1163 
affecting each Commission, the regulated markets, 
and the industry generally; and 
(4) reporting regularly to each Commission and 
to Congress on its activities. 
PART 4—ADDITIONAL COMMISSION REFORMS 
SEC. 7401. REGULATION OF SECURITIES LENDING. 
Section 10 of the Securities Exchange Act of 1934 
(15 U.S.C. 78j) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(c)(1) To effect, accept, or facilitate a transaction 
involving the loan or borrowing of securities in contraven-
tion of such rules and regulations as the Commission may 
prescribe as necessary or appropriate in the public interest 
or for the protection of investors. 
‘‘(2) Nothing in paragraph (1) shall be construed to 
limit the authority of an appropriate Federal banking 
agency (as defined in section 3 of the Federal Deposit In-
surance Act (12 U.S.C. 1813(q))), the National Credit 
Union Administration, or any other Federal department 
or agency identified under law as having a systemic risk 
responsibility from prescribing rules or regulations to im-
pose restrictions on transactions involving the loan or bor-
rowing of securities in order to protect the safety and 
soundness of a financial institution or to protect the finan-
cial system from systemic risk.’’. 
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SEC. 7402. LOST AND STOLEN SECURITIES. 
Section 17(f)(1) of the Securities Exchange Act of 
1934 (15 U.S.C. 78q(f)(1)) is amended— 
(1) in subparagraph (A), by striking ‘‘missing, 
lost, counterfeit, or stolen securities’’ and inserting 
‘‘securities that are missing, lost, counterfeit, stolen, 
cancelled, or any other category of securities as the 
Commission, by rule, may prescribe’’; and 
(2) in subparagraph (B), by striking ‘‘or sto-
len’’ and inserting ‘‘stolen, cancelled, or reported in 
such other manner as the Commission, by rule, may 
prescribe’’. 
SEC. 7403. FINGERPRINTING. 
Section 17(f)(2) of the Securities Exchange Act of 
1934 (15 U.S.C. 78q(f)(2)) is amended— 
(1) by striking ‘‘and registered clearing agen-
cy,’’ and inserting ‘‘registered clearing agency, reg-
istered securities information processor, national se-
curities exchange, and national securities associa-
tion’’; and 
(2) by striking ‘‘or clearing agency,’’ and insert-
ing ‘‘clearing agency, securities information proc-
essor, national securities exchange, or national secu-
rities association,’’. 
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SEC. 7404. EQUAL TREATMENT OF SELF-REGULATORY OR-
GANIZATION RULES. 
Section 29(a) of the Securities Exchange Act of 1934 
(15 U.S.C. 78cc(a)) is amended by striking ‘‘an exchange 
required thereby’’ and inserting ‘‘a self-regulatory organi-
zation,’’. 
SEC. 7405. CLARIFICATION THAT SECTION 205 OF THE IN-
VESTMENT ADVISERS ACT OF 1940 DOES NOT 
APPLY TO STATE-REGISTERED ADVISERS. 
Section 205(a) of the Investment Advisers Act of 
1940 (15 U.S.C. 80b–5(a)) is amended— 
(1) by striking ‘‘, unless exempt from registra-
tion pursuant to section 203(b),’’ and inserting 
‘‘registered or required to be registered with the 
Commission’’; 
(2) by striking ‘‘make use of the mails or any 
means or instrumentality of interstate commerce, di-
rectly or indirectly, to’’; and 
(3) by striking ‘‘to’’ after ‘‘in any way’’. 
SEC. 7406. CONFORMING AMENDMENTS FOR THE REPEAL 
OF THE PUBLIC UTILITY HOLDING COMPANY 
ACT OF 1935. 
(a) SECURITIES EXCHANGE ACT OF 1934.—The Se-
curities Exchange Act of 1934 (15 U.S.C. 78 et seq.) is 
amended— 
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(1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), 
by striking ‘‘the Public Utility Holding Company 
Act of 1935 (15 U.S.C. 79a et seq.),’’; and 
(2) in section 12(k) (15 U.S.C. 78l(k)), by 
amending paragraph (7) to read as follows:
‘‘(7) DEFINITION.—For purposes of this sub-
section, the term ‘emergency’ means— 
‘‘(A) a major market disturbance charac-
terized by or constituting— 
‘‘(i) sudden and excessive fluctuations 
of securities prices generally, or a substan-
tial threat thereof, that threaten fair and 
orderly markets; or 
‘‘(ii) a substantial disruption of the 
safe or efficient operation of the national 
system for clearance and settlement of 
transactions in securities, or a substantial 
threat thereof; or 
‘‘(B) a major disturbance that substan-
tially disrupts, or threatens to substantially dis-
rupt— 
‘‘(i) the functioning of securities mar-
kets, investment companies, or any other 
significant portion or segment of the secu-
rities markets; or 
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‘‘(ii) the transmission or processing of 
securities transactions.’’. 
(3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), 
by striking ‘‘section 18(c) of the Public Utility Hold-
ing Company Act of 1935,’’. 
(b) TRUST INDENTURE ACT OF 1939.—The Trust 
Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) is 
amended— 
(1) in section 303 (15 U.S.C. 77ccc), by 
amending paragraph (17) to read as follows: 
‘‘(17) The terms ‘Securities Act of 1933’ and 
‘Securities Exchange Act of 1934’ shall be deemed 
to refer, respectively, to such Acts, as amended, 
whether amended prior to or after the enactment of 
this title.’’; 
(2) in section 308 (15 U.S.C. 77hhh), by strik-
ing ‘‘Securities Act of 1933, the Securities Exchange 
Act of 1934, or the Public Utility Holding Company 
Act of 1935’’ each place it appears and inserting 
‘‘Securities Act of 1933 or the Securities Exchange 
Act of 1934’’; 
(3) in section 310 (15 U.S.C. 77jjj), by striking 
subsection (c); 
(4) in section 311 (15 U.S.C. 77kkk) by strik-
ing subsection (c); 
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(5) in section 323(b) (15 U.S.C. 77www(b)), by 
striking ‘‘Securities Act of 1933, or the Securities 
Exchange Act of 1934, or the Public Utility Holding 
Company Act of 1935’’ and inserting ‘‘Securities Act 
of 1933 or the Securities Exchange Act of 1934’’; 
and 
(6) in section 326 (15 U.S.C. 77zzz), by strik-
ing ‘‘Securities Act of 1933, or the Securities Ex-
change Act of 1934, or the Public Utility Holding 
Company Act of 1935,’’ and inserting ‘‘Securities 
Act of 1933 or the Securities Exchange Act of 
1934’’. 
(c) INVESTMENT COMPANY ACT OF 1940.—The In-
vestment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) 
is amended— 
(1) in section 2(a)(44) (15 U.S.C. 80a– 
2(a)(44)), by striking ‘‘ ‘Public Utility Holding Com-
pany Act of 1935’,’’; 
(2) in section 3(c) (15 U.S.C. 80a–3(c)), by 
amending paragraph (8) to read as follows: 
‘‘(8) [Repealed]’’; 
(3) in section 38(b) (15 U.S.C. 80a–37(b)), by 
striking ‘‘the Public Utility Holding Company Act of 
1935,’’; and 
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(4) in section 50 (15 U.S.C. 80a–49), by strik-
ing ‘‘the Public Utility Holding Company Act of 
1935,’’. 
(d) INVESTMENT ADVISERS ACT OF 1940.—Section 
202(a)(21) of the Investment Advisers Act of 1940 (15 
U.S.C. 80b–2(a)(21)) is amended by striking ‘‘ ‘Public 
Utility Holding Company Act of 1935’,’’. 
SEC. 7407. PROMOTING TRANSPARENCY IN FINANCIAL RE-
PORTING. 
(a) FINDINGS.—Congress finds the following: 
(1) Transparent and clear financial reporting is 
integral to the continued growth and strength of our 
capital markets and the confidence of investors. 
(2) The increasing detail and volume of ac-
counting, auditing, and reporting guidance pose a 
major challenge. 
(3) The complexity of accounting and auditing 
standards in the United States has added to the 
costs and effort involved in financial reporting. 
(b) TESTIMONY REQUIRED
ON REDUCING COM-
PLEXITY IN FINANCIAL REPORTING.—The Securities and 
Exchange Commission, the Public Company Accounting 
Oversight Board, and the standard setting body des-
ignated pursuant to section 19(b) of the Securities Act 
of 1933 shall annually provide oral testimony by their re-
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spective Chairpersons or a designee of the Chairperson, 
beginning in 2010, and for 5 years thereafter, to the Com-
mittee on Financial Services of the House of Representa-
tives on their efforts to reduce the complexity in financial 
reporting to provide more accurate and clear financial in-
formation to investors, including— 
(1) reassessing complex and outdated account-
ing standards; 
(2) improving the understandability, consist-
ency, and overall usability of the existing accounting 
and auditing literature; 
(3) 
developing 
principles-based 
accounting 
standards; 
(4) encouraging the use and acceptance of 
interactive data; and 
(5) promoting disclosures in ‘‘plain English’’. 
SEC. 7408. UNLAWFUL MARGIN LENDING. 
Section 7(c)(1)(A) of the Securities Exchange Act of 
1934 (15 U.S.C. 78g(c)(1)(A)) is amended by striking ‘‘; 
and’’ and inserting ‘‘; or’’. 
SEC. 7409. PROTECTING CONFIDENTIALITY OF MATERIALS 
SUBMITTED TO THE COMMISSION. 
(a) SECURITIES EXCHANGE ACT OF 1934.—Section 
17(i) of the Securities Exchange Act of 1934 (as amended 
by section 1314(2)) is amended to read as follows: 
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‘‘(i) AUTHORITY TO LIMIT DISCLOSURE OF INFOR-
MATION.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, the Commission shall not be com-
pelled to disclose any information, documents, 
records, or reports that relate to an examination, 
surveillance, or risk assessment of a person subject 
to or described in this section, or the financial or 
operational condition of such persons, or any infor-
mation supplied to the Commission by any domestic 
or foreign regulatory agency or self-regulatory orga-
nization that relates to the financial or operational 
condition of such persons, of any associated person 
of such persons, or any affiliate of an investment 
bank holding company. 
‘‘(2) CERTAIN EXCEPTIONS.—Nothing in this 
subsection shall authorize the Commission to with-
hold information from the Congress, prevent the 
Commission from complying with a request for infor-
mation from any other Federal department or agen-
cy, the Public Company Accounting Oversight 
Board, or any self-regulatory organization request-
ing the information for purposes within the scope of 
its jurisdiction, or prevent the Commission from 
complying with an order of a court of the United 
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States in an action brought by the United States or 
the Commission against a person subject to or de-
scribed in this section to produce information, docu-
ments, records, or reports relating directly to the ex-
amination, surveillance, or risk assessment of that 
person or the financial or operational condition of 
that person or an associated or affiliated person of 
that person. 
‘‘(3) TREATMENT
UNDER
SECTION
552
OF 
TITLE 5, UNITED STATES CODE.—For purposes of 
section 552 of title 5, United States Code, this sub-
section shall be considered a statute described in 
subsection (b)(3)(B) of that section. 
‘‘(4) CERTAIN INFORMATION TO BE CONFIDEN-
TIAL.—In prescribing regulations to carry out the 
requirements of this subsection, the Commission 
shall designate information described in or obtained 
pursuant to subparagraphs (A), (B), and (C) of sub-
section (i)(3) as confidential information for pur-
poses of section 24(b)(2) of this title.’’. 
(b) INVESTMENT COMPANY ACT OF 1940.—Section 
31(b) of the Investment Company Act of 1940 (15 U.S.C. 
80a–30(b)), as amended by sections 7106(a)(2) and 
7218(b)(4), is further amended by adding at the end the 
following new paragraph: 
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‘‘(6) CONFIDENTIALITY.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of law, the Commission shall not 
be compelled to disclose any information, docu-
ments, records, or reports that relate to an ex-
amination, surveillance, or risk assessment of a 
person subject to or described in this section. 
‘‘(B) CERTAIN EXCEPTIONS.—Nothing in 
this subsection shall authorize the Commission 
to withhold information from the Congress, pre-
vent the Commission from complying with a re-
quest for information from any other Federal 
department or agency, or the Public Company 
Accounting Oversight Board requesting the in-
formation for purposes within the scope of its 
jurisdiction, or prevent the Commission from 
complying with an order of a court of the 
United States in an action brought by the 
United States or the Commission against a per-
son subject to or described in this section to 
produce information, documents, records, or re-
ports relating directly to the examination of 
that person or the financial or operational con-
dition of that person or an associated or affili-
ated person of that person. 
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‘‘(C) TREATMENT UNDER SECTION 552 OF 
TITLE 5, UNITED STATES CODE.—For purposes 
of section 552 of title 5, United States Code, 
this subsection shall be considered a statute de-
scribed in subsection (b)(3)(B) of that sec-
tion.’’. 
(c) INVESTMENT ADVISERS ACT OF 1940.—Section 
204 of the Investment Advisers Act of 1940 (15 U.S.C. 
80b–4), as amended by sections 7106(b) and 7218(c), is 
further amended by adding at the end the following new 
subsection: 
‘‘(f) CONFIDENTIALITY.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, the Commission shall not be com-
pelled to disclose any information, documents, 
records, or reports that relate to an examination of 
a person subject to or described in this section. 
‘‘(2) CERTAIN EXCEPTIONS.—Nothing in this 
subsection shall authorize the Commission to with-
hold information from Congress, prevent the Com-
mission from complying with a request for informa-
tion from any other Federal department or agency, 
the Public Company Accounting Oversight Board, or 
a self-regulatory organization requesting the infor-
mation for purposes within the scope of its jurisdic-
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tion, or prevent the Commission from complying 
with an order of a court of the United States in an 
action brought by the United States or the Commis-
sion against a person subject to or described in this 
section to produce information, documents, records, 
or reports relating directly to the examination of 
that person or the financial or operational condition 
of that person or an associated or affiliated person 
of that person. 
‘‘(3) TREATMENT
UNDER
SECTION
552
OF 
TITLE 5, UNITED STATES CODE.—For purposes of 
section 552 of title 5, United States Code, this sub-
section shall be considered a statute described in 
subsection (b)(3)(B) of that section.’’. 
SEC. 7410. TECHNICAL CORRECTIONS. 
(a) SECURITIES ACT OF 1933.—The Securities Act 
of 1933 (15 U.S.C. 77a et seq.) is amended— 
(1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by 
striking ‘‘individual;’’ and inserting ‘‘individual,’’; 
(2) in the matter following paragraph (5) of 
section 11(a), by striking ‘‘earning statement’’ and 
inserting ‘‘earnings statement’’. 
(3) 
in 
section 
18(b)(1)(C) 
(15 
U.S.C. 
77r(b)(1)(C)), by striking ‘‘is a security’’ and insert-
ing ‘‘a security’’; 
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(4) in section 18(c)(2)(B)(i) (15 U.S.C. 
77r(c)(2)(B)(i)), by striking ‘‘State, or’’ and insert-
ing ‘‘State or’’; 
(5) 
in 
section 
19(d)(6)(A) 
(15 
U.S.C. 
77s(d)(6)(A)), by striking ‘‘in paragraph (1) of (3)’’ 
and inserting ‘‘in paragraph (1) or (3)’’; and 
(6) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z– 
2(c)(1)(B)(ii)), by striking ‘‘business entity;’’ and in-
serting ‘‘business entity,’’. 
(b) SECURITIES EXCHANGE ACT OF 1934.—The Se-
curities Exchange Act of 1934 (15 U.S.C. 78 et seq.) is 
amended— 
(1) in section 2(1)(a) (15 U.S.C. 78b(1)(a)), by 
striking ‘‘affected’’ and inserting ‘‘effected’’; 
(2) 
in 
section 
3(a)(55)(A) 
(15 
U.S.C. 
78c(a)(55)(A)), by striking ‘‘section 3(a)(12) of the 
Securities Exchange Act of 1934’’ and inserting 
‘‘section 3(a)(12) of this Act’’; 
(3) in section 3(g) (15 U.S.C. 78c(g)), by strik-
ing ‘‘company, account person, or entity’’ and insert-
ing ‘‘company, account, person, or entity’’; 
(4) in section 10A(i)(1)(B)(i) (15 U.S.C. 78j– 
1(i)(1)(B)(i)), by striking ‘‘nonaudit’’ and inserting 
‘‘non-audit’’; 
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(5) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), 
by striking ‘‘earning statement’’ and inserting 
‘‘earnings statement’’; 
(6) in section 15(b)(1) (15 U.S.C. 78o(b)(1))— 
(A) by striking the sentence beginning 
‘‘The order granting’’ and ending ‘‘from such 
membership.’’ in subparagraph (B); and 
(B) by inserting such sentence in the mat-
ter following such subparagraph after ‘‘are sat-
isfied.’’; 
(7) in section 15C(a)(2) (15 U.S.C. 78o– 
5(a)(2))— 
(A) by redesignating clauses (i) and (ii) as 
subparagraphs (A) and (B), respectively; 
(B) by striking the sentence beginning 
‘‘The order granting’’ and ending ‘‘from such 
membership.’’ in such subparagraph (B), as re-
designated; and 
(C) by inserting such sentence in the mat-
ter following such redesignated subparagraph 
after ‘‘are satisfied.’’; 
(8) 
in 
section 
17(b)(1)(B) 
(15 
U.S.C. 
78q(b)(1)(B)), by striking ‘‘15A(k) gives’’ and in-
serting ‘‘15A(k), give’’; and 
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(9) in section 21C(c)(2) (15 U.S.C. 78u– 
3(c)(2)), by striking ‘‘paragraph (1) subsection’’ and 
inserting ‘‘Paragraph (1)’’. 
(c) TRUST INDENTURE ACT OF 1939.—The Trust 
Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) is 
amended— 
(1) in section 304(b) (15 U.S.C. 77ddd(b)), by 
striking ‘‘section 2 of such Act’’ and inserting ‘‘sec-
tion 2(a) of such Act’’; 
(2) 
in 
section 
313(a)(4) 
(15 
U.S.C. 
77mmm(a)(4)) by striking ‘‘subsection (b) of section 
311’’ and inserting ‘‘section 311(b)’’; and 
(3) 
in 
section 
317(a)(1) 
(15 
U.S.C. 
77qqq(a)(1)), by striking ‘‘(1),’’ and inserting ‘‘(1)’’. 
(d) INVESTMENT COMPANY ACT OF 1940.—The In-
vestment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) 
is amended— 
(1) in section 2(a)(19)(B) (15 U.S.C. 80a– 
2(a)(19)(B)) by striking ‘‘clause (vi)’’ both places it 
appears in the last two sentences and inserting 
‘‘clause (vii)’’; 
(2) in section 9(b)(4)(B) (15 U.S.C. 80a– 
9(b)(4)(B)), by inserting ‘‘or’’ after the semicolon at 
the end; 
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(3) in section 12(d)(1)(J) (15 U.S.C. 80a– 
12(d)(1)(J)), by striking ‘‘any provision of this sub-
section’’ and inserting ‘‘any provision of this para-
graph’’; 
(4) in section 13(a)(3) (15 U.S.C. 80a– 
13(a)(3)), by inserting ‘‘or’’ after the semicolon at 
the end; 
(5) in section 17(f)(4) (15 U.S.C. 80a– 
17(f)(4)), by striking ‘‘No such member’’ and insert-
ing ‘‘No member of a national securities exchange’’; 
(6) in section 17(f)(6) (15 U.S.C. 80a– 
17(f)(6)), by striking ‘‘company may serve’’ and in-
serting ‘‘company, may serve’’; and 
(7) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a– 
60(a)(3)(B)(iii))— 
(A) by striking ‘‘paragraph (1) of section 
205’’ and inserting ‘‘section 205(a)(1)’’; and 
(B) by striking ‘‘clause (A) or (B) of that 
section’’ and inserting ‘‘section 205(b)(1) or 
(2)’’. 
(e) INVESTMENT ADVISERS ACT OF 1940.—The In-
vestment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) 
is amended— 
(1) in each of the following sections, by striking 
‘‘principal business office’’ or ‘‘principal place of 
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business’’ (whichever and wherever it appears) and 
inserting ‘‘principal office and place of business’’: 
sections 203(c)(1)(A), 203(k)(4)(B), 213(a), 222(b), 
and 222(c) (15 U.S.C. 80b–3(c)(1)(A), 80b– 
3(k)(4)(B), 
80b–13(a), 
80b–18a(b), 
and 
80b– 
18a(c)); and 
(2) in section 206(3) (15 U.S.C. 80b–6(3)), by 
inserting ‘‘or’’ after the semicolon at the end. 
SEC. 7411. MUNICIPAL SECURITIES. 
Section 15B(b) of the Securities Exchange Act of 
1934 (15 U.S.C. 78o–4(b)) is amended— 
(1) by amending paragraph (1) to read as fol-
lows: 
‘‘(1) COMPOSITION OF THE MUNICIPAL SECURI-
TIES RULEMAKING BOARD.—Not later than October 
1, 2010, the Municipal Securities Rulemaking Board 
(hereinafter in this section referred to as the 
‘Board’), shall be composed of members which shall 
perform the duties set forth in this section and shall 
consist of— 
‘‘(A) a majority of independent public rep-
resentatives, at least one of whom shall be rep-
resentative of investors in municipal securities 
and at least one of whom shall be representative 
of issuers of municipal securities (which mem-
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bers are hereinafter referred to as ‘public rep-
resentatives’); 
‘‘(B) at least one individual who is rep-
resentative of municipal securities brokers and 
municipal securities dealers which are not 
banks or subsidiaries or departments or divi-
sions of banks (which members are hereinafter 
referred to as ‘broker-dealer representatives’); 
and 
‘‘(C) at least one individual who is rep-
resentative of municipal securities dealers which 
are banks or subsidiaries or departments or di-
visions of banks (which members are herein-
after referred to as ‘bank representatives’).’’; 
and 
(2) by amending paragraph (2)(B) to read as 
follows: 
‘‘(B) Establish fair procedures for the nomina-
tion and election of members of the Board and as-
sure fair representation in such nominations and 
elections of municipal securities brokers and munic-
ipal securities dealers. Such rules— 
‘‘(i) shall establish requirements regarding 
the independence of public representatives; 
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‘‘(ii) shall provide that the number of pub-
lic representatives of the Board shall at all 
times exceed the total number of broker-dealer 
representatives and bank representatives; 
‘‘(iii) shall establish minimum knowledge, 
experience, and other appropriate qualifications 
for individuals to serve as public representa-
tives, which may include, among other things, 
prior work experience in the securities, munic-
ipal finance, or municipal securities industries; 
‘‘(iv) shall specify the term members shall 
serve; and 
‘‘(v) may increase or decrease the number 
of members which shall constitute the whole 
Board, but in no case may such number be an 
even number.’’. 
SEC. 7412. INTERESTED PERSON DEFINITION. 
Section 2(a)(19)(A) of the Investment Company Act 
of 1940 (15 U.S.C. 80a–2(a)(19)(A)) is amended— 
(1) by striking clauses (v) and (vi); 
(2) by inserting after clause (iv) the following 
new clause: 
‘‘(v) any natural person who is a 
member of a class of persons who the 
Commission, by rule or regulation, deter-
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mines are unlikely to exercise an appro-
priate degree of independence as a result 
of— 
‘‘(I) a material business or pro-
fessional relationship with such com-
pany or any affiliated person of such 
company; or 
‘‘(II) a close familial relationship 
with any natural person who is an af-
filiated person of such company;’’; 
(3) by redesignating clause (vii) as clause (vi); 
and 
(4) in clause (vi), as redesignated, by striking 
‘‘two completed fiscal years’’ and inserting ‘‘five 
completed fiscal years’’. 
SEC. 7413. RULEMAKING AUTHORITY TO PROTECT RE-
DEEMING INVESTORS. 
Section 22(e) of the Investment Company Act of 
1940 (15 U.S.C. 80a–22(e)) is amended by adding at the 
end the following: ‘‘The Commission may, by rules and 
regulations, limit the extent to which a registered open- 
end investment company may own, hold, or invest in il-
liquid securities or other illiquid property.’’. 
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SEC. 7414. STUDY ON SEC REVOLVING DOOR. 
(a) 
GOVERNMENT
ACCOUNTABILITY
OFFICE 
STUDY.—The Comptroller General of the United States 
shall conduct a study that will— 
(1) review the number of employees who leave 
the Securities and Exchange Commission to work 
for financial institutions regulated by such Commis-
sion; 
(2) determine how many employees who leave 
the Securities and Exchange Commission worked on 
cases that involved financial institutions regulated by 
such Commission; 
(3) review the length of time employees work 
for the Securities and Exchange Commission before 
leaving to be employed by financial institutions regu-
lated by such Commission; 
(4) review existing internal controls and make 
recommendations on strengthening such controls to 
ensure that employees of the Securities and Ex-
change Commission who are later employed by fi-
nancial institutions did not assist such institutions 
in violating any rules or regulations of the Commis-
sion during the course of their employment with 
such Commission; 
(5) determine if greater post-employment re-
strictions are necessary to prevent employees of the 
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Securities and Exchange Commission from being 
employed by financial institutions after employment 
with such Commission; 
(6) determine if the volume of employees of the 
Securities and Exchange Commission who are later 
employed by financial institutions has led to ineffi-
ciencies in enforcement; 
(7) determine if employees of the Securities and 
Exchange Commission who are later employed by fi-
nancial institutions have engaged in information 
sharing or assisted such institutions in circum-
venting Federal rules and regulations while em-
ployed by such Commission; 
(8) review any information that may address 
the volume of employees of the Securities and Ex-
change Commission who are later employed by fi-
nancial institutions, and make recommendations to 
Congress; and 
(9) review other additional issues as may be 
raised during the course of the study conducted 
under this subsection. 
(b) REPORT.—Not later than 1 year after the date 
of the enactment of this subtitle, the Comptroller General 
of the United States shall submit to the Committee on 
Financial Services of the House of Representatives and 
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the Committee on Banking, Housing, and Urban Affairs 
of the Senate a report on the results of the study required 
by subsection (a). 
SEC. 7415. STUDY ON INTERNAL CONTROL EVALUATION 
AND REPORTING COST BURDENS ON SMALL-
ER ISSUERS. 
(a) STUDY REQUIRED.—The Government Account-
ability Office and the Securities and Exchange Commis-
sion shall each conduct a study evaluating the costs and 
benefits of complying with section 404(b) of the Sarbanes- 
Oxley Act of 2002 (15 U.S.C. § 7262(b)) on issuers who 
are not accelerated or large accelerated filers as defined 
by Commission Rule 12b-2. The study shall— 
(1) include recommendations, administrative re-
forms, and legislative proposals on implementation 
steps that could be taken to reduce compliance bur-
dens on these issuers; and 
(2) determine the efficacy of the Securities and 
Exchange Commission’s measures to limit the cost 
of compliance on smaller issuers. 
(b) REPORTS REQUIRED.—On or before June 1, 
2010, the Government Accountability Office and the Secu-
rities and Exchange Commission shall submit separate re-
ports to Congress containing the findings and conclusions 
of the studies required under subsection (a), together with 
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such recommendations for regulatory, legislative, or ad-
ministrative action as may be appropriate. 
(c) EFFECTIVE DATE CONTINGENT ON REPORTS.— 
Requirements under section 404(b) of the Sarbanes-Oxley 
Act of 2002 on issuers described under subsection (a) shall 
not become effective until the results of the report are de-
livered, but in no case before June 1, 2011. 
SECTION 7416. ANALYSIS OF RULE REGARDING SMALLER 
REPORTING COMPANIES. 
(a) FINDINGS.—Congress finds the following: 
(1) Many small businesses in cutting-edge tech-
nology sectors require significant capital investment 
to develop new technologies related to clean energy, 
drug treatments for terminal diseases and food pro-
duction in hunger-stricken areas of the World. 
(2) Many technology companies conducting re-
search do not meet the definition of ‘‘smaller report-
ing company’’ under the Securities and Exchange 
Commission’s Rule 12b–2 due to unusually high 
public floats despite low or zero revenue. 
(3) The Final Report of the Advisory Com-
mittee on Smaller Public Companies to the Securi-
ties and Exchange Commission recommended that a 
company with a market capitalization of less than 
about $787,000,000 be considered a smallcap com-
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pany and that the Commission provide exemptions 
from section 404(b) of the Sarbanes-Oxley Act to 
companies with less than $250,000,000 in annual 
revenues. 
(b) STUDY OF USING REVENUE AS CRITERIA TO DE-
FINE SMALLER REPORTING COMPANY.—The Securities 
and Exchange Commission shall conduct a study of the 
inclusion of revenue as a criteria used in defining smaller 
reporting company as defined under the Commission’s 
Rule 12b-2 to account for smaller public companies with 
public floats less than $700,000,000 and revenues less 
than $250,000,000. Not later than 180 days after the date 
of enactment of this subtitle, the Commission shall provide 
the Committee on Financial Services of the House of Rep-
resentatives and the Committee on Banking, Housing and 
Urban Affairs of the Senate a report of the findings of 
the study. 
SEC. 7417. FINANCIAL REPORTING FORUM. 
(a) ESTABLISHMENT.—There is hereby established a 
Financial Reporting Forum (hereinafter referred to as the 
‘‘Forum’’), which shall consist of— 
(1) the Chairman of the Securities Exchange 
Commission (hereinafter referred to as the ‘‘SEC’’); 
(2) the head of the Financial Accounting 
Standards Board; 
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(3) the Chairman of the Public Company Ac-
counting Oversight Board; 
(4) the head of each appropriate Federal bank-
ing agency, as such term is defined under section 
3(q) of the Federal Deposit Insurance Act (12 
U.S.C. 1813(q)); 
(5) the Administrator of the National Credit 
Union Administration; 
(6) the Secretary of the Treasury; 
(7) a representative of a non-financial institu-
tion, appointed by the SEC; 
(8) a representative of a financial institution, 
appointed by the SEC; 
(9) a representative of auditors, appointed by 
the SEC; and 
(10) a representative of investors, appointed by 
the SEC. 
(b) MEETINGS.—The Forum shall meet no less often 
than quarterly. 
(c) DUTIES.—The Forum shall meet to discuss im-
mediate and long-term issues critical to financial report-
ing. 
(d) REPORTING.—The Forum shall issue an annual 
report to the Congress detailing any determinations or 
findings made by the Forum during the previous year, in-
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cluding any legislative recommendations the Forum may 
have related to financial reporting matters. 
SEC. 7418. INVESTMENT ADVISERS SUBJECT TO STATE AU-
THORITIES. 
Section 203A(a) of the Investment Advisers Act of 
1940 (15 U.S.C. 80b–3a(a)) is amended— 
(1) by redesignating paragraph (2) as para-
graph (3); and 
(2) by inserting after paragraph (1) the fol-
lowing new paragraph: 
‘‘(2) TREATMENT OF CERTAIN MID-SIZED IN-
VESTMENT
ADVISERS.—Notwithstanding paragraph 
(1), an investment adviser that— 
‘‘(A) is regulated and examined, or re-
quired to be regulated and examined, by a 
State; and 
‘‘(B) has assets under management be-
tween— 
‘‘(i) the amount specified under sub-
paragraph (A) of paragraph (1), as such 
amount may have been adjusted by the 
Commission pursuant to that subpara-
graph, and 
‘‘(ii) $100,000,000, or such higher 
amount as the Commission may, by rule, 
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‘‘(A) the Commission shall publish in the 
Federal Register the standard maximum cash 
advance amount; and 
‘‘(B) the Board of Directors of SIPC shall 
submit a report to the Congress containing 
stating the standard maximum cash advance 
amount. 
‘‘(4) IMPLEMENTATION
PERIOD.—Any adjust-
ment to the standard maximum cash advance 
amount shall take effect on January 1 of the year 
immediately succeeding the calendar year in which 
such adjustment is made. 
‘‘(5) 
INFLATION
ADJUSTMENT
CONSIDER-
ATIONS.—In making any determination under para-
graph (1) to increase the standard maximum cash 
advance amount, the Board of Directors of SIPC 
shall consider— 
‘‘(A) the overall state of the fund and the 
economic conditions affecting members of 
SIPC; 
‘‘(B) the potential problems affecting mem-
bers of SIPC; and 
‘‘(C) such other factors as the Board of 
Directors of SIPC may determine appro-
priate.’’. 
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the date of the enactment of this subtitle, 
or any successor to such requirements; 
(v) that insurers are required to verify 
that each insurance producer successfully 
completes, and each insurance producer is 
required to receive, training designed to 
ensure that the insurance producer is com-
petent to recommend each class of annuity; 
(vi) that insurers are required to 
verify that insurance producers receive, 
and insurance producers are required to 
receive, training regarding the features of 
each offered annuity product, to an extent 
that is at least as protective of the inter-
ests of the consumer as the FINRA firm 
element training requirements, as in effect 
on the date of the enactment of this sub-
title, or any successor to such require-
ments; 
(vii) for coordination of such rules 
with the rules of FINRA governing mem-
ber brokers, dealers, and security rep-
resentatives, to the extent appropriate, 
consistent with protecting the interests of 
consumers, for State insurance regulators 
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to rely on, or to avoid duplication of 
FINRA rules; and 
(viii) for exemption from such rules 
only if such exemption is consistent with 
the protection of consumers. 
SEC. 7704. APPLICATIONS. 
To be eligible for a grant under this part, the State 
or appropriate State agency shall submit to the Commis-
sion a proposal to use the grant money to protect seniors 
from misleading or fraudulent marketing techniques in the 
offer and sale of financial products, which application 
shall— 
(1) identify the scope of the problem; 
(2) describe how the proposed program will help 
to protect seniors from misleading or fraudulent 
marketing in the sale of financial products, includ-
ing, at a minimum— 
(A) by proactively identifying senior vic-
tims of misleading and fraudulent marketing in 
the offer and sale of financial products; 
(B) how the proposed program can assist 
in the investigation and prosecution of those 
using misleading or fraudulent marketing in the 
offer and sale of financial products to seniors; 
and 
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