consult the regulations promulgated by the Adminis-
trator of the Small Business Administration on the 
maximum rate of interest for loans and debt securi-
ties in accordance with section 305 of the Small 
Business Investment Act of 1958 (15 U.S.C. 685). 
(e) MATURITY.— 
(1) IN GENERAL.—Any loan made under this 
section shall have a maturity not exceeding 20 years. 
(2) EXTENSION OR RENEWAL.—Any ownership 
investment company that makes a loan to a covered 
business concern under this section is authorized to 
extend the maturity of or renew such loan for addi-
tional periods, not exceeding 10 years, if the owner-
ship investment company finds that such extension 
or renewal will aid in the orderly liquidation of such 
loan. 
(f) REPAYMENT.—Any loan made under this section 
shall be of such sound value, or so secured, as reasonably 
to assure repayment. 
SEC. 9. PORTFOLIO DIVERSIFICATION. 
If any ownership investment company obtains financ-
ing from the Secretary under this Act and such financing 
remains outstanding, the aggregate amount of securities 
acquired and for which commitments may be issued by 
the ownership investment company under this Act for any 
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single covered business concern shall not, without the ap-
proval of the Secretary, exceed 10 percent of the sum of— 
(1) the private capital of such company; and 
(2) the total amount of leverage projected by 
the ownership investment company in the business 
plan of the ownership investment company that was 
approved by the Secretary at the time of the grant 
of the license of the ownership investment company. 
SEC. 10. EXEMPTIONS. 
(a) SECURITIES ACT OF 1933.—Notwithstanding the 
provisions of title I of the Securities Act of 1933 (15 
U.S.C. 77a et seq.), the Securities and Exchange Commis-
sion may from time to time by the rules and regulations 
of the Securities and Exchange Commission, and subject 
to such terms and conditions as may be prescribed under 
section 3 of the Securities Act of 1933 (15 U.S.C. 77c), 
add to the securities exempted as provided in section 3 
of that Act any class of securities issued by an ownership 
investment company under this Act if the Securities and 
Exchange Commission finds, having regard to the pur-
poses of the Securities Act of 1933 (15 U.S.C. 77a et 
seq.), that the enforcement of title I of the Securities Act 
of 1933 (15 U.S.C. 77a et seq.), with respect to such secu-
rities, is not necessary in the public interest and for the 
protection of investors. 
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(b) TRUST INDENTURE ACT
OF 1939.—Notwith-
standing the provisions of title III of the Trust Indenture 
Act of 1939 (15 U.S.C. 77aaa et seq.), the Securities and 
Exchange Commission may from time to time by the rules 
and regulations of the Securities and Exchange Commis-
sion, and subject to such terms and conditions as may be 
prescribed under section 304 of the Trust Indenture Act 
of 1939 (15 U.S.C. 77ddd), add to the securities exempted 
as provided in section 304 of that Act any class of securi-
ties issued by an ownership investment company under 
this Act if the Securities and Exchange Commission finds, 
having regard to the purposes of the Trust Indenture Act 
of 1939 (15 U.S.C. 77aaa et seq.), that the enforcement 
of title III of the Trust Indenture Act of 1939 (15 U.S.C. 
77aaa et seq.), with respect to such securities is not nec-
essary in the public interest and for the protection of in-
vestors. 
(c) INVESTMENT COMPANY ACT OF 1940.—Notwith-
standing the provisions of section 18 of the Investment 
Company Act of 1940 (15 U.S.C. 80a–18), the provisions 
of subparagraphs (A) and (B) of subsection (a)(1) of that 
section shall not apply to any ownership investment com-
pany operating under this Act, provided that such class 
of senior security shall be guaranteed by the Department. 
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SEC. 11. LEVERAGE REQUIREMENTS. 
No leverage shall be committed by the Department 
under this Act to any licensee unless the managers of such 
licensee— 
(1) certify to the Department the names of any 
attorneys, agents, or other persons engaged by or on 
behalf of such licensee for the purpose of expediting 
applications made to the Department for assistance 
of any sort, and the fees paid or to be paid to any 
such persons; and 
(2) executes an agreement binding any such li-
censee for a period of 2 years after any assistance 
is rendered by the Department to such licensee, to 
refrain from employing, tendering any office or em-
ployment to, or retaining for professional services, 
any person who, on the date such assistance or any 
part thereof was rendered, or within the 1 year pe-
riod prior thereto, shall have served as an officer, at-
torney, agent, or employee of the Department occu-
pying a position or engaging in activities which the 
department shall have determined involve discretion 
with respect to the granting of assistance under this 
Act. 
SEC. 12. REPORTING. 
(a) IN GENERAL.—Not later than 1 year after the 
date of enactment of this Act, and each year thereafter, 
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the Secretary shall submit to Congress a full and detailed 
account of the operations of the Department under this 
Act, including the amount of losses sustained by the Gov-
ernment as a result of such operations during the pre-
ceding fiscal year, together with an estimate of the total 
losses that the Government can reasonably expect to incur 
as a result of such operations during the current fiscal 
year. 
(b) CONTENTS.—In the annual report submitted pur-
suant to subsection (a), the Secretary shall include full 
and detailed accounts relative to the following matters: 
(1) The plans of the Department to insure the 
provision of ownership investment company financ-
ing and licensing to all areas of the country and to 
all covered business concerns, including steps taken 
to accomplish the same. 
(2) The plans of the Department to support 
States that seek to increase the number of licensees 
in the State. 
(3) Steps taken by the Department to maximize 
recoupment of Government funds incident to the in-
auguration and administration of the ownership in-
vestment company program and to insure compli-
ance with statutory and regulatory standards relat-
ing to the ownership investment company program. 
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(4) Recommendations to the Department of the 
Treasury with respect to additional tax incentives to 
improve and facilitate the operations of ownership 
investment companies and to encourage the use of 
the financing facilities of ownership investment com-
panies by covered business concerns. 
(5) A report from the Securities and Exchange 
Commission enumerating actions undertaken by the 
Securities and Exchange Commission to— 
(A) simplify and minimize the regulatory 
requirements governing ownership investment 
companies under the Federal securities laws; 
and 
(B) eliminate overlapping regulation and 
jurisdiction as between the Securities and Ex-
change Commission, the Department, and other 
agencies of the executive branch. 
(6) Actions undertaken by the Securities and 
Exchange Commission to simplify compliance by 
ownership investment companies with the require-
ments of the Investment Company Act of 1940 and 
to facilitate the election to be taxed as regulated in-
vestment companies pursuant to section 851 of the 
Internal Revenue Code of 1954. 
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(C) the total value of employer securities; 
(D) the assets of all membership accounts; 
(E) the median membership account bal-
ance; and 
(F) demographic information of member-
ship base, disaggregated by race, gender, and 
State, to the extent available. 
SEC. 13. REVOCATION AND SUSPENSION OF LICENSES; 
CEASE AND DESIST ORDERS. 
(a) IN GENERAL.—A license may be revoked or sus-
pended by the Secretary— 
(1) for any false statement knowingly made in 
any written statement required under this Act, or 
under any regulation issued under this Act by the 
Secretary; 
(2) if any written statement required under this 
Act, or under any regulation issued under this Act 
by the Secretary, fails to state a material fact nec-
essary in order to make the statement not mis-
leading in the light of the circumstances under 
which the statement was made; 
(3) for willful or repeated violation, or willful or 
repeated failure to observe, any provision of this Act; 
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(4) for willful or repeated violation of, or willful 
or repeated failure to observe, any rule or regulation 
issued under this Act by the Secretary; or 
(5) for violation of, or failure to observe, any 
cease and desist order issued by the Secretary under 
this section. 
(b) ORDER TO CEASE AND DESIST.— 
(1) ISSUANCE.—Where a licensee or any other 
person has not complied with any provision of this 
Act, or of any regulation issued under this Act by 
the Secretary, or is engaging or is about to engage 
in any acts or practices that constitute or will con-
stitute a violation of such Act or regulation, the Sec-
retary may order such licensee or other person to 
cease and desist from such action or failure to act. 
(2) ACTIONS REQUIRED.—The Secretary may 
order such licensee or other person to take such ac-
tion or to refrain from such action as the Secretary 
deems necessary to insure compliance with the Act 
and the regulations implementing this Act. 
(3) SUSPENSION OF LICENSES.—The Secretary 
may also suspend the license of a licensee against 
whom an order has been issued until such licensee 
complies with an order issued under this subsection. 
(c) ORDERS TO SHOW CAUSE.— 
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(1) ISSUANCE.—Before revoking or suspending 
a license pursuant to subsection (a) or issuing a 
cease and desist order pursuant to subsection (b), 
the Secretary shall serve upon the licensee and any 
other person involved an order to show cause why an 
order revoking or suspending the license or a cease 
and desist order should not be issued. 
(2) CONTENTS.—Any order to show cause 
issued under paragraph (1) shall— 
(A) contain a statement of the matters of 
fact and law asserted by the Department and 
the legal authority and jurisdiction under which 
a hearing is to be held; and 
(B) set forth that a hearing will be held 
before the Department at a time and place stat-
ed in the order. 
(3) STATEMENT OF FINDINGS.—If after hear-
ing, or a waiver thereof, the Secretary determines on 
the record that an order revoking or suspending the 
license or a cease and desist order should issue, the 
Secretary shall— 
(A) promptly issue such order, which shall 
include a statement of the findings of the Sec-
retary and the grounds and reasons therefor 
and specify the effective date of the order; and 
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(B) cause the order to be served on the li-
censee and any other person involved. 
(d) WITNESSES.— 
(1) SUBPOENA
AUTHORITY.—The Secretary 
may require by subpoena the attendance and testi-
mony of witnesses and the production of all books, 
papers, and documents relating to the hearing from 
any place in the United States. 
(2) PAYMENT.—Any witness summoned before 
the Department shall be paid by the party at whose 
instance the witness was called the same fees and 
mileage that are paid witnesses in the courts of the 
United States. 
(3) AID OF THE COURT.—In case of disobe-
dience to a subpoena, the Secretary, or any party to 
a proceeding before the Department, may invoke the 
aid of any court of the United States in requiring 
the attendance and testimony of witnesses and the 
production of books, papers, and documents. 
(e) APPEALS.— 
(1) FILING.— 
(A) IN GENERAL.—An order issued by the 
Secretary under this section shall be final and 
conclusive unless within 30 days after the serv-
ice thereof the licensee, or other person against 
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whom an order is issued, appeals to the United 
States court of appeals for the circuit in which 
such licensee has its principal place of business 
by filing with the clerk of such court a petition 
praying that the Department’s order be set 
aside or modified in the manner stated in the 
petition. 
(B) LEAVE REQUIRED.—After the expira-
tion of the 30-day period described in subpara-
graph (A), a petition may be filed only by leave 
of court on a showing of reasonable grounds for 
failure to file the petition theretofore. 
(2) DELIVERY.—The clerk of the court shall 
immediately cause a copy of the petition described in 
paragraph (1) to be delivered to the Secretary, and, 
upon receipt, the Secretary shall certify and file in 
the court a transcript of the record upon which the 
order complained of was entered. 
(3) AMENDING PETITION.—If, before the record 
is filed under paragraph (2), the Secretary amends 
or sets aside its order, in whole or in part, the peti-
tioner may amend the petition within such time as 
the court may determine, on notice to the Secretary. 
(4) OPERATION OF ORDER.—The filing of a pe-
tition for review under this subsection shall not of 
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itself stay or suspend the operation of the order of 
the Department, but the court of appeals in its dis-
cretion may restrain or suspend, in whole or in part, 
the operation of the order pending the final hearing 
and determination of the petition. 
(5) DISPOSITION.— 
(A) IN GENERAL.—The court may affirm, 
modify, or set aside the order of the Secretary 
under this section. 
(B) EVIDENCE.—If the court determines 
that the just and proper disposition of the case 
requires the taking of additional evidence, the 
court shall order the Secretary to reopen the 
hearing for the taking of such evidence, in such 
manner and upon such terms and conditions as 
the court may deem proper. 
(C) FINDINGS OF FACT.—The Secretary— 
(i) may modify the findings as to the 
facts of the Department, or make new 
findings, by reason of the additional evi-
dence so taken; and 
(ii) shall file modified or new findings 
and the amendments, if any, of the order, 
with the record of such additional evidence. 
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