107TH CONGRESS
1ST SESSION
H. R. 1408
AN ACT
To safeguard the public from fraud in the financial services
industry, to streamline and facilitate the antifraud infor-
mation-sharing efforts of Federal and State regulators,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Financial Services Antifraud Network Act of 2001’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
TITLE I—ANTIFRAUD NETWORK
Subtitle A—Direction to Financial Regulators
Sec. 100. Creation and operation of the network.
Subtitle B—Potential Establishment of Antifraud Subcommittee
Sec. 101. Establishment.
Sec. 102. Purposes of the Subcommittee.
Sec. 103. Chairperson; term of chairperson; meetings; officers and staff.
Sec. 104. Nonagency status.
Sec. 105. Powers of the Subcommittee.
Sec. 106. Agreement on cost structure.
Subtitle C—Regulatory Provisions
Sec. 111. Agency supervisory privilege.
Sec. 112. Confidentiality of information.
Sec. 113. Liability provisions.
Sec. 114. Authorization for identification and criminal background check.
Sec. 115. Definitions.
Sec. 116. Technical and conforming amendments to other acts.
Sec. 117. Audit of State insurance regulators.
Subtitle D—Anti-Terrorism
Sec. 121. Preventing international terrorism.
TITLE II—SECURITIES INDUSTRY COORDINATION
Subtitle A—Disciplinary Information
Sec. 201. Investment Advisers Act of 1940.
Sec. 202. Securities Exchange Act of 1934.
Subtitle B—Preventing Migration of Rogue Financial Professionals to the
Securities Industry
Sec. 211. Securities Exchange Act of 1934.
Sec. 212. Investment Advisers Act of 1940.
SEC. 2. PURPOSES.
The purposes of this Act are—
(1) to safeguard the public from fraud in the fi-
nancial services industry;
(2) to streamline the antifraud coordination ef-
forts of Federal and State regulators and prevent
failure to communicate essential information;
(3) to reduce duplicative information requests
and other inefficiencies of financial services regula-
tion;
(4) to assist financial regulators in detecting
patterns of fraud, particularly patterns that only be-
come apparent when viewed across the full spectrum
of the financial services industry; and
(5) to take advantage of Internet technology
and other advanced data-sharing technology to mod-
ernize the fight against fraud in all of its evolving
manifestations and permutations.
TITLE I—ANTIFRAUD NETWORK
Subtitle A—Direction to Financial
Regulators
SEC. 100. CREATION AND OPERATION OF THE NETWORK.
(a) SHARING OF PUBLIC INFORMATION.—The finan-
cial regulators shall, to the extent practicable and appro-
priate and in consultation with other relevant and appro-
priate agencies and parties—
(1) develop procedures to provide for a network
for the sharing of antifraud information; and
(2) coordinate to further improve upon the anti-
fraud efforts of the participants in the network as
such participants deem appropriate over time.
(b) MINIMUM REQUIREMENTS.—The procedures de-
scribed in subsection (a) shall—
(1) provide for the sharing of public final dis-
ciplinary and formal enforcement actions taken by
the financial regulators that are accessible electroni-
cally relating to the conduct of persons engaged in
the business of conducting financial activities that is
fraudulent, dishonest, or involves a breach of trust
or relates to the failure to register with the appro-
priate financial regulator as required by law;
(2) include a plan for considering the sharing
among the participants of other relevant and useful
antifraud information relating to companies and
other persons engaged in conducting financial activi-
ties, to the extent practicable and appropriate when
adequate privacy, confidentiality, and security safe-
guards governing access to, and the use of, such in-
formation have been developed that—
(A) is accessible by the public; or
(B) consists of information, that does not
include personally identifiable information on
consumers, on—
(i) licenses and applications, financial
affiliations and name-relationships, aggre-
gate trend data, appraisals, or reports filed
by a regulated entity with a participant; or
(ii) similar information generated by
or for a participant if—
(I) such information is being
shared for the purpose of verifying an
application or other report filed by a
regulated entity; and
(II) the participant determines
such information is factual and sub-
stantiated; and
(3) provide that, if a financial regulator takes
an adverse action against a person engaged in the
business of conducting financial activities on the
basis of information described in paragraph (1) or
(2) that was received from another participant
through the network, the regulator shall—
(A) notify the person of the identity of the
participant from whom such information was
received;
(B) provide the person with a specific and
detailed description of the information that was
received from the other participant through the
network and would be relied on in taking the
adverse action; and
(C) notify the person of the right to a rea-
sonable opportunity to respond to such informa-
tion.
(c) PROVISIONS RELATING TO REQUIREMENTS.—
(1) TIME OF NOTICE.—The notice to any per-
son, and the opportunity to respond, under sub-
section (b)(3) shall be provided to the person a rea-
sonable period of time before any final action
against the person which is based on information re-
ferred to in such paragraph is completed, unless the
financial regulator determines that such advance no-
tice and opportunity to respond is impracticable or
inappropriate, in which case the notice and oppor-
tunity to respond shall be provided at the time of
such final action.
(2) VERIFICATION OR SUBSTANTIATION OF IN-
FORMATION.—With respect to subsection (b)(3), a
delay in the consideration of a license, application,
report, or other request for the purpose of verifying
or substantiating information relating to such li-
cense, application, report, or other request shall not
be treated as an adverse action if the verification or
substantiation of such information is completed
within a reasonable time.
(d) IMPLEMENTATION.—
(1) SUBMISSION OF PLAN.—Before the end of
the 6-month period beginning on the date of the en-
actment of this Act, the Federal financial regulators
shall submit to Congress a plan detailing how the fi-
nancial regulators (and any association representing
financial regulators) expect to meet the requirements
of subsections (a) and (b).
(2) DEADLINE FOR IMPLEMENTATION.—Before
the end of the 2-year period beginning on the date
of the enactment of this Act, the financial regulators
shall establish the network described in subsections
(a) and (b).
(e) FINANCIAL REGULATORS DEFINED.—For the
purposes of this section, the term ‘‘financial regulators’’
means the financial regulators described in subparagraphs
(A) through (Q) of section 115(3).
(f) DETERMINATION OF IMPLEMENTATION OF SUB-
TITLE B.—
(1) IN GENERAL.—The provisions of subtitle B
shall take effect only if the Secretary of the Treas-
ury, or a designee of the Secretary, before the end
of the 30-day period beginning at the end of the pe-
riod referred to in—
(A) subsection (d)(1), does not determine
that the Federal financial regulators have sub-
mitted a plan which substantially meets the re-
quirements of such subsection; or
(B) subsection (d)(2), does not determine
that the financial regulators have established a
network that substantially complies with the re-
quirements of subsections (a) and (b).
(2) SCOPE
OF
APPLICATION.—This subtitle
shall cease to apply as of the date subtitle B takes
effect.
(g) USE OF CENTRALIZED DATABASES.—
(1) IN GENERAL.—A financial regulator shall
be deemed to have met the requirements of sub-
section (b)(1) if—
(A) the participants have access to a cen-
tralized database that contains information on
public final disciplinary or formal enforcement
actions similar to that described in such sub-
section; or
(B) the financial regulator makes the in-
formation described in such subsection available
to the public over the Internet.
(2) STATE SUPERVISORS.—It is the sense of the
Congress that the National Association of Insurance
Commissioners, the Conference of State Bank Su-
pervisors, the American Council of State Savings
Supervisors, the National Association of State Credit
Union Supervisors, and the North American Securi-
ties Administrators Association should develop model
guidelines for regulators in their respective regulated
financial industries, where appropriate, to promote
uniform standards for sharing information with the
network under this section.
(h) FINANCIAL REGULATOR CONTROL OF ACCESS.—
(1) IN GENERAL.—Except as provided in para-
graph (4), each participant that allows access to its
databases or information by other participants
through the network may establish parameters for
controlling or limiting such access, including the reg-
ulation of—
(A) the type or category of information
that may be accessed by other participants and
the extent to which any such type or category
of information may be accessed;
(B) the participants that may have access
to the database or any specific type or category
of information in the database (whether for rea-
sons of cost reimbursement, data security, effi-
ciency, or otherwise); and
(C) the disclosure by any other participant
of any type or category of information that may
be accessed by the participant.
(2) PROCEDURES.—A participant may establish
the parameters described in paragraph (1) by regu-
lation, order, or guideline or on a case-by-case basis.
(3) DISCLAIMER.—
(A) IN GENERAL.—Each participant shall
ensure that any transfer of information through
the network under this section, other than in-
formation described in subsection (b)(1), from
such participant to another participant is sub-
ject to a disclaimer that the information
accessed may be unsubstantiated and may not
be relied on as the basis for denying any appli-
cation or license.
(B) REGULATORY FLEXIBILITY.—Each fi-
nancial regulator may develop guidelines, as the
regulator determines to be appropriate, gov-
erning the location, wording, and frequency of
disclaimers under this paragraph and the man-
ner in which any such disclaimer shall be made.
(4) FINAL
DISCIPLINARY
AND
FORMAL
EN-
FORCEMENT
ACTIONS
NOT
SUBJECT
TO
LIMITA-
TION.—This subsection, and standards or proce-
dures adopted by any participant under this sub-
section, shall not apply with respect to information
described in subsection (b)(1).
(5) NO EFFECT ON PUBLIC OR COMPANY AC-
CESS.—No provision of this section shall replace, su-
persede, or otherwise affect access to any databases
maintained by any Federal or State regulator, or
any entity representing any such regulator, which
are accessible by the public or persons engaged in
the business of conducting financial activities.
(i) ELIGIBILITY REQUIREMENTS FOR STATE SECURI-
TIES ADMINISTRATORS.—
(1) IN GENERAL.—No State securities adminis-
trator shall be eligible to be a participant and access
the network unless—
(A) such State securities administrator
participates in a centralized database for
broker-dealers, broker-dealer agents, investment
advisers, and investment advisor representa-
tives, registered or required to be registered, as
designated by the North American Securities
Administrators Association; and
(B) such State securities administrator re-
quires the broker-dealer, broker-dealer agent,
investment adviser, or investment adviser rep-
resentative, currently registered or required to
be registered, to file any application, amend-
ment to an application, or a renewal of an ap-
plication through the centralized registration
database.
(2) TIME DELAY FOR PARTICIPATION IN DATA-
BASES.—The provisions of paragraph (1) shall not
become effective until 3 years after the date of en-
actment of this Act.
(j) ELIGIBILITY REQUIREMENTS FOR STATE INSUR-
ANCE COMMISSIONERS.—
(1) PARTICIPATION IN DATABASES.—No State
insurance commissioner shall be eligible to access
the network unless such commissioner participates
with other State insurance commissioners—
(A) in a centralized database addressing
disciplinary 
or 
enforcement 
actions 
taken
against persons engaged in the business of in-
surance, such as the Regulatory Information
Retrieval System maintained by the National
Association of Insurance Commissioners or any
network or database designated by such Asso-
ciation as a successor to such System; and
(B) in centralized databases addressing,
with respect to persons engaged in the business
of insurance—
(i) corporate and other business affili-
ations or relationships, such as the Pro-
ducer Database maintained by the Na-
tional Association of Insurance Commis-
sioners or any network or database des-
ignated by such Association as a successor
to such Database; and
(ii) consumer complaints, such as the
Complaints Database maintained by the
National Association of Insurance Commis-
sioners or any network or database des-
ignated by such Association as a successor
to such Database.
(2) TIME DELAY FOR PARTICIPATION IN DATA-
BASES.—The provisions of subparagraph (1)(B) of
this section shall not become effective until 3 years
after the date of enactment of this Act.
(3) ACCREDITATION.—No State insurance com-
missioner shall be eligible to access the network un-
less the State insurance department which such
commissioner represents meets 1 of the following ac-
creditation requirements at the time of access to the
network:
(A) Is accredited by the National Associa-
tion of Insurance Commissioners.
(B) Has an application for accredited sta-
tus pending with the National Association of
Insurance Commissioners.
(k) STANDARDS.—Each financial regulator shall con-
sider developing guidelines on—
(1) how to denote which types of information
are to receive different levels of confidentiality pro-
tection; and
(2) how entities or associations that act as
agents for financial regulators should denote such
agency status when acting in that capacity.
(l) OTHER
SHARING
ARRANGEMENTS
NOT
AF-
FECTED.—No provision of this section shall be construed
as limiting or otherwise affecting the authority of a finan-
cial regulator to provide any person, including another
participant, access to any information in accordance with
any provision of law other than this Act.
Subtitle 
B—Potential 
Establish-
ment 
of 
Antifraud 
Sub-
committee
SEC. 101. ESTABLISHMENT.
(a) IN GENERAL.—Unless the determinations de-
scribed in section 100(f) are made, after the applicable
date described in such section there shall be established
within the President’s Working Group on Financial Mar-
kets (as established by Executive Order No. 12631) a sub-
committee to be known as the ‘‘Antifraud Subcommittee’’
(hereafter in this title referred to as the ‘‘Subcommittee’’)
which shall consist of the following members:
(1) The Secretary of the Treasury, or a des-
ignee of the Secretary.
(2) The Chairman of the Securities and Ex-
change Commission or a designee of the Chairman.
(3) A State insurance commissioner designated
by the National Association of Insurance Commis-
sioners, or a designee of such commissioner.
(4) The Chairman of the Commodity Futures
Trading Commission or a designee of such Chair-
man.
(5) A designee of the Chairman of the Federal
Financial Institutions Examination Council.
(b) FINANCIAL LIAISONS.—The following shall serve
as liaisons between the Subcommittee and the agencies
represented by each such liaison:
(1) A representative of each Federal banking
agency appointed by the head of each such agency.
(2) A representative of the National Credit
Union Administration appointed by the National
Credit Union Administration Board.
(3) A representative of the Farm Credit Admin-
istration, appointed by the Farm Credit Administra-
tion Board.
(4) A representative of the Federal Housing Fi-
nance Board, appointed by such Board.
(5) A representative of the Office of Federal
Housing Enterprise Oversight of the Department of
Housing and Urban Development appointed by the
Director of such Office.
(6) A representative of the Appraisal Sub-
committee of the Financial Institutions Examination
Council designated by the Chairperson of the Ap-
praisal Subcommittee.
(7) A representative of State bank supervisors
designated by the Conference of State Bank Super-
visors.
(8) A representative of State savings associa-
tion supervisors designated by the American Council
of State Savings Supervisors.
(9) A representative of State credit union su-
pervisors designated by the National Association of
State Credit Union Supervisors.
(10) A representative of State securities admin-
istrators designated by the North American Securi-
ties Administrators Association.
(11) A representative of the National Associa-
tion of Securities Dealers appointed by the National
Association of Securities Dealers.
(12) A representative of the National Futures
Association appointed by the National Futures Asso-
ciation.
(13) Any other financial liaison as the Sub-
committee may provide to represent any other finan-
cial regulator or foreign financial regulator, includ-
ing self-regulatory agencies or organizations that
maintain databases on persons engaged in the busi-
ness of conducting financial activities, designated in
the manner provided by the Subcommittee.
(c) OTHER LIAISONS.—
(1) LAW
ENFORCEMENT
LIAISONS.—The fol-
lowing shall serve as liaisons between the Sub-
committee and the agencies represented by each
such liaison:
(A) A representative of the Department of
Justice appointed by the Attorney General.
(B) A representative of the Federal Bu-
reau of Investigation appointed by the Director
of such Bureau.
(C) A representative of the United States
Secret Service appointed by the Director of
such Service.
(D) A representative of the Financial
Crimes Enforcement Network (as established by
the Secretary of the Treasury) appointed by the
Secretary of the Treasury.
(2) SUBCOMMITTEE
APPOINTED
LIAISONS.—
The Subcommittee may provide for any other liaison
to represent any other regulator, including self-regu-
latory agencies or organizations that maintain data-
bases on persons engaged in the business of con-
ducting financial activities, designated in the manner
provided by the Subcommittee.
(d) VACANCY.—If, for any reason, the position of any
member of or liaison to the Subcommittee is not filled
within a reasonable period of time after being created or
becoming vacant, the President shall appoint an individual
to fill the position after consulting the agency or entity
to be represented by such member or liaison, and to the
extent possible, shall appoint such individual from a list
of possible representatives submitted by such agency or
entity.
(e) REORGANIZATION AUTHORITY.—
(1) IN GENERAL.—If the President disbands or
otherwise significantly modifies the Working Group
referred to in subsection (a), the President shall pro-
vide for the continuation of the Subcommittee’s co-
ordination functions.
(2) MEMBER AND LIAISON WITHDRAWAL.—If
the President materially alters the structure or du-
ties of the Subcommittee, any member of or liaison
to the Subcommittee may withdraw from the Sub-
committee.
SEC. 102. PURPOSES OF THE SUBCOMMITTEE.
(a) IN
GENERAL.—The purposes of the Sub-
committee are as follows:
(1) Coordinate access by the participants to
antifraud databases of various regulators, by facili-
tating the establishment, maintenance, and use of a
network of existing antifraud information main-
tained by such regulators with respect to persons en-
gaged in the business of conducting financial activi-
ties.
(2) Coordinate access by each participant to
such network in a manner that allows the partici-
pant to review, at a minimal cost, existing informa-
tion in the databases of other regulators, as a part
of licensure, change of control, or investigation, con-
cerning any person engaged in the business of con-
ducting financial activities.
(3) Coordinate information sharing, where ap-
propriate, among State, Federal, and foreign finan-
cial regulators, and law enforcement agencies, where
sufficient privacy and confidentiality safeguards
exist.
(4) Consider coordinating development by par-
ticipants of a networked name-relationship index for
persons engaged in the business of conducting finan-
cial activities using information from the databases
of regulators, to the extent such information is avail-
able.
(5) Advise participants on coordinating their
antifraud databases with the network.
(6) Coordinate development of guidelines by
participants for ensuring appropriate privacy, con-
fidentiality, and security of shared information, in-
cluding tracking systems or testing audits, as appro-
priate.
(b) CRITERIA FOR NETWORK WITH RESPECT TO
ANY PERSON ENGAGED
IN
THE BUSINESS
OF CON-
DUCTING FINANCIAL ACTIVITIES.—
(1) FINAL
DISCIPLINARY
AND
FORMAL
EN-
FORCEMENT
ACTIONS.—Each financial regulator
that is represented by a member of the Sub-
committee under section 101(a) or by a financial li-
aison to the Subcommittee under section 101(b)
shall allow any participant access, through the net-
work, to any public final disciplinary or formal en-
forcement action by such regulator which is acces-
sible electronically relating to the conduct of persons
engaged in the business of conducting financial ac-
tivities that is fraudulent or dishonest, involves a
breach of trust, or relates to the failure to register
with the appropriate financial regulator as required
by law.
(2) SENSE OF THE CONGRESS ON OTHER IN-
FORMATION.—It is the sense of the Congress that
the financial regulators should consider sharing
through the network other relevant and useful anti-
fraud information relating to companies and other
persons engaged in conducting financial activities, to
the extent practicable and appropriate when ade-
quate privacy, confidentiality, and security safe-
guards governing access to and the use of such in-
formation have been developed that—
(A) is accessible by the public; or
(B) consists of information, that does not
include personally identifiable information on
consumers, on—
(i) licenses and applications, financial
affiliations and name-relationships, aggre-
gate trend data, or reports filed by a regu-
lated entity with the participant; or
(ii) similar information generated by
or for a participant if—
(I) such information is being
shared for the purpose of verifying an
application or other report filed by a
regulated entity; and
(II) the participant determines
such information is factual and sub-
stantiated.
(3) NOTICE AND RESPONSE.—If a financial reg-
ulator takes an adverse action against a person en-
gaged in the business of conducting financial activi-
ties on the basis of information described in para-
graph (1) or (2) that was received from another par-
ticipant through the network, the regulator shall—
(A) notify the person of the identity of the
participant from whom such information was
received;
(B) provide the person with a specific and
detailed description of the information that was
received from the other participant through the
network and would be relied on in taking the
adverse action; and
(C) notify the person of the right to a rea-
sonable opportunity to respond to such informa-
tion.
(4) 
PROVISIONS
RELATING
TO
REQUIRE-
MENTS.—
(A) TIME OF NOTICE.—Any notice to any
person, and an opportunity to respond, under
paragraph (3) shall be provided to the person a
reasonable period of time before any final ac-
tion against the person which is based on infor-
mation referred to in such paragraph is com-
pleted, unless the financial regulator determines
that such advance notice and opportunity to re-
spond is impracticable or inappropriate, in
which case the notice and opportunity to re-
spond shall be provided at the time of such
final action.
(B) VERIFICATION OR SUBSTANTIATION OF
INFORMATION.—With respect to paragraph (3),
a delay in the consideration of a license, appli-
cation, report, or other request for the purpose
of verifying or substantiating information relat-
ing to such license, application, report, or other
request shall not be treated as an adverse ac-
tion if the verification or substantiation of such
information is completed within a reasonable
time.
(5) USE OF CENTRALIZED DATABASES.—
(A) IN
GENERAL.—A financial regulator
shall be deemed to have met the requirements
of paragraph (1) if the Subcommittee deter-
mines that the participants have access to a
centralized database that contains information
on public final disciplinary or formal enforce-
ment actions similar to that described in para-
graph (1) or if the financial regulator makes
the information described in paragraph (1)
available to the public over the Internet.
(B) FACTORS FOR DETERMINATION.—The
Subcommittee shall make the determination
under subparagraph (A) on an ongoing basis,
considering both short-term costs and techno-
logical limitations, as well as the need for long-
term comprehensive coverage, and other appro-
priate factors.
(C) STATE SUPERVISORS.—It is the sense
of the Congress that the National Association
of Insurance Commissioners, the Conference of
State Bank Supervisors, the American Council
of State Savings Supervisors, the National As-
sociation of State Credit Union Supervisors,
and the North American Securities Administra-
tors Association should develop model guidelines
for regulators in their respective regulated fi-
nancial industries, where appropriate, to pro-
mote uniform standards for sharing information
with the network under this section.
(c) FINANCIAL REGULATOR CONTROL OF ACCESS.—
(1) IN GENERAL.—Except as provided in para-
graph (4), each participant that allows access to its
databases or information by other participants
through the network may establish parameters for
controlling or limiting such access, including the reg-
ulation of—
(A) the type or category of information
that may be accessed by other participants and
the extent to which any such type or category
of information may be accessed;
(B) the participants that may have access
to the database or any specific type or category
of information in the database (whether for rea-
sons of cost reimbursement, data security, effi-
ciency, or otherwise); and
(C) the disclosure by any other participant
of any type or category of information that may
be accessed by the participant.
(2) PROCEDURES.—A participant may establish
the parameters described in paragraph (1) by regu-
lation, order, or guideline or on a case-by-case basis.
(3) DISCLAIMER.—
(A) IN GENERAL.—Each participant shall
ensure that any transfer of information through
the network under this section, other than in-
formation described in paragraph (1) of sub-
section (b), from such participant to another
participant is subject to a disclaimer that the
information accessed may be unsubstantiated
and may not be relied on as the basis for deny-
ing any application or license.
(B) SUBCOMMITTEE
FLEXIBILITY.—The
Subcommittee may prescribe such guidelines as
the Subcommittee determines to be appropriate
governing the location, wording, and frequency
of disclaimers under this paragraph and the
manner in which any such disclaimer shall be
made.
(4) FINAL
DISCIPLINARY
AND
FORMAL
EN-
FORCEMENT
ACTIONS
NOT
SUBJECT
TO
LIMITA-
TION.—This subsection, and standards or proce-
dures adopted by any participant under this sub-
section, shall not apply with respect to information
described in paragraph (1) of subsection (b).
(5) NO EFFECT ON PUBLIC OR COMPANY AC-
CESS.—No provision of this section shall replace, su-
persede, or otherwise affect access to any databases
maintained by any Federal or State regulator, or
any entity representing any such regulator, which
are accessible by the public or persons engaged in
the business of conducting financial activities.
(d) ELIGIBILITY REQUIREMENTS FOR STATE SECU-
RITIES ADMINISTRATORS.—
(1) IN GENERAL.—No State securities adminis-
trator shall be eligible to be a participant and access
the network unless—
(A) such State securities administrator
participates in a centralized database for
broker-dealers, broker-dealer agents, investment
advisers, and investment advisor representa-
tives, registered or required to be registered, as
designated by the North American Securities
Administrators Association; and
(B) such State securities administrator re-
quires the broker-dealer, broker-dealer agent,
investment adviser, or investment adviser rep-
resentative, currently registered or required to
be registered, to file any application, amend-
ment to an application, or a renewal of an ap-
plication through the centralized registration
database.
(2) TIME DELAY FOR PARTICIPATION IN DATA-
BASES.—The provisions of paragraph (1) shall not
become effective until 3 years after the date of en-
actment of this Act.
(e) ELIGIBILITY REQUIREMENTS FOR STATE INSUR-
ANCE COMMISSIONERS.—
(1) PARTICIPATION IN DATABASES.—No State
insurance commissioner shall be eligible to access
the network unless such commissioner participates
with other State insurance commissioners—
(A) in a centralized database addressing
disciplinary 
or 
enforcement 
actions 
taken
against persons engaged in the business of in-
surance, such as the Regulatory Information
Retrieval System maintained by the National
Association of Insurance Commissioners or any
network or database designated by such Asso-
ciation as a successor to such System; and
(B) in centralized databases addressing,
with respect to persons engaged in the business
of insurance—
(i) corporate and other business affili-
ations or relationships, such as the Pro-
ducer Database maintained by the Na-
tional Association of Insurance Commis-
sioners or any network or database des-
ignated by such Association as a successor
to such Database; and
(ii) consumer complaints, such as the
Complaints Database maintained by the
National Association of Insurance Commis-
sioners or any network or database des-
ignated by such Association as a successor
to such Database.
(2) TIME DELAY FOR PARTICIPATION IN DATA-
BASES.—The provisions of subparagraph (1)(B) of
this section shall not become effective until 3 years
after the date of enactment of this Act.
(3) ACCREDITATION.—No State insurance com-
missioner shall be eligible to access the network un-
less the State insurance department which such
commissioner represents meets 1 of the following ac-
creditation requirements at the time of access to the
network:
(A) Is accredited by the National Associa-
tion of Insurance Commissioners.
(B) Has an application for accredited sta-
tus pending with the National Association of
Insurance Commissioners.
(C) Has a determination by the Sub-
committee in effect that such State insurance
department meets or exceeds the standards es-
tablished by the National Association of Insur-
ance Commissioners for accreditation.
(f) 
SUBCOMMITTEE
STANDARDS.—The 
Sub-
committee shall consider developing guidelines for partici-
pants on—
(1) how to denote which types of information
are to receive different levels of confidentiality pro-
tection; and
(2) how entities or associations that act as
agents for financial regulators should denote such
agency status when acting in that capacity.
(g) REPORTING AND FEASIBILITY REQUIREMENTS
AND REVIEW OF OPTIMAL NETWORKING METHODS.—
(1) REPORT.—Before the end of the 180-day
period beginning on the date this subtitle takes ef-
fect in accordance with section 101(a), and again be-
fore the end of the 2-year period beginning on such
date, the Subcommittee shall submit a report to the
Congress regarding the methods the regulators plan
to use to network information, and a description of
any impediments to (or recommended additional leg-
islation for) facilitating the appropriate sharing of
such information.
(2) TIMEFRAME FOR NETWORKING.—
(A) IN GENERAL.—The networking of in-
formation required under subsection (b)(1)
shall be established before the end of the 2-year
period beginning on the date this subtitle takes
effect, unless the Subcommittee determines, in
conjunction with the liaisons, that such a net-
work cannot be established within such time pe-
riod in a practicable and cost-effective manner.
(B) REPORTS ON EFFORTS IF TIMEFRAME
IS NOT MET.—If the Subcommittee makes such
a determination, the Subcommittee shall report
annually to the Congress on its efforts to co-
ordinate the sharing of appropriate information
among the regulators until the networking re-
quirements are fulfilled.
(h) OTHER SHARING ARRANGEMENTS NOT AF-
FECTED.—No provision of this section shall be construed
as limiting or otherwise affecting the authority of a finan-
cial regulator or other member or liaison of the Sub-
committee to provide any person, including another partic-
ipant, access to any information in accordance with any
provision of law other than this Act.
(i) NO NEW DATABASES OR EXPENDITURES MAN-
DATED.—In implementing this Act, the Subcommittee
shall not have any authority to require a member or liaison
to create a new database or otherwise incur significant
costs in modifying existing databases for the networking
of information.
SEC. 103. CHAIRPERSON; TERM OF CHAIRPERSON; MEET-
INGS; OFFICERS AND STAFF.
(a) CHAIRPERSON.—
(1) SELECTION.—The members of the Sub-
committee shall select the Chairperson from among
the members of the Subcommittee.
(2) TERM.—The term of the Chairperson shall
be 2 years.
(b) MEETINGS.—The Subcommittee shall meet at the
call of the Chairperson or a majority of the members when
there is business to be conducted.
(c) QUORUM.—A majority of members of the Sub-
committee shall constitute a quorum.
(d) MAJORITY
VOTE.—Decisions of the Sub-
committee shall be made by the vote of a majority of the
members of the Subcommittee.
(e) OFFICERS AND STAFF.—The Chairperson of the
Subcommittee may appoint such officers and staff as may
be necessary to carry out the purposes of the Sub-
committee.
SEC. 104. NONAGENCY STATUS.
The Subcommittee shall not be considered an advi-
sory committee for purposes of the Federal Advisory Com-
mittee Act or as an agency for purposes of subchapter II
of chapter 5 of title 5, United States Code.
SEC. 105. POWERS OF THE SUBCOMMITTEE.
(a) IN GENERAL.—The Subcommittee shall have
such powers as are necessary to carry out the purposes
of the Subcommittee under this title.
(b) INFORMATION TO FACILITATE COORDINATION.—
Each agency and entity represented by a member or liai-
son shall, to the extent permitted by law, provide the Sub-
committee with a description of the types of databases
maintained by the agency or entity to assist the Sub-
committee in carrying out the purposes described in sec-
tion 102(a).
(c) SERVICE OF MEMBERS AND LIAISONS.—Members
of and liaisons to the Subcommittee shall serve without
additional compensation for their work on the Sub-
committee.
(d) ADMINISTRATIVE AND TECHNICAL SUPPORT.—
The Subcommittee may request that any agency or entity
represented by a member or liaison provide the Sub-
committee with any administrative, technical, or other
support service that the Subcommittee determines is nec-
essary or appropriate for it to carry out the purposes de-
scribed in section 102(a).
SEC. 106. AGREEMENT ON COST STRUCTURE.
(a) IN GENERAL.—The Subcommittee shall deter-
mine, after consultation with the affected participants or
their representatives, the means for providing for any
costs the Subcommittee may incur in carrying out the pur-
poses of this subtitle.
(b) CONSULTATION AND AGREEMENT ON FEES AND
CONTRIBUTIONS.—Notwithstanding any other provision
of this subtitle, the Subcommittee may not impose any fee
or assessment on, or apportion any contribution against,
any member or liaison under this section unless—
(1) the Subcommittee consults with such mem-
ber or liaison; and
(2) the member or liaison consents to the
amounts, or to a schedule, of such fees, assessments,
or contributions.
(c) REIMBURSEMENT OF PARTICIPANT COSTS.—Be-
fore allowing access by the Subcommittee or a participant
to any information described in section 102, other than
access described in subsection (b)(1) of such section, a
member or liaison may request the reimbursement of rea-
sonable costs for providing such access.
Subtitle C—Regulatory Provisions
SEC. 111. AGENCY SUPERVISORY PRIVILEGE.
(a) DEFINITIONS.—For purposes of this section, the
following definitions shall apply:
(1) SUPERVISORY PROCESS.—The term ‘‘super-
visory process’’ means any activity engaged in by a
financial regulator to carry out the official respon-
sibilities of the financial regulator with regard to the
regulation or supervision of persons engaged in the
business of conducting financial activities, including
examinations, inspections, visitations, investigations,
consumer complaints, or any other regulatory or su-
pervisory activities.
(2) CONFIDENTIAL
SUPERVISORY
INFORMA-
TION.—Subject to paragraph (3), the term ‘‘con-
fidential supervisory information’’ means any of the
following information which is treated as, or consid-
ered to be, confidential information by a financial
regulator, regardless of the form or format in which
the information is created, conveyed, or maintained:
(A) Any report of examination, inspection,
visitation, or investigation, and information pre-
pared or collected by the financial regulator in
connection 
with 
the 
supervisory 
process,
including—
(i) any file, work paper, or similar in-
formation;
(ii) any correspondence, communica-
tion, or information exchanged, in connec-
tion with the supervisory process, between
a financial regulator and a person engaged
in the business of conducting financial ac-
tivities; and
(iii) any information, including any
report, created by or on behalf of a person
engaged in the business of conducting fi-
nancial activities that is required by, or is
prepared at the request of, a financial reg-
ulator in connection with the supervisory
process.
(B) Any record to the extent it contains in-
formation derived from any report, correspond-
ence, communication or other information de-
scribed in subparagraph (A).
(C) Any consumer complaints filed with
the financial regulator by a consumer with re-
spect to a person engaged in the business of
conducting financial activities that have been
identified by the financial regulator as requiring
confidential treatment to protect the integrity
of an investigation or the safety of an indi-
vidual.
(3) EXCLUSIONS.—The term ‘‘confidential su-
pervisory information’’ shall not include—
(A) any book, record, or other information,
in the possession of, or maintained on behalf of,
the person engaged in the business of con-
ducting financial activities that—
(i) is not a report required by, or pre-
pared at the request of, a financial regu-
lator; and
(ii) is not, and is not derived from,
confidential supervisory information that
was created or prepared by a financial reg-
ulator; or
(B) any information required to be made
publicly available by—
(i) any applicable Federal law or regu-
lation; or
(ii) in the case of confidential super-
visory information created by a State fi-
nancial regulator or requested from a per-
son engaged in the business of conducting
financial activities by a State financial reg-
ulator, any applicable State law or regula-
tion that specifically refers to such type of
information.
(b) SHARING OF REPORTS.—
(1) IN GENERAL.—No provision of this section
shall be construed as preventing—
(A) a person engaged in the business of
conducting financial activities from providing a
report that is required by, or prepared at the
request of, a financial regulator (the originating
financial regulator) to another financial regu-
lator that has the authority to obtain the infor-
mation from the person under any other provi-
sion of law;
(B) a financial regulator that obtains a re-
port described in subparagraph (A) from a per-
son engaged in the business of conducting fi-
nancial activities from using or disclosing such
report to the extent otherwise permitted by law;
or
(C) a person engaged in the business of
conducting financial activities from sharing con-
fidential supervisory information with the per-
son’s attorneys, accountants, and auditors, sole-
ly for the purpose of providing legal, account-
ing, or auditing services, respectively, for such
person, except that—
(i) such sharing shall not be consid-
ered a disclosure for any other purpose;
(ii) the attorneys, accountants, or
auditors may not further disclose such in-
formation; and
(iii) such sharing shall be conducted
in accordance with any other applicable
governing laws and regulations.
(2) PRIVILEGE PRESERVED.—If a person pro-
vides a report referred to in paragraph (1) to a fi-
nancial regulator other than the originating financial
regulator, such action shall not affect the ability of
the originating financial regulator to assert any
privilege that such financial regulator may claim
with respect to the report against any person that
is not a financial regulator.
(c) FINANCIAL REGULATOR SUPERVISORY PRIVI-
LEGE.—
(1) PRIVILEGE ESTABLISHED.—
(A) IN GENERAL.—All confidential super-
visory information shall be privileged from dis-
closure to any person except as provided in this
section.
(B) PROHIBITION ON UNAUTHORIZED DIS-
CLOSURES.—No person in possession of con-
fidential supervisory information may disclose
such information, in whole or in part, without
the prior authorization of the financial regu-
lator that created the information, or requested
the information from a person engaged in the
business of conducting financial activities, ex-
cept for a disclosure made in published statis-
tical material that does not disclose, either di-
rectly or when used in conjunction with publicly
available information, the affairs of any person
or other personally identifiable information.
(C) AGENCY WAIVER.—The financial regu-
lator that created the confidential supervisory
information, or requested the confidential su-
pervisory information from a person engaged in
the business of conducting financial activities,
may waive, in whole or in part, in the discretion
of the regulator, any privilege established under
this paragraph with respect to such informa-
tion.
(2) EXCEPTIONS.—
(A) ACCESS BY GOVERNMENTAL BODIES.—
(i) CONGRESS
AND
GENERAL
AC-
COUNTING OFFICE.—No provision of para-
graph (1) shall be construed as preventing
access to confidential supervisory informa-
tion by duly authorized committees of the
Congress or the Comptroller General of the
United States.
(ii) FINANCIAL
REGULATOR
OVER-
SIGHT.—No financial regulator which is
described in subparagraph (P), (Q), or (R)
of section 115(3) and is subject to the
oversight of a Federal financial regulator
may assert the privilege described in para-
graph (1) to prevent access to confidential
supervisory information by such Federal fi-
nancial regulator.
(B) PRIVILEGE NOT WAIVED.—If a finan-
cial regulator provides access to confidential su-
pervisory information to the Congress, the
Comptroller General, or another financial regu-
lator, such action shall not affect the ability of
the financial regulator to assert any privilege
associated with such information against any
other person.
(d) TREATMENT OF FOREIGN SUPERVISORY INFOR-
MATION.—In any proceeding before a Federal or State
court of the United States, in which a person seeks to
compel production or disclosure by a financial regulator
of information or documents prepared or collected by a
foreign financial regulator that would, had the information
activities) may disclose, in whole or in part, any
confidential supervisory information to any per-
son who seeks such information through sub-
poena, discovery procedures, or otherwise.
(B) PROCEDURE
FOR
REQUESTS
SUB-
MITTED TO FINANCIAL REGULATOR.—
(i) IN
GENERAL.—Any request for
discovery or disclosure of confidential su-
pervisory information shall be made to the
financial regulator that created the infor-
mation, or requested the information from
a person engaged in the business of con-
ducting financial activities.
(ii) PROCEDURE.—Upon receiving a
request for confidential supervisory infor-
mation, the financial regulator shall deter-
mine within a reasonable time period
whether to disclose such information pur-
suant to procedures and criteria estab-
lished by the financial regulator.
(C) NOTIFICATION.—
(i) IN GENERAL.—Before any finan-
cial regulator releases confidential super-
visory information that was requested from
a person engaged in the business of con-
ducting financial activities to a person
under subparagraph (B), notice and a rea-
sonable time for comment shall be provided
to the person from whom such information
was requested unless such information—
(I) is being provided to another
financial regulator, an agency or enti-
ty represented by a liaison to the Sub-
committee, or a Federal, State, or for-
eign government (or any agency or in-
strumentality of any such government
acting in any capacity);
(II) is being sought for use in a
criminal proceeding or investigation,
or a regulatory, supervisory, enforce-
ment, or disciplinary administrative
proceeding, civil action, or investiga-
tion; or
(III) was originally created, or
included in information created, by
the financial regulator.
(ii) 
PROCEDURES
AND
REQUIRE-
MENTS.—A financial regulator may pre-
scribe regulations, or issue orders, guide-
lines, or procedures, governing the notice
and time period required by clause (i).
(2) FEDERAL COURT JURISDICTION OVER DIS-
PUTES.—
(A) DECLARATORY JUDGMENT.—If a party
seeks in any action or proceeding to compel dis-
closure of confidential supervisory information,
a financial regulator may in a civil action for a
declaratory judgment seek to prevent such dis-
closure.
(B) JUDICIAL REVIEW.—Judicial review of
the final action of a financial regulator with re-
gard to the disposition of a request for con-
fidential supervisory information shall be before
a district court of the United States of com-
petent jurisdiction, subject to chapter 7 of part
I of title 5, United States Code.
(g) AUTHORITY TO INTERVENE.—In the case of any
action or proceeding to compel compliance with a sub-
poena, order, discovery request, or other judicial or admin-
istrative process with respect to any confidential super-
visory information of a financial regulator concerning any
person engaged in the business of conducting financial ac-
tivities, the financial regulator may intervene in such ac-
tion or proceeding, and such person may intervene with
such regulator, for the purpose of—
(1) enforcing the limitations established in
paragraph (1) of subsections (c) and (f);
(2) seeking the withdrawal of any compulsory
process with respect to such information; and
(3) registering appropriate objections with re-
spect to the action or proceeding to the extent the
action or proceeding relates to or involves such infor-
mation.
(h) RIGHT TO APPEAL.—Any court order that com-
pels production of confidential supervisory information
may be immediately appealed by the financial regulator
and the order compelling production shall be automatically
stayed, pending the outcome of such appeal.
(i) REGULATIONS.—
(1) AUTHORITY TO PRESCRIBE.—Each financial
regulator may prescribe such regulations as the reg-
ulator considers to be appropriate, after consultation
with the other financial regulators (to the extent the
prescribing financial regulator considers appropriate
and feasible), to carry out the purposes of this sec-
tion.
(2) AUTHORITY
TO
REQUIRE
NOTICE.—Any
regulations prescribed by a financial regulator under
paragraph (1) may require any person in possession
of confidential supervisory information to notify the
financial regulator whenever the person is served
with a subpoena, order, discovery request, or other
judicial or administrative process requiring the per-
sonal attendance of such person as a witness or re-
quiring the production of such information in any
proceeding.
(j) ABILITY
TO
PARTIALLY
WAIVE
PRIVILEGE
WHERE NO OTHER PRIVILEGE APPLIES.—A financial
regulator may, to the extent permitted by applicable law
governing the disclosure of information by the regulator,
authorize a waiver of the privilege established by this sec-
tion to allow access by a person to confidential supervisory
information created by such regulator (or requested by
such regulator from any person engaged in the business
of conducting financial activities), except that—
(1) the regulator may place appropriate limits
on the use and disclosure of the information shared,
and may continue to assert the privilege with respect
to any other person that seeks access to the infor-
mation; and
(2) such waiver shall not affect any other privi-
lege or confidentiality protection that any party may
assert against any person other than such financial
regulator.
(k) SHARING OF CONFIDENTIAL SUPERVISORY IN-
FORMATION
AMONG
FEDERAL
FUNCTIONAL
REGU-
LATORS.—A Federal functional regulator (as defined in
section 509 of the Gramm-Leach-Bliley Act) shall freely
share, upon request, any confidential supervisory informa-
tion created by it with another Federal functional regu-
lator subject only to any existing legal restrictions on the
regulator’s authority to share or disclose information and
to the following paragraphs:
(1) REQUESTS DIRECTED TO REGULATOR.—A
Federal functional regulator may seek information
described in this subsection solely from the Federal
functional regulator that created the information
(hereafter in this subsection referred to as the ‘‘orig-
inating regulator’’), and not from any other person
(unless authorized by the originating regulator).
(2) REVIEW
OF
REQUESTS.—Notwithstanding
any other provision of law, in response to a request
for such information, the originating regulator may
decline to provide any portion of the information if
the originating regulator, in consultation with the
requesting regulator and after giving due consider-
ation to the request, determines that withholding the
information is appropriate in the public interest.
(3) USE
WITHIN
AGENCY
PERMITTED.—Any
confidential supervisory information received by a re-
questing regulator under this subsection may be
shared freely among personnel within the requesting
regulator.
(4) APPROVAL REQUIRED FOR OTHER USES.—
The requesting regulator shall obtain the approval of
the originating regulator before any information de-
scribed in this subsection is—
(A) made public;
(B) provided to any third person or agen-
cy; or
(C) cited or made a part of the record in
the course of any enforcement action.
(l) ACCESS TO INFORMATION OF REGULATED ENTI-
TY PRESERVED.—No provision of this section shall be
construed as preventing a Federal functional regulator (as
defined in section 509 of the Gramm-Leach-Bliley Act)
from obtaining from any person, other than a Federal
functional regulator, any book, record or information
(other than confidential supervisory information created
by a Federal functional regulator), including any book,
record or other information referred to in, or constituting
the underlying data for, any confidential supervisory infor-
mation created by another Federal functional regulator.
(m) NO GRANT OF AUTHORITY.—No provision of
this section shall be construed as providing any financial
regulator any new authority to request or obtain informa-
tion.
(n) NO WAIVER OF ANY PRIVILEGE OF ANY OTHER
PARTY.—No provision of this Act shall be construed as
providing a financial regulator with any new authority to
disclose information in contravention of applicable law
governing disclosure of information.
SEC. 112. CONFIDENTIALITY OF INFORMATION.
(a) IN GENERAL.—
(1) FINANCIAL REGULATORS.—Except as other-
wise provided in this section or section 111, any re-
quirement under Federal or State law regarding the
privacy or confidentiality of any information or ma-
terial in the possession of any participant, and any
privilege arising under Federal or State law (includ-
ing the rules of any Federal or State court) with re-
spect to such information or material, shall continue
to apply to such information or material after the in-
formation or material has been disclosed through the
network to another participant or, if subtitle B has
taken effect, the Subcommittee.
(2) CERTAIN
INSURANCE
INFORMATION.—Ex-
cept as otherwise provided in this section or section
111, any requirement under Federal or State law re-
garding the privacy or confidentiality of any infor-
mation or material in the possession of the National
Association of Insurance Commissioners, or any
member or affiliate of the Association, and any
privilege arising under Federal or State law (includ-
ing the rules of any Federal or State court) with re-
spect to such information or material, shall continue
to apply to such information or material after the in-
formation has been disclosed to the Association, or
any other member or affiliate of the Association,
through the computer databases maintained by the
Association.
(3) NONAPPLICABILITY OF CERTAIN REQUIRE-
MENTS.—Information or material that is subject to
a privilege or confidentiality under any other para-
graph of this subsection shall not be subject to—
(A) disclosure under any Federal or State
law governing the disclosure to the public of in-
formation held by an officer or an agency of the
Federal Government or the respective State; or
(B) subpoena or discovery, or admission
into evidence, in any private civil action or ad-
ministrative process,
unless with respect to any privilege held by a partici-
pant with respect to such information or material,
the participant waives, in whole or in part, in the
discretion of the participant, such privilege.
(b) PREEMPTION OF STATE LAW.—Any State law,
including any State open record law, relating to the disclo-
sure of confidential supervisory information or any infor-
mation or material described in subsection (a) that is in-
consistent with any provision of section 111 or subsection
(a) of this section shall be superseded by the requirements
of such provision to the extent State law provides less con-
fidentiality or a weaker privilege.
(c) DUTY OF FINANCIAL REGULATOR TO MAINTAIN
CONFIDENTIALITY.—A participant may not receive,
download, copy, or otherwise maintain any information or
material from any other member of or liaison to the Sub-
committee through the network unless—
(1) the participant maintains a system that en-
ables the participant to maintain full compliance
with the requirements of sections 100, 102, and 111
and this section, with respect to such information
and material; and
(2) if and to the extent required by the guide-
lines established under sections 100 and 102, a
record is maintained of each attempt to access such
information and material, and the identity of the
person making the attempt, in order to prevent eva-
sions of such requirements.
SEC. 113. LIABILITY PROVISIONS.
(a) NO
LIABILITY
FOR
GOOD
FAITH
DISCLO-
SURES.—Any financial regulator, and any officer or em-
ployee of any financial regulator, shall not be subject to
any civil action or proceeding for monetary damages by
reason of the good faith action or omission of any officer
or employee, while acting within the scope of office or em-
ployment, relating to collecting, furnishing, or dissemi-
nating regulatory or supervisory information concerning
persons engaged in the business of conducting financial
activities, to or from another financial regulator, whether
directly or through the network.
(b) CRIMINAL LIABILITY FOR INTENTIONAL UNLAW-
FUL DISCLOSURES.—
(1) IN GENERAL.—It shall be unlawful to will-
fully disclose to any person any information con-
cerning any person engaged in the business of con-
ducting financial activities knowing the disclosure to
be in violation of any provision of this title—
(A) requiring the confidentiality of such in-
formation; or
(B) establishing a privilege from disclosure
for such information that has not been waived
by the relevant financial regulator.
(2) PENALTY.—Notwithstanding section 3571
of title 18, United States Code, any person who vio-
lates paragraph (1) shall be fined an amount not to
exceed the greater of $100,000 or the amount of the
actual damages sustained by any person as a result
of such violation, or imprisoned not more than 5
years, or both.
(c) FULL, CONTINUED PROTECTION UNDER THE SO-
CALLED ‘‘FEDERAL TORT CLAIMS ACT’’.—No provision
of this Act shall be construed as reducing or limiting any
protection provided for any Federal agency, or any officer
or employee of any Federal agency, under section 2679
of title 28, United States Code.
(d) 
PROTECTION
APPLIED
TO
THE
SUB-
COMMITTEE.—For the purposes of this section, the term
‘‘financial regulator’’ includes the Subcommittee after
subtitle B has taken effect.
SEC. 114. AUTHORIZATION FOR IDENTIFICATION AND
CRIMINAL BACKGROUND CHECK.
(a) SHARING OF CRIMINAL RECORDS.—
(1) ATTORNEY
GENERAL
AUTHORIZATION.—
Upon receiving a request from a financial regulator,
the Attorney General shall—
(A) search the records of the Criminal Jus-
tice Information Services Division of the Fed-
eral Bureau of Investigation, and any other
similar database over which the Attorney Gen-
eral has authority and deems appropriate, for
any criminal background records (including
wanted persons information) corresponding to
the identification information provided under
subsection (b); and
(B) either—
(i) shall provide any such records to
any authorized agent of the financial regu-
lator, which shall provide the relevant in-
formation to such regulator; or
(ii) may provide such records directly
to the financial regulator if the Attorney
General limits such provision of records to
relevant information.
(2) AUTHORIZED AGENT DEFINED.—For pur-
poses of this section, the term ‘‘authorized agent’’
means—
(A) any agent which has been recognized
by the Attorney General for such purpose and
authorized by at least 3 other financial regu-
lators to receive such records and perform the
information sharing requirements of paragraph
(3);
(B) the State attorney general for the
State in which the regulator is primarily lo-
cated; and
(C) any law enforcement designee of the
Attorney General or such State attorney gen-
eral.
(3) INFORMATION SHARED.—
(A) IN GENERAL.—The authorized agent
shall provide to the requesting financial regu-
lator only any records that are relevant infor-
mation.
(B) RELEVANT INFORMATION DEFINED.—
For purposes of this section, the term ‘‘relevant
information’’ means any of the following
records:
(i) All felony convictions.
(ii) 
All 
misdemeanor 
convictions
involving—
(I) violation of a law involving fi-
nancial activities;
(II) dishonesty or breach of
trust, within the meaning of section
1033 of title 18, United States Code,
including taking, withholding, mis-
appropriating, or converting money or
property;
(III) failure to comply with child
support obligations;
(IV) failure to pay taxes; and
(V) 
domestic 
violence, 
child
abuse, or a crime of violence.
(C) CRIME OF VIOLENCE DEFINED.—For
purposes of subparagraph (B)(ii)(V), the term
‘‘crime of violence’’ means a burglary of a
dwelling and a criminal offense that has as an
element the use or attempted use of physical
force, or threat of great bodily harm, or the
use, attempted use, or threatened use of a
deadly weapon, against an individual, including
committing or attempting to commit murder,
manslaughter, kidnapping, aggravated assault,
forcible sex offenses, robbery, arson, extortion,
and extortionate extension of credit.
(4) STATE UNIFORM OR RECIPROCITY LAWS RE-
QUIREMENT.—
(A) IN GENERAL.—The Attorney General
may not provide any records under this sub-
section to an insurance regulator of a State, or
agent of such regulator, if such State does not
have in effect uniform or reciprocity laws and
regulations governing the licensure of individ-
uals and entities authorized to sell and solicit
the purchase of insurance within the State as
set forth in section 321 of P.L. 106-102.
(B) DETERMINATION OF RECIPROCITY.—
The determination of whether or not a State
has uniform or reciprocity laws or regulations
in effect for purposes of subparagraph (A) shall
be made by the Attorney General, with the ad-
vice and counsel of the National Association of
Insurance Commissioners.
(C) EXCEPTION
UNDER
CERTAIN
CIR-
CUMSTANCES.—Notwithstanding subparagraph
(B), the Attorney General may provide records
under this section to an insurance regulator of
a State, or agent of such regulator, on the basis
of a specific determination by the National As-
sociation of Insurance Commissioners that such
State has in effect uniform or reciprocity laws
and regulations referred to in subparagraph (A)
if—
(i) a determination by the Attorney
General under subparagraph (B) is pend-
ing; or
(ii) the Attorney General considers
whether such State has in effect such uni-
form or reciprocity laws or regulations and
fails to make a determination, unless the
Attorney General subsequently determines
that such State does not have in effect uni-
form or reciprocity laws or regulations.
(b) FORM OF REQUEST.—A request under subsection
(a) shall include a copy of any necessary identification in-
formation required by the Attorney General, such as the
name and fingerprints of the person about whom the
record is requested and a statement signed by the person
acknowledging that the regulator (or such regulator’s des-
ignated agent under subsection (g)(1)) may request the
search.
(c) LIMITATION ON PERMISSIBLE USES OF INFORMA-
TION.—Information obtained under this section may—
(1) be used only for regulatory or law enforce-
ment purposes; and
(2) be disclosed—
(A) only to other financial regulators or
Federal or State law enforcement agencies; and
(B) only if the recipient agrees to—
(i) maintain the confidentiality of
such information; and
(ii) limit the use of such information
to appropriate regulatory and law enforce-
ment purposes.
(d) PENALTY FOR IMPROPER USE.—
(1) IN GENERAL.—Whoever uses any informa-
tion obtained under this section knowingly and will-
fully for an unauthorized purpose shall be fined
under title 18, United States Code, imprisoned for
not more than 2 years, or both.
(2) ADDITIONAL PENALTIES AND WAIVERS.—
(A) IN GENERAL.—Any authorized agent
who violates paragraph (1), or any individual
who directs such agent to violate such para-
graph, shall be barred from engaging in or reg-
ulating any activities related to the business of
insurance.
(B) WAIVER AUTHORIZED.—The Attorney
General, in the discretion of the Attorney Gen-
eral, may waive the bar in subparagraph (A), as
appropriate.
(e) RELIANCE ON INFORMATION.—A financial regu-
lator (or such regulator’s designated agent under sub-
section (g)(1)) who reasonably relies on information pro-
vided under this section shall not be liable in any action
for using information as permitted under this section in
good faith.
(f) CLARIFICATION OF SECTION 1033.—With respect
to any action brought under section 1033(e)(1)(B) of title
18, United States Code, no person engaged in the business
of conducting financial activities shall be subject to any
penalty resulting from such section if the individual who
the person permitted to engage in the business of insur-
ance is licensed, or approved (as part of an application
or otherwise), by a State insurance regulator that per-
forms criminal background checks under this section, un-
less such person knows that the individual is in violation
of section 1033(e)(1)(A) of such title.
(g) DESIGNATION OF AGENT.—
(1) IN GENERAL.—A financial regulator may
designate an agent for facilitating requests and ex-
changes of information under this section between or
among the financial regulator, the Attorney General,
and any other authorized agent.
(2) SENSE OF CONGRESS REGARDING AGENTS
OF INSURANCE REGULATORS.—It is the sense of the
Congress that—
(A) each State insurance commissioner
should designate the National Association of In-
surance Commissioners as an agent under para-
graph (1);
(B) persons engaged in the business of in-
surance should be able to use the National As-
sociation of Insurance Commissioners to facili-
tate obtaining fingerprints and supplying identi-
fication information for use in background
checks under this section on a multijuris-
dictional basis;
(C) the National Association of Insurance
Commissioners should maintain a database to
obtain records under this section for use by
State insurance commissioners to reduce mul-
tiple or duplicative fingerprinting requirements
and criminal background checks, except that
any such record shall not be maintained for
more than 1 year without performing a new
background check to determine if the criminal
background record has changed;
(D) other financial regulators that require
fingerprints and criminal background checks
should similarly coordinate efforts to reduce du-
plication for persons engaged in the business of
conducting multiple types of financial activities;
and
(E) the National Association of Insurance
Commissioners, and other financial regulators
that use this section, should consult with the
Attorney General to consider the feasibility of
developing an on-going notification system that
would allow the Attorney General to notify such
Association when a licensed or approved insur-
ance professional is convicted of a relevant
crime.
(h) FEES.—The Attorney General may charge a rea-
sonable fee for the provision of information under this sec-
tion.
(i) RULE
OF CONSTRUCTION.—This section shall
not—
(1) provide independent authorization for a fi-
nancial regulator to require fingerprinting as a part
of a licensure or other application;
(2) require a financial regulator to perform
criminal background checks under this section; or
(3) supersede or otherwise limit any other au-
thority that allows access to criminal background
records.
(j) REGULATIONS.—The Attorney General may pre-
scribe regulations to carry out this section.
SEC. 115. DEFINITIONS.
For purposes of this title, the following definitions
shall apply:
(1) FEDERAL
BANKING
AGENCY.—The term
‘‘Federal banking agency’’ has the same meaning as
given in section 3(z) of the Federal Deposit Insur-
ance Act.
(2) FINANCIAL ACTIVITIES.—
(A) IN
GENERAL.—The term ‘‘financial
activities’’—
(i) means banking activities (including
the ownership of a bank), securities activi-
ties, insurance activities, or commodities
activities; and
(ii) includes all activities that are fi-
nancial in nature or are incidental to a fi-
nancial activity (as defined under section
4(k) of the Bank Holding Company Act of
1956).
(B) RULE OF CONSTRUCTION.—Subpara-
graph (A) shall not be construed as creating
any inference, including any negative inference,
concerning the types or extent of activities that
are appropriately recognized as activities that
are financial in nature, or are incidental to a fi-
nancial activity, for purposes of section 4 of the
Bank Holding Company Act of 1956.
(3) FINANCIAL REGULATOR.—The term ‘‘finan-
cial regulator’’ means—
(A) each Federal banking agency;
(B) the Securities and Exchange Commis-
sion;
(C) the Commodity Futures Trading Com-
mission;
(D) the National Credit Union Administra-
tion;
(E) the Farm Credit Administration;
(F) the Federal Housing Finance Board;
(G) the Federal Trade Commission, to the
extent the Commission has jurisdiction over fi-
nancial activities being conducted by a person
engaged in the business of conducting financial
activities;
(H) the Secretary of the Treasury, to the
extent the Secretary has jurisdiction over finan-
cial activities being conducted by a person en-
gaged in the business of conducting financial
activities;
(I) the Office of Federal Housing Enter-
prise Oversight of the Department of Housing
and Urban Development;
(J) the Appraisal Subcommittee of the Fi-
nancial Institutions Examination Council;
(K) any State bank supervisor (as defined
in section 3(r) of the Federal Deposit Insurance
Act), including the Conference of State Bank
Supervisors only to the extent such conference
is acting as an agent of, and is subject to the
oversight of, any such State bank supervisor;
(L) any State savings association super-
visor, including the American Council of State
Savings Supervisors only to the extent such
conference is acting as an agent of, and is sub-
ject to the oversight of, any such State savings
association supervisor;
(M) any State insurance commissioner, in-
cluding the National Association of Insurance
Commissioners only to the extent such associa-
tion is acting as the agent of, and is subject to
the oversight of, any such insurance commis-
sioner;
(N) any State securities administrator, in-
cluding the North American Securities Adminis-
trators Association only to the extent such asso-
ciation is acting as the agent of, and is subject
to the oversight of, any such securities adminis-
trator;
(O) any State credit union supervisor, in-
cluding the National Association of State Credit
Union Supervisors only to the extent such asso-
ciation is acting as the agent of, and is subject
to the oversight of, any such credit union super-
visor;
(P) the National Association of Securities
Dealers, only to the extent that—
(i) such association is acting in con-
nection with the financial services industry;
and
(ii) the association and the relevant
actions are subject to the oversight of the
Securities and Exchange Commission;
(Q) the National Futures Association, only
to the extent that—
(i) such association is acting in con-
nection with the financial services industry;
and
(ii) the association and the relevant
actions are subject to the oversight of the
Commodity Futures Trading Commission
or the Securities and Exchange Commis-
sion; and
(R) any other self-regulatory organization
that engages in or coordinates regulatory and
supervisory activities, with respect to any per-
son engaged in the business of conducting fi-
nancial activities, and is subject to the oversight
of the Securities and Exchange Commission or
the Commodity Futures Trading Commission,
but only to the extent that the organization en-
gages in such activities and is subject to such
oversight.
(4) FOREIGN
FINANCIAL
REGULATOR.—The
term ‘‘foreign financial regulator’’ means any agen-
cy, entity, or body (including a self-regulatory orga-
nization) that is empowered by the laws of a foreign
country to supervise and regulate persons engaged
in the business of conducting financial activities, but
only to the extent of such supervisory and regulatory
activities.
(5) PARTICIPANT.—The term ‘‘participant’’
means any entity described in section 101 as being
represented by a member of, or a liaison to, the Sub-
committee (regardless of whether subtitle B has
taken effect) but only to the extent the regulator
provides or obtains access to information through
the network.
(6) PERSON.—The term ‘‘person’’ includes any
financial regulator.
(7) PERSON ENGAGED IN THE BUSINESS OF
CONDUCTING
FINANCIAL
ACTIVITIES.—The term
‘‘person engaged in the business of conducting finan-
cial activities’’ includes, to the extent appropriate
under the laws applicable to the jurisdiction of a fi-
nancial regulator over such person—
(A) any director, officer, employee, or con-
trolling stockholder of, or agent for, any such
person;
(B) any other person who has filed or is
required to file a change-in-control notice with
the appropriate financial regulator before ac-
quiring control of such person; and
(C) any person who has sought approval
from a financial regulator to engage in the
business of conducting financial activities, or
that was engaged in such business and subject
to the jurisdiction of a financial regulator; and
(D) any shareholder, consultant, joint ven-
ture partner, and any other person, including
an independent contractor, as determined by
the appropriate financial regulator (by regula-
tion or case-by-case) who participates in the
conduct of the affairs of such person.
(8) STATE
INSURANCE
COMMISSIONER.—The
term ‘‘State insurance commissioner’’ means any of-
ficer, agency, or other entity of any State which has
primary regulatory authority over the business of in-
surance and over any person engaged in the business
of insurance to the extent of such activities, in such
State.
(9) STATE SECURITIES ADMINISTRATOR.—The
term ‘‘State securities administrator’’ means the se-
curities commission (or any agency or office per-
forming like functions) of any State.
SEC. 116. TECHNICAL AND CONFORMING AMENDMENTS TO
OTHER ACTS.
(a) Subsection (b) of section 552a of title 5, United
States Code, is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(11);
(2) by striking the period at the end of para-
graph (12) and inserting ‘‘; or’’; and
(3) by inserting after paragraph (12) the fol-
lowing new paragraph:
‘‘(13) for recordkeeping, licensing, and other
regulatory and law enforcement purposes in accord-
ance with title I of the Financial Services Antifraud
Network Act of 2001—
‘‘(A) through a network or name-relation-
ship index maintained under such title; or
‘‘(B) to a multistate database maintained
by the National Association of Insurance Com-
missioners and any subsidiary or affiliate of
such association, subject to the requirements of
such title.’’.
(b) Section 1113 of the Financial Institutions Regu-
latory and Interest Rate Control Act of 1978 (12 U.S.C.
3413) is amended by adding at the end the following new
subsection:
‘‘(r) This title shall not apply to disclosure by a finan-
cial regulator of information pursuant to subtitle A or B
of title I of the Financial Services Antifraud Network Act
of 2001 to the extent the disclosure is made in accordance
with the requirements of such Act.’’.
(c) Section 602 of the Consumer Credit Protection
Act (15 U.S.C. 1681) is amended by adding at the end
the following new subsection:
‘‘(c) This title shall not apply to a communication be-
tween participants, as defined in the Financial Services
Antifraud Network Act of 2001, to the extent the commu-
nication is made in accordance with such Act.’’.
SEC. 117. AUDIT OF STATE INSURANCE REGULATORS.
(a) IN GENERAL.—At the request of the Congress,
the Comptroller General shall audit a State insurance reg-
ulator or any person who maintains information on behalf
of such regulator.
(b) LIMITATIONS
ON DISCLOSURE
OF INFORMA-
TION.—Except as provided in this subsection, an officer
or employee of the General Accounting Office may not dis-
close information identifying an open insurance company
or a customer of an open or closed insurance company.
The Comptroller General may disclose information related
to the affairs of a closed insurance company only if the
Comptroller General believes the customer had a control-
ling influence in the management of the closed insurance
company or was related to or affiliated with a person or
group having a controlling influence.
(c) COORDINATION WITH STATE REGULATOR.—An
officer or employee of the General Accounting Office may
discuss a customer or insurance company with an official
of a State insurance regulator and may report an apparent
criminal violation to an appropriate law enforcement au-
thority of the United States Government or a State.
(d) CONGRESSIONAL OVERSIGHT.—This subsection
shall not be construed as authorizing an officer or em-
ployee of a State insurance regulator to withhold informa-
tion from a committee of the Congress authorized to have
the information.
(e) ADMINISTRATIVE ASPECTS OF AUDIT.—
(1) IN GENERAL.—To carry out this section, all
records and property of or used by a State insurance
regulator, including samples of reports of examina-
tions of an insurance company the Comptroller Gen-
eral 
considers 
statistically 
meaningful 
and
workpapers and correspondence related to the re-
ports shall be made available to the Comptroller
General. The Comptroller General shall give a State
insurance regulator a current list of officers and em-
ployees to whom, with proper identification, records
and property may be made available, and who may
make notes or copies necessary to carry out an
audit.
(2) PREVENTION OF UNAUTHORIZED ACCESS.—
The Comptroller General shall prevent unauthorized
access to records or property of or used by a State
insurance regulator that the Comptroller General ob-
tains during an audit.
(f) CONFIDENTIALITY.—
(1) IN
GENERAL.—The Comptroller General
shall maintain the same level of confidentiality for a
record made available under this section as is re-
quired of the head of the State insurance regulator
from which it is obtained.
(2) PREVENTION OF INVASION OF PERSONAL
PRIVACY.—The Comptroller General shall keep in-
formation described in section 552(b)(6) of title 5,
United States Code, that the Comptroller General
obtains in a way that prevents unwarranted inva-
sions of personal privacy.
(3) AVAILABILITY
OF
INFORMATION.—Except
as provided in subsection (b), no provision of this
section shall be construed as authorizing any infor-
mation to be withheld from the Congress.
(g) AVAILABILITY OF INFORMATION AND INSPEC-
TION OF RECORDS.—The right of access of the Comp-
troller General to information under this section shall be
enforceable under section 716 of title 31, United States
Code.
(h) DEFINITIONS.—For purposes of this section, the
following definitions shall apply:
(1) STATE INSURANCE REGULATOR DEFINED.—
The term ‘‘State insurance regulator’’ means the
principal insurance regulatory authority of a State,
the District of Columbia, any territory of the United
States, Puerto Rico, Guam, American Samoa, the
Trust Territory of the Pacific Islands, the Virgin Is-
lands, and the Northern Mariana Islands.
(2) INSURANCE COMPANY.—The term ‘‘insur-
ance company’’ includes any person engaged in the
business of insurance to the extent of such activities.
Subtitle D—Anti-Terrorism
SEC. 121. PREVENTING INTERNATIONAL TERRORISM.
(a) IN GENERAL.—The financial regulators shall co-
ordinate the network established under sections 100 and
101 with their foreign counterparts, to the extent the reg-
ulators deem possible, practicable, and appropriate, to
help uncover, hinder, and prosecute the financial activities
of terrorists.
(b) REPORT REQUIRED.—The entities described in
section 101(a) shall report to the Congress by the end of
the 6-month period beginning on the date of the enact-
ment of this Act their further recommendations to the
Congress for achieving the goals of subsection (a).
TITLE II—SECURITIES
INDUSTRY COORDINATION
Subtitle A—Disciplinary
Information
SEC. 201. INVESTMENT ADVISERS ACT OF 1940.
(a) AMENDMENT.—Section 204 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b–4) is amended—
(1) by striking ‘‘Every investment’’ and insert-
ing the following:
‘‘(a) IN GENERAL.—Every investment’’; and
(2) by adding at the end the following:
‘‘(b) FILING DEPOSITORIES.—The Commission, by
rule, may require an investment adviser—
‘‘(1) to file with the Commission any fee, appli-
cation, report, or notice required to be filed by this
title or the rules issued under this title through any
entity designated by the Commission for that pur-
pose; and
‘‘(2) to pay the reasonable costs associated with
such filing and the establishment and maintenance
of the systems required by subsection (c).
‘‘(c) ACCESS TO DISCIPLINARY AND OTHER INFOR-
MATION.—
‘‘(1) MAINTENANCE OF SYSTEM TO RESPOND
TO INQUIRIES.—The Commission shall require the
entity designated by the Commission under sub-
section (b)(1)—
‘‘(A) to establish and maintain a toll-free
telephone listing or other readily accessible elec-
tronic process to receive inquiries regarding dis-
ciplinary actions and proceedings and other in-
formation involving investment advisers and
persons associated with investment advisers;
and
‘‘(B) to respond promptly to such inquir-
ies.
‘‘(2) RECOVERY
OF
COSTS.—An entity des-
ignated by the Commission under subsection (b)(1)
may charge persons, other than individual investors,
reasonable fees for responses to inquiries made
under paragraph (1).
‘‘(3) LIMITATION
ON
LIABILITY.—An entity
designated by the Commission under subsection
(b)(1) shall not have any liability to any person for
any actions taken or omitted in good faith under
this subsection.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 203A of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-3a) is amended—
(A) by striking subsection (d); and
(B) by redesignating subsection (e) as sub-
section (d).
(2) Section 306 of the National Securities Mar-
kets Improvement Act of 1996 (15 U.S.C. 80b-10,
note; P.L. 104-290; 110 Stat. 3439) is repealed.
SEC. 202. SECURITIES EXCHANGE ACT OF 1934.
Subsection (i) of section 15A of the Securities Ex-
change Act of 1934 (15 U.S.C. 78o–3) is amended to read
as follows:
‘‘(i) OBLIGATION TO MAINTAIN DISCIPLINARY AND
OTHER DATA.—
‘‘(1) MAINTENANCE OF SYSTEM TO RESPOND
TO INQUIRIES.—A registered securities association
shall—
‘‘(A) establish and maintain a toll-free tele-
phone listing or other readily accessible elec-
tronic process to receive inquiries regarding dis-
ciplinary actions and proceedings and other in-
formation involving its members and their asso-
ciated persons and regarding disciplinary ac-
tions and proceedings and other information
that has been reported to the Central Registra-
tion Depository by any registered national secu-
rities exchange involving its members and their
associated persons; and
‘‘(B) promptly respond to such inquiries.
‘‘(2) RECOVERY OF COSTS.—Such association
may charge persons, other than individual investors,
reasonable fees for responses to such inquiries.
‘‘(3) LIMITATION ON LIABILITY.—Such an asso-
ciation or exchange shall not have any liability to
any person for any actions taken or omitted in good
faith under this subsection.’’.
Subtitle B—Preventing Migration
of 
Rogue 
Financial 
Profes-
sionals to the Securities Indus-
try
SEC. 211. SECURITIES EXCHANGE ACT OF 1934.
(a) BROKERS AND DEALERS.—Section 15(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) is
amended—
(1) in paragraph (4), by striking subparagraphs
(F) and (G) and inserting the following:
‘‘(F) is subject to any order of the Commission
barring or suspending the right of the person to be
associated with a broker or dealer.
‘‘(G) has been found by a foreign financial reg-
ulatory authority to have—
‘‘(i) made or caused to be made in any ap-
plication for registration or report required to
be filed with a foreign financial regulatory au-
thority, or in any proceeding before a foreign fi-
nancial regulatory authority with respect to reg-
istration, any statement that was at the time
and in the light of the circumstances under
which it was made false or misleading with re-
spect to any material fact, or omitted to state
in any such application, report, or proceeding
any material fact that is required to be stated
therein;
‘‘(ii) violated any foreign statute or regula-
tion regarding securities, banking, thrift activi-
ties, credit union activities, insurance, or con-
tracts of sale of a commodity for future deliv-
ery, traded on or subject to the rules of a con-
tract market or any board of trade; or
‘‘(iii) aided, abetted, counseled, com-
manded, induced, or procured the violation by
any other person of any provision of any statu-
tory provisions enacted by a foreign govern-
ment, or rules or regulations thereunder, re-
garding securities, banking, thrift activities,
credit union activities, insurance, or contracts
of sale of a commodity for future delivery trad-
ed on or subject to the rules of a contract mar-
ket or any board of trade, or to have failed rea-
sonably to supervise, with a view to preventing
violations of such statutory provisions, rules,
and regulations, another person who commits
such a violation, if such other person is subject
to his supervision.
‘‘(H) is subject to any final order of a State se-
curities commission (or any agency or officer per-
forming like functions), State authority that super-
vises or examines banks, thrifts, or credit unions,
State insurance commission (or any agency or office
performing like functions), an appropriate Federal
banking agency (as defined in section 3 of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1813(q)), or
the National Credit Union Administration, that—
‘‘(i) bars such person from association with
an entity regulated by such commission, author-
ity, agency, or officer, or from engaging in the
business of securities, insurance, banking, thrift
activities, or credit union activities; or
‘‘(ii) constitutes a final order based on vio-
lations of any laws or regulations that prohibit
fraudulent, manipulative, or deceptive con-
duct.’’; and
(2) in paragraph (6)(A)(i), by striking ‘‘or
omission enumerated in subparagraph (A), (D), (E),
or (G)’’ and inserting ‘‘, or is subject to an order or
finding, enumerated in subparagraph (A), (D), (E),
(G), or (H)’’.
(b) MUNICIPAL SECURITIES BROKERS AND DEAL-
ERS.—Section 15B(c) of the Securities Exchange Act of
1934 (15 U.S.C. 78o–4(c)) is amended—
(1) in paragraph (2)—
(A) by striking ‘‘or omission enumerated in
subparagraph (A), (D), (E), or (G)’’ and insert-
ing ‘‘, or is subject to an order or finding, enu-
merated in subparagraph (A), (D), (E), (G), or
(H)’’; and
(B) by striking ‘‘ten’’ and inserting ‘‘10’’;
and
(2) in paragraph (4) by striking ‘‘or omission
enumerated in subparagraph (A), (D), (E), or (G)’’
and inserting ‘‘, or is subject to an order or finding,
enumerated in subparagraph (A), (D), (E), (G), or
(H)’’.
(c) GOVERNMENT SECURITIES BROKERS AND DEAL-
ERS.—Section 15C(c)(1) of the Securities Exchange Act
of 1934 (15 U.S.C. 78o–5(c)(1)) is amended—
(1) in subparagraph (A), by striking ‘‘or omis-
sion enumerated in subparagraph (A), (D), (E), or
(G)’’ and inserting ‘‘, or is subject to an order or
finding, enumerated in subparagraph (A), (D), (E),
(G), or (H)’’; and
(2) in subparagraph (C), by striking ‘‘or omis-
sion enumerated in subparagraph (A), (D), (E), or
(G)’’ and inserting ‘‘, or is subject to an order or
finding, enumerated in subparagraph (A), (D), (E),
(G), or (H)’’.
(d) CLEARANCE AND SETTLEMENT.—Section 17A(c)
of the Securities Exchange Act of 1934 (15 U.S.C. 78q–
1(c)) is amended—
(1) in paragraph (3)(A), by striking ‘‘enumer-
ated in subparagraph (A), (D), (E), or (G)’’ and in-
serting ‘‘, or is subject to an order or finding, enu-
merated in subparagraph (A), (D), (E), (G), or
(H)’’; and
(2) in paragraph (4)(C)—
(A) by striking ‘‘enumerated in subpara-
graph (A), (D), (E), or (G)’’ and inserting ‘‘,
or is subject to an order or finding, enumerated
in subparagraph (A), (D), (E), (G), or (H)’’;
and
(B) by striking ‘‘ten years’’ and inserting
‘‘10 years’’.
(e) DEFINITION
OF
STATUTORY
DISQUALIFICA-
TION.—Section 3(a)(39)(F) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(39)(F)) is amended by
striking ‘‘has committed or omitted any act enumerated
in subparagraph (D), (E), or (G)’’ and inserting ‘‘has
committed or omitted any act, or is subject to an order
or finding, enumerated in subparagraph (D), (E), (G), or
(H)’’.
SEC. 212. INVESTMENT ADVISERS ACT OF 1940.
(a) AUTHORITY TO DENY OR REVOKE REGISTRA-
TION BASED ON STATE (AND OTHER GOVERNMENTAL)
ADMINISTRATIVE ACTIONS.—Section 203(e) of the Invest-
ment Advisers Act of 1940 (15 U.S.C. 80b–3(e)) is
amended by striking paragraphs (7) and (8) and inserting
the following:
‘‘(7) is subject to any order of the Commission
barring or suspending the right of the person to be
associated with an investment adviser.
‘‘(8) has been found by a foreign financial regu-
latory authority to have—
‘‘(A) made or caused to be made in any
application for registration or report required to
be filed with a foreign securities authority, or in
any proceeding before a foreign securities au-
thority with respect to registration, any state-
ment that was at the time and in light of the
circumstances under which it was made false or
misleading with respect to any material fact, or
has omitted to state in any such application, re-
port, or proceeding any material fact that is re-
quired to be stated therein;
‘‘(B) violated any foreign statute or regula-
tion regarding securities, banking, thrift activi-
ties, credit union activities, insurance, or con-
tracts of sale of a commodity for future delivery
traded on or subject to the rules of a contract
market or any board of trade;
‘‘(C) 
aided, 
abetted, 
counseled, 
com-
manded, induced, or procured the violation by
any other person of any foreign statute or regu-
lation regarding securities, banking, thrift ac-
tivities, credit union activities, insurance, or
contracts of sale of a commodity for future de-
livery traded on or subject to the rules of a con-
tract market or any board of trade, or to have
failed reasonably to supervise, with a view to
preventing violations of statutory provisions,
and rules and regulations promulgated there-
under, another person who commits such a vio-
lation, if such other person is subject to his su-
pervision.
‘‘(9) is subject to any final order of a State se-
curities commission (or any agency or officer per-
forming like functions), State authority that super-
vises or examines banks, thrifts, or credit unions,
State insurance commission (or any agency or office
performing like functions), an appropriate Federal
banking agency (as defined in section 3 of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1813(q)), or
the National Credit Union Administration, that—
‘‘(A) bars such person from association
with an entity regulated by such commission,
authority, agency, or officer, or from engaging
in the business of securities, insurance, bank-
ing, thrift activities, or credit union activities;
or
‘‘(B) constitutes a final order based on vio-
lations of any laws or regulations that prohibit
fraudulent, manipulative, or deceptive con-
duct.’’.
(b) BARS ON FELONS ASSOCIATED WITH INVEST-
MENT ADVISERS.—Section 203(f) of the Investment Ad-
visers Act of 1940 (15 U.S.C. 80b–3(f)) is amended—
(A) by striking ‘‘or (8)’’ and inserting
‘‘(8), or (9)’’; and
(B) by inserting ‘‘or (3)’’ after ‘‘paragraph
(2)’’.
Passed the House of Representatives November 6,
2001.
Attest:
Clerk.