(D) any business or personal relationship 
of the compensation consultant, legal counsel, or 
other adviser with a member of the compensation 
committee; and
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‘‘(E) any stock of the issuer owned by the 
compensation consultant, legal counsel, or other 
adviser. 
‘‘(c) COMPENSATION COMMITTEE AUTHORITY RELAT-
ING TO COMPENSATION CONSULTANTS.— 
‘‘(1) AUTHORITY TO RETAIN COMPENSATION CON-
SULTANT.— 
‘‘(A) IN GENERAL.—The compensation com-
mittee of an issuer, in its capacity as a com-
mittee of the board of directors, may, in its sole 
discretion, retain or obtain the advice of a com-
pensation consultant. 
‘‘(B) DIRECT
RESPONSIBILITY
OF
COM-
PENSATION
COMMITTEE.—The 
compensation 
committee of an issuer shall be directly respon-
sible for the appointment, compensation, and 
oversight of the work of a compensation consult-
ant. 
‘‘(C) RULE OF CONSTRUCTION.—This para-
graph may not be construed— 
‘‘(i) to require the compensation com-
mittee to implement or act consistently with 
the advice or recommendations of the com-
pensation consultant; or
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‘‘(ii) to affect the ability or obligation 
of a compensation committee to exercise its 
own judgment in fulfillment of the duties of 
the compensation committee. 
‘‘(2) DISCLOSURE.—In any proxy or consent so-
licitation material for an annual meeting of the 
shareholders (or a special meeting in lieu of the an-
nual meeting) occurring on or after the date that is 
1 year after the date of enactment of this section, each 
issuer shall disclose in the proxy or consent material, 
in accordance with regulations of the Commission, 
whether— 
‘‘(A) the compensation committee of the 
issuer retained or obtained the advice of a com-
pensation consultant; and 
‘‘(B) the work of the compensation consult-
ant has raised any conflict of interest and, if so, 
the nature of the conflict and how the conflict is 
being addressed. 
‘‘(d) AUTHORITY TO ENGAGE INDEPENDENT LEGAL 
COUNSEL AND OTHER ADVISERS.— 
‘‘(1) IN GENERAL.—The compensation committee 
of an issuer, in its capacity as a committee of the 
board of directors, may, in its sole discretion, retain
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and obtain the advice of independent legal counsel 
and other advisers. 
‘‘(2) DIRECT RESPONSIBILITY OF COMPENSATION 
COMMITTEE.—The compensation committee of an 
issuer shall be directly responsible for the appoint-
ment, compensation, and oversight of the work of 
independent legal counsel and other advisers. 
‘‘(3) RULE OF CONSTRUCTION.—This subsection 
may not be construed— 
‘‘(A) to require a compensation committee 
to implement or act consistently with the advice 
or recommendations of independent legal counsel 
or other advisers under this subsection; or 
‘‘(B) to affect the ability or obligation of a 
compensation committee to exercise its own judg-
ment in fulfillment of the duties of the compensa-
tion committee. 
‘‘(e) COMPENSATION
OF COMPENSATION CONSULT-
ANTS, INDEPENDENT LEGAL COUNSEL, AND OTHER ADVIS-
ERS.—Each issuer shall provide for appropriate funding, 
as determined by the compensation committee in its capac-
ity as a committee of the board of directors, for payment 
of reasonable compensation— 
‘‘(1) to a compensation consultant; and
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‘‘(2) to independent legal counsel or any other 
adviser to the compensation committee. 
‘‘(f) COMMISSION RULES.— 
‘‘(1) IN
GENERAL.—Not later than 360 days 
after the date of enactment of this section, the Com-
mission shall, by rule, direct the national securities 
exchanges and national securities associations to pro-
hibit the listing of any security of an issuer that is 
not in compliance with the requirements of this sec-
tion. 
‘‘(2) OPPORTUNITY
TO
CURE
DEFECTS.—The 
rules of the Commission under paragraph (1) shall 
provide for appropriate procedures for an issuer to 
have a reasonable opportunity to cure any defects that 
would be the basis for the prohibition under para-
graph (1), before the imposition of such prohibition. 
‘‘(3) EXEMPTION AUTHORITY.— 
‘‘(A) IN GENERAL.—The rules of the Com-
mission under paragraph (1) shall permit a na-
tional securities exchange or a national securi-
ties association to exempt a category of issuers 
from the requirements under this section, as the 
national securities exchange or the national secu-
rities association determines is appropriate.
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‘‘(B) 
CONSIDERATIONS.—In 
determining 
appropriate exemptions under subparagraph (A), 
the national securities exchange or the national 
securities association shall take into account the 
potential impact of the requirements of this sec-
tion on smaller reporting issuers.’’. 
SEC. 953. EXECUTIVE COMPENSATION DISCLOSURES. 
(a) DISCLOSURE OF PAY VERSUS PERFORMANCE.— 
Section 14 of the Securities Exchange Act of 1934 (15 
U.S.C. 78n), as amended by this title, is amended by add-
ing at the end the following: 
‘‘(i) DISCLOSURE OF PAY VERSUS PERFORMANCE.— 
The Commission shall, by rule, require each issuer to dis-
close in any proxy or consent solicitation material for an 
annual meeting of the shareholders of the issuer a clear de-
scription of any compensation required to be disclosed by 
the issuer under section 229.402 of title 17, Code of Federal 
Regulations (or any successor thereto), including informa-
tion that shows the relationship between executive com-
pensation actually paid and the financial performance of 
the issuer, taking into account any change in the value of 
the shares of stock and dividends of the issuer and any dis-
tributions. The disclosure under this subsection may include 
a graphic representation of the information required to be 
disclosed.’’.
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(b) ADDITIONAL DISCLOSURE REQUIREMENTS.— 
(1) IN GENERAL.—The Commission shall amend 
section 229.402 of title 17, Code of Federal Regula-
tions, to require each issuer to disclose in any filing 
of the issuer described in section 229.10(a) of title 17, 
Code of Federal Regulations (or any successor there-
to)— 
(A) the median of the annual total com-
pensation of all employees of the issuer, except 
the chief executive officer (or any equivalent po-
sition) of the issuer; 
(B) the annual total compensation of the 
chief executive officer (or any equivalent posi-
tion) of the issuer; and 
(C) the ratio of the amount described in 
subparagraph (A) to the amount described in 
subparagraph (B). 
(2) TOTAL COMPENSATION.—For purposes of this 
subsection, the total compensation of an employee of 
an issuer shall be determined in accordance with sec-
tion 229.402(c)(2)(x) of title 17, Code of Federal Reg-
ulations, as in effect on the day before the date of en-
actment of this Act.
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SEC. 954. RECOVERY OF ERRONEOUSLY AWARDED COM-
PENSATION. 
The Securities Exchange Act of 1934 is amended by 
inserting after section 10C, as added by section 952, the 
following: 
‘‘SEC. 10D. RECOVERY OF ERRONEOUSLY AWARDED COM-
PENSATION POLICY. 
‘‘(a) LISTING STANDARDS.—The Commission shall, by 
rule, direct the national securities exchanges and national 
securities associations to prohibit the listing of any security 
of an issuer that does not comply with the requirements 
of this section. 
‘‘(b) RECOVERY OF FUNDS.—The rules of the Commis-
sion under subsection (a) shall require each issuer to develop 
and implement a policy providing— 
‘‘(1) for disclosure of the policy of the issuer on 
incentive-based compensation that is based on finan-
cial information required to be reported under the se-
curities laws; and 
‘‘(2) that, in the event that the issuer is required 
to prepare an accounting restatement due to the ma-
terial noncompliance of the issuer with any financial 
reporting requirement under the securities laws, the 
issuer will recover from any current or former execu-
tive officer of the issuer who received incentive-based 
compensation (including stock options awarded as
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compensation) during the 3-year period preceding the 
date on which the issuer is required to prepare an ac-
counting restatement, based on the erroneous data, in 
excess of what would have been paid to the executive 
officer under the accounting restatement.’’. 
SEC. 955. DISCLOSURE REGARDING EMPLOYEE AND DIREC-
TOR HEDGING. 
Section 14 of the Securities Exchange Act of 1934 (15 
U.S.C. 78n), as amended by this title, is amended by add-
ing at the end the following: 
‘‘(j) DISCLOSURE OF HEDGING BY EMPLOYEES AND 
DIRECTORS.—The Commission shall, by rule, require each 
issuer to disclose in any proxy or consent solicitation mate-
rial for an annual meeting of the shareholders of the issuer 
whether any employee or member of the board of directors 
of the issuer, or any designee of such employee or member, 
is permitted to purchase financial instruments (including 
prepaid variable forward contracts, equity swaps, collars, 
and exchange funds) that are designed to hedge or offset 
any decrease in the market value of equity securities— 
‘‘(1) granted to the employee or member of the 
board of directors by the issuer as part of the com-
pensation of the employee or member of the board of 
directors; or
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‘‘(2) held, directly or indirectly, by the employee 
or member of the board of directors.’’. 
SEC. 956. EXCESSIVE COMPENSATION BY HOLDING COMPA-
NIES OF DEPOSITORY INSTITUTIONS. 
Section 5 of the Bank Holding Company Act of 1956 
(12 U.S.C. 1844) is amended by adding at the end the fol-
lowing: 
‘‘(i) EXCESSIVE COMPENSATION.— 
‘‘(1) IN
GENERAL.—Not later than 180 days 
after the transfer date established under section 311 
of the Restoring American Financial Stability Act of 
2010, the Board of Governors, in consultation with 
the Comptroller of the Currency and the Federal De-
posit Insurance Corporation, shall, by rule, establish 
standards prohibiting as an unsafe and unsound 
practice any compensation plan of a bank holding 
company that— 
‘‘(A) provides an executive officer, employee, 
director, or principal shareholder of the bank 
holding company with excessive compensation, 
fees, or benefits; or 
‘‘(B) could lead to material financial loss to 
the bank holding company. 
‘‘(2) 
CONSIDERATIONS.—In 
establishing 
the 
standards under paragraph (1), the Board of Gov-
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ernors shall take into consideration the compensation 
standards described in section 39(c) of the Federal 
Deposit Insurance Act (12 U.S.C. 1831p–1(c)) and 
the views and recommendations of the Comptroller of 
the Currency and the Federal Deposit Insurance Cor-
poration.’’. 
SEC. 957. VOTING BY BROKERS. 
Section 6(b) of the Securities Exchange Act of 1934 
(15 U.S.C. 78f(b)) is amended— 
(1) in paragraph (9)— 
(A) in subparagraph (A), by redesignating 
clauses (i) through (v) as subclauses (I) through 
(V), respectively, and adjusting the margins ac-
cordingly; 
(B) by redesignating subparagraphs (A) 
through (D) as clauses (i) through (iv), respec-
tively, and adjusting the margins accordingly; 
(C) by inserting ‘‘(A)’’ after ‘‘(9)’’; and 
(D) in the matter immediately following 
clause (iv), as so redesignated, by striking ‘‘As 
used’’ and inserting the following: 
‘‘(B) As used’’. 
(2) by adding at the end the following: 
‘‘(10)(A) The rules of the exchange prohibit any 
member that is not the beneficial owner of a security
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registered under section 12 from granting a proxy to 
vote the security in connection with a shareholder vote 
described in subparagraph (B), unless the beneficial 
owner of the security has instructed the member to 
vote the proxy in accordance with the voting instruc-
tions of the beneficial owner. 
‘‘(B) A shareholder vote described in this sub-
paragraph is a shareholder vote with respect to the 
election of a member of the board of directors of an 
issuer, executive compensation, or any other signifi-
cant matter, as determined by the Commission, by 
rule. 
‘‘(C) Nothing in this paragraph shall be con-
strued to prohibit a national securities exchange from 
prohibiting a member that is not the beneficial owner 
of a security registered under section 12 from grant-
ing a proxy to vote the security in connection with 
a shareholder vote not described in subparagraph 
(A).’’.
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Subtitle F—Improvements to the 
Management of the Securities 
and Exchange Commission 
SEC. 961. REPORT AND CERTIFICATION OF INTERNAL SU-
PERVISORY CONTROLS. 
(a) ANNUAL REPORTS AND CERTIFICATION.—Not later 
than 90 days after the end of each fiscal year, the Commis-
sion shall submit a report to the Committee on Banking, 
Housing, and Urban Affairs of the Senate and the Com-
mittee on Financial Services of the House of Representa-
tives on the conduct by the Commission of examinations 
of registered entities, enforcement investigations, and review 
of corporate financial securities filings. 
(b) CONTENTS OF REPORTS.—Each report under sub-
section (a) shall contain— 
(1) an assessment, as of the end of the most re-
cent fiscal year, of the effectiveness of— 
(A) the internal supervisory controls of the 
Commission; and 
(B) the procedures of the Commission appli-
cable to the staff of the Commission who perform 
examinations of registered entities, enforcement 
investigations, and reviews of corporate financial 
securities filings;
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(2) a certification that the Commission has ade-
quate internal supervisory controls to carry out the 
duties of the Commission described in paragraph 
(1)(B); and 
(3) a summary by the Comptroller General of the 
United States of the review carried out under sub-
section (d). 
(c) CERTIFICATION.— 
(1) SIGNATURE.—The certification under sub-
section (b)(2) shall be signed by the Director of the 
Division of Enforcement, the Director of the Division 
of Corporation Finance, and the Director of the Office 
of Compliance Inspections and Examinations (or the 
head of any successor division or office). 
(2) CONTENT
OF
CERTIFICATION.—Each indi-
vidual described in paragraph (1) shall certify that 
the individual— 
(A) is directly responsible for establishing 
and maintaining the internal supervisory con-
trols of the Division or Office of which the indi-
vidual is the head; 
(B) is knowledgeable about the internal su-
pervisory controls of the Division or Office of 
which the individual is the head;
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(C) has evaluated the effectiveness of the in-
ternal supervisory controls during the 90-day pe-
riod ending on the final day of the fiscal year 
to which the report relates; and 
(D) has disclosed to the Commission any 
significant deficiencies in the design or operation 
of internal supervisory controls that could ad-
versely affect the ability of the Division or Office 
to consistently conduct inspections, or investiga-
tions, or reviews of filings with professional com-
petence and integrity. 
(d) REVIEW BY THE COMPTROLLER GENERAL.—Not 
later than the date on which the first report is submitted 
under subsection (a), the Comptroller General of the United 
States shall submit to the Committee on Banking, Housing, 
and Urban Affairs of the Senate and the Committee on Fi-
nancial Services of the House of Representatives an initial 
report that contains a review of the adequacy and effective-
ness of the internal supervisory control structure and proce-
dures described in subsection (b)(1). 
SEC. 962. TRIENNIAL REPORT ON PERSONNEL MANAGE-
MENT. 
(a) TRIENNIAL REPORT REQUIRED.—Once every 3 
years, the Comptroller General of the United States shall 
submit a report to the Committee on Banking, Housing,
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and Urban Affairs of the Senate and the Committee on Fi-
nancial Services of the House of Representatives on the 
quality of personnel management by the Commission. 
(b) CONTENTS OF REPORT.—Each report under sub-
section (a) shall include— 
(1) an evaluation of— 
(A) the effectiveness of supervisors in using 
the skills, talents, and motivation of the employ-
ees of the Commission to achieve the goals of the 
Commission; 
(B) the criteria for promoting employees of 
the Commission to supervisory positions; 
(C) the fairness of the application of the 
promotion criteria to the decisions of the Com-
mission; 
(D) the competence of the professional staff 
of the Commission; 
(E) the efficiency of communication between 
the units of the Commission regarding the work 
of the Commission (including communication be-
tween divisions and between subunits of a divi-
sion) and the efforts by the Commission to pro-
mote such communication; 
(F) the turnover within subunits of the 
Commission, including the identification of su-
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pervisors whose subordinates have an unusually 
high rate of turnover; 
(G) whether there are excessive numbers of 
low-level, mid-level, or senior-level managers; 
(H) any initiatives of the Commission that 
increase the competence of the staff of the Com-
mission; 
(I) the actions taken by the Commission re-
garding employees of the Commission who have 
failed to perform their duties; and 
(J) such other factors relating to the man-
agement of the Commission as the Comptroller 
General determines are appropriate; 
(2) an evaluation of any improvements made 
with respect to the areas described in paragraph (1) 
since the date of submission of the previous report; 
and 
(3) recommendations for how the Commission 
can use the human resources of the Commission more 
effectively and efficiently to carry out the mission of 
the Commission. 
(c) CONSULTATION.—In preparing the report under 
subsection (a), the Comptroller General shall consult with 
current employees of the Commission, retired employees and 
other former employees of the Commission, the Inspector
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General of the Commission, persons that have business be-
fore the Commission, any union representing the employees 
of the Commission, private management consultants, aca-
demics, and any other source that the Comptroller General 
deems appropriate. 
(d) REPORT BY COMMISSION.—Not later than 90 days 
after the date on which the Comptroller General submits 
each report under subsection (a), the Commission shall sub-
mit to the Committee on Banking, Housing, and Urban Af-
fairs of the Senate and the Committee on Financial Services 
of the House of Representatives a report describing the ac-
tions taken by the Commission in response to the rec-
ommendations contained in the report under subsection (a). 
(e) REIMBURSEMENTS FOR COST OF REPORTS.— 
(1) REIMBURSEMENTS
REQUIRED.—The Com-
mission shall reimburse the Government Account-
ability Office for the full cost of making the reports 
under this section, as billed therefor by the Comp-
troller General. 
(2) CREDITING
AND
USE
OF
REIMBURSE-
MENTS.—Such reimbursements shall— 
(A) be credited to the appropriation account 
‘‘Salaries and Expenses, Government Account-
ability Office’’ current when the payment is re-
ceived; and
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(B) remain available until expended. 
SEC. 963. ANNUAL FINANCIAL CONTROLS AUDIT. 
(a) REPORTS OF COMMISSION.— 
(1) ANNUAL
REPORTS
REQUIRED.—Not later 
than 6 months after the end of each fiscal year, the 
Commission shall publish and submit to Congress a 
report that— 
(A) describes the responsibility of the man-
agement of the Commission for establishing and 
maintaining an adequate internal control struc-
ture and procedures for financial reporting; and 
(B) contains an assessment of the effective-
ness of the internal control structure and proce-
dures for financial reporting of the Commission 
during that fiscal year. 
(2) ATTESTATION.—The reports required under 
paragraph (1) shall be attested to by the Chairman 
and chief financial officer of the Commission. 
(b) REPORT BY COMPTROLLER GENERAL.— 
(1) REPORT
REQUIRED.—Not later than 6 
months after the end of the first fiscal year after the 
date of enactment of this Act, the Comptroller General 
of the United States shall submit a report to Congress 
that assesses—
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(A) the effectiveness of the internal control 
structure and procedures of the Commission for 
financial reporting; and 
(B) the assessment of the Commission under 
subsection (a)(1)(B). 
(2) ATTESTATION.—The Comptroller General 
shall attest to, and report on, the assessment made by 
the Commission under subsection (a). 
(c) REIMBURSEMENTS FOR COST OF REPORTS.— 
(1) REIMBURSEMENTS
REQUIRED.—The Com-
mission shall reimburse the Government Account-
ability Office for the full cost of making the reports 
under subsection (b), as billed therefor by the Comp-
troller General. 
(2) CREDITING
AND
USE
OF
REIMBURSE-
MENTS.—Such reimbursements shall— 
(A) be credited to the appropriation account 
‘‘Salaries and Expenses, Government Account-
ability Office’’ current when the payment is re-
ceived; and 
(B) remain available until expended. 
SEC. 964. REPORT ON OVERSIGHT OF NATIONAL SECURI-
TIES ASSOCIATIONS. 
(a) REPORT REQUIRED.—Not later than 2 years after 
the date of enactment of this Act, and every 3 years there-
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after, the Comptroller General of the United States shall 
submit to the Committee on Banking, Housing, and Urban 
Affairs of the Senate and the Committee on Financial Serv-
ices of the House of Representatives a report that includes 
an evaluation of the oversight by the Commission of na-
tional securities associations registered under section 15A 
of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3) 
with respect to— 
(1) the governance of such national securities as-
sociations, including the identification and manage-
ment of conflicts of interest by such national securi-
ties associations, together with an analysis of the im-
pact of any conflicts of interest on the regulatory en-
forcement or rulemaking by such national securities 
associations; 
(2) the examinations carried out by the national 
securities associations, including the expertise of the 
examiners; 
(3) the executive compensation practices of such 
national securities associations; 
(4) the arbitration services provided by the na-
tional securities associations; 
(5) the review performed by national securities 
associations of advertising by the members of the na-
tional securities associations;
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(6) the cooperation with and assistance to State 
securities administrators by the national securities 
associations to promote investor protection; 
(7) how the funding of national securities asso-
ciations is used to support the mission of the national 
securities associations, including— 
(A) the methods of funding; 
(B) the sufficiency of funds; 
(C) how funds are invested by the national 
securities association pending use; and 
(D) the impact of the methods, sufficiency, 
and investment of funds on regulatory enforce-
ment by the national securities associations; 
(8) the policies regarding the employment of 
former employees of national securities associations 
by regulated entities; 
(9) the ongoing effectiveness of the rules of the 
national securities associations in achieving the goals 
of the rules; 
(10) the transparency of governance and activi-
ties of the national securities associations; and 
(11) any other issue that has an impact, as de-
termined by the Comptroller General, on the effective-
ness of such national securities associations in per-
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forming their mission and in dealing fairly with in-
vestors and members; 
(b) REIMBURSEMENTS FOR COST OF REPORTS.— 
(1) REIMBURSEMENTS
REQUIRED.—The Com-
mission shall reimburse the Government Account-
ability Office for the full cost of making the reports 
under subsection (a), as billed therefor by the Comp-
troller General. 
(2) CREDITING
AND
USE
OF
REIMBURSE-
MENTS.—Such reimbursements shall— 
(A) be credited to the appropriation account 
‘‘Salaries and Expenses, Government Account-
ability Office’’ current when the payment is re-
ceived; and 
(B) remain available until expended. 
SEC. 965. COMPLIANCE EXAMINERS. 
Section 4 of the Securities Exchange Act of 1934 (15 
U.S.C. 78d) is amended by adding at the end the following: 
‘‘(h) EXAMINERS.— 
‘‘(1) DIVISION OF TRADING AND MARKETS.—The 
Division of Trading and Markets of the Commission, 
or any successor organizational unit, shall have a 
staff of examiners who shall—
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‘‘(A) perform compliance inspections and 
examinations of entities under the jurisdiction of 
that Division; and 
‘‘(B) report to the Director of that Division. 
‘‘(2) DIVISION OF INVESTMENT MANAGEMENT.— 
The Division of Investment Management of the Com-
mission, or any successor organizational unit, shall 
have a staff of examiners who shall— 
‘‘(A) perform compliance inspections and 
examinations of entities under the jurisdiction of 
that Division; and 
‘‘(B) report to the Director of that Divi-
sion.’’. 
SEC. 966. SUGGESTION PROGRAM FOR EMPLOYEES OF THE 
COMMISSION. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by inserting after section 4C (15 U.S.C. 
78d–3) the following: 
‘‘SEC. 4D. ADDITIONAL DUTIES OF INSPECTOR GENERAL. 
‘‘(a) SUGGESTION SUBMISSIONS BY COMMISSION EM-
PLOYEES.— 
‘‘(1) HOTLINE
ESTABLISHED.—The Inspector 
General of the Commission shall establish and main-
tain a telephone hotline or other electronic means for 
the receipt of—
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‘‘(1) increase the work efficiency, effectiveness, or 
productivity of the Commission; or 
‘‘(2) reduce waste, abuse, misconduct, or mis-
management within the Commission. 
‘‘(d) REPORT.—The Inspector General of the Commis-
sion shall submit to Congress an annual report containing 
a description of— 
‘‘(1) the nature, number, and potential benefits 
of any suggestions received under subsection (a); 
‘‘(2) the nature, number, and seriousness of any 
allegations received under subsection (a); 
‘‘(3) any recommendations made or actions 
taken by the Inspector General in response to substan-
tiated allegations received under subsection (a); and 
‘‘(4) any action the Commission has taken in re-
sponse to suggestions or allegations received under 
subsection (a). 
‘‘(e) FUNDING.—The activities of the Inspector General 
under this subsection shall be funded by the Securities and 
Exchange Commission Investor Protection Fund established 
under section 21F.’’.
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Subtitle G—Strengthening 
Corporate Governance 
SEC. 971. ELECTION OF DIRECTORS BY MAJORITY VOTE IN 
UNCONTESTED ELECTIONS. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by inserting after section 14A, as added 
by this title, the following: 
‘‘SEC. 14B. CORPORATE GOVERNANCE. 
‘‘(a) CORPORATE GOVERNANCE STANDARDS.— 
‘‘(1) LISTING STANDARDS.— 
‘‘(A) IN GENERAL.—Not later than 1 year 
after the date of enactment of this subsection, the 
Commission shall, by rule, direct the national se-
curities exchanges and national securities asso-
ciations to prohibit the listing of any security of 
an issuer that is not in compliance with any of 
the requirements of this subsection. 
‘‘(B) 
OPPORTUNITY
TO
COMPLY
AND 
CURE.—The rules established under this para-
graph shall allow an issuer to have an oppor-
tunity to come into compliance with the require-
ments of this subsection, and to cure any defect 
that would be the basis for a prohibition under 
subparagraph (A), before the imposition of such 
prohibition.
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‘‘(C) AUTHORITY TO EXEMPT.—The Com-
mission may, by rule or order, exempt an issuer 
from any or all of the requirements of this sub-
section and the rules issued under this sub-
section, based on the size of the issuer, the market 
capitalization of the issuer, the number of share-
holders of record of the issuer, or any other cri-
teria, as the Commission deems necessary and 
appropriate in the public interest or for the pro-
tection of investors. 
‘‘(2) COMMISSION RULES ON ELECTIONS.—In an 
election for membership on the board of directors of 
an issuer— 
‘‘(A) that is uncontested, each director who 
receives a majority of the votes cast shall be 
deemed to be elected; 
‘‘(B) that is contested, if the number of 
nominees exceeds the number of directors to be 
elected, each director shall be elected by the vote 
of a plurality of the shares represented at a 
meeting and entitled to vote; and 
‘‘(C) if a director of an issuer receives less 
than a majority of the votes cast in an 
uncontested election—
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‘‘(i) the director shall tender the res-
ignation of the director to the board of di-
rectors; and 
‘‘(ii) the board of directors— 
‘‘(I) shall— 
‘‘(aa) accept the resignation 
of the director; 
‘‘(bb) determine a date on 
which the resignation will take ef-
fect, within a reasonable period of 
time, as established by the Com-
mission; and 
‘‘(cc) make the date under 
item (bb) public within a reason-
able period of time, as established 
by the Commission; or 
‘‘(II) shall, upon a unanimous 
vote of the board, decline to accept the 
resignation and, not later than 30 
days after the date of the vote (or with-
in such shorter period as the Commis-
sion may establish), make public, to-
gether with a discussion of the analysis 
used in reaching the conclusion, the 
specific reasons that—
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‘‘(aa) the board chose not to 
accept the resignation; and 
‘‘(bb) the decision was in the 
best interests of the issuer and the 
shareholders of the issuer.’’. 
SEC. 972. PROXY ACCESS. 
(a) PROXY ACCESS.—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: 
‘‘(2) The rules and regulations prescribed by the Com-
mission under paragraph (1) may include— 
‘‘(A) a requirement that a solicitation of proxy, 
consent, or authorization by (or on behalf of) an 
issuer include a nominee submitted by a shareholder 
to serve on the board of directors of the issuer; and 
‘‘(B) a requirement that an issuer follow a cer-
tain procedure in relation to a solicitation described 
in subparagraph (A).’’. 
(b) REGULATIONS.—The Commission may issue rules 
permitting the use by shareholders of proxy solicitation ma-
terials supplied by an issuer of securities for the purpose 
of nominating individuals to membership on the board of 
directors of the issuer, under such terms and conditions as
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the Commission determines are in the interests of share-
holders and for the protection of investors. 
SEC. 973. DISCLOSURES REGARDING CHAIRMAN AND CEO 
STRUCTURES. 
Section 14B of the Securities Exchange Act of 1934, 
as added by section 971, is amended by adding at the end 
the following: 
‘‘(b) DISCLOSURES REGARDING CHAIRMAN AND CEO 
STRUCTURES.—Not later than 180 days after the date of 
enactment of this subsection, the Commission shall issue 
rules that require an issuer to disclose in the annual proxy 
sent to investors the reasons why the issuer has chosen— 
‘‘(1) the same person to serve as chairman of the 
board of directors and chief executive officer (or in 
equivalent positions); or 
‘‘(2) different individuals to serve as chairman of 
the board of directors and chief executive officer (or 
in equivalent positions of the issuer).’’. 
Subtitle H—Municipal Securities 
SEC. 975. REGULATION OF MUNICIPAL SECURITIES AND 
CHANGES TO THE BOARD OF THE MSRB. 
(a) REGISTRATION OF MUNICIPAL SECURITIES DEAL-
ERS AND MUNICIPAL ADVISORS.—Section 15B(a) of the Se-
curities Exchange Act of 1934 (15 U.S.C. 78o–4(a)) is 
amended—
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(1) in paragraph (1)— 
(A) by inserting ‘‘(A)’’ after ‘‘(1)’’; and 
(B) by adding at the end the following: 
‘‘(B) It shall be unlawful for a municipal 
advisor to provide advice to or on behalf of a 
municipal entity or obligated person with respect 
to municipal financial products or the issuance 
of municipal securities, or to undertake a solici-
tation of a municipal entity or obligated person, 
unless the municipal advisor is registered in ac-
cordance with this subsection.’’; 
(2) in paragraph (2), by inserting ‘‘or municipal 
advisor’’ after ‘‘municipal securities dealer’’ each 
place that term appears; 
(3) in paragraph (3), by inserting ‘‘or municipal 
advisor’’ after ‘‘municipal securities dealer’’ each 
place that term appears; 
(4) in paragraph (4), by striking ‘‘dealer, or mu-
nicipal securities dealer or class of brokers, dealers, or 
municipal securities dealers’’ and inserting ‘‘dealer, 
municipal securities dealer, or municipal advisor, or 
class of brokers, dealers, municipal securities dealers, 
or municipal advisors’’; and 
(5) by adding at the end the following:
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‘‘(5) No municipal advisor shall make use of the 
mails or any means or instrumentality of interstate 
commerce to provide advice to or on behalf of a mu-
nicipal entity or obligated person with respect to mu-
nicipal financial products, the issuance of municipal 
securities, or participation in the issuance of munic-
ipal securities, or to undertake a solicitation of a mu-
nicipal entity or obligated person, in connection with 
which such municipal advisor engages in any fraudu-
lent, deceptive, or manipulative act or practice.’’. 
(b) MUNICIPAL SECURITIES RULEMAKING BOARD.— 
Section 15B(b) of the Securities Exchange Act of 1934 (15 
U.S.C. 78o–4(b)) is amended— 
(1) in paragraph (1)— 
(A) in the first sentence, by striking ‘‘Not 
later than’’ and all that follows through ‘‘ap-
pointed by the Commission’’ and inserting ‘‘The 
Municipal Securities Rulemaking Board shall be 
composed of 15 members, or such other number 
of members as specified by rules of the Board 
pursuant to paragraph (2)(B),’’; 
(B) by striking the second sentence and in-
serting the following: ‘‘The members of the Board 
shall serve as members for a term of 3 years or 
for such other terms as specified by rules of the
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Board pursuant to paragraph (2)(B), and shall 
consist of (A) 8 individuals who are not associ-
ated with any broker, dealer, municipal securi-
ties dealer, or municipal advisor (other than by 
reason of being under common control with, or 
indirectly controlling, any broker or dealer 
which is not a municipal securities broker or 
municipal securities dealer), at least 1 of whom 
shall be representative of institutional or retail 
investors in municipal securities, at least 1 of 
whom shall be representative of municipal enti-
ties, and at least 1 of whom shall be a member 
of the public with knowledge of or experience in 
the municipal industry (which members are 
hereinafter referred to as ‘public representa-
tives’); and (B) 7 individuals who are associated 
with a broker, dealer, municipal securities deal-
er, or municipal advisor, including at least 1 in-
dividual who is associated with and representa-
tive of brokers, dealers, or municipal securities 
dealers that are not banks or subsidiaries or de-
partments or divisions of banks (which members 
are hereinafter referred to as ‘broker-dealer rep-
resentatives’), at least 1 individual who is associ-
ated with and representative of municipal secu-
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† HR 4173 PP
rities dealers which are banks or subsidiaries or 
departments or divisions of banks (which mem-
bers are hereinafter referred to as ‘bank rep-
resentatives’), and at least 1 individual who is 
associated with a municipal advisor (which 
member is hereinafter referred to as the ‘advisor 
representative’).’’; and 
(C) in the third sentence, by striking ‘‘ini-
tial’’; 
(2) in paragraph (2)— 
(A) in the matter preceding subparagraph 
(A)— 
(i) by inserting before the period at the 
end of the first sentence the following: ‘‘and 
advice provided to or on behalf of municipal 
entities or obligated persons by brokers, 
dealers, municipal securities dealers, and 
municipal advisors with respect to munic-
ipal financial products, the issuance of mu-
nicipal securities, or participation in the 
issuance of municipal securities, and solici-
tations of municipal entities or obligated 
persons undertaken by brokers, dealers, mu-
nicipal securities dealers, and municipal 
advisors’’; and
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(ii) by striking the second sentence; 
(B) in subparagraph (A)— 
(i) in the matter preceding clause (i)— 
(I) by inserting ‘‘, and no broker, 
dealer, municipal securities dealer, or 
municipal advisor shall provide advice 
to or on behalf of a municipal entity 
or obligated person with respect to mu-
nicipal financial products, the issuance 
of municipal securities, or participa-
tion in the issuance of municipal secu-
rities’’ after ‘‘sale of, any municipal 
security’’; and 
(II) by inserting ‘‘and municipal 
entities or obligated persons’’ after 
‘‘protection of investors’’; 
(ii) in clause (i), by striking ‘‘munic-
ipal securities brokers and municipal secu-
rities dealers’’ each place that term appears 
and inserting ‘‘municipal securities brokers, 
municipal securities dealers, and municipal 
advisors’’; 
(iii) in clause (ii), by adding ‘‘and’’ at 
the end;
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(iv) in clause (iii), by striking ‘‘; and’’ 
and inserting a period; and 
(v) by striking clause (iv); 
(C) in subparagraph (B), by striking 
‘‘nominations and elections’’ and all that follows 
through ‘‘specify’’ and inserting ‘‘nominations 
and elections of public representatives, broker- 
dealer representatives, bank representatives, and 
advisor representatives. Such rules shall provide 
that the membership of the Board shall at all 
times be as evenly divided in number as possible 
between entities or individuals who are subject to 
regulation by the Board and entities or individ-
uals not subject to regulation by the Board, pro-
vided, however, that a majority of the members 
of the Board shall at all times be public rep-
resentatives. Such rules shall also specify’’; 
(D) in subparagraph (C)— 
(i) by inserting ‘‘and municipal finan-
cial products’’ after ‘‘municipal securities’’ 
the first two times that term appears; 
(ii) by inserting ‘‘, municipal entities, 
obligated persons,’’ before ‘‘and the public 
interest’’;
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(iii) by striking ‘‘between’’ and insert-
ing ‘‘among’’; 
(iv) by striking ‘‘issuers, municipal se-
curities brokers, or municipal securities 
dealers, to fix’’ and inserting ‘‘municipal 
entities, obligated persons, municipal secu-
rities brokers, municipal securities dealers, 
or municipal advisors, to fix’’; and 
(v) by striking ‘‘brokers or municipal 
securities dealers, to regulate’’ and inserting 
‘‘brokers, municipal securities dealers, or 
municipal advisors, to regulate’’; 
(E) in subparagraph (D)— 
(i) by inserting ‘‘and advice con-
cerning municipal financial products’’ after 
‘‘transactions in municipal securities’’; 
(ii) by striking ‘‘That no’’ and insert-
ing ‘‘that no’’; 
(iii) by inserting ‘‘municipal advisor,’’ 
before ‘‘or person associated’’; and 
(iv) by striking ‘‘a municipal securi-
ties broker or municipal securities dealer 
may be compelled’’ and inserting ‘‘a munic-
ipal securities broker, municipal securities
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† HR 4173 PP
dealer, or municipal advisor may be com-
pelled’’; 
(F) in subparagraph (E)— 
(i) by striking ‘‘municipal securities 
brokers and municipal securities dealers’’ 
and inserting ‘‘municipal securities brokers, 
municipal securities dealers, and municipal 
advisors’’; and 
(ii) by striking ‘‘municipal securities 
broker or municipal securities dealer’’ and 
inserting ‘‘municipal securities broker, mu-
nicipal securities dealer, or municipal advi-
sor’’; 
(G) in subparagraph (G), by striking ‘‘mu-
nicipal securities brokers and municipal securi-
ties dealers’’ and inserting ‘‘municipal securities 
brokers, municipal securities dealers, and munic-
ipal advisors’’; 
(H) in subparagraph (J)— 
(i) by striking ‘‘municipal securities 
broker and each municipal securities deal-
er’’ and inserting ‘‘municipal securities 
broker, municipal securities dealer, and mu-
nicipal advisor’’; and
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(ii) by striking the period at the end of 
the second sentence and inserting ‘‘, which 
may include charges for failure to submit to 
the Board required information or docu-
ments to any information system operated 
by the Board in a full, accurate, or timely 
manner, or any other failure to comply 
with the rules of the Board.’’; 
(I) in subparagraph (K)— 
(i) by inserting ‘‘broker, dealer, or’’ be-
fore ‘‘municipal securities dealer’’ each 
place that term appears; and 
(ii) by striking ‘‘municipal securities 
investment portfolio’’ and inserting ‘‘related 
account of a broker, dealer, or municipal se-
curities dealer’’; and 
(J) by adding at the end the following: 
‘‘(L) provide continuing education require-
ments for municipal advisors. 
‘‘(M) provide professional standards. 
‘‘(N) not impose a regulatory burden on 
small municipal advisors that is not necessary 
or appropriate in the public interest and for the 
protection of investors, municipal entities, and 
obligated persons.’’;
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(3) by redesignating paragraph (3) as para-
graph (7); and 
(4) by inserting after paragraph (2) the fol-
lowing: 
‘‘(3) The Board, in conjunction with or on behalf 
of any Federal financial regulator or self-regulatory 
organization, may— 
‘‘(A) establish information systems; and 
‘‘(B) assess such reasonable fees and charges 
for the submission of information to, or the re-
ceipt of information from, such systems from any 
persons which systems may be developed for the 
purposes of serving as a repository of informa-
tion from municipal market participants or oth-
erwise in furtherance of the purposes of the 
Board, a Federal financial regulator, or a self- 
regulatory organization. 
‘‘(4) The Board shall provide guidance and as-
sistance in the enforcement of, and examination for, 
compliance with the rules of the Board to the Com-
mission, a registered securities association under sec-
tion 15A, or any other appropriate regulatory agency, 
as applicable.’’. 
(c) DISCIPLINE OF DEALERS AND MUNICIPAL ADVI-
SORS AND OTHER MATTERS.—Section 15B(c) of the Securi-
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† HR 4173 PP
ties Exchange Act of 1934 (15 U.S.C. 78o–4(c)) is amend-
ed— 
(1) in paragraph (1), by inserting ‘‘, and no 
broker, dealer, municipal securities dealer, or munic-
ipal advisor shall make use of the mails or any means 
or instrumentality of interstate commerce to provide 
advice to or on behalf of a municipal entity or obli-
gated person with respect to municipal financial 
products, the issuance of municipal securities, or par-
ticipation in the issuance of municipal securities, or 
to undertake a solicitation of a municipal entity or 
obligated person,’’ after ‘‘any municipal security’’; 
(2) in paragraph (2), by inserting ‘‘or municipal 
advisor’’ after ‘‘municipal securities dealer’’ each 
place that term appears; 
(3) in paragraph (3)— 
(A) by inserting ‘‘or municipal entities or 
obligated person’’ after ‘‘protection of investors’’ 
each place that term appears; and 
(B) by inserting ‘‘or municipal advisor’’ 
after ‘‘municipal securities dealer’’ each place 
that term appears; 
(4) in paragraph (4), by inserting ‘‘or municipal 
advisor’’ after ‘‘municipal securities dealer or obli-
gated person’’ each place that term appears;
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(5) in paragraph (6)(B), by inserting ‘‘or mu-
nicipal entities’’ after ‘‘protection of investors’’; 
(6) in paragraph (7)— 
(A) in subparagraph (A)— 
(i) in clause (i), by striking ‘‘; and’’ 
and inserting a semicolon; 
(ii) in clause (ii), by striking the pe-
riod and inserting ‘‘; and’’; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(iii) the Commission, or its designee, 
in the case of municipal advisors.’’. 
(B) in subparagraph (B), by inserting ‘‘or 
municipal entities or obligated person’’ after 
‘‘protection of investors’’; and 
(7) by adding at the end the following: 
‘‘(9)(A) Fines collected by the Commission for 
violations of the rules of the Board shall be equally 
divided between the Commission and the Board. 
‘‘(B) Fines collected by a registered securities as-
sociation under section 15A(7) with respect to viola-
tions of the rules of the Board shall be accounted for 
by such registered securities association separately 
from other fines collected under section 15A(7) and 
shall be allocated between such registered securities as-
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† HR 4173 PP
sociation and the Board at the direction of the Com-
mission.’’. 
(d) ISSUANCE OF MUNICIPAL SECURITIES.—Section 
15B(d)(2) of the Securities Exchange Act of 1934 (15 
U.S.C. 78o–4(d)) is amended— 
(1) by striking ‘‘through a municipal securities 
broker or municipal securities dealer or otherwise’’ 
and inserting ‘‘through a municipal securities broker, 
municipal securities dealer, municipal advisor, or 
otherwise’’; and 
(2) by inserting ‘‘or municipal advisors’’ before 
‘‘to furnish’’. 
(e) DEFINITIONS.—Section 15B of the Securities Ex-
change Act of 1934 (15 U.S.C. 78o–4) is amended by adding 
at the end the following: 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) the term ‘Board’ means the Municipal Secu-
rities Rulemaking Board established under subsection 
(b)(1); 
‘‘(2) the term ‘guaranteed investment contract’ 
includes any investment that has specified with-
drawal or reinvestment provisions and a specifically 
negotiated or bid interest rate, and also includes any 
agreement to supply investments on 2 or more future 
dates, such as a forward supply contract;
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‘‘(3) the term ‘investment strategies’ includes 
plans or programs for the investment of the proceeds 
of municipal securities that are not municipal de-
rivatives, guaranteed investment contracts, and the 
recommendation of and brokerage of municipal es-
crow investments; 
‘‘(4) the term ‘municipal advisor’— 
‘‘(A) means a person (who is not a munic-
ipal entity or an employee of a municipal enti-
ty) that— 
‘‘(i) provides advice to or on behalf of 
a municipal entity or obligated person with 
respect to municipal financial products or 
the issuance of municipal securities, includ-
ing advice with respect to the structure, 
timing, terms, and other similar matters 
concerning such financial products or 
issues; 
‘‘(ii) participates in the issuance of 
municipal securities; or 
‘‘(iii) undertakes a solicitation of a 
municipal entity; 
‘‘(B) includes financial advisors, guaran-
teed investment contract brokers, third-party 
marketers, placement agents, solicitors, finders,
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and swap advisors, if such persons are described 
in any of clauses (i) through (iii) of subpara-
graph (A); and 
‘‘(C) does not include a broker, dealer, or 
municipal securities dealer serving as an under-
writer (as defined in section 2(a)(11) of the Se-
curities Act of 1933) (15 U.S.C. 77b(a)(11)), any 
investment adviser registered under the Invest-
ment Advisers Act of 1940, or persons associated 
with such investment advisers who are providing 
investment advice, attorneys offering legal advice 
or providing services that are of a traditional 
legal nature, or engineers providing engineering 
advice; 
‘‘(5) the term ‘municipal derivative’ means any 
financial instrument or contract designed to hedge a 
risk (including interest rate swaps, basis swaps, cred-
it default swaps, caps, floors, and collars); 
‘‘(6) the term ‘municipal financial product’ 
means municipal derivatives, guaranteed investment 
contracts, and investment strategies; 
‘‘(7) the term ‘rules of the Board’ means the rules 
proposed and adopted by the Board under subsection 
(b)(2);
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‘‘(8) the term ‘person associated with a munic-
ipal advisor’ or ‘associated person of an advisor’ 
means— 
‘‘(A) any partner, officer, director, or 
branch manager of such municipal advisor (or 
any person occupying a similar status or per-
forming similar functions); 
‘‘(B) any other employee of such municipal 
advisor who is engaged in the management, di-
rection, supervision, or performance of any ac-
tivities relating to the provision of advice to or 
on behalf of a municipal entity or obligated per-
son with respect to municipal financial products, 
the issuance of municipal securities, or partici-
pation in the issuance of municipal securities; 
and 
‘‘(C) any person directly or indirectly con-
trolling, controlled by, or under common control 
with such municipal advisor; 
‘‘(9) the term ‘municipal entity’ means any 
State, political subdivision of a State, or municipal 
corporate instrumentality of a State, including— 
‘‘(A) any agency, authority, or instrumen-
tality of the State, political subdivision, or mu-
nicipal corporate instrumentality;
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‘‘(B) any plan, program, or pool of assets 
sponsored or established by the State, political 
subdivision, or municipal corporate instrumen-
tality or any agency, authority, or instrumen-
tality thereof; and 
‘‘(C) any other issuer of municipal securi-
ties; 
‘‘(10) the term ‘solicitation of a municipal entity 
or obligated person’ means a direct or indirect com-
munication with a municipal entity or obligated per-
son made by a person, for direct or indirect com-
pensation, on behalf of a broker, dealer, municipal se-
curities dealer, municipal advisor, or investment ad-
viser (as defined in section 202 of the Investment Ad-
visers Act of 1940) that does not control, is not con-
trolled by, or is not under common control with the 
person undertaking such solicitation for the purpose 
of obtaining or retaining an engagement by a munic-
ipal entity or obligated person of a broker, dealer, 
municipal securities dealer, or municipal advisor for 
or in connection with municipal financial products, 
the issuance of municipal securities, or participation 
in the issuance of municipal securities, or of an in-
vestment adviser to provide investment advisory serv-
ices to or on behalf of a municipal entity; and
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‘‘(11) the term ‘obligated person’ means any per-
son, including an issuer of municipal securities, who 
is either generally or through an enterprise, fund, or 
account of such person, committed by contract or 
other arrangement to support the payment of all or 
part of the obligations on the municipal securities to 
be sold in an offering of municipal securities.’’. 
(f) REGISTERED SECURITIES ASSOCIATION.—Section 
15A(b) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o–3(b)) is amended by adding at the end the following: 
‘‘(15) The rules of the association provide that 
the association shall— 
‘‘(A) request guidance from the Municipal 
Securities Rulemaking Board in interpretation 
of the rules of the Municipal Securities Rule-
making Board; and 
‘‘(B) provide information to the Municipal 
Securities Rulemaking Board about the enforce-
ment actions and examinations of the associa-
tion under section 15B(b)(2)(E), so that the Mu-
nicipal Securities Rulemaking Board may— 
‘‘(i) assist in such enforcement actions 
and examinations; and 
‘‘(ii) evaluate the ongoing effectiveness 
of the rules of the Board.’’.
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(g) REGISTRATION
AND REGULATION
OF BROKERS 
AND DEALERS.—Section 15 of the Securities Exchange Act 
of 1934 is amended— 
(1) in subsection (b)(4), by inserting ‘‘municipal 
advisor,’’ after ‘‘municipal securities dealer’’ each 
place that term appears; and 
(2) in subsection (c), by inserting ‘‘broker, deal-
er, or’’ before ‘‘municipal securities dealer’’ each place 
that term appears. 
(h) ACCOUNTS AND RECORDS, REPORTS, EXAMINA-
TIONS OF EXCHANGES, MEMBERS, AND OTHERS.—Section 
17(a)(1) of the Securities Exchange Act of 1934 is amended 
by inserting ‘‘municipal advisor,’’ after ‘‘municipal securi-
ties dealer’’. 
(i) SAVINGS CLAUSE.—Notwithstanding any provision 
of the Over-the-Counter Derivatives Markets Act of 2010, 
or any amendment made pursuant to such Act, the provi-
sions of this section, and the amendments made pursuant 
to this section, shall apply to any municipal derivative. 
(j) EFFECTIVE DATE.—This section, and the amend-
ments made by this section, shall take effect on October 1, 
2010.
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SEC. 976. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 
OF INCREASED DISCLOSURE TO INVESTORS. 
(a) STUDY.—The Comptroller General of the United 
States shall conduct a study and review of the disclosure 
required to be made by issuers of municipal securities. 
(b) SUBJECTS FOR EVALUATION.—In conducting the 
study under subsection (a), the Comptroller General of the 
United States shall— 
(1) broadly describe— 
(A) the size of the municipal securities mar-
kets and the issuers and investors; and 
(B) the disclosures provided by issuers to 
investors; 
(2) compare the amount, frequency, and quality 
of disclosures that issuers of municipal securities are 
required by law to provide for the benefit of munic-
ipal securities holders, including the amount of and 
frequency of disclosures actually provided by issuers 
of municipal securities, with the amount of and fre-
quency of disclosures that issuers of corporate securi-
ties provide for the benefit of corporate securities hold-
ers, taking into account the differences between issuers 
of municipal securities and issuers of corporate secu-
rities; 
(3) evaluate the costs and benefits to various 
types of issuers of municipal securities of requiring
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issuers of municipal bonds to provide additional fi-
nancial disclosures for the benefit of investors; 
(4) evaluate the potential benefit to investors 
from additional financial disclosures by issuers of 
municipal bonds; and 
(5) make recommendations relating to disclosure 
requirements for municipal issuers, including the ad-
visability of the repeal or retention of section 15B(d) 
of the Securities Exchange Act of 1934 (15 U.S.C. 
78o–4(d)) (commonly known as the ‘‘Tower Amend-
ment’’). 
(c) REPORT.—Not later than 1 year after the date of 
enactment of this Act, the Comptroller General of the United 
States shall submit a report to Congress on the results of 
the study conducted under subsection (a), including rec-
ommendations for how to improve disclosure by issuers of 
municipal securities. 
SEC. 977. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 
ON THE MUNICIPAL SECURITIES MARKETS. 
(a) STUDY.—The Comptroller General of the United 
States shall conduct a study of the municipal securities 
markets. 
(b) REPORT.—Not later than 180 days after the date 
of enactment of this Act, the Comptroller General of the 
United States shall submit a report to the Committee on
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Banking, Housing, and Urban Affairs of the Senate, and 
the Committee on Financial Services of the House of Rep-
resentatives, with copies to the Special Committee on Aging 
of the Senate and the Commission, on the results of the 
study conducted under subsection (a), including— 
(1) an analysis of the mechanisms for trading, 
quality of trade executions, market transparency, 
trade reporting, price discovery, settlement clearing, 
and credit enhancements; 
(2) the needs of the markets and investors and 
the impact of recent innovations; 
(3) recommendations for how to improve the 
transparency, efficiency, fairness, and liquidity of 
trading in the municipal securities markets, includ-
ing with reference to items listed in paragraph (1); 
and 
(4) potential uses of derivatives in the municipal 
securities markets. 
(c) RESPONSES.—Not later than 180 days after receipt 
of the report required under subsection (b), the Commission 
shall submit a response to the Committee on Banking, 
Housing, and Urban Affairs of the Senate, and the Com-
mittee on Financial Services of the House of Representa-
tives, with a copy to the Special Committee on Aging of 
the Senate, stating the actions the Commission has taken
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in response to the recommendations contained in such re-
port. 
SEC. 978. STUDY OF FUNDING FOR GOVERNMENT AC-
COUNTING STANDARDS BOARD. 
(a) STUDY.—The Commission shall conduct a study 
that evaluates— 
(1) the role and importance of the Government 
Accounting Standards Board in the municipal securi-
ties markets; 
(2) the manner in which the Government Ac-
counting Standards Board is funded, and how such 
manner of funding affects the financial information 
available to securities investors; 
(3) the advisability of changes to the manner in 
which the Government Accounting Standards Board 
is funded; and 
(4) whether legislative changes to the manner in 
which the Government Accounting Standards Board 
is funded are necessary for the benefit of investors and 
in the public interest. 
(b) CONSULTATION.—In conducting the study required 
under subsection (a), the Commission shall consult with 
State and local government financial officers. 
(c) REPORT.—Not later than 270 days after the date 
of enactment of this Act, the Commission shall submit to
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the Committee on Banking, Housing, and Urban Affairs 
of the Senate and the Committee on Financial Services of 
the House of Representatives a report on the study required 
under subsection (a). 
SEC. 979. COMMISSION OFFICE OF MUNICIPAL SECURITIES. 
(a) IN GENERAL.—There shall be in the Commission 
an Office of Municipal Securities, which shall— 
(1) administer the rules of the Commission with 
respect to the practices of municipal securities brokers 
and dealers, municipal securities advisors, municipal 
securities investors, and municipal securities issuers; 
and 
(2) coordinate with the Municipal Securities 
Rulemaking Board for rulemaking and enforcement 
actions as required by law. 
(b) DIRECTOR OF THE OFFICE.—The head of the Office 
of Municipal Securities shall be the Director, who shall re-
port to the Chairman. 
(c) STAFFING.— 
(1) IN GENERAL.—The Office of Municipal Secu-
rities shall be staffed sufficiently to carry out the re-
quirements of this section. 
(2) REQUIREMENT.—The staff of the Office of 
Municipal Securities shall include individuals with 
knowledge of and expertise in municipal finance.
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Subtitle 
I—Public 
Company 
Ac-
counting Oversight Board, Port-
folio Margining, and Other Mat-
ters 
SEC. 981. AUTHORITY TO SHARE CERTAIN INFORMATION 
WITH FOREIGN AUTHORITIES. 
(a) DEFINITION.—Section 2(a) of the Sarbanes-Oxley 
Act of 2002 (15 U.S.C. 7201(a)) is amended by adding at 
the end 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.—Without the loss of its status as 
confidential and privileged in the hands of the 
Board, all information referred to in subpara-
graph (A) that relates to a public accounting 
firm that a foreign government has empowered a
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foreign auditor oversight authority to inspect or 
otherwise enforce laws with respect to, may, at 
the discretion of the Board, be made available to 
the foreign auditor oversight authority, if— 
‘‘(i) the Board finds that it is nec-
essary to accomplish the purposes of this 
Act or to protect investors; 
‘‘(ii) the foreign auditor oversight au-
thority provides— 
‘‘(I) such assurances of confiden-
tiality as the Board may request; 
‘‘(II) a description of the applica-
ble information systems and controls of 
the foreign auditor oversight authority; 
and 
‘‘(III) a description of the laws 
and regulations of the foreign govern-
ment of the foreign auditor oversight 
authority that are relevant to informa-
tion access; and 
‘‘(iii) the Board determines that it is 
appropriate to share such information.’’. 
(c) CONFORMING AMENDMENT.—Section 105(b)(5)(A) 
of 
the 
Sarbanes-Oxley 
Act 
of 
2002 
(15 
U.S.C.
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7215(b)(5)(A)) is amended by striking ‘‘subparagraph (B)’’ 
and inserting ‘‘subparagraphs (B) and (C)’’. 
SEC. 982. OVERSIGHT OF BROKERS AND DEALERS. 
(a) DEFINITIONS.— 
(1) DEFINITIONS AMENDED.—Title I of the Sar-
banes-Oxley Act of 2002 (15 U.S.C. 7201 et seq.) is 
amended by adding at the end the following new sec-
tion: 
‘‘SEC. 110. DEFINITIONS. 
‘‘For the purposes of this title, the following definitions 
shall apply: 
‘‘(1) AUDIT.—The term ‘audit’ means an exam-
ination of the financial statements, reports, docu-
ments, procedures, controls, or notices of any issuer, 
broker, or dealer by an independent public accounting 
firm in accordance with the rules of the Board or the 
Commission, for the purpose of expressing an opinion 
on the financial statements or providing an audit re-
port. 
‘‘(2) AUDIT REPORT.—The term ‘audit report’ 
means a document, report, notice, or other record— 
‘‘(A) prepared following an audit performed 
for purposes of compliance by an issuer, broker, 
or dealer with the requirements of the securities 
laws; and
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‘‘(B) in which a public accounting firm ei-
ther— 
‘‘(i) sets forth the opinion of that firm 
regarding a financial statement, report, no-
tice, or other document, procedures, or con-
trols; or 
‘‘(ii) asserts that no such opinion can 
be expressed. 
‘‘(3) 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. 
‘‘(4) DEALER.—The term ‘dealer’ means a dealer 
(as such term is defined in section 3(a)(5) of the Se-
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-
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cial statement is required to be certified by a reg-
istered public accounting firm. 
‘‘(5) 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-
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—
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‘‘(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. 
‘‘(6) SELF-REGULATORY
ORGANIZATION.—The 
term ‘self-regulatory organization’ has the same 
meaning as in section 3(a) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78c(a)).’’. 
(2) CONFORMING AMENDMENT.—Section 2(a) of 
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(a)) 
is amended in the matter preceding paragraph (1), by 
striking ‘‘In this’’ and inserting ‘‘Except as otherwise 
specifically provided in this Act, in this’’. 
(b) ESTABLISHMENT AND ADMINISTRATION OF THE 
PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD.—Sec-
tion 101 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
7211) is amended— 
(1) by striking ‘‘issuers’’ each place that term 
appears and inserting ‘‘issuers, brokers, and dealers’’; 
and 
(2) in subsection (a)— 
(A) by striking ‘‘public companies’’ and in-
serting ‘‘companies’’; and
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(B) by striking ‘‘for companies the securi-
ties of which are sold to, and held by and for, 
public investors’’. 
(c) REGISTRATION WITH THE BOARD.—Section 102 of 
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7212) is amend-
ed— 
(1) in subsection (a)— 
(A) by striking ‘‘Beginning 180’’ and all 
that follows through ‘‘101(d), it’’ and inserting 
‘‘It’’; and 
(B) by striking ‘‘issuer’’ and inserting 
‘‘issuer, broker, or dealer’’; 
(2) in subsection (b)— 
(A) in paragraph (2)(A), by striking 
‘‘issuers’’ and inserting ‘‘issuers, brokers, and 
dealers’’; and 
(B) by striking ‘‘issuer’’ each place that 
term appears and inserting ‘‘issuer, broker, or 
dealer’’. 
(d) AUDITING AND INDEPENDENCE.—Section 103(a) of 
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7213(a)) is 
amended— 
(1) in paragraph (1), by striking ‘‘and such eth-
ics standards’’ and inserting ‘‘such ethics standards, 
and such independence standards’’;
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(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 the Sarbanes-Oxley Act of 2002 
(15 U.S.C. 7214) is amended— 
(1) in subsection (a), by striking ‘‘issuers’’ and 
inserting ‘‘issuers, brokers, and dealers’’; and 
(2) in subsection (b)(1)— 
(A) by striking ‘‘audit reports for’’ each 
place that term appears and inserting ‘‘audit re-
ports on annual financial statements for’’; 
(B) in subparagraph (A), by striking ‘‘and’’ 
at the end; 
(C) in subparagraph (B), by striking the 
period at the end and inserting ‘‘; and’’; and 
(D) by adding at the end the following: 
‘‘(C) with respect to each registered public 
accounting firm that regularly provides audit re-
ports and that is not described in subparagraph 
(A) or (B), on a basis determined by the Board, 
by rule, that is consistent with the public interest 
and protection of investors.’’.
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(f) 
INVESTIGATIONS
AND
DISCIPLINARY
PRO-
CEEDINGS.—Section 105(c)(7)(B) of the Sarbanes-Oxley 
Act of 2002 (15 U.S.C. 7215(c)(7)(B)) is amended— 
(1) in the subparagraph heading, by inserting ‘‘, 
BROKER, OR DEALER’’ after ‘‘ISSUER’’; 
(2) by striking ‘‘any issuer’’ each place that term 
appears and inserting ‘‘any issuer, broker, or dealer’’; 
and 
(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(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
7216(a)) is amended— 
(1) in paragraph (1), by striking ‘‘issuer’’ and 
inserting ‘‘issuer, broker, or dealer’’; and 
(2) in paragraph (2), by striking ‘‘issuers’’ and 
inserting ‘‘issuers, brokers, or dealers’’. 
(h) FUNDING.—Section 109 of the Sarbanes-Oxley Act 
of 2002 (15 U.S.C. 7219) is amended— 
(1) in subsection (c)(2), by striking ‘‘subsection 
(i)’’ and inserting ‘‘subsection (j)’’; 
(2) in subsection (d)— 
(A) in paragraph (2), by striking ‘‘allowing 
for differentiation among classes of issuers, as
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appropriate’’ and inserting ‘‘and among brokers 
and dealers, in accordance with subsection (h), 
and allowing for differentiation among classes of 
issuers, brokers and dealers, as appropriate’’; 
and 
(B) by adding at the end the following: 
‘‘(3) BROKERS AND DEALERS.—The Board shall 
begin the allocation, assessment, and collection of fees 
under paragraph (2) with respect to brokers and deal-
ers with the payment of support fees to fund the first 
full fiscal year beginning after the effective date of 
this paragraph.’’; 
(3) by redesignating subsections (h), (i), and (j) 
as subsections (i), (j), and (k), respectively; and 
(4) by inserting after subsection (g) the fol-
lowing: 
‘‘(h) ALLOCATION
OF ACCOUNTING SUPPORT FEES 
AMONG BROKERS AND DEALERS.— 
‘‘(1) OBLIGATION TO PAY.—Each broker or deal-
er shall pay to the Board the annual accounting sup-
port fee allocated to such broker or dealer under this 
section. 
‘‘(2) ALLOCATION.—Any amount due from a 
broker or dealer (or from a particular class of brokers 
and dealers) under this section shall be allocated
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among brokers and dealers and payable by the broker 
or dealer (or the brokers and dealers in the particular 
class, as applicable). 
‘‘(3) PROPORTIONALITY.—The amount due from 
a broker or dealer shall be in proportion to the net 
capital of the broker or dealer, compared to the total 
net capital of all brokers and dealers, in accordance 
with rules issued by the Board.’’. 
(i) REFERRAL OF INVESTIGATIONS TO A SELF-REGU-
LATORY ORGANIZATION.—Section 105(b)(4)(B) of the Sar-
banes-Oxley Act of 2002 (15 U.S.C. 7215(b)(4)(B)) is 
amended— 
(1) by redesignating clauses (ii) and (iii) as 
clauses (iii) and (iv), respectively; and 
(2) by inserting after clause (i) the following: 
‘‘(ii) to a self-regulatory organization, 
in the case of an investigation that concerns 
an audit report for a broker or dealer that 
is under the jurisdiction of such self-regu-
latory organization;’’. 
(j) USE OF DOCUMENTS RELATED TO AN INSPECTION 
OR INVESTIGATION.—Section 105(b)(5)(B)(ii) of the Sar-
banes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(B)(ii)) is 
amended—
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(1) in subclause (III), by striking ‘‘and’’ at the 
end; 
(2) in subclause (IV), by striking the comma and 
inserting ‘‘; and’’; and 
(3) by inserting after subclause (IV) the fol-
lowing: 
‘‘(V) a self-regulatory organiza-
tion, with respect to an audit report 
for a broker or dealer that is under the 
jurisdiction of such self-regulatory or-
ganization,’’. 
(k) EFFECTIVE DATE.—The amendments made by this 
section shall take effect 180 days after the date of enactment 
of this Act. 
SEC. 983. PORTFOLIO MARGINING. 
(a) ADVANCES.—Section 9(a)(1) of the Securities In-
vestor Protection Act of 1970 (15 U.S.C. 78fff–3(a)(1)) is 
amended by inserting ‘‘or options on commodity futures 
contracts’’ after ‘‘claim for securities’’. 
(b) DEFINITIONS.—Section 16 of the Securities Inves-
tor Protection Act of 1970 (15 U.S.C. 78lll) is amended— 
(1) by striking paragraph (2) and inserting the 
following: 
‘‘(2) CUSTOMER.—
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‘‘(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 
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. 
‘‘(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; 
‘‘(ii) any person who has a claim 
against the debtor for cash, securities, fu-
tures contracts, or options on futures con-
tracts received, acquired, or held in a port-
folio margining account carried as a securi-
ties account pursuant to a portfolio mar-
gining program approved by the Commis-
sion; and
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‘‘(iii) any person who has a claim 
against the debtor arising out of sales or 
conversions of such securities. 
‘‘(C) EXCLUDED PERSONS.—The term ‘cus-
tomer’ does not include any person, to the extent 
that— 
‘‘(i) the claim of such person arises out 
of transactions with a foreign subsidiary of 
a member of SIPC; or 
‘‘(ii) such person has a claim for cash 
or securities which by contract, agreement, 
or understanding, or by operation of law, is 
part of the capital of the debtor, or is subor-
dinated to the claims of any or all creditors 
of the debtor, notwithstanding that some 
ground exists for declaring such contract, 
agreement, or understanding void or void-
able in a suit between the claimant and the 
debtor.’’; 
(2) in paragraph (4)— 
(A) in subparagraph (C), by striking ‘‘and’’ 
at the end; 
(B) by redesignating subparagraph (D) as 
subparagraph (E); and
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(C) by inserting after subparagraph (C) the 
following: 
‘‘(D) in the case of a portfolio margining 
account of a customer that is carried as a securi-
ties account pursuant to a portfolio margining 
program approved by the Commission, a futures 
contract or an option on a futures contract re-
ceived, acquired, or held by or for the account of 
a debtor from or for such portfolio margining ac-
count, and the proceeds thereof; and’’; 
(3) in paragraph (9), in the matter following 
subparagraph (L), by inserting after ‘‘Such term’’ the 
following: ‘‘includes revenues earned by a broker or 
dealer in connection with a transaction in the port-
folio margining account of a customer carried as se-
curities accounts pursuant to a portfolio margining 
program approved by the Commission. Such term’’; 
and 
(4) in paragraph (11)— 
(A) in subparagraph (A)— 
(i) by striking ‘‘filing date, all’’ and 
all that follows through the end of the sub-
paragraph and inserting the following: ‘‘fil-
ing 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, 
including 
all 
property 
collateralizing such positions, to the extent 
that such property is not otherwise included 
herein; minus’’; and 
(B) in the matter following subparagraph 
(C), by striking ‘‘In determining’’ and inserting 
the following: ‘‘A claim for a commodity futures 
contract 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 with respect to such con-
tract as of the filing date, and such claim shall 
be treated as a claim for cash. In determining’’.
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SEC. 984. LOAN OR BORROWING OF SECURITIES. 
(a) RULEMAKING AUTHORITY.—Section 10 of the Se-
curities Exchange Act of 1934 (15 U.S.C. 78j) is amended 
by adding at the end the following: 
‘‘(c)(1) To effect, accept, or facilitate a trans-
action involving the loan or borrowing of securities in 
contravention of such rules and regulations as the 
Commission may prescribe as necessary or appro-
priate in the public interest or for the protection of 
investors. 
‘‘(2) Nothing in paragraph (1) may be construed 
to limit the authority of the appropriate Federal 
banking agency (as defined in section 3(q) of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1813(q))), the 
National Credit Union Administration, or any other 
Federal department or agency having a responsibility 
under Federal law to prescribe rules or regulations re-
stricting transactions involving the loan or borrowing 
of securities in order to protect the safety and sound-
ness of a financial institution or to protect the finan-
cial system from systemic risk.’’. 
(b) RULEMAKING REQUIRED.—Not later than 2 years 
after the date of enactment of this Act, the Commission shall 
promulgate rules that are designed to increase the trans-
parency of information available to brokers, dealers, and 
investors, with respect to the loan or borrowing of securities.
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SEC. 985. TECHNICAL CORRECTIONS TO FEDERAL SECURI-
TIES LAWS. 
(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 section 18 (15 U.S.C. 77r)— 
(A) in subsection (b)(1)(C), by striking ‘‘is 
a security’’ and inserting ‘‘a security’’; and 
(B) in subsection (c)(2)(B)(i), by striking 
‘‘State, or’’ and inserting ‘‘State or’’; 
(3) 
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 
(4) 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. 78a et seq.) is 
amended— 
(1) in section 2 (15 U.S.C. 78b), by striking ‘‘af-
fected’’ and inserting ‘‘effected’’; 
(2) in section 3 (15 U.S.C. 78c)— 
(A) in subsection (a)(55)(A), by striking 
‘‘section 3(a)(12) of the Securities Exchange Act
1150 
† HR 4173 PP
of 1934’’ and inserting ‘‘section 3(a)(12) of this 
title’’; and 
(B) in subsection (g), by striking ‘‘com-
pany, account person, or entity’’ and inserting 
‘‘company, account, person, or entity’’; 
(3) in section 10A(i)(1)(B) (15 U.S.C. 78j– 
1(i)(1)(B))— 
(A) in the subparagraph heading, by strik-
ing ‘‘MINIMUS’’ and inserting ‘‘MINIMIS’’; and 
(B) in clause (i), by striking ‘‘nonaudit’’ 
and inserting ‘‘non-audit’’; 
(4) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by 
striking ‘‘earning statement’’ and inserting ‘‘earnings 
statement’’; 
(5) in section 15 (15 U.S.C. 78o)— 
(A) in subsection (b)(1)— 
(i) in subparagraph (B), by striking 
‘‘The order granting’’ and all that follows 
through ‘‘from such membership.’’; and 
(ii) in the undesignated matter imme-
diately following subparagraph (B), by in-
serting after the first sentence the following: 
‘‘The order granting registration shall not 
be effective until such broker or dealer has 
become a member of a registered securities
1151 
† HR 4173 PP
association, or until such broker or dealer 
has become a member of a national securi-
ties exchange, if such broker or dealer effects 
transactions solely on that exchange, unless 
the Commission has exempted such broker 
or dealer, by rule or order, from such mem-
bership.’’; 
(6) 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, and 
adjusting the subparagraph margins accordingly; 
(B) in subparagraph (B), as so redesig-
nated, by striking ‘‘The order granting’’ and all 
that follows through ‘‘from such membership.’’; 
and 
(C) in the matter following subparagraph 
(B), as so redesignated, by inserting after the 
first sentence the following: ‘‘The order granting 
registration shall not be effective until such gov-
ernment securities broker or government securi-
ties dealer has become a member of a national 
securities exchange registered under section 6 of 
this title, or a securities association registered 
under section 15A of this title, unless the Com-
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mission has exempted such government securities 
broker or government securities dealer, by rule or 
order, from such membership.’’; 
(7) 
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 
(8) 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— 
(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’’; and 
(2) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), 
by striking ‘‘, in the’’ and inserting ‘‘in the’’. 
(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) (15 U.S.C. 80a–2(a)(19)), 
in the matter following subparagraph (B)(vii)— 
(A) by striking ‘‘clause (vi)’’ each place that 
term appears and inserting ‘‘clause (vii)’’; and
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(B) in each of subparagraphs (A)(vi) and 
(B)(vi), by adding ‘‘and’’ at the end of subclause 
(III); 
(2) in section 9(b)(4)(B) (15 U.S.C. 80a– 
9(b)(4)(B)), by adding ‘‘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 17(f) (15 U.S.C. 80a–17(f))— 
(A) in paragraph (4), by striking ‘‘No such 
member’’ and inserting ‘‘No member of a na-
tional securities exchange’’; and 
(B) in paragraph (6), by striking ‘‘com-
pany may serve’’ and inserting ‘‘company, may 
serve’’; and 
(5) 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 ‘‘paragraph (1) or (2) of 
section 205(b)’’.
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(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 section 203 (15 U.S.C. 80b–3)— 
(A) in subsection (c)(1)(A), by striking 
‘‘principal business office and’’ and inserting 
‘‘principal office, principal place of business, 
and’’; and 
(B) in subsection (k)(4)(B), in the matter 
following clause (ii), by striking ‘‘principal place 
of business’’ and inserting ‘‘principal office or 
place of business’’; 
(2) in section 206(3) (15 U.S.C. 80b–6(3)), by 
adding ‘‘or’’ after the semicolon at the end; 
(3) in section 213(a) (15 U.S.C. 80b–13(a)), by 
striking ‘‘principal place of business’’ and inserting 
‘‘principal office or place of business’’; and 
(4) in section 222 (15 U.S.C. 80b–18a), by strik-
ing ‘‘principal place of business’’ each place that term 
appears and inserting ‘‘principal office and place of 
business’’.
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SEC. 986. CONFORMING AMENDMENTS RELATING TO RE-
PEAL OF THE PUBLIC UTILITY HOLDING COM-
PANY 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— 
(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.),’’; 
(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—
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‘‘(i) the functioning of securities mar-
kets, investment companies, or any other 
significant portion or segment of the securi-
ties markets; or 
‘‘(ii) the transmission or processing of 
securities transactions.’’; and 
(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 striking 
paragraph (17) and inserting the following: 
‘‘(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 that term appears and inserting 
‘‘Securities Act of 1933 or the Securities Exchange 
Act of 1934’’; 
(3) in section 310 (15 U.S.C. 77jjj), by striking 
subsection (c);
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(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-
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 
striking paragraph (8) and inserting the following: 
‘‘(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
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(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 
U.S.C. 80b–2(a)(21)) is amended by striking ‘‘ ‘Public Util-
ity Holding Company Act of 1935’,’’. 
SEC. 987. AMENDMENT TO DEFINITION OF MATERIAL LOSS 
AND NONMATERIAL LOSSES TO THE DEPOSIT 
INSURANCE FUND FOR PURPOSES OF IN-
SPECTOR GENERAL REVIEWS. 
(a) IN GENERAL.—Section 38(k) of the Federal De-
posit Insurance Act (U.S.C. 1831o(k)) is amended— 
(1) in paragraph (2), by striking subparagraph 
(B) and inserting the following: 
‘‘(B) MATERIAL LOSS DEFINED.—The term 
‘material loss’ means any estimated loss in ex-
cess of— 
‘‘(i) $100,000,000, if the loss occurs 
during the period beginning on September 
30, 2009, and ending on December 31, 
2010; 
‘‘(ii) $75,000,000, if the loss occurs 
during the period beginning on January 1, 
2011, and ending on December 31, 2011; 
and
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‘‘(iii) $50,000,000, if the loss occurs on 
or after January 1, 2012.’’; 
(2) in paragraph (4)(A) by striking ‘‘the report’’ 
and inserting ‘‘any report on losses required under 
this subsection,’’; 
(3) by striking paragraph (6); 
(4) by redesignating paragraph (5) as para-
graph (6); and 
(5) by inserting after paragraph (4) the fol-
lowing: 
‘‘(5) LOSSES THAT ARE NOT MATERIAL.— 
‘‘(A) SEMIANNUAL
REPORT.—For the 6- 
month period ending on March 31, 2010, and 
each 6-month period thereafter, the Inspector 
General of each Federal banking agency shall— 
‘‘(i) identify losses that the Inspector 
General estimates have been incurred by the 
Deposit Insurance Fund during that 6- 
month period, with respect to the insured 
depository institutions supervised by the 
Federal banking agency; 
‘‘(ii) for each loss incurred by the De-
posit Insurance Fund that is not a material 
loss, determine—
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‘‘(I) the grounds identified by the 
Federal banking agency or State bank 
supervisor for appointing the Corpora-
tion as receiver under section 11(c)(5); 
and 
‘‘(II) whether any unusual cir-
cumstances exist that might warrant 
an in-depth review of the loss; and 
‘‘(iii) prepare and submit a written re-
port to the appropriate Federal banking 
agency and to Congress on the results of 
any determination by the Inspector Gen-
eral, including— 
‘‘(I) an identification of any loss 
that warrants an in-depth review, to-
gether with the reasons why such re-
view is warranted, or, if the Inspector 
General determines that no review is 
warranted, an explanation of such de-
termination; and 
‘‘(II) for each loss identified under 
subclause (I) that warrants an in- 
depth review, the date by which such 
review, and a report on such review 
prepared in a manner consistent with
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reports under paragraph (1)(A), will 
be completed and submitted to the Fed-
eral banking agency and Congress. 
‘‘(B) DEADLINE
FOR
SEMIANNUAL
RE-
PORT.—The Inspector General of each Federal 
banking agency shall— 
‘‘(i) submit each report required under 
paragraph (A) expeditiously, and not later 
than 90 days after the end of the 6-month 
period covered by the report; and 
‘‘(ii) provide a copy of the report re-
quired under paragraph (A) to any Member 
of Congress, upon request.’’. 
(b) TECHNICAL AND CONFORMING AMENDMENT.—The 
heading for subsection (k) of section 38 of the Federal De-
posit Insurance Act (U.S.C. 1831o(k)) is amended to read 
as follows: 
‘‘(k) REVIEWS REQUIRED WHEN DEPOSIT INSURANCE 
FUND INCURS LOSSES.—’’.
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SEC. 988. AMENDMENT TO DEFINITION OF MATERIAL LOSS 
AND NONMATERIAL LOSSES TO THE NA-
TIONAL CREDIT UNION SHARE INSURANCE 
FUND FOR PURPOSES OF INSPECTOR GEN-
ERAL REVIEWS. 
(a) IN GENERAL.—Section 216(j) of the Federal Credit 
Union Act (12 U.S.C. 1790d(j)) is amended to read as fol-
lows: 
‘‘(j) REVIEWS REQUIRED WHEN SHARE INSURANCE 
FUND EXPERIENCES LOSSES.— 
‘‘(1) IN GENERAL.—If the Fund incurs a mate-
rial loss with respect to an insured credit union, the 
Inspector General of the Board shall— 
‘‘(A) submit to the Board a written report 
reviewing the supervision of the credit union by 
the Administration (including the implementa-
tion of this section by the Administration), 
which shall include— 
‘‘(i) a description of the reasons why 
the problems of the credit union resulted in 
a material loss to the Fund; and 
‘‘(ii) recommendations for preventing 
any such loss in the future; and 
‘‘(B) submit a copy of the report under sub-
paragraph (A) to—
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‘‘(i) the Comptroller General of the 
United States; 
‘‘(ii) the Corporation; 
‘‘(iii) in the case of a report relating 
to a State credit union, the appropriate 
State supervisor; and 
‘‘(iv) to any Member of Congress, upon 
request. 
‘‘(2) MATERIAL LOSS DEFINED.—For purposes of 
determining whether the Fund has incurred a mate-
rial loss with respect to an insured credit union, a 
loss is material if it exceeds the sum of— 
‘‘(A) $25,000,000; and 
‘‘(B) an amount equal to 10 percent of the 
total assets of the credit union on the date on 
which the Board initiated assistance under sec-
tion 208 or was appointed liquidating agent. 
‘‘(3) PUBLIC DISCLOSURE REQUIRED.— 
‘‘(A) IN GENERAL.—The Board shall dis-
close a report under this subsection, upon request 
under section 552 of title 5, United States Code, 
without excising— 
‘‘(i) 
any 
portion 
under 
section 
552(b)(5) of title 5, United States Code; or
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‘‘(ii) any information about the in-
sured credit union (other than trade secrets) 
under section 552(b)(8) of title 5, United 
States Code. 
‘‘(B) RULE OF CONSTRUCTION.—Subpara-
graph (A) may not be construed as requiring the 
agency to disclose the name of any customer of 
the insured credit union (other than an institu-
tion-affiliated party), or information from which 
the identity of such customer could reasonably be 
ascertained. 
‘‘(4) LOSSES THAT ARE NOT MATERIAL.— 
‘‘(A) SEMIANNUAL
REPORT.—For the 6- 
month period ending on March 31, 2010, and 
each 6-month period thereafter, the Inspector 
General of the Board shall— 
‘‘(i) identify any losses that the Inspec-
tor General estimates were incurred by the 
Fund during such 6-month period, with re-
spect to insured credit unions; 
‘‘(ii) for each loss to the Fund that is 
not a material loss, determine— 
‘‘(I) the grounds identified by the 
Board or the State official having ju-
risdiction over a State credit union for
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appointing the Board as the liqui-
dating agent for any Federal or State 
credit union; and 
‘‘(II) whether any unusual cir-
cumstances exist that might warrant 
an in-depth review of the loss; and 
‘‘(iii) prepare and submit a written re-
port to the Board and to Congress on the re-
sults of the determinations of the Inspector 
General that includes— 
‘‘(I) an identification of any loss 
that warrants an in-depth review, and 
the reasons such review is warranted, 
or if the Inspector General determines 
that no review is warranted, an expla-
nation of such determination; and 
‘‘(II) for each loss identified in 
subclause (I) that warrants an in- 
depth review, the date by which such 
review, and a report on the review pre-
pared in a manner consistent with re-
ports under paragraph (1)(A), will be 
completed.
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‘‘(B) DEADLINE
FOR
SEMIANNUAL
RE-
PORT.—The Inspector General of the Board 
shall— 
‘‘(i) submit each report required under 
subparagraph (A) expeditiously, and not 
later than 90 days after the end of the 6- 
month period covered by the report; and 
‘‘(ii) provide a copy of the report re-
quired under subparagraph (A) to any 
Member of Congress, upon request. 
‘‘(5) GAO REVIEW.—The Comptroller General of 
the United States shall, under such conditions as the 
Comptroller General determines to be appropriate— 
‘‘(A) review each report made under para-
graph (1), including the extent to which the In-
spector General of the Board complied with the 
requirements under section 8L of the Inspector 
General Act of 1978 (5 U.S.C. App.) with respect 
to each such report; and 
‘‘(B) recommend improvements to the super-
vision of insured credit unions (including im-
provements relating to the implementation of 
this section).’’.
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SEC. 989. GOVERNMENT ACCOUNTABILITY OFFICE STUDY 
ON PROPRIETARY TRADING. 
(a) DEFINITIONS.—In this section— 
(1) the term ‘‘covered entity’’ means— 
(A) an insured depository institution, an 
affiliate of an insured depository institution, a 
bank holding company, a financial holding com-
pany, or a subsidiary of a bank holding com-
pany or a financial holding company, as those 
terms are defined in the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841 et seq.); and 
(B) any other entity, as the Comptroller 
General of the United States may determine; and 
(2) the term ‘‘proprietary trading’’ means the 
act of a covered entity investing as a principal in se-
curities, commodities, derivatives, hedge funds, pri-
vate equity firms, or such other financial products or 
entities as the Comptroller General may determine. 
(b) STUDY.— 
(1) IN GENERAL.—The Comptroller General of 
the United States shall conduct a study regarding the 
risks and conflicts associated with proprietary trad-
ing by and within covered entities, including an eval-
uation of— 
(A) whether proprietary trading presents a 
material systemic risk to the stability of the
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United States financial system, and if so, the 
costs and benefits of options for mitigating such 
systemic risk; 
(B) whether proprietary trading presents 
material risks to the safety and soundness of the 
covered entities that engage in such activities, 
and if so, the costs and benefits of options for 
mitigating such risks; 
(C) whether proprietary trading presents 
material conflicts of interest between covered en-
tities that engage in proprietary trading and the 
clients of the institutions who use the firm to 
execute trades or who rely on the firm to manage 
assets, and if so, the costs and benefits of options 
for mitigating such conflicts of interest; 
(D) whether adequate disclosure regarding 
the risks and conflicts of proprietary trading is 
provided to the depositors, trading and asset 
management clients, and investors of covered en-
tities that engage in proprietary trading, and if 
not, the costs and benefits of options for the im-
provement of such disclosure; and 
(E) whether the banking, securities, and 
commodities regulators of institutions that en-
gage in proprietary trading have in place ade-
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quate systems and controls to monitor and con-
tain any risks and conflicts of interest related to 
proprietary trading, and if not, the costs and 
benefits of options for the improvement of such 
systems and controls. 
(2) CONSIDERATIONS.—In carrying out the 
study required under paragraph (1), the Comptroller 
General shall consider— 
(A) current practice relating to proprietary 
trading; 
(B) the advisability of a complete ban on 
proprietary trading; 
(C) limitations on the scope of activities 
that covered entities may engage in with respect 
to proprietary trading; 
(D) the advisability of additional capital 
requirements for covered entities that engage in 
proprietary trading; 
(E) enhanced restrictions on transactions 
between affiliates related to proprietary trading; 
(F) enhanced accounting disclosures relat-
ing to proprietary trading; 
(G) enhanced public disclosure relating to 
proprietary trading; and
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(H) any other options the Comptroller Gen-
eral deems appropriate. 
(c) REPORT TO CONGRESS.—Not later than 15 months 
after the date of enactment of this Act, the Comptroller Gen-
eral shall submit a report to Congress on the results of the 
study conducted under subsection (b). 
(d) ACCESS BY COMPTROLLER GENERAL.—For pur-
poses of conducting the study required under subsection (b), 
the Comptroller General shall have access, upon request, to 
any information, data, schedules, books, accounts, financial 
records, reports, files, electronic communications, or other 
papers, things, or property belonging to or in use by a cov-
ered entity that engages in proprietary trading, and to the 
officers, directors, employees, independent public account-
ants, financial advisors, staff, and agents and representa-
tives of a covered entity (as related to the activities of the 
agent or representative on behalf of the covered entity), at 
such reasonable times as the Comptroller General may re-
quest. The Comptroller General may make and retain copies 
of books, records, accounts, and other records, as the Comp-
troller General deems appropriate. 
(e) CONFIDENTIALITY OF REPORTS.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the Comptroller General may not disclose 
information regarding—
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(A) any proprietary trading activity of a 
covered entity, unless such information is dis-
closed at a level of generality that does not reveal 
the investment or trading position or strategy of 
the covered entity for any specific security, com-
modity, derivative, or other investment or finan-
cial product; or 
(B) any individual interviewed by the 
Comptroller General for purposes of the study 
under subsection (b), unless such information is 
disclosed at a level of generality that does not re-
veal— 
(i) the name of or identifying details 
relating to such individual; or 
(ii) in the case of an individual who is 
an employee of a third party that provides 
professional services to a covered entity be-
lieved to be engaged in proprietary trading, 
the name of or any identifying details relat-
ing to such third party. 
(2) EXCEPTIONS.—The Comptroller General may 
disclose the information described in paragraph (1)— 
(A) to a department, agency, or official of 
the Federal Government, for official use, upon 
request;
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(B) to a committee of Congress, upon re-
quest; and 
(C) to a court, upon an order of such court. 
SEC. 989A. SENIOR INVESTOR PROTECTIONS. 
(a) DEFINITIONS.—As used in this section— 
(1) the term ‘‘eligible entity’’ means— 
(A) a securities commission (or any agency 
or office performing like functions) of a State 
that the Office determines has adopted rules on 
the appropriate use of designations in the offer 
or sale of securities or investment advice that 
meet or exceed the minimum requirements of the 
NASAA Model Rule on the Use of Senior-Spe-
cific Certifications and Professional Designations 
(or any successor thereto); 
(B) the insurance commission (or any agen-
cy or office performing like functions) of any 
State that the Office determines has— 
(i) adopted rules on the appropriate 
use of designations in the sale of insurance 
products that, to the extent practicable, con-
form to the minimum requirements of the 
National Association of Insurance Commis-
sioners Model Regulation on the Use of Sen-
ior-Specific Certifications and Professional
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Designations in the Sale of Life Insurance 
and Annuities (or any successor thereto); 
and 
(ii) adopted rules with respect to fidu-
ciary or suitability requirements in the sale 
of annuities that meet or exceed the min-
imum requirements established by the Suit-
ability in Annuity Transactions Model Reg-
ulation of the National Association of In-
surance Commissioners (or any successor 
thereto); or 
(C) a consumer protection agency of any 
State, if— 
(i) the securities commission (or any 
agency or office performing like functions) 
of the State is eligible under subparagraph 
(A); or 
(ii) the insurance commission (or any 
agency or office performing like functions) 
of the State is eligible under subparagraph 
(B); 
(2) the term ‘‘financial product’’ means a secu-
rity, an insurance product (including an insurance 
product that pays a return, whether fixed or vari-
able), a bank product, and a loan product;
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(3) the term ‘‘misleading designation’’— 
(A) means a certification, professional des-
ignation, or other purported credential that indi-
cates or implies that a salesperson or adviser has 
special certification or training in advising or 
servicing seniors; and 
(B) does not include a certification, profes-
sional designation, license, or other credential 
that— 
(i) was issued by or obtained from an 
academic institution having regional ac-
creditation; 
(ii) meets the standards for certifi-
cations, licenses, and professional designa-
tions outlined by the NASAA Model Rule on 
the Use of Senior-Specific Certifications 
and Professional Designations in the Sale of 
Life Insurance and Annuities, adopted by 
the National Association of Insurance Com-
missioners (or any successor thereto); or 
(iii) was issued by or obtained from a 
State; 
(4) the term ‘‘misleading or fraudulent mar-
keting’’ means the use of a misleading designation by
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a person that sells to or advises a senior in connection 
with the sale of a financial product; 
(5) the term ‘‘NASAA’’ means the North Amer-
ican Securities Administrators Association; 
(6) the term ‘‘Office’’ means the Office of Finan-
cial Literacy of the Bureau; and 
(7) the term ‘‘senior’’ means any individual who 
has attained the age of 62 years or older. 
(b) GRANTS TO STATES FOR ENHANCED PROTECTION 
OF SENIORS FROM BEING MISLED BY FALSE DESIGNA-
TIONS.—The Office shall establish a program under which 
the Office may make grants to States or eligible entities— 
(1) to hire staff to identify, investigate, and 
prosecute (through civil, administrative, or criminal 
enforcement actions) cases involving misleading or 
fraudulent marketing; 
(2) to fund technology, equipment, and training 
for regulators, prosecutors, and law enforcement offi-
cers, in order to identify salespersons and advisers 
who target seniors through the use of misleading des-
ignations; 
(3) to fund technology, equipment, and training 
for prosecutors to increase the successful prosecution 
of salespersons and advisers who target seniors with 
the use of misleading designations;
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(4) to provide educational materials and train-
ing to regulators on the appropriateness of the use of 
designations by salespersons and advisers in connec-
tion with the sale and marketing of financial prod-
ucts; 
(5) to provide educational materials and train-
ing to seniors to increase awareness and under-
standing of misleading or fraudulent marketing; 
(6) to develop comprehensive plans to combat 
misleading or fraudulent marketing of financial prod-
ucts to seniors; and 
(7) to enhance provisions of State law to provide 
protection for seniors against misleading or fraudu-
lent marketing. 
(c) APPLICATIONS.—A State or eligible entity desiring 
a grant under this section shall submit an application to 
the Office, in such form and in such a manner as the Office 
may determine, that includes— 
(1) a proposal for activities to protect seniors 
from misleading or fraudulent marketing that are 
proposed to be funded using a grant under this sec-
tion, including— 
(A) an identification of the scope of the 
problem of misleading or fraudulent marketing 
in the State;
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(B) a description of how the proposed ac-
tivities would— 
(i) protect seniors from misleading or 
fraudulent marketing in the sale of finan-
cial products, including by proactively 
identifying victims of misleading and 
fraudulent marketing who are seniors; 
(ii) assist in the investigation and 
prosecution of those using misleading or 
fraudulent marketing; and 
(iii) discourage and reduce cases of 
misleading or fraudulent marketing; and 
(C) a description of how the proposed ac-
tivities would be coordinated with other State ef-
forts; and 
(2) any other information, as the Office deter-
mines is appropriate. 
(d) PERFORMANCE OBJECTIVES AND REPORTING RE-
QUIREMENTS.—The Office may establish such performance 
objectives and reporting requirements for States and eligible 
entities receiving a grant under this section as the Office 
determines are necessary to carry out and assess the effec-
tiveness of the program under this section. 
(e) MAXIMUM AMOUNT.—The amount of a grant under 
this section may not exceed—
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(1) $500,000 for each of 3 consecutive fiscal 
years, if the recipient is a State, or an eligible entity 
of a State, that has adopted rules— 
(A) on the appropriate use of designations 
in the offer or sale of securities or investment ad-
vice that meet or exceed the minimum require-
ments of the NASAA Model Rule on the Use of 
Senior-Specific Certifications and Professional 
Designations (or any successor thereto); 
(B) on the appropriate use of designations 
in the sale of insurance products that, to the ex-
tent practicable, conform to the minimum re-
quirements of the National Association of Insur-
ance Commissioners Model Regulation on the 
Use of Senior-Specific Certifications and Profes-
sional Designations in the Sale of Life Insurance 
and Annuities (or any successor thereto); and 
(C) with respect to fiduciary or suitability 
requirements in the sale of annuities that meet 
or exceed the minimum requirements established 
by the Suitability in Annuity Transactions 
Model Regulation of the National Association of 
Insurance Commissioners (or any successor 
thereto); and
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(2) $100,000 for each of 3 consecutive fiscal 
years, if the recipient is a State, or an eligible entity 
of a State, that has adopted— 
(A) rules on the appropriate use of designa-
tions in the offer or sale of securities or invest-
ment advice that meet or exceed the minimum 
requirements of the NASAA Model Rule on the 
Use of Senior-Specific Certifications and Profes-
sional Designations (or any successor thereto); or 
(B) rules— 
(i) on the appropriate use of designa-
tions in the sale of insurance products that, 
to the extent practicable, conform to the 
minimum requirements of the National As-
sociation of Insurance Commissioners Model 
Regulation on the Use of Senior-Specific 
Certifications and Professional Designations 
in the Sale of Life Insurance and Annuities 
(or any successor thereto); and 
(ii) with respect to fiduciary or suit-
ability requirements in the sale of annuities 
that meet or exceed the minimum require-
ments established by the Suitability in An-
nuity Transactions Model Regulation of the
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National Association of Insurance Commis-
sioners (or any successor thereto). 
(f) SUBGRANTS.—A State or eligible entity that re-
ceives a grant under this section may make a subgrant, as 
the State or eligible entity determines is necessary to carry 
out the activities funded using a grant under this section. 
(g) REAPPLICATION.—A State or eligible entity that 
receives a grant under this section may reapply for a grant 
under this section, notwithstanding the limitations on grant 
amounts under subsection (e). 
(h) AUTHORIZATION OF APPROPRIATIONS.—There are 
authorized to be appropriated to carry out this section, 
$8,000,000 for each of fiscal years 2011 through 2015. 
SEC. 989B. DESIGNATED FEDERAL ENTITY INSPECTORS 
GENERAL INDEPENDENCE. 
Section 8G of the Inspector General Act of 1978 (5 
U.S.C. App.) is amended— 
(1) in subsection (a)(4)— 
(A) in the matter preceding subparagraph 
(A), by inserting ‘‘the board or commission of the 
designated Federal entity, or in the event the 
designated Federal entity does not have a board 
or commission,’’ after ‘‘means’’; 
(B) in subparagraph (A), by striking ‘‘and’’ 
after the semicolon; and
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(C) by adding after subparagraph (B) the 
following: 
‘‘(C) with respect to the Federal Labor Re-
lations Authority, such term means the members 
of the Authority (described under section 7104 of 
title 5, United States Code); 
‘‘(D) with respect to the National Archives 
and Records Administration, such term means 
the Archivist of the United States; 
‘‘(E) with respect to the National Credit 
Union Administration, such term means the Na-
tional Credit Union Administration Board (de-
scribed under section 102 of the Federal Credit 
Union Act (12 U.S.C. 1752a); 
‘‘(F) with respect to the National Endow-
ment of the Arts, such term means the National 
Council on the Arts; 
‘‘(G) with respect to the National Endow-
ment for the Humanities, such term means the 
National Council on the Humanities; and 
‘‘(H) with respect to the Peace Corps, such 
term means the Director of the Peace Corps;’’; 
and
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(2) in subsection (h), by inserting ‘‘if the des-
ignated Federal entity is not a board or commission, 
include’’ after ‘‘designated Federal entities and’’. 
SEC. 989C. STRENGTHENING INSPECTOR GENERAL AC-
COUNTABILITY. 
Section 5(a) of the Inspector General Act of 1978 (5 
U.S.C. App.) is amended— 
(1) in paragraph (12), by striking ‘‘and’’ after 
the semicolon; 
(2) in paragraph (13), by striking the period 
and inserting a semicolon; and 
(3) by adding at the end the following: 
‘‘(14)(A) an appendix containing the results of 
any peer review conducted by another Office of In-
spector General during the reporting period; or 
‘‘(B) if no peer review was conducted within that 
reporting period, a statement identifying the date of 
the last peer review conducted by another Office of In-
spector General; 
‘‘(15) a list of any outstanding recommendations 
from any peer review conducted by another Office of 
Inspector General that have not been fully imple-
mented, including a statement describing the status of 
the implementation and why implementation is not 
complete; and
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‘‘(16) a list of any peer reviews conducted by the 
Inspector General of another Office of the Inspector 
General during the reporting period, including a list 
of any outstanding recommendations made from any 
previous peer review (including any peer review con-
ducted before the reporting period) that remain out-
standing or have not been fully implemented.’’. 
SEC. 989D. REMOVAL OF INSPECTORS GENERAL OF DES-
IGNATED FEDERAL ENTITIES. 
Section 8G(e) of the Inspector General Act of 1978 (5 
U.S.C. App.) is amended— 
(1) by redesignating the sentences following ‘‘(e)’’ 
as paragraph (2); and 
(2) by striking ‘‘(e)’’ and inserting the following: 
‘‘(e)(1) In the case of a designated Federal entity for 
which a board or commission is the head of the designated 
Federal entity, a removal under this subsection may only 
be made upon the written concurrence of a 2⁄3 majority of 
the board or commission.’’. 
SEC. 989E. ADDITIONAL OVERSIGHT OF FINANCIAL REGU-
LATORY SYSTEM. 
(a) COUNCIL OF INSPECTORS GENERAL ON FINANCIAL 
OVERSIGHT.— 
(1) ESTABLISHMENT AND MEMBERSHIP.—There 
is established a Council of Inspectors General on Fi-
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nancial Oversight (in this section referred to as the 
‘‘Council of Inspectors General’’) chaired by the In-
spector General of the Department of the Treasury 
and composed of the inspectors general of the fol-
lowing: 
(A) The Board of Governors of the Federal 
Reserve System. 
(B) The Commodity Futures Trading Com-
mission. 
(C) The Department of Housing and Urban 
Development. 
(D) The Department of the Treasury. 
(E) The Federal Deposit Insurance Cor-
poration. 
(F) The Federal Housing Finance Agency. 
(G) The National Credit Union Adminis-
tration. 
(H) The Securities and Exchange Commis-
sion. 
(I) The Troubled Asset Relief Program 
(until the termination of the authority of the 
Special Inspector General for such program 
under section 121(k) of the Emergency Economic 
Stabilization Act of 2008 (12 U.S.C. 5231(k))). 
(2) DUTIES.—
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(A) MEETINGS.—The Council of Inspectors 
General shall meet not less than once each quar-
ter, or more frequently if the chair considers it 
appropriate, to facilitate the sharing of informa-
tion among inspectors general and to discuss the 
ongoing work of each inspector general who is a 
member of the Council of Inspectors General, 
with a focus on concerns that may apply to the 
broader financial sector and ways to improve fi-
nancial oversight. 
(B) ANNUAL
REPORT.—Each year the 
Council of Inspectors General shall submit to the 
Council and to Congress a report including— 
(i) for each inspector general who is a 
member of the Council of Inspectors Gen-
eral, a section within the exclusive editorial 
control of such inspector general that high-
lights the concerns and recommendations of 
such inspector general in such inspector 
general’s ongoing and completed work, with 
a focus on issues that may apply to the 
broader financial sector; and 
(ii) a summary of the general observa-
tions of the Council of Inspectors General 
based on the views expressed by each inspec-
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tor general as required by clause (i), with 
a focus on measures that should be taken to 
improve financial oversight. 
(3) WORKING GROUPS TO EVALUATE COUNCIL.— 
(A) CONVENING A WORKING GROUP.—The 
Council of Inspectors General may, by majority 
vote, convene a Council of Inspectors General 
Working Group to evaluate the effectiveness and 
internal operations of the Council. 
(B) PERSONNEL AND RESOURCES.—The in-
spectors general who are members of the Council 
of Inspectors General may detail staff and re-
sources to a Council of Inspectors General Work-
ing Group established under this paragraph to 
enable it to carry out its duties. 
(C) REPORTS.—A Council of Inspectors 
General Working Group established under this 
paragraph shall submit regular reports to the 
Council and to Congress on its evaluations pur-
suant to this paragraph. 
(b) RESPONSE TO REPORT BY COUNCIL.—The Council 
shall respond to the concerns raised in the report of the 
Council of Inspectors General under subsection (a)(2)(B) 
for such year.
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Subtitle J—Self-funding of the Se-
curities and Exchange Commis-
sion 
SEC. 991. SECURITIES AND EXCHANGE COMMISSION SELF- 
FUNDING. 
(a) SELF-FUNDING AUTHORITY.—Section 4 of the Se-
curities Exchange Act of 1934 (15 U.S.C. 78d) is amend-
ed— 
(1) in subsection (c), in the second sentence, by 
striking ‘‘credited to the appropriated funds of the 
Commission’’ and inserting ‘‘deposited in the account 
described in subsection (i)(4)’’; 
(2) in subsection (f), in the second sentence, by 
striking ‘‘considered a reimbursement to the appro-
priated funds of the Commission’’ and inserting ‘‘de-
posited in the account described in subsection (i)(4)’’; 
and 
(3) by adding at the end the following: 
‘‘(i) FUNDING OF THE COMMISSION.— 
‘‘(1) BUDGET.—For each fiscal year, the Chair-
man of the Commission shall prepare and submit to 
Congress a budget to Congress. Such budget shall be 
submitted at the same time the President submits a 
budget of the United States to Congress for such fiscal 
year. The budget submitted by the Chairman of the
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Commission pursuant to this paragraph shall not be 
considered a request for appropriations. 
‘‘(2) TREASURY PAYMENT.— 
‘‘(A) On the first day of each fiscal year, the 
Treasury shall pay into the account described in 
paragraph (4) an amount equal to the budget 
submitted by the Chairman of the Commission 
pursuant to paragraph (1) for such fiscal year. 
‘‘(B) At or prior to the end of each fiscal 
year, the Commission shall pay to the Treasury 
from fees and assessments deposited in the ac-
count described in paragraph (4) an amount 
equal to the amount paid by the Treasury pursu-
ant to subparagraph (A) for such fiscal year, un-
less there are not sufficient fees and assessments 
deposited in such account at or prior to the end 
of the fiscal year to make such payment, in 
which case the Commission shall make such pay-
ment in a subsequent fiscal year. 
‘‘(3) OBLIGATIONS AND EXPENSES.— 
‘‘(A) IN GENERAL.—The Commission shall 
determine and prescribe the manner in which— 
‘‘(i) the obligations of the Commission 
shall be incurred; and
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‘‘(ii) the disbursements and expenses of 
the Commission allowed and paid. 
‘‘(B) INSUFFICIENT
FUNDS.—If, in the 
course of any fiscal year, the Chairman of the 
Commission determines that, due to unforeseen 
circumstances, the obligations of the Commission 
will exceed those provided for in the budget sub-
mitted under paragraph (1), the Chairman of 
the Commission may notify Congress of the 
amount and expected uses of the additional obli-
gations. 
‘‘(C) AUTHORITY TO INCUR EXCESS OBLIGA-
TIONS.—The Commission may incur obligations 
in excess of the budget submitted under para-
graph (1) from amounts available in the account 
described in paragraph (4). 
‘‘(D) RULE OF CONSTRUCTION.—Any notifi-
cation to Congress under this paragraph shall 
not be considered a request for appropriations. 
‘‘(4) ACCOUNT.— 
‘‘(A) ESTABLISHMENT.—Fees and assess-
ments collected under this title, section 6(b) of 
the Securities Act of 1933 (15 U.S.C. 77f(b)), 
and section 24(f) of the Investment Company Act 
of 1940 (15 U.S.C. 80a–24(f)) and payments
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made by the Treasury pursuant to paragraph 
(2)(A) for any fiscal year shall be deposited into 
an account established at any regular Govern-
ment depositary or any State or national bank. 
‘‘(B) 
RULE
OF
CONSTRUCTION.—Any 
amounts deposited into the account established 
under subparagraph (A) shall not be construed 
to be Government funds or appropriated monies. 
‘‘(C) NO
APPORTIONMENT.—Any amounts 
deposited into the account established under sub-
paragraph (A) shall not be subject to apportion-
ment for the purpose of chapter 15 of title 31, 
United States Code, or under any other author-
ity. 
‘‘(5) USE OF ACCOUNT FUNDS.— 
‘‘(A) PERMISSIBLE USES.—Amounts avail-
able in the account described in paragraph (4) 
may be withdrawn by the Commission and used 
for the purposes described in paragraphs (2) and 
(3). 
‘‘(B) IMPERMISSIBLE USE.—Except as pro-
vided in paragraph (6), no amounts available in 
the account described in paragraph (4) shall be 
deposited and credited as general revenue of the 
Treasury.
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‘‘(6) EXCESS FUNDS.—If, at the end of any fiscal 
year and after all payments have been made to the 
Treasury pursuant to paragraph (2)(B) for such fis-
cal year and all prior fiscal years, the balance of the 
account described in paragraph (4) exceeds 25 percent 
of the budget of the Commission for the following fis-
cal year, the amount by which the balance exceeds 25 
percent of such budget shall be credited as general rev-
enue of the Treasury.’’. 
(b) CONFORMING AMENDMENTS TO TRANSACTION FEE 
PROVISIONS.—Section 31 of the Securities Exchange Act of 
1934 (15 U.S.C. 78ee) is amended— 
(1) by amending subsection (a) to read as fol-
lows: 
‘‘(a) RECOVERY OF COSTS AND EXPENSES.— 
‘‘(1) IN
GENERAL.—The Commission shall, in 
accordance with this section, collect transaction fees 
and assessments that are designed— 
‘‘(A) to recover the reasonable costs and ex-
penses of the Commission, as set forth in the an-
nual budget of the Commission; and 
‘‘(B) to provide funds necessary to main-
tain a reserve. 
‘‘(2) OVERPAYMENTS.—The authority to collect 
transaction fees and assessments in accordance with
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this section shall include the authority to offset from 
such collection any overpayment of transaction fees or 
assessments, regardless of the fiscal year in which 
such overpayment is made.’’; 
(2) in subsection (e)(2), by striking ‘‘September 
30’’ and inserting ‘‘September 25’’; 
(3) in subsection (g), by striking ‘‘April 30’’ and 
inserting ‘‘August 31’’; 
(4) by amending subsection (i) to read as fol-
lows: 
‘‘(i) FEE COLLECTIONS.—Fees and assessments col-
lected pursuant to this section shall be deposited and cred-
ited in accordance with section 4(g) of this title.’’; 
(5) by amending subsection (j) to read as follows: 
‘‘(j) ADJUSTMENTS TO TRANSACTION FEE RATES.— 
‘‘(1) ANNUAL
ADJUSTMENT.—For each fiscal 
year, the Commission shall by order adjust each of the 
rates applicable under subsections (b) and (c) for such 
fiscal year to a uniform adjusted rate that, when ap-
plied to the baseline estimate of the aggregate dollar 
amount of sales for such fiscal year, is reasonably 
likely to produce aggregate fee collections under this 
section (including assessments collected under sub-
section (d)) that are equal to the budget of the Com-
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mission for such fiscal year, plus amounts necessary 
to maintain a reserve. 
‘‘(2) MID-YEAR
ADJUSTMENT.—For each fiscal 
year, the Commission shall determine, by March 1 of 
such fiscal year, whether, based on the actual aggre-
gate dollar volume of sales during the first 4 months 
of such fiscal year, the baseline estimate of the aggre-
gate dollar volume of sales used under paragraph (1) 
for such fiscal year is reasonably likely to be 10 per-
cent (or more) greater or less than the actual aggre-
gate dollar volume of sales for such fiscal year. If the 
Commission so determines, the Commission shall by 
order, not later than March 1, adjust each of the rates 
applicable under subsections (b) and (c) for such fis-
cal year to a uniform adjusted rate that, when ap-
plied to the revised estimate of the aggregate dollar 
amount of sales for the remainder of such fiscal year, 
is reasonably likely to produce aggregate fee collec-
tions under this section (including fees estimated to 
be collected under subsections (b) and (c) during such 
fiscal year prior to the effective date of the new uni-
form adjusted rate and assessments collected under 
subsection (d)) that are equal to the budget of the 
Commission for such fiscal year, plus amounts nec-
essary to maintain a reserve. In making such revised
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estimate, the Commission shall, after consultation 
with the Congressional Budget Office and the Office 
of Management and Budget, use the same method-
ology required by paragraph (4). 
‘‘(3) REVIEW AND EFFECTIVE DATE.—In exer-
cising its authority under this subsection, the Com-
mission shall not be required to comply with the pro-
visions of section 553 of title 5 United States Code. 
An adjusted rate prescribed under paragraph (1) or 
(2) and published under subsection (g) shall not be 
subject to judicial review. An adjusted rate prescribed 
under paragraph (1) shall take effect on the first day 
of the fiscal year to which such rate applies. An ad-
justed rate prescribed under paragraph (2) shall take 
effect on April 1 of the fiscal year to which such rate 
applies. 
‘‘(4) BASELINE ESTIMATE OF THE AGGREGATE 
DOLLAR AMOUNT OF SALES.—For purposes of this 
subsection, the baseline estimate of the aggregate dol-
lar amount of sales for any fiscal year is the baseline 
estimate of the aggregate dollar amount of sales of se-
curities (other than bonds, debentures, other evidences 
of indebtedness, security futures products, and options 
on securities indexes excluding a narrow-based secu-
rity index) to be transacted on each national securi-
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† HR 4173 PP
ties exchange and by or through any member of each 
national securities association (otherwise than on a 
national securities exchange) during such fiscal year 
as determined by the Commission, after consultation 
with the Congressional Budget Office and the Office 
of Management and Budget, using the methodology 
required for making projections pursuant to section 
907 of title 2.’’; and 
(6) by striking subsections (k) and (l). 
(c) CONFORMING AMENDMENTS
TO REGISTRATION 
FEE PROVISIONS.— 
(1) SECTION 6(B) OF THE SECURITIES ACT OF 
1933.—Section 6(b) of the Securities Act of 1933 (15 
U.S.C. 77f(b)) is amended— 
(A) by striking ‘‘offsetting’’ each place that 
term appears and inserting ‘‘fee’’; 
(B) in paragraph (3), in the paragraph 
heading, by striking ‘‘OFFSETTING’’ and insert-
ing ‘‘FEE’’; 
(C) in paragraph (11)(A), in the subpara-
graph heading, by striking ‘‘OFFSETTING’’ and 
inserting ‘‘FEE’’; 
(D) by striking paragraphs (1), (3), (4), 
(6), (8), and (9);
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(E) by redesignating paragraph (2) as 
paragraph (1); 
(F) in paragraph (1), as so redesignated, by 
striking ‘‘(5) or (6)’’ and inserting ‘‘(3)’’; 
(G) by inserting after paragraph (1), as so 
redesignated, the following: 
‘‘(2) FEE COLLECTIONS.—Fees collected pursuant 
to this subsection shall be deposited and credited in 
accordance with section 4(i) of the Securities Ex-
change Act of 1934.’’; 
(H) by redesignating paragraph (5) as 
paragraph (3); 
(I) in paragraph (3), as redesignated— 
(i) by striking ‘‘of the fiscal years 2003 
through 2011’’ and inserting ‘‘fiscal year’’; 
and 
(ii) by striking ‘‘paragraph (2)’’ and 
inserting ‘‘paragraph (1)’’; 
(J) by redesignating paragraph (7) as 
paragraph (4); 
(K) by inserting after paragraph (4), as so 
redesignated, the following: 
‘‘(5) REVIEW AND EFFECTIVE DATE.—In exer-
cising its authority under this subsection, the Com-
mission shall not be required to comply with the pro-
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visions of section 553 of title 5, United States Code. 
An adjusted rate prescribed under paragraph (3) and 
published under paragraph (6) shall not be subject to 
judicial review. An adjusted rate prescribed under 
paragraph (3) shall take effect on the first day of the 
fiscal year to which such rate applies.’’; 
(L) by redesignating paragraphs (10) and 
(11), as paragraphs (6) and (7); 
(M) in paragraph (6), as redesignated, by 
striking ‘‘April 30’’ and inserting ‘‘August 31’’; 
and 
(N) in paragraph (7), as redesignated— 
(i) by striking ‘‘of the fiscal years 2002 
through 2011’’ and inserting ‘‘fiscal year’’; 
and 
(ii) by inserting at the end of the table 
in subparagraph (A) the following: 
2012 and each succeeding fiscal year 
An amount that is 
equal to the tar-
get fee collec-
tion amount for 
the prior fiscal 
year adjusted by 
the rate of infla-
tion. 
(2) SECTION
13(E)
OF
THE
SECURITIES
EX-
CHANGE ACT OF 1934.—Section 13(e) of the Securities
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Exchange Act of 1934 (15 U.S.C. 78m(e)) is amend-
ed— 
(A) by striking ‘‘offsetting’’ each place that 
term appears and inserting ‘‘fee’’; 
(B) in paragraph (3) by striking ‘‘para-
graphs (5) and (6)’’ and inserting ‘‘paragraph 
(5)’’; 
(C) by amending paragraph (4) to read as 
follows: 
‘‘(4) FEE COLLECTIONS.—Fees collected pursuant 
to this subsection shall be deposited and credited in 
accordance with section 4(g) of this title.’’; 
(D) in paragraph (5), by striking ‘‘of the 
fiscal years 2003 through 2011’’ and inserting 
‘‘fiscal year’’; 
(E) by striking paragraphs (6), (7), and 
(8); 
(F) by redesignating paragraph (7) as 
paragraph (6); 
(G) by inserting after paragraph (6), as so 
redesignated, the following: 
‘‘(7) REVIEW AND EFFECTIVE DATE.—In exer-
cising its authority under this subsection, the Com-
mission shall not be required to comply with the pro-
visions of section 553 of title 5. An adjusted rate pre-
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scribed under paragraph (5) and published under 
paragraph (8) shall not be subject to judicial review. 
An adjusted rate prescribed under paragraph (5) 
shall take effect on the first day of the fiscal year to 
which such rate applies.’’; 
(H) by striking paragraph (9); 
(I) by redesignating paragraph (10) as 
paragraph (8); and 
(J) in paragraph (8), as so redesignated, by 
striking ‘‘6(b)(10)’’ and inserting ‘‘6(b)(6)’’. 
(3) SECTION 14 OF THE SECURITIES EXCHANGE 
ACT
OF
1934.—Section 14(g) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78n(g)) is amended— 
(A) by striking the word ‘‘offsetting’’ each 
time that it appears and inserting in its place 
the word ‘‘fee’’; 
(B) in paragraph (1)(A), by striking ‘‘para-
graphs (5) and (6)’’ each time it appears and 
inserting ‘‘paragraph (5)’’; 
(C) in paragraph (3), by striking ‘‘para-
graphs (5) and (6)’’ and inserting ‘‘paragraph 
(5)’’; 
(D) by amending paragraph (4) to read as 
follows:
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‘‘(4) FEE COLLECTIONS.—Fees collected pursuant 
to this subsection shall be deposited and credited in 
accordance with section 4(g) of this title.’’; 
(E) in paragraph (5), by striking ‘‘of the 
fiscal years 2003 through 2011’’ and inserting 
‘‘fiscal year’’; 
(F) by striking paragraphs (6), (8), and 
(9); 
(G) by redesignating paragraph (7) as 
paragraph (6); 
(H) by inserting after paragraph (6), as so 
redesignated, the following: 
‘‘(7) REVIEW AND EFFECTIVE DATE.—In exer-
cising its authority under this subsection, the Com-
mission shall not be required to comply with the pro-
visions of section 553 of title 5. An adjusted rate pre-
scribed under paragraph (5) and published under 
paragraph (8) shall not be subject to judicial review. 
An adjusted rate prescribed under paragraph (5) 
shall take effect on the first day of the fiscal year to 
which such rate applies.’’; 
(I) by redesignating paragraphs (10) and 
(11) as paragraphs (8) and (9), respectively; and 
(J) in paragraph (9), as so redesignated, by 
striking ‘‘6(b)(10)’’ and inserting ‘‘6(b)(7)’’.
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(d) REPEAL
OF AUTHORIZATION
OF APPROPRIA-
TIONS.—Section 35 of the Securities Exchange Act of 1934 
(15 U.S.C. 78kk) is repealed. 
(e) EFFECTIVE DATE AND TRANSITION PROVISIONS.— 
(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), the amendments made by this sec-
tion shall be effective on the first day of the fiscal 
year following the fiscal year in which this Act is en-
acted. 
(2) TRANSITION
PERIOD.—For the fiscal year 
following the fiscal year in which this Act is enacted, 
the budget of the Commission shall be deemed to be 
the budget submitted by the Chairman of the Commis-
sion to the President for such fiscal year in accord-
ance with the provisions of section 1108 of title 31, 
United States Code. 
(3) OTHER PROVISIONS.—The amendments made 
by this section to subsections (g) and (j)(1) of section 
31 of the Securities Exchange Act of 1934 (15 U.S.C. 
78ee) shall be effective on the date of enactment of this 
Act, and shall require the Commission to make and 
publish an annual adjustment to the fee rates appli-
cable under subsections (b) and (c) of section 31 of the 
Securities Exchange Act of 1934 (15 U.S.C. 78ee) for 
the fiscal year following the fiscal year in which this
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† HR 4173 PP
Act is enacted. The adjusted rate described in the pre-
ceding sentence shall supersede any previously pub-
lished adjusted rate applicable under subsections (b) 
and (c) of section 31 of the Securities Exchange Act 
of 1934 for the fiscal year following the fiscal year in 
which this Act is enacted and shall take effect on the 
first day of the fiscal year following the fiscal year in 
which this Act is enacted, except that, if this Act is 
enacted on or after August 31 and on or prior to Sep-
tember 30, the adjusted rate described in the first sen-
tence shall be published not later than 15 days after 
the date of enactment of this Act and take effect 30 
days thereafter, and the Commission shall continue to 
collect fees under subsections (b) and (c) of section 31 
of the Securities Exchange Act of 1934 at the rate in 
effect during the preceding fiscal year until the ad-
justed rate is effective. 
TITLE 
X—BUREAU 
OF 
CON-
SUMER FINANCIAL PROTEC-
TION 
SEC. 1001. SHORT TITLE. 
This title may be cited as the ‘‘Consumer Financial 
Protection Act of 2010’’.
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SEC. 1002. DEFINITIONS. 
Except as otherwise provided in this title, for purposes 
of this title, the following definitions shall apply: 
(1) AFFILIATE.—The term ‘‘affiliate’’ means any 
person that controls, is controlled by, or is under com-
mon control with another person. 
(2) BUREAU.—The term ‘‘Bureau’’ means the 
Bureau of Consumer Financial Protection. 
(3) BUSINESS OF INSURANCE.—The term ‘‘busi-
ness of insurance’’ means the writing of insurance or 
the reinsuring of risks by an insurer, including all 
acts necessary to such writing or reinsuring and the 
activities relating to the writing of insurance or the 
reinsuring of risks conducted by persons who act as, 
or are, officers, directors, agents, or employees of in-
surers or who are other persons authorized to act on 
behalf of such persons. 
(4) CONSUMER.—The term ‘‘consumer’’ means 
an individual or an agent, trustee, or representative 
acting on behalf of an individual. 
(5) CONSUMER FINANCIAL PRODUCT OR SERV-
ICE.—The term ‘‘consumer financial product or serv-
ice’’ means any financial product or service that is 
described in one or more categories under—
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† HR 4173 PP
(A) paragraph (13) and is offered or pro-
vided for use by consumers primarily for per-
sonal, family, or household purposes; or 
(B) clause (i), (iii), (ix), or (x) of para-
graph (13)(A), and is delivered, offered, or pro-
vided in connection with a consumer financial 
product or service referred to in subparagraph 
(A). 
(6) COVERED PERSON.—The term ‘‘covered per-
son’’ means— 
(A) any person that engages in offering or 
providing a consumer financial product or serv-
ice; and 
(B) any affiliate of a person described in 
subparagraph (A) if such affiliate acts as a serv-
ice provider to such person. 
(7) CREDIT.—The term ‘‘credit’’ means the right 
granted by a person to a consumer to defer payment 
of a debt, incur debt and defer its payment, or pur-
chase property or services and defer payment for such 
purchase. 
(8) DEPOSIT-TAKING ACTIVITY.—The term ‘‘de-
posit-taking activity’’ means— 
(A) the acceptance of deposits, maintenance 
of deposit accounts, or the provision of services
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† HR 4173 PP
related to the acceptance of deposits or the main-
tenance of deposit accounts; 
(B) the acceptance of funds, the provision of 
other services related to the acceptance of funds, 
or the maintenance of member share accounts by 
a credit union; or 
(C) the receipt of funds or the equivalent 
thereof, as the Bureau may determine by rule or 
order, received or held by a covered person (or an 
agent for a covered person) for the purpose of fa-
cilitating a payment or transferring funds or 
value of funds between a consumer and a third 
party. 
(9) DESIGNATED
TRANSFER
DATE.—The term 
‘‘designated transfer date’’ means the date established 
under section 1062. 
(10) DIRECTOR.—The term ‘‘Director’’ means 
the Director of the Bureau. 
(11) ENUMERATED CONSUMER LAWS.—The term 
‘‘enumerated consumer laws’’ means— 
(A) the Alternative Mortgage Transaction 
Parity Act of 1982 (12 U.S.C. 3801 et seq.); 
(B) the Consumer Leasing Act of 1976 (15 
U.S.C. 1667 et seq.);
1206 
† HR 4173 PP
(C) the Electronic Fund Transfer Act (15 
U.S.C. 1693 et seq.); 
(D) the Equal Credit Opportunity Act (15 
U.S.C. 1691 et seq.); 
(E) the Fair Credit Billing Act (15 U.S.C. 
1666 et seq.); 
(F) the Fair Credit Reporting Act (15 
U.S.C. 1681 et seq.), except with respect to sec-
tions 615(e) and 628 of that Act (15 U.S.C. 
1681m(e), 1681w); 
(G) the Home Owners Protection Act of 
1998 (12 U.S.C. 4901 et seq.); 
(H) the Fair Debt Collection Practices Act 
(15 U.S.C. 1692 et seq.); 
(I) subsections (b) through (f) of section 43 
of the Federal Deposit Insurance Act (12 U.S.C. 
1831t(c)–(f)); 
(J) sections 502 through 509 of the Gramm- 
Leach-Bliley Act (15 U.S.C. 6802–6809) except 
for section 505 as it applies to section 501(b); 
(K) the Home Mortgage Disclosure Act of 
1975 (12 U.S.C. 2801 et seq.); 
(L) the Home Ownership and Equity Pro-
tection Act of 1994 (15 U.S.C. 1601 note);
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† HR 4173 PP
(M) the Real Estate Settlement Procedures 
Act of 1974 (12 U.S.C. 2601 et seq.); 
(N) the S.A.F.E. Mortgage Licensing Act of 
2008 (12 U.S.C. 5101 et seq.); 
(O) the Truth in Lending Act (15 U.S.C. 
1601 et seq.); 
(P) the Truth in Savings Act (12 U.S.C. 
4301 et seq.); and 
(Q) section 626 of the Omnibus Appropria-
tions Act, 2009 (Public Law 111–8). 
(12) FEDERAL CONSUMER FINANCIAL LAW.—The 
term ‘‘Federal consumer financial law’’ means the 
provisions of this title, the enumerated consumer 
laws, the laws for which authorities are transferred 
under subtitles F and H, and any rule or order pre-
scribed by the Bureau under this title, an enumerated 
consumer law, or pursuant to the authorities trans-
ferred under subtitles F and H. The term does not in-
clude the Federal Trade Commission Act. 
(13) FINANCIAL
PRODUCT
OR
SERVICE.—The 
term ‘‘financial product or service’’— 
(A) means— 
(i) extending credit and servicing 
loans, including acquiring, purchasing, sell-
ing, brokering, or other extensions of credit
1208 
† HR 4173 PP
(other than solely extending commercial 
credit to a person who originates consumer 
credit transactions); 
(ii) extending or brokering leases of 
personal or real property that are the func-
tional equivalent of purchase finance ar-
rangements, if— 
(I) the lease is on a non-operating 
basis; 
(II) the initial term of the lease is 
at least 90 days; and 
(III) in the case of a lease involv-
ing real property, at the inception of 
the initial lease, the transaction is in-
tended to result in ownership of the 
leased property to be transferred to the 
lessee, subject to standards prescribed 
by the Bureau; 
(iii) providing real estate settlement 
services or performing appraisals of real es-
tate or personal property; 
(iv) engaging in deposit-taking activi-
ties, transmitting or exchanging funds, or 
otherwise acting as a custodian of funds or
1209 
† HR 4173 PP
any financial instrument for use by or on 
behalf of a consumer; 
(v) selling, providing, or issuing stored 
value or payment instruments, except that, 
in the case of a sale of, or transaction to re-
load, stored value, only if the seller exercises 
substantial control over the terms or condi-
tions of the stored value provided to the con-
sumer where, for purposes of this clause— 
(I) a seller shall not be found to 
exercise substantial control over the 
terms or conditions of the stored value 
if the seller is not a party to the con-
tract with the consumer for the stored 
value product, and another person is 
principally responsible for establishing 
the terms or conditions of the stored 
value; and 
(II) advertising the nonfinancial 
goods or services of the seller on the 
stored value card or device is not in 
itself an exercise of substantial control 
over the terms or conditions; 
(vi) providing check cashing, check col-
lection, or check guaranty services;
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† HR 4173 PP
(vii) providing payments or other fi-
nancial data processing products or services 
to a consumer by any technological means, 
including processing or storing financial or 
banking data for any payment instrument, 
or through any payments systems or net-
work used for processing payments data, in-
cluding payments made through an online 
banking system or mobile telecommuni-
cations network, except that a person shall 
not be deemed to be a covered person with 
respect to financial data processing solely 
because the person— 
(I) unknowingly or incidentally 
processes, stores, or transmits over the 
Internet, telephone line, mobile net-
work, or any other mode of trans-
mission, as part of a stream of other 
types of data, financial data in a 
manner that such data is undifferen-
tiated from other types of data of the 
same form that the person processes, 
stores, or transmits; 
(II) is a merchant, retailer, or 
seller of any nonfinancial good or serv-
1211 
† HR 4173 PP
ice who engages in financial data proc-
essing by transmitting or storing pay-
ments data about a consumer exclu-
sively for purpose of initiating pay-
ments instructions by the consumer to 
pay such person for the purchase of, or 
to complete a commercial transaction 
for, such nonfinancial good or service 
sold directly by such person to the con-
sumer; or 
(III) provides access to a host 
server to a person for purposes of ena-
bling that person to establish and 
maintain a website; 
(viii) providing financial advisory 
services to consumers on individual finan-
cial matters or relating to proprietary fi-
nancial products or services (other than by 
publishing any bona fide newspaper, news 
magazine, or business or financial publica-
tion of general and regular circulation, in-
cluding publishing market data, news, or 
data analytics or investment information or 
recommendations that are not tailored to
1212 
† HR 4173 PP
the individual needs of a particular con-
sumer), including— 
(I) providing credit counseling to 
any consumer; and 
(II) providing services to assist a 
consumer with debt management or 
debt settlement, modifying the terms of 
any extension of credit, or avoiding 
foreclosure; 
(ix) collecting, analyzing, maintaining, 
or providing consumer report information 
or other account information, including in-
formation relating to the credit history of 
consumers, used or expected to be used in 
connection with any decision regarding the 
offering or provision of a consumer finan-
cial product or service, except to the extent 
that— 
(I) a person— 
(aa) collects, analyzes, or 
maintains information that re-
lates solely to the transactions be-
tween a consumer and such per-
son; or
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† HR 4173 PP
(bb) provides the information 
described in item (aa) to an affil-
iate of such person; and 
(II) the information described in 
subclause (I)(aa) is not used by such 
person or affiliate in connection with 
any decision regarding the offering or 
provision of a consumer financial 
product or service to the consumer, 
other than credit described in section 
1027(a)(2)(A); 
(x) collecting debt related to any con-
sumer financial product or service; and 
(xi) such other financial product or 
service as may be defined by the Bureau, by 
regulation, for purposes of this title, if the 
Bureau finds that such financial product or 
service is— 
(I) entered into or conducted as a 
subterfuge or with a purpose to evade 
any Federal consumer financial law; 
or 
(II) permissible for a bank or for 
a financial holding company to offer 
or to provide under any provision of a
1214 
† HR 4173 PP
Federal law or regulation applicable to 
a bank or a financial holding com-
pany, and has, or likely will have, a 
material impact on consumers; and 
(B) does not include the business of insur-
ance. 
(14) FOREIGN
EXCHANGE.—The term ‘‘foreign 
exchange’’ means the exchange, for compensation, of 
currency of the United States or of a foreign govern-
ment for currency of another government. 
(15) INSURED CREDIT UNION.—The term ‘‘in-
sured credit union’’ has the same meaning as in sec-
tion 101 of the Federal Credit Union Act (12 U.S.C. 
1752). 
(16) PAYMENT
INSTRUMENT.—The term ‘‘pay-
ment instrument’’ means a check, draft, warrant, 
money order, traveler’s check, electronic instrument, 
or other instrument, payment of funds, or monetary 
value (other than currency). 
(17) PERSON.—The term ‘‘person’’ means an in-
dividual, partnership, company, corporation, associa-
tion (incorporated or unincorporated), trust, estate, 
cooperative organization, or other entity. 
(18) PERSON REGULATED BY THE COMMODITY 
FUTURES TRADING COMMISSION.—The term ‘‘person
1215 
† HR 4173 PP
regulated by the Commodity Futures Trading Com-
mission’’ means any person that is registered, or re-
quired by statute or regulation to be registered, with 
the Commodity Futures Trading Commission, but 
only to the extent that the activities of such person 
are subject to the jurisdiction of the Commodity Fu-
tures Trading Commission under the Commodity Ex-
change Act. 
(19) PERSON
REGULATED
BY
THE
COMMIS-
SION.—The term ‘‘person regulated by the Commis-
sion’’ means a person who is— 
(A) a broker or dealer that is required to be 
registered under the Securities Exchange Act of 
1934; 
(B) an investment adviser that is registered 
under the Investment Advisers Act of 1940; 
(C) an investment company that is required 
to be registered under the Investment Company 
Act of 1940, and any company that has elected 
to be regulated as a business development com-
pany under that Act; 
(D) a national securities exchange that is 
required to be registered under the Securities Ex-
change Act of 1934;
1216 
† HR 4173 PP
(E) a transfer agent that is required to be 
registered under the Securities Exchange Act of 
1934; 
(F) a clearing corporation that is required 
to be registered under the Securities Exchange 
Act of 1934; 
(G) any self-regulatory organization that is 
required to be registered with the Commission; 
(H) any nationally recognized statistical 
rating organization that is required to be reg-
istered with the Commission; 
(I) any securities information processor 
that is required to be registered with the Com-
mission; 
(J) any municipal securities dealer that is 
required to be registered with the Commission; 
(K) any other person that is required to be 
registered with the Commission under the Secu-
rities Exchange Act of 1934; and 
(L) any employee, agent, or contractor act-
ing on behalf of, registered with, or providing 
services to, any person described in any of sub-
paragraphs (A) through (K), but only to the ex-
tent that any person described in any of sub-
paragraphs (A) through (K), or the employee,
1217 
† HR 4173 PP
agent, or contractor of such person, acts in a reg-
ulated capacity. 
(20) PERSON REGULATED BY A STATE INSUR-
ANCE REGULATOR.—The term ‘‘person regulated by a 
State insurance regulator’’ means any person that is 
engaged in the business of insurance and subject to 
regulation by any State insurance regulator, but only 
to the extent that such person acts in such capacity. 
(21) PERSON
THAT
PERFORMS
INCOME
TAX 
PREPARATION
ACTIVITIES
FOR
CONSUMERS.—The 
term ‘‘person that performs income tax preparation 
activities for consumers’’ means— 
(A) any tax return preparer (as defined in 
section 7701(a)(36) of the Internal Revenue Code 
of 1986), regardless of whether compensated, but 
only to the extent that the person acts in such 
capacity; 
(B) any person regulated by the Secretary 
under section 330 of title 31, United States Code, 
but only to the extent that the person acts in 
such capacity; and 
(C) any authorized IRS e-file Providers (as 
defined for purposes of section 7216 of the Inter-
nal Revenue Code of 1986), but only to the extent 
that the person acts in such capacity.
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† HR 4173 PP
(22) PRUDENTIAL REGULATOR.—The term ‘‘pru-
dential regulator’’ means— 
(A) in the case of an insured depository in-
stitution, the appropriate Federal banking agen-
cy, as that term is defined in section 3 of the 
Federal Deposit Insurance Act; and 
(B) in the case of an insured credit union, 
the National Credit Union Administration. 
(23) RELATED PERSON.—The term ‘‘related per-
son’’— 
(A) shall apply only with respect to a cov-
ered person that is not a bank holding company 
(as that term is defined in section 2 of the Bank 
Holding Company Act of 1956), credit union, or 
depository institution; 
(B) shall be deemed to mean a covered per-
son for all purposes of any provision of Federal 
consumer financial law; and 
(C) means— 
(i) any director, officer, or employee 
charged with managerial responsibility for, 
or controlling shareholder of, or agent for, 
such covered person; 
(ii) any shareholder, consultant, joint 
venture partner, or other person, as deter-
1219 
† HR 4173 PP
mined by the Bureau (by rule or on a case- 
by-case basis) who materially participates 
in the conduct of the affairs of such covered 
person; and 
(iii) any independent contractor (in-
cluding any attorney, appraiser, or ac-
countant) who knowingly or recklessly par-
ticipates in any— 
(I) violation of any provision of 
law or regulation; or 
(II) breach of a fiduciary duty. 
(24) SERVICE PROVIDER.— 
(A) IN GENERAL.—The term ‘‘service pro-
vider’’ means any person that provides a mate-
rial service to a covered person in connection 
with the offering or provision by such covered 
person of a consumer financial product or serv-
ice, including a person that— 
(i) participates in designing, oper-
ating, or maintaining the consumer finan-
cial product or service; or 
(ii) processes transactions relating to 
the consumer financial product or service 
(other than unknowingly or incidentally 
transmitting or processing financial data in
1220 
† HR 4173 PP
a manner that such data is undifferentiated 
from other types of data of the same form 
as the person transmits or processes). 
(B) EXCEPTIONS.—The term ‘‘service pro-
vider’’ does not include a person solely by virtue 
of such person offering or providing to a covered 
person— 
(i) a support service of a type provided 
to businesses generally or a similar ministe-
rial service; or 
(ii) time or space for an advertisement 
for a consumer financial product or service 
through print, newspaper, or electronic 
media. 
(C) RULE
OF
CONSTRUCTION.—A person 
that is a service provider shall be deemed to be 
a covered person to the extent that such person 
engages in the offering or provision of its own 
consumer financial product or service. 
(25) STATE.—The term ‘‘State’’ means any 
State, territory, or possession of the United States, the 
District of Columbia, the Commonwealth of Puerto 
Rico, the Commonwealth of the Northern Mariana Is-
lands, Guam, American Samoa, or the United States 
Virgin Islands or any federally recognized Indian
1221 
† HR 4173 PP
tribe, as defined by the Secretary of the Interior 
under section 104(a) of the Federally Recognized In-
dian Tribe List Act of 1994 (25 U.S.C. 479a–1(a)). 
(26) STORED VALUE.—The term ‘‘stored value’’ 
means funds or monetary value represented in any 
electronic format, whether or not specially encrypted, 
and stored or capable of storage on electronic media 
in such a way as to be retrievable and transferred 
electronically, and includes a prepaid debit card or 
product, or any other similar product, regardless of 
whether the amount of the funds or monetary value 
may be increased or reloaded. 
(27) TRANSMITTING OR EXCHANGING FUNDS.— 
The term ‘‘transmitting or exchanging funds’’ means 
receiving currency, monetary value, or payment in-
struments from a consumer for the purpose of ex-
changing or transmitting the same by any means, in-
cluding transmission by wire, facsimile, electronic 
transfer, courier, the Internet, or through bill pay-
ment services or through other businesses that facili-
tate third-party transfers within the United States or 
to or from the United States.
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Subtitle A—Bureau of Consumer 
Financial Protection 
SEC. 1011. ESTABLISHMENT OF THE BUREAU. 
(a) BUREAU ESTABLISHED.—There is established in 
the Federal Reserve System the Bureau of Consumer Finan-
cial Protection, which shall regulate the offering and provi-
sion of consumer financial products or services under the 
Federal consumer financial laws. 
(b) DIRECTOR AND DEPUTY DIRECTOR.— 
(1) IN GENERAL.—There is established the posi-
tion of the Director, who shall serve as the head of the 
Bureau. 
(2) APPOINTMENT.—Subject to paragraph (3), 
the Director shall be appointed by the President, by 
and with the advice and consent of the Senate. 
(3) QUALIFICATION.—The President shall nomi-
nate the Director from among individuals who are 
citizens of the United States. 
(4) COMPENSATION.—The Director shall be com-
pensated at the rate prescribed for level II of the Ex-
ecutive Schedule under section 5313 of title 5, United 
States Code. 
(5) DEPUTY DIRECTOR.—There is established the 
position of Deputy Director, who shall— 
(A) be appointed by the Director; and
1223 
† HR 4173 PP
(B) serve as acting Director in the absence 
or unavailability of the Director. 
(c) TERM.— 
(1) IN GENERAL.—The Director shall serve for a 
term of 5 years. 
(2) EXPIRATION OF TERM.—An individual may 
serve as Director after the expiration of the term for 
which appointed, until a successor has been appointed 
and qualified. 
(3) REMOVAL FOR CAUSE.—The President may 
remove the Director for inefficiency, neglect of duty, 
or malfeasance in office. 
(d) SERVICE RESTRICTION.—No Director or Deputy 
Director may hold any office, position, or employment in 
any Federal reserve bank, Federal home loan bank, covered 
person, or service provider during the period of service of 
such person as Director or Deputy Director. 
(e) OFFICES.—The principal office of the Bureau shall 
be in the District of Columbia. The Director may establish 
regional offices of the Bureau, including in cities in which 
the Federal reserve banks, or branches of such banks, are 
located, in order to carry out the responsibilities assigned 
to the Bureau under the Federal consumer financial laws.
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† HR 4173 PP
SEC. 1012. EXECUTIVE AND ADMINISTRATIVE POWERS. 
(a) POWERS OF THE BUREAU.—The Bureau is author-
ized to establish the general policies of the Bureau with re-
spect to all executive and administrative functions, includ-
ing— 
(1) the establishment of rules for conducting the 
general business of the Bureau, in a manner not in-
consistent with this title; 
(2) to bind the Bureau and enter into contracts; 
(3) directing the establishment and maintenance 
of divisions or other offices within the Bureau, in 
order to carry out the responsibilities under the Fed-
eral consumer financial laws, and to satisfy the re-
quirements of other applicable law; 
(4) to coordinate and oversee the operation of all 
administrative, enforcement, and research activities of 
the Bureau; 
(5) to adopt and use a seal; 
(6) to determine the character of and the neces-
sity for the obligations and expenditures of the Bu-
reau; 
(7) the appointment and supervision of per-
sonnel employed by the Bureau; 
(8) the distribution of business among personnel 
appointed and supervised by the Director and among 
administrative units of the Bureau;
1225 
† HR 4173 PP
(9) the use and expenditure of funds; 
(10) implementing the Federal consumer finan-
cial laws through rules, orders, guidance, interpreta-
tions, statements of policy, examinations, and enforce-
ment actions; and 
(11) performing such other functions as may be 
authorized or required by law. 
(b) DELEGATION OF AUTHORITY.—The Director of the 
Bureau may delegate to any duly authorized employee, rep-
resentative, or agent any power vested in the Bureau by 
law. 
(c) AUTONOMY OF THE BUREAU.— 
(1) COORDINATION WITH THE BOARD OF GOV-
ERNORS.—Notwithstanding section 18 of the Federal 
Trade Commission Act (15 U.S.C. 57a) and any 
other provision of law applicable to the supervision or 
examination of persons with respect to Federal con-
sumer financial laws, the Board of Governors may 
delegate to the Bureau the authorities to examine per-
sons subject to the jurisdiction of the Board of Gov-
ernors for compliance with the Federal consumer fi-
nancial laws. 
(2) AUTONOMY.—Notwithstanding the authori-
ties granted to the Board of Governors under the Fed-
eral Reserve Act, the Board of Governors may not—
1226 
† HR 4173 PP
(A) intervene in any matter or proceeding 
before the Director, including examinations or 
enforcement actions, unless otherwise specifically 
provided by law; 
(B) appoint, direct, or remove any officer or 
employee of the Bureau; or 
(C) merge or consolidate the Bureau, or any 
of the functions or responsibilities of the Bureau, 
with any division or office of the Board of Gov-
ernors or the Federal reserve banks. 
(3) RULES AND ORDERS.—No rule or order of 
the Bureau shall be subject to approval or review by 
the Board of Governors. The Board of Governors may 
not delay or prevent the issuance of any rule or order 
of the Bureau. 
(4) RECOMMENDATIONS AND TESTIMONY.—No of-
ficer or agency of the United States shall have any 
authority to require the Director or any other officer 
of the Bureau to submit legislative recommendations, 
or testimony or comments on legislation, to any offi-
cer or agency of the United States for approval, com-
ments, or review prior to the submission of such rec-
ommendations, testimony, or comments to the Con-
gress, if such recommendations, testimony, or com-
ments to the Congress include a statement indicating
1227 
† HR 4173 PP
that the views expressed therein are those of the Direc-
tor or such officer, and do not necessarily reflect the 
views of the Board of Governors or the President. 
SEC. 1013. ADMINISTRATION. 
(a) PERSONNEL.— 
(1) APPOINTMENT.— 
(A) IN GENERAL.—The Director may fix the 
number of, and appoint and direct, all employees 
of the Bureau. 
(B) EMPLOYEES OF THE BUREAU.—The Di-
rector is authorized to employ attorneys, compli-
ance examiners, compliance supervision ana-
lysts, economists, statisticians, and other employ-
ees as may be deemed necessary to conduct the 
business of the Bureau. Notwithstanding any 
other provision of law, all such employees shall 
be appointed and compensated on terms and 
conditions that are consistent with the terms and 
conditions set forth in section 11(l) of the Fed-
eral Reserve Act (12 U.S.C. 248(l)). 
(2) COMPENSATION.—The Director shall at all 
times provide compensation and benefits to each class 
of employees that, at a minimum, are equivalent to 
the compensation and benefits then being provided by
1228 
† HR 4173 PP
the Board of Governors for the corresponding class of 
employees. 
(b) SPECIFIC FUNCTIONAL UNITS.— 
(1) RESEARCH.—The Director shall establish a 
unit whose functions shall include researching, ana-
lyzing, and reporting on— 
(A) developments in markets for consumer 
financial products or services, including market 
areas of alternative consumer financial products 
or services with high growth rates and areas of 
risk to consumers; 
(B) access to fair and affordable credit for 
traditionally underserved communities; 
(C) consumer awareness, understanding, 
and use of disclosures and communications re-
garding consumer financial products or services; 
(D) consumer awareness and understanding 
of costs, risks, and benefits of consumer financial 
products or services; and 
(E) consumer behavior with respect to con-
sumer financial products or services. 
(2) COMMUNITY AFFAIRS.—The Director shall es-
tablish a unit whose functions shall include providing 
information, guidance, and technical assistance re-
garding the offering and provision of consumer finan-
1229 
† HR 4173 PP
cial products or services to traditionally underserved 
consumers and communities. 
(3) COLLECTING AND TRACKING COMPLAINTS.— 
(A) IN GENERAL.—The Director shall estab-
lish a unit whose functions shall include estab-
lishing a single, toll-free telephone number, a 
website, and a database or utilizing an existing 
database to facilitate the centralized collection of, 
monitoring of, and response to consumer com-
plaints regarding consumer financial products or 
services. The Director shall coordinate with the 
Federal Trade Commission or other Federal 
agencies to route complaints to such agencies, 
where appropriate. 
(B) ROUTING CALLS TO STATES.—To the 
extent practicable, State agencies may receive 
appropriate complaints from the systems estab-
lished under subparagraph (A), if— 
(i) the State agency system has the 
functional capacity to receive calls or elec-
tronic reports routed by the Bureau systems; 
and 
(ii) the State agency has satisfied any 
conditions of participation in the system 
that the Bureau may establish, including
1230 
† HR 4173 PP
treatment of personally identifiable infor-
mation and sharing of information on com-
plaint resolution or related compliance pro-
cedures and resources. 
(C) REPORTS TO THE CONGRESS.—The Di-
rector shall present an annual report to Congress 
not later than March 31 of each year on the com-
plaints received by the Bureau in the prior year 
regarding consumer financial products and serv-
ices. Such report shall include information and 
analysis about complaint numbers, complaint 
types, and, where applicable, information about 
resolution of complaints. 
(D) DATA SHARING REQUIRED.—To facili-
tate preparation of the reports required under 
subparagraph (C), supervision and enforcement 
activities, and monitoring of the market for con-
sumer financial products and services, the Bu-
reau shall share consumer complaint informa-
tion with prudential regulators, the Federal 
Trade Commission, other Federal agencies, and 
State agencies, consistent with Federal law ap-
plicable to personally identifiable information. 
The prudential regulators, the Federal Trade 
Commission, and other Federal agencies shall
1231 
† HR 4173 PP
share data relating to consumer complaints re-
garding consumer financial products and serv-
ices with the Bureau, consistent with Federal 
law applicable to personally identifiable infor-
mation. 
(c) OFFICE OF FAIR LENDING AND EQUAL OPPOR-
TUNITY.— 
(1) ESTABLISHMENT.—The Director shall estab-
lish within the Bureau the Office of Fair Lending 
and Equal Opportunity. 
(2) FUNCTIONS.—The Office of Fair Lending 
and Equal Opportunity shall have such powers and 
duties as the Director may delegate to the Office, in-
cluding— 
(A) providing oversight and enforcement of 
Federal laws intended to ensure the fair, equi-
table, and nondiscriminatory access to credit for 
both individuals and communities that are en-
forced by the Bureau, including the Equal Credit 
Opportunity Act and the Home Mortgage Disclo-
sure Act; 
(B) coordinating fair lending and fair 
housing efforts of the Bureau with other Federal 
agencies and State regulators, as appropriate, to
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promote consistent, efficient, and effective en-
forcement of Federal fair lending laws; 
(C) working with private industry, fair 
lending, civil rights, consumer and community 
advocates on the promotion of fair lending com-
pliance and education; and 
(D) providing annual reports to Congress 
on the efforts of the Bureau to fulfill its fair 
lending mandate. 
(3) ADMINISTRATION OF OFFICE.—There is es-
tablished the position of Assistant Director of the Bu-
reau for Fair Lending and Equal Opportunity, 
who— 
(A) shall be appointed by the Director; and 
(B) shall carry out such duties as the Direc-
tor may delegate to such Assistant Director. 
(d) OFFICE OF FINANCIAL LITERACY.— 
(1) ESTABLISHMENT.—The Director shall estab-
lish an Office of Financial Literacy, which shall be 
responsible for developing and implementing initia-
tives intended to educate and empower consumers to 
make better informed financial decisions. 
(2) OTHER
DUTIES.—The Office of Financial 
Literacy shall develop and implement a strategy to 
improve the financial literacy of consumers that in-
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cludes measurable goals and objectives, in consulta-
tion with the Financial Literacy and Education 
Commission, consistent with the National Strategy 
for Financial Education, through activities including 
providing opportunities for consumers to access— 
(A) financial counseling; 
(B) information to assist with the evalua-
tion of credit products and the understanding of 
credit histories and scores; 
(C) savings, borrowing, and other services 
found at mainstream financial institutions; 
(D) activities intended to— 
(i) prepare the consumer for edu-
cational expenses and the submission of fi-
nancial aid applications, and other major 
purchases; 
(ii) reduce debt; and 
(iii) improve the financial situation of 
the consumer; 
(E) assistance in developing long-term sav-
ings strategies; and 
(F) wealth building and financial services 
during the preparation process to claim earned 
income tax credits and Federal benefits.
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(3) COORDINATION.—The Office of Financial 
Literacy shall coordinate with other units within the 
Bureau in carrying out its functions, including— 
(A) working with the Community Affairs 
Office to implement the strategy to improve fi-
nancial literacy of consumers; and 
(B) working with the research unit estab-
lished by the Director to conduct research related 
to consumer financial education and counseling. 
(4) REPORT.—Not later than 24 months after the 
designated transfer date, and annually thereafter, the 
Director shall submit a report on its financial lit-
eracy activities and strategy to improve financial lit-
eracy of consumers to— 
(A) the Committee on Banking, Housing, 
and Urban Affairs of the Senate; and 
(B) the Committee on Financial Services of 
the House of Representatives. 
(5) MEMBERSHIP IN FINANCIAL LITERACY AND 
EDUCATION
COMMISSION.—Section 513(c)(1) of the 
Financial Literacy and Education Improvement Act 
(20 U.S.C. 9702(c)(1)) is amended— 
(A) in subparagraph (B), by striking ‘‘and’’ 
at the end;
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(B) by redesignating subparagraph (C) as 
subparagraph (D); and 
(C) by inserting after subparagraph (B) the 
following new subparagraph: 
‘‘(C) the Director of the Bureau of Con-
sumer Financial Protection; and’’. 
(6) CONFORMING AMENDMENT.—Section 513(d) 
of the Financial Literacy and Education Improve-
ment Act (20 U.S.C. 9702(d)) is amended by adding 
at the end the following: ‘‘The Director of the Bureau 
of Consumer Financial Protection shall serve as the 
Vice Chairman.’’. 
(e) OFFICE OF SERVICE MEMBER AFFAIRS.— 
(1) IN GENERAL.—The Director shall establish 
an Office of Service Member Affairs, which shall be 
responsible for developing and implementing initia-
tives for service members and their families intended 
to— 
(A) educate and empower service members 
and their families to make better informed deci-
sions regarding consumer financial products and 
services; 
(B) coordinate with the unit of the Bureau 
established under subsection (b)(3), in order to 
monitor complaints by service members and
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their families and responses to those complaints 
by the Bureau or other appropriate Federal or 
State agency; and 
(C) coordinate efforts among Federal and 
State agencies, as appropriate, regarding con-
sumer protection measures relating to consumer 
financial products and services offered to, or 
used by, service members and their families. 
(2) COORDINATION.— 
(A) REGIONAL SERVICES.—The Director is 
authorized to assign employees of the Bureau as 
may be deemed necessary to conduct the business 
of the Office of Service Member Affairs, including 
by establishing and maintaining the functions of 
the Office in regional offices of the Bureau lo-
cated near military bases, military treatment fa-
cilities, or other similar military facilities. 
(B) AGREEMENTS.—The Director is author-
ized to enter into memoranda of understanding 
and similar agreements with the Department of 
Defense, including any branch or agency as au-
thorized by the department, in order to carry out 
the business of the Office of Service Member Af-
fairs.
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(3) DEFINITION.—As used in this subsection, the 
term ‘‘service member’’ means any member of the 
United States Armed Forces and any member of the 
National Guard or Reserves. 
SEC. 1014. CONSUMER ADVISORY BOARD. 
(a) ESTABLISHMENT REQUIRED.—The Director shall 
establish a Consumer Advisory Board to advise and consult 
with the Bureau in the exercise of its functions under the 
Federal consumer financial laws, and to provide informa-
tion on emerging practices in the consumer financial prod-
ucts or services industry, including regional trends, con-
cerns, and other relevant information. 
(b) MEMBERSHIP.—In appointing the members of the 
Consumer Advisory Board, the Director shall seek to assem-
ble experts in consumer protection, financial services, com-
munity development, fair lending, and consumer financial 
products or services and seek representation of the interests 
of covered persons and consumers, without regard to party 
affiliation. Not fewer than 6 members shall be appointed 
upon the recommendation of the regional Federal Reserve 
Bank Presidents, on a rotating basis. 
(c) MEETINGS.—The Consumer Advisory Board shall 
meet from time to time at the call of the Director, but, at 
a minimum, shall meet at least twice in each year.