II
104TH CONGRESS
2D SESSION
H. R. 3005
IN THE SENATE OF THE UNITED STATES
JUNE 20, 1996
Received
AN ACT
To amend the Federal securities laws in order to promote
efficiency and capital formation in the financial markets,
and to amend the Investment Company Act of 1940
to promote more efficient management of mutual funds,
protect investors, and provide more effective and less
burdensome regulation.
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Securities Amendments of 1996’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—CAPITAL MARKETS DEREGULATION AND
LIBERALIZATION
Sec. 101. Short title.
Sec. 102. Creation of national securities markets.
Sec. 103. Margin requirements.
Sec. 104. Prospectus delivery.
Sec. 105. Exemptive authority.
Sec. 106. Promotion of efficiency, competition, and capital formation.
Sec. 107. Privatization of EDGAR.
Sec. 108. Coordination of Examining Authorities.
Sec. 109. Foreign press conferences.
Sec. 110. Report on Trust Indenture Act of 1939.
TITLE II—INVESTMENT COMPANY ACT AMENDMENTS
Sec. 201. Short title.
Sec. 202. Funds of funds.
Sec. 203. Registration of securities.
Sec. 204. Investment company advertising prospectus.
Sec. 205. Variable insurance contracts.
Sec. 206. Reports to the Commission and shareholders.
Sec. 207. Books, records and inspections.
Sec. 208. Investment company names.
Sec. 209. Exceptions from definition of investment company.
TITLE III—SECURITIES AND EXCHANGE COMMISSION
AUTHORIZATION
Sec. 301. Short title.
Sec. 302. Purposes.
Sec. 303. Authorization of appropriations.
Sec. 304. Registration fees.
Sec. 305. Transaction fees.
Sec. 306. Time for payment.
Sec. 307. Sense of the Congress concerning fees.
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TITLE I—CAPITAL MARKETS DE-
REGULATION AND LIBERAL-
IZATION
SEC. 101. SHORT TITLE.
This title may be cited as the ‘‘Capital Markets De-
regulation and Liberalization Act of 1996’’.
SEC. 102. CREATION OF NATIONAL SECURITIES MARKETS.
(a) SECURITIES ACT OF 1933.—
(1) AMENDMENT.—Section 18 of the Securities
Act of 1933 (15 U.S.C. 77r) is amended to read as
follows:
‘‘SEC. 18. EXEMPTION FROM STATE REGULATION OF SECU-
RITIES OFFERINGS.
‘‘(a) SCOPE OF EXEMPTION.—Except as otherwise
provided in this section, no law, rule, regulation, or order,
or other administrative action of any State or Territory
of the United States, or the District of Columbia, or any
political subdivision thereof—
‘‘(1) requiring, or with respect to, registration
or qualification of securities, or registration or quali-
fication of securities transactions, shall directly or
indirectly apply to a security that—
‘‘(A) is a covered security; or
‘‘(B) will be a covered security upon com-
pletion of the transaction;
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‘‘(2) shall directly or indirectly prohibit, limit,
or impose conditions upon the use of—
‘‘(A) with respect to a covered security de-
scribed in subsection (b)(1) or (c)(1)—
‘‘(i) any offering document that is
prepared by the issuer; or
‘‘(ii) any offering document that is
not prepared by the issuer if such offering
document is required to be and is filed
with the Commission or any national secu-
rities organization registered under section
15A of the Securities Exchange Act of
1934 (15 U.S.C. 78o–3);
‘‘(B) with respect to a covered security de-
scribed in paragraph (2), (3), or (4) of sub-
section (b), any offering document; or
‘‘(C) any proxy statement, report to share-
holders, or other disclosure document relating
to a covered security or the issuer thereof that
is required to be and is filed with the Commis-
sion or any national securities organization reg-
istered under section 15A of the Securities Ex-
change Act of 1934 (15 U.S.C. 78o–3); or
‘‘(3) shall directly or indirectly prohibit, limit,
or impose conditions, based on the merits of such of-
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fering or issuer, upon the offer or sale of any secu-
rity described in paragraph (1).
‘‘(b) COVERED SECURITIES.—For purposes of this
section, the following are covered securities:
‘‘(1) EXCLUSIVE
FEDERAL
REGISTRATION
OF
NATIONALLY TRADED SECURITIES.—A security is a
covered security if such security is—
‘‘(A) listed, or authorized for listing, on
the New York Stock Exchange or the American
Stock Exchange, or included or qualified for in-
clusion in the National Market System of the
National Association of Securities Dealers
Automated Quotation System (or any successor
to such entities);
‘‘(B) listed, or authorized for listing, on a
national securities exchange (or tier or segment
thereof) that has listing standards that the
Commission determines by rule (on its own ini-
tiative or on the basis of a petition) are sub-
stantially similar to the listing standards appli-
cable to securities described in subparagraph
(A); or
‘‘(C) is a security of the same issuer that
is equal in seniority or senior to a security de-
scribed in subparagraph (A) or (B).
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‘‘(2) EXCLUSIVE
FEDERAL
REGISTRATION
OF
INVESTMENT COMPANIES.—A security is a covered
security if such security is a security issued by an
investment company that is registered under the In-
vestment Company Act of 1940 (15 U.S.C. 80a et
seq.).
‘‘(3) SALES
TO
QUALIFIED
PURCHASERS.—A
security is a covered security with respect to the
offer or sale of the security to qualified purchasers,
as defined by the Commission by rule. In prescribing
such rule, the Commission may define qualified pur-
chaser differently with respect to different categories
of securities, consistent with the public interest and
the protection of investors.
‘‘(4) EXEMPTION IN CONNECTION WITH CER-
TAIN EXEMPT OFFERINGS.—A security is a covered
security if—
‘‘(A) the offer or sale of such security is
exempt from registration under this title pursu-
ant to section 4(1) or 4(3), and—
‘‘(i) the issuer of such security files
reports with the Commission pursuant to
section 13 or 15(d) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78m,
78o(d)); or
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‘‘(ii) the issuer is exempt from filing
such reports;
‘‘(B) such security is exempt from registra-
tion under this title pursuant to section 4(4);
‘‘(C) the offer or sale of such security is
exempt from registration under this title pursu-
ant to section 3(a), other than the offer or sale
of a security that is exempt from such registra-
tion pursuant to paragraph (4) or (11) of such
section, except that a municipal security that is
exempt from such registration pursuant to
paragraph (2) of such section is not a covered
security with respect to the offer or sale of such
security in the State in which the issuer of such
security is located; or
‘‘(D) the offer or sale of such security is
exempt from registration under this title pursu-
ant to Commission rule or regulation under sec-
tion 4(2) of this title.
‘‘(c) CONDITIONALLY COVERED SECURITIES.—
‘‘(1) FEDERALLY
REGISTERED
OFFERINGS.—
Subject to the limitations contained in paragraphs
(2) and (3), a security is a covered security if—
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‘‘(A) the issuer of such security has (or
will have upon conclusion of the transaction)
total assets exceeding $10,000,000;
‘‘(B) such security is the subject of a reg-
istration statement that is filed with the Com-
mission pursuant to this title; and
‘‘(C) the issuer files with such registration
statement audited financial statements for each
of the two most recent fiscal years of its oper-
ations ending before the filing of the registra-
tion statement.
‘‘(2) LIMITATIONS FOR CERTAIN OFFERINGS.—
Notwithstanding paragraph (1), a security is not a
covered security if such security is—
‘‘(A) a security of an issuer which is a
blank check company (as defined in section 7(b)
of this title), a partnership, a limited liability
company, or a direct participation investment
program;
‘‘(B) a penny stock (as such term is de-
fined in section 3(a)(51) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)(51)); or
‘‘(C) a security issued in an offering relat-
ing to a rollup transaction (as such term is de-