1191 
deem appropriate in accordance with the 
purposes of this title, 
shall register with, and be subject to examina-
tion by, such State. The Commission shall pub-
lish a list of the States that regulate and exam-
ine, or require regulation and examination of, 
investment advisers to which the requirements 
of this paragraph apply.’’. 
SEC. 7419. CUSTODIAL REQUIREMENTS. 
Not later than 180 days after the date of the enact-
ment of this subtitle, the Securities and Exchange Com-
mission shall adopt a rule pursuant to its authority under 
section 211(a) of the Investment Advisers Act of 1940 
making it unlawful under section 206(4) of such Act for 
an investment adviser registered under the Act to have 
custody of funds or securities of a client the value of which 
exceeds $10,000,000, subject to such exception the Com-
mission determines in such rule are in the public interest 
and consistent with the protection of investors, unless— 
(1) the funds and securities are maintained 
with a qualified custodian either in a separate ac-
count for each client under the client’s name, or in 
accounts that contain only client funds and securi-
ties under the name of the investment adviser as 
agent or trustee for the client; and 
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(2) the qualified custodian does not directly or 
indirectly provide investment advice with respect to 
such funds or securities. 
SEC. 7420. OMBUDSMAN. 
(a) APPOINTMENT.—Not later than 180 days after 
the date of the enactment of this subtitle, the Chairman 
of the Securities and Exchange Commission shall appoint 
an Ombudsman who shall report directly to the Chairman. 
(b) DUTIES.—The Ombudsman appointed under sub-
section (a) shall— 
(1) act as a liaison between the Commission 
and any affected person with respect to any problem 
such person may have in dealing with the Commis-
sion resulting from the regulatory activities of the 
Commission; 
(2) review and make recommendations regard-
ing Commission policies and procedures to encour-
age persons to present questions to the Commission 
regarding compliance with Federal securities laws; 
and 
(3) maintain confidentiality of communications 
between such persons and the Ombudsman. 
(c) LIMITATION.—In carrying out the duties under 
subsection (b), the Ombudsman shall utilize personnel of 
the Commission to the extent practicable. Nothing in this 
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section shall be construed as replacing, altering, or dimin-
ishing the activities of any ombudsman or similar office 
in any other agency. 
(d) REPORT.—Each year, the Ombudsman shall sub-
mit a report to the Commission for inclusion in the annual 
report that describes the activities and evaluates the effec-
tiveness of the Ombudsman during the preceding year. In 
that report, the Ombudsman shall include solicited com-
ments and evaluations from registrants in regards to the 
effectiveness of the Ombudsman. 
PART 5—SECURITIES INVESTOR PROTECTION 
ACT AMENDMENTS 
SEC. 7501. INCREASING THE MINIMUM ASSESSMENT PAID 
BY SIPC MEMBERS. 
Section 4(d)(1)(C) of the Securities Investor Protec-
tion Act of 1970 (15 U.S.C. 78ddd(d)(1)(C)) is amended 
by striking ‘‘$150 per annum’’ and inserting the following: 
‘‘0.02 percent of the gross revenues from the securities 
business of such member of SIPC’’. 
SEC. 7502. INCREASING THE BORROWING LIMIT ON TREAS-
URY LOANS. 
Section 4(h) of the Securities Investor Protection Act 
of 1970 (15 U.S.C. 78ddd(h)) is amended by striking ‘‘of 
not to exceed $1,000,000,000’’ and inserting ‘‘the lesser 
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of $2,500,000,000 or the target amount of the SIPC Fund 
specified in the bylaws of SIPC’’. 
SEC. 7503. INCREASING THE CASH LIMIT OF PROTECTION. 
Section 9 of the Securities Investor Protection Act 
of 1970 (15 U.S.C. 78fff–3) is amended— 
(1) in subsection (a)(1), by striking ‘‘$100,000 
for each such customer’’ and inserting ‘‘the standard 
maximum cash advance amount for each such cus-
tomer, as determined in accordance with subsection 
(d)’’; and 
(2) by adding the following new subsections: 
‘‘(d) STANDARD MAXIMUM CASH ADVANCE AMOUNT 
DEFINED.—For purposes of this section, the term ‘stand-
ard maximum cash advance amount’ means $250,000, as 
such amount may be adjusted after March 31, 2010, as 
provided under subsection (e). 
‘‘(e) INFLATION ADJUSTMENT.— 
‘‘(1) IN
GENERAL.—No later than April 1, 
2010, and every 5 years thereafter, and subject to 
the approval of the Commission as provided under 
section 3(e)(2), the Board of Directors of SIPC shall 
determine whether an inflation adjustment to the 
standard maximum cash advance amount is appro-
priate. If the Board of Directors of SIPC determines 
such an adjustment is appropriate, then the stand-
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ard maximum cash advance amount shall be an 
amount equal to— 
‘‘(A) $250,000 multiplied by, 
‘‘(B) the ratio of the annual value of the 
Personal Consumption Expenditures Chain- 
Type Price Index (or any successor index there-
to), published by the Department of Commerce, 
for the calendar year preceding the year in 
which such determination is made, to the pub-
lished annual value of such index for the cal-
endar year preceding the year in which this 
subsection was enacted. 
The index values used in calculations under this 
paragraph shall be, as of the date of the calculation, 
the values most recently published by the Depart-
ment of Commerce. 
‘‘(2) ROUNDING.—If the standard maximum 
cash advance amount determined under paragraph 
(1) for any period is not a multiple of $10,000, the 
amount so determined shall be rounded down to the 
nearest $10,000. 
‘‘(3) PUBLICATION AND REPORT TO THE CON-
GRESS.—Not later than April 5 of any calendar year 
in which a determination is required to be made 
under paragraph (1)— 
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(2) in paragraph (2), by striking ‘‘$50,000’’ 
and inserting ‘‘$250,000’’. 
SEC. 7508. PENALTY FOR MISREPRESENTATION OF SIPC 
MEMBERSHIP OR PROTECTION. 
Section 14 of the Securities Investor Protection Act 
of 1970 (15 U.S.C. 78jjj) is amended by adding at the 
end the following new subsection: 
‘‘(d) MISREPRESENTATION OF SIPC MEMBERSHIP 
OR PROTECTION.— 
‘‘(1) IN
GENERAL.—Any person who falsely 
represents by any means (including, without limita-
tion, through the Internet or any other medium of 
mass communication), with actual knowledge of the 
falsity of the representation and with an intent to 
deceive or cause injury to another, that such person, 
or another person, is a member of SIPC or that any 
person or account is protected or is eligible for pro-
tection under this Act or by SIPC, shall be liable for 
any damages caused thereby and shall be fined not 
more than $250,000 or imprisoned for not more 
than five years. 
‘‘(2) INTERNET
SERVICE
PROVIDERS.—Any 
Internet service provider that, on or through a sys-
tem or network controlled or operated by the Inter-
net service provider, transmits, routes, provides con-
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nections for, or stores any material containing any 
misrepresentation of the kind prohibited in para-
graph (1) shall be liable for any damages caused 
thereby, including damages suffered by SIPC, if the 
Internet service provider— 
‘‘(A) has actual knowledge that the mate-
rial contains a misrepresentation of the kind 
prohibited in paragraph (1), or 
‘‘(B) in the absence of actual knowledge, is 
aware of facts or circumstances from which it 
is apparent that the material contains a mis-
representation of the kind prohibited in para-
graph (1), and 
upon obtaining such knowledge or awareness, fails to 
act expeditiously to remove, or disable access to, the 
material. 
‘‘(3) INJUNCTIONS.—Any court having jurisdic-
tion of a civil action arising under this Act may 
grant temporary injunctions and final injunctions on 
such terms as the court deems reasonable to prevent 
or restrain any violation of paragraph (1) or (2). 
Any such injunction may be served anywhere in the 
United States on the person enjoined, shall be oper-
ative throughout the United States, and shall be en-
forceable, by proceedings in contempt or otherwise, 
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by any United States court having jurisdiction over 
that person. The clerk of the court granting the in-
junction shall, when requested by any other court in 
which enforcement of the injunction is sought, trans-
mit promptly to the other court a certified copy of 
all papers in the case on file in such clerk’s office.’’. 
SEC. 7509. FUTURES HELD IN A PORTFOLIO MARGIN SECU-
RITIES ACCOUNT PROTECTION. 
(a) SIPC ADVANCES.—Section 9(a)(1) of the Securi-
ties Investor Protection Act of 1970 (15 U.S.C. 78fff– 
3(a)(1)) is amended by inserting ‘‘or options on futures 
contracts’’ after ‘‘claim for securities’’. 
(b) DEFINITIONS.—Section 16 of such Act (15 
U.S.C. 78lll) is amended— 
(1) by amending paragraph (2) to read as fol-
lows: 
‘‘(2) CUSTOMER.— 
‘‘(A) IN GENERAL.—The term ‘customer’ 
of a debtor means any person (including any 
person with whom the debtor deals as principal 
or agent) who has a claim on account of securi-
ties 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, 
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to cover consummated sales, pursuant to pur-
chases, as collateral, security, or for purposes of 
effecting transfer. The term ‘customer’ includes 
any person who has a claim against the debtor 
arising out of sales or conversions of such secu-
rities. 
‘‘(B) 
INCLUDED
PERSONS.—The 
term 
‘customer’ includes— 
‘‘(i) any person who has deposited 
cash with the debtor for the purpose of 
purchasing securities; and 
‘‘(ii) any person who has a claim 
against the debtor for, or a claim against 
the debtor arising out of sales or conver-
sions of, cash, securities, futures contracts, 
or options on futures contracts received, 
acquired, or held in a portfolio margining 
account carried as a securities account 
pursuant to a portfolio margining program 
approved by the Commission. 
‘‘(C) EXCLUDED
PERSONS.—The term 
‘customer’ does not include— 
‘‘(i) any person to the extent that the 
claim of such person arises out of trans-
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actions with a foreign subsidiary of a mem-
ber of SIPC; 
‘‘(ii) any person to the extent that 
such person has a claim for cash or securi-
ties which by contract, agreement, or un-
derstanding, or by operation of law, is part 
of the capital of the debtor, or is subordi-
nated 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; or 
‘‘(iii) any person to the extent such 
person has a claim relating to any open re-
purchase or open reverse repurchase agree-
ment. 
For purposes of this paragraph, the term ‘re-
purchase agreement’ means the sale of a secu-
rity at a specified price with a simultaneous 
agreement or obligation to repurchase the secu-
rity at a specified price on a specified future 
date.’’; 
(2) in paragraph (4), by inserting after the first 
sentence the following new sentence: ‘‘In the case of 
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portfolio margining accounts of customers that are 
carried as securities accounts pursuant to a portfolio 
margining program approved by the Commission, 
such term shall also include futures contracts and 
options on futures contracts received, acquired, or 
held by or for the account of a debtor from or for 
such accounts, and the proceeds thereof.’’; 
(3) in paragraph (9), by inserting before ‘‘Such 
term’’ in the matter following subparagraph (L) the 
following: ‘‘The term includes revenues earned by a 
broker or dealer in connection with transactions in 
customers’ portfolio margining accounts carried as 
securities accounts pursuant to a portfolio margining 
program approved by the Commission.’’; and 
(4) in paragraph (11)— 
(A) by amending subparagraph (A) to read 
as follows: 
‘‘(A) calculating the sum which would have 
been owed by the debtor to such customer if the 
debtor had liquidated, by sale or purchase on 
the filing date— 
‘‘(i) all securities positions of such 
customer (other than customer name secu-
rities reclaimed by such customer); and 
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‘‘(ii) all positions in futures contracts 
and options on futures contracts held in a 
portfolio margining account carried as a 
securities account pursuant to a portfolio 
margining program approved by the Com-
mission; minus’’; and 
(B) by inserting before ‘‘In determining’’ 
in the matter following subparagraph (C) the 
following: ‘‘A claim for a commodity futures 
contract received, acquired, or held in a port-
folio margining account pursuant to a portfolio 
margining program approved by the Commis-
sion, or a claim for a security futures contract, 
shall be deemed to be a claim for the mark-to- 
market (variation) payments due with respect 
to such contract as of the filing date, and such 
claim shall be treated as a claim for cash.’’. 
SEC. 7510. STUDY AND REPORT ON THE FEASIBILITY OF 
RISK-BASED ASSESSMENTS FOR SIPC MEM-
BERS. 
(a) STUDY REQUIRED.—The Comptroller General of 
the United States shall conduct a study on whether the 
Securities Investor Protection Corporation (hereafter in 
this section referred to as ‘‘SIPC’’) should be required to 
impose assessments, on its member brokers and dealers, 
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based on risk for the purpose of adequately maintaining 
the SIPC Fund. 
(b) CONTENT.—The Comptroller General in con-
ducting this study shall— 
(1) identify and examine available approaches, 
including modeling, to measure broker and dealer 
operational risk; 
(2) analyze whether the available approaches to 
measure broker and dealer operational risk can be 
used in managing the aggregate risk to the SIPC 
Fund; 
(3) explore whether objective measures like the 
volume of assets of the SIPC member, previous en-
forcement and compliance actions taken by regu-
latory bodies against the SIPC member, or the num-
ber of years the SIPC member has been in oper-
ation, among other factors, can be used to assess the 
probability the fund will incur a loss with respect to 
the SIPC member; 
(4) examine the impact that risk-based assess-
ments could have on large and small brokers and 
dealers; and 
(5) examine the impact that risk-based assess-
ments could have on institutional and retail brokers 
and dealers. 
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(c) CONSULTATION.—The Comptroller General in 
planning and conducting this study shall consult with the 
Securities and Exchange Commission, the Federal Deposit 
Insurance Corporation, SIPC, the Financial Industry Reg-
ulatory Authority, and any other public or private sector 
organization that the Comptroller General considers ap-
propriate. 
(d) REPORT REQUIRED.—Not later than one year 
after the date of enactment of this subtitle, the Comp-
troller general shall submit a report of the results of the 
study required by this section to the Committee on Bank-
ing, Housing, and Urban Affairs of the Senate and the 
Committee on Financial Services of the House of Rep-
resentatives. 
SEC. 7511. BUDGETARY TREATMENT OF COMMISSION 
LOANS TO SIPC. 
Section 4(g) of the Securities Investor Protection Act 
of 1970 (15 U.S.C. 78ddd(g)) is amended by adding at 
the end the following: ‘‘Any loan made by the Commission 
to SIPC under this subsection shall not be considered to 
result in a new direct loan obligation or a new loan guar-
antee commitment for purposes of section 504 of the Fed-
eral Credit Reform Act of 1990.’’. 
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PART 6—SARBANES-OXLEY ACT AMENDMENTS 
SEC. 7601. PUBLIC COMPANY ACCOUNTING OVERSIGHT 
BOARD OVERSIGHT OF AUDITORS OF BRO-
KERS AND DEALERS. 
(a) DEFINITIONS.—(1) Title I of the Sarbanes-Oxley 
Act of 2002 is amended by adding at the end the following 
new section: 
‘‘SEC. 110. DEFINITIONS. 
‘‘For the purposes of this title, and notwithstanding 
section 2: 
‘‘(1) AUDIT.—The term ‘audit’ means an exam-
ination of the financial statements, reports, docu-
ments, procedures or 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 (or, for the period pre-
ceding the adoption of applicable rules of the Board 
under section 103, in accordance with then-applica-
ble generally accepted auditing and related stand-
ards for such purposes), for the purpose of express-
ing an opinion on such financial statements, reports, 
documents, procedures or controls, or notices. 
‘‘(2) AUDIT REPORT.—The term ‘audit report’ 
means a document, report, notice, or other record— 
‘‘(A) prepared following an audit per-
formed for purposes of compliance by an issuer, 
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broker, or dealer with the requirements of the 
securities laws; and 
‘‘(B) in which a public accounting firm ei-
ther— 
‘‘(i) sets forth the opinion of that firm 
regarding a financial statement, report, no-
tice, other document, procedures, or con-
trols; or 
‘‘(ii) asserts that no such opinion can 
be expressed. 
‘‘(3) PROFESSIONAL
STANDARDS.—The term 
‘professional standards’ means— 
‘‘(A) accounting principles that are— 
‘‘(i) established by the standard set-
ting body described in section 19(b) of the 
Securities Act of 1933, as amended by this 
Act, or prescribed by the Commission 
under section 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-
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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— 
‘‘(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 pro-
mulgated as rules of the Commission. 
‘‘(4) 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, 
income 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 
statement, or financial statement is required to be 
certified by a registered public accounting firm. 
‘‘(5) DEALER.—The term ‘dealer’ means a 
dealer (as such term is defined in section 3(a)(5) of 
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the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(5))) that is required to file a balance sheet, 
income 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 
statement, or financial statement is required to be 
certified by a registered public accounting firm. 
‘‘(6) SELF-REGULATORY
ORGANIZATION.—The 
term ‘self-regulatory organization’ has the same 
meaning as in section 3(a)(26) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)(26)).’’. 
(2) The table of sections in section 1(b) of such Act 
is amended, by inserting after the item relating to section 
109 the following new item: 
‘‘Sec. 110. Definitions.’’. 
(b) ESTABLISHMENT AND ADMINISTRATION OF THE 
PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD.— 
Section 101 of such Act is amended— 
(1) by striking ‘‘issuers’’ each place it appears 
and inserting ‘‘issuers, brokers, and dealers’’; 
(2) in subsection (a), by striking ‘‘public com-
panies’’ and inserting ‘‘companies’’; and 
(3) in subsection (a), by striking ‘‘for compa-
nies the securities of which are sold to, and held by 
and for, public investors’’. 
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(c) REGISTRATION WITH THE BOARD.—Section 102 
of such Act is amended— 
(1) in subsection (a), by striking ‘‘Beginning 
180 days after the date of the determination of the 
Commission under section 101(d), it’’ and inserting 
‘‘It’’; 
(2) in subsections (a) and (b)(2)(G), by striking 
‘‘issuer’’ each place it appears and inserting ‘‘issuer, 
broker, or dealer’’; and 
(3) 
in 
subsection 
(b)(2)(A), 
by 
striking 
‘‘issuers’’ and inserting ‘‘issuers, brokers, and deal-
ers’’. 
(d) AUDITING AND INDEPENDENCE.—Section 103(a) 
of such Act is amended— 
(1) in paragraph (1), by striking ‘‘and such eth-
ics standards’’ and inserting ‘‘such ethics standards, 
and such independence standards’’; 
(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 deal-
ers’’. 
(e) INSPECTIONS OF REGISTERED PUBLIC ACCOUNT-
ING FIRMS.—Section 104 of such Act is amended— 
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(1) in subsection (a), by striking ‘‘issuers’’ and 
inserting ‘‘issuers, brokers, and dealers’’; 
(2) in subsection (b)(1)(A)— 
(A) by striking ‘‘audit reports’’ and insert-
ing ‘‘audit reports on annual financial state-
ments’’; and 
(B) by striking ‘‘and’’; 
(3) in subsection (b)(1)(B)— 
(A) by striking ‘‘audit reports’’ and insert-
ing ‘‘audit reports on annual financial state-
ments’’; and 
(B) by striking the period at the end and 
inserting ‘‘; and’’; and 
(4) by adding at the end of subsection (b)(1) 
the following new subparagraph: 
‘‘(C) with respect to each registered public 
accounting firm that regularly provides audit 
reports and is not described under subpara-
graph (A) or (B), on a basis to be determined 
by the Board, by rule, consistent with the pub-
lic interest and protection of investors.’’. 
(f) 
INVESTIGATIONS
AND
DISCIPLINARY
PRO-
CEEDINGS.—Section 105(c)(7)(B) of such Act is amend-
ed— 
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(1) in the subparagraph heading, by inserting 
‘‘, BROKER, OR DEALER’’ after ‘‘ISSUER’’; 
(2) by striking ‘‘any issuer’’ each place it ap-
pears and inserting ‘‘any issuer, broker, or dealer’’; 
and 
(3) by striking ‘‘an issuer under this sub-
section’’ and inserting ‘‘a registered public account-
ing firm under this subsection’’. 
(g) FOREIGN PUBLIC ACCOUNTING FIRMS.—Section 
106 of such Act is amended— 
(1) in subsection (a)(1), by striking ‘‘issuer’’ 
and inserting ‘‘issuer, broker, or dealer’’; and 
(2) in subsection (a)(2), by striking ‘‘issuers’’ 
and inserting ‘‘issuers, brokers, or dealers’’. 
(h) FUNDING.—Section 109 of such Act is amend-
ed— 
(1) in subsection (c)(2), by striking ‘‘subsection 
(i)’’ and inserting ‘‘subsection (j)’’; 
(2) in subsection (d)(2), by striking ‘‘allowing 
for differentiation among classes of issuers, as ap-
propriate’’ and inserting ‘‘and among brokers and 
dealers in accordance with subsection (h), and allow-
ing for differentiation among classes of issuers and 
brokers and dealers, as appropriate’’; 
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(3) in subsection (d), by inserting at the end 
the following new paragraph: 
‘‘(3) BROKERS
AND
DEALERS.—The rules of 
the Board under paragraph (1) shall provide that 
the allocation, assessment, and collection by the 
Board (or an agent appointed by the Board) of the 
fee established under paragraph (1) with respect to 
brokers and dealers shall not begin until the first 
day of the first full fiscal year beginning after the 
date of the enactment of this paragraph.’’; 
(4) by redesignating subsections (h), (i), and (j) 
as subsections (i), (j), and (k), respectively; and 
(5) by inserting after subsection (g) the fol-
lowing new subsection: 
‘‘(h) ALLOCATION OF ACCOUNTING SUPPORT FEES 
AMONG BROKERS AND DEALERS.— 
‘‘(1) IN GENERAL.—Any amount due from bro-
kers and dealers (or a particular class of such bro-
kers and dealers) under this section to fund the 
budget of the Board shall be allocated among and 
payable by such brokers and dealers (or such bro-
kers and dealers in a particular class, as applicable). 
A broker or dealer’s allocation shall be in proportion 
to the broker or dealer’s net capital compared to the 
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total net capital of all brokers and dealer, in accord-
ance with the rules of the Board. 
‘‘(2) OBLIGATION
TO
PAY.—Every broker or 
dealer shall pay the share of a reasonable annual ac-
counting support fee or fees allocated to such broker 
or dealer under this section.’’. 
(i) REFERRAL OF INVESTIGATIONS TO A SELF-REGU-
LATORY ORGANIZATION.—Section 105(b)(4)(B) of the 
Sarbanes-Oxley Act of 2002 is amended— 
(1) by redesignating clauses (ii) and (iii) as 
clauses (iii) and (iv), respectively; and 
(2) by inserting after clause (i) the following 
new clause: 
‘‘(ii) to a self-regulatory organization, 
in the case of an investigation that con-
cerns an audit report for a broker or deal-
er that is subject to the jurisdiction of 
such self-regulatory organization;’’. 
(j) USE OF DOCUMENTS RELATED TO AN INSPEC-
TION
OR INVESTIGATION.—Section 105(b)(5)(B)(ii) of 
such Act is amended— 
(1) in subclause (III), by striking ‘‘and’’; 
(2) in subclause (IV), by striking the comma 
and inserting ‘‘; and’’; and 
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(3) by inserting after subclause (IV) the fol-
lowing new subclause: 
‘‘(V) a self-regulatory organiza-
tion, with respect to an audit report 
for a broker or dealer that is subject 
to the jurisdiction of such self-regu-
latory organization,’’. 
SEC. 7602. FOREIGN REGULATORY INFORMATION SHARING. 
(a) DEFINITION.—Section 2(a) of the Sarbanes- 
Oxley Act of 2002 (15 U.S.C. 7201(a)) is amended by 
inserting after paragraph (16) the following: 
‘‘(17) FOREIGN AUDITOR OVERSIGHT AUTHOR-
ITY.—The term ‘foreign auditor oversight authority’ 
means any governmental body or other entity em-
powered by a foreign government to conduct inspec-
tions of public accounting firms or otherwise to ad-
minister or enforce laws related to the regulation of 
public accounting firms.’’. 
(b) AVAILABILITY TO SHARE INFORMATION.—Sec-
tion 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
OVER-
SIGHT
AUTHORITIES.—When in the Board’s 
discretion it is necessary to accomplish the pur-
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poses of this Act or to protect investors, and 
without the loss of its status as confidential and 
privileged in the hands of the Board, all infor-
mation referred to in subparagraph (A) that re-
lates to a public accounting firm within the in-
spection authority, or other regulatory or law 
enforcement jurisdiction, of a foreign auditor 
oversight authority may be made available to 
the foreign auditor oversight authority if the 
foreign auditor oversight authority provides 
such assurances of confidentiality as the Board 
determines appropriate.’’. 
(c) 
CONFORMING
AMENDMENT.—Section 
105(b)(5)(A) of the Sarbanes-Oxley Act of 2002 (15 
U.S.C. 7215(b)(5)(A)) is amended by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B) and (C)’’. 
SEC. 7603. EXPANSION OF AUDIT INFORMATION TO BE PRO-
DUCED AND EXCHANGED WITH FOREIGN 
COUNTERPARTS. 
Section 106 of the Sarbanes-Oxley Act of 2002 (15 
U.S.C. 7216) is amended— 
(1) by amending subsection (b) to read as fol-
lows: 
‘‘(b) PRODUCTION OF DOCUMENTS.— 
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‘‘(1) PRODUCTION BY FOREIGN FIRMS.—If a 
foreign public accounting firm issues an audit re-
port, performs audit work, conducts interim reviews, 
or performs material services upon which a reg-
istered public accounting firm relies in the conduct 
of an audit or interim review, the foreign public ac-
counting firm shall produce its audit work papers 
and all other documents related to any such audit 
work or interim review to the Commission or the 
Board when requested by the Commission or the 
Board and the foreign public accounting firm shall 
be subject to the jurisdiction of the courts of the 
United States for purposes of enforcement of any re-
quest of such documents. 
‘‘(2) OTHER
PRODUCTION.—Any registered 
public accounting firm that relies, in whole or in 
part, on the work of a foreign public accounting firm 
in issuing an audit report, performing audit work, or 
conducting an interim review, shall— 
‘‘(A) produce the foreign public accounting 
firm’s audit work papers and all other docu-
ments related to any such work in response to 
a request for production by the Commission or 
the Board; and 
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‘‘(B) secure the agreement of any foreign 
public accounting firm to such production, as a 
condition of its reliance on the work of that for-
eign public accounting firm.’’; 
(2) by redesignating subsection (d) as sub-
section (g); and 
(3) by inserting after subsection (c) the fol-
lowing new subsections: 
‘‘(d) SERVICE OF REQUESTS OR PROCESS.—Any for-
eign public accounting firm that performs work for a do-
mestic registered public accounting firm shall furnish to 
the domestic firm a written irrevocable consent and power 
of attorney that designates the domestic firm as an agent 
upon whom may be served any process, pleadings, or other 
papers in any action brought to enforce this section. Any 
foreign public accounting firm that issues an audit report, 
performs audit work, performs interim reviews, or per-
forms other material services upon which a registered pub-
lic accounting firm relies in the conduct of an audit or 
interim review, shall designate to the Commission or the 
Board an agent in the United States upon whom may be 
served any process, pleading, or other papers in any action 
brought to enforce this section or any request by the Com-
mission or the Board under this section. 
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‘‘(e) SANCTIONS.—A willful refusal to comply, in 
whole in or in part, with any request by the Commission 
or the Board under this section, shall be a violation of 
this Act. 
‘‘(f) OTHER MEANS OF SATISFYING PRODUCTION 
OBLIGATIONS.—Notwithstanding any other provision of 
this section, the staff of the Commission or Board may 
allow foreign public accounting firms subject to this sec-
tion to meet production obligations under this section 
though alternate means, such as through foreign counter-
parts of the Commission or Board.’’. 
SEC. 7604. CONFORMING AMENDMENT RELATED TO REG-
ISTRATION. 
Section 102(b)(3)(A) of the Sarbanes-Oxley Act of 
2002 (15 U.S. Code 7212(b)(3)(A)) is amended by strik-
ing ‘‘by the Board’’ and inserting ‘‘by the Commission or 
the Board’’. 
SEC. 7605. FAIR FUND AMENDMENTS. 
Section 308 of the Sarbanes-Oxley Act of 2002 (15 
U.S.C. 7246(a)) is amended— 
(1) by amending subsection (a) to read as fol-
lows: 
‘‘(a) CIVIL PENALTIES TO BE USED FOR THE RE-
LIEF OF VICTIMS.—If in any judicial or administrative ac-
tion brought by the Commission under the securities laws 
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(as such term is defined in section 3(a)(47) of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78c(a)(47)), the 
Commission obtains a civil penalty against any person for 
a violation of such laws or the rules and regulations there-
under, or such person agrees in settlement of any such 
action to such civil penalty, the amount of such civil pen-
alty or settlement shall, on the motion or at the direction 
of the Commission, be added to and become part of a 
disgorgement fund or other fund established for the ben-
efit of the victims of such violation.’’; 
(2) in subsection (b), by— 
(A) striking ‘‘for a disgorgement fund de-
scribed in subsection (a)’’ and inserting ‘‘for a 
disgorgement fund or other fund described in 
subsection (a)’’; and 
(B) striking ‘‘in the disgorgement fund’’ 
and inserting ‘‘in such fund’’; and 
(3) by striking subsection (e). 
SEC. 7606. EXEMPTION FOR NONACCELERATED FILERS. 
(a) EXEMPTION.—Section 404 of the Sarbanes-Oxley 
Act of 2002 is amended by adding at the end the fol-
lowing: 
‘‘(c) EXEMPTION
FOR SMALLER ISSUERS.—Sub-
section (b) shall not apply with respect to any audit report 
prepared for an issuer that is not an accelerated filer with-
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in the meaning Rule 12b–2 of the Commission (17 C.F.R. 
240.12b–2).’’. 
(b) STUDY.—The Securities and Exchange Commis-
sion and the Comptroller General shall jointly conduct a 
study to determine how the Commission could reduce the 
burden of complying with section 404(b) of the Sarbanes- 
Oxley Act of 2002 for companies whose market capitaliza-
tion is between $75,000,000 and $250,000,000 for the rel-
evant reporting period while maintaining investor protec-
tions for such companies. The study shall also consider 
whether any such methods of reducing the compliance bur-
den or a complete exemption for such companies from 
compliance with such section would encourage companies 
to list on exchanges in the United States in their initial 
public offerings. Not later than 180 days after the date 
of the enactment of this subtitle, the Commission and the 
Comptroller General shall transmit a report of such study 
to Congress. 
SEC. 7607. WHISTLEBLOWER PROTECTION AGAINST RETAL-
IATION BY A SUBSIDIARY OF AN ISSUER. 
Section 1514A(a) of title 18, United States Code, is 
amended by inserting ‘‘including any subsidiary or affil-
iate whose financial information is included in the consoli-
dated financial statements of such company,’’ after ‘‘(15 
U.S.C. 78o(d)),’’. 
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SEC. 7608. CONGRESSIONAL ACCESS TO INFORMATION. 
Section 101 of the Sarbanes-Oxley Act of 2002 is 
amended by adding at the end the following: 
‘‘(i) CONGRESSIONAL ACCESS TO INFORMATION.— 
Nothing in this section shall— 
‘‘(1) affect the Boards obligations, if any, to 
provide access to records under the Right to Finan-
cial Privacy Act; or 
‘‘(2) authorize the Board to withhold informa-
tion from Congress or prevent the Board from com-
plying with an order of a court of the United States 
in an action commenced by the United States or the 
Board.’’. 
SEC. 7609. CREATION OF OMBUDSMAN FOR THE PCAOB. 
(a) OMBUDSMAN.—Title I of the Sarbanes-Oxley Act 
of 2002 (15 U.S.C. 7211 et seq.), as amended by section 
7601(a)(1), is further amended by adding at the end the 
following new section: 
‘‘SEC. 111. OMBUDSMAN. 
‘‘(a) ESTABLISHMENT REQUIRED.—Not later than 
180 days after the date of enactment of the Investor Pro-
tection Act, the Board shall appoint an ombudsman for 
the Board. The Ombudsman shall report directly to the 
Chairman. 
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‘‘(b) DUTIES OF OMBUDSMAN.—The ombudsman ap-
pointed in accordance with subsection (a) for the Board 
shall— 
‘‘(1) act as a liaison between the Board and— 
‘‘(A) any registered public accounting firm 
or issuer with respect to issues or disputes con-
cerning the preparation or issuance of any audit 
report with respect to that issuer; and 
‘‘(B) any affected registered public ac-
counting firm or issuer with respect to— 
‘‘(i) any problem such firm or issuer 
may have in dealing with the Board result-
ing from the regulatory activities of the 
Board, particularly with regard to the im-
plementation of section 404; and 
‘‘(ii) issues caused by the relationships 
of registered public accounting firms and 
issuers generally; and 
‘‘(2) assure that safeguards exist to encourage 
complainants to come forward and to preserve con-
fidentiality; and 
‘‘(3) carry out such activities, and any other ac-
tivities assigned by the Board, in accordance with 
guidelines prescribed by the Board.’’. 
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(b) CONFORMING AMENDMENT.—The table of sec-
tions in section 1(b) of such Act is amended, by inserting 
after the item relating to section 110 (as added by section 
601(a)(2)) the following new item: 
‘‘Sec. 111. Ombudsman.’’. 
SEC. 7610. AUDITING OVERSIGHT BOARD. 
The Sarbanes-Oxley Act of 2002 is amended— 
(1) in section 2(a)(5), by striking ‘‘Public Com-
pany Accounting Oversight Board’’ and inserting 
‘‘Auditing Oversight Board’’; 
(2) in section 101(a), by striking ‘‘Public Com-
pany Accounting Oversight Board’’ and inserting 
‘‘Auditing Oversight Board’’; and 
(3) in the heading of title I, by striking ‘‘PUB-
LIC COMPANY ACCOUNTING OVER-
SIGHT BOARD’’ and inserting ‘‘AUDITING 
OVERSIGHT BOARD’’. 
PART 7—SENIOR INVESTMENT PROTECTION 
SEC. 7701. FINDINGS. 
Congress finds that— 
(1) many seniors are targeted by salespersons 
and advisers using misleading certifications and pro-
fessional designations; 
(2) many certifications and professional des-
ignations used by salespersons and advisers rep-
resent limited training or expertise, and may in fact 
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be of no value with respect to advising seniors on fi-
nancial and estate planning matters, and far too 
often, such designations are obtained simply by at-
tending a weekend seminar and passing an open 
book, multiple choice test; 
(3) many seniors have lost their life savings be-
cause salespersons and advisers holding a misleading 
designation have steered them toward products that 
were unsuitable for them, given their retirement 
needs and life expectancies; 
(4) seniors have a right to clearly know whether 
they are working with a qualified adviser who under-
stands the products and is working in their best in-
terest or a self-interested salesperson or adviser ad-
vocating particular products; and 
(5) many existing State laws and enforcement 
measures addressing the use of certifications, profes-
sional designations, and suitability standards in sell-
ing financial products to seniors are inadequate to 
protect senior investors from salespersons and advis-
ers using such designations. 
SEC. 7702. DEFINITIONS. 
For purposes of this part: 
(1) MISLEADING
DESIGNATION.—The term 
‘‘misleading designation’’— 
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(A) means the use of a purported certifi-
cation, professional designation, or other cre-
dential, that indicates or implies that a sales-
person or adviser has special certification or 
training in advising or servicing seniors; and 
(B) does not include any legitimate certifi-
cation, professional designation, license, or 
other credential, if— 
(i) it has been offered by an academic 
institution having regional accreditation; or 
(ii) it meets the standards for certifi-
cations, licenses, and professional designa-
tions outlined by the North American Se-
curities Administrators Association (in this 
part referred to as the ‘‘NASAA’’) Model 
Rule on the Use of Senior-Specific Certifi-
cations and Professional Designations, as 
in effect on the date of the enactment of 
this subtitle, or any successor thereto, or it 
was issued by or obtained from any State. 
(2) FINANCIAL PRODUCT.—The term ‘‘financial 
product’’ means securities, insurance products (in-
cluding insurance products which pay a return, 
whether fixed or variable), and bank and loan prod-
ucts. 
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(3) 
MISLEADING
OR
FRAUDULENT
MAR-
KETING.—The term ‘‘misleading or fraudulent mar-
keting’’ means the use of a misleading designation 
when selling to or advising a senior about the sale 
of a financial product. 
(4) SENIOR.—The term ‘‘senior’’ means any in-
dividual who has attained the age of 62 years or 
more. 
(5) STATE.—The term ‘‘State’’ means each of 
the 50 States, the District of Columbia, and the un-
incorporated territories of Puerto Rico and the U.S. 
Virgin Islands. 
SEC. 7703. GRANTS TO STATES FOR ENHANCED PROTEC-
TION OF SENIORS FROM BEING MISLEAD BY 
FALSE DESIGNATIONS. 
(a) GRANT PROGRAM.—The Securities and Exchange 
Commission (in this part referred to as the ‘‘Commis-
sion’’)— 
(1) shall establish a program in accordance with 
this part to provide grants to States— 
(A) to investigate and prosecute misleading 
and fraudulent marketing practices; or 
(B) to develop educational materials and 
training aimed at reducing misleading and 
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fraudulent marketing of financial products to-
ward seniors; and 
(2) may establish such performance objectives, 
reporting requirements, and application procedures 
for States and State agencies receiving grants under 
this part as the Commission determines are nec-
essary to carry out and assess the effectiveness of 
the program under this part. 
(b) USE OF GRANT AMOUNTS.—A grant under this 
part may be used (including through subgrants) by the 
State or the appropriate State agency designated by the 
State— 
(1) to fund additional staff to identify, inves-
tigate, and prosecute (through civil, administrative, 
or criminal enforcement actions) cases involving mis-
leading or fraudulent marketing of financial prod-
ucts to seniors; 
(2) to fund technology, equipment, and training 
for regulators, prosecutors, and law enforcement in 
order to identify salespersons and advisers who tar-
get seniors through the use of misleading designa-
tions; 
(3) to fund technology, equipment, and training 
for prosecutors to increase the successful prosecution 
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of those targeting seniors with the use of misleading 
designations; 
(4) to provide educational materials and train-
ing to regulators on the appropriateness of the use 
of designations by salespersons and advisers of fi-
nancial products; 
(5) to provide educational materials and train-
ing to seniors to increase their awareness and under-
standing of designations; and 
(6) to develop comprehensive plans to combat 
misleading or fraudulent marketing of financial 
products to seniors. 
(c) GRANT REQUIREMENTS.— 
(1) MAXIMUM.—The amount of a grant under 
this part may not exceed $500,000 per fiscal year 
per State, if all requirements of paragraphs (2), (3), 
(4), and (5) are met. Such amount shall be limited 
to $100,000 per fiscal year per State in any case in 
which the State meets the requirements of— 
(A) paragraphs (2) and (3), but not each 
of paragraphs (4) and (5); or 
(B) paragraphs (4) and (5), but not each 
of paragraphs (2) and (3). 
(2) STANDARD DESIGNATION RULES FOR SECU-
RITIES.—A State shall have adopted rules on the ap-
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propriate use of designations in the offer or sale of 
securities or investment advice, which shall meet or 
exceed the minimum requirements of the NASAA 
Model Rule on the Use of Senior-Specific Certifi-
cations and Professional Designations, as in effect 
on the date of the enactment of this subtitle, or any 
successor thereto. 
(3) SUITABILITY RULES FOR SECURITIES.—A 
State shall have adopted standard rules on the suit-
ability requirements in the sale of securities, which 
shall, to the extent practicable, conform to the min-
imum requirements on suitability imposed by self- 
regulatory organization rules under the securities 
laws (as defined in section 3 of the Securities Ex-
change Act of 1934). 
(4) STANDARD DESIGNATION RULES FOR IN-
SURANCE PRODUCTS.—A State shall have adopted 
standard rules on the appropriate use of designa-
tions in the sale of insurance products, which shall, 
to the extent practicable, conform to the minimum 
requirements of the National Association of Insur-
ance Commissioners Model Regulation on the Use of 
Senior-Specific Certifications and Professional Des-
ignations in the Sale of Life Insurance and Annu-
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ities, as in effect on the date of the enactment of 
this subtitle, or any successor thereto. 
(5) SUITABILITY AND SUPERVISION RULES FOR 
ANNUITY PRODUCTS.— 
(A) IN
GENERAL.—A State shall have 
adopted rules governing insurer supervision of, 
suitability of, and insurer and insurance pro-
ducer conduct relating to, the sale of annuity 
products, including fixed and index annuities. 
(B) ANNUITY PRODUCTS CRITERIA.—The 
rules required by subparagraph (A) shall, to the 
extent practicable, provide— 
(i) that insurers, and insurance pro-
ducers are responsible for, and liable for 
penalties for, the suitability of each rec-
ommended annuity transaction; 
(ii) that insurers and insurance pro-
ducers are required to apply a standard for 
determining the suitability of each rec-
ommended annuity transaction, including 
fixed and index annuities, that is at least 
as protective of the interests of the con-
sumer as rule 2821(b) of the Financial In-
dustry Regulatory Authority (in this para-
graph referred to as ‘‘FINRA’’), as in ef-
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fect on the date of the enactment of this 
subtitle, or any successor to such rule; 
(iii) that insurers and insurance pro-
ducers are required to maintain a process 
for review of the suitability, and approval 
or disapproval, of each recommended annu-
ity transaction that is at least as protective 
of the interests of the consumer as the 
principal 
review 
required 
under 
rule 
2821(c) of FINRA, as in effect on the date 
of the enactment of this subtitle, or any 
successor to such rule; 
(iv) that insurers and insurance pro-
ducers are required to maintain processes 
for the supervision of direct annuity sales 
and insurance producer-recommended an-
nuity sales (including procedures for the 
insurer to obtain and confirm consumer 
suitability information and for the insurer 
to confirm consumer understanding of the 
annuity transaction) that are at least as 
protective of the interests of the consumer 
as member broker and dealer supervision 
requirements of FINRA, as in effect on 
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(C) how the proposed program can help 
discourage and reduce future cases of mis-
leading or fraudulent marketing in the offer 
and sale of financial products to seniors; and 
(3) describe how the proposed program is to be 
integrated with other existing State efforts. 
SEC. 7705. LENGTH OF PARTICIPATION. 
A State receiving a grant under this part shall be 
provided assistance funds for a period of 3 years, after 
which the State may reapply for additional funding. 
SEC. 7706. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated to carry out 
this part, $8,000,000 for each of the fiscal years 2011 
through 2015. 
PART 8—REGISTRATION OF MUNICIPAL 
FINANCIAL ADVISORS 
SEC. 7801. MUNICIPAL FINANCIAL ADVISER REGISTRATION 
REQUIREMENT. 
(a) IN GENERAL.—The Securities Exchange Act of 
1934 (as amended by section 3204) is amended by insert-
ing after section 15F (15 U.S.C. 78o–7) the following new 
section: 
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‘‘SEC. 15G. MUNICIPAL FINANCIAL ADVISER REGISTRATION 
REQUIREMENT. 
‘‘(a)(1)(A) It shall be unlawful for any person to 
make use of the mails or any means or instrumentality 
of interstate commerce to act as a municipal financial ad-
viser unless such person is registered as a municipal finan-
cial adviser in accordance with subsection (b). 
‘‘(B) Subparagraph (A) shall not apply to a natural 
person associated with a municipal financial adviser, as 
long as such adviser is registered in accordance with sub-
section (b) and is not a natural person. 
‘‘(2) The Commission, by rule or order, as it deems 
consistent with the public interest and the protection of 
investors, may conditionally or unconditionally exempt 
from paragraph (1) of this section any municipal financial 
adviser or class of municipal financial advisers specified 
in such rule or order. 
‘‘(b)(1) A municipal financial adviser may be reg-
istered by filing with the Commission an application for 
registration in such form and containing such information 
and documents concerning such municipal financial ad-
viser and any persons associated with such municipal fi-
nancial adviser as the Commission, by rule, may prescribe 
as necessary or appropriate in the public interest or for 
the protection of investors. Within 45 days of the date of 
the filing of such application (or within such longer period 
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as to which the applicant consents), the Commission 
shall— 
‘‘(A) by order grant registration, or 
‘‘(B) institute proceedings to determine whether reg-
istration should be denied. Such proceedings shall include 
notice of the grounds for denial under consideration and 
opportunity for hearing and shall be concluded within 120 
days of the date of the filing of the application for reg-
istration. At the conclusion of such proceedings, the Com-
mission, by order, shall grant or deny such registration. 
The Commission may extend the time for conclusion of 
such proceedings for up to 90 days if it finds good cause 
for such extension and publishes its reasons for so finding 
or for such longer period as to which the applicant con-
sents. 
The Commission shall grant such registration if the Com-
mission finds that the requirements of this section are sat-
isfied. The Commission shall deny such registration if it 
does not make such a finding or if it finds that if the 
applicant were so registered, its registration would be sub-
ject to suspension or revocation under paragraph (4). 
‘‘(2) An application for registration of a municipal 
financial adviser to be formed or organized may be made 
by a municipal financial adviser to which the municipal 
financial adviser to be formed or organized is to be the 
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successor. Such application, in such form as the Commis-
sion, by rule, may prescribe, shall contain such informa-
tion and documents concerning the applicant, the suc-
cessor, and any persons associated with the applicant or 
the successor, as the Commission, by rule, may prescribe 
as necessary or appropriate in the public interest or for 
the protection of investors. The grant or denial of registra-
tion to such an applicant shall be in accordance with the 
procedures set forth in paragraph (1) of this subsection. 
If the Commission grants such registration, the registra-
tion shall terminate on the 45th day after the effective 
date thereof, unless prior thereto the successor shall, in 
accordance with such rules and regulations as the Com-
mission may prescribe, adopt the application for registra-
tion as its own. 
‘‘(3) Any provision of this title (other than section 
5 and subsection (a) of this section) which prohibits any 
act, practice, or course of business if the mails or any 
means or instrumentality of interstate commerce is used 
in connection therewith shall also prohibit any such act, 
practice, or course of business by any registered municipal 
financial adviser or any person acting on behalf of such 
a municipal financial adviser, irrespective of any use of 
the mails or any means or instrumentality of interstate 
commerce in connection therewith. 
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‘‘(4) The Commission, by order, shall censure, place 
limitations on the activities, functions, or operations of, 
suspend for a period not exceeding 12 months, or revoke 
the registration of any municipal financial adviser if it 
finds, on the record after notice and opportunity for hear-
ing, that such censure, placing of limitations, suspension, 
or revocation is in the public interest and that such munic-
ipal financial adviser, whether prior or subsequent to be-
coming such, or any person associated with such municipal 
financial adviser, whether prior or subsequent to becoming 
so associated— 
‘‘(A) has willfully made or caused to be made 
in any application for registration or report required 
to be filed with the Commission or with any other 
appropriate regulatory agency under this title, or in 
any proceeding before the Commission with respect 
to registration, any statement which was at the time 
and in the light of the circumstances under which it 
was made false or misleading with respect to any 
material fact, or has omitted to state in any such 
application or report any material fact which is re-
quired to be stated therein; 
‘‘(B) has been convicted within 10 years pre-
ceding the filing of any application for registration 
or at any time thereafter of any felony or mis-
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demeanor or of a substantially equivalent crime by 
a foreign court of competent jurisdiction which the 
Commission finds— 
‘‘(i) involves the purchase or sale of any 
security, the taking of a false oath, the making 
of a false report, bribery, perjury, burglary, any 
substantially equivalent activity however de-
nominated by the laws of the relevant foreign 
government, or conspiracy to commit any such 
offense; 
‘‘(ii) arises out of the conduct of the busi-
ness of a municipal financial adviser, broker, 
dealer, municipal securities dealer, government 
securities broker, government securities dealer, 
investment adviser, bank, insurance company, 
fiduciary, transfer agent, nationally recognized 
statistical rating organization, foreign person 
performing a function substantially equivalent 
to any of the above, or entity or person required 
to be registered under the Commodity Ex-
change Act (7 U.S.C. 1 et seq.) or any substan-
tially equivalent foreign statute or regulation; 
‘‘(iii) involves the larceny, theft, robbery, 
extortion, forgery, counterfeiting, fraudulent 
concealment, embezzlement, fraudulent conver-
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sion, or misappropriation of funds, or securities, 
or substantially equivalent activity however de-
nominated by the laws of the relevant foreign 
government; or 
‘‘(iv) involves the violation of section 152, 
1341, 1342, or 1343 or chapter 25 or 47 of 
title 18, or a violation of a substantially equiva-
lent foreign statute; 
‘‘(C) is permanently or temporarily enjoined by 
order, judgment, or decree of any court of competent 
jurisdiction from acting as a municipal financial ad-
viser, investment adviser, underwriter, broker, deal-
er, municipal securities dealer, government securities 
broker, government securities dealer, transfer agent, 
nationally recognized statistical rating organization, 
foreign person performing a function substantially 
equivalent to any of the above, or entity or person 
required to be registered under the Commodity Ex-
change Act or any substantially equivalent foreign 
statute or regulation, or as an affiliated person or 
employee of any investment company, bank, insur-
ance company, foreign entity substantially equivalent 
to any of the above, or entity or person required to 
be registered under the Commodity Exchange Act or 
any substantially equivalent foreign statute or regu-
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lation or from engaging in or continuing any con-
duct or practice in connection with any such activity, 
or in connection with the purchase or sale of any se-
curity; 
‘‘(D) has willfully violated any provision of the 
Securities Act of 1933, the Investment Advisers Act 
of 1940, the Investment Company Act of 1940, the 
Commodity Exchange Act, this title, the rules or 
regulations under any of such statutes, or is unable 
to comply with any such provision; 
‘‘(E) has willfully aided, abetted, counseled, 
commanded, induced, or procured the violation by 
any other person of any provision of the Securities 
Act of 1933, the Investment Advisers Act of 1940, 
the Investment Company Act of 1940, the Com-
modity Exchange Act, this title, the rules or regula-
tions under any of such statutes, or has failed rea-
sonably to supervise, with a view to preventing viola-
tions of the provisions of such statutes, rules, and 
regulations, another person who commits such a vio-
lation, if such other person is subject to his super-
vision. For the purposes of this subparagraph, no 
person shall be deemed to have failed reasonably to 
supervise any other person, if— 
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‘‘(i) there have been established proce-
dures, and a system for applying such proce-
dures, which would reasonably be expected to 
prevent and detect, insofar as practicable, any 
such violation by such other person, and 
‘‘(ii) such person has reasonably dis-
charged the duties and obligations incumbent 
upon him by reason of such procedures and sys-
tem without reasonable cause to believe that 
such procedures and system were not being 
complied with; 
‘‘(F) is subject to any order of the Commission 
barring or suspending the right of the person to be 
associated with a municipal financial adviser; 
‘‘(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 has omitted to 
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state in any application or report to the foreign 
financial regulatory authority any material fact 
that is required to be stated therein; 
‘‘(ii) violated any foreign statute or regula-
tion regarding transactions in securities, 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 
any person of any provision of any statutory 
provisions enacted by a foreign government, or 
rules or regulations thereunder, empowering a 
foreign financial regulatory authority regarding 
transactions in securities, or contracts of sale of 
a commodity for future delivery, traded on or 
subject to the rules of a contract market or any 
board of trade, or has been found, by a foreign 
financial regulatory authority, to have failed 
reasonably to supervise, with a view to pre-
venting violations of such statutory provisions, 
rules, and regulations, another person who com-
mits such a violation, if such other person is 
subject to his supervision; or 
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‘‘(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, savings associations, or 
credit unions, State insurance commission (or any 
agency or office performing like functions), an ap-
propriate Federal banking agency (as defined in sec-
tion 3 of the Federal Deposit Insurance Act (12 
U.S.C. 1813(q))), or the National Credit Union Ad-
ministration, that— 
‘‘(i) bars such person from association with 
an entity regulated by such commission, author-
ity, agency, or officer, or from engaging in the 
business of securities, insurance, banking, sav-
ings association activities, or credit union activi-
ties; or 
‘‘(ii) constitutes a final order based on vio-
lations of any laws or regulations that prohibit 
fraudulent, manipulative, or deceptive conduct. 
‘‘(5) Pending final determination whether any reg-
istration under this subsection shall be revoked, the Com-
mission, by order, may suspend such registration, if such 
suspension appears to the Commission, after notice and 
opportunity for hearing, to be necessary or appropriate in 
the public interest or for the protection of investors. Any 
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registered municipal financial adviser may, upon such 
terms and conditions as the Commission deems necessary 
or appropriate in the public interest or for the protection 
of investors, withdraw from registration by filing a written 
notice of withdrawal with the Commission. If the Commis-
sion finds that any registered municipal financial adviser 
is no longer in existence or has ceased to do business as 
a municipal financial adviser, the Commission, by order, 
shall cancel the registration of such municipal financial 
adviser. 
‘‘(6)(A) With respect to any person who is associated, 
who is seeking to become associated, or, at the time of 
the alleged misconduct, who was associated or was seeking 
to become associated with a municipal financial adviser, 
the Commission, by order, shall censure, place limitations 
on the activities or functions of such person, or suspend 
for a period not exceeding 12 months, or bar such person 
from being associated with a municipal financial adviser, 
if the Commission finds, on the record after notice and 
opportunity for a hearing, that such censure, placing of 
limitations, suspension, or bar is in the public interest and 
that such person— 
‘‘(i) has committed or omitted any act, or is 
subject to an order or finding, enumerated in sub-
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paragraph (A), (D), or (E) of paragraph (4) of this 
subsection; 
‘‘(ii) has been convicted of any offense specified 
in subparagraph (B) of such paragraph (4) within 
10 years of the commencement of the proceedings 
under this paragraph; or 
‘‘(iii) is enjoined from any action, conduct, or 
practice specified in subparagraph (C) of such para-
graph (4). 
‘‘(B) It shall be unlawful— 
‘‘(i) for any person as to whom an order under 
subparagraph (A) is in effect, without the consent of 
the Commission, willfully to become, or to be, associ-
ated with a municipal financial adviser in contraven-
tion of such order; or 
‘‘(ii) for any municipal financial adviser to per-
mit such a person, without the consent of the Com-
mission, to become or remain, a person associated 
with the municipal financial adviser in contravention 
of such order, if such municipal financial adviser 
knew, or in the exercise of reasonable care should 
have known, of such order. 
‘‘(7) No registered municipal financial adviser shall 
act as such unless it meets such standards of operational 
capability and such municipal financial adviser and all 
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natural persons associated with such municipal financial 
adviser meet such standards of training, experience, com-
petence, and such other qualifications as the Commission 
finds necessary or appropriate in the public interest or for 
the protection of investors. The Commission shall establish 
such standards by rules and regulations, which may— 
‘‘(A) specify that all or any portion of such 
standards shall be applicable to any class of munic-
ipal financial advisers and persons associated with 
municipal financial advisers; 
‘‘(B) require persons in any such class to pass 
tests prescribed in accordance with such rules and 
regulations, which tests shall, with respect to any 
class of partners, officers, or supervisory employees 
(which latter term may be defined by the Commis-
sion’s rules and regulations) engaged in the manage-
ment of the municipal financial adviser, include 
questions relating to bookkeeping, accounting, super-
vision of employees, maintenance of records, and 
other appropriate matters; and 
‘‘(C) provide that persons in any such class 
other than municipal financial advisers and partners, 
officers, and supervisory employees of municipal fi-
nancial advisers, may be qualified solely on the basis 
of compliance with such standards of training and 
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such other qualifications as the Commission finds 
appropriate. 
The Commission, by rule, may prescribe reasonable fees 
and charges to defray its costs in carrying out this para-
graph, including, but not limited to, fees for any test ad-
ministered by it or under its direction. 
‘‘(c)(1)(A) No municipal financial adviser shall make 
use of the mails or any means or instrumentality of inter-
state commerce in connection with which such municipal 
financial adviser engages in any fraudulent, deceptive, or 
manipulative act or practice or violates such rules and reg-
ulations regarding conflicts of interest or fair practices, 
including but not limited to rules and regulations related 
to political contributions, as the Commission shall pre-
scribe in the public interest or for the protection of inves-
tors or to maintain fair and orderly markets. 
‘‘(B) The Commission shall, for the purposes of this 
paragraph as the Commission finds necessary or appro-
priate in the public interest or for the protection of inves-
tors, by rules and regulations define, and prescribe means 
reasonably designed to prevent, such acts and practices 
as are fraudulent, deceptive, or manipulative. 
‘‘(2) If the Commission finds, after notice and oppor-
tunity for a hearing, that any person subject to the provi-
sions of this section or any rule or regulation thereunder 
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has failed to comply with any such provision, rule, or regu-
lation in any material respect, the Commission may pub-
lish its findings and issue an order requiring such person, 
and any person who was a cause of the failure to comply 
due to an act or omission the person knew or should have 
known would contribute to the failure to comply, to com-
ply, or to take steps to effect compliance, with such provi-
sion or such rule or regulation thereunder upon such 
terms and conditions and within such time as the Commis-
sion may specify in such order. 
‘‘(d) Every registered municipal financial adviser 
shall establish, maintain, and enforce written policies and 
procedures reasonably designed, taking into consideration 
the nature of such municipal financial adviser’s business, 
to prevent the misuse in violation of this title, or the rules 
or regulations thereunder, of material, nonpublic informa-
tion by such municipal financial adviser or any person as-
sociated with such municipal financial adviser. The Com-
mission, as it deems necessary or appropriate in the public 
interest or for the protection of investors, shall adopt rules 
or regulations to require specific policies or procedures 
reasonably designed to prevent misuse in violation of this 
title (or the rules or regulations thereunder) of material, 
nonpublic information. 
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‘‘(e) A municipal financial adviser and any person as-
sociated with such municipal financial adviser shall be 
deemed to have a fiduciary duty to any municipal securi-
ties issuer for whom such municipal financial adviser acts 
as a municipal financial adviser. A municipal financial ad-
viser may not engage in any act, practice, or course of 
business which is not consistent with a municipal financial 
adviser’s fiduciary duty. The Commission shall, for the 
purposes of this paragraph, by rules and regulations de-
fine, and prescribe means reasonably designed to prevent, 
such acts, practices, and courses of business as are not 
consistent with a municipal financial adviser’s fiduciary 
duty to its clients.’’. 
(b) DEFINITION.—Section 3(a) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)) (as amended by 
section 3201(6)) is amended by adding at the end the fol-
lowing new paragraphs: 
‘‘(78) MUNICIPAL FINANCIAL ADVISER.— 
‘‘(A) The term ‘municipal financial adviser’ 
means a person who, for compensation, engages 
in the business of— 
‘‘(i) providing advice to a municipal 
securities issuer with respect to— 
‘‘(I) the issuance or proposed 
issuance of securities, including any 
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remarketing of municipal securities 
directly or indirectly by or on behalf 
of a municipal securities issuer; 
‘‘(II) the investment of proceeds 
from securities issued by such munic-
ipal securities issuer; 
‘‘(III) the hedging of any risks 
associated with subclauses (I) or (II), 
including advice as to swap agree-
ments (as defined in section 206A of 
the Gramm-Leach-Bliley Act regard-
less of whether the counterparties 
constitute eligible contract partici-
pants); or 
‘‘(IV) preparation of disclosure 
documents in connection with the 
issuance, proposed issuance, or pre-
vious issuance of securities issued by 
a municipal securities issuer, includ-
ing, without limitation, official state-
ments and documents prepared in 
connection with a written agreement 
or contract for the benefit of holders 
of such securities described in section 
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240.15c2–12 of title 17, Code of Fed-
eral Regulations; 
‘‘(ii) assisting a municipal securities 
issuer in selecting or negotiating guaran-
teed investment contracts or other invest-
ment products; or 
‘‘(iii) assisting any municipal securi-
ties issuer in the primary offering of secu-
rities not involving a public offering. 
‘‘(B) Such term does not include— 
‘‘(i) an attorney, if the attorney is of-
fering advice or providing services that are 
of a traditional legal nature; 
‘‘(ii) a nationally recognized statistical 
rating organization to the extent it is in-
volved in the process of developing credit 
ratings; 
‘‘(iii) a registered broker-dealer when 
acting as an underwriter, as such term is 
defined in section 2(a)(11) of the Securi-
ties Act of 1933 (15 U.S.C. section 
77b(a)(11)); or 
‘‘(iv) a State or any political subdivi-
sion thereof. 
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