datamatters24/research-document-archive huggingface dataset:
‘‘(C) existing fidelity bonding require-
ments; and
‘‘(D) any alternative means to protect cli-
ent assets.
‘‘(3) EXEMPTION
AUTHORITY.—The Commis-
sion by rule may exempt any person or class of per-
sons, under such terms and conditions and for such
periods as the Commission shall provide in such
rule, from the requirements of this subsection and
the rules thereunder.’’.
SEC. 8. DISQUALIFYING CONDUCT.
(a) AMENDMENT.—Section 203(e) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b–3(e)) is amended—
(1) by redesignating paragraphs (3) through
(7) as paragraphs (4) through (8), respectively; and
(2) by inserting after paragraph (2) the follow-
ing new paragraph:
‘‘(3) has been convicted within ten years pre-
ceding the filing of any application for registration
or at any time thereafter of any crime that is pun-
ishable by imprisonment for one or more years and
that is not described in paragraph (2) of this sub-
section or of a substantially equivalent crime by a
foreign court of competent jurisdiction.’’.
‘‘Assets under management
Fee due:
$500,000,000 or more .............................................................
$7,000.
‘‘(d) SUSPENSION FOR FAILURE TO PAY.—The Com-
mission, by order, may suspend the registration of any in-
vestment adviser if it finds, after notice, that such invest-
ment adviser has failed to pay when due any fee required
by this section. The Commission shall reinstate such reg-
istration upon payment of the fee (and any penalty due),
if such suspension was based solely on the failure to pay
the fee.
‘‘(e) RULEMAKING.—The Commission may adopt
such rules as are necessary to carry out this section.
‘‘(f) DEFINITION
OF
ASSETS
UNDER
MANAGE-
MENT.—As used in this section, the term ‘assets under
management’ means the client assets with respect to which
an investment adviser provides continuous and regular su-
pervisory or management services.’’.
(b) EFFECTIVE DATE.—This section shall become ef-
fective upon the adoption by the Commission of imple-
menting rules, under section 203A(f) of the Investment
Advisers Act of 1940, as added by subsection (a).
SEC. 3. EXAMINATIONS AND SURVEYS.
The Investment Advisers Act of 1940 is amended by
inserting after section 222 (15 U.S.C. 80b–22) the follow-
ing new section:
‘‘EXAMINATIONS AND SURVEYS
‘‘SEC. 223. (a) PERIODIC
EXAMINATIONS.—The
Commission shall establish and periodically revise a sched-
ule for the regular examination of investment advisers.
Such schedule shall provide for more frequent examina-
tions of certain investment advisers based on factors that
the Commission determines increase the need for examina-
tion of those investment advisers, which shall include (at
a minimum) each of the following:
‘‘(1) the frequency of customer complaints;
‘‘(2) the risks associated with newly registered
investment advisers;
‘‘(3) custody of funds and the authority to exer-
cise investment discretion;
‘‘(4) the existence of deficiencies detected dur-
ing an examination under this title that may con-
tinue to present high risks to clients; and
‘‘(5) the receipt of commissions for the sale of
investments recommended to clients.
‘‘(b) SURVEYS OF UNREGISTERED PERSONS.—The
Commission shall, within 3 years after the date of enact-
ment of this section and periodically thereafter, provide
for the conduct of a survey to determine the extent of,
and reasons for, the failure of persons to register as re-
quired by this Act. The Commission shall, on the basis
of such survey results, establish objectives for the reduc-
tion or elimination of such failures and shall include in
annual reports to Congress (under section 23(b) of the
Securities Exchange Act of 1934) submitted after comple-
tion of the first survey, a statement of such objectives,
an evaluation of the success in attaining those objectives
during the preceding year, and such recommendations as
the Commission considers appropriate to assist in the at-
tainment of those objectives. If the survey identifies any
pattern of noncompliance with the registration require-
ments of the title and the rules thereunder, the Commis-
sion’s objectives shall include such rulemaking proceedings
as may be required to correct such noncompliance.
‘‘(c) PROVISIONS NOT LIMITATION.—The provisions
of this section shall not be construed to limit the authority
of the Commission to prescribe rules under this Act or
to conduct an examination or investigation at any time
or to institute proceedings under this title or any other
title.’’.
SEC. 4. DESIGNATION OF SELF-REGULATORY ORGANIZA-
TIONS.
The Investment Advisers Act of 1940 (15 U.S.C.
80b–1 et seq.) is amended by inserting after section 223
(as added by section 3 of this Act) the following new sec-
tion:
‘‘DESIGNATION OF SELF-REGULATORY ORGANIZATIONS
‘‘SEC. 224. (a) DESIGNATION TO CONDUCT EXAMI-
NATIONS.—The Commission, by rule, consistent with the
public interest, the protection of investors, and the pur-
poses of this title, may designate one or more self-regu-
latory organizations registered with the Commission under
sections 6 or 15A of the Securities Exchange Act of 1934,
to conduct periodic examinations of its members and affili-
ates of members that are registered or required to register
under this title to determine compliance with applicable
provisions of this title and the rules and regulations there-
under. Such rules shall specify the minimum scope and
frequency for such examinations and shall, to the extent
consistent with the protection of investors, be designed to
avoid unnecessary regulatory duplication or undue regu-
latory burdens. Such self-regulatory organization may dis-
cipline such members and affiliates of members for viola-
tions of the applicable provisions of this title and the rules
and regulations thereunder pursuant to the standards and
procedures set forth in sections 6, 15A, and 19 of the Se-
curities Exchange Act of 1934. The penalties imposed by
a self-regulatory organization for violations of this title
shall not exceed those contained in subsections (e), (f),
and (i) of section 203.
‘‘(b) LIMITATION.—The Commission shall not exer-
cise the designation authority contained in subsection (a)
for members or affiliates of members if the primary busi-
ness of the member or its affiliates is investment advisory
activities. The Commission, by rule, may establish criteria
for defining the term ‘primary business’.
‘‘(c) AUTHORITY TO IMPOSE FEES.—
‘‘(1) IN GENERAL.—Any self-regulatory organi-
zation designated by the Commission to perform the
examinations specified in subsection (a) shall have
the authority to collect fees in accordance with this
subsection.
‘‘(2) LIMITATION.—The total fee paid by a reg-
istered investment adviser under this subsection
shall not exceed an amount determined in accord-
ance with rules prescribed by the Commission. Such
rules shall require that the fees collected by a self-
regulatory organization under this subsection—
‘‘(A) cover only the costs of the self-regu-
latory organization’s expenses for examinations
conducted pursuant to subsection (a);
‘‘(B) as to any investment adviser, bear a
reasonable relationship to the costs of conduct-
ing an examination of that adviser pursuant to
subsection (a); and
‘‘(C) not exceed such portion of the fee au-
thorized under section 203A as the Commission
determines is allocable to the Commission’s ex-
penses for conducting such an examination.
‘‘(3) REDUCTION OF SECTION 203A FEES.—The
amount of any fee that a registered investment ad-
viser is required to pay under section 203A with re-
spect to any fiscal year shall be reduced by the
amount paid to a self-regulatory organization in ac-
cordance with this subsection with respect to such
fiscal year.
‘‘(d) EFFECTIVE DATE OF RULE.—A rule prescribed
by the Commission under this section shall not be effective
until 90 days after the date on which the Commission sub-
mits to each House of Congress a report—
‘‘(1) containing the text of the proposed rule
and the reasons therefor;
‘‘(2) describing the procedures to be used to co-
ordinate the collection of fees by the Commission
under section 203A and by a self-regulatory organi-
zation under the rule; and
‘‘(3) containing such other information as may
be necessary to describe the implementation and en-
forcement of the rule.
‘‘(e) DEFINITION.—For purposes of this section, the
term ‘affiliate’ shall mean any person directly or indirectly
controlling, controlled by, or under common control with
a member.’’.
SEC. 5. SUITABILITY AND OTHER ADVISER OBLIGATIONS.
(a) AMENDMENT.—Section 206 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b–6) is amended to
read as follows:
‘‘PROHIBITED TRANSACTIONS BY INVESTMENT ADVISERS
‘‘SEC. 206. (a) PROHIBITED CONDUCT.—It shall be
unlawful for any investment adviser or any person associ-
ated with an investment adviser, by use of the mails or
any means or instrumentality of interstate commerce, di-
rectly or indirectly—
‘‘(1) to employ any device, scheme, or artifice to
defraud any client or prospective client;
‘‘(2) to engage in any transaction, practice, or
course of business which operates as a fraud or de-
ceit upon any client or prospective client;
‘‘(3) acting as principal for his own account,
knowingly to sell any security to or purchase any se-
curity from a client, or acting as broker for a person
other than such client, knowingly to effect any sale
or purchase of any security for the account of such
client, without disclosing to such client in writing be-
fore the completion of such transaction the capacity
in which he is acting and obtaining the consent of
the client to such transaction;
‘‘(4) to engage in any act, practice, or course of
business which is fraudulent, deceptive, or manipula-
tive;
‘‘(5) to provide investment advice to any client,
other than in connection with impersonal advisory
services, unless the adviser—
‘‘(A) prior to providing any investment ad-
vice, and as appropriate thereafter, makes a
reasonable inquiry into the client’s financial sit-
uation, investment experience, and investment
objectives;
‘‘(B) reasonably determines that the in-
vestment advice is suitable for the client; and
‘‘(C) maintains reasonable records, in ac-
cordance with such rules as the Commission
shall prescribe, of the information obtained
from the inquiries the adviser made in comply-
ing with this paragraph; or
‘‘(6) to guarantee a client that a specific result
will be achieved as a result of the investment advi-
sory services.
‘‘(b) EXEMPTIONS AND SPECIAL RULES.—
‘‘(1) EXEMPTION.—The prohibitions of sub-
section (a)(3) shall not apply to any transaction with
a customer of a broker or dealer if such broker or
dealer is not acting as an investment adviser in rela-
tion to such transaction.
‘‘(2) 
AUTHORITY
TO
DEFINE
AND
PRE-
SCRIBE.—The Commission shall, for the purposes of
subsection (a)(4), by rules define, and prescribe
means reasonably designed to prevent, such acts,
practices, and courses of business as are fraudulent,
deceptive, or manipulative.
‘‘(3) DEFINITION
OF
IMPERSONAL
ADVISORY
SERVICES.—As used in subsection (a)(5), the term
‘impersonal advisory services’ means any investment
advisory services provided—
‘‘(A) by means of written material or oral
statements which do not purport to meet the
objectives or needs of specific individuals or ac-
counts;
‘‘(B) through the issuance of statistical in-
formation containing no expression of opinion
as to the investment merits of a particular secu-
rity; or
‘‘(C) by any combination of the foregoing
services.’’.
(b) RULEMAKING REQUIRED.—The Commission shall
prescribe rules for purposes of paragraph (5)(C) of section
206(a) of the Investment Advisers Act of 1940 (as added
by subsection (a) of this section) within one year after the
date of enactment of this Act.
SEC. 6. ADDITIONAL DISCLOSURE OBLIGATIONS OF IN-
VESTMENT ADVISERS.
(a) ADDITIONAL OBLIGATIONS.—Section 204 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b–4) is
amended—
(1) by striking the heading of such section and
inserting the following:
‘‘PERIODIC REPORTS AND OTHER DISCLOSURE
REQUIREMENTS’’;
(2) by inserting ‘‘(a) PERIODIC
AND OTHER
REPORTS.—’’ after ‘‘SEC. 204.’’; and
(3) by adding at the end the following new sub-
sections:
‘‘(b) BROCHURE REQUIRED.—
‘‘(1) IN
GENERAL.—Each person registered
under section 203 of this title shall disseminate to
each client or prospective client a document disclos-
ing material facts concerning matters listed in para-
graphs (2) and (3) and such other matters as the
Commission shall prescribe. In order to provide for
timely and effective disclosure of such facts and
matters to clients, the Commission shall by rule pre-
scribe the format of the document and the timing of
its dissemination.
‘‘(2) CONTENTS OF BROCHURE.—The document
required by paragraph (1) shall include information
concerning—
‘‘(A) the education and business back-
ground of such person and of any associated
person providing significant investment advisory
services to the client,
‘‘(B) compensation arrangements between
the client and the investment adviser,
‘‘(C) the nature of services offered,
‘‘(D) business practices,
‘‘(E) methods for obtaining information on
the disciplinary history and registration of the
investment adviser and persons associated with
the investment adviser, and
‘‘(F) conflicts of interest which could rea-
sonably be expected to impair the rendering of
disinterested advice.
‘‘(3) PROMINENT
DISCLOSURES.—Such docu-
ment shall also prominently disclose—
‘‘(A) that—
third party with respect to any recommended
transaction;
‘‘(C) in the case of a client account for
which the investment adviser provides invest-
ment supervisory services, securities positions
held in the account at the beginning and at the
end of the period; and
‘‘(D) such other matters as the Commission
shall prescribe.
‘‘(2) COMMISSION RULES.—The rule prescribed
by the Commission pursuant to paragraph (1) shall
require that the format and timing of delivery be de-
signed to present the required information in a man-
ner that readily permits clients to compare the costs
charged by the investment adviser with the costs
charged by other advisers. In adopting such rule, the
Commission shall require an investment adviser
whose clients purchase or sell investment products
through persons other than such adviser, or persons
associated or under common control with such ad-
viser, to disclose to its clients that such information
concerning costs charged does not include commis-
sions or other fees paid in connection with such pur-
chases or sales. Such rule shall, to the extent consist-
ent with the protection of investors, permit delivery of
line facility and other appropriate authorities;
or’’.
SEC. 17. ANNUAL REPORTS.
Section 60124 and the item relating to such section
in the analysis for chapter 601 are repealed.
SEC. 18. POPULATION ENCROACHMENT.
(a) IN GENERAL.—Chapter 601 is amended by insert-
ing after section 60123 the following new section:
‘‘§ 60124. Population encroachment
‘‘(a) LAND USE RECOMMENDATIONS.—The Secretary
of Transportation shall make available to an appropriate
official of each State, as determined by the Secretary, the
land use recommendations of the Transportation Research
Board’s Special Report 219, entitled ‘Pipelines and Public
Safety’.
‘‘(b) EVALUATION.—The Secretary shall evaluate the
recommendations in the report referred to in subsection (a),
determine to what extent the recommendations are being
implemented, consider ways to improve implementation of
the recommendations, and consider other initiatives to fur-
ther improve awareness of local planning and zoning enti-
ties regarding issues involved with population encroach-
ment in proximity to the rights-of-ways of any interstate
gas pipeline facility or interstate hazardous liquid pipeline
facility.’’.
(ii) in the case of county coverage, the ac-
tual average yield for the county for the covered 
commodity, as determined by the Secretary; 
and 
(B) the higher of— 
(i) the national average market price 
received by producers during the 12-month 
marketing year for the covered commodity, 
as determined by the Secretary; or 
(ii) if applicable, the reference price 
for the covered commodity under section 
1107. 
(4) AGRICULTURE
RISK
COVERAGE
GUAR-
ANTEE.— 
(A) IN
GENERAL.—The agriculture risk 
coverage guarantee for a crop year for a cov-
ered commodity shall equal 88 percent of the 
benchmark revenue. 
(B) BENCHMARK REVENUE.— 
(i) IN
GENERAL.—The benchmark 
revenue shall be the product obtained by 
multiplying— 
(I)(aa) in the case of individual 
coverage, subject to clause (ii), the av-
erage individual yield, as determined 
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sroberts on DSK5SPTVN1PROD with BILLS
cle operated exclusively on a rail or
rails),
‘‘(II) such vehicle is of a model
year not earlier than the second model
year preceding the model year during
which the vehicle is purchased by the
taxpayer, and
‘‘(III) such vehicle is designated
by the taxpayer for purposes of this
paragraph.
‘‘(ii) LIMITATION ON NUMBER OF VE-
HICLES WHICH MAY BE DESIGNATED.—A
vehicle may be designated under clause
(i)(III) only if such a designation by the
taxpayer is not in effect with respect to—
‘‘(I) any other vehicle, or
‘‘(II) in the case of a joint re-
turn, more than 1 other vehicle.
‘‘(C) REDUCTION
OF
INTEREST
DEDUC-
TION
FOR
VEHICLES
COSTING
MORE
THAN
$20,000.—If the purchase price of the des-
ignated vehicle exceeds $20,000, the amount
which would (but for this subparagraph) be
treated as qualified vehicle interest for any tax-
able year with respect to indebtedness secured
ally identifiable financial information with respect to
any client unless required by law to do so, or un-
less—
‘‘(A) the client has been adequately in-
formed of the proposed information disclosure, in
accordance with rules prescribed by the Commis-
sion, and (i) has been afforded the opportunity,
in accordance with such rules, to object to the
disclosure, and (ii) has not objected or has af-
firmatively consented;
‘‘(B) the information disclosed is necessary
and appropriate in order to establish an advi-
sory or brokerage account or to effect or attempt
to effect a transaction for the client;
‘‘(C) the information (i) is requested by rep-
resentatives of the Commission, a State agency
whose primary assignment is the regulation of
the securities business, or a self-regulatory orga-
nization, or (ii) is requested by subpoena; or
‘‘(D) the information is requested by the cli-
ent’s auditors or accountants.
‘‘(2) SECONDARY DISCLOSURE.—It is unlawful
for any person to whom information is disclosed for
the purpose described in paragraph (1)(B) to use such
information for any purpose other than the effec-
tuation of the client’s transaction.’’.
SEC. 10. CUSTODIANSHIP.
(a) FINDINGS.—The Congress finds that—
(1) most clients of investment advisers who give
their advisers discretionary authority over their secu-
rities and funds provide for the safekeeping of their
securities and funds with a custodian;
(2) it is a customary business practice for
custodians to provide reports of the transactions in
client accounts directly to clients;
(3) such direct reporting provides an important
safeguard against improper use of client assets; and
(4) permitting advisers to serve as the sole recip-
ient of custodial account communications has allowed,
and may continue to allow, unscrupulous persons to
misuse client assets, causing substantial losses for
those clients.
(b) REPORT.—The Commission, within 18 months of
enactment of this Act, after consultation with the appro-
priate Federal banking agencies (as such term is defined
in section 3(q) of the Federal Deposit Insurance Act), shall
submit a report to Congress—
(1) analyzing the risks to investors when an in-
vestment adviser is made the sole recipient of commu-
nications from the custodian or when an investment
adviser or affiliate thereof serves as the custodian;
and
(2) making any recommendations the Commis-
sion believes are necessary to eliminate or reduce these
risks.
HR 578 RH——2
HR 578 RH——1
HR 578 RH——3
I
103D CONGRESS
1ST SESSION
H. R. 579
To amend the Internal Revenue Code of 1986 to provide that the disallowance
of deductions for personal interest shall not apply to interest on loans
used to buy highway vehicles.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 26, 1993
Mr. CARR introduced the following bill; which was referred to the Committee
on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
that the disallowance of deductions for personal interest
shall not apply to interest on loans used to buy highway
vehicles.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. DEDUCTION FOR INTEREST ON LOANS FOR
CERTAIN HIGHWAY VEHICLES.
(a) IN GENERAL.—Paragraph (2) of section 163(h)
of the Internal Revenue Code of 1986 (relating to dis-
allowance of deduction for personal interest) is amended
by striking ‘‘and’’ at the end of subparagraph (D), by re-
designating subparagraph (E) as subparagraph (F), and
by inserting after subparagraph (D) the following new
subparagraph:
‘‘(E) any qualified vehicle interest (as de-
fined in paragraph (5)), and’’.
(b) QUALIFIED VEHICLE INTEREST.—Section 163(h)
of such Code is amended by redesignating paragraph (5)
as paragraph (6) and by inserting after paragraph (4) the
following new paragraph:
‘‘(5) 
QUALIFIED
VEHICLE
INTEREST
DE-
FINED.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (2)(E), the term ‘qualified vehicle inter-
est’ means any interest on indebtedness secured
by qualified vehicle which is incurred in acquir-
ing such vehicle.
‘‘(B) QUALIFIED VEHICLE.—
‘‘(i) IN
GENERAL.—For purposes of
this paragraph, the term ‘qualified vehicle’
means any 4-wheeled vehicle propelled by
fuel if—
‘‘(I) such vehicle is manufactured
primarily for use on public streets,
roads, and highways (except any vehi-
by such vehicle shall be reduced by the amount
which bears the same ratio to such interest for
such year as such excess bears to the purchase
price of the vehicle.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to vehicles purchased after Janu-
ary 26, 1993.
Æ
‘‘(iii) health;
‘‘(iv) social services such as emergency
food or shelter;
‘‘(v) activities that are mandated by
Federal law, including such activities
under the Federal Water Pollution Control
Act or the Americans with Disabilities Act
of 1990; or
‘‘(vi) any public works project for
which on-site labor can begin within 90
days after the date of the approval of the
project by the unit.
‘‘(b) TIMING OF PAYMENTS.—The Secretary shall
pay each amount allocated under this chapter to a unit
of general local government for a payment period by the
later of 60 days after the date the amount is available
or the first day of the payment period.
‘‘(c) ADJUSTMENTS.—(1) Subject to paragraph (2),
the Secretary shall adjust a payment under this chapter
to a unit of general local government to the extent that
a prior payment to the government was more or less than
the amount required to be paid.
‘‘(2) The Secretary may increase or decrease under
this subsection a payment to a unit of local government
only if the Secretary determines the need for the increase