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from engaging in or continuing any con-
duct or practice in connection with a secu-
rity; or
‘‘(B) with respect to a particular State, if
the issuer, or a principal officer or principal
shareholder thereof—
‘‘(i) has filed a registration statement
which is the subject of a currently effective
stop order entered pursuant to that State’s
securities laws within 5 years prior to the
offering;
‘‘(ii) is currently named in and subject
to any administrative enforcement order or
judgment of that State’s securities com-
mission (or any agency or office perform-
ing like functions) entered within 5 years
prior to the offering, or is currently named
in and subject to any other administrative
enforcement order or judgment of that
State entered within 5 years prior to the
offering that finds fraud or deceit; or
‘‘(iii) is currently named in and sub-
ject to any administrative enforcement
order or judgment of that State which pro-
hibits or denies registration, or revokes the
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use of any exemption from registration, in
connection with the offer, purchase, or sale
of securities.
‘‘(4) EXCEPTIONS TO LIMITATIONS.—
(A) DEBT
SECURITY
EXEMPTION.—The
limitations in paragraph (2)(A) shall not apply
with respect to the debt securities of any issuer
that is a partnership or limited liability com-
pany, provided that (i) the issuer is either a
registered dealer or an affiliate of such a dealer,
(ii) the issuer has, both before and after the of-
fering, capital or equity (each computed in ac-
cordance with United States generally accepted
accounting 
principles) 
of 
not 
less 
than
$75,000,000, and (iii) if the issuer is not a reg-
istered dealer, such issuer does not use the pro-
ceeds of the offering primarily to fund the non-
financial business of the issuer or any of its af-
filiates that are not registered dealers.
‘‘(B) 
MISCONDUCT
EXEMPTIONS.—The
limitations in paragraph (3)(A) shall not apply
if the Commission has exempted the subject
person from the application of such paragraph
by rule or order, and the limitations in para-
graph (3)(B) shall not apply if the securities
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commission (or any agency or office performing
like functions) of the affected State has exempt-
ed the subject person from the application of
such paragraph by rule or order.
‘‘(C) REASONABLE STEPS.—The provisions
of paragraph (3) shall not apply if the issuer
has taken reasonable steps to ascertain whether
any principal officer or principal shareholder is
subject to such paragraph, and such steps do
not reveal a person who is subject to such para-
graph. An issuer shall be considered to have
taken reasonable steps if such issuer or its
agent has conducted a search of any centralized
data bases that the Commission may designate
by rule, and has received an affidavit under
oath by each such principal officer or principal
shareholder stating that such officer or share-
holder is not subject to the provisions of para-
graph (3).
‘‘(D) EFFECT OF LIMITATIONS ON REM-
EDIES.—Notwithstanding paragraph (3), an is-
suer shall not be subject to a right of rescission
under State securities laws solely as a result of
the operation of such paragraph.
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‘‘(5) NO EFFECT UNDER SUBSECTION (B).—No
limitation under this subsection shall affect the
treatment of a security that qualifies as a covered
security under subsection (b).
‘‘(d) PRESERVATION OF AUTHORITY.—
‘‘(1) FRAUD AUTHORITY.—Consistent with this
section, the securities commission (or any agency or
office performing like functions) of any State or Ter-
ritory of the United States, or the District of Colum-
bia, shall retain jurisdiction under the laws of such
State, Territory, or District to investigate and bring
enforcement actions with respect to fraud or deceit
in connection with securities or securities trans-
actions.
‘‘(2) PRESERVATION
OF
FILING
REQUIRE-
MENTS.—
‘‘(A) NOTICE FILINGS PERMITTED.—Noth-
ing contained in this section shall prohibit the
securities commission (or any agency or office
performing like functions) of any State or Ter-
ritory of the United States, or the District of
Columbia, from requiring the filing of any docu-
ments filed with the Commission pursuant to
this title solely for notice purposes, together
with any required fee.
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‘‘(B) PRESERVATION OF FEES.—Until oth-
erwise provided by State law enacted after the
date of enactment of the Securities Amend-
ments of 1996, filing or registration fees with
respect to securities or securities transactions
may continue to be collected in amounts deter-
mined pursuant to State law as in effect on the
day before such date.
‘‘(C) FEES
NOT
PERMITTED
ON
LISTED
SECURITIES.—Notwithstanding subparagraphs
(A) and (B), no filing or fee may be required
with respect to any security that is a covered
security pursuant to subsection (b)(1) of this
section, or will be such a covered security upon
completion of the transaction, or is a security of
the same issuer that is equal in seniority or
senior to a security that is a covered security
pursuant to such subsection.
‘‘(3) ENFORCEMENT
OF
REQUIREMENTS.—
Nothing in this section shall prohibit the securities
commission (or any agency or office performing like
functions) of any State or Territory of the United
States, or the District of Columbia, from suspending
the offer or sale of securities within such State, Ter-
ritory, or District as a result of the failure to submit
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any filing or fee required under law and permitted
under this section.
‘‘(e) DEFINITIONS.—For purposes of this section:
‘‘(1) PRINCIPAL OFFICER.—The term ‘principal
officer’ means a director, chief executive officer, or
chief financial officer of an issuer, or any other offi-
cer performing like functions.
‘‘(2) PRINCIPAL
SHAREHOLDER.—The term
‘principal shareholder’ means any person who is di-
rectly or indirectly the beneficial owner of more than
20 percent of any class of equity security of an is-
suer. When two or more persons act as a partner-
ship, limited partnership, syndicate, or other group
for the purpose of acquiring, holding, or disposing of
securities of an issuer, such syndicate or group shall
be deemed a ‘person’ for purposes of this paragraph.
In determining, for purposes of this paragraph, any
percentage of a class of any security, such class shall
be deemed to consist of the amount of the outstand-
ing securities of such class, exclusive of any securi-
ties of such class held by or for the account of the
issuer or a subsidiary of the issuer.
‘‘(3) OFFERING DOCUMENT.—The term ‘offer-
ing document’ has the meaning given the term ‘pro-
spectus’ by section 2(10), but without regard to the
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provisions of clauses (a) and (b) of such section, ex-
cept that, with respect to a security described in
subsection (b)(2) of this section, such term also in-
cludes a communication that is not deemed to offer
such a security pursuant to a rule of the Commis-
sion.
‘‘(4) PREPARED
BY
THE
ISSUER.—Within 6
months after the date of enactment of the Securities
Amendments of 1996, the Commission shall, by rule,
define the term ‘prepared by the issuer’ for purposes
of this section.’’.
(2) STUDY
OF
UNIFORMITY.—The Securities
Exchange Commission shall conduct a study after
consultation with States, issuers, brokers, and deal-
ers on the extent to which uniformity of State regu-
latory requirements for securities or securities trans-
actions has been achieved for securities that are not
covered securities (within the meaning of section 18
of the Securities Act of 1933 as amended by para-
graph (1) of this subsection). Such study shall spe-
cifically focus on the impact of such uniformity or
lack thereof on the cost of capital, innovation and
technological development in securities markets, and
duplicative regulation with respect to securities issu-
ers (including small business), brokers, and dealers
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tinuing need for, and, if necessary, options for the modi-
fication or elimination of, the Trust Indenture Act of 1939
(15 U.S.C. 77aaa et seq.).
TITLE II—INVESTMENT
COMPANY ACT AMENDMENTS
SEC. 201. SHORT TITLE.
This title may be cited as the ‘‘Investment Company
Act Amendments of 1996’’.
SEC. 202. FUNDS OF FUNDS.
Section 12(d)(1) of the Investment Company Act of
1940 (15 U.S.C. 80a–12(d)(1)) is amended—
(1) in subparagraph (E)(iii)—
(A) by striking ‘‘in the event such invest-
ment company is not a registered investment
company,’’; and
(B) by inserting ‘‘in the event such invest-
ment company is not a registered investment
company’’ after ‘‘(bb)’’;
(2) by redesignating existing subparagraphs (G)
and (H) as subparagraphs (H) and (I), respectively;
(3) by inserting after subparagraph (F) the fol-
lowing new subparagraph:
‘‘(G) The provisions of this paragraph (1) shall not
apply to securities of a registered open-end company (the
‘acquired company’) purchased or otherwise acquired by