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formation involving its members and their asso-
ciated persons and regarding disciplinary ac-
tions and proceedings and other information
that has been reported to the Central Registra-
tion Depository by any registered national secu-
rities exchange involving its members and their
associated persons; and
‘‘(B) promptly respond to such inquiries.
‘‘(2) RECOVERY OF COSTS.—Such association
may charge persons, other than individual investors,
reasonable fees for responses to such inquiries.
‘‘(3) LIMITATION ON LIABILITY.—Such an asso-
ciation or exchange shall not have any liability to
any person for any actions taken or omitted in good
faith under this subsection.’’.
Subtitle B—Preventing Migration
of 
Rogue 
Financial 
Profes-
sionals to the Securities Indus-
try
SEC. 211. SECURITIES EXCHANGE ACT OF 1934.
(a) BROKERS AND DEALERS.—Section 15(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) is
amended—
(1) in paragraph (4), by striking subparagraphs
(F) and (G) and inserting the following:
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‘‘(F) is subject to any order of the Commission
barring or suspending the right of the person to be
associated with a broker or dealer.
‘‘(G) has been found by a foreign financial reg-
ulatory authority to have—
‘‘(i) made or caused to be made in any ap-
plication for registration or report required to
be filed with a foreign financial regulatory au-
thority, or in any proceeding before a foreign fi-
nancial regulatory authority with respect to reg-
istration, any statement that was at the time
and in the light of the circumstances under
which it was made false or misleading with re-
spect to any material fact, or omitted to state
in any such application, report, or proceeding
any material fact that is required to be stated
therein;
‘‘(ii) violated any foreign statute or regula-
tion regarding securities, banking, thrift activi-
ties, credit union activities, insurance, or con-
tracts of sale of a commodity for future deliv-
ery, traded on or subject to the rules of a con-
tract market or any board of trade; or
‘‘(iii) aided, abetted, counseled, com-
manded, induced, or procured the violation by
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any other person of any provision of any statu-
tory provisions enacted by a foreign govern-
ment, or rules or regulations thereunder, re-
garding securities, banking, thrift activities,
credit union activities, insurance, or contracts
of sale of a commodity for future delivery trad-
ed on or subject to the rules of a contract mar-
ket or any board of trade, or to have failed rea-
sonably to supervise, with a view to preventing
violations of such statutory provisions, rules,
and regulations, another person who commits
such a violation, if such other person is subject
to his supervision.
‘‘(H) is subject to any final order of a State se-
curities commission (or any agency or officer per-
forming like functions), State authority that super-
vises or examines banks, thrifts, or credit unions,
State insurance commission (or any agency or office
performing like functions), an appropriate Federal
banking agency (as defined in section 3 of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1813(q)), or
the National Credit Union Administration, that—
‘‘(i) bars such person from association with
an entity regulated by such commission, author-
ity, agency, or officer, or from engaging in the
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business of securities, insurance, banking, thrift
activities, or credit union activities; or
‘‘(ii) constitutes a final order based on vio-
lations of any laws or regulations that prohibit
fraudulent, manipulative, or deceptive con-
duct.’’; and
(2) in paragraph (6)(A)(i), by striking ‘‘or
omission enumerated in subparagraph (A), (D), (E),
or (G)’’ and inserting ‘‘, or is subject to an order or
finding, enumerated in subparagraph (A), (D), (E),
(G), or (H)’’.
(b) MUNICIPAL SECURITIES BROKERS AND DEAL-
ERS.—Section 15B(c) of the Securities Exchange Act of
1934 (15 U.S.C. 78o–4(c)) is amended—
(1) in paragraph (2)—
(A) by striking ‘‘or omission enumerated in
subparagraph (A), (D), (E), or (G)’’ and insert-
ing ‘‘, or is subject to an order or finding, enu-
merated in subparagraph (A), (D), (E), (G), or
(H)’’; and
(B) by striking ‘‘ten’’ and inserting ‘‘10’’;
and
(2) in paragraph (4) by striking ‘‘or omission
enumerated in subparagraph (A), (D), (E), or (G)’’
and inserting ‘‘, or is subject to an order or finding,
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enumerated in subparagraph (A), (D), (E), (G), or
(H)’’.
(c) GOVERNMENT SECURITIES BROKERS AND DEAL-
ERS.—Section 15C(c)(1) of the Securities Exchange Act
of 1934 (15 U.S.C. 78o–5(c)(1)) is amended—
(1) in subparagraph (A), by striking ‘‘or omis-
sion enumerated in subparagraph (A), (D), (E), or
(G)’’ and inserting ‘‘, or is subject to an order or
finding, enumerated in subparagraph (A), (D), (E),
(G), or (H)’’; and
(2) in subparagraph (C), by striking ‘‘or omis-
sion enumerated in subparagraph (A), (D), (E), or
(G)’’ and inserting ‘‘, or is subject to an order or
finding, enumerated in subparagraph (A), (D), (E),
(G), or (H)’’.
(d) CLEARANCE AND SETTLEMENT.—Section 17A(c)
of the Securities Exchange Act of 1934 (15 U.S.C. 78q–
1(c)) is amended—
(1) in paragraph (3)(A), by striking ‘‘enumer-
ated in subparagraph (A), (D), (E), or (G)’’ and in-
serting ‘‘, or is subject to an order or finding, enu-
merated in subparagraph (A), (D), (E), (G), or
(H)’’; and
(2) in paragraph (4)(C)—
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(A) by striking ‘‘enumerated in subpara-
graph (A), (D), (E), or (G)’’ and inserting ‘‘,
or is subject to an order or finding, enumerated
in subparagraph (A), (D), (E), (G), or (H)’’;
and
(B) by striking ‘‘ten years’’ and inserting
‘‘10 years’’.
(e) DEFINITION
OF
STATUTORY
DISQUALIFICA-
TION.—Section 3(a)(39)(F) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(39)(F)) is amended by
striking ‘‘has committed or omitted any act enumerated
in subparagraph (D), (E), or (G)’’ and inserting ‘‘has
committed or omitted any act, or is subject to an order
or finding, enumerated in subparagraph (D), (E), (G), or
(H)’’.
SEC. 212. INVESTMENT ADVISERS ACT OF 1940.
(a) AUTHORITY TO DENY OR REVOKE REGISTRA-
TION BASED ON STATE (AND OTHER GOVERNMENTAL)
ADMINISTRATIVE ACTIONS.—Section 203(e) of the Invest-
ment Advisers Act of 1940 (15 U.S.C. 80b–3(e)) is
amended by striking paragraphs (7) and (8) and inserting
the following:
‘‘(7) is subject to any order of the Commission
barring or suspending the right of the person to be
associated with an investment adviser.
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livery traded on or subject to the rules of a con-
tract market or any board of trade, or to have
failed reasonably to supervise, with a view to
preventing violations of statutory provisions,
and rules and regulations promulgated there-
under, another person who commits such a vio-
lation, if such other person is subject to his su-
pervision.
‘‘(9) is subject to any final order of a State se-
curities commission (or any agency or officer per-
forming like functions), State authority that super-
vises or examines banks, thrifts, or credit unions,
State insurance commission (or any agency or office
performing like functions), an appropriate Federal
banking agency (as defined in section 3 of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1813(q)), or
the National Credit Union Administration, that—
‘‘(A) bars such person from association
with an entity regulated by such commission,
authority, agency, or officer, or from engaging
in the business of securities, insurance, bank-
ing, thrift activities, or credit union activities;
or
‘‘(B) constitutes a final order based on vio-
lations of any laws or regulations that prohibit
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fraudulent, manipulative, or deceptive con-
duct.’’.
(b) BARS ON FELONS ASSOCIATED WITH INVEST-
MENT ADVISERS.—Section 203(f) of the Investment Ad-
visers Act of 1940 (15 U.S.C. 80b–3(f)) is amended—
(A) by striking ‘‘or (8)’’ and inserting
‘‘(8), or (9)’’; and
(B) by inserting ‘‘or (3)’’ after ‘‘paragraph
(2)’’.
Passed the House of Representatives November 6,
2001.
Attest:
JEFF TRANDAHL,
Clerk.