An Act to amend the Small Business Investment Act of 1958, and for other purposes
PL 89-779 (H.R.18021), enacted 11/06/1966

80 STAT.] 
PUBLIC LAW 89-779-NOV. 6, 1966 
1359 
Public Law 89-779 
AN ACT 
November 6, 1966 
To amend the Small Business Investment Act of 1958, and for other purposes. 
[H. R. 18021] 
Small Business 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That this Act may ^^^^^^^^^^_ ^^t 
be cited as the "Small Business Investment Act Amendments of 1966". /Tmendments o
f 
SEC. 2. Section 201 of the Small Business Investment Act of 1958 I'^fs. 
is amended to read as follows: 
72 Stat. 690. 
15 u s e 671. 
"ESTABLISHMENT OF SMALL BUSINESS INVESTMENT DIVISION 
"SEC. 201. There is hereby established in the Small Business Admin-
istration a division to be known as the Small Business Investment 
Division. 
The Division shall be headed by an Associate Adminis-
trator who shall be appointed by the Administrator, and shall receive 
compensation at the rate provided by law for other Associate Admin-
istrators of the Small Business Administration." 
SEC, 3. Section 808 of the Small Business Investment Act of 1958 
is amended— 
(1) by striking out the last two sentences of subsection (c); 
and 
(2) by inserting after subsection (e) the following new sub-
sections : 
"(f) In the performance of, and with respect to the functions, 
]_)Owers, and duties vested by this Act, the Administrator and the 
Administration shall (in addition to any authority otherwise vested 
by this Act) have the functions, powders, and duties set forth in the 
Small Business Act, and the provisions of sections 13 and 16 of that 
Act, insofar as applicable, are extended to the functions of the Admin-
istrator and the Administration under this Act. 
"(g) The Administration shall include in its annual report, made 
pursuant to section 10(a) of the Small Business Act, a full and detailed 
account of its operations under this Act. Such report shall set forth 
IJie amount of losses sustained by the Government as a result of such 
operations during the preceding fiscal year, together with an estimate 
of the total losses which the Government can reasonably expect to 
incur as a result of such operations during the then current fiscal 
year." 
SEC. 4. (a) Section 309 of the Small Business Investment Act of 
1958 is amended by striking out the section heading and inserting in 
lieu thereof the following: 
15 use 687. 
72 Stat. 384. 
ISUSe 631 note. 
75 Stat. 666. 
15 u s e 639. 
75 Stat. 753. 
15 use 687a. 
"REVOCATION AND SUSPENSION or LICENSES ; CEASE AND DESIST ORDERS". 
(b) Section 309(a) of such Act is amended— 
(1) by inserting "revoked or" before "suspended"; 
(2) by striking out in paragraph (1) "Administration, for the 
purpose of obtaining the license" and inserting in lieu thereof 
"Administration"; and 
(3) by striking out in paragraph (2) "for the purpose of 
obtaining the license,". 
(c) Section 309 (b) of such Act is amended to read as follows: 
"(b) Where a licensee or any other person has not complied with 
any provision of this Act, or of any regulation issued pursuant thereto 
by the Administration, or is engaging or is about to engage in any acts 
or practices which constitute or will constitute a violation of such Act 
or regulation, the Administration may order such licensee or other 
person to cease and desist from such action or failure to act. 
The 
1360 
PUBLIC LAW 89-779-NOV. 6, 1966 
[80 STAT. 
Administration may further order such licensee or other person to take 
such action or to refrain from such action as the Administration deems 
necessary to insure compliance with the Act and the regulations. 
The Administration may also suspend the license of a licensee, against 
whom an order has been issued, until such licensee complies with 
such order." 
II use es^a. 
(^) Section 309 (c) of such Act is amended— 
(1) by inserting after "licensee", the first place it appears, 
the following: "and any other person"; 
(2) by striking out "inform the licensee" and inserting in lieu 
thereof the following: "set forth"; 
(3) by inserting after "licensee", the last place it appears, the 
following: "and any other person involved"; and 
(4) by inserting before "suspending", each place it appears, 
the following: "revoking or". 
(e) Section 309(e) of such Act is amended by inserting after 
"licensee", the first place it appears, the following: ", or other person 
against whom an order is issued,". 
(f) Section 309 (f) of such Act is amended— 
(1) by striking out the first sentence and inserting in lieu 
thereof the following: "If any licensee or other person against 
which or against whom an order is issued under this section fails 
to obey the order, the Administration may apply to the United 
States court of appeals, within the circuit where the licensee has 
its principal place of business, for the enforcement of the order, 
and shall file a transcript of the record upon which the order 
complained of was entered."; and 
(2) by inserting "or other person" before the period at the 
end of the second sentence. 
15 use 687b. 
gj,(,_ 5
_ Section 310 of the Small Business Investment Act of 1958 
is amended— 
(1) by striking out the section heading and inserting in lieu 
thereof "EXAMINATIONS AND INVESTIGATIONS" ; and 
(2) by inserting " ( a ) " after "SEC. 310.", and by adding at the 
end thereof a new subsection as follows: 
"(b) Each small business investment company shall be subject to 
examinations made by direction of the Administration by examiners 
selected or approved by the Administration, and the cost of such 
examinations, including the compensation of the examiners, may in 
the discretion of the Administration be assessed against the company 
examined and when so assessed shall be paid by such company. Every 
such company shall make such reports to the Administration at such 
times and in such form as the Administration may require; except 
that the Administration is authorized to exempt from making such 
reports any such company which is registered under the Investment 
isus^soa-si 
Company Act of 1940 to the extent necessary to avoid duplication in 
reporting requirements." 
Is v^sceiic 
^^^' ^- Section 311 of the Small Business Investment Act of 1958 
is amended by adding at the end thereof the following new subsection: 
"(c) The Administration shall have authority to act as trustee or 
receiver of the licensee. Upon request by the Administration, the 
court may appoint the Administration to act in such capacity unless 
the court deems such appointment inequitable or otherwise inappro-
priate by reason of the special circumstances involved." 
II vie !su 
SEC. 7. Title I I I of the Small Business Investment Act of 1958 is 
687d. 
" 
further amended by adding at the end thereof the following new 
sections: 
80 STAT.] 
PUBLIC LAW 89-779-NOV. 6, 1966 
"REMOVAL OR SUSPE]\"SION OF DIRECTORS AND OFFICERS OF LICENSEES 
"SEC. 313. (a) The Administration may serve upon any director or 
officer of a licensee a written notice of its intention to remove him 
from office whenever, in the opinion of the Administration, such direc-
tor or officer— 
"(1) has willfully and knowingly committed any substantial 
violation of— 
"(A) this Act, 
"(B) any regulation issued under this Act, or 
"(C) a cease-and-desist order which has become final, or 
" (2) has willfully and knowingly committed or engaged in any 
act, omission, or practice which constitutes a substantial breach 
of his fiduciary duty as such director or officer, 
and that such violation or such breach of fiduciary duty is one involv-
ing personal dishonesty on the part of such director or officer. 
"(b) In respect to any director or officer referred to in subsection 
(a), the Administration may, if it deems it necessary for the protection 
of the licensee or the interests of the Administration, by written notice 
to such effect served upon such director or officer, suspend him from 
office and/or prohibit him from further participation in any manner 
in the conduct of the affairs of the licensee. Such suspension and/or 
prohibition shall become effective upon service of such notice and, 
unless stayed by a court in proceedings authorized by subsection (d), 
shall remain in effect pending the completion of the administrative 
proceedings pursuant to the notice served under subsection (a) and 
until such time as the Administration shall dismiss the charges speci-
fied in such notice, or, if an order of removal and/or prohibition is 
issued against the director or officer, until the effective date of any 
such order. Copies of any such notice shall also be served upon the 
interested licensee. 
"(c) A notice of intention to remove a director or officer, as pro-
vided in subsection (a), shall contain a statement of the facts con-
stituting grounds therefor, and shall fix a time and place at which a 
hearing will be held thereon. Such hearing shall be fixed for a date 
not earlier than thirty days nor later than sixty days after the date 
of service of such notice, unless an earlier or a later date is set by the 
Administration at the request of (1) such director or officer and for 
good cause shown, or (2) the Attorney General of the United States. 
Unless such director or officer shall appear at the hearing in person 
or by a duly authorized representative, he shall be deemed to have 
consented to the issuance of an order of such removal. In the event 
of such consent, or if upon the record made at any such hearing the 
Administration shall find that any of the grounds specified in such 
notice has been established, the Administration may issue such orders 
of removal from office as it deems appropriate. Any such order shall 
become effective at the expiration of thirty days after service upon 
such licensee and the director or officer concerned (except in the case 
of an order issued upon consent, which shall become effective at the 
time specified therein). 
Such order shall remain effective 
and 
enforcible except to such extent as it is stayed, modified, terminated, 
or set aside by action of the Administration or a reviewing court. 
"(d) Within ten days after any director or officer has been sus-
pended from office and/or prohibited from participation in the con-
duct of the affairs of a licensee under subsection (b), such director or 
officer may apply to the United States district court for the judicial 
district in which the home office of the licensee is located, or the United 
States District Court for the District of Columbia, for a stay of such 
suspension and/or prohibition pending the completion of the adminis-
trative proceedings pursuant to the notice served upon such director 
1362 
PUBLIC LAW 89-779-NOV. 6, 1966 
[80 STAT. 
or officer under subsection (a), and such court shall have jurisdiction 
to stay such suspension and/or prohibition. 
"(e) Whenever any director or officer of a licensee is charg-ed in any 
information, indictment, or complaint authorized by a United States 
attorney, with the commission of or participation in a felony involving 
dishone3ty or breach of trust, the Administration may, by written 
notice served upon such director or officer, suspend him from office 
and/or prohibit him from further participation in any manner in the 
conduct of the affairs of the licensee. A copy of such notice shall also 
be served upon the licensee. Such suspension and/or prohibition shall 
remain in effect until such information, indictment, or complaint is 
finally disposed of or until terminated by the Administration. In the 
event that a judgment of conviction with respect to such offense is 
entered against such director or officer, and at such time as such judg-
ment is not subject to further appellate review, the Administration 
may issue and serve upon such director or officer an order removing 
him from office. 
A copy of such order shall be served upon such 
licensee, whereupon such director or officer shall cease to be a director 
or officer of such licensee. A finding of not guilty or other disposition 
of the charge shall not preclude the Administration from thereafter 
instituting proceedings to suspend or remove such director or officer 
from office and/or to prohibit him from further participation in 
licensee affairs, pursuant to subsection (a) or (b). 
di^^a^review'^ ^"' 
"(^) ^^^) "^^^^ hearing provided for in this section shall be held in 
the Federal judicial district or in the territory in which the principal 
office of the licensee is located unless the party afforded the hearhig 
consents to another place, and shall be conducted in accordance with 
Ante, p. 380. 
^|^g provisious of chapter 5 of title 5 of the United States Code. After 
such hearing, and within ninety days after the Administration has 
notified the parties that the case has been submitted to it for final 
decision, the Administration shall render its decision (which shall 
include findings of fact upon which its decision is predicated) and 
shall issue and cause to be served upon each party to the proceeding 
an order or orders consistent with the provisions of this section. 
Judicial review^ of any such order shall be exclusively as provided 
in this subsection. 
Unless a petition for review is timely filed in 
a court of appeals of the United States, as hereinafter provided in 
paragraph (2) of this subsection, and thereafter until the record 
in the proceeding has been filed as so provided, the Administration 
may at any time, upon such notice and in such manner as it shall 
deem proper, modify, terminate, or set aside any such order. 
Upon 
such filing of the record, the Administration may modify, terminate, 
or set aside any such order with permission of the court. 
"(2) Any party to such proceeding may obtain a review of any 
order served pursuant to paragraph (1) of this subsection (other 
than an order issued with the consent of the director or officer con-
cerned, or an order issued under subsection (e) of this section), by 
filing in the court of appeals of the United States for the circuit in 
which the principal office of the licensee is located, or in the United 
States Court of Appeals for the District of Columbia Circuit, within 
thirty days after the date of service of such order, a written petition 
praying that the order of the Administration be modified, terminated, 
or set aside. A copy of such petition shall be forthwith transmitted 
by the clerk of the court to the Administration, and thereupon the 
80 STAT.] 
PUBLIC LAW 89-779-NOV. 6, 1966 
1363 
72 Stat. 941. 
Administration shall file in the court the record in the proceeding, 
as provided in section 2112 of title 28 of the United States Code. 
Upon the filing of such petition, such court shall have jurisdiction, 
which upon the filing of the record shall, except as provided in the 
last sentence of said paragraph (1), be exclusive, to affirm, modify, 
terminate, or set aside, in whole or in part, the order of the Adminis-
tration. 
Review of such proceedings shall be had as provided in 
chapter 7 of title 5 of the United States Code. The judgment and 
^"'«' P- ^9 2. 
decree of the court shall be final, except that the same shall be sub-
ject to review by the Supreme Court upon certiorari as provided in 
section 1254 of title 28 of the United States Code. 
^^ stat. 928. 
"(3) The commencement of proceedings for judicial review under 
paragraph (2) of this subsection shall not, unless specifically ordered 
by the court, operate as a stay of any order issued by the Adminis-
tration. 
" U N L A W F U L ACTS A N D O M I S S I O N S B Y OrnCERS, DIRECTORS, EMPLOYEES, 
OR A G E N T S ; B R E A C H O F F I D U C I A R Y 
D U T Y 
"SEC. 314. (a) Wherever a licensee violates any provision of this 
Act or regulation issued thereunder by reason of its failure to comply 
with the terms thereof or by reason of its engaging in any act or prac-
tice wliich constitutes or will constitute a violation thereof, such viola-
tion shall be deemed to be also a violation and an unlawful act on the 
part of any person who, directly or indirectly, authorizes, orders, par-
ticipates in, or causes, brings about, counsels, aids, or abets in the 
commission of any acts, practices, or transactions which constitute or 
will constitute, in whole or in part, such violation. 
"(b) It shall be unlawful for any officer, director, employee, agent, 
or other participant in the management or conduct of the affairs of 
a licensee to engage in any act or practice, or to omit any act, in breach 
of his fiduciary duty as such officer, director, employee, agent, or par-
ticipant, if, as a result thereof, the licensee has suffered or is in immi-
nent danger of suffering financial loss or other damage. 
"(c) Except with the written consent of the Administration, it shall 
be unlawful— 
"(1) for any person hereafter to take office as an officer, 
director, or employee of a licensee, or to become an agent or par-
ticipant in the conduct of the affairs or management of a licensee, 
if— 
" (A) he has been convicted of a felony, or any other crimi-
nal offense involving dishonesty or breach of trust, or 
"(B) he has been found civilly liable in damages, or has 
been permanently or temporarily enjoined by an order, judg-
ment, or decree of a court of competent jurisdiction, by reason 
of any act or practice involving fraud or breach of trust; or 
"(2) for any j)erson to continue to serve in any of the above-
described capacities, if— 
"(A) he is hereafter convicted of a felony, or any other 
criminal offense involving dishonesty or breach of trust, or 
"(B) he is hereafter found civilly liable in damages, or is 
permanently or temporarily enjoined by an order, judgment, 
or decree of a court of competent jurisdiction, by reason of 
any act or practice involving fraud or breach of trust. 
1364 
PUBLIC LAW 89-779-NOV. 6, 1966 
[80 STAT. 
"PEXAI.TIES AND FORFEITURES 
"SEC. 315. (a) Except as provided in subsection (b) of this section, 
a licensee which violates any regulation or written directive issued by 
the Administrator, requiring the filing of any regular or special report 
Ante. p. 1360, 
pursuant to section 310(b) of this Act, shall forfeit and pay to the 
United States a civil penalty of not more than $100 for each and every 
day of the continuance of the licensee's failure to file such report, 
unless it is shown that such failure is due to reasonable cause and not 
due to willful neglect. The civil penalties provided for in this section 
shall accrue to the United States and may be recovered in a civil action 
brought by the Administration. 
"(b) The Administration may by rules and regulations, or upon 
application of an interested party, at any time previous to such failure, 
by order, after notice and opportunity for hearing, exempt in whole 
or in part, any small business investment company from the provi-
sions of subsection (a) of this section, upon such terms and conditions 
and for such period of time as it deems necessary and appropriate, 
if the Administration finds that such action is not inconsistent with 
the public interest or the protection of the Administration. The 
Administration may for the purposes of this section make any alter-
native requirements appropriate to the situation. 
"JURISDICTION AND SERVICE OF PROCESS 
"SEC. 316. Any suit or action brought under section 308, 309, 311, 
7 2 Stat. 694; 
313 or 315 by the Administration at law or in equity to enforce any 
15 use 687, 
liability or duty created by, or to enjoin any violation of, this Act, 
687a, 687c.^^ 
or auy rule, regulation, or order promulgated thereunder, shall be 
brought in the district wherein the licensee maintains its principal 
office, and process in such cases may be served in any district in which 
the defendant maintains its principal office or transacts business, or 
wherever the defendant may be found." 
SEC. 8. (a) Section 4(b) of the Small Business Act is amended by 
'
7
°
2 Stat. 384. 
Striking out "three Deputy Administrators" and inserting in lieu 
15 use 633. 
thereof "a Deputy Administrator and three Associate Administrators 
(including the Associate Administrator specified in section 201 of 
Ante, p. 1359. 
t^^ gj^all Busiuess Investment Act of 1958)". 
(b) Such section is further amended by adding at the end thereof 
the following: "The Deputy Administrator shall be Acting Adminis-
trator of the Administration during the absence or disability of the 
Administrator or in the event of a vacancy in the office of the 
A ClTTllTllSl"T*flf"OT* 
Ante, p. 461. 
{c) {1) Sectiou 5315 of title 5 of the United States Code is 
amended by adding at the end thereof the following: 
"(78) Deputy Administrator of the Small Business Adminis-
tration." 
(2) Section 5316(11) of such title is amended by changing 
"Deputy Administrators of the Small Business Administration (4)" 
to read "Associate Administrators of the Small Business Administra-
tion (3)". 
SEC. 9. (a) The table of contents of the Small Business Investment 
Act of 1958 is amended— 
(1) by striking out the items describing the contents of sections 
309 and 310 and inserting in lieu thereof the following: 
"Sec. 309. Revocation and suspension of licenses; cease and desist orders. 
"Sec. 310. Examinations and investigations." ; 
and 
Ante, p . 1361. 
SB 
A Administra^ 
tors 
80 STAT. ] 
PUBLIC LAW 89-780-NOV. 6, 1966 
1365 
(2) by inserting at the end of that part which describes the contents 
of title I I I the following new items: 
"Sec. 313. Removal or suspension of directors and officers of licensees. 
-Sec. 314. Unlawful acts and omissions by officers, directors, employees, or 
agents; breach of fiduciary duty. 
"Sec. 315. Penalties and forfeitures. 
"Sec. 316. Jurisdiction and service of process." 
Approved November 6, 1966. 
Public Law 89-780 
A N A C T 
November 6, 1966 
To amend title V of the International Claims Settlement Act of 1949 to provide 
*
• ' 
^ 
for the determination of the amounts of claims of nationals of the United 
States against the Chinese Communist regime. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled, That section 501 communist 
of the International Claims Settlement Act of 1M9 (22 U.S.C 1643) ^ cTa^ims of u.s. 
is amended as follows: 
nationals. 
(1) After "the Government of Cuba" at each place it appears in rg^ltat^gssl^^' 
such section insert ", or the Chinese Communist regime,"; and 
(2) After "since January 1, 1959," insert "in the case of claims 
against the Government of Cuba, or since October 1, 1949, in the case 
of claims against the Chinese Communist regime,". 
SEC. 2. Section 502 of such Act (22 U.S.C. 1643a) is amended as 
follows: 
(1) In paragraph (3), after "the Government of Cuba" at each 
place it appears insert "or the Chinese Communist regime"; and 
(2) Add the following new paragraph at the end thereof: 
" (5) The term 'Chinese Communist regime' means the so-called „i*^t*'^"^f^ ^"""""^ 
Peoples Republic of China, including any political subdivision, "'^ '"^g^'n^-
agency, or mstrumentality thereof.". 
SEC. 3. Section 503 of such Act (22 U.S.C. 1643b) is amended as 
follows: 
(1) After "the Government of Cuba" at each place it appears in 
subsections (a) and (b) thereof insert ", or the Chinese Communist 
regime,"; 
(2) After "since January 1, 1959," at each place it appears in sub-
sections (a) and (b) thereof insert "in the case of claims against the 
Government of Cuba, or since October 1, 1949, in the case of claims 
against the Chinese Communist regime,"; 
(3) After "within sixty days after the enactment of this title" 
insert "or sixty days after the enactment of the amendments made 
thereto with respect to claims against the Chinese Communist 
regime,"; and 
(4) After "carrying out its functions" insert "with respect to each 
respective claims program authorized,". 
SEC. 4. Section 505(a) of such Act (22 U.S.C. 1643d) is amended 
by inserting before the period at the end thereof a comma and the 
following: "or the Chinese Communist regime". 
SEC. 5. Section 510 of such Act (22 U.S.C. 1643i) is amended by 
inserting "with respect to each respective claims program authorized ' 
after "carrying out its functions". 
Approved November 6, 1966.