‘‘SEC. 203B. REGISTRATION OF NATIONAL INVESTMENT AD-
VISER ASSOCIATIONS. 
‘‘(a) REGISTRATION REQUIREMENT.—Except as pro-
vided in subsection (b), it shall be unlawful for any invest-
ment adviser registered under section 203 or that is regu-
lated or required to be regulated as an investment adviser 
in a State in which it maintains its principal office and 
place of business to make use of the mails or any means 
or instrumentality of interstate commerce in connection 
with the person’s business as an investment adviser unless 
the investment adviser has applied to be a member of a 
registered national investment adviser association reg-
istered in accordance with this section and section 203C 
within the time period provided by the Commission under 
subsection (f). No investment adviser shall be required to 
be a member of more than one registered national invest-
ment adviser association. 
‘‘(b) EXEMPTIONS.—The provisions of subsection (a) 
shall not apply to the following investment advisers: 
‘‘(1) Any investment adviser one or more of 
whose clients is an investment company registered 
under the Investment Company Act of 1940. 
‘‘(2) Any investment adviser that has total as-
sets under management 90 percent or more of which 
are attributable individually or in the aggregate to 
one or more of the following persons with which the 
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investment adviser has entered into a written invest-
ment advisory agreement: 
‘‘(A) A client that is not ‘in the United 
States’ in accordance with the definitions in 
section 202. 
‘‘(B) A qualified purchaser as defined in 
section 2(a)(51) of the Investment Company 
Act of 1940. 
‘‘(C) An issuer that would be an invest-
ment company, as defined in section 3 of the 
Investment Company Act of 1940, but for sec-
tion 3(c)(10) of that Act. 
‘‘(D) An issuer that would be an invest-
ment company, as defined in section 3 of the 
Investment Company Act of 1940, but for sec-
tion 3(c)(11) of that Act. 
‘‘(E) A private fund. 
‘‘(F) An issuer that would be an invest-
ment company, as defined in section 3 of the 
Investment Company Act of 1940, but for sec-
tion 3(c)(5)(C) of that Act. 
‘‘(G) An issuer that would be an invest-
ment company, as defined in section 3 of the 
Investment Company Act of 1940, but for Rule 
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3a–7 issued under that Act (17 C.F.R. 270.3a– 
7). 
‘‘(H) A company that has elected to be a 
business development company pursuant to sec-
tion 54 of the Investment Company Act of 1940 
and has not withdrawn its election. 
‘‘(I) An investment adviser registered 
under section 203 or that is regulated or re-
quired to be regulated as an investment adviser 
in a State in which it maintains its principal of-
fice and place of business. 
‘‘(J) A broker or dealer registered under 
section 15 of the Securities Exchange Act of 
1934; and 
‘‘(K) An employees’ securities company 
that has been granted an exemption under sec-
tion 6(b) of the Investment Company Act of 
1940 and any such company that has filed an 
application for an exemption under that section 
and that, under Commission rule, is exempt 
pending final determination of such application 
by the Commission. 
‘‘(3) Any investment adviser that is controlling, 
controlled by, or under common control with one or 
more investment advisers described in paragraph (1) 
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or (2) (hereafter referred to as ‘affiliated investment 
advisers’) if the affiliated investment advisers and all 
such investment advisers described in such para-
graph, have combined assets under management 90 
percent or more of which are attributable to one or 
more of the types of clients described in paragraph 
(1) and subparagraphs (A) through (K) of para-
graph (2), unless the Commission, by order, deter-
mines that such affiliated investment adviser is an 
independent affiliate. 
‘‘(4) Any investment adviser that is a member 
of any other national investment adviser association 
registered with the Commission. 
‘‘(5) Any other investment adviser or class of 
investment advisers that the Commission may ex-
empt by rule or regulation consistent with section 
206A. 
‘‘(c) INDEPENDENT AFFILIATE DEFINITION
AND 
DETERMINATION.— 
‘‘(1) DEFINITION.—For purposes of subsection 
(b)(3), the term ‘independent affiliate’ means any 
affiliated investment adviser with compliance pro-
grams, operations, and businesses that are suffi-
ciently independent from those of the investment ad-
visers described in subsection (b)(1) or (2) that 
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membership by any such affiliated investment ad-
viser in a registered national investment adviser as-
sociation is necessary in the public interest and for 
the protection of investors or in furtherance of the 
purposes of this title. 
‘‘(2) DETERMINATION.—The Commission’s de-
termination under such subsection (b)(3) shall be 
made by order at the earlier of 180 days from re-
ceipt by the Commission of a request from any na-
tional investment adviser association or investment 
adviser for such a determination, or the date of the 
first on-site examination of such affiliated invest-
ment adviser conducted by the Commission after the 
date of enactment of this section. The Commission 
may, by order, determine that an investment adviser 
that the Commission had previously determined to 
be an independent affiliate is no longer an inde-
pendent affiliate due to changes in its compliance 
programs, operations, or businesses. 
‘‘(3) NOTIFICATION.—The Commission shall 
promptly notify all national investment adviser asso-
ciations of any determination that an investment ad-
viser is an independent affiliate. In addition to the 
authority to determine by order that a particular in-
vestment adviser is an independent affiliate, the 
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Commission shall have authority from time to time 
to exempt by rule, regulation or order, any class of 
investment advisers that the Commission determines 
are independent affiliates. 
‘‘(d) PROCEDURE FOR REGISTRATION.—An associa-
tion of investment advisers may be registered as a national 
investment adviser association by filing with the Commis-
sion an application for registration in such form, and con-
taining the rules of the association and such other infor-
mation and documents, as the Commission, by rule, may 
prescribe as necessary or appropriate in the public interest 
or for the protection of investors or otherwise in further-
ance of the provisions of this title. 
‘‘(e) REQUIREMENTS FOR REGISTRATION.—An asso-
ciation of investment advisers shall not be registered as 
a national investment adviser association unless the Com-
mission determines that— 
‘‘(1) such association is so organized and has 
the capacity to be able to carry out the purposes of 
this title and to enforce compliance by its members 
and persons associated with its members with the 
provisions of this title, the rules and regulations 
thereunder, and the rules of the association; and 
‘‘(2) the rules of the association— 
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‘‘(A) assure a fair representation of the 
public interest and the association’s members in 
the selection of the association’s board of direc-
tors and the administration of its affairs and 
provide that a majority of its directors shall not 
be associated with any member of the associa-
tion or other self-regulatory organization reg-
istered under the Securities Exchange Act of 
1934, or any investment adviser, broker, or 
dealer; 
‘‘(B) are designed to prevent fraudulent 
and manipulative acts and practices, to protect 
investors and the public interest, and to pro-
mote business conduct standards for its mem-
bers consistent with their obligations to inves-
tors under this title and the rules thereunder 
and are not designed to impose any schedule or 
fixed rates of fees to be charged by its members 
or to regulate by virtue of any authority con-
ferred by this title matters not related to the 
purposes of this title or the administration of 
the association; 
‘‘(C) are necessary in furtherance of, and 
are consistent with, the principles and provi-
sions of this title and the rules thereunder, and 
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the fiduciary standards applicable to investment 
advisers under this title or State law, and do 
not unnecessarily duplicate, overlap, or conflict 
with any existing provision of this title or the 
rules thereunder; 
‘‘(D) are necessary or appropriate in light 
of the business of registered investment advis-
ers and do not impose any burden on the ability 
of members to compete in the market for finan-
cial services that is not necessary or appro-
priate in the public interest or for the protec-
tion of investors or otherwise in furtherance of 
the provisions of this title; 
‘‘(E) provide for periodic examinations of 
its members and persons associated with its 
members to determine compliance with the ap-
plicable provisions of this title, the rules and 
regulations thereunder, and the rules of the as-
sociation, and for consultation with the Com-
mission in the development of such an examina-
tion program, except that the association— 
‘‘(i) shall not conduct periodic exami-
nations of any investment adviser in a 
State— 
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‘‘(I) in which the investment ad-
viser is regulated or required to be 
regulated and maintains its principal 
office and place of business; and 
‘‘(II) that has adopted a plan to 
conduct an on-site examination of all 
such investment advisers on average 
at least once every four years (here-
after referred to as a ‘State examina-
tion plan’); and 
‘‘(ii) may conduct examinations for 
cause of any such investment adviser that 
is a member of the association and may 
conduct a periodic examinations of any 
such investment adviser that is a member 
of the association and that is also reg-
istered as a broker or dealer under section 
15 of the Securities Exchange Act of 1934 
or that is controlling, controlled by, or 
under common control with such a broker 
or dealer; 
‘‘(F) provide for the equitable allocation of 
reasonable dues, fees, and other charges among 
members and other persons using any facility 
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or system that the association operates or con-
trols; 
‘‘(G) provide for the issuance by the asso-
ciation of an annual report on the operations, 
performance, and financial condition of the as-
sociation and any financial arrangement be-
tween the association and any company directly 
controlling, controlled by, or under common 
control with the association, and for the sub-
mission of the report to the Commission and for 
the publication of the report; 
‘‘(H) establish appropriate procedures and 
criteria for investment advisers to become mem-
bers of the association; 
‘‘(I) establish appropriate procedures to 
register persons associated with members, to re-
quire supervisory systems for members and per-
sons associated with members, and to discipline 
its members and persons associated with its 
members for violations of the provisions of this 
title or the rules and regulations thereunder, 
and the rules of the association; 
‘‘(J) provide for substantively equivalent 
regulation and oversight of members and asso-
ciated persons of members, including with re-
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spect to business conduct requirements and ex-
aminations, as provided under the rules of any 
other national investment adviser association 
registered with the Commission; and 
‘‘(K) require the association to— 
‘‘(i) implement and maintain a com-
prehensive information security program 
that meets administrative, technical, and 
physical safeguards as the Commission 
shall by rule determine, and that contains 
strong and risk-based information security 
controls to protect all information that the 
association is required to protect from un-
authorized internal or external disclosure 
or dissemination (including, without limita-
tion, a member’s confidential or propri-
etary information, or examination or in-
spection reports and documents prepared 
by the association or other regulatory au-
thority); 
‘‘(ii) obtain, every 3 years, a com-
prehensive, independent review of the asso-
ciation’s information security program and 
the association’s compliance with its infor-
mation security policies and procedures 
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conducted by an independent reviewer who 
is qualified data security professional; 
‘‘(iii) within 45 days after the receipt 
of such independent reviewer’s report on 
the association’s information security pro-
gram and the association’s compliance with 
its security policies and procedures, submit 
the annual report to the Commission to-
gether with the independent reviewer’s at-
testation in writing that addresses— 
‘‘(I) whether the association’s in-
formation security policies and proce-
dures conform to the Commission’s in-
formation security standards; 
‘‘(II) whether the strength of the 
association’s information security con-
trols meet recognized industry stand-
ards; 
‘‘(III) whether the independent 
reviewer’s tests revealed any material 
weaknesses in the association’s infor-
mation security controls; 
‘‘(IV) whether the association 
complies with its information security 
policy and procedures; and 
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‘‘(V) any other requirements as 
the Commission may by rule deter-
mine; and 
‘‘(iv) provide notice promptly to the 
Commission, any affected member, or any 
affected person associated with any mem-
ber of any unauthorized access to— 
‘‘(I) the association’s information 
systems; or 
‘‘(II) the confidential or propri-
etary information of the member or 
associated person. 
‘‘(f) TIME PERIOD
FOR MEMBERSHIP APPLICA-
TION.—A Commission determination to permit the reg-
istration of a national investment adviser association shall 
establish a reasonable period of time following the effective 
date of such registration for investment advisers to apply 
for membership in accordance with the rules of the asso-
ciation. 
‘‘(g) RULES OF CONSTRUCTION.— 
‘‘(1) NON-PREEMPTION
OF
STATE
AUTHOR-
ITY.—Nothing in this section shall be construed to 
limit or detract from or otherwise preempt the au-
thority of any State securities commission (or any 
agency or office performing similar functions) to 
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adopt rules, investigate possible violations of State 
law, initiate enforcement proceedings, or otherwise 
regulate any investment adviser that is subject to 
State authority under section 203A(a). 
‘‘(2) INFORMATION SHARING.—Nothing in this 
Act shall be construed to limit the authority of any 
national investment adviser association, whether or 
not it is also a self-regulatory organization reg-
istered under the Securities Exchange Act of 1934, 
to share any information in its possession with a 
Federal, State, or local governmental agency, nor 
shall the sharing of information be construed to be 
the action of such an agency. 
‘‘(h) ANNUAL CONFERENCE.— 
‘‘(1) REQUIREMENT.—In order to foster co-
operation between national investment adviser asso-
ciations and any association composed of duly con-
stituted representatives of State governments one of 
whose primary assignment is the regulation of in-
vestment advisers within those States (hereafter re-
ferred to as ‘State securities administrators associa-
tion’), each national investment adviser association 
shall conduct an annual conference as well as such 
other meetings as are determined necessary, to 
which representatives from the State securities ad-
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ministrators association and the Commission shall 
be invited to participate. 
‘‘(2) PURPOSE.—One purpose of the conference 
shall be the discussion by the State securities admin-
istrators association, each national investment ad-
viser association and the Commission, concerning 
those States that have adopted a State examination 
plan under subsection (e)(2)(E)(i) and the proposed 
methodology of those State examinations. 
‘‘(3) REPORT.—Promptly following each con-
ference, each national investment adviser association 
shall submit a report to Congress, describing those 
States that the State securities administrators asso-
ciation has identified as having adopted a State ex-
amination plan, and providing any information avail-
able to the national investment adviser association 
concerning the States’ proposed methodology of their 
examinations and the extent to which those States 
have been able to meet their previously submitted 
State examination plans. 
‘‘SEC. 203C. OVERSIGHT OF NATIONAL INVESTMENT AD-
VISER ASSOCIATIONS. 
‘‘(a) PROCEDURES
FOR APPROVAL
OF REGISTRA-
TION.— 
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‘‘(1) IN
GENERAL.—The Commission shall, 
upon the filing of an application for registration as 
a national investment adviser association pursuant 
to section 203B, publish notice of the filing and af-
ford interested persons an opportunity to submit 
written data, views, and arguments concerning such 
application. Within 90 days of the date of publica-
tion of such notice (or within such longer period as 
to which the applicant consents), the Commission 
shall— 
‘‘(A) by order, grant such registration; or 
‘‘(B) institute proceedings to determine 
whether registration should be denied. 
‘‘(2) PROCEEDINGS
FOR
DENIAL.—The pro-
ceedings to determine whether registration should be 
denied shall include notice of the grounds for denial 
under consideration and opportunity for hearing and 
shall be concluded within 180 days of the date of 
publication of notice of the filing of the application 
for registration. At the conclusion of such pro-
ceedings, the Commission, by order, shall grant or 
deny 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 
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publishes its reasons for so finding or for such 
longer period as to which the applicant consents. 
‘‘(3) BASIS FOR APPROVAL.—The Commission 
shall grant such registration if it finds that the re-
quirements of this title and the rules and regulations 
thereunder with respect to the applicant are satis-
fied. The Commission shall deny such registration if 
it does not make such finding. 
‘‘(4) WITHDRAWAL.—A national investment ad-
viser association may, upon such terms and condi-
tions as the Commission, by rule, considers nec-
essary or appropriate in the public interest and for 
the protection of investors or otherwise in further-
ance of the purposes of this title, withdraw from reg-
istration by filing a written notice of withdrawal 
with the Commission. If the Commission finds that 
any national investment adviser association is no 
longer in existence or has ceased to do business in 
the capacity specified in its application for registra-
tion, the Commission, by order, shall cancel its reg-
istration. 
‘‘(b) PROCEDURES FOR APPROVAL OF RULES AND 
RULE CHANGES.— 
‘‘(1) FILING
AND
PUBLICATION
BY
COMMIS-
SION.— 
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‘‘(A) FILING.—Each national investment 
adviser association shall file with the Commis-
sion, in accordance with such rules as the Com-
mission may prescribe, any proposed rule or 
any proposed change in, addition to, or deletion 
from the rules of the association (in this para-
graph collectively referred to as a ‘proposed rule 
change’) accompanied by a concise statement of 
the basis and purpose of, and the terms of sub-
stance of, or a description of the subjects and 
issues involved with, the proposed rule change. 
‘‘(B) EXPLANATION AND COMMENTS.—The 
national investment adviser association shall ex-
plain in its public filing with the Commission 
the nature of comments that it received, includ-
ing those from the industry or consumer 
groups, concerning the potential costs or bene-
fits of the proposed rule or proposed rule 
change, and shall provide a response to those 
comments in its public filing with the Commis-
sion, including an explanation of any amend-
ments to the proposed rule or proposed rule 
change that were made in response to those 
comments and a description of significant alter-
natives to the proposed rule change that were 
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suggested in those comments and the reasons 
that the national investment adviser association 
did not any propose them. 
‘‘(C) 
PUBLICATION.—The 
Commission 
shall, as soon as practicable upon the filing of 
any proposed rule change, publish notice there-
of together with the terms of substance of the 
proposed rule change or a description of the 
subjects and issues involved. The Commission 
shall give interested persons an opportunity to 
submit written data, views, and arguments con-
cerning such proposed rule change. 
‘‘(2) DETERMINATION.—Not later than 35 days 
after the date of publication of notice of the filing 
of a proposed rule change in accordance with para-
graph (1), or within such longer period as the Com-
mission may designate if it finds a longer period to 
be appropriate and publishes its reasons for so find-
ing or as to which the national investment adviser 
association consents, the Commission shall— 
‘‘(A) by order, approve the proposed rule 
change; or 
‘‘(B) institute proceedings to determine 
whether the proposed rule change should be dis-
approved. 
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‘‘(3) PROCEEDINGS
FOR
DISAPPROVAL.—The 
proceedings to determine whether the proposed rule 
change should be disapproved shall include notice of 
the grounds for disapproval under consideration and 
opportunity for hearing and shall be concluded with-
in 180 days of the date of publication of notice of 
the filing of the proposed rule change. At the conclu-
sion of the proceedings, the Commission, by order, 
shall approve or disapprove the proposed rule 
change. The Commission may extend the time for 
conclusion of the proceedings for up to 60 days if it 
finds good cause for the extension and publishes its 
reasons for so finding or for such longer period to 
which the national investment adviser association 
consents. 
‘‘(4) BASIS FOR APPROVAL.—The Commission 
shall approve a proposed rule change of a national 
investment adviser association if it finds that the 
proposed rule change is consistent with the require-
ments of this title, the rules thereunder, and the 
rules and regulations applicable to the national in-
vestment adviser association. The Commission shall 
disapprove a proposed rule change of a national in-
vestment adviser association if it does not make this 
finding. The Commission shall not approve any pro-
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posed rule change before the 30th day after the date 
of publication of notice of its filing, unless the Com-
mission finds good cause for so doing and publishes 
its reasons for so finding. 
‘‘(5) STAY PENDING APPROVAL.—No proposed 
rule of any national investment adviser association, 
and no proposed rule change of such an association, 
including any rule or proposed rule change con-
cerning any assessment, fee, or other charge im-
posed by the association, shall take effect unless ap-
proved by the Commission after public notice and 
opportunity for comment. 
‘‘(6) EFFECTIVE DATE.—Notwithstanding para-
graph (5), no proposed rule of any national invest-
ment adviser association shall take effect within 1 
year after the date of enactment of this section, un-
less the Commission determines that an earlier effec-
tive date is appropriate to facilitate the effective op-
eration of the association’s examination or enforce-
ment programs, the organization and management 
of the association, or the Commission’s oversight of 
the association. 
‘‘(7) SUMMARY EFFECTIVENESS.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of this subsection, a proposed 
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rule change may be put into effect summarily 
if it appears to the Commission that such ac-
tion is necessary for the protection of investors 
or the safeguarding of securities or funds. Any 
proposed rule change so put into effect shall be 
filed promptly thereafter in accordance with the 
provisions of paragraph (1). 
‘‘(B) AMENDMENTS.—Any proposed rule 
change of a national investment adviser associa-
tion which has taken effect under subparagraph 
(A) may be enforced by the national investment 
adviser association to the extent it is not incon-
sistent with the provisions of this title, the rules 
and regulations thereunder, and applicable Fed-
eral law. The Commission, by rule, may abro-
gate, add to, and delete from (in this subsection 
collectively referred to as ‘amend’) the rules of 
an association as the Commission considers nec-
essary or appropriate to ensure the fair admin-
istration of the national investment adviser as-
sociation, to conform its rules to requirements 
of this title and the rules and regulations appli-
cable to such national investment adviser asso-
ciation, or otherwise in furtherance of the pur-
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poses of this title, in the manner provided for 
herein. 
‘‘(8) NOTIFICATION
AND
OPPORTUNITY
TO 
COMMENT.—The Commission shall notify the na-
tional investment adviser association and publish no-
tice of any proposed rulemaking in the Federal Reg-
ister. The notice shall include the text of the pro-
posed amendment to the rules of the association and 
a statement of the Commission’s reasons, including 
any pertinent facts, for commencing the proposed 
rulemaking. The Commission shall give interested 
persons an opportunity for a hearing. 
‘‘(9) STATEMENT OF BASIS FOR DETERMINA-
TION.—A rule adopted under this subsection shall 
incorporate the text of the amendment to the rules 
of the association and a statement of the Commis-
sion’s basis for and purpose in amending such rules. 
This statement shall include an identification of any 
facts on which the Commission considers its deter-
mination to amend the rules of the association to be 
based, including the reasons for the Commission’s 
conclusions as to any of such facts which were dis-
puted in the rulemaking. 
‘‘(10) APA RULEMAKING PROCEDURES.— 
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‘‘(A) Except where a hearing is provided in 
paragraphs (1) through (9), rulemaking under 
this subsection shall be in accordance with the 
procedures specified in section 553 of title 5, 
United States Code, for notice-and-comment 
rulemaking. 
‘‘(B) Nothing in this subsection shall be 
construed to impair or limit the Commission’s 
power to make, or to modify or alter the proce-
dures the Commission may follow in making 
rules and regulations pursuant to any other au-
thority under this title. 
‘‘(C) Any amendment to the rules of a na-
tional investment adviser association made by 
the Commission under this subsection shall be 
considered for all purposes of this title to be 
part of the rules of the association and shall not 
be considered to be a rule of the Commission. 
‘‘(c) DISCIPLINE OF MEMBERS.— 
‘‘(1) IN GENERAL.—In any proceeding by a na-
tional investment adviser association to determine 
whether a member or person associated with a mem-
ber should be disciplined (other than a summary 
proceeding pursuant to paragraph (3)), the national 
investment adviser association shall bring specific 
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charges, notify the member or person associated 
with a member of, and give the member or person 
an opportunity to defend against, such charges, and 
keep a record. A determination by the national in-
vestment adviser association to impose a disciplinary 
sanction shall be supported by a statement setting 
forth— 
‘‘(A) any act or practice in which the mem-
ber or person associated with a member has 
been found to have engaged, or which the mem-
ber or person associated with a member has 
been found to have omitted; 
‘‘(B) the specific provision of this title, the 
rules or regulations thereunder, or the rules of 
the association which any such act or practice, 
or omission to act, violates; and 
‘‘(C) the sanction imposed and the reason 
for it. 
‘‘(2) PROCEDURES
AND
DETERMINATION.—In 
any proceeding by a national investment adviser as-
sociation to determine whether a person shall be de-
nied membership, barred from becoming associated 
with a member, or prohibited or limited with respect 
to access to services offered by the national invest-
ment adviser association, the national investment 
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adviser association shall notify the person of, and 
give such person an opportunity to be heard on, the 
specific grounds for denial, bar, prohibition, or limi-
tation under consideration, and keep a record. A de-
termination by the national investment adviser asso-
ciation to deny membership, bar a person from be-
coming associated with a member, or prohibit or 
limit a person with respect to access to services of-
fered by the national investment adviser association 
shall be supported by a statement setting forth the 
specific grounds on which the denial, bar, prohibi-
tion, or limitation is based. 
‘‘(3) SUMMARY SUSPENSION AND SUBSEQUENT 
PROCEDURES.—A national investment adviser asso-
ciation may summarily— 
‘‘(A) suspend a member or person associ-
ated with a member who has been and is ex-
pelled or suspended from any self-regulatory or-
ganization or barred or suspended from being 
associated with a member of any self-regulatory 
organization; 
‘‘(B) suspend a member who is in such fi-
nancial or operating difficulty that the national 
investment adviser association determines and 
so notifies the Commission that the member 
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cannot be permitted to continue to do business 
as a member and serve the interest of investors, 
creditors, other members, or the national in-
vestment adviser association; or 
‘‘(C) limit or prohibit any person with re-
spect to access to services offered by the na-
tional investment adviser association if subpara-
graph (A) or (B) is applicable to such person 
or, in the case of a person who is not a mem-
ber, if the national investment adviser associa-
tion determines that such person does not meet 
the qualification requirements or other pre-
requisites for such access and such person can-
not be permitted to continue to have such ac-
cess and serve the interest of investors, credi-
tors, members, or the national investment ad-
viser association. Any person aggrieved by any 
such summary action shall be promptly afforded 
an opportunity for a hearing by the national in-
vestment adviser association in accordance with 
the provisions of paragraph (1) or (2). The 
Commission, by order, may stay any such sum-
mary action on its own motion or upon applica-
tion by any person aggrieved thereby, if the 
Commission determines summarily or after no-
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tice and opportunity for hearing (which hearing 
may consist solely of the submission of affida-
vits or presentation of oral arguments) that 
such stay is consistent with the public interest 
and the protection of investors. 
‘‘(d) FINAL DISCIPLINARY SANCTION.— 
‘‘(1) NOTICE.—If any national investment ad-
viser association imposes any final disciplinary sanc-
tion on any member, denies membership to any ap-
plicant, or prohibits or limits any person in respect 
to access to services offered by the national invest-
ment adviser association, or if any national invest-
ment adviser association imposes any final discipli-
nary sanction on any person associated with a mem-
ber, or bars any person from becoming associated 
with a member, the national investment adviser as-
sociation shall promptly file notice thereof with the 
Commission and publish the notice. The notice shall 
be in such form and contain such information as the 
Commission, by rule, may prescribe as necessary or 
appropriate in furtherance of the purposes of this 
title. 
‘‘(2) REVIEW.—Any action with respect to 
which a national investment adviser association is 
required by paragraph (1) to file notice shall be sub-
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ject to review by the Commission, on its own motion, 
or upon application by any person aggrieved thereby 
filed within 30 days after the date such notice was 
both filed with the Commission and received by such 
aggrieved person, or within such longer period as the 
Commission may determine. Application to the Com-
mission for review, or the institution of review by the 
Commission on its own motion, shall not operate as 
a stay of the action unless the Commission otherwise 
orders, summarily or after notice and opportunity 
for hearing on the question of a stay (which hearing 
may consist solely of the submission of affidavits or 
presentation of oral arguments). The Commission 
may establish for appropriate cases an expedited 
procedure for consideration and determination of the 
question of a stay. 
‘‘(e) REVIEW OF FINAL SANCTION.— 
‘‘(1) IN GENERAL.—In any proceeding to review 
a final disciplinary sanction imposed by a national 
investment adviser association on a member or a 
person associated with a member, after notice and 
opportunity for hearing (which hearing may consist 
solely of consideration of the record before the na-
tional investment adviser association and oppor-
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tunity for the presentation of supporting reasons to 
affirm, modify, or set aside the sanction)— 
‘‘(A) if the Commission finds that such 
member or person associated with a member 
has engaged in such acts or practices, or has 
omitted such acts, as the national investment 
adviser association has found him or her to 
have engaged in or omitted that such acts or 
practices, or omissions to act, are in violation of 
such provisions of this title, the rules or regula-
tions thereunder, or the rules of the association, 
as have been specified in the determination of 
the national investment adviser association, and 
that such provisions are, and were applied in a 
manner, consistent with the purposes of this 
title, the Commission, by order, shall so declare 
and, as appropriate, affirm the sanction im-
posed by the national investment adviser asso-
ciation, modify the sanction in accordance with 
paragraph (2), or remand to the national in-
vestment adviser association for further pro-
ceedings; or 
‘‘(B) if the Commission does not make any 
such finding it shall, by order, set aside the 
sanction imposed by the national investment ad-
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viser association and, if consistent with the pur-
poses of this title, remand to the national in-
vestment adviser association for further pro-
ceedings. 
‘‘(2) REDUCTION
OR
REVOCATION
OF
SANC-
TION.—If the Commission, having due regard for 
the public interest, the protection of investors, and 
the policies and purposes of this title, finds after a 
proceeding in accordance with paragraph (1) that a 
sanction imposed by a national investment adviser 
association on a member or person associated with 
a member imposes any burden on competition not 
necessary or appropriate in furtherance of the pur-
poses of this title or is excessive or oppressive, the 
Commission may cancel, reduce, or require the rev-
ocation of such sanction. 
‘‘(f) REVIEW OF DENIAL OF MEMBERSHIP.—In any 
proceeding to review the denial of membership in a na-
tional investment adviser association to any applicant, the 
barring of any person from becoming associated with a 
member, or the prohibition or limitation by a national in-
vestment adviser association of any person with respect 
to access to services offered by the national investment 
adviser association— 
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‘‘(1) if the Commission, after notice and oppor-
tunity for hearing (which hearing may consist solely 
of consideration of the record before the national in-
vestment adviser association and opportunity for the 
presentation of supporting reasons to dismiss the 
proceeding or set aside the action of the national in-
vestment adviser association) finds that the specific 
grounds on which the denial, bar, prohibition or lim-
itation is based exist in fact, that the denial, bar, 
prohibition, or limitation is in accordance with the 
rules of the association, and that the rules are and 
were applied in a manner consistent with the pur-
poses of this title, the Commission, by order, shall 
dismiss the proceeding; or 
‘‘(2) if the Commission does not make any such 
finding or it finds that the denial, bar, prohibition 
or limitation imposes any burden on competition not 
necessary or appropriate in furtherance of the pur-
poses of this title, the Commission, by order, shall 
set aside the action of the national investment ad-
viser association and require it to admit the appli-
cant to membership or participation, permit the per-
son to become associated with a member, or grant 
the person access to services offered by the national 
investment adviser association. 
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‘‘(g) COMPLIANCE.— 
‘‘(1) IN GENERAL.—Every registered national 
investment adviser association shall comply with the 
provisions of this title, the rules and regulations 
thereunder, and its own rules, and (subject to the 
provisions of paragraph (2) and the rules there-
under) absent reasonable justification or excuse, en-
force compliance with such provisions by its mem-
bers and persons associated with a member. The 
Commission shall conduct regular and routine in-
spections, at least annually, of the registered na-
tional investment adviser association, to ensure that 
the association complies with the provisions of this 
title and the rules and regulations thereunder. 
‘‘(2) RELIEF OF RESPONSIBILITY.—The Com-
mission, by rule, consistent with the public interest 
and the protection of investors, and the other poli-
cies and purposes of this title, may relieve any na-
tional investment adviser association of any respon-
sibility under this title to enforce compliance with 
any provision of this title or the rules or regulations 
thereunder by any member of the national invest-
ment adviser association or any class of such mem-
bers or persons associated with a member. 
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‘‘(h) ENFORCEMENT AUTHORITY OF THE COMMIS-
SION.— 
‘‘(1) SUSPENSION, CENSURE AND LIMITATION 
ON ASSOCIATIONS.—If in its opinion such action is 
necessary or appropriate in the public interest, for 
the protection of investors, or otherwise in further-
ance of the purposes of this title, the Commission 
may, by order, suspend for a period not exceeding 
12 months or revoke the registration of a national 
investment adviser association, or to censure or im-
pose limitations upon the activities, functions, and 
operations of the national investment adviser asso-
ciation, if the Commission finds, on the record after 
notice and opportunity for hearing, that the national 
investment adviser association has violated or is un-
able to comply with any provision of this title, the 
rules or regulations thereunder, or its own rules, or 
without reasonable justification or excuse has failed 
to enforce compliance with any such provision by a 
member or a person associated with a member. 
‘‘(2) SUSPENSION
AND
EXPULSION
OF
MEM-
BERS.—If in its opinion such action is necessary or 
appropriate in the public interest, for the protection 
of investors, or otherwise in furtherance of the pur-
poses of this title, the Commission may, by order, 
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suspend for a period not exceeding 12 months or 
expel from a national investment adviser association 
any member, if the member is subject to an order 
of the Commission pursuant to section 203(e) or if 
the Commission finds, on the record after notice and 
opportunity for hearing, that the member has will-
fully violated, or has participated in any transaction 
with or for any other person who the member had 
reason to believe was violating with respect to such 
transaction, any provision of the Securities Act of 
1933, the Securities Exchange Act of 1934, the In-
vestment Company Act of 1940, this title, the Com-
modity Exchange Act, or the rules or regulations 
under any of such statutes, or the rules of the Mu-
nicipal Securities Rulemaking Board. 
‘‘(3) OTHER BARS.—If in its opinion, such ac-
tion is necessary or appropriate in the public inter-
est, for the protection of investors, or otherwise in 
furtherance of the purposes of this title, the Com-
mission may, by order, suspend for a period not ex-
ceeding 12 months or bar any person from being as-
sociated with a member of a national investment ad-
viser association, if the person is subject to an order 
of the Commission under section 203(f) or if the 
Commission finds, on the record after notice and op-
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portunity for hearing, that the person has willfully 
violated, or has participated in any transaction with 
any other person who the person associated with a 
member had reason to believe was violating with re-
spect to the transaction, any provision of the Securi-
ties Act of 1933, the Securities Exchange Act of 
1934, the Investment Company Act of 1940, this 
title, or the rules or regulations under any of those 
statutes, or the rules of the Municipal Securities 
Rulemaking Board. 
‘‘(4) REMOVAL OR CENSURE OF OFFICERS AND 
DIRECTORS.—If in its opinion such action is nec-
essary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance 
of the purposes of this title, the Commission may, by 
order, remove from office or censure any officer, di-
rector or any person performing similar functions of 
a national investment adviser association, if the 
Commission finds, on the record after notice and op-
portunity for hearing, that such person has willfully 
violated any provision of this title, the rules or regu-
lations thereunder, or the rules of the national in-
vestment adviser association, willfully abused his au-
thority, or without reasonable justification or excuse 
has failed to enforce compliance with any such provi-
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sion by any member or person associated with a 
member.’’. 
Æ 
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