IB 
Union Calendar No. 408 
111TH CONGRESS 
2D SESSION 
H. R. 3817 
[Report No. 111–687, Part I] 
To provide the Securities and Exchange Commission with additional authori-
ties to protect investors from violations of the securities laws, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 15, 2009 
Mr. KANJORSKI introduced the following bill; which was referred to the 
Committee on Financial Services 
DECEMBER 16, 2010 
Reported with an amendment, and referred to the Committee on the Judiciary 
for a period ending not later than December 17, 2010, for consideration 
of such provisions of the bill and amendment as fall within the jurisdic-
tion of that committee pursuant to clause 1(k) of rule X 
[Strike out all after the enacting clause and insert the part printed in italic] 
DECEMBER 17, 2010 
Committee on the Judiciary discharged; committed to the Committee of the 
Whole House on the State of the Union and ordered to be printed 
[For text of introduced bill, see copy of bill as introduced on October 15, 2009] 
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A BILL 
To provide the Securities and Exchange Commission with 
additional authorities to protect investors from violations 
of the securities laws, and for other purposes. 
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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. 
This Act may be cited as the ‘‘Investor Protection Act 
of 2009’’. 
SEC. 2. TABLE OF CONTENTS. 
The table of contents for this Act is as follows: 
Sec. 1. Short title. 
Sec. 2. Table of contents. 
TITLE I—DISCLOSURE 
Sec. 101. Investor Advisory Committee established. 
Sec. 102. Clarification of the commission’s authority to engage in consumer test-
ing. 
Sec. 103. Establishment of a fiduciary duty for brokers, dealers, and investment 
advisers, and harmonization of regulation. 
Sec. 104. Commission study on disclosure to retail customers before purchase of 
products or services. 
Sec. 105. Beneficial ownership and short-swing profit reporting. 
Sec. 106. Revision to recordkeeping rules. 
Sec. 107. Study on enhancing investment advisor examinations. 
Sec. 108. GAO study of financial planning. 
TITLE II—ENFORCEMENT AND REMEDIES 
Sec. 201. Authority to restrict mandatory pre-dispute arbitration. 
Sec. 202. Comptroller General study to review securities arbitration system. 
Sec. 203. Whistleblower protection. 
Sec. 204. Conforming amendments for whistleblower protection. 
Sec. 205. Implementation and transition provisions for whistleblower protections. 
Sec. 206. Collateral bars. 
Sec. 207. Aiding and abetting authority under the Securities Act and the Invest-
ment Company Act. 
Sec. 208. Authority to impose penalties for aiding and abetting violations of the 
Investment Advisers Act. 
Sec. 209. Deadline for completing examinations, inspections and enforcement ac-
tions. 
Sec. 210. Nationwide service of subpoenas. 
Sec. 211. Authority to impose civil penalties in cease and desist proceedings. 
Sec. 212. Formerly associated persons. 
Sec. 213. Sharing privileged information with other authorities. 
Sec. 214. Expanded access to grand jury material. 
Sec. 215. Aiding and abetting standard of knowledge satisfied by recklessness. 
Sec. 216. Extraterritorial jurisdiction of the antifraud provisions of the Federal 
securities laws. 
Sec. 217. Fidelity bonding. 
Sec. 218. Enhanced SEC authority to conduct surveillance and risk assessment. 
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Sec. 219. Investment company examinations. 
Sec. 220. Control person liability under the Securities Exchange Act. 
Sec. 221. Enhanced application of anti-fraud provisions. 
Sec. 222. SEC Authority to Issue Rules on Proxy Access. 
TITLE III—COMMISSION FUNDING AND ORGANIZATION 
Sec. 301. Authorization of appropriations. 
Sec. 302. Investment adviser regulation funding. 
Sec. 303. Amendments to section 31 of the Securities Exchange Act of 1934. 
Sec. 304. Commission organizational study and reform. 
Sec. 305. Capital Markets Safety Board. 
Sec. 306. Report on implementation of ‘‘post-Madoff reforms’’. 
Sec. 307. Joint Advisory Committee. 
TITLE IV—ADDITIONAL COMMISSION REFORMS 
Sec. 401. Regulation of securities lending. 
Sec. 402. Lost and stolen securities. 
Sec. 403. Fingerprinting. 
Sec. 404. Equal treatment of self-regulatory organization rules. 
Sec. 405. Clarification that section 205 of the Investment Advisers Act of 1940 
does not apply to State-registered advisers. 
Sec. 406. Conforming amendments for the repeal of the Public Utility Holding 
Company Act of 1935. 
Sec. 407. Promoting transparency in financial reporting. 
Sec. 408. Unlawful margin lending. 
Sec. 409. Protecting confidentiality of materials submitted to the Commission. 
Sec. 410. Technical corrections. 
Sec. 411. Municipal securities. 
Sec. 412. Interested person definition. 
Sec. 413. Rulemaking authority to protect redeeming investors. 
Sec. 414. Study on SEC revolving door. 
Sec. 415. Study on internal control evaluation and reporting cost burdens on 
smaller issuers. 
Sec. 416. Analysis of rule regarding smaller reporting companies. 
Sec. 417. Financial Reporting Forum. 
Sec. 418. Investment advisers subject to State authorities. 
Sec. 419. Custodial requirements. 
Sec. 420. Ombudsman. 
TITLE V—SECURITIES INVESTOR PROTECTION ACT AMENDMENTS 
Sec. 501. Increasing the minimum assessment paid by SIPC members. 
Sec. 502. Increasing the borrowing limit on treasury loans. 
Sec. 503. Increasing the cash limit of protection. 
Sec. 504. SIPC as trustee in SIPA liquidation proceedings. 
Sec. 505. Insiders ineligible for SIPC advances. 
Sec. 506. Eligibility for direct payment procedure. 
Sec. 507. Increasing the fine for prohibited acts under SIPA. 
Sec. 508. Penalty for misrepresentation of SIPC membership or protection. 
Sec. 509. Futures held in a portfolio margin securities account protection. 
Sec. 510. Study and report on the feasibility of risk-based assessments SIPC 
members. 
Sec. 511. Budgetary treatment of Commission loans to SIPC. 
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‘‘(1) regulatory priorities and issues regarding 
new products, trading strategies, fee structures and 
the effectiveness of disclosures; 
‘‘(2) initiatives to protect investor interest; and 
‘‘(3) initiatives to promote investor confidence in 
the integrity of the marketplace. 
‘‘(b) MEMBERSHIP.— 
‘‘(1) APPOINTMENT.—The Chairman of the Com-
mission shall appoint the members of the Committee, 
which members shall— 
‘‘(A) represent the interests of individual 
investors; 
‘‘(B) represent the interests of institutional 
investors; and 
‘‘(C) use a wide range of investment ap-
proaches. 
‘‘(2) MEMBERS NOT COMMISSION EMPLOYEES.— 
Members shall not be considered employees or agents 
of the Commission solely because of membership on 
the Committee. 
‘‘(c) MEETINGS.—The Committee shall meet from time 
to time at the call of the Commission, but, at a minimum, 
shall meet at least twice each year. 
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‘‘(d) COMPENSATION AND TRAVEL EXPENSES.—Mem-
bers of the Committee who are not full-time employees of 
the United States shall— 
‘‘(1) be entitled to receive compensation at a rate 
fixed by the Commission while attending meetings of 
the Committee, including travel time; and 
‘‘(2) be allowed travel expenses, including trans-
portation and subsistence, while away from their 
homes or regular places of business. 
‘‘(e) COMMITTEE FINDINGS.—Nothing in this section 
requires the Commission to accept, agree, or act upon the 
findings or recommendations of the Committee. 
‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to the Commission such sums 
as are necessary for the activities of the Committee.’’. 
SEC. 102. CLARIFICATION OF THE COMMISSION’S AUTHOR-
ITY TO ENGAGE IN CONSUMER TESTING. 
(a) AMENDMENT TO SECURITIES ACT OF 1933.—Sec-
tion 19 of the Securities Act of 1933 (15 U.S.C. 77s) is 
amended by adding at the end the following new subsection: 
‘‘(e) For the purposes of evaluating its rules and pro-
grams and for considering, proposing, adopting, or engag-
ing in rules or programs, the Commission is authorized to 
gather information, communicate with investors or other 
members of the public, and engage in such temporary or 
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experimental programs as the Commission in its discretion 
determines is in the public interest or for the protection of 
investors. The Commission may delegate to its staff some 
or all of the authority conferred by this subsection.’’. 
(b) AMENDMENT TO SECURITIES EXCHANGE ACT OF 
1934.—Section 23 of the Securities Exchange Act of 1934 
(15 U.S.C. 78w) is amended by redesignating subsections 
(b), (c), and (d) as subsections (c), (d), and (e), respectively, 
and inserting after subsection (a) the following: 
‘‘(b) For the purposes of evaluating its rules and pro-
grams and for considering proposing, adopting, or engaging 
in rules or programs, the Commission is authorized to gath-
er information, communicate with investors or other mem-
bers of the public, and engage in such temporary or experi-
mental programs as the Commission in its discretion deter-
mines is in the public interest or for the protection of inves-
tors. The Commission may delegate to its staff some or all 
of the authority conferred by this subsection.’’. 
(c) AMENDMENT TO INVESTMENT COMPANY ACT OF 
1940.—Section 38 of the Investment Company Act of 1940 
(15 U.S.C. 80a–38) is amended by adding at the end the 
following new subsection: 
‘‘(d) GATHERING INFORMATION.—For the purposes of 
evaluating its rules and programs and for considering pro-
posing, adopting, or engaging in rules or programs, the 
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Commission is authorized to gather information, commu-
nicate with investors or other members of the public, and 
engage in such temporary or experimental programs as the 
Commission in its discretion determines is in the public 
interest or for the protection of investors. The Commission 
may delegate to its staff some or all of the authority con-
ferred by this subsection.’’. 
(d) AMENDMENT TO THE INVESTMENT ADVISERS ACT 
OF 1940.—Section 211 of the Investment Advisers Act of 
1940 (15 U.S.C. 80b–11) is amended by adding at the end 
the following new subsections: 
‘‘(e) For the purposes of evaluating its rules and pro-
grams and for considering proposing, adopting, or engaging 
in rules or programs, the Commission is authorized to gath-
er information, communicate with investors or other mem-
bers of the public, and engage in such temporary or experi-
mental programs as the Commission in its discretion deter-
mines is in the public interest or for the protection of inves-
tors. The Commission may delegate to its staff some or all 
of the authority conferred by this subsection.’’. 
SEC. 103. ESTABLISHMENT OF A FIDUCIARY DUTY FOR BRO-
KERS, DEALERS, AND INVESTMENT ADVISERS, 
AND HARMONIZATION OF REGULATION. 
(a) IN GENERAL.— 
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(1) SECURITIES EXCHANGE ACT OF 1934.—Sec-
tion 15 of the Securities Exchange Act of 1934 (15 
U.S.C. 78o) is amended— 
(A) by redesignating the second subsection 
(i) as subsection (j); and 
(B) by adding at the end the following new 
subsections: 
‘‘(k) STANDARD OF CONDUCT.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of this Act or the Investment Advisers Act 
of 1940, the Commission shall promulgate rules to 
provide that, with respect to a broker or dealer, when 
providing personalized investment advice about secu-
rities to a retail customer (and such other customers 
as the Commission may by rule provide), the stand-
ard of conduct for such broker or dealer with respect 
to such customer shall be the same as the standard of 
conduct applicable to an investment adviser under the 
Investment Advisers Act of 1940. The receipt of com-
pensation based on commission or other standard 
compensation for the sale of securities shall not, in 
and of itself, be considered a violation of such stand-
ard applied to a broker or dealer. 
‘‘(2) DISCLOSURE OF RANGE OF PRODUCTS OF-
FERED.—Where a broker or dealer sells only propri-
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etary or other limited range of products, as deter-
mined by the Commission, the Commission shall by 
rule require that such broker or dealer provide notice 
to each retail customer and obtain the consent or ac-
knowledgment of the customer. The sale of only pro-
prietary or other limited range of products by a 
broker or dealer shall not, in and of itself, be consid-
ered a violation of the standard set forth in para-
graph (1). 
‘‘(3) RETAIL
CUSTOMER
DEFINED.—For pur-
poses of this subsection, the term ‘retail customer’ 
means a natural person, or the legal representative of 
such natural person, who— 
‘‘(A) receives personalized investment advice 
about securities from a broker or dealer; and 
‘‘(B) uses such advice primarily for per-
sonal, family, or household purposes. 
‘‘(l) OTHER MATTERS.—The Commission shall— 
‘‘(1) facilitate the provision of simple and clear 
disclosures to investors regarding the terms of their 
relationships with brokers, dealers, and investment 
advisers, including any material conflicts of interest; 
and 
‘‘(2) examine and, where appropriate, promul-
gate rules prohibiting or restricting certain sales 
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practices, conflicts of interest, and compensation 
schemes for brokers, dealers, and investment advisers 
that the Commission deems contrary to the public in-
terest and the protection of investors.’’. 
(2) INVESTMENT ADVISERS ACT OF 1940.—Sec-
tion 211 of the Investment Advisers Act of 1940, as 
amended by section 102(d), is further amended by 
adding at the end the following new subsections: 
‘‘(f) STANDARD OF CONDUCT.— 
‘‘(1) IN GENERAL.—The Commission shall pro-
mulgate rules to provide that the standard of conduct 
for all brokers, dealers, and investment advisers, when 
providing personalized investment advice about secu-
rities to retail customers (and such other customers as 
the Commission may by rule provide), shall be to act 
in the best interest of the customer without regard to 
the financial or other interest of the broker, dealer, or 
investment adviser providing the advice. In accord-
ance with such rules, any material conflicts of inter-
est shall be disclosed and may be consented to by the 
customer. Such rules shall provide that such standard 
of conduct shall be no less stringent than the standard 
applicable to investment advisers under section 
206(1) and (2) of this Act when providing personal-
ized investment advice about securities, except the 
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Commission shall not ascribe a meaning to the term 
‘customer’ that would include an investor in a private 
fund managed by an investment adviser, where such 
private fund has entered into an advisory contract 
with such adviser. The receipt of compensation based 
on commission or fees shall not, in and of itself, be 
considered a violation of such standard applied to a 
broker, dealer, or investment adviser. 
‘‘(2) RETAIL
CUSTOMER
DEFINED.—For pur-
poses of this subsection, the term ‘retail customer’ 
means a natural person, or the legal representative of 
such natural person, who— 
‘‘(A) receives personalized investment advice 
about securities from a broker, dealer, or invest-
ment adviser; and 
‘‘(B) uses such advice primarily for per-
sonal, family, or household purposes. 
‘‘(g) OTHER MATTERS.—The Commission shall— 
‘‘(1) facilitate the provision of simple and clear 
disclosures to investors regarding the terms of their 
relationships with brokers, dealers, and investment 
advisers, including any material conflicts of interest; 
and 
‘‘(2) examine and, where appropriate, promul-
gate rules prohibiting or restricting certain sales 
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practices, conflicts of interest, and compensation 
schemes for brokers, dealers, and investment advisers 
that the Commission deems contrary to the public in-
terest and the protection of investors.’’. 
(b) HARMONIZATION OF ENFORCEMENT.— 
(1) SECURITIES EXCHANGE ACT OF 1934.—Sec-
tion 15 of the Securities Exchange Act of 1934, as 
amended by subsection (a)(1), is further amended by 
adding at the end the following new subsection: 
‘‘(m) HARMONIZATION OF ENFORCEMENT.—The en-
forcement authority of the Commission with respect to vio-
lations of the standard of conduct applicable to a broker 
or dealer providing personalized investment advice about 
securities to a retail customer shall include— 
‘‘(1) the enforcement authority of the Commis-
sion with respect to such violations provided under 
this Act, and 
‘‘(2) the enforcement authority of the Commis-
sion with respect to violations of the standard of con-
duct applicable to an investment advisor under the 
Investment Advisers Act of 1940, including the au-
thority to impose sanctions for such violations, and 
the Commission shall seek to prosecute and sanction viola-
tors of the standard of conduct applicable to a broker or 
dealer providing personalized investment advice about secu-
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rities to a retail customer under this Act to same extent 
as the Commission prosecutes and sanctions violators of the 
standard of conduct applicable to an investment advisor 
under the Investment Advisers Act of 1940.’’. 
(2) INVESTMENT ADVISERS ACT OF 1940.—Sec-
tion 211 of the Investment Advisers Act of 1940, as 
amended by section (a)(2), is further amended by 
adding at the end the following new subsection: 
‘‘(h) HARMONIZATION
OF ENFORCEMENT.—The en-
forcement authority of the Commission with respect to vio-
lations of the standard of conduct applicable to an invest-
ment adviser shall include— 
‘‘(1) the enforcement authority of the Commis-
sion with respect to such violations provided under 
this Act, and 
‘‘(2) the enforcement authority of the Commis-
sion with respect to violations of the standard of con-
duct applicable to a broker or dealer providing per-
sonalized investment advice about securities to a re-
tail customer under the Securities Exchange Act of 
1934, including the authority to impose sanctions for 
such violations, and 
the Commission shall seek to prosecute and sanction viola-
tors of the standard of conduct applicable to an investment 
advisor under this Act to same extent as the Commission 
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prosecutes and sanctions violators of the standard of con-
duct applicable to a broker or dealer providing personalized 
investment advice about securities to a retail customer 
under the Securities Exchange Act of 1934.’’. 
SEC. 104. COMMISSION STUDY ON DISCLOSURE TO RETAIL 
CUSTOMERS BEFORE PURCHASE OF PROD-
UCTS OR SERVICES. 
(a) STUDY REQUIRED.—Prior to proposing any rules 
or regulations pursuant to subsection (b)(1) regarding the 
manner in which investment products or services are sold 
or provided in the United States to retail customers or the 
information that must be provided to retail customers prior 
to the purchase of such products or services, and within 180 
days after the date of the enactment of this Act, the Securi-
ties and Exchange Commission shall publish a study that 
examines— 
(1) the nature of a ‘‘retail customer’’, taking into 
consideration the definition in section 15(k) of the Se-
curities Exchange Act of 1934 (15 U.S.C. 78o), as 
amended by section 103 of this Act; 
(2) the range of products and services sold or 
provided to retail customers, and the sellers or pro-
viders of such products and services, that are within 
the Commission’s jurisdiction; 
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(3) how such products and services are sold or 
provided to retail customers, the fees charged for such 
products and services, and the conflicts of interest 
that may arise during the sales process or provision 
of services; 
(4) information that retail customers should re-
ceive prior to purchasing each product or service, and 
the appropriate person or entity to provide such in-
formation; and 
(5) ways to ensure that, where possible, reason-
ably similar products and services are subject to simi-
lar regulatory treatment, including with respect to in-
formation that must be provided to retail customers 
prior to the purchase of such products or services and 
how such information is provided. 
(b) RULEMAKING.— 
(1) Notwithstanding any other provision of the 
Securities Act of 1933 (15 U.S.C. 77a et seq.) or the 
Investment Company Act of 1940 (15 U.S.C. 80a–1 
et seq.), following completion of the study required by 
subsection (a), the Commission is authorized to pro-
mulgate rules to require that the appropriate persons 
or entities provide designated documents or informa-
tion to retail customers prior to the purchase of iden-
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tified investment products or services. Any such rules 
shall— 
(A) take into account the findings of the 
study conducted pursuant to subsection (a); 
(B) take into consideration, to the extent 
possible, the need for such documents and infor-
mation to be consistent and comparable across 
investment products or services sold or provided 
to retail customers; and 
(C) reduce, to the extent possible, disrup-
tions to the purchase process for investment 
products and services sold or provided to retail 
customers, by means such as permitting required 
disclosures to be made via the Internet. 
(2) Notwithstanding paragraph (1), the Commis-
sion is authorized to promulgate rules in connection 
with— 
(A) the implementation of section 103; and 
(B) disclosure to retail customers other than 
in connection with the purchase of investment 
products or services. 
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SEC. 105. BENEFICIAL OWNERSHIP AND SHORT-SWING 
PROFIT REPORTING. 
(a) BENEFICIAL OWNERSHIP REPORTING.—Section 13 
of the Securities Exchange Act of 1934 (15 U.S.C. 78m) 
is amended— 
(1) in subsection (d)(1)— 
(A) by inserting after ‘‘within ten days 
after such acquisition’’ the following: ‘‘or within 
such shorter time as the Commission may estab-
lish by rule’’; and 
(B) by striking ‘‘send to the issuer of the se-
curity at its principal executive office, by reg-
istered or certified mail, send to each exchange 
where the security is traded, and’’; 
(2) in subsection (d)(2)— 
(A) by striking ‘‘in the statements to the 
issuer and the exchange, and’’; and 
(B) by striking ‘‘shall be transmitted to the 
issuer and the exchange and’’; 
(3) in subsection (g)(1), by striking ‘‘shall send 
to the issuer of the security and’’; and 
(4) in subsection (g)(2)— 
(A) by striking ‘‘sent to the issuer and’’; 
and 
(B) by striking ‘‘shall be transmitted to the 
issuer and’’. 
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(b) SHORT-SWING PROFIT REPORTING.—Section 16(a) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78p(a)) 
is amended— 
(1) in paragraph (1), by striking ‘‘(and, if such 
security is registered on a national securities ex-
change, also with the exchange)’’; and 
(2) in paragraph (2)(B), by inserting after ‘‘offi-
cer’’ the following: ‘‘, or within such shorter time as 
the Commission may establish by rule’’. 
SEC. 106. REVISION TO RECORDKEEPING RULES. 
(a) INVESTMENT COMPANY ACT
OF 1940 AMEND-
MENTS.—Section 31 of the Investment Company Act of 
1940 (15 U.S.C. 80a–30) is amended— 
(1) in subsection (a)(1), by adding at the end the 
following: ‘‘Each person with custody or use of a reg-
istered investment company’s securities, deposits, or 
credits shall maintain and preserve all records that 
relate to the person’s custody or use of the registered 
investment company’s securities, deposits, or credits 
for such period or periods as the Commission, by 
rules and regulations, may prescribe as necessary or 
appropriate in the public interest or for the protec-
tion of investors.’’; and 
(2) in subsection (b), by adding at the end the 
following new paragraph: 
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‘‘(4) RECORDS OF PERSONS WITH CUSTODY OR 
USE.— 
‘‘(A) IN GENERAL.—Notwithstanding para-
graph (1), records of persons with custody or use 
of a registered investment company’s securities, 
deposits, or credits, that relate to such custody or 
use, are subject at any time, or from time to 
time, to such reasonable periodic, special, or 
other examinations and other information and 
document requests by representatives of the Com-
mission as the Commission deems necessary or 
appropriate in the public interest or for the pro-
tection of investors. 
‘‘(B) CERTAIN PERSONS SUBJECT TO OTHER 
REGULATION.—Persons subject to regulation and 
examination by a Federal financial institution 
regulatory agency (as such term is defined under 
section 212(c)(2) of title 18, United States Code) 
may satisfy any examination request, informa-
tion request, or document request described under 
subparagraph (A), by providing the Commission 
with a detailed listing, in writing, of the reg-
istered investment company’s securities, deposits, 
or credits within such person’s custody or use.’’. 
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(b) INVESTMENT ADVISERS ACT
OF 1940 AMEND-
MENT.—Section 204 of the Investment Advisers Act of 1940 
(15 U.S.C. 80b–4) is amended by adding at the end the 
following new subsection: 
‘‘(d) RECORDS
OF PERSONS WITH CUSTODY
OR 
USE.— 
‘‘(1) IN GENERAL.—Records of persons with cus-
tody or use of a client’s securities, deposits, or credits, 
that relate to such custody or use, are subject at any 
time, or from time to time, to such reasonable peri-
odic, special, or other examinations and other infor-
mation and document requests by representatives of 
the Commission as the Commission deems necessary 
or appropriate in the public interest or for the protec-
tion of investors. 
‘‘(2) CERTAIN
PERSONS
SUBJECT
TO
OTHER 
REGULATION.—Persons subject to regulation and ex-
amination by a Federal financial institution regu-
latory agency (as such term is defined under section 
212(c)(2) of title 18, United States Code) may satisfy 
any examination request, information request, or doc-
ument request described under paragraph (1), by pro-
viding the Commission with a detailed listing, in 
writing, of the client’s securities, deposits, or credits 
within such person’s custody or use.’’. 
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SEC. 107. STUDY ON ENHANCING INVESTMENT ADVISOR EX-
AMINATIONS. 
(a) STUDY REQUIRED.— 
(1) IN GENERAL.—The Commission shall review 
and analyze the need for enhanced examination and 
enforcement resources for investment advisers. 
(2) AREAS OF CONSIDERATION.—The study re-
quired by this subsection shall examine— 
(A) the number and frequency of examina-
tions of investment advisers by the Commission 
over the 5 years preceding the date of the enact-
ment of this Act; 
(B) the extent to which having Congress au-
thorize the Commission to designate one or more 
self-regulatory organizations to augment the 
Commission’s efforts in overseeing investment 
advisers would improve the frequency of exami-
nations of investment advisers; and 
(C) current and potential approaches to ex-
amining the investment advisory activities of 
dually registered broker-dealers and investment 
advisers or affiliated broker-dealers and invest-
ment advisers. 
(b) REPORT REQUIRED.—The Commission shall re-
port its findings to the Committee on Financial Services 
of the House of Representatives and the Committee on 
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Banking, Housing, and Urban Affairs of the Senate, not 
later than 180 days after the date of enactment of this Act, 
and shall use such findings to revise its rules and regula-
tions, as necessary. The report shall include a discussion 
of regulatory or legislative steps that are recommended or 
that may be necessary to address concerns identified in the 
study. 
SEC. 108. GAO STUDY OF FINANCIAL PLANNING. 
(a) STUDY REQUIRED.—The Comptroller General of 
the United States shall conduct a study on the regulation 
and oversight of financial planning.
The study shall con-
sider— 
(1) the unique role of financial planners in pro-
viding comprehensive advice in investment planning, 
income tax planning, education planning, retirement 
planning, estate planning, risk management, and 
other areas with respect to the management of finan-
cial resources; and 
(2) any gaps in the regulation of financial plan-
ners given existing State and Federal regulation of fi-
nancial planning activities and the need to provide 
related consumer protections for such financial plan-
ning activities. 
(b) REPORT.—Not later than the end of the 180-day 
period beginning on the date of the enactment of this Act, 
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the Comptroller General of the United States shall submit 
to the Congress a report containing the findings and deter-
minations made by the Comptroller General in carrying out 
the study required under subsection (a), including rec-
ommendations for the appropriate regulation of, or stand-
ards for, financial planners as a profession and how such 
regulations or standards should be established. 
TITLE II—ENFORCEMENT AND 
REMEDIES 
SEC. 201. AUTHORITY TO RESTRICT MANDATORY PRE-DIS-
PUTE ARBITRATION. 
(a) AMENDMENT TO SECURITIES EXCHANGE ACT OF 
1934.—Section 15 of the Securities Exchange Act of 1934 
(15 U.S.C. 78o), as amended by section 103, is further 
amended by adding at the end the following new subsection: 
‘‘(n) AUTHORITY TO RESTRICT MANDATORY PRE-DIS-
PUTE ARBITRATION.—The Commission, by rule, may pro-
hibit, or impose conditions or limitations on the use of, 
agreements that require customers or clients of any broker, 
dealer, or municipal securities dealer to arbitrate any fu-
ture dispute between them arising under the Federal securi-
ties laws, the rules and regulations thereunder, or the rules 
of a self-regulatory organization if it finds that such prohi-
bition, imposition of conditions, or limitations are in the 
public interest and for the protection of investors.’’. 
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(b) AMENDMENT TO INVESTMENT ADVISERS ACT OF 
1940.—Section 205 of the Investment Advisers Act of 1940 
(15 U.S.C. 80b–5) is amended by adding at the end the 
following new subsection: 
‘‘(f) AUTHORITY TO RESTRICT MANDATORY PRE-DIS-
PUTE ARBITRATION.—The Commission, by rule, may pro-
hibit, or impose conditions or limitations on the use of, 
agreements that require customers or clients of any invest-
ment adviser to arbitrate any future dispute between them 
arising under the Federal securities laws, the rules and reg-
ulations thereunder, or the rules of a self-regulatory organi-
zation if it finds that such prohibition, imposition of condi-
tions, or limitations are in the public interest and for the 
protection of investors.’’. 
SEC. 202. COMPTROLLER GENERAL STUDY TO REVIEW SE-
CURITIES ARBITRATION SYSTEM. 
(a) STUDY.—The Comptroller General of the United 
States shall conduct a study to review— 
(1) the costs to parties of an arbitration pro-
ceeding using the arbitration system operated by the 
Financial Industry Regulatory Authority and over-
seen by the Securities and Exchange Commission as 
compared to litigation; 
(2) the percentage of recovery of the total amount 
of a claim in an arbitration proceeding using the ar-
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bitration system operated by the Financial Industry 
Regulatory Authority and overseen by the Securities 
and Exchange Commission; and 
(3) other additional issues as may be raised dur-
ing the course of the study conducted under this sub-
section. 
(b) REPORT.—Not later than 1 year after the date of 
enactment of this Act, the Comptroller General of the United 
States shall submit to the Committee on Financial Services 
of the House of Representatives and the Committee on 
Banking, Housing, and Urban Affairs of the Senate a re-
port on the results of the study required by subsection (a), 
including in such report recommendations for improve-
ments to the arbitration system referenced in such sub-
section. 
SEC. 203. WHISTLEBLOWER PROTECTION. 
(a) IN GENERAL.—The Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.) is amended by adding after 
section 21E the following new section: 
‘‘SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND 
PROTECTION. 
‘‘(a) IN GENERAL.—In any judicial or administrative 
action brought by the Commission under the securities laws 
that results in monetary sanctions exceeding $1,000,000, the 
Commission, under regulations prescribed by the Commis-
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sion and subject to subsection (b), may pay an award or 
awards not exceeding an amount equal to 30 percent, in 
total, of the monetary sanctions imposed in the action or 
related actions to one or more whistleblowers who volun-
tarily provided original information to the Commission 
that led to the successful enforcement of the action. Any 
amount payable under the preceding sentence shall be paid 
from the fund described in subsection (f). 
‘‘(b) DETERMINATION OF AMOUNT OF AWARD; DENIAL 
OF AWARD.— 
‘‘(1) DETERMINATION OF AMOUNT OF AWARD.— 
The determination of the amount of an award, within 
the limit specified in subsection (a), shall be in the 
sole discretion of the Commission. The Commission 
may take into account the significance of the whistle-
blower’s information to the success of the judicial or 
administrative action described in subsection (a), the 
degree of assistance provided by the whistleblower and 
any legal representative of the whistleblower in such 
action, the Commission’s programmatic interest in 
deterring violations of the securities laws by making 
awards to whistleblowers who provide information 
that leads to the successful enforcement of such laws, 
and such additional factors as the Commission may 
establish by rules or regulations. 
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‘‘(2) DENIAL OF AWARD.—No award under sub-
section (a) shall be made— 
‘‘(A) to any whistleblower who is, or was at 
the time he or she acquired the original informa-
tion submitted to the Commission, a member, of-
ficer, or employee of any appropriate regulatory 
agency, the Department of Justice, the Public 
Company Accounting Oversight Board, or a self- 
regulatory organization; 
‘‘(B) to any whistleblower who is convicted 
of a criminal violation related to the judicial or 
administrative action for which the whistle-
blower otherwise could receive an award under 
this section; or 
‘‘(C) to any whistleblower who fails to sub-
mit information to the Commission in such form 
as the Commission may, by rule, require. 
‘‘(c) REPRESENTATION.— 
‘‘(1) PERMITTED REPRESENTATION.—Any whis-
tleblower who makes a claim for an award under sub-
section (a) may be represented by counsel. 
‘‘(2) REQUIRED REPRESENTATION.—Any whis-
tleblower who makes a claim for an award under sub-
section (a) must be represented by counsel if the whis-
tleblower submits the information upon which the 
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claim is based anonymously. Prior to the payment of 
an award, the whistleblower must disclose his or her 
identity and provide such other information as the 
Commission may require. 
‘‘(d) NO CONTRACT NECESSARY.—No contract with the 
Commission is necessary for any whistleblower to receive 
an award under subsection (a), unless the Commission, by 
rule or regulation, so requires. 
‘‘(e) APPEALS.—Any determinations under this sec-
tion, including whether, to whom, or in what amounts to 
make awards, shall be in the sole discretion of the Commis-
sion, and any such determinations shall be final and not 
subject to judicial review. 
‘‘(f) INVESTOR PROTECTION FUND.— 
‘‘(1) FUND ESTABLISHED.—There is established 
in the Treasury of the United States a fund to be 
known as the ‘Securities and Exchange Commission 
Investor Protection Fund’ (referred to in this section 
as the ‘Fund’). 
‘‘(2) USE OF FUND.—The Fund shall be avail-
able to the Commission, without further appropria-
tion or fiscal year limitation, for the following pur-
poses: 
‘‘(A) Paying awards to whistleblowers as 
provided in subsection (a). 
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‘‘(B) Funding investor education initiatives 
designed to help investors protect themselves 
against securities fraud or other violations of the 
securities laws, or the rules and regulations 
thereunder. 
‘‘(3) DEPOSITS AND CREDITS.—There shall be 
deposited into or credited to the Fund— 
‘‘(A) any monetary sanction collected by the 
Commission in any judicial or administrative 
action brought by the Commission under the se-
curities laws that is not added to a disgorgement 
fund or other fund pursuant to section 308 of the 
Sarbanes-Oxley Act of 2002 or otherwise distrib-
uted to victims of a violation of the securities 
laws, or the rules and regulations thereunder, 
underlying such action, unless the balance of the 
Fund at the time the monetary sanction is col-
lected exceeds $100,000,000; 
‘‘(B) any monetary sanction added to a 
disgorgement fund or other fund pursuant to sec-
tion 308 of the Sarbanes-Oxley Act of 2002 that 
is not distributed to the victims for whom the 
disgorgement fund or other fund was established, 
unless the balance of the Fund at the time the de-
termination is made not to distribute the mone-
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tary 
sanction 
to 
such 
victims 
exceeds 
$100,000,000; and 
‘‘(C) all income from investments made 
under paragraph (4). 
‘‘(4) INVESTMENTS.— 
‘‘(A) AMOUNTS
IN
FUND
MAY
BE
IN-
VESTED.—The Commission may request the Sec-
retary of the Treasury to invest the portion of 
the Fund that is not, in the Commission’s judg-
ment, required to meet the current needs of the 
Fund. 
‘‘(B) ELIGIBLE INVESTMENTS.—Investments 
shall be made by the Secretary of the Treasury 
in obligations of the United States or obligations 
that are guaranteed as to principal and interest 
by the United States, with maturities suitable to 
the needs of the Fund as determined by the Com-
mission. 
‘‘(C) INTEREST
AND
PROCEEDS
CRED-
ITED.—The interest on, and the proceeds from 
the sale or redemption of, any obligations held in 
the Fund shall be credited to, and form a part 
of, the Fund. 
‘‘(5) REPORTS TO CONGRESS.—Not later than 
October 30 of each year, the Commission shall trans-
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mit to 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— 
‘‘(A) the Commission’s whistleblower award 
program under this section, including a descrip-
tion of the number of awards that were granted 
and the types of cases in which awards were 
granted during the preceding fiscal year; 
‘‘(B) investor education initiatives described 
in paragraph (2)(B) that were funded by the 
Fund during the preceding fiscal year; 
‘‘(C) the balance of the Fund at the begin-
ning of the preceding fiscal year; 
‘‘(D) the amounts deposited into or credited 
to the Fund during the preceding fiscal year; 
‘‘(E) the amount of earnings on investments 
of amounts in the Fund during the preceding fis-
cal year; 
‘‘(F) the amount paid from the Fund dur-
ing the preceding fiscal year to whistleblowers 
pursuant to subsection (a); 
‘‘(G) the amount paid from the Fund dur-
ing the preceding fiscal year for investor edu-
cation initiatives described in paragraph (1)(B); 
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‘‘(H) the balance of the Fund at the end of 
the preceding fiscal year; and 
‘‘(I) a complete set of audited financial 
statements, including a balance sheet, income 
statement, and cash flow analysis. 
‘‘(g) PROTECTION OF WHISTLEBLOWERS.— 
‘‘(1) PROHIBITION AGAINST RETALIATION.— 
‘‘(A) IN GENERAL.—No employer may dis-
charge, demote, suspend, threaten, harass, or in 
any other manner discriminate against an em-
ployee, contractor, or agent in the terms and 
conditions of employment because of any lawful 
act done by the employee, contractor, or agent in 
providing information to the Commission in ac-
cordance with subsection (a), or in assisting in 
any investigation or judicial or administrative 
action of the Commission based upon or related 
to such information. 
‘‘(B) ENFORCEMENT.— 
‘‘(i) CAUSE
OF
ACTION.—An indi-
vidual who alleges discharge or other dis-
crimination in violation of subparagraph 
(A) may bring an action under this sub-
section in the appropriate district court of 
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