1074 
‘‘(A) IN GENERAL.—A national bank meets 
the requirements of this paragraph if the bank 
is one of the 100 largest insured banks and has 
not fewer than 1 issue of outstanding debt that 
meets standards of credit-worthiness or other 
criteria as the Secretary of the Treasury and 
the Board of Governors of the Federal Reserve 
System may jointly establish.’’. 
(4) in the heading for subsection (f), by striking 
‘‘MAINTAIN
PUBLIC
RATING
OR’’ and inserting 
‘‘MEET STANDARDS OF CREDIT-WORTHINESS’’; and 
(5) in subsection (f)(1), by striking ‘‘any appli-
cable rating’’ and inserting ‘‘standards of credit-wor-
thiness established by the Comptroller of the Cur-
rency’’. 
(e) SECURITIES EXCHANGE ACT OF 1934.—Section 
3(a) Securities Exchange Act of 1934 (15 U.S.C. 
78a(3)(a)) is amended— 
(1) in paragraph (41), by striking ‘‘is rated in 
one of the two highest rating categories by at least 
one nationally recognized statistical rating organiza-
tion’’ and inserting ‘‘meets standards of credit-wor-
thiness as defined by the Commission’’; and 
(2) in paragraph (53)(A), by striking ‘‘is rated 
in 1 of the 4 highest rating categories by at least 1 
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nationally recognized statistical rating organization’’ 
and inserting ‘‘meets standards of credit-worthiness 
as defined by the Commission’’. 
(f) WORLD BANK DISCUSSIONS.—Section 3(a)(6) of 
the amendment in the nature of a substitute to the text 
of H.R. 4645, as ordered reported from the Committee 
on Banking, Finance and Urban Affairs on September 22, 
1988, as enacted into law by section 555 of Public Law 
100-461, (22 U.S.C. 286hh(a)(6)), is amended by striking 
‘‘rating’’ and inserting ‘‘worthiness’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall take effect after the end of the 6-month 
period beginning on the date of the enactment of this sub-
title. 
SEC. 6010. REVIEW OF RELIANCE ON RATINGS. 
(a) AGENCY REVIEW.— 
(1) REVIEW.—Not later than 1 year after the 
date of the enactment of this subtitle, each Federal 
agency listed in paragraph (4) shall, to the extent 
applicable, review— 
(A) any regulation issued by such agency 
that requires the use of an assessment of the 
credit-worthiness of a security or money market 
instrument, and 
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(B) any references to or requirements in 
such regulations regarding credit ratings. 
(2) MODIFICATIONS
REQUIRED.—Each such 
agency shall modify any such regulations identified 
by the review conducted under paragraph (1) to re-
move any reference to or requirement of reliance on 
credit ratings and to substitute in such regulations 
such standard of credit-worthiness as each respective 
agency shall determine as appropriate for such regu-
lations. In making such determination, such agencies 
shall seek to establish, to the extent feasible, uni-
form standards of credit-worthiness for use by each 
such agency, taking into account the entities regu-
lated by each such agency and the purposes for 
which such entities would rely on such standards of 
credit-worthiness. 
(3) REPORT.—Upon conclusion of the review 
required under paragraph (1), each Federal agency 
listed in paragraph (4) shall transmit a report to 
Congress containing a description of any modifica-
tion of any regulation such agency made pursuant to 
paragraph (2). 
(4) APPLICABLE AGENCIES.—The agencies re-
quired to conduct the review and report required by 
this subsection are— 
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(A) the Securities and Exchange Commis-
sion; 
(B) the Federal Deposit Insurance Cor-
poration; 
(C) the Office of Thrift Supervision; 
(D) the Office of the Comptroller of the 
Currency; 
(E) the Board of Governors of the Federal 
Reserve; 
(F) the National Credit Union Administra-
tion; and 
(G) the Federal Housing Finance Agency. 
(b) GAO REVIEW OF OTHER AGENCIES.— 
(1) REVIEW.—The Comptroller General shall 
conduct a comprehensive review of the use of credit 
ratings by Federal agencies other than those listed 
in subsection (a)(3), including an analysis of the 
provisions of law or regulation applicable to each 
such agency that refer to and require the use of 
credit ratings by the agency, and the policies and 
practices of each agency with respect to credit rat-
ings. 
(2) REPORT.—Not later than 1 year after the 
date of the enactment of this subtitle, the Comp-
troller General shall transmit to Congress a report 
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on the findings of the study conducted pursuant to 
paragraph (1), including recommendations for any 
legislation or rulemaking necessary or appropriate in 
order for such agencies to reduce their reliance on 
credit ratings. 
SEC. 6011. PUBLICATION OF RATING HISTORIES ON THE 
EDGAR SYSTEM. 
Not later than 180 days after the date of the enact-
ment of this subtitle, the Securities and Exchange Com-
mission shall revise its rules in section 240.17g-2(a) and 
(d) of title 17, Code of Federal Regulations, to require 
that the random sample of ratings histories of credit rat-
ings required under such rules to be disclosed on the 
website of a nationally recognized statistical rating organi-
zation also be provided to the Commission in a format con-
sistent with publication by the Commission on the 
EDGAR system. 
SEC. 6012. EFFECT OF RULE 436(G). 
Rule 436(g), promulgated by the Securities and Ex-
change Commission under the Securities Act of 1933, 
shall have no force or effect. 
SEC. 6013. STUDIES. 
(a) GAO STUDY.— 
(1) IN
GENERAL.—The Comptroller General 
shall conduct a study of— 
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(A) the implementation of this subtitle and 
the amendments made by this subtitle by the 
Securities and Exchange Commission; 
(B) the appropriateness of relying on rat-
ings for use in Federal, State, and local securi-
ties and banking regulations, including for de-
termining capital requirements; and 
(C) the effect of liability in private actions 
arising under the Securities Exchange Act of 
1934; 
(D) alternative means for compensating 
credit rating agencies that would create incen-
tives for accurate credit ratings and what, if 
any, statutory changes would be required to 
permit or facilitate the use of such alternative 
means of compensation; and 
(E) alternative methodologies to assess 
credit risk, including market-based measures. 
(2) REPORT.—Not later than 30 months after 
the date of enactment of this subtitle, the Comp-
troller General shall submit to Congress and the Se-
curities Exchange Commission, a report containing 
the findings under the study required by subsection 
(a). 
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(b) SEC STUDY
ON ASSIGNING CREDIT RATING 
AGENCIES ON A ROTATING BASIS.—The Securities and 
Exchange Commission shall undertake a study on creating 
a system whereby nationally recognized statistical rating 
organizations are assigned on a rotating basis to issuers 
and obligors seeking a credit rating. Not later than 1 year 
after the date of enactment of this subtitle, the Securities 
and Exchange Commission shall transmit to Congress a 
report containing the findings of the study. 
(c) SEC STUDY
ON EFFECT
OF NEW REQUIRE-
MENTS ON NRSRO REGISTRATION.—The Securities and 
Exchange Commission shall conduct a study on the effect 
of the amendments made by section 2 on credit rating 
agencies seeking to register as nationally recognized sta-
tistical rating organizations, including whether the new re-
quirements in such amendments deter credit rating agen-
cies from registering as nationally recognized statistical 
rating organizations. Not later than 1 year after the date 
of enactment of this subtitle, the Commission shall trans-
mit to the Committee on Financial Services of the House 
of Representatives and the Committee on Banking, Hous-
ing, and Urban Affairs of the Senate a report on the find-
ings of such study. 
(d) STUDY
OF CREDIT RATINGS
OF DIFFERENT 
CLASSES OF BONDS.— 
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(1) STUDY.—The Securities and Exchange 
Commission shall conduct a study of the treatment 
of different classes of bonds (municipal versus cor-
porate) by the nationally recognized statistical rating 
organizations. Such study shall examine— 
(A) whether there are fundamental dif-
ferences in the treatment of different classes of 
bonds by such rating organizations that cause 
some classes of bonds to suffer from undue dis-
crimination; 
(B) if there are such differences, what are 
the causes of such differences and how can they 
be alleviated; 
(C) whether there are factors other than 
risk of loss that are appropriate for the credit 
ratings agencies to consider when rating bonds, 
and do those factors vary across different sec-
tors 
(D) the types of financing arrangement 
used by municipal issuers 
(E) the differing legal and regulatory re-
gimes governing disclosures for corporate bonds 
and municipal bonds; 
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(F) the extent to which retail investors 
could be disadvantaged by a single ratings 
scale; and 
(G) practices, policies, and methodologies 
by the nationally recognized statistical rating 
organizations with respect to rating municipal 
bonds. 
(2) REPORT.—Within 6 months after the date 
of enactment of this subtitle, the Securities and Ex-
change Commission shall submit a report on the re-
sults of the study required by paragraph (1) to the 
Committee on Financial Services of the House of 
Representatives and the Committee on Banking, 
Housing, and Urban Development of the Senate. 
Such report shall include as assessment of each of 
the issues and subjects described in subparagraphs 
(A) through (G) of paragraph (1). 
(e) SEC STUDY ON MEANINGFUL MULTI DIGIT RAT-
ING SYMBOLS.— 
(1) STUDY.—The Securities and Exchange 
Commission shall conduct a study on the feasibility 
and desirability of implementing a standardized rat-
ing system whereby ratings symbols contain multiple 
characters, each representing a range of default 
probabilities and loss expectations under standard-
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ized and increasingly severe levels of market stress. 
The study shall optimize the definitions of the sym-
bols to maximize their overall usefulness for users of 
credit ratings. 
(2) INITIAL EXAMPLE FOR GUIDANCE.—An ex-
ample to provide initial guidance for the study is a 
ratings symbol consisting of three digits, each of 
which corresponds to default probabilities under dif-
ferent levels of market stress as follows: 
(A) The first digit represents the default 
probability under ‘‘normal’’ market stress, char-
acterized by normal economic fluctuations in 
addition to a 5 percent decline in asset value 
and 2 percent increase in unemployment. 
(B) The second digit represents the default 
probability under more severe market stress, 
characterized a 20 percent decline in asset 
value and 5 percent increase in unemployment. 
(C) The third digit represents the default 
probability under extreme market stress, char-
acterized by a 50 percent decline in asset value 
and 10 percent increase in unemployment. 
(3) REPORT.—Not later than 1 year after the 
date of the enactment of this subtitle, the Commis-
sion shall transmit to Congress a report of the study 
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conducted pursuant to paragraph (1), including rec-
ommendations on whether the system similar to that 
described in paragraph (2) should be implemented 
and, if so, any necessary legislation required to im-
plement such a system. 
(f) SEC STUDY ON RATINGS STANDARDIZATION.— 
(1) IN
GENERAL.—The Securities and Ex-
change Commission shall undertake a study on the 
feasability and desirability of— 
(A) standardizing credit ratings termi-
nology, so that all credit rating agencies issue 
credit ratings using identical terms; 
(B) standardizing the market stress condi-
tions under which ratings are evaluated; 
(C) requiring a quantitative correspond-
ence between credit ratings and a range of de-
fault probabilities and loss expectations under 
standardized conditions of economic stress; and 
(D) standardizing credit rating termi-
nology across asset classes, so that named rat-
ings shall correspond to a standard range of de-
fault probabilities and expected losses inde-
pendent of asset class and issuing entity. 
(2) REPORT.—Not later than 1 year after the 
date of enactment of this subtitle, the Securities and 
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Exchange Commission shall transmit to Congress a 
report containing the findings of the study and the 
recommendations of the Commission. 
Subtitle C—Investor Protection Act 
SEC. 7001. SHORT TITLE. 
This subtitle may be cited as the ‘‘Investor Protection 
Act of 2009’’. 
PART 1—DISCLOSURE 
SEC. 
7101. 
INVESTOR 
ADVISORY 
COMMITTEE 
ESTAB-
LISHED. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by adding after section 4C the fol-
lowing new section: 
‘‘SEC. 4D. INVESTOR ADVISORY COMMITTEE. 
‘‘(a) ESTABLISHMENT AND PURPOSE.—There is es-
tablished an Investor Advisory Committee (in this section 
referred to as the ‘Committee’) to advise and consult with 
the Commission on— 
‘‘(1) regulatory priorities and issues regarding 
new products, trading strategies, fee structures and 
the effectiveness of disclosures; 
‘‘(2) initiatives to protect investor interest; and 
‘‘(3) initiatives to promote investor confidence 
in the integrity of the marketplace. 
‘‘(b) MEMBERSHIP.— 
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‘‘(1) APPOINTMENT.—The Chairman of the 
Commission shall appoint the members of the Com-
mittee, which members shall— 
‘‘(A) represent the interests of individual 
investors; 
‘‘(B) represent the interests of institutional 
investors; and 
‘‘(C) use a wide range of investment ap-
proaches. 
‘‘(2) MEMBERS
NOT
COMMISSION
EMPLOY-
EES.—Members shall not be considered employees or 
agents of the Commission solely because of member-
ship on the Committee. 
‘‘(c) MEETINGS.—The Committee shall meet from 
time to time at the call of the Commission, but, at a min-
imum, shall meet at least twice each year. 
‘‘(d) COMPENSATION
AND TRAVEL EXPENSES.— 
Members of the Committee who are not full-time employ-
ees of the United States shall— 
‘‘(1) be entitled to receive compensation at a 
rate fixed by the Commission while attending meet-
ings of the Committee, including travel time; and 
‘‘(2) be allowed travel expenses, including trans-
portation and subsistence, while away from their 
homes or regular places of business. 
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‘‘(e) COMMITTEE FINDINGS.—Nothing in this section 
requires the Commission to accept, agree, or act upon the 
findings or recommendations of the Committee. 
‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There 
is authorized to be appropriated to the Commission such 
sums as are necessary for the activities of the Com-
mittee.’’. 
SEC. 7102. CLARIFICATION OF THE COMMISSION’S AUTHOR-
ITY TO ENGAGE IN CONSUMER TESTING. 
(a) AMENDMENT TO SECURITIES ACT OF 1933.— 
Section 19 of the Securities Act of 1933 (15 U.S.C. 77s) 
is amended by adding at the end the following new sub-
section: 
‘‘(e) For the purposes of evaluating its rules and pro-
grams and for considering, proposing, adopting, or engag-
ing in rules or programs, the Commission is authorized 
to gather information, communicate with investors or 
other members of the public, and engage in such tem-
porary or experimental programs as the Commission in its 
discretion determines is in the public interest or for the 
protection of investors. The Commission may delegate to 
its staff some or all of the authority conferred by this sub-
section.’’. 
(b) AMENDMENT TO SECURITIES EXCHANGE ACT OF 
1934.—Section 23 of the Securities Exchange Act of 1934 
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(15 U.S.C. 78w) is amended by redesignating subsections 
(b), (c), and (d) as subsections (c), (d), and (e), respec-
tively, and inserting after subsection (a) the following: 
‘‘(b) For the purposes of evaluating its rules and pro-
grams and for considering proposing, adopting, or engag-
ing in rules or programs, the Commission is authorized 
to gather information, communicate with investors or 
other members of the public, and engage in such tem-
porary or experimental programs as the Commission in its 
discretion determines is in the public interest or for the 
protection of investors. The Commission may delegate to 
its staff some or all of the authority conferred by this sub-
section.’’. 
(c) AMENDMENT TO INVESTMENT COMPANY ACT OF 
1940.—Section 38 of the Investment Company Act of 
1940 (15 U.S.C. 80a–38) is amended by adding at the 
end the following new subsection: 
‘‘(d) GATHERING INFORMATION.—For the purposes 
of evaluating its rules and programs and for considering 
proposing, adopting, or engaging in rules or programs, the 
Commission is authorized to gather information, commu-
nicate with investors or other members of the public, and 
engage in such temporary or experimental programs as 
the Commission in its discretion determines is in the pub-
lic interest or for the protection of investors. The Commis-
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sion may delegate to its staff some or all of the authority 
conferred by this subsection.’’. 
(d) AMENDMENT TO THE INVESTMENT ADVISERS 
ACT OF 1940.—Section 211 of the Investment Advisers 
Act of 1940 (15 U.S.C. 80b–11) (as amended by section 
5008(2)) is further amended by adding at the end the fol-
lowing new subsection: 
‘‘(f) For the purposes of evaluating its rules and pro-
grams and for considering proposing, adopting, or engag-
ing in rules or programs, the Commission is authorized 
to gather information, communicate with investors or 
other members of the public, and engage in such tem-
porary or experimental programs as the Commission in its 
discretion determines is in the public interest or for the 
protection of investors. The Commission may delegate to 
its staff some or all of the authority conferred by this sub-
section.’’. 
SEC. 7103. ESTABLISHMENT OF A FIDUCIARY DUTY FOR 
BROKERS, DEALERS, AND INVESTMENT AD-
VISERS, AND HARMONIZATION OF REGULA-
TION. 
(a) IN GENERAL.— 
(1) SECURITIES EXCHANGE ACT OF 1934.—Sec-
tion 15 of the Securities Exchange Act of 1934 (15 
U.S.C. 78o) (as amended by section 1951(c)) is fur-
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ther amended by adding at the end the following 
new subsections: 
‘‘(m) STANDARD OF CONDUCT.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of this Act or the Investment Advisers Act 
of 1940, the Commission shall promulgate rules to 
provide that, with respect to a broker or dealer, 
when providing personalized investment advice about 
securities to a retail customer (and such other cus-
tomers as the Commission may by rule provide), the 
standard of conduct for such broker or dealer with 
respect to such customer shall be the same as the 
standard of conduct applicable to an investment ad-
viser under the Investment Advisers Act of 1940. 
The receipt of compensation based on commission or 
other standard compensation for the sale of securi-
ties shall not, in and of itself, be considered a viola-
tion of such standard applied to a broker or dealer. 
‘‘(2) DISCLOSURE OF RANGE OF PRODUCTS OF-
FERED.—Where a broker or dealer sells only propri-
etary or other limited range of products, as deter-
mined by the Commission, the Commission shall by 
rule require that such broker or dealer provide no-
tice to each retail customer and obtain the consent 
or acknowledgment of the customer. The sale of only 
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proprietary or other limited range of products by a 
broker or dealer shall not, in and of itself, be consid-
ered a violation of the standard set forth in para-
graph (1). 
‘‘(3) RETAIL CUSTOMER DEFINED.—For pur-
poses of this subsection, the term ‘retail customer’ 
means a natural person, or the legal representative 
of such natural person, who— 
‘‘(A) receives personalized investment ad-
vice about securities from a broker or dealer; 
and 
‘‘(B) uses such advice primarily for per-
sonal, family, or household purposes. 
‘‘(n) OTHER MATTERS.—The Commission shall— 
‘‘(1) facilitate the provision of simple and clear 
disclosures to investors regarding the terms of their 
relationships with brokers, dealers, and investment 
advisers, including any material conflicts of interest; 
and 
‘‘(2) examine and, where appropriate, promul-
gate rules prohibiting or restricting certain sales 
practices, conflicts of interest, and compensation 
schemes for brokers, dealers, and investment advis-
ers that the Commission deems contrary to the pub-
lic interest and the protection of investors.’’. 
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(3) INVESTMENT ADVISERS ACT OF 1940.—Sec-
tion 211 of the Investment Advisers Act of 1940, as 
amended by section 7102(d), is further amended by 
adding at the end the following new subsections: 
‘‘(g) STANDARD OF CONDUCT.— 
‘‘(1) IN GENERAL.—The Commission shall pro-
mulgate rules to provide that the standard of con-
duct for all brokers, dealers, and investment advis-
ers, when providing personalized investment advice 
about securities to retail customers (and such other 
customers as the Commission may by rule provide), 
shall be to act in the best interest of the customer 
without regard to the financial or other interest of 
the broker, dealer, or investment adviser providing 
the advice. In accordance with such rules, any mate-
rial conflicts of interest shall be disclosed and may 
be consented to by the customer. Such rules shall 
provide that such standard of conduct shall be no 
less stringent than the standard applicable to invest-
ment advisers under section 206(1) and (2) of this 
Act when providing personalized investment advice 
about securities, except the Commission shall not as-
cribe a meaning to the term ‘customer’ that would 
include an investor in a private fund managed by an 
investment adviser, where such private fund has en-
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tered into an advisory contract with such adviser. 
The receipt of compensation based on commission or 
fees shall not, in and of itself, be considered a viola-
tion of such standard applied to a broker, dealer, or 
investment adviser. 
‘‘(2) RETAIL CUSTOMER DEFINED.—For pur-
poses of this subsection, the term ‘retail customer’ 
means a natural person, or the legal representative 
of such natural person, who— 
‘‘(A) receives personalized investment ad-
vice about securities from a broker, dealer, or 
investment adviser; and 
‘‘(B) uses such advice primarily for per-
sonal, family, or household purposes. 
‘‘(h) OTHER MATTERS.—The Commission shall— 
‘‘(1) facilitate the provision of simple and clear 
disclosures to investors regarding the terms of their 
relationships with brokers, dealers, and investment 
advisers, including any material conflicts of interest; 
and 
‘‘(2) examine and, where appropriate, promul-
gate rules prohibiting or restricting certain sales 
practices, conflicts of interest, and compensation 
schemes for brokers, dealers, and investment advis-
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ers that the Commission deems contrary to the pub-
lic interest and the protection of investors.’’. 
(b) HARMONIZATION OF ENFORCEMENT.— 
(1) SECURITIES EXCHANGE ACT OF 1934.—Sec-
tion 15 of the Securities Exchange Act of 1934, as 
amended by subsection (a)(1), is further amended by 
adding at the end the following new subsection: 
‘‘(o) HARMONIZATION OF ENFORCEMENT.—The en-
forcement authority of the Commission with respect to vio-
lations of the standard of conduct applicable to a broker 
or dealer providing personalized investment advice about 
securities to a retail customer shall include— 
‘‘(1) the enforcement authority of the Commis-
sion with respect to such violations provided under 
this Act, and 
‘‘(2) the enforcement authority of the Commis-
sion with respect to violations of the standard of 
conduct applicable to an investment advisor under 
the Investment Advisers Act of 1940, including the 
authority to impose sanctions for such violations, 
and 
the Commission shall seek to prosecute and sanction viola-
tors of the standard of conduct applicable to a broker or 
dealer providing personalized investment advice about se-
curities to a retail customer under this Act to same extent 
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as the Commission prosecutes and sanctions violators of 
the standard of conduct applicable to an investment advi-
sor under the Investment Advisers Act of 1940.’’. 
(2) INVESTMENT ADVISERS ACT OF 1940.—Sec-
tion 211 of the Investment Advisers Act of 1940, as 
amended by subsection (a)(2), is further amended by 
adding at the end the following new subsection: 
‘‘(i) HARMONIZATION OF ENFORCEMENT.—The en-
forcement authority of the Commission with respect to vio-
lations of the standard of conduct applicable to an invest-
ment adviser shall include— 
‘‘(1) the enforcement authority of the Commis-
sion with respect to such violations provided under 
this Act, and 
‘‘(2) the enforcement authority of the Commis-
sion with respect to violations of the standard of 
conduct applicable to a broker or dealer providing 
personalized investment advice about securities to a 
retail customer under the Securities Exchange Act 
of 1934, including the authority to impose sanctions 
for such violations, and 
the Commission shall seek to prosecute and sanction viola-
tors of the standard of conduct applicable to an invest-
ment advisor under this Act to same extent as the Com-
mission prosecutes and sanctions violators of the standard 
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of conduct applicable to a broker or dealer providing per-
sonalized investment advice about securities to a retail 
customer under the Securities Exchange Act of 1934.’’. 
SEC. 7104. COMMISSION STUDY ON DISCLOSURE TO RETAIL 
CUSTOMERS BEFORE PURCHASE OF PROD-
UCTS OR SERVICES. 
(a) STUDY REQUIRED.—Prior to proposing any rules 
or regulations pursuant to subsection (b)(1) regarding the 
manner in which investment products or services are sold 
or provided in the United States to retail customers or 
the information that must be provided to retail customers 
prior to the purchase of such products or services, and 
within 180 days after the date of the enactment of this 
subtitle, the Securities and Exchange Commission shall 
publish a study that examines— 
(1) the nature of a ‘‘retail customer’’, taking 
into consideration the definition in section 15(k) of 
the Securities Exchange Act of 1934 (15 U.S.C. 
78o), as amended by section 7103 of this subtitle; 
(2) the range of products and services sold or 
provided to retail customers, and the sellers or pro-
viders of such products and services, that are within 
the Commission’s jurisdiction; 
(3) how such products and services are sold or 
provided to retail customers, the fees charged for 
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such products and services, and the conflicts of in-
terest that may arise during the sales process or 
provision of services; 
(4) information that retail customers should re-
ceive prior to purchasing each product or service, 
and the appropriate person or entity to provide such 
information; and 
(5) ways to ensure that, where possible, reason-
ably similar products and services are subject to 
similar regulatory treatment, including with respect 
to information that must be provided to retail cus-
tomers prior to the purchase of such products or 
services and how such information is provided. 
(b) RULEMAKING.— 
(1) Notwithstanding any other provision of the 
Securities Act of 1933 (15 U.S.C. 77a et seq.) or 
the Investment Company Act of 1940 (15 U.S.C. 
80a–1 et seq.), following completion of the study re-
quired by subsection (a), the Commission is author-
ized to promulgate rules to require that the appro-
priate persons or entities provide designated docu-
ments or information to retail customers prior to the 
purchase of identified investment products or serv-
ices. Any such rules shall— 
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(A) take into account the findings of the 
study conducted pursuant to subsection (a); 
(B) take into consideration, to the extent 
possible, the need for such documents and in-
formation to be consistent and comparable 
across investment products or services sold or 
provided to retail customers; and 
(C) reduce, to the extent possible, disrup-
tions to the purchase process for investment 
products and services sold or provided to retail 
customers, by means such as permitting re-
quired disclosures to be made via the Internet. 
(2) Notwithstanding paragraph (1), the Com-
mission is authorized to promulgate rules in connec-
tion with— 
(A) the implementation of section 7103; 
and 
(B) disclosure to retail customers other 
than in connection with the purchase of invest-
ment products or services. 
SEC. 7105. BENEFICIAL OWNERSHIP AND SHORT-SWING 
PROFIT REPORTING. 
(a) BENEFICIAL OWNERSHIP REPORTING.—Section 
13 of the Securities Exchange Act of 1934 (15 U.S.C. 
78m) is amended— 
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(1) in subsection (d)(1)— 
(A) by inserting after ‘‘within ten days 
after such acquisition’’ the following: ‘‘or within 
such shorter time as the Commission may es-
tablish by rule’’; and 
(B) by striking ‘‘send to the issuer of the 
security at its principal executive office, by reg-
istered or certified mail, send to each exchange 
where the security is traded, and’’; 
(2) in subsection (d)(2)— 
(A) by striking ‘‘in the statements to the 
issuer and the exchange, and’’; and 
(B) by striking ‘‘shall be transmitted to 
the issuer and the exchange and’’; 
(3) in subsection (g)(1), by striking ‘‘shall send 
to the issuer of the security and’’; and 
(4) in subsection (g)(2)— 
(A) by striking ‘‘sent to the issuer and’’; 
and 
(B) by striking ‘‘shall be transmitted to 
the issuer and’’. 
(b) SHORT-SWING
PROFIT
REPORTING.—Section 
16(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78p(a)) is amended— 
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(1) in paragraph (1), by striking ‘‘(and, if such 
security is registered on a national securities ex-
change, also with the exchange)’’; and 
(2) in paragraph (2)(B), by inserting after ‘‘of-
ficer’’ the following: ‘‘, or within such shorter time 
as the Commission may establish by rule’’. 
SEC. 7106. REVISION TO RECORDKEEPING RULES. 
(a) INVESTMENT COMPANY ACT OF 1940 AMEND-
MENTS.—Section 31 of the Investment Company Act of 
1940 (15 U.S.C. 80a–30) is amended— 
(1) in subsection (a)(1), by adding at the end 
the following: ‘‘Each person with custody or use of 
a registered investment company’s securities, depos-
its, or credits shall maintain and preserve all records 
that relate to the person’s custody or use of the reg-
istered investment company’s securities, deposits, or 
credits for such period or periods as the Commis-
sion, by rules and regulations, may prescribe as nec-
essary or appropriate in the public interest or for 
the protection of investors.’’; and 
(2) in subsection (b), by adding at the end the 
following new paragraph: 
‘‘(4) RECORDS OF PERSONS WITH CUSTODY OR 
USE.— 
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‘‘(A) IN GENERAL.—Notwithstanding para-
graph (1), records of persons with custody or 
use of a registered investment company’s secu-
rities, deposits, or credits, that relate to such 
custody or use, are subject at any time, or from 
time to time, to such reasonable periodic, spe-
cial, or other examinations and other informa-
tion and document requests by representatives 
of the Commission as the Commission deems 
necessary or appropriate in the public interest 
or for the protection of investors. 
‘‘(B) CERTAIN
PERSONS
SUBJECT
TO 
OTHER REGULATION.—Persons subject to regu-
lation and examination by a Federal financial 
institution regulatory agency (as such term is 
defined under section 212(c)(2) of title 18, 
United States Code) may satisfy any examina-
tion request, information request, or document 
request described under subparagraph (A), by 
providing the Commission with a detailed list-
ing, in writing, of the registered investment 
company’s securities, deposits, or credits within 
such person’s custody or use.’’. 
(b) INVESTMENT ADVISERS ACT OF 1940 AMEND-
MENT.—Section 204 of the Investment Advisers Act of 
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1940 (15 U.S.C. 80b–4) is amended by adding at the end 
the following new subsection: 
‘‘(d) RECORDS
OF PERSONS WITH CUSTODY
OR 
USE.— 
‘‘(1) IN
GENERAL.—Records of persons with 
custody or use of a client’s securities, deposits, or 
credits, that relate to such custody or use, are sub-
ject at any time, or from time to time, to such rea-
sonable periodic, special, or other examinations and 
other information and document requests by rep-
resentatives of the Commission as the Commission 
deems necessary or appropriate in the public interest 
or for the protection of investors. 
‘‘(2) CERTAIN
PERSONS
SUBJECT
TO
OTHER 
REGULATION.—Persons subject to regulation and ex-
amination by a Federal financial institution regu-
latory agency (as such term is defined under section 
212(c)(2) of title 18, United States Code) may sat-
isfy any examination request, information request, 
or document request described under paragraph (1), 
by providing the Commission with a detailed listing, 
in writing, of the client’s securities, deposits, or 
credits within such person’s custody or use.’’. 
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SEC. 7107. STUDY ON ENHANCING INVESTMENT ADVISOR 
EXAMINATIONS. 
(a) STUDY REQUIRED.— 
(1) IN GENERAL.—The Commission shall review 
and analyze the need for enhanced examination and 
enforcement resources for investment advisers. 
(2) AREAS OF CONSIDERATION.—The study re-
quired by this subsection shall examine— 
(A) the number and frequency of examina-
tions of investment advisers by the Commission 
over the 5 years preceding the date of the en-
actment of this subtitle; 
(B) the extent to which having Congress 
authorize the Commission to designate one or 
more self-regulatory organizations to augment 
the Commission’s efforts in overseeing invest-
ment advisers would improve the frequency of 
examinations of investment advisers; and 
(C) current and potential approaches to ex-
amining the investment advisory activities of 
dually registered broker-dealers and investment 
advisers or affiliated broker-dealers and invest-
ment advisers. 
(b) REPORT REQUIRED.—The Commission shall re-
port its findings to the Committee on Financial Services 
of the House of Representatives and the Committee on 
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Banking, Housing, and Urban Affairs of the Senate, not 
later than 180 days after the date of enactment of this 
subtitle, and shall use such findings to revise its rules and 
regulations, as necessary. The report shall include a dis-
cussion of regulatory or legislative steps that are rec-
ommended or that may be necessary to address concerns 
identified in the study. 
SEC. 7108. GAO STUDY OF FINANCIAL PLANNING. 
(a) STUDY REQUIRED.—The Comptroller General of 
the United States shall conduct a study on the regulation 
and oversight of financial planning.
The study shall con-
sider— 
(1) the unique role of financial planners in pro-
viding comprehensive advice in investment planning, 
income tax planning, education planning, retirement 
planning, estate planning, risk management, and 
other areas with respect to the management of fi-
nancial resources; and 
(2) any gaps in the regulation of financial plan-
ners given existing State and Federal regulation of 
financial planning activities and the need to provide 
related consumer protections for such financial plan-
ning activities. 
(b) REPORT.—Not later than the end of the 180-day 
period beginning on the date of the enactment of this sub-
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title, the Comptroller General of the United States shall 
submit to the Congress a report containing the findings 
and determinations made by the Comptroller General in 
carrying out the study required under subsection (a), in-
cluding recommendations for the appropriate regulation 
of, or standards for, financial planners as a profession and 
how such regulations or standards should be established. 
PART 2—ENFORCEMENT AND REMEDIES 
SEC. 7201. AUTHORITY TO RESTRICT MANDATORY PRE-DIS-
PUTE ARBITRATION. 
(a) AMENDMENT TO SECURITIES EXCHANGE ACT OF 
1934.—Section 15 of the Securities Exchange Act of 1934 
(15 U.S.C. 78o), as amended by section 7103, is further 
amended by adding at the end the following new sub-
section: 
‘‘(p) AUTHORITY TO RESTRICT MANDATORY PRE- 
DISPUTE ARBITRATION.—The Commission, by rule, may 
prohibit, or impose conditions or limitations on the use 
of, agreements that require customers or clients of any 
broker, dealer, or municipal securities dealer to arbitrate 
any future dispute between them arising under the Fed-
eral securities laws, the rules and regulations thereunder, 
or the rules of a self-regulatory organization if it finds 
that such prohibition, imposition of conditions, or limita-
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tions are in the public interest and for the protection of 
investors.’’. 
(b) AMENDMENT TO INVESTMENT ADVISERS ACT OF 
1940.—Section 205 of the Investment Advisers Act of 
1940 (15 U.S.C. 80b–5) is amended by adding at the end 
the following new subsection: 
‘‘(f) AUTHORITY TO RESTRICT MANDATORY PRE- 
DISPUTE ARBITRATION.—The Commission, by rule, may 
prohibit, or impose conditions or limitations on the use 
of, agreements that require customers or clients of any 
investment adviser to arbitrate any future dispute between 
them arising under the Federal securities laws, the rules 
and regulations thereunder, or the rules of a self-regu-
latory organization if it finds that such prohibition, impo-
sition of conditions, or limitations are in the public inter-
est and for the protection of investors.’’. 
SEC. 7202. COMPTROLLER GENERAL STUDY TO REVIEW SE-
CURITIES ARBITRATION SYSTEM. 
(a) STUDY.—The Comptroller General of the United 
States shall conduct a study to review— 
(1) the costs to parties of an arbitration pro-
ceeding using the arbitration system operated by the 
Financial Industry Regulatory Authority and over-
seen by the Securities and Exchange Commission as 
compared to litigation; 
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(2) the percentage of recovery of the total 
amount of a claim in an arbitration proceeding using 
the arbitration system operated by the Financial In-
dustry Regulatory Authority and overseen by the Se-
curities and Exchange Commission; and 
(3) other additional issues as may be raised 
during the course of the study conducted under this 
subsection. 
(b) REPORT.—Not later than 1 year after the date 
of enactment of this subtitle, the Comptroller General of 
the United States shall submit to the Committee on Fi-
nancial Services of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs of 
the Senate a report on the results of the study required 
by subsection (a), including in such report recommenda-
tions for improvements to the arbitration system ref-
erenced in such subsection. 
SEC. 7203. WHISTLEBLOWER PROTECTION. 
(a) IN GENERAL.—The Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.) is amended by adding after 
section 21E the following new section: 
‘‘SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND 
PROTECTION. 
‘‘(a) IN GENERAL.—In any judicial or administrative 
action brought by the Commission under the securities 
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laws that results in monetary sanctions exceeding 
$1,000,000, the Commission, under regulations prescribed 
by the Commission and subject to subsection (b), may pay 
an award or awards not exceeding an amount equal to 30 
percent, in total, of the monetary sanctions imposed in the 
action or related actions to one or more whistleblowers 
who voluntarily provided original information to the Com-
mission that led to the successful enforcement of the ac-
tion. Any amount payable under the preceding sentence 
shall be paid from the fund described in subsection (f). 
‘‘(b) DETERMINATION OF AMOUNT OF AWARD; DE-
NIAL OF AWARD.— 
‘‘(1) 
DETERMINATION
OF
AMOUNT
OF 
AWARD.—The determination of the amount of an 
award, within the limit specified in subsection (a), 
shall be in the sole discretion of the Commission. 
The Commission may take into account the signifi-
cance of the whistleblower’s information to the suc-
cess of the judicial or administrative action described 
in subsection (a), the degree of assistance provided 
by the whistleblower and any legal representative of 
the whistleblower in such action, the Commission’s 
programmatic interest in deterring violations of the 
securities laws by making awards to whistleblowers 
who provide information that leads to the successful 
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enforcement of such laws, and such additional fac-
tors as the Commission may establish by rules or 
regulations. 
‘‘(2) DENIAL
OF
AWARD.—No award under 
subsection (a) shall be made— 
‘‘(A) to any whistleblower who is, or was at 
the time he or she acquired the original infor-
mation submitted to the Commission, a mem-
ber, officer, or employee of any appropriate reg-
ulatory agency, the Department of Justice, the 
Public Company Accounting Oversight Board, 
or a self-regulatory organization; 
‘‘(B) to any whistleblower who is convicted 
of a criminal violation related to the judicial or 
administrative action for which the whistle-
blower otherwise could receive an award under 
this section; or 
‘‘(C) to any whistleblower who fails to sub-
mit information to the Commission in such 
form as the Commission may, by rule, require. 
‘‘(c) REPRESENTATION.— 
‘‘(1) 
PERMITTED
REPRESENTATION.—Any 
whistleblower who makes a claim for an award under 
subsection (a) may be represented by counsel. 
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‘‘(2) REQUIRED REPRESENTATION.—Any whis-
tleblower who makes a claim for an award under 
subsection (a) must be represented by counsel if the 
whistleblower submits the information upon which 
the claim is based anonymously. Prior to the pay-
ment of an award, the whistleblower must disclose 
his or her identity and provide such other informa-
tion as the Commission may require. 
‘‘(d) NO CONTRACT NECESSARY.—No contract with 
the Commission is necessary for any whistleblower to re-
ceive an award under subsection (a), unless the Commis-
sion, by rule or regulation, so requires. 
‘‘(e) APPEALS.—Any determinations under this sec-
tion, including whether, to whom, or in what amounts to 
make awards, shall be in the sole discretion of the Com-
mission, and any such determinations shall be final and 
not subject to judicial review. 
‘‘(f) INVESTOR PROTECTION FUND.— 
‘‘(1) FUND
ESTABLISHED.—There is estab-
lished in the Treasury of the United States a fund 
to be known as the ‘Securities and Exchange Com-
mission Investor Protection Fund’ (referred to in 
this section as the ‘Fund’). 
‘‘(2) USE OF FUND.—The Fund shall be avail-
able to the Commission, without further appropria-
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tion or fiscal year limitation, for the following pur-
poses: 
‘‘(A) Paying awards to whistleblowers as 
provided in subsection (a). 
‘‘(B) Funding investor education initiatives 
designed to help investors protect themselves 
against securities fraud or other violations of 
the securities laws, or the rules and regulations 
thereunder. 
‘‘(3) DEPOSITS AND CREDITS.—There shall be 
deposited into or credited to the Fund— 
‘‘(A) any monetary sanction collected by 
the Commission in any judicial or administra-
tive action brought by the Commission under 
the securities laws that is not added to a 
disgorgement fund or other fund pursuant to 
section 308 of the Sarbanes-Oxley Act of 2002 
or otherwise distributed to victims of a violation 
of the securities laws, or the rules and regula-
tions thereunder, underlying such action, unless 
the balance of the Fund at the time the mone-
tary sanction is collected exceeds $100,000,000; 
‘‘(B) any monetary sanction added to a 
disgorgement fund or other fund pursuant to 
section 308 of the Sarbanes-Oxley Act of 2002 
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that is not distributed to the victims for whom 
the disgorgement fund or other fund was estab-
lished, unless the balance of the Fund at the 
time the determination is made not to dis-
tribute the monetary sanction to such victims 
exceeds $100,000,000; and 
‘‘(C) all income from investments made 
under paragraph (4). 
‘‘(4) INVESTMENTS.— 
‘‘(A) AMOUNTS
IN
FUND
MAY
BE
IN-
VESTED.—The Commission may request the 
Secretary of the Treasury to invest the portion 
of the Fund that is not, in the Commission’s 
judgment, required to meet the current needs of 
the Fund. 
‘‘(B) 
ELIGIBLE
INVESTMENTS.—Invest-
ments shall be made by the Secretary of the 
Treasury in obligations of the United States or 
obligations that are guaranteed as to principal 
and interest by the United States, with matu-
rities suitable to the needs of the Fund as de-
termined by the Commission. 
‘‘(C) INTEREST
AND
PROCEEDS
CRED-
ITED.—The interest on, and the proceeds from 
the sale or redemption of, any obligations held 
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in the Fund shall be credited to, and form a 
part of, the Fund. 
‘‘(5) REPORTS TO CONGRESS.—Not later than 
October 30 of each year, the Commission shall 
transmit to the Committee on Banking, Housing, 
and Urban Affairs of the Senate, and the Committee 
on Financial Services of the House of Representa-
tives a report on— 
‘‘(A) 
the 
Commission’s 
whistleblower 
award program under this section, including a 
description of the number of awards that were 
granted and the types of cases in which awards 
were granted during the preceding fiscal year; 
‘‘(B) investor education initiatives de-
scribed in paragraph (2)(B) that were funded 
by the Fund during the preceding fiscal year; 
‘‘(C) the balance of the Fund at the begin-
ning of the preceding fiscal year; 
‘‘(D) the amounts deposited into or cred-
ited to the Fund during the preceding fiscal 
year; 
‘‘(E) the amount of earnings on invest-
ments of amounts in the Fund during the pre-
ceding fiscal year; 
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‘‘(F) the amount paid from the Fund dur-
ing the preceding fiscal year to whistleblowers 
pursuant to subsection (a); 
‘‘(G) the amount paid from the Fund dur-
ing the preceding fiscal year for investor edu-
cation initiatives described in paragraph (1)(B); 
‘‘(H) the balance of the Fund at the end 
of the preceding fiscal year; and 
‘‘(I) a complete set of audited financial 
statements, including a balance sheet, income 
statement, and cash flow analysis. 
‘‘(g) PROTECTION OF WHISTLEBLOWERS.— 
‘‘(1) PROHIBITION AGAINST RETALIATION.— 
‘‘(A) IN GENERAL.—No employer may dis-
charge, demote, suspend, threaten, harass, or in 
any other manner discriminate against an em-
ployee, contractor, or agent in the terms and 
conditions of employment because of any lawful 
act done by the employee, contractor, or agent 
in providing information to the Commission in 
accordance with subsection (a), or in assisting 
in any investigation or judicial or administrative 
action of the Commission based upon or related 
to such information. 
‘‘(B) ENFORCEMENT.— 
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‘‘(i) CAUSE
OF
ACTION.—An indi-
vidual who alleges discharge or other dis-
crimination in violation of subparagraph 
(A) may bring an action under this sub-
section in the appropriate district court of 
the United States for the relief provided in 
subparagraph (C). 
‘‘(ii) SUBPOENAS.—A subpoena re-
quiring the attendance of a witness at a 
trial or hearing conducted under this sec-
tion may be served at any place in the 
United States. 
‘‘(iii) STATUTE OF LIMITATIONS.—An 
action under this subsection may not be 
brought more than 6 years after the date 
on which the violation of subparagraph (A) 
occurred, or more than 3 years after the 
date when facts material to the right of ac-
tion are known or reasonably should have 
been known by the employee alleging a vio-
lation of subparagraph (A), but in no event 
after 10 years after the date on which the 
violation occurs. 
‘‘(C) RELIEF.—An employee, contractor, 
or agent prevailing in any action brought under 
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subparagraph (B) shall be entitled to all relief 
necessary to make that employee, contractor, or 
agent whole, including reinstatement with the 
same seniority status that the employee, con-
tractor, or agent would have had, but for the 
discrimination, 2 times the amount of back pay, 
with interest, and compensation for any special 
damages sustained as a result of the discrimi-
nation, including litigation costs, expert witness 
fees, and reasonable attorneys’ fees. 
‘‘(2) CONFIDENTIALITY.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), all information provided to 
the Commission by a whistleblower shall be con-
fidential and privileged as an evidentiary matter 
(and shall not be subject to civil discovery or 
other legal process) in any proceeding in any 
Federal or State court or administrative agen-
cy, and shall be exempt from disclosure, in the 
hands of an agency or establishment of the 
Federal Government, under the Freedom of In-
formation Act (5 U.S.C. 552), or otherwise, un-
less and until required to be disclosed to a de-
fendant or respondent in connection with a pro-
ceeding instituted by the Commission or any 
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entity described in subparagraph (B). For pur-
poses of section 552 of title 5, United States 
Code, this paragraph shall be considered a stat-
ute described in subsection (b)(3)(B) of such 
section 552. Nothing herein is intended to limit 
the Attorney General’s ability to present such 
evidence to a grand jury or to share such evi-
dence with potential witnesses or defendants in 
the course of an ongoing criminal investigation. 
‘‘(B) 
AVAILABILITY
TO
GOVERNMENT 
AGENCIES.—Without the loss of its status as 
confidential and privileged in the hands of the 
Commission, all information referred to in sub-
paragraph (A) may, in the discretion of the 
Commission, when determined by the Commis-
sion to be necessary to accomplish the purposes 
of this Act and protect investors, be made avail-
able to— 
‘‘(i) the Attorney General of the 
United States, 
‘‘(ii) an appropriate regulatory au-
thority, 
‘‘(iii) a self-regulatory organization, 
‘‘(iv) the Public Company Accounting 
Oversight Board, 
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‘‘(v) State attorneys general in con-
nection with any criminal investigation, 
and 
‘‘(vi) any appropriate State regulatory 
authority, 
each of which shall maintain such information 
as confidential and privileged, in accordance 
with the requirements in subparagraph (A). 
‘‘(3) RIGHTS RETAINED.—Nothing in this sec-
tion shall be deemed to diminish the rights, privi-
leges, or remedies of any whistleblower under any 
Federal or State law, or under any collective bar-
gaining agreement. 
‘‘(h) PROVISION
OF FALSE INFORMATION.—Any 
whistleblower who knowingly and willfully makes any 
false, fictitious, or fraudulent statement or representation, 
or makes or uses any false writing or document knowing 
the same to contain any false, fictitious, or fraudulent 
statement or entry, shall not be entitled to an award under 
this section and shall be subject to prosecution under sec-
tion 1001 of title 18, United States Code. 
‘‘(i) RULEMAKING AUTHORITY.—The Commission 
shall have the authority to issue such rules and regulations 
as may be necessary or appropriate to implement the pro-
visions of this section. 
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‘‘(j) DEFINITIONS.—For purposes of this section, the 
following terms have the following meanings: 
‘‘(1) 
ORIGINAL
INFORMATION.—The 
term 
‘original information’ means information that— 
‘‘(A) is based on the direct and inde-
pendent knowledge or analysis of a whistle-
blower; 
‘‘(B) is not known to the Commission from 
any other source, unless the whistleblower is the 
initial source of the information; and 
‘‘(C) is not based on allegations in a judi-
cial or administrative hearing, in a govern-
mental report, hearing, audit, or investigation, 
or from the news media, unless the whistle-
blower is the initial source of the information 
that resulted in the judicial or administrative 
hearing, governmental report, hearing, audit, or 
investigation, or the news media’s report on the 
allegations. 
‘‘(2) MONETARY SANCTIONS.—The term ‘mone-
tary sanctions’, when used with respect to any judi-
cial or administrative action, means any monies, in-
cluding but not limited to penalties, disgorgement, 
and interest, ordered to be paid, and any monies de-
posited into a disgorgement fund or other fund pur-
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suant to section 308(b) of the Sarbanes-Oxley Act of 
2002 (15 U.S.C. 7246(b)), as a result of such action 
or any settlement of such action. 
‘‘(3) RELATED ACTION.—The term ‘related ac-
tion’, when used with respect to any judicial or ad-
ministrative action brought by the Commission 
under the securities laws, means any judicial or ad-
ministrative action brought by an entity described in 
subsection (g)(2)(B) that is based upon the same 
original information provided by a whistleblower 
pursuant to subsection (a) that led to the successful 
enforcement of the Commission action. 
‘‘(4) WHISTLEBLOWER.—The term ‘whistle-
blower’ means an individual, or two or more individ-
uals acting jointly, who submit information to the 
Commission as provided in this section.’’. 
(b) ADMINISTRATION AND ENFORCEMENT.—The Se-
curities and Exchange Commission shall establish a sepa-
rate office within the Commission to administer and en-
force the provisions of section 21F of the Securities Ex-
change Act of 1934, as added by subsection (a). Such of-
fice shall report annually to Congress on its activities, 
whistleblower complaints, and the response of the Com-
mission to such complaints. 
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(3) in section 21A, by striking subsection (e) 
and redesignating subsections (f) and (g) as sub-
section (e) and (f), respectively. 
SEC. 7205. IMPLEMENTATION AND TRANSITION PROVI-
SIONS FOR WHISTLEBLOWER PROTECTIONS. 
(a) IMPLEMENTING RULES.—The Securities and Ex-
change Commission shall issue final regulations imple-
menting the provisions of section 21F of the Securities 
Exchange Act of 1934, as added by this part, no later 
than 270 days after the date of enactment of this subtitle. 
(b) ORIGINAL
INFORMATION.—Information sub-
mitted to the Commission by a whistleblower in accord-
ance with regulations implementing the provisions of sec-
tion 21F of the Securities Exchange Act of 1934, as added 
by this part, shall not lose its status as original informa-
tion, as defined in subsection (i)(1) of such section, solely 
because the whistleblower submitted such information 
prior to the effective date of such regulations, provided 
such information was submitted after the date of enact-
ment of this subtitle, or related to insider trading viola-
tions for which a bounty could have been paid at the time 
such information was submitted. 
(c) AWARDS.—A whistleblower may receive an award 
pursuant to section 21F of the Securities Exchange Act 
of 1934, as added by this part, regardless of whether any 
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violation of a provision of the securities laws, or a rule 
or regulation thereunder, underlying the judicial or admin-
istrative action upon which the award is based occurred 
prior to the date of enactment of this subtitle. 
SEC. 7206. COLLATERAL BARS. 
(a) SECTION 15 OF THE SECURITIES EXCHANGE ACT 
OF 1934.—Section 15(b)(6)(A) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is amended 
by striking ‘‘12 months, or bar such person from being 
associated with a broker or dealer,’’ and inserting ‘‘12 
months, or bar any such person from being associated with 
a broker, dealer, investment adviser, municipal securities 
dealer, transfer agent, or nationally recognized statistical 
rating organization,’’. 
(b) SECTION 15B OF THE SECURITIES EXCHANGE 
ACT OF 1934.—Section 15B(c)(4) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78o–4(c)(4)) is amended 
by striking ‘‘twelve months or bar any such person from 
being associated with a municipal securities dealer,’’ and 
inserting ‘‘12 months or bar any such person from being 
associated with a broker, dealer, investment adviser, mu-
nicipal securities dealer, transfer agent, or nationally rec-
ognized statistical rating organization,’’. 
(c) SECTION 17A OF THE SECURITIES EXCHANGE 
ACT OF 1934.—Section 17A(c)(4)(C) of the Securities 
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Exchange Act of 1934 (15 U.S.C. 78q–1(c)(4)(C)) is 
amended by striking ‘‘twelve months or bar any such per-
son from being associated with the transfer agent,’’ and 
inserting ‘‘12 months or bar any such person from being 
associated with any transfer agent, broker, dealer, invest-
ment adviser, municipal securities dealer, or nationally 
recognized statistical rating organization,’’. 
(d) SECTION 203 OF THE INVESTMENT ADVISERS 
ACT OF 1940.—Section 203(f) of the Investment Advisers 
Act of 1940 (15 U.S.C. 80b–3(f)) is amended by striking 
‘‘twelve months or bar any such person from being associ-
ated with an investment adviser,’’ and inserting ‘‘12 
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. 7207. 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 
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(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 
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.’’. 
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SEC. 7208. 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 subsections: 
‘‘(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. 
‘‘(g) ENFORCEMENT BY NATIONAL SECURITIES AS-
SOCIATIONS.—The Commission may permit or require a 
national securities association registered under the Securi-
ties Exchange Act of 1934 to enforce compliance by its 
members and persons associated with its members with 
the provisions of this Act, the rules and regulations there-
under, and to adopt such rules (subject to any rule or 
order of the Commission pursuant to the Securities Ex-
change Act of 1934) as the association may deem nec-
essary and in the public interest to further the purposes 
of this Act.’’. 
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SEC. 7209. DEADLINE FOR COMPLETING EXAMINATIONS, 
INSPECTIONS 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 7101) the following new section: 
‘‘SEC. 4E. DEADLINE FOR COMPLETING ENFORCEMENT IN-
VESTIGATIONS AND COMPLIANCE EXAMINA-
TIONS AND INSPECTIONS. 
‘‘(a) ENFORCEMENT INVESTIGATIONS.— 
‘‘(1) IN GENERAL.—Not later than 180 days 
after the date on which Commission staff provide a 
written Wells notification to any person, the Com-
mission staff shall either file an action against such 
person or provide notice to the Director of the Divi-
sion of Enforcement of its intent to not file an ac-
tion. 
‘‘(2) EXCEPTIONS FOR CERTAIN COMPLEX AC-
TIONS.—Notwithstanding paragraph (1), if the head 
of any division or office within the Commission or 
his designee determines that a particular enforce-
ment investigation is sufficiently complex such that 
a determination regarding the filing of an action 
against a person cannot be completed within the 
deadline specified in paragraph (1), the head of any 
division or office within the Commission or his des-
ignee may, after providing notice to the Chairman of 
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the Commission, extend such deadline as needed for 
one additional 180-day period. If after the additional 
180-day period the head of any division or office 
within the Commission or his designee determines 
that a particular enforcement investigation is suffi-
ciently complex such that a determination regarding 
the filing of an action against a person cannot be 
completed within the additional 180-day period, the 
head of any division or office within the Commission 
or his designee may, after providing notice to and 
receiving approval of the Commission, extend such 
deadline as needed for one or more additional suc-
cessive 180-day periods. 
‘‘(b) COMPLIANCE
EXAMINATIONS
AND
INSPEC-
TIONS.— 
‘‘(1) IN GENERAL.—Not later than 180 days 
after the date on which Commission staff completes 
the on-site portion of its compliance examination or 
inspection or receives all records requested from the 
entity being examined or inspected, whichever is 
later, Commission staff shall provide the entity being 
examined or inspected with written notification indi-
cating either that the examination or inspection has 
concluded without findings or that the staff requests 
the entity undertake corrective action. 
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‘‘(2) EXCEPTION FOR CERTAIN COMPLEX AC-
TIONS.—Notwithstanding paragraph (1), if the head 
of any division or office within the Commission or 
his designee determines that a particular compliance 
examination or inspection is sufficiently complex 
such that a determination regarding concluding the 
examination or inspection or regarding the staff re-
quests the entity undertake corrective action cannot 
be completed within the deadline specified in para-
graph (1), the head of any division or office within 
the Commission or his designee may, after providing 
notice to the Chairman of the Commission, extend 
such deadline as needed for one additional 180-day 
period.’’. 
SEC. 7210. 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 
this title in a United States district court for any judicial 
district, subpoenas issued to compel the attendance of wit-
nesses or the production of documents or tangible things 
(or both) at a hearing or trial may be served at any place 
within the United States.’’. 
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(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 to compel 
the attendance of witnesses or the production of docu-
ments or tangible things (or both) at a hearing or trial 
may be served at any place within the United States.’’. 
(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 
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 to compel 
the attendance of witnesses or the production of docu-
ments or tangible things (or both) at a hearing or trial 
may be served at any place within the United States.’’. 
(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 to compel 
the attendance of witnesses or the production of docu-
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ments or tangible things (or both) at a hearing or trial 
may be served at any place within the United States.’’. 
SEC. 7211. 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 
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paragraph (1) shall be $7,500 for a natural 
person or $75,000 for any other person. 
‘‘(B) 
SECOND
TIER.—Notwithstanding 
paragraph (A), the maximum amount of pen-
alty for each such act or omission shall be 
$75,000 for a natural person or $375,000 for 
any other person if the act or omission de-
scribed in paragraph (1) involved fraud, deceit, 
manipulation, or deliberate or reckless dis-
regard of a regulatory requirement. 
‘‘(C) THIRD TIER.—Notwithstanding para-
graphs (A) and (B), the maximum amount of 
penalty for each such act or omission shall be 
$150,000 for a natural person or $725,000 for 
any other person if— 
‘‘(i) the act or omission described in 
paragraph (1) involved fraud, deceit, ma-
nipulation, or deliberate or reckless dis-
regard of a regulatory requirement; and 
‘‘(ii) such act or omission directly or 
indirectly resulted in substantial losses or 
created a significant risk of substantial 
losses to other persons or resulted in sub-
stantial pecuniary gain to the person who 
committed the act or omission. 
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‘‘(3) EVIDENCE
CONCERNING
ABILITY
TO 
PAY.—In any proceeding in which the Commission 
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 
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(D), respectively, and moving such redesignated sub-
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.— 
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‘‘(A) IN GENERAL.—In any proceeding’’; 
(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. 7212. 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 
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become associated with a registered public 
accounting firm; and 
‘‘(ii) the authority to commence a pro-
ceeding under section 105(c)(1), or impose 
disciplinary 
sanctions 
under 
section 
105(c)(4), against such person shall apply 
only on— 
‘‘(I) the basis of conduct occur-
ring while such person was associated 
or seeking to become associated with 
a registered public accounting firm; or 
‘‘(II) 
non-cooperation 
as 
de-
scribed in section 105(b)(3) with re-
spect to a demand in a Board inves-
tigation for testimony, documents, or 
other information relating to a period 
when such person was associated or 
seeking to become associated with a 
registered public accounting firm.’’. 
(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-
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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 
is, or at the time of the alleged failure reasonably to 
supervise was, a supervisory person’’; and 
(2) 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 associated person’’. 
(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’’. 
SEC. 7213. SHARING PRIVILEGED INFORMATION WITH 
OTHER AUTHORITIES. 
Section 24 of the Securities Exchange Act of 1934 
(15 U.S.C. 78x) is amended— 
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(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) 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) the Public Company Accounting 
Oversight Board; 
‘‘(D) any self-regulatory organization; 
‘‘(E) any foreign law enforcement author-
ity; or 
‘‘(F) 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.— 
‘‘(A) 
IN
GENERAL.—Federal 
agencies, 
State securities and law enforcement authori-
ties, self-regulatory organizations, and the Pub-
lic Company Accounting Oversight Board shall 
not be deemed to have waived any privilege ap-
plicable to any information by transferring that 
information to or permitting that information 
to be used by the Commission. 
‘‘(B) EXCEPTION WITH RESPECT TO CER-
TAIN
ACTIONS.—The provisions of subpara-
graph (A) shall not apply to a self-regulatory 
organization or the Public Company Accounting 
Oversight Board with respect to information 
used by the Commission in an action against 
such organization. 
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‘‘(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. 
‘‘(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. 7214. 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 
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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. 
‘‘(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. 7215. 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’’. 
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SEC. 7216. EXTRATERRITORIAL JURISDICTION OF THE 
ANTIFRAUD PROVISIONS OF THE FEDERAL 
SECURITIES 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 
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: 
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‘‘(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— 
‘‘(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 
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(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-
tion, even if the violation is committed by a foreign 
adviser and involves only foreign investors; or 
‘‘(2) conduct occurring outside the United 
States that has a foreseeable substantial effect with-
in the United States.’’. 
SEC. 7217. 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 com-
pany provide and maintain a fidelity bond against 
loss as to any officer or employee who has access to 
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securities or funds of the company, either directly or 
through authority to draw upon such funds or to di-
rect generally the disposition of such securities (un-
less the officer or employee has such access solely 
through his position as an officer or employee of a 
bank), 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: 
‘‘(A) MANAGEMENT COMPANY.—The term 
‘management company’ has the meaning given 
such term under section 4 of the Investment 
Company Act of 1940. 
‘‘(B) OFFICER OR EMPLOYEE.—The term 
‘officer or employee’ means— 
‘‘(i) any officer or employee of the 
management company; and; 
‘‘(ii) any officer or employee of any 
investment adviser to the management 
company, or of any affiliated company of 
any such investment adviser, as the Com-
mission may prescribe by rule, regulation, 
or order for the protection of investors. 
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‘‘(C) OTHER
DEFINITIONS.—The terms 
‘affiliated company’ and ‘investment adviser’ 
shall have the meaning given such terms under 
section 2 of the Investment Company Act of 
1940.’’. 
SEC. 7218. 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)), as amended by section 
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7106(a)(2), is further amended by adding at the end the 
following new paragraph: 
‘‘(5) 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 
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), as amended by section 7106(b), 
is further amended by adding at the end the following new 
subsection: 
‘‘(e) 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, 
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persons registered with the Commission under this title, 
or otherwise in furtherance of the purposes of this title.’’. 
SEC. 7219. 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 
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. 7220. 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. 7221. ENHANCED APPLICATION OF ANTI-FRAUD PRO-
VISIONS. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended— 
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(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 
(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’’ and inserting 
‘‘other than a government security’’; and 
(3) in section 15(c)(1)(A), by striking ‘‘other-
wise than on a national securities exchange of which 
it is a member’’. 
SEC. 7222. SEC AUTHORITY TO ISSUE RULES ON PROXY AC-
CESS. 
Section 14(a) of the Securities Exchange Act of 1934 
(15 U.S.C. 78n(a)) is amended— 
(1) by inserting ‘‘(1)’’ after ‘‘(a)’’; and 
(2) by adding at the end the following: 
‘‘(2) The authority of the Commission to prescribe 
rules and regulations under paragraph (1) includes rules 
and regulations that require the inclusion and set proce-
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dures relating to the inclusion, in a solicitation of a proxy 
or consent or authorization by or on behalf of an issuer, 
of a nominee or nominees submitted by shareholders to 
serve on the issuer’s board of directors.’’. 
PART 3—COMMISSION FUNDING AND 
ORGANIZATION 
SEC. 7301. 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 
‘‘(6) for fiscal year 2015, $2,250,000,000.’’. 
SEC. 7302. INVESTMENT ADVISER REGULATION FUNDING. 
Section 203 of the Investment Advisers Act of 1940 
(15 U.S.C. 80b–3) (as amended by sections 5006 and 
5007) is further amended by adding at the end the fol-
lowing new subsection: 
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‘‘(o) ANNUAL ASSESSMENT.— 
‘‘(1) IN GENERAL.—The Commission shall, in 
accordance with this subsection, promulgate rules 
pursuant to which it may collect from investment 
advisers required to register with the Commission 
under this title, fees designed to help recover the 
cost of inspections and examinations of registered 
investment advisers conducted by the Commission 
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 objective factors such as— 
‘‘(A) the investment adviser’s size; 
‘‘(B) the number of clients of the invest-
ment adviser; 
‘‘(C) the types of clients of the investment 
adviser; and 
‘‘(D) such other relevant factors as the 
Commission determines to be appropriate. 
‘‘(3) AMOUNT AND USE OF FEES.— 
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‘‘(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. 
‘‘(6) JUDICIAL REVIEW.—Increases or decreases 
in fees made pursuant to this section shall not be 
subject to judicial review.’’. 
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SEC. 7303. 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)(2)— 
(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))’’ and inserting 
‘‘(including fees estimated to be collected under 
subsections (b) and (c) prior to the effective 
date of the uniform adjusted rate and assess-
ments estimated to be collected under sub-
section (d))’’. 
SEC. 7304. COMMISSION ORGANIZATIONAL STUDY AND RE-
FORM. 
(a) STUDY REQUIRED.— 
(1) IN GENERAL.—Not later than the end of 
the 90-day period beginning on the date of the en-
actment of this subtitle, the Securities and Ex-
change Commission (hereinafter in this section re-
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ferred to as the ‘‘SEC’’) shall hire an independent 
consultant of high caliber and with expertise in orga-
nizational restructuring and the operations of capital 
markets to examine the internal operations, struc-
ture, funding, and the need for comprehensive re-
form of the SEC, as well as the SEC’s relationship 
with the reliance on self-regulatory organizations 
and other entities relevant to the regulation of secu-
rities and the protection of securities investors that 
are under the SEC’s oversight. 
(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 effect of high-frequency trading 
and other technological advances on the market 
and what the SEC requires to monitor the ef-
fect of such trading and advances on the mar-
ket; 
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(E) the SEC’s hiring authorities, work-
place policies, and personal practices, includ-
ing— 
(i) whether there is a need to further 
streamline hiring authorities for those who 
are not lawyers, accountants, compliance 
examiners, or economists; 
(ii) whether there is a need for further 
pay reforms; 
(iii) the diversity of skill sets of SEC 
employees and whether the present skill set 
diversity efficiently and effectively fosters 
the SEC’s mission of investor protection; 
and 
(iv) the application of civil service 
laws by the SEC; 
(F) whether the SEC’s oversight and reli-
ance on self-regulatory organizations promotes 
efficient and effective governance for the securi-
ties markets; and 
(G) whether adjusting the SEC’s reliance 
on self-regulatory organizations is necessary to 
promote more efficient and effective governance 
for the securities markets. 
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(b) CONSULTANT REPORT.—Not later than the end 
of the 150-day period after being retained, the inde-
pendent consultant hired pursuant to subsection (a)(1) 
shall issue a report to the SEC and the Congress con-
taining— 
(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-
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. 
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SEC. 7305. CAPITAL MARKETS SAFETY BOARD. 
There is established within the Securities and Ex-
change Commission an office to be known as the Capital 
Markets Safety Board whose purpose shall be to conduct 
investigations, at the direction of the Commission, of 
failed institutions registered with the Commission, to de-
termine what caused such institutions to fail. Upon the 
conclusion of an investigation, the Board shall make avail-
able on the Commission’s website a report of its findings, 
including recommendations regarding how others can 
avoid similar mistakes. No information that may com-
promise an ongoing Federal investigation shall be made 
available in any such report. 
SEC. 7306. REPORT ON IMPLEMENTATION OF ‘‘POST- 
MADOFF REFORMS’’. 
(a) IN GENERAL.—Not later than 6 months after the 
date of the enactment of this subtitle, the Securities and 
Exchange Commission shall provide to the Committee on 
Financial Services of the House of Representatives and 
the Committee on Banking, Housing, and Urban Affairs 
of the Senate a report describing the implementation of 
reforms outlined by the Commission in the wake of the 
discovery of fraud by Bernie Madoff. 
(b) CONTENTS OF REPORT.—The report required by 
subsection (a) shall include an analysis of— 
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(1) how many of the post-Madoff reforms have 
been implemented and to what extent; and 
(2) whether there is overlap between any of the 
Commission’s reform proposals and those rec-
ommended by the Inspector General of the Commis-
sion. 
(c) PUBLICATION OF REPORT.—The Commission and 
the Committees referred to in subsection (a) shall publish 
the report required by such subsection on their Web sites. 
SEC. 7307. JOINT ADVISORY COMMITTEE. 
The Securities and Exchange Commission and the 
Commodities Futures Trading Commission may jointly 
form and operate a joint advisory committee composed of 
members of each Commission and industry experts and 
participants. The purposes of such an advisory committee 
include— 
(1) considering and developing solutions to 
emerging and ongoing issues of common interest in 
the futures and securities markets; 
(2) identifying emerging regulatory risks and 
assess and quantify their implications for investors 
and other market participants, and provide rec-
ommendations for solutions; 
(3) serving as a vehicle for discussion and com-
munication on regulatory issues of mutual concerns 
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SEC. 7504. 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. 7505. 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,’’ after ‘‘or net profits of the debtor,’’. 
SEC. 7506. ELIGIBILITY FOR DIRECT PAYMENT PROCE-
DURE. 
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’’. 
SEC. 7507. 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 
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