(1) The automatic disqualification provisions in 
the securities laws are valuable tools that protect in-
vestors, the markets, and the public by deterring 
misconduct, reducing recidivism, promoting market 
integrity, and removing bad actors from the market. 
(2) These tools are inappropriately underuti-
lized and waivers of the automatic disqualification 
provisions are disproportionately granted to the larg-
est financial institutions on Wall Street, many of 
which are recidivists. Between July, 2003, and De-
cember, 2014, large financial firms received the vast 
majority of waivers of sanctions, about 82 percent of 
201 total waivers. 
(3) Waivers of these automatic sanctions should 
be granted sparingly and only through an open and 
transparent process. 
SEC. 
3. 
INCREASING 
TRANSPARENCY 
AND 
ACCOUNT-
ABILITY IN WAIVING BAD ACTOR DISQUALI-
FICATIONS. 
Section 36 of the Securities Exchange Act of 1934 
(15 U.S.C. 78mm) is amended by adding at the end the 
following: 
‘‘(c) WAIVER PROCEDURE AND IDENTIFICATION OF 
BAD ACTORS.— 
‘‘(1) WAIVER PROCEDURE.— 
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‘‘(A) TEMPORARY WAIVER.— 
‘‘(i) PETITION FOR WAIVER.—A per-
son may petition the Commission for a 
temporary waiver of a disqualification or 
pending disqualification described under 
subparagraphs (A) through (G) of para-
graph (3). 
‘‘(ii) GRANT
OF
WAIVER.—With re-
spect to a petition made by a person under 
clause (i), when such person becomes an 
ineligible person, the Commission may vote 
to provide such person with a single 180- 
day temporary waiver, by order, if the 
Commission determines that such person 
has demonstrated immediate irreparable 
injury. 
‘‘(iii) PUBLICATION
OF
PETITION.— 
The Commission shall publish any petition 
for a temporary waiver along with the 
order containing an explanation for any 
Commission determination immediately fol-
lowing the related vote under clause (ii). 
‘‘(B) GENERAL
WAIVER.—Following the 
180-day period provided under subparagraph 
(A), the Commission, by vote during a meeting 
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open to the public, may not waive any disquali-
fication described under subparagraphs (A) 
through (G) of paragraph (3), unless the Com-
mission determines, without regard to the direct 
costs to the ineligible person associated with a 
denial, that such waiver— 
‘‘(i) is in the public interest; 
‘‘(ii) is necessary for the protection of 
investors; and 
‘‘(iii) promotes market integrity. 
‘‘(C) FEDERAL REGISTER NOTICE; PUBLIC 
HEARING.—Before making a determination 
under subparagraph (B), the Commission shall 
publish adequate notice in the Federal Register 
of the pendency of the waiver determination 
and shall afford the public and interested per-
sons an opportunity to present their views, in-
cluding at a public hearing. 
‘‘(D) PROHIBITION
ON
ADVANCE
AD-
VICE.—Commission staff may not advise any 
person of the recommendation of staff to the 
Commission or on the likelihood of a waiver 
being granted or denied under this paragraph 
for such person. 
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‘‘(E) RECORDKEEPING
REQUIREMENT.— 
The Commission shall keep a public record of 
all requests for a waiver under this paragraph 
that are later withdrawn. 
‘‘(2) DATABASE OF INELIGIBLE PERSONS.—The 
Commission shall establish, and maintain, a public 
database of all ineligible persons that the Commis-
sion has voted against providing a waiver under this 
subsection or that have indicated their ineligibility in 
any disclosure to the Commission. 
‘‘(3) INELIGIBLE PERSON DEFINED.—For pur-
poses of this subsection, the term ‘ineligible person’ 
means any person that— 
‘‘(A) is an ineligible issuer and not eligible 
to qualify as a well-known seasoned issuer (as 
such terms are defined under section 230.405 
of title 17, Code of Federal Regulations); 
‘‘(B) is not eligible to make use of an ex-
emption provided for certain Regulation D pri-
vate 
offerings 
under 
section 
230.505 
or 
230.506 of title 17, Code of Federal Regula-
tions; 
‘‘(C) is not eligible for any safe harbor for 
forward-looking statements provided for under 
section 27A(c) of the Securities Act of 1933; 
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‘‘(D) is not eligible for any safe harbor for 
forward-looking statements provided for under 
section 21E(c) of the Securities Exchange Act 
of 1934; 
‘‘(E) is disqualified from receiving a cash 
fee, directly or indirectly, from an investment 
adviser with respect to solicitation activities, as 
described under section 275.206(4)–3 of title 
17, Code of Federal Regulations; 
‘‘(F) is not eligible to make use of an ex-
emption provided for certain Regulation A of-
ferings under section 230.262 of title 17, Code 
of Federal Regulations; or 
‘‘(G) is not eligible to make use of an ex-
emption provided for certain Regulation E of-
ferings under section 230.602 of title 17, Code 
of Federal Regulations.’’. 
SEC. 4. GAO STUDY. 
(a) STUDY.—The Comptroller General of the United 
States shall carry out a study of the Securities and Ex-
change Commission’s existing waiver process, and the 
standard used by the Commission in granting an applica-
tion for an exemption, under section 9(c) of the Invest-
ment Company Act of 1940. 
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(b) REPORT.—Not later than the end of the 180-day 
period beginning on the date of the enactment of this Act, 
the Comptroller General shall issue a report to the Con-
gress containing— 
(1) all findings and determinations made in car-
rying out the study required under subsection (a); 
(2) a comparison of the Commission’s standard 
used in granting an application for an exemption 
under section 9(c) of the Investment Company Act 
of 1940 with the standard used to grant a waiver 
under section 36(c) of the Securities Exchange Act 
of 1934, as added by this Act; and 
(3) recommendations on how to increase trans-
parency and opportunity for public participation in 
the waiver process under section 9(c) of the Invest-
ment Company Act of 1940 and ensure that the dis-
qualification and waiver process used by the Com-
mission under such section 9(c) is protective of in-
vestors, the markets, and the public and deters mis-
conduct, reduces recidivism, promotes market integ-
rity, and removes bad actors from the market. 
Æ 
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