[Congressional Bills 104th Congress]
[From the U.S. Government Printing Office]
[H.R. 3005 Enrolled Bill (ENR)]
H.R.3005
One Hundred Fourth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Wednesday,
the third day of January, one thousand nine hundred and ninety-six
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,

843f1e9d3feb0c117728ee87149f03c26a1246e2ba6f524e18dfdf98c625e8e1

(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:

cfe86ae85b9b4d796cbeb9ca1e0e2706a1f1ad14ce4e8d71eef6efac3fdd5df7

84c6af221724dd956d22a1acb20af3cbecf04e6a00af2219d1ee714fbabd1556

TITLE V

-REDUCING THE COST OF SAVING AND INVESTMENT

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.

2e6fff5df23a5c38c684f2d289c17127877c17c206277db08c18ad7b9fc0667c

If any provision of this Act, an amendment made by this Act, or the
application 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.

5ef595ea0a892a5b09668aaf81b1f7ec144bcf640dd38781aa28ef1a22a79c80

This title may be cited as the ``Capital Markets Efficiency Act of
1996''.

bbe2d179e8a7dfa0ded23c0fdba84051b1e8a749796fc1ef2585a7af68bc7197

TITLE I

-CAPITAL 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 administrative
action of any State or any political subdivision thereof--
``(1) requiring, or with respect to, registration or
qualification of securities, or registration or qualification 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
any 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
``(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 and is filed with the
Commission or any national securities organization 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 registered, or that has
filed a registration statement, under the Investment Company Act of
1940.
``(3) Sales to qualified purchasers.--A security is a covered
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
categories 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 in the State in
which the issuer of such security is located; or
``(D) Commission rules or regulations issued under section
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 unlawful conduct by a broker or
dealer, in connection with securities or securities transactions.
``(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 requiring the
filing of any 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 shall be paid, and all necessary supporting
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 payment 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 payment of fees or underpayments of fees that are
promptly remedied shall not constitute a refusal to pay
fees.
``(D) Fees not permitted on listed securities.--
Notwithstanding 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 transaction, 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 section
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 under
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
subparagraphs (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.''.
(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.

86602021afb03ae5219b8f301d7ac6f0ae18fc58eff8f33979dc997044c561f6

(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
administrative action of any State or political subdivision thereof
shall establish capital, custody, margin, financial responsibility,
making and keeping records, bonding, or financial or operational
reporting requirements for brokers, dealers, municipal securities
dealers, government securities brokers, or government 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 commissions (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 transaction;
``(B) such associated person is registered with a
registered 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 transaction;
``(ii) the transaction 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 application 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 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 transaction 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''.

24b01f475b7f379db0fe185148632a8826a774c60644d93929b902538fd938d2

(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 (hereafter 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
regulations 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 carrying securities or
of evading or circumventing the provisions of subparagraph
(A).
``(2) Exception.--This subsection and the rules and regulations
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
``(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 protection 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 carrying 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 carrying 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
regulations 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 conditions or for
stated periods, from the operation of this subsection 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.

f6520c666c02a51859cab9f9ae08859131f31e9d222c9615db2d54d378f5d9c9

(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:
``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 necessary
or appropriate in the public interest, and is consistent with the
protection of 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:
``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 consistent with the
protection of investors.
``(2) Procedures.--The Commission shall, by rule or regulation,
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).''.

0cc31a82d3e311e26c0864a3441f703960fd8483a3629b1950fc766c0d1c363b

(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, Competition, 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 addition 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:
``(f) Consideration of Promotion of Efficiency, Competition, 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 Investment
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, Competition, 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.''.

77c7293027af0759bb081bff4509b41c9c97a0a5a4585bc325eea8088ea957c5

(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 examination 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 enactment 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).

e3ca7e0065705445d25f2f87da558234697f06f8d38295d8ea063329b855b910

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 coordination of
examination and oversight activities, shall eliminate any
unnecessary and burdensome duplication in the examination process.
``(2) Coordination of examinations.--The Commission and the
examining authorities shall share such information, including
reports of examinations, customer complaint information, 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 examining
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 24(c) to ensure
that such information is not inappropriately disclosed.
``(B) Appropriate disclosure not prohibited.--Nothing 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 jurisdiction, or complying 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
registered 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.''.

7e67f1e5d53cb0d34eaad0a1b23b6ac02987b4a370d78cca37054a43c8ab32e4

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.

cad08905a73427fe98f2d533134923bb006c88e098b585afd76ee5c33fc484fe

This title may be cited as the ``Investment Company Act Amendments
of 1996''.

d41820642a20d69e34cfaf3c45a34105ca42388d6956a0ab5135197976ea9644

TITLE II

-INVESTMENT COMPANY ACT AMENDMENTS

Section 12(d)(1) of the Investment Company Act of 1940 (15 U.S.C.
80a-12(d)(1)) 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 subparagraphs
(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
registered open-end investment company or a registered unit investment
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 company') if--
``(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 acquiring
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 investment
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.''.

2e23c9ec70c30240facdc633f1b2ef808f33b2cbb1d1dd98a4c21a08927c8c4d

(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.--Section 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-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
than 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.''.
(c) Effective Date.--The amendments made by this section 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.

bf673dce909b9d8aec90ebe9028bcfb0e74d696715f09dcb16ec7527f5d993f9

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 subsection:
``(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 investment
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.''.

3b595b5a9add07fe80b98fafd3861cd311aa4bf278991fbcf229c667ef7afa96

(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 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 financial 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
protection 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)(1) 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 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).''.

aeaae5aae61e980d3623f96cf423fa6555ff3d89752bc1c78cce997283d3ac77

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
subsection:
``(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 investment
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 inserting
``subsections (a) and (e)''.

d51af99de024918d5591158ea54ffe507dc2ebecc2d795acc59010b695155452

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 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 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 recordkeeping
burdens on subject persons;
``(B) the necessity of such records in view of the public
benefits derived from the independent scrutiny of such records
through Commission examination;
``(C) the costs associated with maintaining the information
that would be required to be reflected in such records; and
``(D) the effects that a proposed recordkeeping requirement
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 from 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 from 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
subsections:
``(c) Limitations on Disclosure by Commission.--Notwithstanding any
other provision of law, the Commission shall not be compelled to
disclose any internal compliance or audit records, or information
contained therein, provided to the Commission under this section.
Nothing in this subsection shall authorize the Commission to withhold
information from the Congress or prevent the Commission from complying
with a request for information from any other Federal department or
agency requesting the information for purposes within the scope of the
jurisdiction of that department or agency, or complying with an order
of a court of the United States in an action brought by the United
States or the Commission. For purposes of section 552 of title 5,
United States Code, this section shall 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 Commission''.

b5d65f1487057d1acd1f326562ee706c0bf0ed38dbf1ed3e3c4a5dedcfab136c

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.''.

3380c394f2198617844025fe7106499e885f50fd4b67d2d04ccd431187691c31

(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 an investment
company for purposes of the limitations set forth in subparagraphs
(A)(i) and (B)(i) of section 12(d)(1) governing the purchase or
other acquisition by such issuer of any 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
(C) by adding at the end the following new subparagraph:
``(B) For purposes of this paragraph--
``(i) the term `market intermediary' means any person that
regularly holds itself out as being willing contemporaneously
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 arrangement
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,
currencies, 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 from 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 from 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
securities 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
``(II) 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 opportunity, 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 purposes 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 registered investment
company 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
paragraph and paragraph (1), an issuer that is otherwise excepted
under 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 beneficial 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 ownership
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, charitable 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 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 investment company'), unless
all beneficial owners of its outstanding securities (other than
short-term paper), determined in accordance 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-amendment 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
following: ``, 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 1
year after the date of enactment of this Act, the Commission 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)(1)(B)),
as amended by this section.
(2) Identification of investments.--Not later than 180 days
after the date of enactment of this Act, the Commission 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.
(3) Employee exception.--Not later than 1 year after the date
of enactment of this Act, the Commission shall prescribe 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 prescribe 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 of--
(1) 180 days after the date of enactment of this Act; or
(2) the date on which the rulemaking required under subsection
(d)(2) is completed.

0e5c68c67bc80d91d0b9115df55d7d770e0c8bd4962edf16f2bd82f9b664ed77

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 company
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 unconditionally
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.''.

b8f7ea1885ac6f4ceb1e5458fc8ab53ffa6f4bef52b2478fc8d579fdbc9a5a5a

This title may be cited as the ``Investment Advisers Supervision
Coordination Act''.

77facad863bad2aee8a54680572e12523b2f04da0bd089f1a2b13b8b9bdcb52c

TITLE III

-INVESTMENT ADVISERS SUPERVISION COORDINATION ACT

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.

4c107d205b4619193f205e4bea728b57832e80e359b87a51728ebc670626c696

(a) State and Federal Responsibilities.--The Investment Advisers
Act of 1940 (15 U.S.C. 80b-1 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 and 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 accordance 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 subdivision
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 investment
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)(11).
``(2) Limitation.--Nothing in this subsection shall prohibit
the securities commission (or any agency or office performing like
functions) of any State from 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 Commission,
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--
``(1) to file with the Commission any fee, application, 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
commissioner (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 performing 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 Investment
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''.

41d53417ad8e66e323c0fff7d4efe357c6a38e7186119ee97dc92858eaf63e63

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.
``(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 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 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 investment
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.''.

2a70873e855f92681aa5430d5439ccb4f68c2349596c985e551936fcb6c01531

(a) Amendment.--Section 203(e) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-3(e)) is amended--
(1) by redesignating paragraphs (3) through (7) as paragraphs
(4) through (8), respectively; and
(2) by inserting after paragraph (2) the 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, of--
``(A) any crime that is punishable 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
subsection (e) of this section'' and inserting ``paragraph (1),
(5), (6), or (8) of subsection (e)'';
(B) by striking ``paragraph (3)'' and inserting ``paragraph
(4)''; and
(C) by striking ``said subsection'' each place that term
appears and inserting ``subsection''; and
(3) in subsection (i)(1)(D), by striking ``section 203(e)(5) of
this title'' and inserting ``subsection (e)(6)''.

3448b3135201700738b2f1b30991dd1507fccd05507eeca294e6e26818ee6ee2

The Commission shall--
(1) provide for the establishment and maintenance of a readily
accessible telephonic or other electronic process to 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).

2b982d20421c12198379ae84d131fe1f63a8ca8b4c3548fe231da47768151b77

(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
any 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 amounts determined pursuant to the law, rule, regulation, 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 refuses 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 payment
of fees or underpayments of fees that are promptly remedied in
accordance with the applicable laws, rules, regulations, or orders,
or other administrative actions of the relevant State shall not
constitute a failure or refusal to pay fees.

f09f3abbe6db129f26117ad013e9fe98a0c19e9081f2f09b3d4ddc06a5df3e49

(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 Retirement
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.

42f9d818859b7b21ba3a2e86842974a45d1ac3b79a39e6fcf996110b6c1e9049

This title may be cited as the ``Securities and Exchange Commission
Authorization Act of 1996''.

5f808a401f92b0b0ccec5f8f46355e11610c212009343838aa6b0ecdc19fcc4e

TITLE IV

-SECURITIES AND EXCHANGE COMMISSION AUTHORIZATION

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.

9c1c50b0b971762b8df191caf6cdb9b730a1c29b95a42f6c933ec38b976e9be5

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.''.

1b5633990227ab70c2d1f1dcb384fe93c4f7534e15440f70141a6d7ac340f28f

Section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(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 regulatory
activities.
``(2) Fee payment required.--At the time of filing a
registration 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:
``(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 any 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.''.

e1a1c6e25e37be032f37a72211db827e5797346367bb233c5107140d917843c4

(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 activities.
``(b) Exchange-Traded Securities.--Every national securities
exchange shall pay to the Commission a fee at a rate equal to \1/300\
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 exchange, except that for fiscal
year 2007 or any succeeding fiscal year such rate shall be equal to \1/
800\ 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 \1/300\ 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 \1/800\ 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.
``(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
\1/300\ 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 (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 association, excluding any
sales for which a fee is paid under subsection (c), except that for
fiscal year 2007, or any succeeding fiscal year, such rate shall be
equal to \1/800\ 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 subsection
(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 subsections
(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 preceding
September 1 and 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 exemption is consistent
with the public interest, the equal regulation of markets and brokers
and dealers, and the development of a national market system.
``(g) Publication.--The Commission shall publish in the Federal
Register notices of the fee rates applicable under this section for
each fiscal year.''.
(b) Effective Dates; Transition.--
(1) In general.--Except as provided in paragraph (2), the
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 transactions.--
The amendment made by subsection (a) shall apply with respect to
transactions described in section 31(d)(1) of the Securities
Exchange Act of 1934 (as amended by subsection (a) of this section)
that occur on or after September 1, 1997.

f83d6441ca355294061785c82547207f8f2fc709880658f8c2c0353b7d47cf30

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''.

fb0fbaa04ce8ecf154ebdd6ad17b2dfe7da16a1c1dc8b684feb2296ac21b0913

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 involving portfolios
of equity securities taking place at times of day characterized by low
volume and during nontraditional trading hours.

d4709b52165884d9607121f0fdde5c3467e0b9593458837dd662ae0d6eafaf90

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 financial 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 company are limited to the promotion
of economic, business, or industrial development in the State
through the provision of financial or managerial 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 company 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 substantial 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 the
definition of the term `investment company' under paragraph (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 statistical 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
securities 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 by this paragraph,
section 9 (and, to the extent necessary to enforce section 9,
sections 38 through 51) shall apply to a company described in this
paragraph as if the company were an investment company registered
under this title.
``(C) Any company proposing to rely on the exemption provided
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 paragraph
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 determines 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 Commission may by
rule, regulation, or order determine are necessary or appropriate
in the public interest or for the protection of investors.''.

48bba0aa307cb2edc6a80505ff0972b003008a411cdd33e452b327ff841bc19c

Section 6(d)(1) of the Investment Company Act of 1940 (15 U.S.C.
80a-6(d)(1)) 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''.

4f18841564dcbccdac3af6db995356b7d0233f5f9ea6891706fce48803e07e94

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''.

31c46c664dfd6978f5ac2d5a0edacab929bb42a17e740c3197ec9b19d885f107

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 need not make
available significant managerial assistance with respect to any 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 consistent with the public interest,
the protection of investors, and the purposes of this title; and''.

001881d44d5bb2f111e471b732f69ac5bbbb5226f044948ce57d75fa0758a251

Section 55(a)(1)(A) of the Investment Company Act of 1940 (15
U.S.C. 80a-54(a)(1)(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''.

32e1f976a109d6d62e8dcc9964770c130c34664e4c64d0fd4a1cd586a05ff5c2

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
development company'' and all that follows through the end of the
paragraph and inserting a period;
(2) in paragraph (3)(A)--
(A) by striking ``senior securities representing
indebtedness accompanied by'';
(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 warrants,
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 issuance 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 issuance is in the best
interests of the company and its shareholders or
partners.''.

b3375845c70f5187a0656c0ca6cba461e27fabbcdbeeeda4e34638ce178b6b63

Section 64(b)(1) of the Investment Company Act of 1940 (15 U.S.C.
80a-63(b)(1)) is amended by inserting ``and capital structure'' after
``portfolio''.

de838e1b3d260cbc9bc96cd1acea62878809ec053091efd5dee08a85760365d5

(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 paragraph:
``(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 beneficiaries, 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
of--
``(i) managing or holding assets contributed to such
church plans or other assets which are permitted to be
commingled with the assets of church plans 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 from 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 Securities
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 after 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, company, account person, or entity, acting within the
scope of that person's employment or activities with respect to such
plan, shall be deemed to be a `broker', `dealer', `municipal securities
broker', `municipal securities dealer', `government securities broker',
`government securities dealer', `clearing agency', or `transfer 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 account 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 plan, person, or entity or any company, account, or
fund that is excluded from the definition of an investment company
under section 3(c)(14) of the Investment 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)''.
(f) Protection of Church Employee Benefit Plans Under 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 any 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 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, 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 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 subsections:
``(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, company, 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 any 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.''.

cb4f935375e35a586229cd568bf0637342c63bd6a5c20cdd6db3cf8ba51a9061

It is the sense of the Congress that--
(1) the United States and foreign securities markets are
increasingly becoming international securities markets, as issuers
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 international
financing 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
enactment 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
(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 Congress,
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 corporations in United States markets.

58633940bbaffff25460961ddcf8ce76b629bc049cde37a8fc089ce49056e5fe

(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 and 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 enactment
of this Act, the Commission shall submit a report to the Congress
on the results of the study conducted under paragraph (1).
(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 relating
to corporate practices and social issues included as part of
proxy statements.
(2) Report.--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 the study conducted under paragraph (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 of--
(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.--
(1) Study.--The Commission, after consultation with registered
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 enactment
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 changes to
implement such recommendations.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.

bef1ffaf0ae8bae965e47752f4ac468a2ed5285bb751fd019a133e62610092de

National Securities Markets Improvement Act of 1996 — HR. 3005

Other Sections

TITLE V

TITLE I

TITLE II

TITLE III

TITLE IV

Want the full experience?