National Securities Markets Improvement Act of 1996
PL 104-290 (H.R.3005), enacted 10/11/1996

110 STAT. 3416 
PUBLIC LAW 104-290—OCT. 11, 1996 
Public Law 104-
104th Congress 
-290 
Oct. 11, 1996 
[H.R. 3005] 
National 
Securities 
Markets 
Improvement Act 
of 1996. 
15 u s e 78a note. 
An Act 
To amend the Federal securities laws in order to promote efficiency and capital 
formation in the financial markets, and to amend the Investment Company Act 
of 1940 to promote more efficient management of mutual funds, protect investors, 
and provide more effective and less burdensome regulation. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the "National 
Securities Markets Improvement Act of 1996". 
(b) TABLE OF CONTENTS.—The table of contents of this Act 
is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Definitions. 
Sec. 3. Severability. 
TITLE I—CAPITAL MARKETS 
Sec. 101. Short title. 
Sec. 102. Creation of national securities markets. 
Sec. 103. Broker-dealer exemptions from State law. 
Sec. 104. Broker-dealer funding. 
Sec. 105. Exemptive authority. 
Sec. 106. Promotion of efficiency, competition, and capital formation. 
Sec. 107. Privatization of EDGAR. 
Sec. 108. Improving coordination of supervision. 
Sec. 109. Increased access to foreign business information. 
TITLE II—INVESTMENT COMPANY ACT AMENDMENTS 
Sec. 201. Short title. 
Sec. 202. Funds of funds. 
Sec. 203. Flexible registration of securities. 
Sec. 204. Facilitating use of current information in advertising. 
Sec. 205. Variable insurance contracts. 
Sec. 206. Reports to the Commission and shareholders. 
Sec. 207. Books, records, and inspections. 
Sec. 208. Prohibition on deceptive investment company names. 
Sec. 209. Amendments to definitions. 
Sec. 210. Performance fees exemptions. 
TITLE III—INVESTMENT ADVISERS SUPERVISION COORDINATION ACT 
Sec. 301. Short title. 
Sec. 302. Funding for enhanced enforcement prioriW. 
Sec. 303. Improved supervision through State and Federal cooperation. 
Sec. 304. Interstate cooperation. 
Sec. 305. Disqualification of convicted felons. 
Sec. 306. Investor access to information. 
Sec. 307. Continued State authority. 
Sec. 308. Effective date. 
TITLE IV—SECURITIES AND EXCHANGE COMMISSION AUTHORIZATION 
Sec. 401. Short title. 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3417 
Sec. 402. Purposes. 
Sec. 403. Authorization of appropriations. 
Sec. 404. Registration fees. 
Sec. 405. Transaction fees. 
Sec. 406. Time for payment. 
Sec. 407. Sense of the Congress concerning fees. 
TITLE V—REDUCING THE COST OF SAVING AND INVESTMENT 
Sec. 501. Exemption for economic, business, and industrial development companies. 
Sec. 502. Intrastate closed-end investment company exemption. 
Sec. 503. Definition of eligible portfolio company. 
Sec. 504. Definition of business development company. 
Sec. 505. Acquisition of assets by business development companies. 
Sec. 506. Capital structure amendments. 
Sec. 507. Filing of written statements. 
Sec. 508. Church employee pension plans. 
Sec. 509. Promoting global preeminence of American securities markets. 
Sec. 510. Studies and reports. 
SEC. 2. DEFESriTIONS. 
15 USC 78a note. 
For purposes of this Act— 
(1) the term "Commission" means the Securities and 
Exchange Commission; and 
(2) the term "State" has the same meaning as in section 
3 of the Securities Exchange Act of 1934. 
SEC. 3. SEVERABILITY. 
15 USC 78a note. 
If £iny provision of this Act, an amendment made by this 
Act, or the appHcation of such provision or amendment to any 
person or circumstance is held to be unconstitutional, the remainder 
of this Act, the amendments made by this Act, and the application 
of the provisions of such to any person or circumstance shall not 
be affected thereby. 
TITLE I—CAPITAL MARKETS 
capital Markets 
Efnciency Act of 
1996. 
SEC. 101. SHORT TITLE. 
15 USC 78a note. 
This title may be cited as the "Capital Markets Efficiency 
Act of 1996". 
SEC. 102. CREATION OF NATIONAL SECURITIES MARKETS. 
(a) IN GENERAL.—Section 18 of the Securities Act of 1933 
(15 U.S.C. 77r) is amended to read as follows: 
"SEC. 18. EXEMPTION FROM STATE REGULATION OF SECURITIES 
OFFERINGS. 
"(a) SCOPE OF EXEMPTION.—Except as otherwise provided in 
this section, no law, rule, regulation, or order, or other administra-
tive action of any State or any political subdivision thereof— 
"(1) requiring, or with respect to, registration or qualifica-
tion of securities, or registration or qu^ification of securities 
transactions, shall directly or indirectly apply to a security 
that— 
"(A) is a covered security; or 
"(B) will be a covered security upon completion of the 
transaction; 
"(2) shall directly or indirectly prohibit, limit, or impose 
£iny conditions upon the use of— 
"(A) with respect to a covered security described in 
subsection (b), any offering document that is prepared by 
or on behalf of the issuer; or 
110 STAT. 3418 
PUBLIC LAW 104-290—OCT. 11, 1996 
"(B) any proxy statement, report to shareholders, or 
other disclosure document relating to a covered security 
or the issuer thereof that is required to be £Uid is filed 
with the Commission or any national securities organiza-
tion registered under section 
15A of the 
Securities 
Exchange Act of 1934, except that this subparagraph does 
not apply to the laws, rules, regulations, or orders, or 
other administrative actions of the State of incorporation 
of the issuer; or 
"(3) shall directly or indirectly prohibit, limit, or impose 
conditions, based on the merits of such offering or issuer, upon 
the offer or sale of any security described in paragraph (1). 
"(b) COVERED SECURITIES.—For purposes of this section, the 
following are covered securities: 
"(1) 
EXCLUSIVE FEDERAL REGISTRATION OF NATIONALLY 
TRADED SECURITIES.—^A security is a covered security if such 
security is— 
"(A) listed, or authorized for listing, on the New York 
Stock Exchange or the American Stock Exchange, or listed 
on the National Market System of the Nasdaq Stock Market 
(or any successor to such entities); 
"(B) listed, or authorized for listing, on a national 
securities exchange (or tier or segment thereof) that has 
listing standards that the Commission determines by rule 
(on its own initiative or on the basis of a petition) are 
substantially similar to the listing standards applicable 
to securities described in subparagraph (A); or 
"(C) is a security of the same issuer that is equal 
in seniority or that is a senior security to a security 
described in subparagraph (A) or (B). 
"(2) 
EXCLUSIVE FEDERAL REGISTRATION OF INVESTMENT 
COMPANIES.—^A security is a covered security if such security 
is a security issued by an investment company that is reg-
istered, or that has filed a registration statement, under the 
Investment Company Act of 1940. 
"(3) SALES TO QUALIFIED PURCHASERS.—A security is a cov-
ered security with respect to the offer or sale of the security 
to qualified purchasers, as defined by the Commission by rule. 
In prescribing such rule, the Commission may define the term 
'qualified purchaser' differently with respect to different cat-
egories of securities, consistent with the public interest and 
the protection of investors. 
"(4) 
EXEMPTION IN CONNECTION WITH CERTAIN EXEMPT 
OFFERINGS.—A security is a covered security with respect to 
a transaction that is exempt from registration under this title 
pursuant to— 
"(A) paragraph (1) or (3) of section 4, and the issuer 
of such security files reports with the Commission pursuant 
to section 13 or 15(d) of the Securities Exchange Act of 
1934; 
"(B) section 4(4); 
"(C) section 3(a), other than the offer or sale of a 
security that is exempt from such registration pursuant 
to paragraph (4) or (11) of such section, except that a 
municipal security that is exempt from such registration 
pursuant to paragraph (2) of such section is not a covered 
security with respect to the offer or sale of such security 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3419 
in the State in which the issuer of such security is located; 
or 
"(D) Commission rules or regulations issued under sec-
tion 4(2), except that this subparagraph does not prohibit 
a State from imposing notice filing requirements that are 
substantially similar to those required by rule or regulation 
under section 4(2) that are in effect on September 1, 1996. 
"(c) PRESERVATION OF AUTHORITY.— 
"(1) FRAUD AUTHORITY.—Consistent with this section, the 
securities commission (or any agency or office performing like 
functions) of any State shall retain jurisdiction under the laws 
of such State to investigate and bring enforcement actions 
with respect to fraud or deceit, or unlawfiil conduct by a broker 
or dealer, in connection with securities or securities trans-
actions. 
"(2) PRESERVATION OF FILING REQUIREMENTS.— 
"(A) 
NOTICE FILINGS PERMITTED.—Nothing in this 
section prohibits the securities commission (or any agency 
or office performing like functions) of any State from requir-
ing the filing of £iny document filed with the Commission 
pursuant to this title, together with annual or periodic 
reports of the value of securities sold or offered to be 
sold to persons located in the State (if such sales data 
is not included in documents filed with the Commission), 
solely for notice purposes and the assessment of any fee, 
together with a consent to service of process and any 
required fee. 
"(B) PRESERVATION OF FEES.— 
"(i) IN GENERAL.—Until otherwise provided by law, 
rule, regulation, or order, or other administrative 
action of any State, or any political subdivision thereof, 
adopted after the date of enactment of the Capital 
Markets Efficiency Act of 1996, filing or registration 
fees with respect to securities or securities transactions 
shall continue to be collected in amounts determined 
pursuant to State law as in effect on the day before 
such date. 
"(ii) 
SCHEDULE.—The 
fees 
required 
by 
this 
subparagraph shsJl be paid, and all necesssiry support-
ing data on sales or offers for sales required under 
subparagraph (A), shall be reported on the same 
schedule as would have been applicable had the issuer 
not relied on the exemption provided in subsection 
(a). 
"(C) AVAILABILITY OF PREEMPTION CONTINGENT ON PAY-
MENT OF FEES.— 
"(i) IN GENERAL.—During the period beginning on 
the date of enactment of the National Securities 
Market Improvement Act of 1996 and ending 3 years 
after that date of enactment, the securities commission 
(or any agency or office performing like functions) of 
any State may require the registration of securities 
issued by any issuer who refuses to pay the fees 
required by subparagraph (B). 
"(ii) DELAYS.—For purposes of this subparagraph, 
delays in pa3nnent of fees or xinderpayments of fees 
110 STAT. 3420 
PUBLIC LAW 104-290—OCT. 11, 1996 
that are promptly remedied shall not constitute a 
refusal to pay fees. 
"(D) FEES NOT PERMITTED ON LISTED SECURITIES.—Not-
withstanding subparagraphs (A), (B), and (C), no filing 
or fee may be required with respect to any security that 
is a covered security pursuant to subsection (b)(1), or will 
be such a covered security upon completion of the trans-
action, or is a security of the same issuer that is equal 
in seniority or that is a senior security to a security that 
is a covered security pursuant to subsection (b)(1). 
"(3) ENFORCEMENT OF REQUIREMENTS.—Nothing in this sec-
tion shall prohibit the securities commission (or any agency 
or office performing like functions) of any State from suspending 
the offer or sale of securities within such State as a result 
of the failure to submit any filing or fee required under law 
and permitted imder this section. 
"(d) DEFINITIONS.—For purposes of this section, the following 
definitions shall apply: 
"(1) OFFERING DOCUMENT.—The term 'offering document'— 
"(A) has the meaning given the term 'prospectus' in 
section 2(10), but without regard to the provisions of sub-
paragraphs (A) and (B) of that section; and 
"(B) includes a communication that is not deemed to 
offer a security pursuant to a rule of the Commission. 
"(2) PREPARED BY OR ON BEHALF OF THE ISSUER.—Not later 
than 6 months after the date of enactment of the Securities 
Amendments Act of 1996, the Commission shall, by rule, define 
the term 'prepared by or on behalf of the issuer' for purposes 
of this section. 
"(3) STATE.—The term 'State' has the same meaning as 
in section 3 of the Securities Exchange Act of 1934. 
"(4) SENIOR SECURITY.—For purposes of this paragraph, 
the term 'senior security means any bond, debenture, note, 
or similar obligation or instrument constituting a security and 
evidencing indebtedness, and any stock of a class having 
priority over any other class as to distribution of assets or 
payment of dividends.". 
15 use 78r note. 
(b) STUDY AND REPORT ON UNIFORMITY.—The Commission shall 
conduct a study, after consultation with States, issuers, brokers, 
and dealers, on the extent to which uniformity of State regulatory 
requirements for securities or securities transactions has been 
achieved for securities that are not covered securities (within the 
meaning of section 18 of the Securities Act of 1933, as amended 
by paragraph (1) of this subsection). Not later than 1 year after 
the date of enactment of this Act, the Commission shall submit 
a report to the Congress on the results of such study. 
SEC. 103. BROKER-DEALER EXEMPTIONS FROM STATE LAW. 
(a) IN GENERAL.—Section 15 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78o) is amended by adding at the end the 
following new subsection: 
"(h) LIMITATIONS ON STATE LAW.— 
"(1) CAPITAL, MARGIN, BOOKS AND RECORDS, BONDING, AND 
REPORTS.—No law, rule, regulation, or order, or other adminis-
trative action of any State or political subdivision thereof shall 
establish capital, custody, margin, financial responsibility, mak-
ing and keeping records, bonding, or financial or operational 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3421 
reporting requirements for brokers, dealers, municipal securi-
ties dealers, government securities brokers, or g:overnment 
securities dealers that differ from, or are in addition to, the 
requirements in those areas established under this title. The 
Commission shall consult periodically the securities commis-
sions (or any agency or office performing like functions) of 
the States concerning the adequacy of such requirements as 
established under this title. 
"(2) DE MINIMIS TRANSACTIONS BY ASSOCIATED PERSONS.— 
No law, rule, regulation, or order, or other administrative action 
of any State or political subdivision thereof may prohibit an 
associated person of a broker or dealer from affecting a 
transaction described in paragraph (3) for a customer in such 
State if— 
"(A) such associated person is not ineligible to register 
with such State for any reason other than such a trans-
action; 
"(B) such associated person is registered with a reg-
istered securities association and at least one State; and 
"(C) the broker or dealer with which such person is 
associated is registered with such State. 
"(3) DESCRIBED TRANSACTIONS.— 
"(A) IN GENERAL.—A transaction is described in this 
paragraph if— 
"(i) such transaction is effected— 
"(I) on behalf of a customer that, for 30 days 
prior to the day of the transaction, maintained 
an account with the broker or dealer; and 
"(II) by an associated person of the broker 
or dealer— 
"(aa) to which the customer was assigned 
for 14 days prior to the day of the transaction; 
and 
"(bb) who is registered with a State in 
which the customer was a resident or was 
present for at least 30 consecutive days during 
the 1-year period prior to the day of the trans-
action; 
"(ii) the trginsaction is effected— 
"(I) on behalf of a customer that, for 30 days 
prior to the day of the transaction, maintains an 
account with the broker or dealer; and 
"(II) during the period beginning on the date 
on which such associated person files an applica-
tion for registration with the State in which the 
transaction is effected and ending on the earlier 
of— 
"(aa) 60 days after the date on which the 
application is filed; or 
"(bb) the date on which such State notifies 
the associated person that it has denied the 
application for registration or has stayed the 
pendency of the application for cause. 
"(B) 
RULES 
OF 
CONSTRUCTION.—For 
purposes 
of 
subparagraph (A)(i)(II)— 
"(i) each of up to 3 associated persons of a broker 
or dealer who are designated to effect transactions 
110 STAT. 3422 
PUBLIC LAW 104-290—OCT. 11, 1996 
during the absence or unavailability of the principal 
associated person for a customer may be treated as 
an associated person to which such customer is 
assigned; and 
"(ii) if the customer is present in another State 
for 30 or more consecutive days or has permanently 
changed his or her residence to another State, a trans-
action is not described in this paragraph, unless the 
association person of the broker or dealer files an 
application for registration with such State not later 
than 10 business days after the later of the date of 
the transaction, or the date of the discovery of the 
presence of the customer in the other State for 30 
or more consecutive days or the change in the 
customer's residence.", 
(b) TECHNICAL AMENDMENT.—Section 28(a) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78bb(a)) is amended by striking 
"Nothing" and inserting "Except as otherwise specifically provided 
in this title, nothing". 
SEC. 104. BROKER-DEALER FUNDING. 
(a) MARGIN REQUIREMENTS.— 
(1) EXTENSIONS OF CREDIT BY BROKER-DEALERS.—Section 
7(c) of the Securities Exchange Act of 1934 (15 U.S.C. 78g(c)) 
is amended to read as follows: 
"(c) UNLAWFUL CREDIT EXTENSION TO CUSTOMERS.— 
"(1) PROHIBITION.—It shall be unlawful for any member 
of a national securities exchange or any broker or dealer, 
directly or indirectly, to extend or maintain credit or arrange 
for the extension or maintenance of credit to or for any 
customer— 
"(A) on any security (other than an exempted security), 
in contravention of the rules and regulations which the 
Board of Governors of the Federal Reserve System (here-
after in this section referred to as the 'Board') shall 
prescribe under subsections (a) and (b); and 
"(B) without collateral or on any collateral other than 
securities, except in accordance with such rules and regula-
tions as the Board may prescribe— 
"(i) to permit under specified conditions and for 
a limited period any such member, broker, or dealer 
to maintain a credit initially extended in conformity 
with the rules and regulations of the Board; and 
"(ii) to permit the extension or maintenance of 
credit in cases where the extension or maintenance 
of credit is not for the purpose of purchasing or carr3dng 
securities or of evading or circumventing the provisions 
of subparagraph (A). 
"(2) EXCEPTION.—This subsection and the rules and regula-
tions issued under this subsection shall not apply to any credit 
extended, maintained, or arranged by a member of a national 
securities exchange or a broker or dealer to or for a member 
of a national securities exchange or a registered broker or 
dealer— 
"(A) a substantial portion of whose business consists 
of transactions with persons other than brokers or dealers; 
or 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3423 
"(B) to finance its activities as a market maker or 
an underwriter; 
except that the Board may impose such rules and regulations, 
in whole or in part, on any credit otherwise exempted by 
this paragraph if the Board determines that such action is 
necessary or appropriate in the public interest or for the protec-
tion of investors.". 
(2) EXTENSIONS OF CREDIT BY OTHER LENDERS.—Section 
7(d) of the Securities Exchange Act of 1934 (78 U.S.C. 78g(d)) 
is amended to read as follows: 
"(d) UNLAWFUL CREDIT EXTENSION IN VIOLATION OF RULES 
AND REGULATIONS; EXCEPTION TO APPLICATION OF RULES, ETC.— 
"(1) PROHIBITION.—It shall be unlawful for any person not 
subject to subsection (c) to extend or maintain credit or to 
arrange for the extension or maintenance of credit for the 
purpose of purchasing or carrying any security, in contravention 
of such rules and regulations as the Board shall prescribe 
to prevent the excessive use of credit for the purchasing or 
carr5dng of or trading in securities in circumvention of the 
other provisions of this section. Such rules and regulations 
may impose upon all loans made for the purpose of purchasing 
or carr3dng securities limitations similar to those imposed upon 
members, brokers, or dealers by subsection (c) and the rules 
and regulations thereunder. 
"(2) EXCEPTIONS.—This subsection and the rules and regu-
lations issued under this subsection shall not apply to any 
credit extended, maintained, or arranged— 
"(A) by a person not in the ordinary course of business; 
"(B) on an exempted security; 
"(C) to or for a member of a national securities 
exchange or a registered broker or dealer— 
"(i) a substantial portion of whose business consists 
of transactions with persons other than brokers or 
dealers; or 
"(ii) to finance its activities as a market maker 
or an underwriter; 
"(D) by a bank on a security other than an equity 
security; or 
"(E) as the Board shall, by such rules, regulations, 
or orders as it may deem necessary or appropriate in the 
public interest or for the protection of investors, exempt, 
either unconditionally or upon specified terms and condi-
tions or for stated periods, from the operation of this sub-
section and the rules and regulations thereunder. 
"(3) BOARD AUTHORITY.—The Board may impose such rules 
and regulations, in whole or in part, on any credit otherwise 
exempted by subparagraph (C) if it determines that such action 
is necessary or appropriate in the public interest or for the 
protection of investors.". 
(b) BORROWING BY MEMBERS, BROKERS, AND DEALERS.—Section 
8 of the Securities Exchange Act of 1934 (15 U.S.C. 78h) is 
amended— 
(1) by striking subsection (a); and 
(2) by redesignating subsections (b) and (c) as subsections 
(a) and (b), respectively. 
110 STAT. 3424 
PUBLIC LAW 104-290—OCT. 11, 1996 
SEC. 105. EXEMPTIVE AUTHORITY. 
(a) GENERAL EXEMPTIVE AUTHORITY UNDER THE SECURITIES 
ACT OF 1933.—Title I of the Securities Act of 1933 (15 U.S.C. 
77a et seq.) is amended by adding at the end the following new 
section: 
15 u s e 77z-3. 
"SEC 28. GENERAL EXEMPTIVE AUTHORITY. 
"The Commission, by rule or regulation, may conditionally or 
unconditionally exempt any person, security, or transaction, or any 
class or classes of persons, securities, or transactions, from any 
provision or provisions of this title or of any rule or regulation 
issued under this title, to the extent that such exemption is nec-
essary or appropriate in the public interest, and is consistent with 
the protection oi investors.". 
(b) GENERAL EXEMPTIVE AUTHORITY UNDER THE SECURITIES 
EXCHANGE ACT OF 1934.—Title I of the Securities Exchange Act 
of 1934 (15 U.S.C. 78a et seq.) is amended by adding at the end 
the following new section: 
15 u s e 78mm. 
"SEC. 36. GENERAL EXEMPTIVE AUTHORITY. 
"(a) AUTHORITY.— 
"(1) IN GENERAL.—Except as provided in subsection (b), 
but notwithstanding any other provision of this title, the 
Commission, by rule, regulation, or order, may conditionally 
or unconditionally exempt any person, security, or transaction, 
or any class or classes of persons, securities, or transactions, 
from any provision or provisions of this title or of any rule 
or regulation thereunder, to the extent that such exemption 
is necessary or appropriate in the public interest, and is consist-
ent with the protection of investors. 
Regulations. 
"(2) PROCEDURES.—The Commission shall, by rule or regu-
lation, determine the procedures under which an exemptive 
order under this section shall be granted and may, in its 
sole discretion, decline to entertain any application for an order 
of exemption under this section. 
"(b) LIMITATION.—The Commission may not, under this section, 
exempt any person, security, or transaction, or any class or classes 
of persons, securities, or transactions from section 15C or the rules 
or regulations issued thereunder or (for purposes of section 15C 
and the rules and regulations issued thereunder) from any definition 
in paragraph (42), (43), (44), or (45) of section 3(a).". 
SEC. 106. PROMOTION OF EFFICIENCY, COMPETITION, AND CAPITAL 
FORMATION. 
(a) SECURITIES ACT OF 1933.—Section 2 of the Securities Act 
of 1933 (15 U.S.C. 77b) is amended— 
(1) by inserting "(a) DEFINITIONS.—" after "SEC. 2."; and 
(2) by adding at the end the following new subsection: 
"(b) CONSIDERATION OF PROMOTION OF EFFICIENCY, COMPETI-
TION, AND CAPITAL FORMATION.—Whenever pursuant to this title 
the Commission is engaged in rulemaking and is required to 
consider or determine whether an action is necessary or appropriate 
in the public interest, the Commission shall also consider, in addi-
tion to the protection of investors, whether the action will promote 
efficiency, competition, and capital formation.". 
(b) SECURITIES EXCHANGE ACT of 1934.—Section 3 of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c) is amended by 
adding at the end the following new subsection: 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3425 
"(f) CONSIDERATION OF PROMOTION OF EFFICIENCY, COMPETI-
TION, AND CAPITAL FORMATION.—^Whenever pursuant to this title 
the Commission is engaged in rulemaking, or in the review of 
a rule of a self-regulatory organization, and is required to consider 
or determine whether an action is necessary or appropriate in 
the public interest, the Commission shall also consider, in addition 
to the protection of investors, whether the action will promote 
efficiency, competition, and capital formation.". 
(c) INVESTMENT COMPANY ACT of 1940.—Section 2 of the Invest-
ment Company Act of 1940 (15 U.S.C. 80a-2) is amended by adding 
at the end the following new subsection: 
"(c) CONSIDERATION OF PROMOTION OF EFFICIENCY, COMPETI-
TION, AND CAPITAL FORMATION.—Whenever pursuant to this title 
the Commission is engaged in rulemaking and is required to 
consider or determine whether an action is consistent with the 
public interest, the Commission shall also consider, in addition 
to the protection of investors, whether the action will promote 
efficiency, competition, and capital formation.". 
SEC. 107. PRIVATIZATION OF EDGAR. 
(a) EXAMINATION.—The Commission shall examine proposals 
for the privatization of the EDGAR system. Such examination shall 
promote competition in the automation and rapid collection and 
dissemination of information required to be disclosed. Such exam-
ination shall include proposals that maintain free public access 
to data filings in the EDGAR system. 
(b) REPORT.—Not later than 180 days after the date of enact-
ment of this Act, the Commission shall submit to the Congress 
a report on the examination under subsection (a). Such report 
shall include such recommendations for such legislative action as 
may be necessary to implement the proposal that the Commission 
determines most effectively achieves the objectives described in 
subsection (a). 
SEC. 108. IMPROVING COORDINATION OF SUPERVISION. 
Section 17 of the Securities Exchange Act of 1934 (15 U.S.C. 
78q) is amended by adding at the end the following new subsection: 
"(i) COORDINATION OF EXAMINING AUTHORITIES.— 
"(1) ELIMINATION OF DUPLICATION.—The Commission and 
the examining authorities, through cooperation and coordina-
tion of examination and oversight activities, shall eliminate 
any unnecessary and burdensome duplication in the examina-
tion process. 
"(2) COORDINATION OF EXAMINATIONS.—The Commission 
and the examining authorities shall share such information, 
including reports of examinations, customer complaint informa-
tion, and other nonpublic regulatory information, as appropriate 
to foster a coordinated approach to regulatory oversight of 
brokers and dealers that are subject to examination by more 
than one examining authority. 
"(3) EXAMINATIONS FOR CAUSE.—At any time, any examin-
ing authority may conduct an examination for cause of any 
broker or dealer subject to its jurisdiction. 
"(4) CONFIDENTIALITY.— 
"(A) IN GENERAL.—Section 24 shall apply to the sharing 
of information in accordance with this subsection. The 
Commission shall take appropriate action under section 
110 STAT. 3426 
PUBLIC LAW 104-290—OCT. 11, 1996 
24(c) to ensure that such information is not inappropriately 
disclosed. 
"(B) APPROPRIATE DISCLOSURE NOT PROHIBITED.—Noth-
ing in this paragraph authorizes the Commission or any 
examining authority to withhold information from the 
Congress, or prevent the Commission or any examining 
authority from complying with a request for information 
from any other Federal department or agency requesting 
the information for purposes within the scope of its jurisdic-
tion, or compljdng with an order of a court of the United 
States in an action brought by the United States or the 
Commission. 
"(5) DEFINITION.—For purposes of this subsection, the term 
'examining authority' means a self-regulatory organization reg-
istered with the Commission under this title (other than a 
registered clearing agency) with the authority to examine, 
inspect, and otherwise oversee the activities of a registered 
broker or dealer.". 
15 u s e 77e note. 
SEC. 109. INCREASED ACCESS TO FOREIGN BUSINESS INFORMATION. 
Not later than 1 year after the date of enactment of this 
Act, the Commission shall adopt rules under the Securities Act 
of 1933 concerning the status under the registration provisions 
of the Securities Act of 1933 of foreign press conferences and foreign 
press releases by persons engaged in the offer and sale of securities. 
Investment 
Company Act 
Amendments of 
1996. 
TITLE II—INVESTMENT COMPANY ACT 
AMENDMENTS 
15 u s e 80a-51 
SEC. 201. SHORT TITLE. 
This title may be cited as the "Investment Company Act Amend-
ments of 1996". 
SEC. 202. FUNDS OF FUNDS. 
Section 12(d)(1) of the Investment Company Act of 1940 (15 
U.S.C. 80a-12(d)(l)) is amended— 
(1) in subparagraph (E)(iii)— 
(A) by striking "in the event such investment company 
is not a registered investment company,"; and 
(B) by inserting "in the event that such investment 
company is not a registered investment company," after 
"(bb)"; 
(2) by redesignating subparagraphs (G) and (H) as subpara-
graphs (H) and (I), respectively; 
(3) by striking "this paragraph (1)" each place that term 
appears and inserting "this paragraph"; 
(4) by inserting after subparagraph (F) the following new 
subparagraph: 
"(G)(i) This paragraph does not apply to securities of a reg-
istered open-end investment company or a registered unit invest-
ment trust (hereafter in this subparagraph referred to as the 
'acquired company') purchased or otherwise acquired by a registered 
open-end investment company or a registered unit investment trust 
(hereafter in this subparagraph referred to as the 'acquiring com-
pan/) if— 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3427 
"(I) the acquired company and the acquiring company are 
part of the same group of investment companies; 
"(II) the securities of the acquired company, securities of 
other registered open-end investment companies and registered 
unit investment trusts that are part of the same group of 
investment companies. Government securities, and short-term 
paper are the only investments held by the acquiring company; 
"(III) with respect to— 
"(aa) securities of the acquired company, the acquiring 
company does not pay and is not assessed any charges 
or fees for distribution-related activities, unless the acquir-
ing company does not charge a sales load or other fees 
or charges for distribution-related activities; or 
"(bb) securities of the acquiring company, any sales 
loads and other distribution-related fees charged, when 
aggregated with any sales load and distribution-related 
fees paid by the acquiring company with respect to 
securities of the acquired fund, are not excessive under 
rules adopted pursuant to section 22(b) or section 22(c) 
by a securities association registered under section 15A 
of the Securities Exchange Act of 1934, or the Commission; 
"(IV) the acquired company has a policy that prohibits 
it from acquiring any securities of registered open-end invest-
ment companies or registered unit investment trusts in reliance 
on this subparagraph or subparagraph (F); and 
"(V) such acquisition is not in contravention of such rules 
and regulations as the Commission may from time to time 
prescribe with respect to acquisitions in accordance with this 
subparagraph, as necessary and appropriate for the protection 
of investors. 
"(ii) For purposes of this subparagraph, the term 'group of 
investment companies' means any 2 or more registered investment 
companies that hold themselves out to investors as related 
companies for purposes of investment and investor services."; and 
(5) by adding at the end the following new subparagraph: 
"(J) The Commission, by rule or regulation, upon its own motion 
or by order upon application, may conditionally or unconditionally 
exempt any person, security, or transaction, or any class or classes 
of persons, securities, or transactions from any provision of this 
subsection, if and to the extent that such exemption is consistent 
with the public interest and the protection of investors.". 
SEC. 203. FLEXIBLE REGISTRATION OF SECURITIES. 
(a) AMENDMENTS TO REGISTRATION STATEMENTS.—Section 24(e) 
of the Investment Company Act of 1940 (15 U.S.C. 80a-24(e)) 
is amended— 
(1) by striking paragraphs (1) and (2); 
(2) by striking "(3) For" and inserting "For"; and 
(3) by striking "pursuant to this subsection or otherwise". 
(b) REGISTRATION OF INDEFINITE AMOUNT OF SECURITIES.—Sec-
tion 24(f) of the Investment Company Act of 1940 (15 U.S.C. 
80a-24(f)) is amended to read as follows: 
"(f) 
REGISTRATION OF INDEFINITE AMOUNT OF SECURITIES.— 
"(1) REGISTRATION OF SECURITIES.—Upon the effective date 
of its registration statement, as provided by section 8 of the 
Securities Act of 1933, a face-amount certificate company, open-
2&-194 O - 96 - 12 : QL 3 Part 5 
110 STAT. 3428 
PUBLIC LAW 104-290—OCT. 11, 1996 
end management company, or unit investment trust, shall be 
deemed to have registered an indefinite amount of securities. 
"(2) PAYMENT OF REGISTRATION FEES.—Not later than 90 
days after the end of the fiscal year of a company or trust 
referred to in paragraph (1), the company or trust, as applicable, 
shall pay a registration fee to the Commission, calculated in 
the manner specified in section 6(b) of the Securities Act of 
1933, based on the aggregate sales price for which its securities 
(including, for purposes of this paragraph, all securities issued 
pursuant to a dividend reinvestment plan) were sold pursuant 
to a registration of an indefinite amount of securities under 
this subsection during the previous fiscal year of the company 
or trust, reduced by— 
"(A) the aggregate redemption or repurchase price of 
the securities of the company or trust during that year; 
and 
"(B) the aggregate redemption or repurchase price of 
the securities of the company or trust during any prior 
fiscal year ending not more than 1 year before the date 
of enactment of the Investment Company Act Amendments 
of 1996, that were not used previously by the company 
or trust to reduce fees payable under this section. 
"(3) INTEREST DUE ON LATE PAYMENT.—A company or trust 
paying the fee required by this subsection or any portion thereof 
more thein 90 days after the end of the fiscal year of the 
company or trust shall pay to the Commission interest on 
unpaid amounts, at the average investment rate for Treasury 
tax and loan accounts published by the Secretary of the 
Treasury pursuant to section 3717(a) of title 31, United States 
Code. The payment of interest pursuant to this paragraph 
shall not preclude the Commission from bringing an action 
to enforce the requirements of paragraph (2). 
"(4) RULEMAKING AUTHORITY.—The Commission may adopt 
rules and regulations to implement this subsection.". 
l5USC80a-24 
(c) EFFECTIVE DATE.—The amendments made by this section 
"lote. 
shall become effective on the earlier of— 
(1) 1 year after the date of enactment of this Act; or 
(2) the effective date of final rules or regulations issued 
in accordance with section 24(f) of the Investment Company 
Act of 1940, as amended by this section. 
SEC. 204. FACILITATING USE OF CURRENT INFORMATION IN 
ADVERTISING. 
Section 24 of the Investment Company Act of 1940 (15 U.S.C. 
80a-24) is amended by adding at the end the following new sub-
section: 
Regulations. 
"(g) ADDITIONAL PROSPECTUSES.—In addition to any prospectus 
permitted or required by section 10(a) of the Securities Act of 
1933, the Commission shall permit, by rules or regulations deemed 
necessary or appropriate in the public interest or for the protection 
of investors, the use of a prospectus for purposes of section 5(b)(1) 
of that Act with respect to securities issued by a registered invest-
ment company. Such a prospectus, which may include information 
the substance of which is not included in the prospectus specified 
in section 10(a) of the Securities Act of 1933, shall be deemed 
to be permitted by section 10(b) of that Act.". 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3429 
SEC. 205. VARIABLE INSURANCE CONTRACTS. 
(a) UNIT INVESTMENT TRUST TREATMENT.—Section 26 of 
the 
Investment Company Act of 1940 (15 U.S.C. 80a-26) is amended 
by adding at the end the following new subsection: 
"(e) EXEMPTION.— 
"(1) IN GENERAL.—Subsection (a) does not apply to any 
registered 
separate 
account 
funding 
variable 
insurance 
contracts, or to the sponsoring insurance company and principal 
underwriter of such account. 
"(2) LIMITATION ON SALES.—It shall be unlawful for any 
registered 
separate 
account 
funding 
variable 
insurance 
contracts, or for the sponsoring insurance company of such 
account, to sell any such contract— 
"(A) unless the fees and charges deducted under the 
contract, in the aggregate, are reasonable in relation to 
the services rendered, the expenses expected to be incurred, 
and the risks assumed by the insurance company, and, 
beginning on the earlier of August 1, 1997, or the earliest 
i, 
effective date of any registration statement or amendment 
thereto for such contract following the date of enactment 
of this subsection, the insurance company so represents 
in the registration statement for the contract; and 
"(B) unless the insurance company— 
"(i) complies with all other applicable provisions 
of this section, as if it were a trustee or custodian 
of the registered separate account; 
"(ii) files with the insurance regulatory authority 
of the State which is the domiciliary State of the 
insurance company, an annual statement of its finan-
cial condition, which most recent statement indicates 
that the insurance company has a combined capital 
and surplus, if a stock company, or an unassigned 
surplus, if a mutual company, of not less than 
$1,000,000, or such other amount as the Commission 
may from time to time prescribe by rule, as necessary 
or appropriate in the public interest or for the protec-
tion of investors; and 
"(iii) together with its registered separate accounts, 
is supervised 
and 
examined 
periodically by the 
insurance authority of such State. 
"(3) FEES AND CHARGES.—For purposes of paragraph (2), 
the fees and charges deducted under the contract shall include 
all fees and charges imposed for any purpose and in any 
manner. 
"(4) REGULATORY AUTHORITY.—The Commission may issue 
such rules and regulations to carry out paragraph (2)(A) as 
it determines are necessary or appropriate in the public interest 
or for the protection of investors.". 
(b) PERIODIC PAYMENT PLAN TREATMENT.—Section 27 of 
the 
Investment Company Act of 1940 (15 U.S.C. 80a-27) is amended 
by adding at the end the following new subsection: 
"(i)(l) This section does not apply to any registered separate 
account funding variable insurance contracts, or to the sponsoring 
insurance company and principal underwriter of such account, 
except as provided in paragraph (2). 
"(2) It shall be unlawful for any registered separate account 
funding variable insurance contracts, or for the 
sponsoring 
110 STAT. 3430 
PUBLIC LAW 104-290—OCT. 11, 1996 
insurance company of such account, to sell any such contract 
unless— 
"(A) such contract is a redeemable security; and 
"(B) the insurance company complies with section 26(e) 
and any rules or regulations issued by the Commission under 
section 26(e).". 
SEC. 206. REPORTS TO THE COMMISSION AND SHAREHOLDERS. 
Section 30 of the Investment Company Act of 1940 (15 U.S.C. 
80a-29) is amended— 
(1) in subsection (b), by striking paragraph (1) and inserting 
the following: 
"(1) such information, documents, and reports (other than 
financial statements), as the Commission may require to keep 
reasonably current the information and documents contained 
in the registration statement of such company filed under this 
title;"; 
(2) by redesignating subsections (c), (d), (e), and (f) as 
subsections (d), (e), (g), and (h), respectively; 
(3) by inserting after subsection (b) the following new sub-
section: 
"(c)(1) The Commission shall take such action as it deems 
necessary or appropriate, consistent with the public interest and 
the protection of investors, to avoid unnecessary reporting by, and 
minimize the compliance burdens on, registered 
investment 
companies and their affiliated persons in exercising its authority— 
"(A) under subsection (f); and 
"(B) under subsection (b)(1), if the Commission requires 
the filing of information, documents, and reports under that 
subsection on a basis more frequently than semiannually. 
"(2) Action taken by the Commission under paragraph (1) shall 
include considering, and requesting public comment on— 
"(A) feasible alternatives that minimize the reporting 
burdens on registered investment companies; and 
"(B) the utility of such information, documents, and reports 
to the Commission in relation to the costs to registered invest-
ment companies and their affiliated persons of providing such 
information, documents, and reports."; 
(4) by inserting after subsection (e) (as redesignated by 
paragraph (2) of this section), the following new subsection: 
"(f) The Commission may, by rule, require that semiannual 
reports containing the information set forth in subsection (e) include 
such other information as the Commission deems necessary or 
appropriate in the public interest or for the protection of investors."; 
and 
(5) in subsection (g) (as redesignated by paragraph (2) 
of this section), by striking "subsections (a) and (d)" and insert-
ing "subsections (a) and (e)". 
SEC. 207. BOOKS, RECORDS, AND INSPECTIONS. 
Section 31 of the Investment Company Act of 1940 (15 U.S.C. 
80a-30) is amended— 
(1) by striking subsections (a) and (b) and inserting the 
following: 
"(a) MAINTENANCE OF RECORDS.— 
"(1) IN GENERAL.—Each registered investment company, 
and each underwriter, broker, dealer, or investment adviser 
that is a majority-owned subsidiary of such a company, shall 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3431 
maintain and preserve such records (as defined in section 
3(a)(37) of the Securities Exchange Act of 1934) for such period 
or periods as the Commission, by rules and regulations, may 
prescribe as necessary or appropriate in the public interest 
or for the protection of investors. Each investment adviser Regulations. 
that is not a majority-owned subsidiary of, and each depositor 
of any registered investment company, and each principal 
underwriter for any registered investment company other than 
a closed-end company, shall maintain and preserve for such 
period or periods as the Commission shall prescribe by rules 
and regulations, such records as are necessary or appropriate 
to record such person's transactions with such registered 
company. 
"(2) MINIMIZING COMPLIANCE BURDEN.—In exercising its 
authority under this subsection, the Commission shall take 
such steps as it deems necessary or appropriate, consistent 
with the public interest and for the protection of investors, 
to avoid unnecessary recordkeeping by, and minimize the 
compliance burden on, persons required to maintain records 
under this subsection (hereafter in this section referred to 
as 'subject persons'). Such steps shall include considering, and 
requesting public comment on— 
"(A) feasible alternatives that minimize the record-
keeping burdens on subject persons; 
"(B) the necessity of such records in view of the public 
benefits derived fi*om the independent scrutiny of such 
records through Commission examination; 
"(C) the costs associated with maintaining the informa-
tion that would be required to be reflected in such records; 
and 
"(D) the effects that a pro;;osed recordkeeping require-
ment would have on internal compliance policies and 
procedures. 
"(b) EXAMINATIONS OF RECORDS.— 
"(1) IN GENERAL.—All records required to be maintained 
and preserved in accordance with subsection (a) shall be subject 
at any time and fi*om time to time to such reasonable periodic, 
special, and other examinations by the Commission, or any 
member or representative thereof, as the Commission may 
prescribe. 
"(2) AVAILABILITY.—For purposes of examinations referred 
to in paragraph (1), any subject person shall make available 
to the Commission or its representatives any copies or extracts 
fi-om such records as may be prepared without undue effort, 
expense, or delay as the Commission or its representatives 
may reasonably request. 
"(3) COMMISSION ACTION.—The Commission shall exercise 
its authority under this subsection with due regard for the 
benefits of internal compliance policies and procedures and 
the effective implementation and operation thereof."; 
(2) by redesignating subsections (c) and (d) as subsections 
(e) and (f), respectively; 
(3) by inserting after subsection (b) the following new sub-
sections: 
"(c) LIMITATIONS ON DISCLOSURE BY COMMISSION.—Notwith-
standing any other provision of law, the Commission shall not 
be compelled to disclose any internal complismce or audit records, 
110 STAT. 3432 
PUBLIC LAW 104-290—OCT. 11, 1996 
or information contained therein, provided to the Commission under 
this section. Nothing in this subsection shall authorize the Commis-
sion to withhold information from the Congress or prevent the 
Commission from complying with a request for information from 
any other Federal depaurtment or agency requesting the information 
for purposes within tne scope of the jurisdiction of that department 
or agency, or complying with an order of a court of the United 
States in an action Drought by the United States or the Commission. 
For purposes of section 552 of title 5, United States Code, this 
section snail be considered a statute described in subsection (b)(3)(B) 
of such section 552. 
"(d) DEFINITIONS.—For purposes of this section— 
"(1) the term 'internal compliance policies and procedures' 
means policies and procedures designed by subject persons 
to promote compliance with the Federal securities laws; and 
"(2) the term 'internal compliance and audit record' means 
any record prepared by a subject person in accordance with 
internal compliance policies and procedures."; 
(4) in subsection (e), as redesignated, by inserting 
"REGULATORY AUTHORITY.—" before "The Commission"; and 
(5) in subsection 
(f), as redesignated, by inserting 
"EXEMPTION AUTHORITY.—" before "The (Jommission". 
SEC. 208. PROfflBrriON ON DECEPTIVE INVESTMENT COMPANY 
NAMES. 
Section 35(d) of the Investment Company Act of 1940 (15 U.S.C. 
80a-34(d)) is amended to read as follows: 
"(d) DECEPTIVE OR MISLEADING NAMES.—It shall be unlawful 
for any registered investment company to adopt as a part of the 
name or title of such company, or of any securities of which it 
is the issuer, any word or words that the Commission finds are 
materially deceptive or misleading. The Commission is authorized, 
by rule, regulation, or order, to define such names or titles as 
are materially deceptive or misleading.". 
SEC. 209. AMENDMENTS TO DEFINITIONS. 
(a) EXCEPTED INVESTMENT COMPANIES.—Section 3(c) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-3(c)) is amended— 
(1) in paragraph (1), by inserting after the first sentence 
the following: "Such issuer shall be deemed to be £in investment 
company for purposes of the limitations set forth in subpara-
graphs (A)(i) and (B)(i) of section 12(d)(1) governing the pur-
chase or other acquisition by such issuer of smy security issued 
by any registered investment company and the sale of any 
security issued by any registered open-end investment company 
to any such issuer."; 
(2) in subparagraph (A) of paragraph (1)— 
(A) by inserting after "issuer," the first place that 
term appears, the following: "and is or, but for the exception 
provided for in this paragraph or paragraph (7), would 
be an investment company,"; and 
(B) by striking "unless, as of and all that follows 
through the end of the subparagraph and inserting a 
period; 
(3) in paragraph (2)— 
(A) by striking "and acting as broker," and inserting 
"acting as broker, and acting as market intermediary,"; 
(B) by inserting "(A)" after "(2)"; and 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3433 
(C) by adding at the end the following new subpara-
graph: 
"(B) For purposes of this paragraph— 
"(i) the term 'market intermediary' means any person 
that regularly holds itself out as being willing contempora-
neously to engage in, and that is regularly engaged in, 
the business of entering into transactions on both sides 
of the market for a financial contract or one or more such 
financial contracts; and 
"(ii) the term 'financial contract' means any arrange-
ment that— 
"(I) takes the form of an individually negotiated 
contract, agreement, or option to buy, sell, lend, swap, 
or repurchase, or other similar individually negotiated 
transaction commonly entered into by participants in 
the financial markets; 
"(II) is in respect of securities, commodities, cur-
rencies, interest or other rates, other measures of 
value, or any other financial or economic interest 
similar in purpose or function to any of the foregoing; 
and 
"(III) is entered into in response to a request fi*om 
a counter party for a quotation, or is otherwise entered 
into and structured to accommodate the objectives of 
the counter party to such arrangement."; and 
(4) by striking paragraph (7) and inserting the following: 
"(7)(A) Any issuer, the outstanding securities of which are 
owned exclusively by persons who, at the time of acquisition 
of such securities, are qualified purchasers, and which is not 
making and does not at that time propose to make a public 
offering of such securities. Securities that are owned by persons 
who received the securities fi*om a qualified purchaser as a 
gift or bequest, or in a case in which the transfer was caused 
by legal separation, divorce, death, or other involuntary event, 
shall be deemed to be owned by a qualified purchaser, subject 
to such rules, regulations, and orders as the Commission may 
prescribe as necessary or appropriate in the public interest 
or for the protection of investors. 
"(B) Notwithstanding subparagraph (A), an issuer is within 
the exception provided by this paragraph if— 
"(i) in addition to qualified purchasers, outstanding 
securities of that issuer are beneficially owned by not more 
than 100 persons who are not qualified purchasers, if— 
"(I) such persons acquired any portion of the secu-
rities of such issuer on or before September 1, 1996; 
and 
"(II) at the time at which such persons initially 
acquired the securities of such issuer, the issuer was 
excepted by paragraph (1); and 
"(ii) prior to availing itself of the exception provided 
by this paragraph— 
"(I) such issuer has disclosed to each beneficial 
owner, as determined under paragraph (1), that future 
investors will be limited to qualified purchasers, and 
that ownership in such issuer is no longer limited 
to not more than 100 persons; and 
110 STAT. 3434 
PUBLIC LAW 104-290—OCT. 11, 1996 
"(11) concurrently with or after such disclosure, 
such issuer has provided each beneficial owner, as 
determined under paragraph (1), with a reasonable 
opportunity to redeem any part or all of their interests 
in the issuer, notwithstanding any agreement to the 
contrary between the issuer and such persons, for that 
person's proportionate share of the issuer's net assets. 
"(C) Each person that elects to redeem under subparagraph 
(B)(ii)(II) shall receive an amount in cash equal to that person's 
proportionate share of the issuer's net assets, unless the issuer 
elects to provide such person with the option of receiving, 
and such person agrees to receive, all or a portion of such 
person's share in assets of the issuer. If the issuer elects to 
provide such persons with such an opportiuiity, disclosure 
concerning such opportunity shall be made in the disclosure 
required by subparagraph (B)(ii)(I). 
"(D) An issuer that is excepted under this paragraph shall 
nonetheless be deemed to be an investment company for pur-
poses of the limitations set forth in subparagraphs (A)(i) and 
(B)(i) of section 12(d)(1) relating to the purchase or other 
acquisition by such issuer of any security issued by any reg-
istered investment compsiny and the sale of any security issued 
by any registered open-end investment company to any such 
issuer. 
"(E) For purposes of determining compliance with this para-
graph 
and paragraph 
(1), an issuer that 
is 
otherwise 
excepted imder this paragraph and an issuer that is otherwise 
excepted under paragraph (1) shall not be treated by the 
Commission as being a single issuer for purposes of determining 
whether the outstanding securities of the issuer excepted under 
paragraph (1) are beneficially owned by not more than 100 
persons or whether the outstanding securities of the issuer 
excepted under this paragraph are owned by persons that are 
not qualified purchasers. Nothing in this subparagraph shall 
be construed to establish that a person is a bona fide qualified 
purchaser for purposes of this paragraph or a bona fide bene-
ficial owner for purposes of paragraph (1).". 
(b) QUALIFIED PURCHASER.—Section 2(a) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-2(a)) is amended by adding 
at the end the following new paragraph: 
"(51)(A) 'Qualified purchaser' means— 
"(i) any natural person (including any person who holds 
a joint, community property, or other similar shared owner-
ship interest in an issuer that is excepted under section 
3(c)(7) with that person's qualified purchaser spouse) who 
owns not less than $5,000,000 in investments, as defined 
by the Commission; 
"(ii) any company that owns not less than $5,000,000 
in investments and that is owned directly or indirectly 
by or for 2 or more natural persons who are related as 
siblings or spouse (including former spouses), or direct 
lineal descendants by birth or adoption, spouses of such 
persons, the estates of such persons, or foundations, chari-
table organizations, or trusts established by or for the 
benefit of such persons; 
"(iii) any trust that is not covered by clause (ii) and 
that was not formed for the specific purpose of acquiring 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3435 
the securities offered, as to which the trustee or other 
person authorized to make decisions with respect to the 
trust, and each settlor or other person who has contributed 
assets to the trust, is a person described in clause (i), 
(ii), or (iv); or 
"(iv) any person, acting for its own account or the 
accounts of other qualified 
purchasers, who in 
the 
aggregate owns and invests on a discretionary basis, not 
less than $25,000,000 in investments. 
"(B) The Commission may adopt such rules and regulations 
applicable to the persons and trusts specified in clauses (i) 
through (iv) of subparagraph (A) as it determines are necessary 
or appropriate in the public interest or for the protection of 
investors. 
"(C) The term 'qualified purchaser' does not include a 
company that, but for the exceptions provided for in paragraph 
(1) or (7) of section 3(c), would be an investment company 
(hereafter in this paragraph referred to as an 'excepted invest-
ment company), unless all beneficial owners of its outstanding 
securities (other than short-term paper), determined in accord-
ance with section 3(c)(1)(A), that acquired such securities on 
or before April 30, 1996 (hereafter in this paragraph referred 
to as 'pre-amendment beneficial owners'), and all pre-amend-
ment beneficial owners of the outstanding securities (other 
than short-term paper) of any excepted investment company 
that, directly or indirectly, owns any outstanding securities 
of such excepted investment company, have consented to its 
treatment as a qualified purchaser. Unanimous consent of all 
trustees, directors, or general partners of a company or trust 
referred to in clause (ii) or (iii) of subparagraph (A) shall 
constitute consent for purposes of this subparagraph.". 
(c) CONFORMING AMENDMENTS.—Section 3(a) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-3(a)) is amended— 
(1) by striking "(1)" and inserting "(A)"; 
(2) by striking "(2)" and inserting "(B)"; 
(3) by striking "(3)" and inserting "(C)"; 
(4) by inserting "(1)" after "(a)"; 
(5) by striking "As used" and inserting "(2) As used"; and 
(6) in paragraph (2)(C), as designated by paragraph (5) 
of this subsection— 
(A) by striking "which are" and inserting the following: 
"which (i) are"; and 
(B) by inserting before the period at the end, the follow-
ing: ", and (ii) are not relying on the exception from the 
definition of investment company in paragraph (1) or (7) 
of subsection (c)". 
(d) RULEMAKING REQUIRED.— 
(1) IMPLEMENTATION OF SECTION 3(C)(1)(B).—Not later than 
i5USC80a-3 
1 year after the date of enactment of this Act, the Commission note. 
shall prescribe rules to implement the requirements of section 
3(c)(1)(B) of the Investment Company Act of 1940 (15 U.S.C. 
80a-3(c)(l)(B)), as amended by this section. 
(2) IDENTIFICATION OF INVESTMENTS.—Not later than 180 15 use 80a-2 
days after the date of enactment of this Act, the Commission note. 
shall prescribe rules defining the term, or otherwise identifying, 
"investments" for purposes of section 2(a)(51) of the Investment 
Company Act of 1940, as added by this Act. 
110 STAT. 3436 
PUBLIC LAW 104-290—OCT. 11, 1996 
15 u s e 80a-3 
note. 
15 u s e 80a-3 
note. 
15 u s e 80a-2 
note. 
(3) EMPLOYEE EXCEPTION.—Not later than 1 year after 
the date of enactment of this Act, the Commission shall pre-
scribe rules pursuant to its authority under section 6 of the 
Investment Company Act of 1940 to permit the ownership 
of securities by knowledgeable employees of the issuer of the 
securities or an affiliated person without loss of the exception 
of the issuer under paragraph (1) or (7) of section 3(c) of 
that Act from treatment as an investment company under 
that Act. 
(4) BENEFICIAL OWNERSHIP.—Not later than 180 days after 
the date of enactment of this Act, the Commission shall pre-
scribe rules defining the term "beneficial owner" for purposes 
of section 3(c)(7)(B) of the Investment Company Act of 1940, 
as amended by this Act. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on the earlier o
f
—
-
(1) 180 days after the date of enactment of this Act; or 
(2) the date on which the rulemeiking required under sub-
section (d)(2) is completed. 
SEC. 210. PERFORMANCE FEES EXEMPTIONS. 
Section 205 of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-5) is amended— 
(1) in subsection (b)— 
(A) in paragraph (2), by striking "or" at the end; 
(B) in paragraph (3), by striking the period at the 
end and inserting a semicolon; and 
(C) by adding at the end the following new paragraphs: 
"(4) apply to an investment advisory contract with a com-
pany excepted from the definition of an investment company 
under section 3(c)(7) of title I of this Act; or 
"(5) apply to an investment advisory contract with a person 
who is not a resident of the United States."; and 
(2) by adding at the end the following new subsection: 
"(e) The Commission, by rule or regulation, upon its own 
motion, or by order upon application, may conditionally or uncondi-
tionally exempt any person or transaction, or any class or classes 
of persons or transactions, from subsection (a)(1), if and to the 
extent that the exemption relates to an investment advisory contract 
with any person that the Commission determines does not need 
the protections of subsection (a)(1), on the basis of such factors 
as financial sophistication, net worth, knowledge of and experience 
in 
financial 
matters, amount of assets under 
management, 
relationship with a registered investment adviser, and such other 
factors as the Commission determines are consistent with this 
section.". 
Investment 
Advisers 
Supervision 
Coordination Act. 
15 u s e 80b-20 
note. 
TITLE III^INVESTMENT ADVISERS 
SUPERVISION COORDINATION ACT 
S E C . 301. SHORT TITLE. 
This title may be cited as the "Investment Advisers Supervision 
Coordination Act". 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3437 
SEC. 302. FUNDING FOR ENHANCED ENFORCEMENT PRIORITY. 
There are authorized to be appropriated to the Commission, 
for the enforcement of the Investment Advisers Act of 1940, not 
more than $20,000,000 in each of fiscal years 1997 and 1998, 
in addition to any funds authorized to be appropriated to the 
Commission for this or other purposes. 
SEC. 303. IMPROVED SUPERVISION THROUGH STATE AND FEDERAL 
COOPERATION. 
(a) STATE AND FEDERAL RESPONSIBILITIES.—The Investment 
Advisers Act of 1940 (15 U.S.C. 80b-l et seq.) is amended by 
inserting after section 203 the following new section: 
"SEC. 203A. STATE AND FEDERAL RESPONSIBILITIES. 
"(a) ADVISERS SUBJECT TO STATE AUTHORITIES.— 
"(1) IN GENERAL.—No investment adviser that is regulated 
or required to be regulated as an investment adviser in the 
State in which it maintains its principal office £md place of 
business shall register under section 203, unless the investment 
adviser— 
"(A) has assets under management of not less than 
$25,000,000, or such higher amount as the Commission 
may, by rule, deem appropriate in accordeince with the 
purposes of this title; or 
"(B) is an adviser to an investment company registered 
under title I of this Act, 
"(2) DEFINITION.—For purposes of this subsection, the term 
'assets under management' means the securities portfolios with 
respect to which an investment adviser provides continuous 
and regular supervisory or management services. 
"(b) ADVISERS SUBJECT TO COMMISSION AUTHORITY.— 
"(1) IN GENERAL.—No law of any State or political subdivi-
sion 
thereof 
requiring 
the 
registration, 
licensing, 
or 
qualification as an investment adviser or supervised person 
of an investment adviser shall apply to any person— 
"(A) that is registered under section 203 as an invest-
ment adviser, or that is a supervised person of such person, 
except that a State may license, register, or otherwise 
qualify any investment adviser representative who has a 
place of business located within that State; or 
"(B) that is not registered under section 203 because 
that person is excepted from the definition of an investment 
adviser under section 202(a)(ll). 
"(2) LIMITATION.—Nothing in this subsection shall prohibit 
the securities commission (or any agency or office performing 
like functions) of any State fi-om investigating and bringing 
enforcement actions with respect to fraud or deceit against 
an investment adviser or person associated with an investment 
adviser. 
"(c) EXEMPTIONS.—Notwithstanding subsection (a), the Commis-
sion, by rule or regulation upon its own motion, or by order upon 
application, may permit the registration with the Commission of 
any person or class of persons to which the application of subsection 
(a) would be unfair, a burden on interstate commerce, or otherwise 
inconsistent with the purposes of this section. 
"(d) FILING DEPOSITORIES.—The Commission may, by rule, 
require an investment adviser— 
Appropriation 
authorization. 
15 use 80b-3a. 
110 STAT. 3438 
PUBLIC LAW 104-290—OCT. 11, 1996 
"(1) to file with the Commission any fee, apphcation, report, 
or notice required by this title or by the rules issued under 
this title through any entity designated by the Commission 
for that purpose; and 
"(2) to pay the reasonable costs associated with such filing. 
"(e) STATE ASSISTANCE.—Upon request of the securities commis-
sioner (or any agency or officer performing like functions) of any 
State, the Commission may provide such training, technical 
assistance, or other reasonable assistance in connection with the 
regulation of investment advisers by the State.". 
(b) ADVISERS NOT ELIGIBLE To REGISTER.—Section 203 of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-3) is amended— 
(1) in subsection (c), in the matter immediately following 
paragraph (2), by inserting "and that the applicant is not 
prohibited from registering as an investment adviser under 
section 203A" after "satisfied"; and 
(2) in subsection (h), in the second sentence— 
(A) 
by 
striking 
"existence 
or" and 
inserting 
"existence,"; and 
(B) by inserting "or is prohibited from registering as 
an investment adviser under section 203A," after "adviser,". 
(c) DEFINITION OF "SUPERVISED PERSON".—Section 202(a) of 
the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is 
amended— 
(1) by striking "requires—" and inserting "requires, the 
following definitions shall apply:"; and 
(2) by adding at the end the following new paragraph: 
"(25) 'Supervised person' means any partner, 
officer, 
director (or other person occupying a similar status or perform-
ing similar functions), or employee of an investment adviser, 
or other person who provides investment advice on behalf of 
the investment adviser and is subject to the supervision and 
control of the investment adviser.". 
(d) CONFORMING AMENDMENT.—Section 203(a) of the Invest-
ment Advisers Act of 1940 (15 U.S.C. 80b-3(a)) is amended by 
striking "subsection (b) of this section" and inserting "subsection 
(b) and section 203A". 
SEC. 304. INTERSTATE COOPERATION. 
Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-18a) is amended to read as follows: 
"SEC. 222. STATE REGULATION OF INVESTMENT ADVISERS. 
"(a) JURISDICTION OF STATE REGULATORS.—Nothing in this title 
shall affect the jurisdiction of the securities commissioner (or any 
agency or officer performing like functions) of any State over any 
security or any person insofar as it does not conflict with the 
provisions of this title or the rules and regulations thereunder. 
"(b) DUAL COMPLIANCE PURPOSES.—No State may enforce any 
law or regulation that would require an investment adviser to 
maintain any books or records in addition to those required under 
the laws of the State in which it maintains its principal place 
of business, if the investment adviser— 
"(1) is registered or licensed as such in the State in which 
it maintains its principal place of business; and 
"(2) is in compliance with the applicable books and records 
requirements of the State in which it maintains its principle 
place of business. 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3439 
"(c) LIMITATION ON CAPITAL AND BOND REQUIREMENTS.—NO 
State may enforce any law or regulation that would require an 
investment adviser to maintain a higher minimum net capital or 
to post any bond in addition to any that is required under the 
laws of the State in which it maintains its principal place of busi-
ness, if the investment adviser— 
"(1) is registered or licensed as such in the State in which 
it maintains its principal place of business; and 
"(2) is in compliance with the applicable net capital or 
bonding requirements of the State in which it maintains its 
principal place of business. 
"(d) NATIONAL DE MINIMIS STANDARD.—NO law of any State 
or political subdivision thereof requiring the registration, licensing, 
or qualification as an investment adviser shall require an invest-
ment adviser to register with the securities commissioner of the 
State (or any agency or officer performing like functions) or to 
comply with such law (other than any provision thereof prohibiting 
fraudulent conduct) if the investment adviser— 
"(1) does not have a place of business located within the 
State; and 
"(2) during the preceding 12-month period, has had fewer 
than 6 clients who are residents of that State.". 
SEC. 305. DISQUALIFICATION OF CONVICTED FELONS. 
(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 psira-
graphs (4) through (8), respectively; and 
(2) by inserting after paragraph (2) the following new 
paragraph: 
(3) has been convicted during the 10-year period preceding 
the date of filing of any application for registration, or at 
any time thereafter, o
f
— 
"(A) any crime that is pvinishable by imprisonment 
for 1 or more years, and that is not described in paragraph 
(2); or 
"(B) a substantially equivalent crime by a foreign court 
of competent jurisdiction.". 
(b) CONFORMING AMENDMENTS.—Section 203 of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-3) is amended— 
(1) in subsection (e)(6) (as redesignated by subsection (a) 
of this section), by striking "this paragraph (5)" and inserting 
"this paragraph"; 
(2) in subsection (f)— 
(A) by striking "paragraph (1), (4), (5), or (7) of sub-
section (e) of this section" and inserting "paragraph (1), 
(5), (6), or (8) of subsection (e)"; 
(B) by striking "paragraph (3)" and inserting "para-
graph (4)"; and 
(C) by striking "said subsection" each place that term 
appears and inserting "subsection"; and 
(3) in subsection (i)(l)(D), by striking "section 203(e)(5) 
of this title" and inserting "subsection (e)(6)". 
SEC. 306. INVESTOR ACCESS TO INFORMATION. 
15 USC 80b-10 
The Commission shall— 
"°*^-
(1) provide for the establishment and maintenance of a 
readily accessible telephonic or other electronic process to 
110 STAT. 3440 
PUBLIC LAW 104-290—OCT. 11, 1996 
15 use 80b-3a 
note. 
15 use 80b-2 
note. 
29 use 1002 
note. 
receive inquiries regarding disciplinary actions and proceedings 
involving investment advisers and persons associated with 
investment advisers; and 
(2) provide for prompt response to any inquiry described 
in paragraph (1). 
SEC. 307. CONTINUED STATE AUTHORITY. 
(a) PRESERVATION OF FILING REQUIREMENTS.—Nothing in this 
title or any amendment made by this title prohibits the securities 
commission (or any agency or office performing like functions) of 
any State from requiring the filing of any documents filed with 
the Commission pursuant to the securities laws solely for notice 
purposes, together with a consent to service of process and any 
required fee. 
(b) PRESERVATION OF FEES.—Until otherwise provided by law, 
rule, regulation, or order, or other administrative action of any 
State, or £iny political subdivision thereof, adopted after the date 
of enactment of this Act, filing, registration, or licensing fees shall, 
notwithstanding the amendments made by this title, continue to 
be paid in amoimts determined pursuant to the law, rule, regula-
tion, or order, or other administrative action as in effect on the 
day before such date of enactment, 
(c) AVAILABILITY OF PREEMPTION CONTINGENT ON PAYMENT OF 
FEES.— 
(1) IN GENERAL.—During the period beginning on the date 
of enactment of this Act and ending 3 years after that 
date of enactment, the securities commission (or any agency 
or office performing like functions) of any State may require 
registration of any investment adviser that fails or refiises 
to pay the fees required by subsection (b) in or to such State, 
notwithstanding the limitations on the laws, rules, regulations, 
or orders, or other administrative actions of any State, or 
any political subdivision thereof, contained in subsection (a), 
if the laws of such State require registration of investment 
advisers, 
(2) DELAYS.—For purposes of this subsection, delays in 
pajnnent of fees or underpayments of fees that are promptly 
remedied in accordance with the applicable laws, rules, regula-
tions, or orders, or other administrative actions of the relevant 
State shall not constitute a failure or refusal to pay fees. 
SEC. 308. EFFECTIVE DATE. 
(a) IN GENERAL.—This title and the amendments made by 
this title shall take effect 180 days after the date of enactment 
of this Act. 
(b) CONFORMING AMENDMENT.— 
(1) IN GENERAL.—Section 3(38)(B) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 1002(38)(B)) is 
amended by inserting "or under the laws of any State" after 
"1940". 
(2) SUNSET.—The amendment made by paragraph (1) shall 
cease to be effective 2 years after the date of enactment of 
this Act. 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3441 
TITLE IV—SECURITIES AND EXCHANGE 
COMMISSION AUTHORIZATION 
SEC. 401. SHORT TITLE. 
This title may be cited as the "Securities and Exchange 
Commission Authorization Act of 1996". 
SEC. 402. PURPOSES. 
The purposes of this title are— 
(1) to authorize appropriations for the Commission for fiscal 
year 1997; and 
(2) to reduce over time the rates of fees charged under 
the Federal securities laws. 
SEC. 403. AUTHORIZATION OF APPROPRIATIONS. 
Section 35 of the Securities Exchange Act of 1934 is amended 
to read as follows: 
"SEC. 35. AUTHORIZATION OF APPROPRIATIONS. 
"There are authorized to be appropriated to carry out the 
functions, powers, and duties of the Commission $300,000,000 for 
fiscal year 1997, in addition to any other funds authorized to 
be appropriated to the Commission.". 
SEC. 404. REGISTRATION FEES. 
Section 6(b) of the Securities Act of 1933 (15 U.S.C. 77fl[b)) 
is amended to read as follows: 
"(b) REGISTRATION FEE.— 
"(1) RECOVERY OF COST OF SERVICES.—The Commission 
shall, in accordance with this subsection, collect registration 
fees that are designed to recover the costs to the government 
of the securities registration process, and costs related to such 
process, including enforcement activities, policy and rulemaking 
activities, administration, legal services, and international regu-
latory activities. 
"(2) FEE PAYMENT REQUIRED.—At the time of filing a reg-
istration statement, the applicant shall pay to the Commission 
a fee that shall be equal to the sum of the amounts (if any) 
determined under the rates established by paragraphs (3) and 
(4). The Commission shall publish in the Federal Register 
notices of the fee rates applicable under this section for each 
fiscal year. 
"(3) GENERAL REVENUE FEES.—The rate determined under 
this paragraph is a rate equal to $200 per $1,000,000 of the 
maximum aggregate price at which such securities are proposed 
to be offered, except that during fiscal year 2007 and any 
succeeding fiscal year such rate is equal to $67 per $1,000,000 
of the maximum aggregate price at which such securities are 
proposed to be offered. Fees collected during any fiscal year 
pursuant to this paragraph shall be deposited and credited 
as general revenues of the Treasury. 
"(4) OFFSETTING COLLECTION FEES.— 
"(A) IN GENERAL.—Except 
as 
provided 
in 
sub-
paragraphs (B) and (C), the rate determined under this 
paragraph is a rate equal to the following amount per 
$1,000,000 of the maximum aggregate price at which such 
securities are proposed to be offered: 
Securities and 
Exchange 
Commission 
Authorization 
Act of 1996. 
15 u s e 78a note. 
15 u s e 78a note. 
15 u s e 78kk. 
110 STAT. 3442 
PUBLIC LAW 104-290—OCT. 11, 1996 
"(i) $95 during fiscal year 1998; 
"(ii) $78 during fiscal year 1999; 
"(iii) $64 during fiscal year 2000; 
"(iv) $50 during fiscal year 2001; 
"(v) $39 during fiscal year 2002; 
"(vi) $28 during fiscal year 2003; 
"(vii) $9 during fiscal year 2004; 
"(viii) $5 during fiscal year 2005; and 
"(ix) $0 during fiscal year 2006 or any succeeding 
fiscal year. 
"(B) 
LIMITATION; DEPOSIT.—Except 
as 
provided 
in 
subparagraph (C), no amounts shall be collected pursuant 
to this paragraph (4) for any fiscal year except to the 
extent provided in advance in appropriations Acts. Fees 
collected during £iny fiscal year pursuant to this paragraph 
shall be deposited and credited as offsetting collections 
in accordance with appropriations Acts. 
"(C) LAPSE OF APPROPRIATIONS.—If on the 
first 
day 
of a fiscal year a regular appropriation to the Commission 
has not been enacted, the Commission shall continue to 
collect fees (as offsetting collections) under this paragraph 
at the rate in effect during the preceding fiscal year, until 
such a regular appropriation is enacted. 
"(5) PRO RATA APPLICATION OF RATES.—The rates required 
by this subsection shall be applied pro rata to amounts and 
balances equal to less than $1,000,000.". 
SEC. 405. TRANSACTION FEES. 
(a) AMENDMENT.—Section 31 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78ee) is amended to read as follows: 
"SEC. 31. TRANSACTION FEES. 
"(a) RECOVERY OF COST OF SERVICES.—The Commission shall, 
in accordance with this subsection, collect transaction fees that 
are designed to recover the costs to the Government of the 
supervision and regulation of securities markets and securities 
professionals, and costs related to such supervision and regulation, 
including enforcement activities, policy and rulemaking activities, 
administration, legal services, and international regulatory activi-
ties. 
"(b) EXCHANGE-TRADED SECURITIES.—Every national securities 
exchange shall pay to the Commission a fee at a rate equal to 
Vaoo of one percent of the aggregate dollar amount of sales of 
securities (other than bonds, debentures, and other evidences of 
indebtedness) transacted on such national securities excheinge, 
except that for fiscal year 2007 or any succeeding fiscal year such 
rate shall be equal to Vsoo of one percent of such aggregate dollar 
amount of sales. Fees collected pursuant to this subsection shall 
be deposited and collected as general revenue of the Treasury. 
"(c) 
OFF-EXCHANGE 
TRADES 
OF 
EXCHANGE 
REGISTERED 
SECURITIES.—Each national securities association shall pay to the 
Commission a fee at a rate equal to Vaoo of one percent of the 
aggregate dollar amount of sales transacted by or through any 
member of such association otherwise than on a national securities 
exchange of securities registered on such an exchange (other than 
bonds, debentures, and other evidences of indebtedness), except 
that for fiscal year 2007 or any succeeding fiscal year such rate 
shall be equal to Vsoo of one percent of such aggregate dollar 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3443 
amount of sales. Fees collected pursuant to this subsection shall 
be deposited and collected as general revenue of the Treasury. 
"(d) 
OFF-EXCHANGE 
TRADES 
OF 
LAST-SALE-REPORTED 
SECURITIES.— 
"(1) COVERED TRANSACTIONS.—Each national securities 
' 
association shall pay to the Commission a fee at a rate equal 
to Vaoo of one percent of the aggregate dollar amount of sales 
transacted by or through any member of such association other-
wise than on a national securities exchange of securities (other 
than bonds, debentures, and other evidences of indebtedness) 
subject to prompt last sale reporting pursuant to the rules 
of the Commission or a registered national securities associa-
tion, excluding any sales for which a fee is paid under sub-
section (c), except that for fiscal year 2007, or any succeeding 
fiscal year, such rate shall be equal to Vsoo of one percent 
of such aggregate dollar amount of sale. 
"(2) LIMITATION; DEPOSIT OF FEES.—Except as provided in 
paragraph (3), no amounts shall be collected pursuant to sub-
section (d) for any fiscal year, except to the extent provided 
in advance in appropriations Acts. Fees collected during any 
such fiscal year pursuant to this subsection shall be deposited 
and credited as offsetting collections to the account providing 
appropriations to the Commission. 
"(3) LAPSE OF APPROPRIATIONS.—If on the first day of a 
fiscal year a regular appropriation to the Commission has not 
been enacted, the Commission shall continue to collect fees 
(as offsetting collections) under this subsection at the rate 
in effect during the preceding fiscal year, until such a regular 
appropriation is enacted. 
"(e) DATES FOR PAYMENT OF FEES.—The fees required by sub-
sections (b), (c), and (d) of this section shall be paid— 
"(1) on or before March 15, with respect to transactions 
and sales occurring during the period beginning on the preced-
ing September 1 £ind ending at the close of the preceding 
December 31; and 
"(2) on or before September 30, with respect to transactions 
and sales occurring during the period beginning on the 
preceding January 1 and ending at the close of the preceding 
August 31. 
"(f) EXEMPTIONS.—The Commission, by rule, may exempt any 
sale of securities or any class of sales of securities from any fee 
imposed by this section, if the Commission finds that such exemp-
tion is consistent with the public interest, the equal regulation 
of markets and brokers £ind dealers, and the development of a 
national market system. 
"(g) PUBLICATION.—The Commission shall publish in the Federal Register, 
Federal Register notices of the fee rates applicable under this publication, 
section for each fiscal year.". 
(b) EFFECTIVE DATES; TRANSITION.— 
IS use 78ee 
(1) IN GENERAL.—Except as provided in paragraph (2), the note. 
amendment made by subsection (a) shall apply with respect 
to transactions in securities that occur on or after October 
1, 1997. 
(2) OFF-EXCHANGE TRADES OF LAST SALE REPORTED TRANS-
ACTIONS.—^The amendment made by subsection (a) shall apply 
with respect to transactions described in section 31(d)(1) of 
110 STAT. 3444 
PUBLIC LAW 104-290—OCT. 11, 1996 
the Securities Exchange Act of 1934 (as amended by subsection 
(a) of this section) that occur on or after September 1, 1997. 
SEC. 406. TIME FOR PAYMENT. 
Section 4(e) of the Securities Exchange Act of 1934 (15 U.S.C. 
78d(e)) is amended by inserting before the period at the end thereof 
the following: "and the Commission may also specify the time 
that such fee shall be determined and paid relative to the filing 
of any statement or document with the Commission". 
SEC. 407. SENSE OF THE CONGRESS CONCERND^G FEES. 
It is the sense of the Congress that, in order to maintain 
the competitiveness of United States securities markets relative 
to foreign markets, no fee should be assessed on transactions involv-
ing portfolios of equity securities taking place at times of day 
characterized by low volume and during nontraditional trading 
hours. 
TITLE V—REDUCING THE COST OF 
SAVING AND INVESTMENT 
SEC. 501. EXEMPTION FOR ECONOMIC, BUSINESS, AND INDUSTRIAL 
DEVELOPMENT COMPANIES. 
Section 6(a) of the Investment Company Act of 1940 (15 U.S.C. 
80a-6(a)) is amended by adding at the end the following new 
paragraph: 
"(5)(A) Any company that is not engaged in the business 
of issuing redeemable securities, the operations of which are 
subject to regulation by the State in which the company is 
organized under a statute governing entities that provide finsin-
cial or managerial assistance to enterprises doing business, 
or proposing to do business, in that State if— 
"(i) the organizational documents of the company state 
that the activities of the compsmy are limited to the pro-
motion of economic, business, or industrial development 
in the State through the provision of financial or manage-
rial assistance to enterprises doing business, or proposing 
to do business, in that State, and such other activities 
that are incidental or necessary to carry out that purpose; 
"(ii) immediately following each sale of the securities 
of the compEiny by the company or any underwriter for 
the company, not less than 80 percent of the securities 
of the company being offered in such sale, on a class-
by-class basis, are held by persons who reside or who 
have a substsmtiEil business presence in that State; 
"(iii) the securities of the company are sold, or proposed 
to be sold, by the company or by any underwriter for 
the company, solely to accredited investors, as that term 
is defined in section 2(a)(15) of the Securities Act of 1933, 
or to such other persons that the Commission, as necessary 
or appropriate in the public interest and consistent with 
the protection of investors, may permit by rule, regulation, 
or order; and 
"(iv) the company does not purchase any security issued 
by an investment company or by any company that would 
be an investment company except for the exclusions from 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3445 
the definition of the term 'investment compan/ under para-
graph (1) or (7) of section 3(c), other than— 
"(I) any debt security that is rated investment 
grade by not less than 1 nationally recognized statis-
tical rating organization; or 
"(II) any security issued by a registered open-end 
investment company that is required by its investment 
policies to invest not less than 65 percent of its total 
assets in securities described in subclause (I) or securi-
ties that are determined by such registered open-end 
investment company to be comparable in quality to 
securities described in subclause (I). 
"(B) Notwithstanding the exemption provided bjr this para-
graph, section 9 (and, to the extent necessary to enmrce section 
9, sections 38 through 51) shall apply to a company described 
in this paragraph as if the company were an investment com-
pany registered under this title. 
"(C) Any company proposing to rely on the exemption pro-
vided by this paragraph shall file with the Commission a 
notification stating that the company intends to do so, in such 
form and manner as the Commission may prescribe by rule. 
"(D) Any company meeting the requirements of this para-
graph may rely on the exemption provided by this paragraph 
upon filing with the Commission the notification required by 
subparagraph (C), until such time as the Commission deter-
mines by order that such reliance is not in the public interest 
or is not consistent with the protection of investors. 
"(E) The exemption provided by this paragraph may be 
subject to such additional terms and conditions as the Commis-
sion may by rule, regulation, or order determine are necessary 
or appropriate in the public interest or for the protection of 
investors.". 
SEC. 
502. 
INTRASTATE 
CLOSED-END 
INVESTMENT 
COMPANY 
EXEMPTION. 
Section 6(d)(1) of the Investment Company Act of 1940 (15 
U.S.C. 80a-6(d)(l)) is amended by striking "$100,000" and inserting 
"$10,000,000, or such other amount as the Commission may set 
by rule, regulation, or order". 
SEC. 503. DEFINITION OF ELIGIBLE PORTFOLIO COMPANY. 
Section 2(a)(46)(C) of the Investment Company Act of 1940 
(15 U.S.C. 80a-2(a)(46)(C)) is amended— 
(1) in clause (ii), by striking "or" at the end; 
(2) by redesignating clause (iii) as clause (iv); and 
(3) by inserting after clause (ii) the following: 
"(iii) it has total assets of not more 
than 
$4,000,000, and capital and surplus (shareholders' 
equity less retained 
earnings) of not less 
than 
$2,000,000, except that the Commission may adjust 
such amounts by rule, regulation, or order to reflect 
changes in 1 or more generally accepted indices or 
other indicators for small businesses; or". 
SEC. 504. DEFINITION OF BUSINESS DEVELOPMENT COMPANY. 
Section 2(a)(48)(B) of the Investment Company Act of 1940 
(15 U.S.C. 80a-2(a)(48)(B)) is amended by adding at the end the 
following: "provided further that a business development company 
110 STAT. 3446 
PUBLIC LAW 104-290—OCT. 11, 1996 
need not make available significant managerial assistance with 
respect to siny company described in paragraph (46)(C)(iii), or 
with respect to any other company that meets such criteria as 
the Commission may by rule, regulation, or order permit, as consist-
ent with the public interest, the protection of investors, and the 
purposes of this title; and". 
SEC. 505. ACQUISITION OF ASSETS BY BUSI>fESS DEVELOPMENT 
COMPANIES. 
Section 55(a)(1)(A) of the Investment Company Act of 1940 
(15 U.S.C. 80a-54(a)(l)(A)) is amended— 
(1) by striking "or from any person" and inserting "from 
any person"; and 
(2) by inserting before the semicolon ", or from any other 
person, subject to such rules and regulations as the Commission 
may prescribe as necessary or appropriate in the public interest 
or for the protection of investors". 
SEC. 506. CAPITAL STRUCTURE AMENDMENTS. 
Section 61(a) of the Investment Company Act of 1940 (15 U.S.C. 
80a-60(a)) is amended— 
(1) in paragraph (2), by striking "if such business develop-
ment company" and all that follows through the end of the 
paragraph sind inserting a period; 
(2) in paragraph (3)(A)— 
(A) by striking "senior securities representing indebted-
ness accompanied bj^'; 
(B) by inserting "accompanied by securities," after "of 
such company,"; and 
(C) in clause (ii), by striking "senior"; and 
(3) in paragraph (3)— 
(A) in subparagraph (A), by striking "and" at the end; 
(B) in subparagraph (B), by striking the period at 
the end of clause (iv) and inserting "; and"; and 
(C) by inserting immediately after subparagraph (B) 
the following new subparagraph: 
"(C) a business development company may issue war-
rants, options, or rights to subscribe to, convert to, or 
purchase voting securities not accompanied by securities, 
if— 
"(i) such warrants, options, or rights satisfy the 
conditions in clauses (i) and (iii) of subparagraph (A); 
and 
"(ii) the proposal to issue such warrants, options, 
or rights is authorized by the shareholders or partners 
of such business development company, and such issu-
ance is approved by the required majority (as defined 
in section 57(o)) of the directors of or general 
partners in such company on the basis that such issu-
ance is in the best interests of the company and its 
shareholders or partners.". 
SEC. 507. FILING OF WRITTEN STATEMENTS. 
Section 64(b)(1) of the Investment Company Act of 1940 (15 
U.S.C. 80a-63(b)(l)) is amended by inserting "and capital structure" 
after "portfolio". 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3447 
SEC. 508. CHURCH EMPLOYEE PENSION PLANS. 
(a) AMENDMENT TO THE INVESTMENT COMPANY ACT OF 1940.— 
Section 3(c) of the Investment Company Act of 1940 (15 U.S.C. 
80a-3(c)) is amended by adding at the end the following new para-
graph: 
"(14) Any church plan described in section 414(e) of the 
Internal Revenue Code of 1986, if, under any such plan, no 
part of the assets may be used for, or diverted to, purposes 
other than the exclusive benefit of plan participants or bene-
ficiaries, or any company or account that is— 
"(A) established by a person that is eligible to establish 
and maintain such a plan under section 414(e) of the 
Internal Revenue Code of 1986; and 
"(B) substantially all of the activities of which 
consist o
f
— 
"(i) managing or holding assets contributed to such 
church plans or other assets which are permitted to 
be commingled with the assets of church pleins under 
the Internal Revenue Code of 1986; or 
"(ii) administering or providing benefits pursuant 
to church plans.". 
(b) AMENDMENT TO THE SECURITIES ACT OF 1933.—Section 3(a) 
of the Securities Act of 1933 (15 U.S.C. 77c(a)) is amended by 
adding at the end the following new paragraph: 
"(13) Any security issued by or any interest or participation 
in any church plan, company or account that is excluded fi"om 
the definition of an investment company under section 3(c)(14) 
of the Investment Company Act of 1940.". 
(c) AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.— 
(1) EXEMPTED SECURITIES.—Section 3(a)(12)(A) of the Secu-
rities Exchange Act of 1934 (15 U.S.C. 78c(a)(12)(A)) is 
amended— 
(A) in clause (v), by striking "and" at the end; 
(B) by redesignating clause (vi) as clause (vii); and 
(C) by inserting afi;er clause (v) the following new 
clause: 
"(vi) solely for purposes of sections 12, 13, 14, 
and 16 of this title, any security issued by or any 
interest or participation in any church plan, company, 
or account that is excluded from the definition of 
an investment company under section 3(c)(14) of the 
Investment Company Act of 1940; and". 
(2) EXEMPTION FROM BROKER-DEALER PROVISIONS.—Section 
3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c) is 
amended by adding at the end the following new subsection: 
"(g) CHURCH PLANS.—NO church plan described in section 414(e) 
of the Internal Revenue Code of 1986, no person or entity eligible 
to establish and maintain such a plan under the Internal Revenue 
Code of 1986, no company or account that is excluded from the 
definition of an investment company under section 3(c)(14) of the 
Investment Company Act of 1940, and no trustee, director, officer 
or employee of or volunteer for such plan, compsmy, account 
person, or entity, acting within the scope of that person's employ-
ment or activities with respect to such plan, shall be deemed to 
be a 'broker', 'dealer', 'municipal securities broker', 'municipal secu-
rities dealer', 'government securities broker', 'government securities 
110 STAT. 3448 
PUBLIC LAW 104-290—OCT. 11, 1996 
dealer', 'clearing agency, or 'trsinsfer agent' for purposes of this 
title— 
"(1) solely because such plan, company, person, or entity 
buys, holds, sells, trades in, or transfers securities or acts 
as an intermediary in making payments in connection with 
transactions in securities for its own accoimt in its capacity 
as trustee or administrator of, or otherwise on behalf of, or 
for the account of, any church plan, company, or account that 
is excluded from the definition of an investment company under 
section 3(c)(14) of the Investment Company Act of 1940; and 
"(2) if no such person or entity receives a commission 
or other transaction-related sales compensation in connection 
with any activities conducted in reliance on the exemption 
provided by this subsection.". 
(d) AMENDMENT TO THE INVESTMENT ADVISERS ACT OF 1940.— 
Section 203(b) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-3(b)) is amended— 
(1) in paragraph (3), by striking "or" at the end; 
(2) in paragraph (4), by striking the period at the end 
and inserting "; or"; and 
(3) by adding at the end the following new paragraph: 
"(5) any plan described in section 414(e) of the Internal 
Revenue Code of 1986, any person or entity eligible to establish 
and maintain such a plan under the Internal Revenue Code 
of 1986, or any trustee, director, officer, or employee of or 
volunteer for any such plan or person, if such person or entity, 
acting in such capacity, provides investment advice exclusively 
to, or with respect to, any plsin, person, or entity or any com-
pany, accoiuit, or fund that is excluded from the definition 
of an investment company under section 3(c)(14) of the Invest-
ment Company Act of 1940.". 
(e) AMENDMENT TO THE TRUST INDENTURE ACT OF 1939.— 
Section 304(a)(4)(A) of the Trust Indenture Act of 1939 (15 U.S.C. 
77ddd(4)(A)) is amended by striking "or (11)" and inserting "(11), 
or (14)". 
15 use 80a-3 
(f) PROTECTION OF CHURCH EMPLOYEE BENEFIT PLANS UNDER 
note. 
STATE LAW.— 
(1) REGISTRATION REQUIREMENTS.—Any security issued 
by or any interest or participation in any church plan, company, 
or account that is excluded from the definition of an investment 
company under section 3(c)(14) of the Investment Company 
Act of 1940, as added by subsection (a) of this section, and 
any offer, sale, or purchase thereof, shall be exempt from amy 
law of a State that requires registration or qualification of 
securities. 
(2) TREATMENT OF CHURCH PLANS.—No church plan 
described in section 414(e) of the Internal Revenue Cod!e of 
1986, no person or entity eligible to establish and maintain 
such a pl£in under the Internal Revenue Code of 1986, no 
company or account that is excluded from the definition of 
an investment company under section 3(c)(14) of the Investment 
Company Act of 1940, as added by subsection (a) of this section, 
and no trustee, director, officer, or employee of or volunteer 
for any such plan, person, entity, company, or account shall 
be required to qualify, register, or be subject to regulation 
as an investment company or as a broker, dealer, investment 
adviser, or agent under the laws of any State solely because 
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3449 
such plan, person, entity, company, or account buys, holds, 
sells, or trades in securities for its own account or in its capacity 
as a trustee or administrator of or otherwise on behalf of, 
or for the account of, or provides investment advice to, 
for, or on behalf of, any such plan, person, or entity or any 
company or account that is excluded from the definition of 
an investment company under section 3(c)(14) of the Investment 
Company Act of 1940, as added by subsection (a) of this section, 
(g) AMENDMENT TO THE INVESTMENT COMPANY ACT OF 1940.— 
Section 30 of the Investment Company Act of 1940 (15 U.S.C. 
80a-29) is amended by adding at the end the following new sub-
sections: 
"(g) DISCLOSURE TO CHURCH PLAN PARTICIPANTS.—A person 
that maintains a church plan that is excluded from the definition 
of an investment company solely by reason of section 3(c)(14) shall 
provide disclosure to plan participants, in writing, and not less 
frequently than annually, and for new participants joining such 
a plan after May 31, 1996, as soon as is practicable after joining 
such plan, that— 
"(1) the plan, or any company or account maintained to 
manage or hold plan assets and interests in such plan, com-
pany, or account, are not subject to registration, regulation, 
or reporting under this title, the Securities Act of 1933, the 
Securities Exchange Act of 1934, or State securities laws; and 
"(2) plan participants and beneficiaries therefore will not 
be afforded the protections of those provisions. 
"(h) NOTICE TO COMMISSION.—The Commission may issue rules 
and regulations to require an^ person that maintains a church 
plan that is excluded from the definition of an investment company 
solely by reason of section 3(c)(14) to file a notice with the 
Commission containing such information and in such form as the 
Commission may prescribe as necessary or appropriate in the public 
interest or consistent with the protection of investors.". 
SEC. 
509. 
PROMOTING GLOBAL PREEMINENCE 
OF AMERICAN 
SECURITIES MARKETS. 
It is the sense of the Congress that— 
(1) the United States and foreign securities markets are 
increasingly becoming international securities markets, as issu-
ers and investors seek the benefits of new capital and secondary 
market opportunities without regard to national borders; 
(2) as issuers seek to raise capital across national borders, 
they confront differing accounting requirements in the various 
regulatory jurisdictions; 
(3) the establishment of a high-quality comprehensive set 
of generally accepted international accounting standards in 
cross-border securities offerings would greatly facilitate inter-
national fin£incing activities and, most significantly, would 
enhance the ability of foreign corporations to access and list 
in United States markets; 
(4) in addition to the efforts made before the date of enact-
ment of this Act by the Commission to respond to the growing 
internationalization of securities markets, the Commission 
should enhance its vigorous support for the development of 
high-quality international accounting standards as soon as 
practicable; and 
110 STAT. 3450 
PUBLIC LAW 104-290—OCT. 11, 1996 
(5) the Commission, in view of its clear authority under 
law to facilitate the access of foreign corporations to list their 
securities in United States markets, should report to the Con-
gress, not later than 1 year after the date of enactment of 
this Act, on progress in the development of international 
accounting standards and the outlook for successful completion 
of a set of international standards that would be acceptable 
to the Commission for offerings and listings by foreign corpora-
tions in United States markets. 
SEC. 510. STUDIES AND REPORTS. 
15 u s e 78b note. 
(a) IMPACT OF TECHNOLOGICAL ADVANCES.— 
(1) STUDY.— 
(A) IN GENERAL.—The Commission shall conduct a 
study of— 
(i) the impact of technological advances and the 
use of on-line information systems on the securities 
markets, including steps that the Commission has 
taken 
to 
facilitate 
the 
electronic 
delivery 
of 
prospectuses to institutional and other investors; 
(ii) how such technologies have changed the way 
in which the securities markets operate; and 
(iii) any steps taken by the Commission to address 
such changes. 
(B) CONSIDERATIONS.—In conducting the study under 
subparagraph (A), the Commission shall consider how the 
Commission has adapted its enforcement policies and 
practices in response to technological developments with 
regard to— 
(i) disclosure, prospectus delivery, and 
other 
customer protection regulations; 
(ii) intermediaries and exchanges in the domestic 
and international financial services industry; 
(iii) reporting by issuers, including communications 
with holders of securities; 
(iv) the relationship of the Commission with other 
national regulatory authorities £ind organizations to 
improve coordination and cooperation; and 
(v) the relationship of the Commission with State 
regulatory authorities and organizations to improve 
coordination and cooperation. 
(2) REPORT.—Not later than 1 year after the date of enact-
ment of this Act, the Commission shall submit a report to 
the Congress on the results of the study conducted under para-
graph (1). 
15 u s e 78n note. 
(b) SHAREHOLDER PROPOSALS.— 
(1) STUDY.—The Commission shall conduct a study of— 
(A) whether shareholder access to proxy statements 
pursuant to section 14 of the Securities Exchange Act of 
1934 has been impaired by recent statutory, judicial, or 
regulatory changes; and 
(B) the ability of shareholders to have proposals relat-
ing to corporate practices and social issues included as 
part of proxy statements. 
(2) REPORT.—Not later than 1 year after the date of enact-
ment of this Act, the Commission shall submit a report to 
the Congress on the results of the study conducted imder para-
PUBLIC LAW 104-290—OCT. 11, 1996 
110 STAT. 3451 
graph (1), together with any recommendations for regulatory 
or legislative changes that it considers necessary to improve 
shareholder access to proxy statements. 
(c) PREFERENCING.— 
(1) STUDY.—^The Commission shall conduct a study of the 
impact on investors and the national market system of the 
practice known as "preferencing" on one or more registered 
securities exchanges, including consideration o
f
— 
(A) how preferencing impacts— 
(i) the execution prices received by retail securities 
customers whose orders are preferenced; and 
(ii) the ability of retail securities customers in 
all markets to obtain executions of their limit orders 
in preferenced securities; and 
(B) the costs of preferencing to such customers. 
(2) REPORT.—^Not later than 6 months after the date of 
enactment of this Act, the Commission shall submit a report 
to the Congress on the results of the study conducted under 
paragraph (1). 
(3) DEFINITION.—^For purposes of this subsection, the term 
"preferencing" refers to the practice of a broker acting as a 
dealer on a national securities exchange, directing the orders 
of customers to buy or sell securities to itself for execution 
under rules that permit the broker to take priority in execution 
over same-priced orders or quotations entered prior in time. 
(d) BROKER-DEALER UNIFORMITY.— 
is use 7
8
o note. 
(1) STUDY.—^The Commission, after consultation with reg-
istered securities associations, national securities exchanges, 
and States, shall conduct a study of the impact of disparate 
State licensing requirements on associated persons of registered 
brokers or dealers and methods for States to attain uniform 
licensing requirements for such persons. 
(2) REPORT.—^Not later than 1 year after the date of enact-
ment of this Act, the Commission shall submit to the Congress 
a report on the study conducted under paragraph (1). Such 
report shall include recommendations concerning appropriate 
methods described in paragraph (1)(B), including any necessary 
legislative chsmges to implement such recommendations. 
Approved October 11, 1996. 
LEGISLATIVE HISTORY—H.R. 3005 (S. 1815): 
HOUSE REPORTS: Nos. 104-622 (Comm. on Commerce) and 104-864 (Comm. of 
Conference). 
CONGRESSIONAL RECORD, Vol. 142 (1996): 
June 18, 19, considered and passed House. 
June 27, considered and passed Senate, amended, in lieu of S. 1815. 
Sept. 28, House agreed to conference report. 
Oct. 1, Senate agreed to conference report. 
WEEKLY COMPILATION O F PRESIDENTIAL DOCUMENTS, Vol. 32 (1996): 
Oct. 11, Presidential statement.