months or bar any such person from being associated with 
an investment adviser, broker, dealer, municipal securities 
dealer, transfer agent, or nationally recognized statistical 
rating organization,’’. 
SEC. 206. AIDING AND ABETTING AUTHORITY UNDER THE 
SECURITIES ACT AND THE INVESTMENT COM-
PANY ACT. 
(a) UNDER THE SECURITIES ACT OF 1933.—Section 
15 of the Securities Act of 1933 (15 U.S.C. 77o) is 
amended— 
(1) by striking ‘‘Every person who’’ and insert-
ing ‘‘(a) CONTROLLING PERSONS.—Every person 
who’’; and 
(2) by adding at the end the following: 
‘‘(b) PROSECUTION
OF PERSONS WHO AID
AND 
ABET VIOLATIONS.—For purposes of any action brought 
by the Commission under subparagraph (b) or (d) of sec-
tion 20, any person that knowingly or recklessly provides 
substantial assistance to another person in violation of a 
provision of this Act, or of any rule or regulation issued 
under this Act, shall be deemed to be in violation of such 
provision to the same extent as the person to whom such 
assistance is provided.’’. 
(c) UNDER
THE INVESTMENT COMPANY ACT
OF 
1940.—Section 48 of the Investment Company Act of 
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1940 (15 U.S.C. 80a–48) is amended by redesignating 
subsection (b) as subsection (c) and inserting after sub-
section (a) the following: 
‘‘(b) For purposes of any action brought by the Com-
mission under subsection (d) or (e) of section 42, any per-
son that knowingly or recklessly provides substantial as-
sistance to another person in violation of a provision of 
this Act, or of any rule or regulation issued under this 
Act, shall be deemed to be in violation of such provision 
to the same extent as the person to whom such assistance 
is provided.’’. 
SEC. 207. AUTHORITY TO IMPOSE PENALTIES FOR AIDING 
AND ABETTING VIOLATIONS OF THE INVEST-
MENT ADVISERS ACT. 
Section 209 of the Investment Advisers Act of 1940 
(15 U.S.C. 80b–9) is amended by inserting at the end the 
following new subsection: 
‘‘(f) AIDING AND ABETTING.—For purposes of any 
action brought by the Commission under subsection (e), 
any person that knowingly or recklessly has aided, abetted, 
counseled, commanded, induced, or procured a violation 
of any provision of this Act, or of any rule, regulation, 
or order hereunder, shall be deemed to be in violation of 
such provision, rule, regulation, or order to the same ex-
tent as the person that committed such violation.’’. 
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SEC. 208. DEADLINE FOR COMPLETING EXAMINATIONS, IN-
SPECTIONS AND ENFORCEMENT ACTIONS. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by inserting after section 4D (as added 
by section 101) the following new section: 
‘‘SEC. 4E. DEADLINE FOR COMPLETING EXAMINATIONS, IN-
VESTIGATIONS AND ENFORCEMENT ACTIONS. 
‘‘(a) IN GENERAL.—The Commission shall complete 
any examination, investigations, or enforcement action ini-
tiated by the Commission not later than 180 days after 
the date on which such examination, inspection, or en-
forcement action is commenced. 
‘‘(b) EXCEPTION
FOR
CERTAIN
COMPLEX
AC-
TIONS.—Notwithstanding subsection (a), if the head of 
any division or office within the Commission determines 
that a particular examination, investigation, or enforce-
ment action is sufficiently complex that it cannot be com-
pleted within the deadline provided under subsection (a), 
such head may, after providing notice to the Chairman 
of the Commission, extend such deadline by an additional 
180 days.’’. 
SEC. 209. NATIONWIDE SERVICE OF SUBPOENAS. 
(a) SECURITIES ACT OF 1933.—Section 22(a) of the 
Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by 
inserting after the second sentence the following: ‘‘In any 
action or proceeding instituted by the Commission under 
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this title in a United States district court for any judicial 
district, subpoenas issued by or on behalf of such court 
to compel the attendance of witnesses or the production 
of documents or tangible things (or both) may be served 
in any other district. Such subpoenas may be served and 
enforced without application to the court or a showing of 
cause, notwithstanding the provisions of rule 45(b)(2), 
(c)(3)(A)(ii), and (c)(3)(B)(iii) of the Federal Rules of 
Civil Procedure.’’. 
(b) SECURITIES EXCHANGE ACT OF 1934.—Section 
27 of the Securities Exchange Act of 1934 (15 U.S.C. 
78aa) is amended by inserting after the third sentence the 
following: ‘‘In any action or proceeding instituted by the 
Commission under this title in a United States district 
court for any judicial district, subpoenas issued by or on 
behalf of such court to compel the attendance of witnesses 
or the production of documents or tangible things (or 
both) may be served in any other district. Such subpoenas 
may be served and enforced without application to the 
court or a showing of cause, notwithstanding the provi-
sions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of 
the Federal Rules of Civil Procedure.’’. 
(c) INVESTMENT COMPANY ACT OF 1940.—Section 
44 of the Investment Company Act of 1940 (15 U.S.C. 
80a–43) is amended by inserting after the fourth sentence 
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the following: ‘‘In any action or proceeding instituted by 
the Commission under this title in a United States district 
court for any judicial district, subpoenas issued by or on 
behalf of such court to compel the attendance of witnesses 
or the production of documents or tangible things (or 
both) may be served in any other district. Such subpoenas 
may be served and enforced without application to the 
court or a showing of cause, notwithstanding the provi-
sions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of 
the Federal Rules of Civil Procedure.’’. 
(d) INVESTMENT ADVISERS ACT OF 1940.—Section 
214 of the Investment Advisers Act of 1940 (15 U.S.C. 
80b–14) is amended by inserting after the third sentence 
the following: ‘‘In any action or proceeding instituted by 
the Commission under this title in a United States district 
court for any judicial district, subpoenas issued by or on 
behalf of such court to compel the attendance of witnesses 
or the production of documents or tangible things (or 
both) may be served in any other district. Such subpoenas 
may be served and enforced without application to the 
court or a showing of cause, notwithstanding the provi-
sions of rule 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii) of 
the Federal Rules of Civil Procedure.’’. 
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SEC. 210. AUTHORITY TO IMPOSE CIVIL PENALTIES IN 
CEASE AND DESIST PROCEEDINGS. 
(a) UNDER THE SECURITIES ACT OF 1933.—Section 
8A of the Securities Act of 1933 (15 U.S.C. 77h–1) is 
amended by adding at the end the following new sub-
section: 
‘‘(g) AUTHORITY TO IMPOSE MONEY PENALTIES.— 
‘‘(1) GROUNDS FOR IMPOSING.—In any cease- 
and-desist proceeding under subsection (a), the 
Commission may impose a civil penalty on a person 
if it finds, on the record after notice and opportunity 
for hearing, that— 
‘‘(A) such person— 
‘‘(i) is violating or has violated any 
provision of this title, or any rule or regu-
lation thereunder; or 
‘‘(ii) is or was a cause of the violation 
of any provision of this title, or any rule or 
regulation thereunder; and 
‘‘(B) such penalty is in the public interest. 
‘‘(2) MAXIMUM AMOUNT OF PENALTY.— 
‘‘(A) FIRST TIER.—The maximum amount 
of penalty for each act or omission described in 
paragraph (1) shall be $7,500 for a natural 
person or $75,000 for any other person. 
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may impose a penalty under this section, a respond-
ent may present evidence of the respondent’s ability 
to pay such penalty. The Commission may, in its 
discretion, consider such evidence in determining 
whether such penalty is in the public interest. Such 
evidence may relate to the extent of such person’s 
ability to continue in business and the collectability 
of a penalty, taking into account any other claims of 
the United States or third parties upon such per-
son’s assets and the amount of such person’s as-
sets.’’. 
(b) UNDER THE SECURITIES EXCHANGE ACT OF 
1934.—Subsection (a) of section 21B of the Securities 
Exchange Act of 1934 (15 U.S.C. 78u–2(a)) is amend-
ed— 
(1) by striking ‘‘(a) COMMISSION AUTHORITY 
TO
ASSESS
MONEY
PENALTIES.—In any pro-
ceeding’’ and inserting the following: 
‘‘(a) COMMISSION AUTHORITY TO ASSESS MONEY 
PENALTIES.— 
‘‘(1) IN GENERAL.—In any proceeding’’; 
(2) by redesignating paragraphs (1) through 
(4) of such subsection as subparagraphs (A) through 
(D), respectively, and moving such redesignated sub-
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paragraphs and the matter following such subpara-
graphs 2 ems to the right; and 
(3) by adding at the end of such subsection the 
following new paragraph: 
‘‘(2) 
CEASE-AND-DESIST
PROCEEDINGS.—In 
any proceeding instituted pursuant to section 21C of 
this title against any person, the Commission may 
impose a civil penalty if it finds, on the record after 
notice and opportunity for hearing, that such per-
son— 
‘‘(A) is violating or has violated any provi-
sion of this title, or any rule or regulation 
thereunder; or 
‘‘(B) is or was a cause of the violation of 
any provision of this title, or any rule or regula-
tion thereunder.’’. 
(c) UNDER
THE INVESTMENT COMPANY ACT
OF 
1940.—Paragraph (1) of section 9(d) of the Investment 
Company Act of 1940 (15 U.S.C. 80a–9(d)(1)) is amend-
ed— 
(1) by striking ‘‘(1) AUTHORITY OF COMMIS-
SION.—In any proceeding’’ and inserting the fol-
lowing: 
‘‘(1) AUTHORITY OF COMMISSION.— 
‘‘(A) IN GENERAL.—In any proceeding’’; 
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(2) by redesignating subparagraphs (A) through 
(C) of such paragraph as clauses (i) through (iii), 
respectively, and by moving such redesignated 
clauses and the matter following such subparagraphs 
2 ems to the right; and 
(3) by adding at the end of such paragraph the 
following new subparagraph: 
‘‘(B) CEASE-AND-DESIST PROCEEDINGS.— 
In any proceeding instituted pursuant to sub-
section (f) against any person, the Commission 
may impose a civil penalty if it finds, on the 
record after notice and opportunity for hearing, 
that such person— 
‘‘(i) is violating or has violated any 
provision of this title, or any rule or regu-
lation thereunder; or 
‘‘(ii) is or was a cause of the violation 
of any provision of this title, or any rule or 
regulation thereunder.’’. 
(d) UNDER THE INVESTMENT ADVISERS ACT OF 
1940.—Paragraph (1) of section 203(i) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b–3(i)(1)) is amend-
ed— 
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(1) by striking ‘‘(1) AUTHORITY OF COMMIS-
SION.—In any proceeding’’ and inserting the fol-
lowing: 
‘‘(1) AUTHORITY OF COMMISSION.— 
‘‘(A) IN GENERAL.—In any proceeding’’; 
(2) by redesignating subparagraphs (A) through 
(D) of such paragraph as clauses (i) through (iv), 
respectively, and moving such redesignated clauses 
and the matter following such subparagraphs 2 ems 
to the right; and 
(3) by adding at the end of such paragraph the 
following new subparagraph: 
‘‘(B) CEASE-AND-DESIST PROCEEDINGS.— 
In any proceeding instituted pursuant to sub-
section (k) against any person, the Commission 
may impose a civil penalty if it finds, on the 
record after notice and opportunity for hearing, 
that such person— 
‘‘(i) is violating or has violated any 
provision of this title, or any rule or regu-
lation thereunder; or 
‘‘(ii) is or was a cause of the violation 
of any provision of this title, or any rule or 
regulation thereunder.’’. 
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SEC. 211. FORMERLY ASSOCIATED PERSONS. 
(a) MEMBER OR EMPLOYEE OF THE MUNICIPAL SE-
CURITIES RULEMAKING BOARD.—Section 15B(c)(8) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78o– 
4(c)(8)) is amended by striking ‘‘any member or em-
ployee’’ and inserting ‘‘any person who is, or at the time 
of the alleged misconduct was, a member or employee’’. 
(b) PERSON ASSOCIATED WITH A GOVERNMENT SE-
CURITIES BROKER OR DEALER.—Section 15C of the Se-
curities Exchange Act of 1934 (15 U.S.C. 78o–5) is 
amended— 
(1) in subsection (c)(1)(C), by striking ‘‘or 
seeking to become associated,’’ and inserting ‘‘seek-
ing to become associated, or, at the time of the al-
leged misconduct, associated or seeking to become 
associated’’; 
(2) in subsection (c)(2)(A), by inserting ‘‘, seek-
ing to become associated, or, at the time of the al-
leged misconduct, associated or seeking to become 
associated’’ after ‘‘any person associated’’; and 
(3) in subsection (c)(2)(B), by inserting ‘‘, 
seeking to become associated, or, at the time of the 
alleged misconduct, associated or seeking to become 
associated’’ after ‘‘any person associated’’. 
(c) PERSON ASSOCIATED WITH A MEMBER OF A NA-
TIONAL SECURITIES EXCHANGE OR REGISTERED SECURI-
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TIES ASSOCIATION.—Section 21(a)(1) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is amended 
by inserting ‘‘, or, as to any act or practice, or omission 
to act, while associated with a member, formerly associ-
ated’’ after ‘‘member or a person associated’’. 
(d) PARTICIPANT
OF
A REGISTERED CLEARING 
AGENCY.—Section 21(a)(1) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78u(a)(1)) is amended by insert-
ing ‘‘or, as to any act or practice, or omission to act, while 
a participant, was a participant,’’ after ‘‘in which such 
person is a participant,’’. 
(e) OFFICER OR DIRECTOR OF A SELF-REGULATORY 
ORGANIZATION.—Section 19(h)(4) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78s(h)(4)) is amended— 
(1) by striking ‘‘any officer or director’’ and in-
serting ‘‘any person who is, or at the time of the al-
leged misconduct was, an officer or director’’; and 
(2) by striking ‘‘such officer or director’’ and 
inserting ‘‘such person’’. 
(f) OFFICER OR DIRECTOR OF AN INVESTMENT COM-
PANY.—Section 36(a) of the Investment Company Act of 
1940 (15 U.S.C. 80a–35(a)) is amended— 
(1) by striking ‘‘a person serving or acting’’ and 
inserting ‘‘a person who is, or at the time of the al-
leged misconduct was, serving or acting’’; and 
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(2) by striking ‘‘such person so serves or acts’’ 
and inserting ‘‘such person so serves or acts, or at 
the time of the alleged misconduct, so served or 
acted’’. 
(g) PERSON ASSOCIATED WITH A PUBLIC ACCOUNT-
ING FIRM.— 
(1) SARBANES-OXLEY
ACT
OF
2002
AMEND-
MENT.—Section 2(a)(9) of the Sarbanes-Oxley Act 
of 2002 (15 U.S.C. 7201(9)) is amended by adding 
at the end the following new subparagraph: 
‘‘(C) INVESTIGATIVE AND ENFORCEMENT 
AUTHORITY.—For purposes of the provisions of 
sections 3(c), 101(c), 105, and 107(c) and 
Board or Commission rules thereunder, except 
to the extent specifically excepted by such rules, 
the terms defined in subparagraph (A) shall in-
clude any person associated, seeking to become 
associated, or formerly associated with a public 
accounting firm, except— 
‘‘(i) the authority to conduct an inves-
tigation of such person under section 
105(b) shall apply only with respect to any 
act or practice, or omission to act, while 
such person was associated or seeking to 
become associated with that firm; and 
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‘‘(ii) the authority to commence a dis-
ciplinary 
proceeding 
under 
section 
105(c)(1), or impose disciplinary sanctions 
under section 105(c)(4), against such per-
son shall apply only on— 
‘‘(I) the basis of misconduct oc-
curring while such person was associ-
ated or seeking to become associated 
with that firm; or 
‘‘(II) on a violation of section 
105(b).’’. 
(2) SECURITIES
EXCHANGE
ACT
OF
1934 
AMENDMENT.—Section 21(a)(1) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is 
amended by striking ‘‘or a person associated with 
such a firm’’ and inserting ‘‘, a person associated 
with such a firm, or, as to any act, practice, or omis-
sion to act, while associated with such firm, a person 
formerly associated with such a firm’’. 
(h) SUPERVISORY
PERSONNEL
OF
AN
AUDIT 
FIRM.—Section 105(c)(6) of the Sarbanes-Oxley Act of 
2002 (15 U.S.C. 7215(c)(6)) is amended— 
(1) in subparagraph (A), by striking ‘‘the su-
pervisory personnel’’ and inserting ‘‘any person who 
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is, or at the time of the alleged failure reasonably to 
supervise was, a supervisory person’’; 
(2) in subparagraph (A)(i), by inserting after 
‘‘failed reasonably to supervise’’ the following: ‘‘any 
person who is, or at the time of the alleged failure, 
was’’; 
(3) in subparagraph (A)(ii), by striking ‘‘associ-
ated’’; 
(4) in subparagraph (B)— 
(A) by striking ‘‘No associated person’’ 
and inserting ‘‘No current or former super-
visory person’’; and 
(B) by striking ‘‘any other person’’ and in-
serting ‘‘any current or former associated per-
son’’; and 
(5) in subparagraph (B)(i), by striking ‘‘associ-
ated’’. 
(i) MEMBER OF THE PUBLIC COMPANY ACCOUNTING 
OVERSIGHT BOARD.—Section 107(d)(3) of the Sarbanes- 
Oxley Act of 2002 (15 U.S.C. 7217(d)(3)) is amended by 
striking ‘‘any member’’ and inserting ‘‘any person who is, 
or at the time of the alleged misconduct was, a member’’. 
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SEC. 
212. 
SHARING 
PRIVILEGED 
INFORMATION 
WITH 
OTHER AUTHORITIES. 
Section 24 of the Securities Exchange Act of 1934 
(15 U.S.C. 78x) is amended— 
(1) by redesignating subsections (d) and (e) as 
subsections (e) and (f), respectively; 
(2) in subsection (e), as redesignated, by strik-
ing ‘‘as provided in subsection (e)’’ and inserting ‘‘as 
provided in subsection (f)’’; and 
(3) by inserting after subsection (c) the fol-
lowing new subsection (d)— 
‘‘(d) SHARING
PRIVILEGED
INFORMATION
WITH 
OTHER AUTHORITIES.— 
‘‘(1) PRIVILEGED INFORMATION PROVIDED BY 
THE
COMMISSION.—The Commission shall not be 
deemed to have waived any privilege applicable to 
any information by transferring that information to 
or permitting that information to be used by— 
‘‘(A) any agency (as defined in section 6 of 
title 18, United States Code); 
‘‘(B) any foreign securities authority; 
‘‘(C) any foreign law enforcement author-
ity; or 
‘‘(D) any State securities or law enforce-
ment authority. 
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‘‘(2) NON-DISCLOSURE OF PRIVILEGED INFOR-
MATION PROVIDED TO THE COMMISSION.—Except as 
provided in subsection (f), the Commission shall not 
be compelled to disclose privileged information ob-
tained from any foreign securities authority, or for-
eign law enforcement authority, if the authority has 
in good faith determined and represented to the 
Commission that the information is privileged. 
‘‘(3) NON-WAIVER
OF
PRIVILEGED
INFORMA-
TION PROVIDED TO THE COMMISSION.—No Federal 
agency or State securities or law enforcement au-
thority shall be deemed to have waived any privilege 
applicable to any information by transferring that 
information to or permitting that information to be 
used by the Commission. 
‘‘(4) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) The term ‘privilege’ includes any 
work-product privilege, attorney-client privilege, 
governmental privilege, or other privilege recog-
nized under Federal, foreign, or State law. 
‘‘(B) The term ‘foreign law enforcement 
authority’ means any foreign authority that is 
empowered under foreign law to detect, inves-
tigate or prosecute potential violations of law. 
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‘‘(C) The term ‘State securities or law en-
forcement authority’ means the authority of any 
State or territory that is empowered under 
State or territory law to detect, investigate or 
prosecute potential violations of law.’’. 
SEC. 213. EXPANDED ACCESS TO GRAND JURY MATERIAL. 
(a) IN GENERAL.—Title VI of the Sarbanes-Oxley 
Act of 2002 is amended by adding at the end the following 
new section: 
‘‘SEC. 605. ACCESS TO GRAND JURY INFORMATION. 
‘‘(a) DISCLOSURE.— 
‘‘(1) IN GENERAL.—Upon motion of an attor-
ney for the government, a court may direct disclo-
sure of matters occurring before a grand jury during 
an investigation of conduct that may constitute a 
violation of any provision of the securities laws to 
the Commission for use in relation to any matter 
within the jurisdiction of the Commission. 
‘‘(2) SUBSTANTIAL NEED REQUIRED.—A court 
may issue an order under paragraph (1) only upon 
a finding of a substantial need in the public interest. 
‘‘(b) USE OF MATTER.—A person to whom a matter 
has been disclosed under this section shall not use such 
matter other than for the purpose for which such disclo-
sure was authorized. 
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‘‘(c) DEFINITIONS.—As used in this section, the 
terms ‘attorney for the government’ and ‘grand jury infor-
mation’ have the meanings given to those terms in section 
3322 of title 18, United States Code.’’. 
(b) CONFORMING AMENDMENT.—The table of con-
tents in section 1(b) of the Sarbanes-Oxley Act of 2002 
is amended by inserting after the item relating to section 
604 the following: 
‘‘Sec. 605. Access to grand jury information.’’. 
SEC. 214. AIDING AND ABETTING STANDARD OF KNOWL-
EDGE SATISFIED BY RECKLESSNESS. 
Section 20(e) of the Securities Exchange Act of 1934 
(15 U.S.C. 78t(e)) is amended by inserting ‘‘or recklessly’’ 
after ‘‘knowingly’’. 
SEC. 215. EXTRATERRITORIAL JURISDICTION OF THE ANTI-
FRAUD PROVISIONS OF THE FEDERAL SECU-
RITIES LAWS. 
(a) UNDER THE SECURITIES ACT OF 1933.—Section 
22 of the Securities Act of 1933 (15 U.S.C. 77v(a)) is 
amended by adding at the end the following new sub-
section: 
‘‘(c) EXTRATERRITORIAL JURISDICTION.—The juris-
diction of the district courts of the United States and the 
United States courts of any Territory described under 
subsection (a) includes violations of section 17(a), and all 
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suits in equity and actions at law under that section, in-
volving— 
‘‘(1) conduct within the United States that con-
stitutes significant steps in furtherance of the viola-
tion, even if the securities transaction occurs outside 
the United States and involves only foreign inves-
tors; or 
‘‘(2) conduct occurring outside the United 
States that has a foreseeable substantial effect with-
in the United States.’’. 
(b) UNDER THE SECURITIES EXCHANGE ACT OF 
1934.—Section 27 of the Securities Exchange Act of 1934 
(15 U.S.C. 78aa) is amended— 
(1) by striking ‘‘The district’’ and inserting the 
following: 
‘‘(a) IN GENERAL.—The district’’; and 
(2) by inserting at the end the following new 
subsection: 
‘‘(b) EXTRATERRITORIAL JURISDICTION.—The juris-
diction of the district courts of the United States and the 
United States courts of any Territory or other place sub-
ject to the jurisdiction of the United States described 
under subsection (a) includes violations of the antifraud 
provisions of this title, and all suits in equity and actions 
at law under those provisions, involving— 
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‘‘(1) conduct within the United States that con-
stitutes significant steps in furtherance of the viola-
tion, even if the securities transaction occurs outside 
the United States and involves only foreign inves-
tors; or 
‘‘(2) conduct occurring outside the United 
States that has a foreseeable substantial effect with-
in the United States.’’. 
(c) UNDER
THE INVESTMENT ADVISERS ACT
OF 
1940.—Section 214 of the Investment Advisers Act of 
1940 (15 U.S.C. 80b–14) is amended— 
(1) by striking ‘‘The district’’ and inserting the 
following: 
‘‘(a) IN GENERAL.—The district’’; and 
(2) by inserting at the end the following new 
subsection: 
‘‘(b) EXTRATERRITORIAL JURISDICTION.—The juris-
diction of the district courts of the United States and the 
United States courts of any Territory or other place sub-
ject to the jurisdiction of the United States described 
under subsection (a) includes violations of section 206, 
and all suits in equity and actions at law under that sec-
tion, involving— 
‘‘(1) conduct within the United States that con-
stitutes significant steps in furtherance of the viola-
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tion, even if the securities transaction occurs outside 
the United States and involves only foreign inves-
tors; or 
‘‘(2) conduct occurring outside the United 
States that has a foreseeable substantial effect with-
in the United States.’’. 
SEC. 216. FIDELITY BONDING. 
Section 17(g) of the Investment Company Act of 
1940 (15 U.S.C. 80a–17(g)) is amended to read as fol-
lows: 
‘‘(g) FIDELITY BONDING.— 
‘‘(1) IN GENERAL.—The Commission is author-
ized to require that a registered management invest-
ment company provide and maintain a bond against 
loss caused by any fraudulent act or theft committed 
by any officer or employee of the company, either 
alone or in collusion with others, in such form and 
amount as the Commission may prescribe by rule, 
regulation, or order for the protection of investors. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the term ‘officer or employee’ shall include 
the officers and employees of the depositor, trustee, 
investment adviser, or any other manager of the reg-
istered investment company, and any affiliated per-
son of any such person.’’. 
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SEC. 217. ENHANCED SEC AUTHORITY TO CONDUCT SUR-
VEILLANCE AND RISK ASSESSMENT. 
(a) SECURITIES EXCHANGE ACT OF 1934 AMEND-
MENTS.—Section 17(b) of the Securities Exchange Act of 
1934 (15 U.S.C. 78q(b)) is amended by adding at the end 
the following new paragraph: 
‘‘(5) SURVEILLANCE AND RISK ASSESSMENT.— 
All persons described in subsection (a) of this sec-
tion are subject at any time, or from time to time, 
to such reasonable periodic, special, or other infor-
mation and document requests by representatives of 
the Commission as the Commission by rule or order 
deems necessary or appropriate to conduct surveil-
lance or risk assessments of the securities markets, 
persons registered with the Commission under this 
title, or otherwise in furtherance of the purposes of 
this title.’’. 
(b) INVESTMENT COMPANY ACT OF 1940 AMEND-
MENTS.—Section 31(b) of the Investment Company Act 
of 1940 (15 U.S.C. 80a–30(b)) is amended by adding at 
the end the following new paragraph: 
‘‘(4) SURVEILLANCE AND RISK ASSESSMENT.— 
All persons described in paragraph (1) are subject at 
any time, or from time to time, to such reasonable 
periodic, special, or other information and document 
requests by representatives of the Commission as the 
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Commission by rule or order deems necessary or ap-
propriate to conduct surveillance or risk assessments 
of the securities markets, persons registered with the 
Commission under this title, or otherwise in further-
ance of the purposes of this title.’’. 
(c) INVESTMENT ADVISERS ACT OF 1940 AMEND-
MENTS.—Section 204 of the Investment Advisers Act of 
1940 (15 U.S.C. 80b–4) is amended by adding at the end 
the following new subsection: 
‘‘(d) SURVEILLANCE AND RISK ASSESSMENT.—All 
persons described in subsection (a) are subject at any 
time, or from time to time, to such reasonable periodic, 
special, or other information and document requests by 
representatives of the Commission as the Commission by 
rule or order deems necessary or appropriate to conduct 
surveillance or risk assessments of the securities markets, 
persons registered with the Commission under this title, 
or otherwise in furtherance of the purposes of this title.’’. 
SEC. 218. INVESTMENT COMPANY EXAMINATIONS. 
Section 31(b)(1) of the Investment Company Act of 
1940 (15 U.S.C. 80a–30) is amended to read as follows: 
‘‘(1) IN
GENERAL.—All records of each reg-
istered investment company, and each underwriter, 
broker, dealer, or investment adviser that is a major-
ity-owned subsidiary of such a company, shall be 
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subject at any time, or from time to time, to such 
reasonable periodic, special, or other examinations 
by representatives of the Commission as the Com-
mission deems necessary or appropriate in the public 
interest or for the protection of investors.’’. 
SEC. 219. CONTROL PERSON LIABILITY UNDER THE SECU-
RITIES EXCHANGE ACT. 
Section 20(a) of the Securities Exchange Act of 1934 
(15 U.S.C. 78t(a)) is amended by inserting after ‘‘con-
trolled person is liable’’ the following: ‘‘including to the 
Commission in any action brought under paragraph (1) 
or (3) of section 21(d),’’. 
SEC. 220. ENHANCED APPLICATION OF ANTI-FRAUD PROVI-
SIONS. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended— 
(1) in section 9— 
(A) by striking ‘‘registered on a national 
securities exchange’’ each place it appears and 
inserting ‘‘other than a government security’’; 
(B) in subsection (b), by striking ‘‘by use 
of any facility of a national securities ex-
change,’’; and 
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(C) in subsection (c), by inserting after 
‘‘unlawful for any’’ the following: ‘‘broker, deal-
er, or’’; 
(2) in section 10(a)(1), by striking ‘‘registered 
on a national securities exchange’’ each place it ap-
pears and inserting ‘‘other than a government secu-
rity’’; and 
(3) in section 15(c)(1)(A), by striking ‘‘other-
wise than on a national securities exchange of which 
it is a member’’. 
TITLE III—COMMISSION 
FUNDING AND ORGANIZATION 
SEC. 301. AUTHORIZATION OF APPROPRIATIONS. 
Section 35 of the Securities Exchange Act of 1934 
(15 U.S.C. 78kk) is amended to read as follows: 
‘‘SEC. 35. AUTHORIZATION OF APPROPRIATIONS. 
‘‘In addition to any other funds authorized to be ap-
propriated to the Commission, there are authorized to be 
appropriated to carry out the functions, powers, and du-
ties of the Commission— 
‘‘(1) for fiscal year 2010, $1,115,000,000; 
‘‘(2) for fiscal year 2011, $1,300,000,000; 
‘‘(3) for fiscal year 2012, $1,500,000,000; 
‘‘(4) for fiscal year 2013, $1,750,000,000; 
‘‘(5) for fiscal year 2014, $2,000,000,000; and 
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‘‘(6) for fiscal year 2015, $2,250,000,000.’’. 
SEC. 302. INVESTMENT ADVISER REGULATION FUNDING. 
Section 203 of the Investment Advisers Act of 1940 
(15 U.S.C. 80b–3) is amended by adding at the end the 
following new subsection: 
‘‘(l) ANNUAL ASSESSMENT.— 
‘‘(1) IN GENERAL.—The Commission shall, in 
accordance with this subsection, collect from invest-
ment advisers required to register with the Commis-
sion under this title, fees designed to help recover 
the cost of inspections and examinations of reg-
istered investment advisers conducted by the Com-
mission pursuant to this title. 
‘‘(2) FEE PAYMENT REQUIRED.—An investment 
adviser shall, at the time of registration with the 
Commission, and each fiscal year thereafter during 
which such adviser is so registered, pay to the Com-
mission a fair and reasonable fee determined by the 
Commission. In determining such fee, the Commis-
sion shall consider— 
‘‘(A) the investment adviser’s size; 
‘‘(B) the risk profile of the investment ad-
viser; 
‘‘(C) the types of clients of the investment 
adviser; and 
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‘‘(D) such other relevant factors as the 
Commission determines to be appropriate. 
‘‘(3) AMOUNT AND USE OF FEES.— 
‘‘(A) MINIMUM
AGGREGATE
AMOUNT.— 
The aggregate amount of fees determined by 
the Commission under this subsection for any 
fiscal year shall be greater than the amount the 
Commission spent on inspections and examina-
tions of registered investment advisers during 
the 2009 fiscal year. 
‘‘(B) EXCESS
FEES.—The Commission 
may retain any excess fees collected under this 
subsection during a fiscal year for application 
towards the costs of inspections and examina-
tions of investment advisers in future fiscal 
years. 
‘‘(4) REVIEW
AND
ADJUSTMENT
OF
FEES.— 
The Commission may review fee rates established 
pursuant to this section before the end of any fiscal 
year and make any appropriate adjustments prior to 
collecting any such fee in the following fiscal year. 
‘‘(5) PENALTY
FEE.—The Commission shall 
prescribe by rule or regulation an additional fee to 
be assessed as a penalty for late payment of fees re-
quired by this subsection. 
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‘‘(6) JUDICIAL REVIEW.—Increases or decreases 
in fees made pursuant to this section shall not be 
subject to judicial review.’’. 
SEC. 303. AMENDMENTS TO SECTION 31 OF THE SECURI-
TIES EXCHANGE ACT OF 1934. 
Section 31 of the Securities Exchange Act of 1934 
(15 U.S.C. 78ee) is amended— 
(1) in subsection (e)(2), by striking ‘‘September 
30’’ and inserting ‘‘September 25’’; 
(2) in subsection (g), by striking ‘‘April 30’’ 
and inserting ‘‘August 31’’; and 
(3) in subsection (j)— 
(A) by striking ‘‘5 months’’ and inserting 
‘‘4 months’’; and 
(B) by striking ‘‘(including fees collected 
during such 5-month period and assessments 
collected under subsection (d) of this section)’’ 
and inserting ‘‘(including fees estimated to be 
collected under subsections (b) and (c) prior to 
the effective date of the uniform adjusted rate 
and assessments estimated to be collected under 
subsection (d))’’. 
SEC. 304. COMMISSION ORGANIZATIONAL STUDY AND RE-
FORM. 
(a) STUDY REQUIRED.— 
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(1) IN GENERAL.—Not later than the end of 
the 60-day period beginning on the date of the en-
actment of this Act, the Securities and Exchange 
Commission (hereinafter in this section referred to 
as the ‘‘SEC’’) shall hire an independent consultant 
of high caliber and with expertise in organizational 
restructuring to examine the internal operations, 
structure, funding, and need for comprehensive re-
form of the SEC, self-regulatory organizations, and 
other entities relevant to the regulation of securities 
and the protection of securities investors. 
(2) SPECIFIC AREAS FOR STUDY.—The study 
required under paragraph (1) shall, at a minimum, 
include the study of— 
(A) the possible elimination of unnecessary 
or redundant units at the SEC; 
(B) improving communications between 
SEC offices and divisions; 
(C) the need to put in place a clear chain 
of command structure, particularly for enforce-
ment examinations and compliance inspections; 
(D) the SEC’s hiring policies and personal 
practices, including— 
(i) whether there is a need to further 
streamline hiring authorities for those who 
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are not lawyers, accountants, compliance 
examiners, or economists; 
(ii) whether there is a need for further 
pay reforms; 
(iii) the experiential mix of SEC em-
ployees and whether such mix efficiently 
and effectively permits the SEC to protect 
investors; and 
(iv) the application of civil service 
laws by the SEC; and 
(E) the present self-regulatory organiza-
tional structure and a determination of whether 
the present reliance on self-regulatory organiza-
tions promotes efficient and effective govern-
ance for the securities markets. 
(b) CONSULTANT REPORT.—Not later than the end 
of the 180-day period beginning on the date of the enact-
ment of this Act, the independent consultant hired pursu-
ant to subsection (a)(1) shall issue a report to the SEC 
and the Congress containing— 
(1) a detailed description of any findings and 
conclusions made while carrying out the study re-
quired under subsection (a)(1); 
(2) recommendations for legislative, regulatory, 
or administrative action that the consultant deter-
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mines appropriate to enable the SEC and other enti-
ties on which it reports to perform their statutorily 
or otherwise mandated missions. 
(c) SEC REPORT.—Not later than the end of the 6- 
month period beginning on the date the consultant issues 
the report under subsection (b), and every 6-months there-
after during the 2-year period following the date on which 
the consultant issues such report, the SEC shall issue a 
report to the Committee on Financial Services of the 
House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs of the Senate describing the 
SEC’s implementation of the regulatory and administra-
tive recommendations contained in the consultant’s report. 
TITLE IV—ADDITIONAL 
COMMISSION REFORMS 
SEC. 401. 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) To effect or accept a transaction involving the 
loan or borrowing of securities in contravention of such 
rules and regulations as the Commission may prescribe as 
necessary or appropriate in the public interest or for the 
protection of investors.’’. 
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SEC. 402. 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. 403. 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. 404. EQUAL TREATMENT OF SELF-REGULATORY ORGA-
NIZATION 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. 405. 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. 406. 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) (including the preceding heading); 
(4) in section 311 (15 U.S.C. 77kkk) by strik-
ing subsection (c); 
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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. 407. 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 Financial Accounting Stand-
ards Board, and the Public Company Accounting Over-
sight Board shall annually provide oral testimony by their 
respective Chairpersons or a designee of the Chairperson, 
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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. 408. 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. 409. PROTECTING CONFIDENTIALITY OF MATERIALS 
SUBMITTED TO THE COMMISSION. 
(a) SECURITIES EXCHANGE ACT OF 1934.—Section 
17(j) of the Securities Exchange Act of 1934 (15 U.S.C. 
78q(j)) is amended to read as follows: 
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‘‘(j) 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 of 
a person subject to or described in this section, in-
cluding subsection (i)(5)(A), or the financial or oper-
ational condition of such persons, or any information 
supplied to the Commission by any domestic or for-
eign regulatory agency that relates to the financial 
or operational condition of such persons, of any as-
sociated 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 or any self-regulatory organization requesting the 
information for purposes within the scope of its ju-
risdiction, or prevent the Commission from com-
plying with an order of a court of the United States 
in an action brought by the United States or the 
Commission against a person subject to or described 
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in this section to produce information, documents, 
records, or reports relating directly to the examina-
tion of that person or the financial or operational 
condition of that person or an associated or affili-
ated 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)) is amended by adding at the end the following 
new paragraph: 
‘‘(4) CONFIDENTIALITY.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of law, the Commission shall not 
be compelled to disclose any information, docu-
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ments, records, or reports that relate to an ex-
amination 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 requesting the informa-
tion for purposes within the scope of its juris-
diction, or prevent the Commission from com-
plying with an order of a court of the United 
States in an action brought by the United 
States or the Commission against a person sub-
ject to or described in this section to produce 
information, documents, records, or reports re-
lating 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. 
‘‘(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-
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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) is amended by adding at the end the following new 
subsection: 
‘‘(d) 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 
requesting 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 States in an action brought by the United 
States or the Commission against a person subject 
to or described in this section to produce informa-
tion, documents, records, or reports relating directly 
to the examination of that person or the financial or 
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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. 410. 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 
section 
18(b)(1)(C) 
(15 
U.S.C. 
77r(b)(1)(C)), by striking ‘‘is a security’’ and insert-
ing ‘‘a security’’; 
(3) 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’’; 
(4) 
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 
(5) 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,’’. 
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(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’’; 
(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.’’; 
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(7) in section 15 (15 U.S.C. 78o), by redesig-
nating subsection (i), as added by section 303(f) of 
the Commodity Futures Modernization Act of 2000 
(114 Stat. 2763A–455), as subsection (j); 
(8) 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.’’; 
(9) 
in 
section 
16(a)(2)(C) 
(15 
U.S.C. 
78p(a)(2)(C)), by striking ‘‘section 206(b)’’ and in-
serting ‘‘section 206B’’; 
(10) 
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 
(11) in section 21C(c)(2) (15 U.S.C. 78u– 
3(c)(2)), by striking ‘‘paragraph (1) subsection’’ and 
inserting ‘‘Paragraph (1)’’. 
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(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 311’’ and in-
serting ‘‘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) (15 U.S.C. 80a– 
2(a)(19)) by striking ‘‘clause (vi)’’ both places it ap-
pears 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; 
(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’’; 
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(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 
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– 
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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. 411. 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 the end 
of the 120-day period beginning on the date of the 
enactment of this paragraph, the Municipal Securi-
ties 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 public representatives, 
at least one of whom shall be representative of 
investors in municipal securities and at least 
one of whom shall be representative of issuers 
of municipal securities (which members are 
hereinafter referred to as ‘public representa-
tives’); 
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‘‘(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 
nomination and election of members of the 
Board and assure fair representation in such 
nominations and elections. Such rules— 
‘‘(i) shall establish requirements re-
garding the independence of public rep-
resentatives; 
‘‘(ii) shall provide that the number of 
public representatives of the Board shall at 
all times exceed the total number of 
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broker-dealer representatives and bank 
representatives; 
‘‘(iii) shall specify the term members 
shall serve; and 
‘‘(iv) 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. 412. 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-
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 
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‘‘(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. 413. RULEMAKING AUTHORITY TO PROTECT REDEEM-
ING 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’’. 
TITLE V—SECURITIES INVESTOR 
PROTECTION ACT AMENDMENTS 
SEC. 501. INCREASING THE MINIMUM ASSESSMENT PAID BY 
SIPC MEMBERS. 
Section 4(d)(1)(C) of the Securities Investor Protec-
tion Act of 1970 (15 U.S.C. 78ddd(d)(1)(C)) is amended 
by striking ‘‘$150 per annum’’ and inserting the following: 
‘‘0.02 percent of the gross revenues of such member of 
SIPC’’. 
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SEC. 502. INCREASING THE BORROWING LIMIT ON TREAS-
URY LOANS. 
Section 4(h) of the Securities Investor Protection Act 
of 1970 (15 U.S.C. 78ddd(h)) is amended by striking ‘‘of 
not to exceed $1,000,000,000’’ and inserting ‘‘not to ex-
ceed $2,500,000,000’’. 
SEC. 503. INCREASING THE CASH LIMIT OF PROTECTION. 
Section 9 of the Securities Investor Protection Act 
of 1970 (15 U.S.C. 78fff–3) is amended— 
(1) in subsection (a)(1), by striking ‘‘$100,000 
for each such customer’’ and inserting ‘‘the standard 
maximum cash advance amount for each such cus-
tomer, as determined in accordance with subsection 
(d)’’; and 
(2) by adding the following new subsections: 
‘‘(d) STANDARD MAXIMUM CASH ADVANCE AMOUNT 
DEFINED.—For purposes of this section, the term ‘stand-
ard maximum cash advance amount’ means $250,000, as 
such amount may be adjusted after March 31, 2010, as 
provided under subsection (e). 
‘‘(e) INFLATION ADJUSTMENT.— 
‘‘(1) IN
GENERAL.—No later than April 1, 
2010, and every 5 years thereafter, and subject to 
the approval of the Commission as provided under 
section 3(e)(2), the Board of Directors of SIPC shall 
determine whether an inflation adjustment to the 
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standard maximum cash advance amount is appro-
priate. If the Board of Directors of SIPC determines 
such an adjustment is appropriate, then the stand-
ard maximum cash advance amount shall be an 
amount equal to— 
‘‘(A) $250,000 multiplied by, 
‘‘(B) the ratio of the annual value of the 
Personal Consumption Expenditures Chain- 
Type Price Index (or any successor index there-
to), published by the Department of Commerce, 
for the calendar year preceding the year in 
which such determination is made, to the pub-
lished annual value of such index for the cal-
endar year preceding the year in which this 
subsection was enacted. 
The index values used in calculations under this 
paragraph shall be, as of the date of the calculation, 
the values most recently published by the Depart-
ment of Commerce. 
‘‘(2) ROUNDING.—If the standard maximum 
cash advance amount determined under paragraph 
(1) for any period is not a multiple of $10,000, the 
amount so determined shall be rounded down to the 
nearest $10,000. 
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‘‘(3) PUBLICATION AND REPORT TO THE CON-
GRESS.—Not later than April 5 of any calendar year 
in which a determination is required to be made 
under paragraph (1)— 
‘‘(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; 
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‘‘(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.’’. 
SEC. 504. SIPC AS TRUSTEE IN SIPA LIQUIDATION PRO-
CEEDINGS. 
Section 5(b)(3) of the Securities Investor Protection 
Act of 1970 (15 U.S.C. 78eee(b)(3)) is amended— 
(1) by striking ‘‘SIPC has determined that the 
liabilities of the debtor to unsecured general credi-
tors and to subordinated lenders appear to aggre-
gate less than $750,000 and that’’; and 
(2) by striking ‘‘five hundred’’ and inserting 
‘‘five thousand’’. 
SEC. 505. INSIDERS INELIGIBLE FOR SIPC ADVANCES. 
Section 9(a)(4) of the Securities Investor Protection 
Act of 1970 (15 U.S.C. 78fff–3(a)(4)) is amended by in-
serting ‘‘an insider (as such term is defined under section 
101(31) of title 11, United States Code),’’ after ‘‘or net 
profits of the debtor,’’. 
SEC. 506. ELIGIBILITY FOR DIRECT PAYMENT PROCEDURE. 
Section 10(a)(4) of the Securities Investor Protection 
Act of 1970 (15 U.S.C. 78fff–4(a)(4)) is amended by 
striking ‘‘$250,000’’ and inserting ‘‘$850,000’’. 
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SEC. 507. INCREASING THE FINE FOR PROHIBITED ACTS 
UNDER SIPA. 
Section 14(c) of the Securities Investor Protection 
Act of 1970 (15 U.S.C. 78jjj(c)) is amended— 
(1) in paragraph (1), by striking ‘‘$50,000’’ 
and inserting ‘‘$250,000’’; and 
(2) in paragraph (2), by striking ‘‘$50,000’’ 
and inserting ‘‘$250,000’’. 
SEC. 508. PENALTY FOR MISREPRESENTATION OF SIPC 
MEMBERSHIP OR PROTECTION. 
Section 14 of the Securities Investor Protection Act 
of 1970 (15 U.S.C. 78jjj) is amended by adding at the 
end the following new subsection: 
‘‘(d) MISREPRESENTATION OF SIPC MEMBERSHIP 
OR PROTECTION.— 
‘‘(1) IN
GENERAL.—Any person who falsely 
represents by any means (including, without limita-
tion, through the Internet or any other medium of 
mass communication), with actual knowledge of the 
falsity of the representation and with an intent to 
deceive or cause injury to another, that such person, 
or another person, is a member of SIPC or that any 
person or account is protected or is eligible for pro-
tection under this Act or by SIPC, shall be liable for 
any damages caused thereby and shall be fined not 
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more than $250,000 or imprisoned for not more 
than five years. 
‘‘(2) INTERNET
SERVICE
PROVIDERS.—Any 
Internet service provider that, on or through a sys-
tem or network controlled or operated by the Inter-
net service provider, transmits, routes, provides con-
nections for, or stores any material containing any 
misrepresentation of the kind prohibited in para-
graph (1) shall be liable for any damages caused 
thereby, including damages suffered by SIPC, if the 
Internet service provider— 
‘‘(A) has actual knowledge that the mate-
rial contains a misrepresentation of the kind 
prohibited in paragraph (1), or 
‘‘(B) in the absence of actual knowledge, is 
aware of facts or circumstances from which it 
is apparent that the material contains a mis-
representation of the kind prohibited in para-
graph (1), and 
upon obtaining such knowledge or awareness, fails to 
act expeditiously to remove, or disable access to, the 
material. 
‘‘(3) INJUNCTIONS.—Any court having jurisdic-
tion of a civil action arising under this Act may 
grant temporary injunctions and final injunctions on 
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such terms as the court deems reasonable to prevent 
or restrain any violation of paragraph (1) or (2). 
Any such injunction may be served anywhere in the 
United States on the person enjoined, shall be oper-
ative throughout the United States, and shall be en-
forceable, by proceedings in contempt or otherwise, 
by any United States court having jurisdiction over 
that person. The clerk of the court granting the in-
junction shall, when requested by any other court in 
which enforcement of the injunction is sought, trans-
mit promptly to the other court a certified copy of 
all papers in the case on file in such clerk’s office.’’. 
SEC. 509. LIMITATIONS ON CUSTOMER STATUS. 
Section 16(2) of the Securities Investor Protection 
Act of 1970 (15 U.S.C. 78lll(2)) is amended— 
(1) in subparagraph (A), by striking ‘‘or’’; 
(2) in subparagraph (B), by striking the period 
at the end and inserting ‘‘; or’’; and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(C) any person to the extent such person 
has a claim for cash or securities arising out of 
a repurchase agreement or reverse repurchase 
agreement (as such terms are defined under 
section 47 of title 11, United States Code).’’. 
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SEC. 510. FUTURES HELD IN A PORTFOLIO MARGIN SECU-
RITIES ACCOUNT PROTECTION. 
(a) SIPC ADVANCES.—Section 9(a)(1) of the Securi-
ties Investor Protection Act of 1970 (15 U.S.C. 78fff– 
3(a)(1)) is amended by inserting ‘‘or options on com-
modity futures contracts’’ after ‘‘claim for securities’’. 
(b) DEFINITIONS.—Section 16 of such Act (15 
U.S.C. 78lll) is amended— 
(1) by amending paragraph (2) to read as fol-
lows: 
‘‘(2) CUSTOMER.— 
‘‘(A) IN GENERAL.—The term ‘customer’ 
of a debtor means any person (including any 
person with whom the debtor deals as principal 
or agent) who has a claim on account of securi-
ties received, acquired, or held by the debtor in 
the ordinary course of its business as a broker 
or dealer from or for the securities accounts of 
such person for safekeeping, with a view to sale, 
to cover consummated sales, pursuant to pur-
chases, as collateral, security, or for purposes of 
effecting transfer. 
‘‘(B) 
INCLUDED
PERSONS.—The 
term 
‘customer’ includes— 
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‘‘(i) any person who has deposited 
cash with the debtor for the purpose of 
purchasing securities; and 
‘‘(ii) any person who has a claim 
against the debtor for, or a claim against 
the debtor arising out of sales or conver-
sions of, cash, securities, futures contracts, 
or options on futures contracts received, 
acquired, or held in a portfolio margining 
account carried as a securities account 
pursuant to a portfolio margining program 
approved by the Commission. 
‘‘(C) EXCLUDED
PERSONS.—The term 
‘customer’ does not include— 
‘‘(i) any person to the extent that the 
claim of such person arises out of trans-
actions with a foreign subsidiary of a mem-
ber of SIPC; or 
‘‘(ii) any person to the extent that 
such person has a claim for cash or securi-
ties which by contract, agreement, or un-
derstanding, or by operation of law, is part 
of the capital of the debtor, or is subordi-
nated to the claims of any or all creditors 
of the debtor, notwithstanding that some 
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