IB
Union Calendar No. 144
107TH CONGRESS
1ST SESSION
H. R. 1408
[Report No. 107–192, Parts I and II]
To safeguard the public from fraud in the financial services industry, to
streamline and facilitate the antifraud information-sharing efforts of Fed-
eral and State regulators, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 4, 2001
Mr. ROGERS of Michigan (for himself, Mr. OXLEY, Mrs. KELLY, Mr. BACHUS,
and Mr. TIBERI) introduced the following bill; which was referred to the
Committee on Financial Services, and in addition to the Committees on
the Judiciary, and Agriculture, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
AUGUST 2, 2001
Reported from the Committee on Financial Services with an amendment
[Strike out all after the enacting clause and insert the part printed in italic]
AUGUST 2, 2001
Referral to the Committee on Agriculture extended for a period ending not
later than August 2, 2001
AUGUST 2, 2001
The Committee on Agriculture discharged
AUGUST 2, 2001
Referral to the Committee on the Judiciary extended for a period ending not
later than September 14, 2001
SEPTEMBER 14, 2001
Referral to the Committee on the Judiciary extended for a period ending not
later than October 5, 2001
OCTOBER 5, 2001
Referral to the Committee on the Judiciary extended for a period ending not
later than October 12, 2001
OCTOBER 12, 2001
Referral to the Committee on the Judiciary extended for a period ending not
later than October 16, 2001
OCTOBER 16, 2001
Additional sponsors: Mr. SHOWS, Mr. SHERMAN, Mr. CANTOR, Mr. HOBSON,
Mr. GILLMOR, Mr. NEY, Mrs. ROUKEMA, Ms. KILPATRICK, Mr. WELDON
of Florida, Mrs. BIGGERT, Mr. NORWOOD, Mr. KING, Mr. CHAMBLISS,
Mrs. NORTHUP, Ms. PRYCE of Ohio, and Mr. CRAMER
OCTOBER 16, 2001
Reported from the Committee on the Judiciary with an amendment; com-
mitted to the Committee of the Whole House on the State of the Union,
and ordered to be printed
[Omit the part struck through in italic and insert the part printed in boldface roman]
[For text of introduced bill, see copy of bill as introduced on April 4, 2001]
A BILL
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 ‘‘Fi-
nancial 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.
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 fail-
ure to communicate essential information;
(3) to reduce duplicative information requests
by, and other inefficiencies of, financial services regu-
lation;
(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 modernize
the fight against fraud in all of its evolving mani-
festations 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 appropriate
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 infor-
mation have been developed that—
(A) is accessible by the public; or
(B) pertains to 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 re-
ceived;
(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 ad-
verse 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 person,
and the opportunity to respond, under subsection
(b)(3) shall be provided to the person a reasonable pe-
riod of time before any final action against the person
which is based on information referred to in such
paragraph is completed, unless the financial regulator
determines that such advance notice and opportunity
to respond is impracticable or inappropriate, in
which case the notice and opportunity 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 license,
application, report, or other request shall not be treat-
ed as an adverse action if the verification or substan-
tiation of such information is completed within a rea-
sonable time.
(d) IMPLEMENTATION.—
(1) SUBMISSION OF PLAN.—Before the end of the
6-month period beginning on the date of the enact-
ment 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) will 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 pur-
poses 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 Treasury,
or a designee of the Secretary, before the end of the
30-day period beginning at the end of the period re-
ferred 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 subsection
(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 infor-
mation 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 Super-
visors, the American Council of State Savings Super-
visors, the National Association of State Credit Union
Supervisors, and the North American Securities Ad-
ministrators Association should develop model guide-
lines for regulators in their respective regulated finan-
cial industries, where appropriate, to promote uni-
form standards for sharing information with the net-
work 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 in-
formation 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 regula-
tion, 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 infor-
mation described in paragraphs (1) and (2) of
subsection (b), from such participant to another
participant is subject to a disclaimer that the in-
formation accessed may be unsubstantiated and
may not be relied on as the basis for denying
any application 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 ENFORCE-
MENT ACTIONS NOT SUBJECT TO LIMITATION.—This
subsection, and standards or procedures adopted by
any participant under this subsection, shall not apply
with respect to information described in paragraphs
(1) and (2) 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 ac-
cessible by the public or persons engaged in the busi-
ness 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 par-
ticipates in a centralized database for broker-
dealers, broker-dealer agents, investment advis-
ers, and investment advisor representatives, reg-
istered or required to be registered, as designated
by the North American Securities Administra-
tors Association; and
(B) such State securities administrator re-
quires the broker-dealer, broker-dealer agent, in-
vestment adviser, or investment adviser rep-
resentative, currently registered or required to be
registered, to file any application, amendment to
an application, or a renewal of an application
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 enact-
ment 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 insur-
ance, such as the Regulatory Information Re-
trieval System maintained by the National Asso-
ciation of Insurance Commissioners or any net-
work or database designated by such Association
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 National
Association of Insurance Commissioners or
any network or database designated 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 unless
the State insurance department which such commis-
sioner represents meets 1 of the following accredita-
tion 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 In-
surance Commissioners.
(C) Has a determination by the Sub-
committee in effect that such State insurance de-
partment meets or exceeds the standards estab-
lished by the National Association of Insurance
Commissioners for accreditation.
(k) STANDARDS.—Each financial regulator shall con-
sider developing guidelines for participants on—
(1) how to denote which types of information are
to receive different levels of confidentiality protection;
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 par-
ticipant, access to any information in accordance with any
provision of law other than this Act.
Subtitle 
B—Potential 
Establish-
ment of Antifraud Subcommittee
SEC. 101. ESTABLISHMENT.
(a) IN GENERAL.—Unless the determinations described
in section 100(f) are made, after the applicable date de-
scribed in such section there shall be established within the
President’s Working Group on Financial Markets (as estab-
lished by Executive Order No. 12631) a subcommittee 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 designee
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 Chairman.
(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 rep-
resented 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.
(7) A representative of State bank supervisors
designated by the Conference of State Bank Super-
visors.
(8) A representative of State savings association
supervisors designated by the American Council of
State Savings Supervisors.
(9) A representative of State credit union super-
visors designated by the National Association of State
Credit Union Supervisors.
(10) A representative of State securities adminis-
trators designated by the North American Securities
Administrators Association.
(11) A representative of the National Association
of Securities Dealers appointed by the National Asso-
ciation of Securities Dealers.
(12) A representative of the National Futures As-
sociation appointed by the National Futures Associa-
tion.
(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 significant databases on persons engaged in
the business of conducting financial activities, des-
ignated 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 Bureau
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 with-
in a reasonable period of time after being created or becom-
ing 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 pos-
sible 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 duties of
the Subcommittee, any member of or liaison to the
Subcommittee may withdraw from the Subcommittee.
SEC. 102. PURPOSES OF THE SUBCOMMITTEE.
(a) IN GENERAL.—The purposes of the Subcommittee
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 maintained
by such regulators with respect to persons engaged in
the business of conducting financial activities.
(2) Coordinate access by each participant to such
network in a manner that allows the participant to
review, at a minimal cost, existing information in the
databases of other regulators, as a part of licensure,
change of control, or investigation, concerning any
person engaged in the business of conducting finan-
cial 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 available.
(5) Advise participants on coordinating their
antifraud databases with the network.
(6) Coordinate development of guidelines by par-
ticipants for ensuring appropriate privacy, confiden-
tiality, and security of shared information, including
tracking systems or testing audits, as appropriate.
(b) CRITERIA FOR NETWORK WITH RESPECT TO ANY
PERSON ENGAGED IN THE BUSINESS OF CONDUCTING FI-
NANCIAL ACTIVITIES.—
(1) FINAL DISCIPLINARY AND FORMAL ENFORCE-
MENT ACTIONS.—Each financial regulator that is rep-
resented by a member of the Subcommittee under sec-
tion 101(a) or by a financial liaison to the Sub-
committee under section 101(b) shall allow any par-
ticipant access, through the network, to any public
final disciplinary or formal enforcement action by
such regulator which is accessible electronically relat-
ing to the conduct of persons engaged in the business
of conducting financial activities that is fraudulent or
dishonest, involves a breach of trust, or relates to the
failure to register with the appropriate financial reg-
ulator as required by law.
(2) SENSE OF THE CONGRESS ON OTHER INFOR-
MATION.—It is the sense of the Congress that the fi-
nancial regulators should consider sharing through
the network other relevant and useful antifraud infor-
mation relating to companies and other persons en-
gaged in conducting financial activities, to the extent
practicable and appropriate when adequate privacy,
confidentiality, and security safeguards governing ac-
cess to and the use of such information have been de-
veloped 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; and
(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 re-
ceived;
(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 ad-
verse action; and
(C) notify the person of the right to a rea-
sonable opportunity to respond to such informa-
tion.
(4) PROVISIONS RELATING TO REQUIREMENTS.—
(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 action
against the person which is based on information
referred to in such paragraph is completed, un-
less the financial regulator determines that such
advance notice and opportunity to respond is
impracticable or inappropriate, in which case
the notice and opportunity to respond shall be
provided at the time of such final action.
(B) VERIFICATION OR SUBSTANTIATION OF
INFORMATION.—With respect to information re-
ferred to in paragraph (3), a delay in the con-
sideration of a license, application, report, or
other request for the purpose of verifying or sub-
stantiating information relating to such license,
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.
(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 determines
that the participants have access to a centralized
database that contains information on public
final disciplinary or formal enforcement actions
similar to that described in paragraph (1) or if
the financial regulator makes the information
described in paragraph (1) available to the pub-
lic 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 In-
surance Commissioners, the Conference of State
Bank Supervisors, the American Council of State
Savings Supervisors, the National Association of
State Credit Union Supervisors, and the North
American Securities Administrators Association
should develop model guidelines for regulators in
their respective regulated financial industries,
where appropriate, to promote uniform stand-
ards 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 in-
formation 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 regula-
tion, 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 infor-
mation described in paragraphs (1) and (2) of
subsection (b), from such participant to another
participant is subject to a disclaimer that the in-
formation accessed may be unsubstantiated and
may not be relied on as the basis for denying
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 ENFORCE-
MENT ACTIONS NOT SUBJECT TO LIMITATION.—This
subsection, and standards or procedures adopted by
any participant under this subsection, shall not apply
with respect to information described in paragraphs
(1) and (2) 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 ac-
cessible by the public or persons engaged in the busi-
ness of conducting financial activities.
(d) 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 par-
ticipates in a centralized database for broker-
dealers, broker-dealer agents, investment advis-
ers, and investment advisor representatives, reg-
istered or required to be registered, as designated
by the North American Securities Administra-
tors Association; and
(B) such State securities administrator re-
quires the broker-dealer, broker-dealer agent, in-
vestment adviser, or investment adviser rep-
resentative, currently registered or required to be
registered, to file any application, amendment to
an application, or a renewal of an application
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 enact-
ment 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 insur-
ance, such as the Regulatory Information Re-
trieval System maintained by the National Asso-
ciation of Insurance Commissioners or any net-
work or database designated by such Association
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 National
Association of Insurance Commissioners or
any network or database designated 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 unless
the State insurance department which such commis-
sioner represents meets 1 of the following accredita-
tion 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 In-
surance Commissioners.
(C) Has a determination by the Sub-
committee in effect that such State insurance de-
partment meets or exceeds the standards estab-
lished by the National Association of Insurance
Commissioners for accreditation.
(f) SUBCOMMITTEE STANDARDS.—The Subcommittee
shall consider developing guidelines for participants on—
(1) how to denote which types of information are
to receive different levels of confidentiality protection;
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 pe-
riod beginning on the date this subtitle takes effect in
accordance with section 101(a), and again before 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 im-
pediments to (or recommended additional legislation
for) facilitating the appropriate sharing of such infor-
mation.
(2) TIMEFRAME FOR NETWORKING.—
(A) IN GENERAL.—The networking of infor-
mation required under subsection (b)(1) shall be
established before the end of the 2-year period be-
ginning on the date this subtitle takes effect, un-
less the Subcommittee determines, in conjunction
with the liaisons, that such a network cannot be
established within such time period in a prac-
ticable and cost-effective manner.
(B) REPORTS ON EFFORTS IF TIMEFRAME
IS NOT MET.—If the Subcommittee makes such a
determination, the Subcommittee shall report an-
nually to the Congress on its efforts to coordinate
the sharing of appropriate information among
the regulators until the networking requirements
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 partici-
pant, 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 infor-
mation.
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 Subcommittee
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 Subcommittee.
SEC. 104. NONAGENCY STATUS.
The Subcommittee shall not be considered an advisory
committee for purposes of the Federal Advisory Committee
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 liaison
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 section
102(a).
(c) SERVICE OF MEMBERS AND LIAISONS.—Members
of and liaisons to the Subcommittee shall serve without ad-
ditional compensation for their work on the Subcommittee.
(d) ADMINISTRATIVE AND TECHNICAL SUPPORT.—The
Subcommittee may request that any agency or entity rep-
resented by a member or liaison provide the Subcommittee
with any administrative, technical, or other support service
that the Subcommittee determines is necessary or appro-
priate for it to carry out the purposes described in section
102(a).
SEC. 106. AGREEMENT ON COST STRUCTURE.
(a) IN GENERAL.—The Subcommittee shall determine,
after consultation with the affected participants or their
representatives, the means for providing for any costs the
Subcommittee may incur in carrying out the purposes 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 member
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.—Before
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 reasonable 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 ‘‘confiden-
tial supervisory information’’ means any of the fol-
lowing information which is treated as, or considered
to be, confidential information by a financial regu-
lator, 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 activi-
ties; and
(iii) any information, including any
report, created by or on behalf of a person
engaged in the business of conducting finan-
cial activities that is required by, or is pre-
pared at the request of, a financial regu-
lator 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 respect
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 inves-
tigation or the safety of an individual.
(3) EXCLUSIONS.—The term ‘‘confidential super-
visory 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 conducting
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) 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 confiden-
tial supervisory information may disclose such
information, in whole or in part, without the
prior authorization of the financial regulator
that created the information, or requested the in-
formation from a person engaged in the business
of conducting financial activities, except for a
disclosure made in published statistical material
that does not disclose, either directly or when
used in conjunction with publicly available in-
formation, the affairs of any person or other per-
sonally identifiable information.
(C) AGENCY WAIVER.—The financial regu-
lator that created the confidential supervisory
information, or requested the confidential super-
visory 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 information.
(2) EXCEPTIONS.—
(A) ACCESS BY GOVERNMENTAL BODIES.—
(i) CONGRESS AND GENERAL ACCOUNT-
ING
OFFICE.—No provision of paragraph
(1) shall be construed as preventing access
to confidential supervisory information 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 de-
scribed 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 paragraph (1) to
prevent access to confidential supervisory
information by such Federal financial regu-
lator.
(B) PRIVILEGE NOT WAIVED.—If a finan-
cial regulator provides access to confidential su-
pervisory information to the Congress, the Comp-
troller General, or another financial regulator,
such action shall not affect the ability of the fi-
nancial regulator to assert any privilege associ-
ated with such information against any other
person.
(c) TREATMENT OF FOREIGN SUPERVISORY INFORMA-
TION.—In any proceeding before a Federal or State court
of the United States, in which a person seeks to compel pro-
duction or disclosure by a financial regulator of informa-
tion or documents prepared or collected by a foreign finan-
cial regulator that would, had the information or document
been prepared or collected by a financial regulator, be con-
fidential supervisory information for purposes of this sec-
tion, the information or document shall be privileged to the
same extent that the information and documents of finan-
cial regulators are privileged under this title.
(d) OTHER PRIVILEGES NOT WAIVED BY DISCLOSURE
TO FINANCIAL REGULATOR.—The submission by a person
engaged in the business of conducting financial activities
of any information to a financial regulator or a foreign
financial regulator in connection with the supervisory proc-
ess of such financial regulator or foreign financial regulator
shall not waive, destroy, or otherwise affect any privilege
such person may claim with respect to such information
under Federal or State law as to a party other than such
financial regulator or foreign financial regulator.
(e) DISCOVERY AND DISCLOSURE OF INFORMATION.—
(1) INFORMATION AVAILABLE ONLY FROM FINAN-
CIAL REGULATOR.—
(A) IN GENERAL.—No person (other than
the financial regulator that created the informa-
tion or requested the information from a person
engaged in the business of conducting financial
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 dis-
covery or disclosure of confidential super-
visory information shall be made to the fi-
nancial regulator that created the informa-
tion, 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 pursu-
ant to procedures and criteria established
by the financial regulator.
(C) NOTIFICATION.—
(i) IN GENERAL.—Before any financial
regulator releases information that was re-
quested from a person engaged in the busi-
ness of conducting financial activities to a
person under subparagraph (B), notice and
a reasonable time for comment shall be pro-
vided to the person from whom such infor-
mation 
was 
requested 
unless 
such
information—
(I) is being provided to another fi-
nancial regulator, an agency or entity
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) REMOVAL AUTHORITY.—In any action
or proceeding in which a party seeks to compel
disclosure of confidential supervisory informa-
tion, a financial regulator may, in its sole dis-
cretion, elect to remove the matter relating to the
disclosure issue to Federal court, and, if the ac-
tion is so removed, the appropriate Federal court
shall have exclusive jurisdiction over such mat-
ter.
(A) DECLARATORY JUDGMENT.—If a
party seeks in any action or pro-
ceeding to compel disclosure of con-
fidential supervisory information, a
financial regulator may in a civil ac-
tion for a declaratory judgment seek
to prevent such disclosure.
(B) JUDICIAL REVIEW.—Judicial review of
the final action of a financial regulator with re-
gard to the disposition of a request for confiden-
tial supervisory information shall be before a
district court of the United States of competent
jurisdiction, subject to chapter 7 of part I of title
5, United States Code.
(f) AUTHORITY TO INTERVENE.—In the case of any
action or proceeding to compel compliance with a subpoena,
order, discovery request, or other judicial or administrative
process with respect to any confidential supervisory infor-
mation of a financial regulator concerning any person en-
gaged in the business of conducting financial activities, the
financial regulator may intervene in such action or pro-
ceeding, and such person may intervene with such regu-
lator, for the purpose of—
(1) enforcing the limitations established in para-
graph (1) of subsections (b) and (e);
(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 ac-
tion or proceeding relates to or involves such informa-
tion.
(g) RIGHT TO APPEAL.—Any court order that compels
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.
(h) REGULATIONS.—
(1) AUTHORITY TO PRESCRIBE.—Each financial
regulator may prescribe such regulations as the regu-
lator 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 section.
(2) AUTHORITY TO REQUIRE NOTICE.—Any reg-
ulations 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 personal at-
tendance of such person as a witness or requiring the
production of such information in any proceeding.
(i) 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 section 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 fi-
nancial 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 informa-
tion; 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.
(j) SHARING OF REPORTS.—
(1) IN GENERAL.—Subject to subsection (k), no
provision of this section shall be construed as pre-
venting a person engaged in the business of con-
ducting financial activities from providing a report
that is required by, or prepared at the request of, a
financial regulator (the originating financial regu-
lator) to another financial regulator that has the au-
thority to obtain the information from the person
under any other provision of law.
(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.
(k) REQUESTS
FOR INFORMATION INVOLVING AN-
OTHER FINANCIAL REGULATOR.—
(1) IN
GENERAL.—Before any financial regu-
lator requests information from a person engaged in
the business of conducting financial activities that is
confidential supervisory information contained in a
report that was created by another financial regu-
lator, or that was derived from confidential super-
visory information that was created by another finan-
cial regulator, (hereafter in this subsection referred to
as the ‘‘originating financial regulator’’), the finan-
cial regulator seeking such information (hereafter in
this subsection referred to as the ‘‘requesting financial
regulator’’) shall first request such information di-
rectly from the originating financial regulator.
(2) NOTICE OF INTENT TO REQUEST INFORMA-
TION FROM FINANCIAL INSTITUTION.—If, pursuant to
a request from a requesting financial regulator under
paragraph (1), an originating financial regulator re-
fuses to provide the information described in such
paragraph, the requesting financial regulator may
not request or compel the production of such informa-
tion from a person engaged in the business of con-
ducting financial activities unless the requesting fi-
nancial regulator first provides notice of such regu-
lator’s intention (to make such request or compel such
production) to the originating financial institution
and provides the originating financial regulator with
reasonable opportunity to respond.
(3) DECLARATORY JUDGMENT.—The opportunity
to respond described in paragraph (2) shall include
the right of the originating financial regulator to
bring an action in the United States District Court
for the District of Columbia for a declaratory judg-
ment of the rights and privileges of the requesting and
originating financial regulators with respect to the
information described in paragraph (1), and such re-
lief as may be appropriate.
(4) STANDARDS.—In any action brought under
paragraph (3), the United States District Court for
the District of Columbia shall decide the matter de
novo based on applicable law, other than this title, in-
cluding any protections or privileges that would be
available to the originating financial regulator if such
regulator were to intervene in an action brought by
the requesting financial regulator to compel the pro-
duction of such information from the person engaged
in the business of conducting financial activity re-
ferred to in paragraph (1).
(5) PROHIBITION ON REQUESTING INFORMATION
WHILE ACTION IS PENDING.—While any action under
paragraph (3) is pending with respect to any infor-
mation described in paragraph (1), the requesting fi-
nancial regulator may not make any request for such
information from any person engaged in the business
of conducting financial activity.
(6) RULE OF CONSTRUCTION.—No provision of
this subsection may be construed as creating any new
authority for any financial regulator to request or
compel the production of any information from any
person engaged in the business of conducting finan-
cial activities.
(l) NO WAIVER OF ANY PRIVILEGE OF ANY OTHER
PARTY.—No provision of this Act shall provide 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
information or material has been disclosed through
the network to another participant or, if subtitle B
has taken effect, the Subcommittee.
(2) CERTAIN INSURANCE INFORMATION.—Except
as otherwise provided in this section or section 111,
any requirement under Federal or State law regard-
ing the privacy or confidentiality of any information
or material in the possession of the National Associa-
tion of Insurance Commissioners, or any member or
affiliate of the Association, and any privilege arising
under Federal or State law (including the rules of
any Federal or State court) with respect to such in-
formation or material, shall continue to apply to such
information or material after the information 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 discre-
tion of the participant, such privilege.
(b) PREEMPTION OF STATE LAW.—Any State law, in-
cluding any State open record law, relating to the disclosure
of confidential supervisory information or any information
or material to which subsection (a) applies that is incon-
sistent 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 guidelines
established under sections 100 and 102, a record is
maintained of each attempt to access such informa-
tion and material, and the identity of the person
making the attempt, in order to prevent evasions of
such requirements.
SEC. 113. LIABILITY PROVISIONS.
(a) NO LIABILITY FOR GOOD FAITH DISCLOSURES.—
Any financial regulator, and any officer or employee 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 employment, relating
to collecting, furnishing, or disseminating regulatory or su-
pervisory information concerning persons engaged in the
business of conducting financial activities, to or from an-
other financial regulator, whether directly or through the
network.
(b) CRIMINAL LIABILITY FOR INTENTIONAL UNLAWFUL
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 violates
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 pro-
tection 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 SUBCOMMITTEE.—
For the purposes of this section, the term ‘‘financial regu-
lator’’ 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 Federal
Bureau of Investigation, and any other similar
database over which the Attorney General has
authority and deems appropriate, for any crimi-
nal background records (including wanted per-
sons information) corresponding to the identi-
fication 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 infor-
mation 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 au-
thorized by at least 3 other financial regulators
to receive such records and perform the informa-
tion sharing requirements of paragraph (3);
(B) the State attorney general for the State
in which the regulator is primarily located; and
(C) any law enforcement designee of the At-
torney General or such State attorney general.
(3) INFORMATION SHARED.—
(A) IN
GENERAL.—The authorized agent
shall provide to the requesting financial regu-
lator only any records that are relevant informa-
tion.
(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, misappropriating,
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 dwell-
ing and a criminal offense that has as an ele-
ment, the use or attempted use of physical force,
or threat of great bodily harm, or the use, at-
tempted use, or threatened use of a deadly weap-
on, against an individual, including committing
or attempting to commit murder, manslaughter,
kidnapping, aggravated assault, forcible sex of-
fenses, 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 individuals
and entities authorized to sell and solicit the
purchase of insurance within the State as set
forth in section 321 of Public Law 106–102.
(B) DETERMINATION
OF
RECIPROCITY.—
The determination of whether or not a State has
uniform or reciprocity laws or regulations in ef-
fect for purposes of subparagraph (A) shall be
made by the Attorney General, with the advice
and counsel of the National Association of Insur-
ance 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 Associa-
tion 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 acknowl-
edging that the regulator (or such regulator’s designated
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 information
obtained under this section knowingly and willfully
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 regu-
lating any activities related to the business of in-
surance.
(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 subsection
(g)(1)) who reasonably relies on information provided
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 pen-
alty resulting from such section if the individual who the
person permitted to engage in the business of insurance is
licensed, or approved (as part of an application or other-
wise), by a State insurance regulator that performs crimi-
nal background checks under this section, unless 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 Con-
gress 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 Asso-
ciation of Insurance Commissioners to facilitate
obtaining fingerprints and supplying identifica-
tion information for use in background checks
under this section on a multijurisdictional 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 multiple 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 At-
torney General to consider the feasibility of de-
veloping 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 Insurance
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, con-
cerning the types or extent of activities that are
appropriately recognized as activities that are fi-
nancial in nature, or are incidental to a finan-
cial 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 ex-
tent the Secretary has jurisdiction over financial
activities being conducted by a person engaged
in the business of conducting financial activities;
(I) the Office of Federal Housing Enterprise
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 Su-
pervisors only to the extent such conference is
acting as an agent of, and is subject to the over-
sight 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 con-
ference is acting as an agent of, and is subject
to the oversight of, any such State savings asso-
ciation 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 ac-
tions are subject to the oversight of the Secu-
rities 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 ac-
tions are subject to the oversight of the Com-
modity Futures Trading Commission or the
Securities and Exchange Commission; and
(R) any other self-regulatory organization
that engages in or coordinates regulatory and su-
pervisory activities, with respect to any person
engaged in the business of conducting financial
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 engages
in such activities and is subject to such oversight.
(4) FOREIGN FINANCIAL REGULATOR.—The term
‘‘foreign financial regulator’’ means any agency, enti-
ty, or body (including a self-regulatory organization)
that is empowered by the laws of a foreign country
to supervise and regulate persons engaged in the busi-
ness 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 CON-
DUCTING FINANCIAL ACTIVITIES.—The term ‘‘person
engaged in the business of conducting financial ac-
tivities’’ includes, to the extent appropriate under the
laws applicable to the jurisdiction of a financial regu-
lator 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 re-
quired to file a change-in-control notice with the
appropriate financial regulator before acquiring
control of such person; and
(C) any person who has sought approval
from a financial regulator to engage in the busi-
ness 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 ap-
propriate financial regulator (by regulation 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 offi-
cer, 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 secu-
rities commission (or any agency or office performing
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 reg-
ulatory and law enforcement purposes in accordance
with title I of the Financial Services Antifraud Net-
work 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 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 fol-
lowing 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 regulator
or any person who maintains information on behalf of such
regulator.
(b) LIMITATIONS ON DISCLOSURE OF INFORMATION.—
Except as provided in this subsection, an officer or employee
of the General Accounting Office may not disclose informa-
tion 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 controlling influence in the
management of the closed insurance company or was re-
lated to or affiliated with a person or group having a con-
trolling influence.
(c) COORDINATION WITH STATE REGULATOR.—An of-
ficer or employee of the 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 authority of the United
States Government or a State.
(d) CONGRESSIONAL
OVERSIGHT.—This subsection
shall not be construed as authorizing an officer or employee
of a State insurance regulator to withhold information from
a committee of the Congress authorized to have the informa-
tion.
(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 reports
shall be made available to the Comptroller General.
The Comptroller General shall give a State insurance
regulator a current list of officers and employees to
whom, with proper identification, records and prop-
erty 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 in-
surance 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 required of the
head of the State insurance regulator from which it
is obtained.
(2) PREVENTION OF INVASION OF PERSONAL PRI-
VACY.—The Comptroller General shall keep informa-
tion described in section 552(b)(6) of title 5, United
States Code, that the Comptroller General obtains in
a way that prevents unwarranted invasions of per-
sonal privacy.
(3) AVAILABILITY OF INFORMATION.—Except as
provided in subsection (b), no provision of this section
shall be construed as authorizing any information to
be withheld from the Congress.
(g) AVAILABILITY OF INFORMATION AND INSPECTION
OF RECORDS.—The right of access of the Comptroller Gen-
eral 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 ‘‘insurance
company’’ includes any person engaged in the busi-
ness of insurance to the extent of such activities.
TITLE II—SECURITIES INDUSTRY
COORDINATION
Subtitle A—Disciplinary
Information
SEC. 201. INVESTMENT ADVISERS ACT OF 1940.
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 purpose;
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 INFORMA-
TION.—
‘‘(1) MAINTENANCE OF SYSTEM TO RESPOND TO
INQUIRIES.—The Commission shall require the entity
designated by the Commission under subsection
(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 inquiries.
‘‘(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 des-
ignated by the Commission under subsection (b)(1)
shall not have any liability to any person for any ac-
tions taken or omitted in good faith under this sub-
section.’’.
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 Professionals
to the Securities Industry
SEC. 211. SECURITIES EXCHANGE ACT OF 1934.
(a) BROKERS AND DEALERS.—Section 15(b) of the Se-
curities 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 as-
sociated with a broker or dealer.
‘‘(G) has been found by a foreign financial regu-
latory 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 author-
ity, or in any proceeding before a foreign finan-
cial 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 there-
in;
‘‘(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 delivery,
traded on or subject to the rules of a contract
market or any board of trade; or
‘‘(iii) aided, abetted, counseled, commanded,
induced, or procured the violation by any other
person of any provision of any statutory provi-
sions enacted by a foreign government, or rules
or regulations thereunder, regarding securities,
banking, thrift activities, credit union activities,
insurance, or contracts of sale of a commodity
for future delivery traded on or subject to the
rules of a contract market or any board of trade,
or to have failed reasonably 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 per-
son 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 Federal
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 conduct.’’;
and
(2) in paragraph (6)(A)(i), 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)’’.
(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 DISQUALIFICATION.—
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 com-
mitted 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 REGISTRATION
BASED ON STATE (AND OTHER GOVERNMENTAL) ADMINIS-
TRATIVE ACTIONS.—Section 203(e) of the Investment Advis-
ers 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 as-
sociated 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 ap-
plication for registration or report required to be
filed with a foreign securities authority, or in
any proceeding before a foreign securities author-
ity with respect to registration, any statement
that was at the time and in light of the cir-
cumstances under which it was made false or
misleading with respect to any material fact, or
has omitted to state in any such application, re-
State insurance commission (or any agency or office
performing like functions), an appropriate Federal
banking agency (as defined in section 3 of the Federal
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, author-
ity, agency, or officer, or from engaging in the
business of securities, insurance, banking, 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 conduct.’’.
(b) BARS ON FELONS ASSOCIATED WITH INVESTMENT
ADVISERS.—Section 203(f) of the Investment Advisers 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)’’.
Union Calendar No. 144
107TH CONGRESS
1ST SESSION
H.R. 1408
[Report No. 107–192, Parts I and II]
A BILL
To safeguard the public from fraud in the financial
services industry, to streamline and facilitate the
antifraud information-sharing efforts of Federal
and State regulators, and for other purposes.
OCTOBER 16, 2001
Reported from the Committee on the Judiciary with an
amendment; committed to the Committee of the Whole
House on the State of the Union, and ordered to be
printed