US (United States) Code. Title 15. Chapter 2B: Securities exchanges

Codificación normativa de EEUU (Estados Unidos). Legislación federal estadounidense # Commerce and Trade

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-CITE-

15 USC CHAPTER 2B - SECURITIES EXCHANGES 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

.

-HEAD-

CHAPTER 2B - SECURITIES EXCHANGES

-MISC1-

Sec.

78a. Short title.

78b. Necessity for regulation.

78c. Definitions and application.

(a) Definitions.

(b) Power to define technical, trade, accounting, and

other terms.

(c) Application to governmental departments or

agencies.

(d) Issuers of municipal securities.

(e) Charitable organizations.

(f) Consideration of promotion of efficiency,

competition, and capital formation.

(g) Church plans.

78c-1. Swap agreements.

(a) Non-security-based swap agreements.

(b) Security-based swap agreements.

78d. Securities and Exchange Commission.

(a) Establishment; composition; limitations on

commissioners; terms of office.

(b) Appointment and compensation of staff and leasing

authority.

(c) Acceptance of travel support for Commission

activities from non-Federal sources;

regulations.

(d) Acceptance of relocation expenses from former

employers by professional fellows program

participants.

(e) Fee payments.

(f) Reimbursement of expenses for assisting foreign

securities authorities.

78d-1. Delegation of functions by Commission.

(a) Authorization; functions delegable; eligible

persons; application of other laws.

(b) Right of review; procedure.

(c) Finality of delegated action.

78d-2. Transfer of functions with respect to assignment of

personnel to chairman.

78d-3. Appearance and practice before the Commission.

(a) Authority to censure.

(b) Definition.

78e. Transactions on unregistered exchanges.

78f. National securities exchanges.

(a) Registration; application.

(b) Determinations by Commission requisite to

registration of applicant as a national

securities exchange.

(c) Denial of membership in national exchanges;

denial of association with member; conditions;

limitation of membership.

(d) Discipline of national securities exchange

members and persons associated with members;

summary proceedings.

(e) Commissions, allowances, discounts, and other

fees.

(f) Compliance of non-members with exchange rules.

(g) Notice registration of security futures product

exchanges.

(h) Trading in security futures products.

(i) Rules to avoid duplicative regulation of dual

registrants.

(j) Procedures and rules for security future

products.

(k) Rules relating to security futures products

traded on foreign boards of trade.

78g. Margin requirements.

(a) Rules and regulations for extension of credit;

standard for initial extension; undermargined

accounts.

(b) Lower and higher margin requirements.

(c) Unlawful credit extension to customers.

(d) Unlawful credit extension in violation of rules

and regulations; exceptions to application of

rules, etc.

(e) Effective date of this section and rules and

regulations.

(f) Unlawful receipt of credit; exemptions.

(g) Effect of bona fide agreement for delayed

delivery of mortgage related security.

78h. Restrictions on borrowing and lending by members, brokers, and

dealers.

78i. Manipulation of security prices.

(a) Transactions relating to purchase or sale of

security.

(b) Transactions relating to puts, calls, straddles,

or options.

(c) Endorsement or guarantee of puts, calls,

straddles, or options.

(d) Registered warrant, right, or convertible

security not included in ''put'', ''call'',

''straddle'', or ''option''.

(e) Persons liable; suits at law or in equity.

(f) Subsection (a) not applicable to exempted

securities.

(g) Foreign currencies and security futures products.

(h) Limitations on practices that affect market

volatility.

(i) Limitation on Commission authority.

78j. Manipulative and deceptive devices.

78j-1. Audit requirements.

(a) In general.

(b) Required response to audit discoveries.

(c) Auditor liability limitation.

(d) Civil penalties in cease-and-desist proceedings.

(e) Preservation of existing authority.

(f) Definitions.

(g) Prohibited activities.

(h) Preapproval required for non-audit services.

(i) Preapproval requirements.

(j) Audit partner rotation.

(k) Reports to audit committees.

(l) Conflicts of interest.

(m) Standards relating to audit committees.

78k. Trading by members of exchanges, brokers, and dealers.

(a) Trading for own account or account of associated

person; exceptions.

(b) Registration of members as odd-lot dealers and

specialists.

(c) Exemptions from provisions of section and rules

and regulations.

(d) Prohibition on extension of credit by

broker-dealer.

78k-1. National market system for securities; securities

information processors.

(a) Congressional findings; facilitating

establishment of national market system for

securities; designation of qualified

securities.

(b) Securities information processors; registration;

withdrawal of registration; access to services;

censure; suspension or revocation of

registration.

(c) Rules and regulations covering use of mails or

other means or instrumentalities of interstate

commerce; reports of purchase or sale of

qualified securities; limiting registered

securities transactions to national securities

exchanges.

(d) National Market Advisory Board.

(e) National markets system for security futures

products.

78l. Registration requirements for securities.

(a) General requirement of registration.

(b) Procedure for registration; information.

(c) Additional or alternative information.

(d) Effective date of registration; withdrawal of

registration.

(e) Exemption from provisions of section for period

ending not later than July 1, 1935.

(f) Unlisted trading privileges for security

originally listed on another national exchange.

(g) Registration of securities by issuer; exemptions.

(h) Exemption by rules and regulations from certain

provisions of section.

(i) Securities issued by banks.

(j) Denial, suspension, or revocation of

registration; notice and hearing.

(k) Trading suspensions; emergency authority.

(l) Issuance of any security in contravention of

rules and regulations; application to annuity

contracts and variable life policies.

78l-1. Applications for unlisted trading privileges deemed filed

under section 78l of this title.

78m. Periodical and other reports.

(a) Reports by issuer of security; contents.

(b) Form of report; books, records, and internal

accounting; directives.

(c) Alternative reports.

(d) Reports by persons acquiring more than five per

centum of certain classes of securities.

(e) Purchase of securities by issuer.

(f) Reports by institutional investment managers.

(g) Statement of equity security ownership.

(h) Large trader reporting.

(i) Accuracy of financial reports.

(j) Off-balance sheet transactions.

(k) Prohibition on personal loans to executives.

(l) Real time issuer disclosures.

78n. Proxies.

(a) Solicitation of proxies in violation of rules and

regulations.

(b) Giving or refraining from giving proxy in respect

of any security carried for account of

customer.

(c) Information to holders of record prior to annual

or other meeting.

(d) Tender offer by owner of more than five per

centum of class of securities; exceptions.

(e) Untrue statement of material fact or omission of

fact with respect to tender offer.

(f) Election or designation of majority of directors

of issuer by owner of more than five per centum

of class of securities at other than meeting of

security holders.

(g) Filing fees.

(h) Proxy solicitations and tender offers in

connection with limited partnership rollup

transactions.

78o. Registration and regulation of brokers and dealers.

(a) Registration of all persons utilizing exchange

facilities to effect transactions; exemptions.

(b) Manner of registration of brokers and dealers.

(c) Use of manipulative or deceptive devices;

contravention of rules and regulations.

(d) Filing of supplementary and periodic information.

(e) Compliance with this chapter by members not

required to be registered.

(f) Prevention of misuse of material, nonpublic

information.

(g) Requirements for transactions in penny stocks.

(h) Limitations on State law.

(i) Rulemaking to extend requirements to new hybrid

products.

(i) Limitation on Commission authority.

78o-1. Brokers deemed to be registered.

78o-2. Liabilities arising prior to amendment unaffected.

78o-3. Registered securities associations.

(a) Registration; application.

(b) Determinations by Commission requisite to

registration of applicant as national

securities association.

(c) National association rules; provision for

registration of affiliated securities

association.

(d) Registration as affiliated association;

prerequisites; association rules.

(e) Dealings with nonmember professionals.

(f) Transactions in municipal securities.

(g) Denial of membership.

(h) Discipline of registered securities association

members and persons associated with members;

summary proceedings.

(i) Broker-dealer disciplinary history.

(j) Registration for sales of private securities

offerings.

(k) Limited purpose national securities association.

(l) Rules to avoid duplicative regulation of dual

registrants.

(m) Procedures and rules for security future

products.

78o-4. Municipal securities.

(a) Registration of municipal securities dealers.

(b) Municipal Securities Rulemaking Board; rules and

regulations.

(c) Discipline of municipal securities dealers;

censure; suspension or revocation of

registration; other sanctions; investigations.

(d) Issuance of municipal securities.

78o-5. Government securities brokers and dealers.

(a) Registration requirements; notice to regulatory

agencies; manner of registration; exemption

from registration requirements.

(b) Rules with respect to transactions in government

securities.

(c) Sanctions for violations.

(d) Records of brokers and dealers subject to

examination.

(e) Membership in national securities exchange;

exemptions.

(f) Large position reporting.

(g) Effect on other laws; authority of Commission.

78o-6. Securities analysts and research reports.

(a) Analyst protections.

(b) Disclosure.

(c) Definitions.

78p. Directors, officers, and principal stockholders.

(a) Disclosures required.

(b) Profits from purchase and sale of security within

six months.

(c) Conditions for sale of security by beneficial

owner, director, or officer.

(d) Securities held in investment account,

transactions in ordinary course of business,

and establishment of primary or secondary

market.

(e) Application of section to foreign or domestic

arbitrage transactions.

(f) Treatment of transactions in security futures

products.

(g) Limitation on Commission authority.

78q. Records and reports.

(a) Rules and regulations.

(b) Records subject to examination.

(c) Copies of reports filed with other regulatory

agencies.

(d) Self-regulatory organizations.

(e) Balance sheet and income statement; other

financial statements and information.

(f) Missing, lost, counterfeit, and stolen

securities.

(g) Persons extending credit.

(h) Risk assessment for holding company systems.

(i) Investment bank holding companies.

(j) Authority to limit disclosure of information.

(k) Coordination of examining authorities.

78q-1. National system for clearance and settlement of securities

transactions.

(a) Congressional findings; facilitating

establishment of system.

(b) Registration of clearing agencies; application;

determinations by Commission requisite to

registration of applicant as clearing agency;

denial of participation; discipline; summary

proceedings; exemption; facilities for handling

derivatives.

(c) Registration of transfer agents.

(d) Activities of clearing agencies and transfer

agents; enforcement by appropriate regulatory

agencies.

(e) Physical movement of securities certificates.

(f) Rules concerning transfer of securities and

rights and obligations of involved or affected

parties.

78q-2. Automated quotation systems for penny stocks.

(a) Findings.

(b) Mandate to facilitate establishment of automated

quotation systems.

(c) Exemptive authority.

(d) Commission reporting requirements.

78r. Liability for misleading statements.

(a) Persons liable; persons entitled to recover;

defense of good faith; suit at law or in

equity; costs, etc.

(b) Contribution.

(c) Period of limitations.

78s. Registration, responsibilities, and oversight of

self-regulatory organizations.

(a) Registration procedures; notice of filing; other

regulatory agencies.

(b) Proposed rule changes; notice; proceedings.

(c) Amendment by Commission of rules of

self-regulatory organizations.

(d) Notice of disciplinary action taken by

self-regulatory organization against a member

or participant; review of action by appropriate

regulatory agency; procedure.

(e) Disposition of review; cancellation, reduction,

or remission of sanction.

(f) Dismissal of review proceeding.

(g) Compliance with rules and regulations.

(h) Suspension or revocation of self-regulatory

organization's registration; censure; other

sanctions.

(i) Appointment of trustee.

78t. Liability of controlling persons and persons who aid and abet

violations.

(a) Joint and several liability; good faith defense.

(b) Unlawful activity through or by means of any

other person.

(c) Hindering, delaying, or obstructing the making or

filing of any document, report, or information.

(d) Liability for trading in securities while in

possession of material nonpublic information.

(e) Prosecution of persons who aid and abet

violations.

(f) Limitation on Commission authority.

78t-1. Liability to contemporaneous traders for insider trading.

(a) Private rights of action based on contemporaneous

trading.

(b) Limitations on liability.

(c) Joint and several liability for communicating.

(d) Authority not to restrict other express or

implied rights of action.

(e) Provisions not to affect public prosecutions.

78u. Investigations and actions.

(a) Authority and discretion of Commission to

investigate violations.

(b) Attendance of witnesses; production of records.

(c) Judicial enforcement of investigative power of

Commission; refusal to obey subpoena; criminal

sanctions.

(d) Injunction proceedings; authority of court to

prohibit persons from serving as officers and

directors; money penalties in civil actions.

(e) Mandamus.

(f) Rules of self-regulatory organizations or Board.

(g) Consolidation of actions; consent of Commission.

(h) Access to records.

(i) Information to CFTC.

78u-1. Civil penalties for insider trading.

(a) Authority to impose civil penalties.

(b) Limitations on liability.

(c) Authority of Commission.

(d) Procedures for collection.

(e) Authority to award bounties to informants.

(f) Definition.

(g) Limitation on Commission authority.

78u-2. Civil remedies in administrative proceedings.

(a) Commission authority to assess money penalties.

(b) Maximum amount of penalty.

(c) Determination of public interest.

(d) Evidence concerning ability to pay.

(e) Authority to enter order requiring accounting and

disgorgement.

78u-3. Cease-and-desist proceedings.

(a) Authority of Commission.

(b) Hearing.

(c) Temporary order.

(d) Review of temporary orders.

(e) Authority to enter order requiring accounting and

disgorgement.

(f) Authority of the Commission to prohibit persons

from serving as officers or directors.

78u-4. Private securities litigation.

(a) Private class actions.

(b) Requirements for securities fraud actions.

(c) Sanctions for abusive litigation.

(d) Defendant's right to written interrogatories.

(e) Limitation on damages.

(f) Proportionate liability.

78u-5. Application of safe harbor for forward-looking statements.

(a) Applicability.

(b) Exclusions.

(c) Safe harbor.

(d) Duty to update.

(e) Dispositive motion.

(f) Stay pending decision on motion.

(g) Exemption authority.

(h) Effect on other authority of Commission.

(i) Definitions.

78v. Hearings by Commission.

78w. Rules, regulations, and orders; annual reports.

(a) Power to make rules and regulations;

considerations; public disclosure.

(b) Omitted.

(c) Procedure for adjudication.

(d) Cease-and-desist procedures.

78x. Public availability of information.

(a) ''Records'' defined.

(b) Disclosure or personal use.

(c) Confidential disclosures.

(d) Records obtained from foreign securities

authorities.

(e) Savings provision.

78y. Court review of orders and rules.

(a) Final Commission orders; persons aggrieved;

petition; record; findings; affirmance,

modification, enforcement, or setting aside of

orders; remand to adduce additional evidence.

(b) Commission rules; persons adversely affected;

petition; record; affirmance, enforcement, or

setting aside of rules; findings; transfer of

proceedings.

(c) Objections not urged before Commission; stay of

orders and rules; transfer of enforcement or

review proceedings.

(d) Other appropriate regulatory agencies.

78z. Unlawful representations.

78aa. Jurisdiction of offenses and suits.

78aa-1. Special provision relating to statute of limitations on

private causes of action.

(a) Effect on pending causes of action.

(b) Effect on dismissed causes of action.

78bb. Effect on existing law.

(a) Addition of rights and remedies; recovery of

actual damages; State securities commissions.

(b) Modification of disciplinary procedures.

(c) Continuing validity of disciplinary sanctions.

(d) Physical location of facilities of registered

clearing agencies or registered transfer agents

not to subject changes in beneficial or record

ownership of securities to State or local

taxes.

(e) Exchange, broker, and dealer commissions;

brokerage and research services.

(f) Limitations on remedies.

78cc. Validity of contracts.

(a) Waiver provisions.

(b) Contract provisions in violation of chapter.

(c) Validity of loans, extensions of credit, and

creation of liens; actual knowledge of

violation.

78dd. Foreign securities exchanges.

78dd-1. Prohibited foreign trade practices by issuers.

(a) Prohibition.

(b) Exception for routine governmental action.

(c) Affirmative defenses.

(d) Guidelines by Attorney General.

(e) Opinions of Attorney General.

(f) Definitions.

(g) Alternative jurisdiction.

78dd-2. Prohibited foreign trade practices by domestic concerns.

(a) Prohibition.

(b) Exception for routine governmental action.

(c) Affirmative defenses.

(d) Injunctive relief.

(e) Guidelines by Attorney General.

(f) Opinions of Attorney General.

(g) Penalties.

(h) Definitions.

(i) Alternative jurisdiction.

78dd-3. Prohibited foreign trade practices by persons other than

issuers or domestic concerns.

(a) Prohibition.

(b) Exception for routine governmental action.

(c) Affirmative defenses.

(d) Injunctive relief.

(e) Penalties.

(f) Definitions.

78ee. Transaction fees.

(a) Recovery of cost of services.

(b) Exchange-traded securities.

(c) Off-exchange trades of exchange registered and

last-sale-reported securities.

(d) Assessments on security futures transactions.

(e) Dates for payments.

(f) Exemptions.

(g) Publication.

(h) Pro rata application.

(i) Deposit of fees.

(j) Recapture of projection windfalls for further

rate reductions.

(k) Lapse of appropriation.

(l) Definitions.

78ff. Penalties.

(a) Willful violations; false and misleading

statements.

(b) Failure to file information, documents, or

reports.

(c) Violations by issuers, officers, directors,

stockholders, employees, or agents of issuers.

78gg. Separability.

78hh. Effective date.

78hh-1. Effective date of certain sections.

78ii, 78jj. Omitted or Repealed.

78kk. Authorization of appropriations.

78ll. Requirements for the EDGAR system.

78mm. General exemptive authority.

(a) Authority.

(b) Limitation.

-SECREF-

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in sections 77ccc, 77hhh, 77www,

77zzz, 78bbb, 78eee, 79p, 79t, 79u, 80a-2, 80a-8, 80a-9, 80a-12,

80a-17, 80a-29, 80a-34, 80a-37, 80a-49, 80a-56, 80b-2, 80b-3,

80b-4a, 80b-8, 631b, 1691c, 1693o, 6805, 7202 of this title; title

2 section 1602; title 7 sections 1a, 2, 6, 6m, 7a, 7a-1, 12a; title

11 section 741; title 12 sections 1831o, 1844, 2279aa-12, 3422,

4402, 4422; title 25 section 646; title 26 sections 162, 277; title

29 sections 432, 1343; title 31 section 5312; title 42 sections

2297h-2, 2297h-7; title 43 sections 1625, 1629b; title 45 section

1342; title 47 section 274.

-CITE-

15 USC Sec. 78a 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78a. Short title

-STATUTE-

This chapter may be cited as the ''Securities Exchange Act of

1934.''

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 1, 48 Stat. 881.)

-REFTEXT-

REFERENCES IN TEXT

This chapter, referred to in text, was in the original ''This

Act''. The act was divided into two titles as follows: ''Title I -

Regulation of Securities Exchanges'' and ''Title II - Amendments to

Securities Act of 1933.'' This section was section 1 of title I,

which title is set out as sections 78a to 78l, 78m to 78o, 78o-3 to

78dd-1, and 78ee to 78hh, and 78kk to 78mm of this title. Title II

of the act amended or repealed sections 77b to 77e, 77j, 77k, 77m,

77o, and 77s, and added former sections 78ii and 78jj of this

title. For complete classification of this Act to the Code, see

Tables.

-MISC2-

SHORT TITLE OF 2002 AMENDMENTS

Pub. L. 107-204, title XI, Sec. 1101, July 30, 2002, 116 Stat.

807, provided that: ''This title (amending sections 77h-1, 78u-3,

and 78ff of this title and sections 1512 and 1513 of Title 18,

Crimes and Criminal Procedure, and enacting provisions set out as a

note under section 994 of Title 28, Judiciary and Judicial

Procedure) may be cited as the 'Corporate Fraud Accountability Act

of 2002'.''

Pub. L. 107-123, Sec. 1, Jan. 16, 2002, 115 Stat. 2390, provided

that: ''This Act (enacting chapter 48 of Title 5, Government

Organization and Employees, amending sections 77f, 77ggg, 78d, 78m,

78n, and 78ee of this title, sections 3132 and 5373 of Title 5, and

section 1833b of Title 12, Banks and Banking, and enacting

provisions set out as notes under section 78ee of this title and

section 4802 of Title 5) may be cited as the 'Investor and Capital

Markets Fee Relief Act'.''

SHORT TITLE OF 1998 AMENDMENTS

Pub. L. 105-366, Sec. 1, Nov. 10, 1998, 112 Stat. 3302, provided

that: ''This Act (enacting section 78dd-3 of this title, amending

sections 78dd-1, 78dd-2, and 78ff of this title, and enacting

provisions set out as notes under section 78dd-1 of this title) may

be cited as the 'International Anti-Bribery and Fair Competition

Act of 1998'.''

Pub. L. 105-353, Sec. 1, Nov. 3, 1998, 112 Stat. 3227, provided

that: ''This Act (amending sections 77b, 77k, 77m, 77p, 77r, 77v,

77z-1 to 77z-3, 77aa, 77ccc, 77ddd, 77mmm, 77sss, 78c, 78d, 78g,

78n, 78o, 78o-4, 78o-5, 78q, 78s, 78t, 78u-4, 78z, 78bb, 78ee,

78kk, 78ll, 80a-2, 80a-3, 80a-12, 80a-18, 80a-29, 80a-30, 80b-3,

and 80b-18a of this title and enacting provisions set out as notes

under this section and sections 77p and 78u of this title) may be

cited as the 'Securities Litigation Uniform Standards Act of

1998'.''

SHORT TITLE OF 1996 AMENDMENT

Pub. L. 104-290, Sec. 1(a), Oct. 11, 1996, 110 Stat. 3416,

provided that: ''This Act (enacting sections 77z-3, 78mm, and

80b-3a of this title, amending sections 77b, 77c, 77f, 77r, 77ddd,

78c, 78d, 78g, 78h, 78o, 78q, 78bb, 78ee, 78kk, 80a-2, 80a-3,

80a-6, 80a-12, 80a-24, 80a-26, 80a-27, 80a-29, 80a-30, 80a-34,

80a-54, 80a-60, 80a-63, 80b-2, 80b-3, 80b-5, and 80b-18a of this

title and section 1002 of Title 29, Labor, and enacting provisions

set out as notes under this section, sections 77e, 77r, 78b, 78n,

78o, 78ee, 80a-2, 80a-3, 80a-24, 80a-51, 80b-2, 80b-3a, 80b-10, and

80b-20 of this title, and section 1002 of Title 29) may be cited as

the 'National Securities Markets Improvement Act of 1996'.''

Pub. L. 104-290, title I, Sec. 101, Oct. 11, 1996, 110 Stat.

3417, provided that: ''This title (enacting sections 77z-3 and 78mm

of this title, amending sections 77b, 77r, 78c, 78g, 78h, 78o, 78q,

78bb, and 80a-2 of this title, and enacting provisions set out as

notes under sections 77e and 77r of this title) may be cited as the

'Capital Markets Efficiency Act of 1996'.''

Pub. L. 104-290, title IV, Sec. 401, Oct. 11, 1996, 110 Stat.

3441, provided that: ''This title (amending sections 77f, 78d,

78ee, and 78kk of this title and enacting provisions set out as

notes under this section and section 78ee of this title) may be

cited as the 'Securities and Exchange Commission Authorization Act

of 1996'.''

SHORT TITLE OF 1995 AMENDMENT

Pub. L. 104-67, Sec. 1(a), Dec. 22, 1995, 109 Stat. 737, provided

that: ''This Act (enacting sections 77z-1, 77z-2, 78j-1, 78u-4, and

78u-5 of this title, amending sections 77k, 77l, 77t, 78o, 78t,

78u, and 78u-4 of this title and section 1964 of Title 18, Crimes

and Criminal Procedure, and enacting provisions set out as notes

under sections 77k, 77l, and 78j-1 of this title) may be cited as

the 'Private Securities Litigation Reform Act of 1995'.''

SHORT TITLE OF 1994 AMENDMENTS

Pub. L. 103-389, Sec. 1, Oct. 22, 1994, 108 Stat. 4081, provided

that: ''This Act (amending section 78l of this title) may be cited

as the 'Unlisted Trading Privileges Act of 1994'.''

Pub. L. 103-325, title II, Sec. 201, Sept. 23, 1994, 108 Stat.

2198, provided that: ''This subtitle (subtitle A (Sec. 201-210) of

title II of Pub. L. 103-325 enacting section 1835 of Title 12,

Banks and Banking, amending sections 77r-1, 78c, 78g, 78h, and 78k

of this title and sections 24, 1464, and 1757 of Title 12, and

enacting provisions set out as notes under section 78b of this

title and section 3305 of Title 12) may be cited as the 'Small

Business Loan Securitization and Secondary Market Enhancement Act

of 1994'.''

SHORT TITLE OF 1993 AMENDMENT

Pub. L. 103-202, Sec. 1(a), Dec. 17, 1993, 107 Stat. 2344,

provided that: ''This Act (enacting section 3130 of Title 31, Money

and Finance, amending sections 78c, 78f, 78n, 78o, 78o-3, 78o-5,

78s, and 78w of this title, and enacting provisions set out as

notes under this section, sections 78f, 78n, and 78o-5 of this

title, and section 3121 of Title 31) may be cited as the

'Government Securities Act Amendments of 1993'.''

Pub. L. 103-202, title III, Sec. 301, Dec. 17, 1993, 107 Stat.

2359, provided that: ''This title (amending sections 78f, 78n, and

78o-3 of this title and enacting provisions set out as notes under

sections 78f and 78n of this title) may be cited as the 'Limited

Partnership Rollup Reform Act of 1993'.''

SHORT TITLE OF 1990 AMENDMENTS

Pub. L. 101-550, Sec. 1, Nov. 15, 1990, 104 Stat. 2713, provided

that: ''This Act (amending sections 77ccc to 77eee, 77iii to 77rrr,

77uuu, 77vvv, 78c, 78d, 78n, 78o, 78o-4, 78o-5, 78q-1, 78x, 78kk,

79z-5, 80a-2, 80a-9, 80a-44, 80a-45, 80b-2, 80b-3, 80b-10, and

80b-18 of this title and enacting provisions set out as notes under

this section and sections 77aaa and 78n of this title) may be cited

as the 'Securities Acts Amendments of 1990'.''

Pub. L. 101-550, title I, Sec. 101, Nov. 15, 1990, 104 Stat.

2713, provided that: ''This title (amending sections 77uuu, 78d,

78kk, 79z-5, 80a-45, and 80b-18 of this title) may be cited as the

'Securities and Exchange Commission Authorization Act of 1990'.''

Pub. L. 101-550, title II, Sec. 201, Nov. 15, 1990, 104 Stat.

2714, provided that: ''This title (amending sections 78c, 78d, 78o,

78o-4, 78o-5, 78q-1, 78x, 80a-2, 80a-9, 80a-44, 80b-2, 80b-3, and

80b-10 of this title) may be cited as the 'International Securities

Enforcement Cooperation Act of 1990'.''

Pub. L. 101-550, title III, Sec. 301, Nov. 15, 1990, 104 Stat.

2721, provided that: ''This title (amending section 78n of this

title and enacting provisions set out as a note under section 78n

of this title) may be cited as the 'Shareholder Communications

Improvement Act of 1990'.''

Pub. L. 101-432, Sec. 1, Oct. 16, 1990, 104 Stat. 963, provided

that: ''This Act (enacting section 1831l of Title 12, Banks and

Banking, amending sections 78i, 78l, 78m, 78o-5, 78q, 78q-1, and

78y of this title, and enacting provisions set out as notes under

sections 78b and 78q-1 of this title) may be cited as the 'Market

Reform Act of 1990'.''

Pub. L. 101-429, Sec. 1(a), Oct. 15, 1990, 104 Stat. 931,

provided that: ''This Act (enacting sections 77h-1, 78q-2, 78u-2,

and 78u-3 of this title, amending sections 77g, 77t, 78c, 78o,

78o-3, 78o-4, 78q-1, 78u, 78u-1, 78w, 78cc, 80a-9, 80a-41, 80b-3,

80b-9, and 80b-14 of this title, and enacting provisions set out as

notes under this section and sections 77g, 78o, and 78s of this

title) may be cited as the 'Securities Enforcement Remedies and

Penny Stock Reform Act of 1990'.''

Pub. L. 101-429, title V, Sec. 501, Oct. 15, 1990, 104 Stat. 951,

provided that: ''This title (enacting section 78q-2 of this title,

amending sections 77g, 78c, 78o, 78o-3, and 78cc of this title, and

enacting provisions set out as notes under sections 78o and 78s of

this title) may be cited as the 'Penny Stock Reform Act of 1990'.''

SHORT TITLE OF 1988 AMENDMENTS

Pub. L. 100-704, Sec. 1, Nov. 19, 1988, 102 Stat. 4677, provided

that: ''This Act (enacting sections 78t-1, 78u-1, and 80b-4a of

this title, amending sections 78c, 78o, 78u, 78ff, and 78kk of this

title, and enacting provisions set out as notes under sections 78b,

78o, and 78u-1 of this title) may be cited as the 'Insider Trading

and Securities Fraud Enforcement Act of 1988'.''

Pub. L. 100-418, title V, Sec. 5001, Aug. 23, 1988, 102 Stat.

1415, provided that: ''This part (part I (Sec. 5001-5003) of

subtitle A of title I of Pub. L. 100-418, amending sections 78m,

78dd-1, 78dd-2, and 78ff of this title and enacting provisions set

out as a note under section 78dd-1 of this title) may be cited as

the 'Foreign Corrupt Practices Act Amendments of 1988'.''

SHORT TITLE OF 1987 AMENDMENT

Pub. L. 100-181, Sec. 1, Dec. 4, 1987, 101 Stat. 1249, provided

that: ''This Act (enacting sections 78d-1, 78d-2, and 78ll of this

title, amending sections 77b, 77c, 77f, 77i, 77s, 77t, 77v, 77ccc,

78c, 78d, 78f, 78k-1, 78l, 78m, 78o, 78o-4, 78o-5, 78q, 78q-1, 78u,

78w, 78aa, 78bb, 78kk, 78lll, 79h, 79r, 79x, 79y, 79z-4, 80a-2,

80a-3, 80a-5, 80a-6, 80a-9, 80a-12, 80a-15, 80a-17, 80a-18, 80a-20,

80a-21, 80a-22, 80a-24, 80a-26, 80a-28, 80a-35, 80a-41, 80a-52,

80a-53, 80a-54, 80a-56, 80b-2, 80b-3, 80b-5, 80b-9, 80b-11, 80b-13,

and 80b-14 of this title, and repealing sections 78d-1, 78d-2, and

78jj of this title) may be cited as the 'Securities and Exchange

Commission Authorization Act of 1987'.''

SHORT TITLE OF 1986 AMENDMENT

Pub. L. 99-571, Sec. 1(a), Oct. 28, 1986, 100 Stat. 3208,

provided that: ''This Act (enacting section 78o-5 of this title and

section 9110 of Title 31, Money and Finance, amending sections 78c,

78o, 78o-3, 78q, 78w, 78y, 80a-9, and 80b-3 of this title and

section 3121 of Title 31, and enacting provisions set out as notes

under section 78o-5 of this title) may be cited as the 'Government

Securities Act of 1986'.''

SHORT TITLE OF 1985 AMENDMENT

Pub. L. 99-222, Sec. 1, Dec. 28, 1985, 99 Stat. 1737, provided

that: ''This Act (amending section 78n of this title and enacting a

provision set out as a note under section 78n of this title) may be

cited as the 'Shareholder Communications Act of 1985'.''

SHORT TITLE OF 1984 AMENDMENT

Pub. L. 98-376, Sec. 1, Aug. 10, 1984, 98 Stat. 1264, provided

that: ''This Act (amending sections 78c, 78o, 78t, 78u, and 78ff of

this title and enacting provisions set out as a note under section

78c of this title) may be cited as the 'Insider Trading Sanctions

Act of 1984'.''

SHORT TITLE OF 1977 AMENDMENT

Pub. L. 95-213, title I, Sec. 101, Dec. 19, 1977, 91 Stat. 1494,

provided that: ''This title (enacting sections 78dd-1 and 78dd-2 of

this title and amending sections 78m and 78ff of this title) may be

cited as the 'Foreign Corrupt Practices Act of 1977'.''

Pub. L. 95-213, title II, Sec. 201, Dec. 19, 1977, 91 Stat. 1498,

provided that: ''This title (amending sections 78m and 78o of this

title) may be cited as the 'Domestic and Foreign Investment

Improved Disclosure Act of 1977'.''

SHORT TITLE OF 1975 AMENDMENT

Section 1 of Pub. L. 94-29, June 4, 1975, 89 Stat. 97, provided:

''That this Act (enacting sections 78k-1, 78o-4, 78q-1, and 78kk of

this title, amending sections 77d, 77x, 77yyy, 78b, 78c, 78d-1,

78f, 78h, 78k, 78l, 78m, 78o, 78o-3, 78q, 78s, 78u, 78w, 78x, 78y,

78bb, 78ee, 78ff, 78iii, 79z-3, 80a-9, 80a-10, 80a-13, 80a-15,

80a-16, 80a-18, 80a-31, 80a-35, 80a-48, 80b-3, 80b-4, and 80b-17 of

this title, and enacting provisions set out as notes under sections

78b and 78f of this title) may be cited as the 'Securities Acts

Amendments of 1975'.''

SHORT TITLE OF 1964 AMENDMENT

Section 1 of Pub. L. 88-467, Aug. 20, 1964, 78 Stat. 565,

provided: ''That this Act (amending sections 77d, 78c, 78l to 78o,

78o-3, 78p, 78t, 78w, and 78ff of this title and enacting

provisions set out as a note under section 78c of this title) may

be cited as the 'Securities Acts Amendments of 1964'.''

SHORT TITLE OF 1936 AMENDMENT

Act May 27, 1936, ch. 462, 49 Stat. 1375, enacting sections

78l-1, 78o-1, 78o-2, and 78hh-1 of this title, and amending

sections 78l, 78o, 78q, 78r, 78t, 78u, 78w, and 78ff of this title,

is popularly known as the Unlisted Securities Trading Act.

SEVERABILITY

Pub. L. 104-290, Sec. 3, Oct. 11, 1996, 110 Stat. 3417, provided:

''If any provision of this Act (see Short Title of 1996 Amendment

note above), 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.''

CONGRESSIONAL FINDINGS OF 1998 AMENDMENT

Pub. L. 105-353, Sec. 2, Nov. 3, 1998, 112 Stat. 3227, provided

that: ''The Congress finds that -

''(1) the Private Securities Litigation Reform Act of 1995 (see

Short Title of 1995 Amendment note above) sought to prevent

abuses in private securities fraud lawsuits;

''(2) since enactment of that legislation, considerable

evidence has been presented to Congress that a number of

securities class action lawsuits have shifted from Federal to

State courts;

''(3) this shift has prevented that Act from fully achieving

its objectives;

''(4) State securities regulation is of continuing importance,

together with Federal regulation of securities, to protect

investors and promote strong financial markets; and

''(5) in order to prevent certain State private securities

class action lawsuits alleging fraud from being used to frustrate

the objectives of the Private Securities Litigation Reform Act of

1995, it is appropriate to enact national standards for

securities class action lawsuits involving nationally traded

securities, while preserving the appropriate enforcement powers

of State securities regulators and not changing the current

treatment of individual lawsuits.''

PURPOSES OF 1996 AMENDMENT

Pub. L. 104-290, title IV, Sec. 402, Oct. 11, 1996, 110 Stat.

3441, provided: ''The purposes of this title (see Short Title of

1996 Amendment note above) 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.''

-CROSS-

DEFINITIONS

Pub. L. 104-290, Sec. 2, Oct. 11, 1996, 110 Stat. 3417, provided:

''For purposes of this Act (see Short Title of 1996 Amendment note

above) -

''(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 (15 U.S.C. 78c).''

-CITE-

15 USC Sec. 78b 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78b. Necessity for regulation

-STATUTE-

For the reasons hereinafter enumerated, transactions in

securities as commonly conducted upon securities exchanges and

over-the-counter markets are affected with a national public

interest which makes it necessary to provide for regulation and

control of such transactions and of practices and matters related

thereto, including transactions by officers, directors, and

principal security holders, to require appropriate reports to

remove impediments to and perfect the mechanisms of a national

market system for securities and a national system for the

clearance and settlement of securities transactions and the

safeguarding of securities and funds related thereto, and to impose

requirements necessary to make such regulation and control

reasonably complete and effective, in order to protect interstate

commerce, the national credit, the Federal taxing power, to protect

and make more effective the national banking system and Federal

Reserve System, and to insure the maintenance of fair and honest

markets in such transactions:

(1) Such transactions (a) are carried on in large volume by the

public generally and in large part originate outside the States

in which the exchanges and over-the-counter markets are located

and/or are effected by means of the mails and instrumentalities

of interstate commerce; (b) constitute an important part of the

current of interstate commerce; (c) involve in large part the

securities of issuers engaged in interstate commerce; (d) involve

the use of credit, directly affect the financing of trade,

industry, and transportation in interstate commerce, and directly

affect and influence the volume of interstate commerce; and

affect the national credit.

(2) The prices established and offered in such transactions are

generally disseminated and quoted throughout the United States

and foreign countries and constitute a basis for determining and

establishing the prices at which securities are bought and sold,

the amount of certain taxes owing to the United States and to the

several States by owners, buyers, and sellers of securities, and

the value of collateral for bank loans.

(3) Frequently the prices of securities on such exchanges and

markets are susceptible to manipulation and control, and the

dissemination of such prices gives rise to excessive speculation,

resulting in sudden and unreasonable fluctuations in the prices

of securities which (a) cause alternately unreasonable expansion

and unreasonable contraction of the volume of credit available

for trade, transportation, and industry in interstate commerce,

(b) hinder the proper appraisal of the value of securities and

thus prevent a fair calculation of taxes owing to the United

States and to the several States by owners, buyers, and sellers

of securities, and (c) prevent the fair valuation of collateral

for bank loans and/or obstruct the effective operation of the

national banking system and Federal Reserve System.

(4) National emergencies, which produce widespread unemployment

and the dislocation of trade, transportation, and industry, and

which burden interstate commerce and adversely affect the general

welfare, are precipitated, intensified, and prolonged by

manipulation and sudden and unreasonable fluctuations of security

prices and by excessive speculation on such exchanges and

markets, and to meet such emergencies the Federal Government is

put to such great expense as to burden the national credit.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 2, 48 Stat. 881; Pub. L.

94-29, Sec. 2, June 4, 1975, 89 Stat. 97.)

-MISC1-

AMENDMENTS

1975 - Pub. L. 94-29 inserted ''to remove impediments to and

perfect the mechanisms of a national market system for securities

and a national system for the clearance and settlement of

securities transactions and the safeguarding of securities and

funds related thereto,'' after ''require appropriate reports,'' in

introductory provisions preceding par. (1).

EFFECTIVE DATE OF 1975 AMENDMENT

Section 31(a) of Pub. L. 94-29 provided that: ''This Act

(enacting sections 78k-1, 78o-4, 78q-1, and 78kk of this title,

amending this section and sections 77d, 77x, 77yyy, 78c, 78d-1,

78f, 78h, 78k, 78l, 78m, 78o, 78o-3, 78q, 78s, 78u, 78w, 78x, 78y,

78bb, 78ee, 78ff, 78iii, 79z-3, 80a-9, 80a-10, 80a-13, 80a-15,

80a-16, 80a-18, 80a-31, 80a-35, 80a-48, 80b-3, 80b-4, and 80b-17 of

this title, and enacting provisions set out as notes under sections

78a and 78f of this title) shall become effective on the date of

its enactment (June 4, 1975) except as hereinafter provided. The

amendments made by this Act to sections 3(a)(12), 6(a) through (d),

11A(b), 15(a), 15A, 15B(a), 17A(b), and (c), and 19(g) of the

Securities Exchange Act of 1934 (sections 78c(a)(12), 78f(a)

through (d), 78k-1(b), 78o(a), 78o-3, 78o-4(a), 78q-1(b) and (c),

and 78s(g) of this title) shall become effective one hundred eighty

days after the date of enactment of this Act (June 4, 1975), and

the amendments made by this Act to section 31 of the Securities

Exchange Act of 1934 (section 78ee of this title) shall become

effective on January 1, 1976. Neither the provisions of section

3(a)(3), 6(b)(2), or 6(c)(1) of the Securities Exchange Act of 1934

(as amended by this Act) (section 78c(a)(3), 78f(b)(2), or

78f(c)(1) of this title) nor any rule or regulation thereunder

shall apply so as to deprive any person of membership in any

national securities exchange (or its successor) of which such

person was, on the date of enactment of this Act (June 4, 1975), a

member or a member firm as defined in the constitution of such

exchange or so as to deny membership in any such exchange (or its

successor) to any natural person who is or becomes associated with

such member or member firm.''

STUDY AND REPORT ON IMPACT OF TECHNOLOGICAL ADVANCES ON SECURITIES

MARKETS

Pub. L. 104-290, title V, Sec. 510(a), Oct. 11, 1996, 110 Stat.

3450, provided that:

''(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 (Oct. 11, 1996), the Commission shall submit a report

to the Congress on the results of the study conducted under

paragraph (1).''

JOINT STUDY ON IMPACT OF ADDITIONAL SECURITIES BASED ON POOLED

OBLIGATIONS

Pub. L. 103-325, title II, Sec. 209, Sept. 23, 1994, 108 Stat.

2202, provided that:

''(a) Joint Study Required. - The Board and the Commission shall

conduct a joint study of the impact of the provisions of this

subtitle (subtitle A (Sec. 201-210 of title II of Pub. L. 103-325),

see Short Title of 1994 Amendment note set out under section 78a of

this title) (including the amendments made by this subtitle) on the

credit and securities markets. Such study shall evaluate -

''(1) the impact of the provisions of this subtitle on the

availability of credit for business and commercial enterprises in

general, and the availability of credit in particular for -

''(A) businesses in low- and moderate-income areas;

''(B) businesses owned by women and minorities;

''(C) community development efforts;

''(D) community development financial institutions;

''(E) businesses in different geographical regions; and

''(F) a diversity of types of businesses;

''(2) the structure and operation of the markets that develop

for small business related securities and commercial mortgage

related securities, including the types of entities (such as

pension funds and insurance companies) that are significant

purchasers of such securities, the extent to which such entities

are sophisticated investors, the use of credit enhancements in

obtaining investment-grade ratings, any conflicts of interest

that arise in such markets, and any adverse effects of such

markets on commercial real estate ventures, pension funds, or

pension fund beneficiaries;

''(3) the extent to which the provisions of this subtitle with

regard to margin requirements, the number of eligible investment

rating categories, preemption of State law, and the treatment of

such securities as government securities for the purpose of State

investment limitations, affect the structure and operation of

such markets; and

''(4) in view of the findings made pursuant to paragraphs (2)

and (3), any additional suitability or disclosure requirements or

other investor protections that should be required.

''(b) Reports. -

''(1) In general. - The Board and the Commission shall submit

to the Congress a report on the results of the study required by

subsection (a) before the end of -

''(A) the 2-year period beginning on the date of enactment of

this Act (Sept. 23, 1994);

''(B) the 4-year period beginning on such date of enactment;

and

''(C) the 6-year period beginning on such date of enactment.

''(2) Contents of report. - Each report required under

paragraph (1) shall contain or be accompanied by such

recommendations for administrative or legislative action as the

Board and the Commission consider appropriate and may include

recommendations regarding the need to develop a system for

reporting additional information concerning investments by the

entities described in subsection (a)(2).

''(c) Definitions. - As used in this section -

''(1) the term 'Board' means the Board of Governors of the

Federal Reserve System; and

''(2) the term 'Commission' means the Securities and Exchange

Commission.''

INTERMARKET COORDINATION; REPORTS TO CONGRESS

Pub. L. 101-432, Sec. 8(a), Oct. 16, 1990, 104 Stat. 976,

provided that: ''The Secretary of the Treasury, the Chairman of the

Board of Governors of the Federal Reserve System, the Chairman of

the Securities and Exchange Commission, and the Chairman of the

Commodity Futures Trading Commission, shall report to the Congress

not later than May 31, 1991, and annually thereafter until May 31,

1995, on the following:

''(1) the efforts their respective agencies have made relating

to the coordination of regulatory activities to ensure the

integrity and competitiveness of United States financial markets;

''(2) the efforts their respective agencies have made to

formulate coordinated mechanisms across marketplaces to protect

the payments and market systems during market emergencies;

''(3) the views of their respective agencies with respect to

the adequacy of margin levels and use of leverage by market

participants; and

''(4) such other issues and concerns relating to the soundness,

stability, and integrity of domestic and international capital

markets as may be appropriate.

The agencies shall cooperate in the development of their reports,

and prior to submitting its report to Congress, each agency shall

provide copies to the other agencies.''

SECURITIES LAWS STUDY

Pub. L. 100-704, Sec. 7, Nov. 19, 1988, 102 Stat. 4682, directed

Securities and Exchange Commission to study and investigate

adequacy of Federal securities laws and regulations for protection

of the public interest and interests of investors, specified

subjects for the study and investigation and authority of

Commission in conducting the study and investigation, directed

Commission to supply interim information to Congress on the

progress of, and any impediments to completing, the study and

investigation, directed Commission to report to Congress on results

of the study and investigation within 18 months after the date

funds are appropriated for the study and investigation, including

in such report the Commission's recommendations.

FOREIGN INVESTMENT STUDY

Pub. L. 93-479, Oct. 26, 1974, 88 Stat. 1450, directed Secretary

of the Treasury and Secretary of Commerce to conduct a

comprehensive, overall study of foreign direct and portfolio

investments in the United States and submit to Congress an interim

report twelve months after Oct. 26, 1974, and not later than one

and one-half years after Oct. 26, 1974, a full and complete report

of the findings made under the study authorized, together with such

recommendations as they considered appropriate.

-EXEC-

EX. ORD. NO. 11858. FOREIGN INVESTMENT IN THE UNITED STATES

Ex. Ord. No. 11858, May 7, 1975, 40 F.R. 20263, as amended by Ex.

Ord. No. 12188, Jan. 2, 1980, 45 F.R. 989; Ex. Ord. No. 12661, Dec.

27, 1988, 54 F.R. 779; Ex. Ord. No. 12860, Sept. 3, 1993, 58 F.R.

47201; Ex. Ord. No. 13286, Sec. 57, Feb. 28, 2003, 68 F.R. 10629,

provided:

By virtue of the authority vested in me by the Constitution and

statutes of the United States of America, including the Act of

February 14, 1903, as amended (15 U.S.C. 1501 et seq.), section 10

of the Gold Reserve Act of 1934, as amended (31 U.S.C. 822a), and

section 301 of title 3 of the United States Code, and as President

of the United States of America, it is hereby ordered as follows:

Section 1. (a) There is hereby established the Committee on

Foreign Investment in the United States (hereinafter referred to as

the Committee). The Committee shall be composed of the following:

(1) The Secretary of State.

(2) The Secretary of the Treasury.

(3) The Secretary of Defense.

(4) The Secretary of Commerce.

(5) The United States Trade Representative.

(6) The Chairman of the Council of Economic Advisers.

(7) The Attorney General.

(8) The Secretary of Homeland Security.

(9) The Director of the Office of Management and Budget.

(9)(sic) the Director of the Office of Science and Technology

Policy.

(10) the Assistant to the President for National Security

Affairs.

(11) the Assistant to the President for Economic Policy.

The Secretary of the Treasury shall be the chairman of the

Committee. The chairman, as he deems appropriate, may invite

representatives of other departments and agencies to participate

from time to time in activities of the Committee.

(b) The Committee shall have primary continuing responsibility

within the Executive Branch for monitoring the impact of foreign

investment in the United States, both direct and portfolio, and for

coordinating the implementation of United States policy on such

investment. In fulfillment of this responsibility, the Committee

shall:

(1) arrange for the preparation of analyses of trends and

significant developments in foreign investments in the United

States;

(2) provide guidance on arrangements with foreign governments for

advance consultations on prospective major foreign governmental

investments in the United States;

(3) review investments in the United States which, in the

judgment of the Committee, might have major implications for United

States national interests;

(4) consider proposals for new legislation or regulations

relating to foreign investment as may appear necessary; and

(5) coordinate the views of the Executive Branch and discharge

the responsibilities with respect to Section 721(a) and (e) of the

Defense Production Act of 1950 (50 U.S.C. App. 2170(a), (e)), as

amended (50 U.S.C. App. 2061 et seq.) (''Defense Production Act'').

(c) As the need arises, the Committee shall submit

recommendations and analyses to the National Security Council and

to the Economic Policy Board. It shall also arrange for the

preparation and publication of periodic reports.

Sec. 2. The Secretary of Commerce, with respect to the collection

and use of data on foreign investment in the United States, shall

provide, in particular, for the performance of the following

activities:

(a) The obtainment, consolidation, and analysis of information on

foreign investment in the United States;

(b) the improvement of procedures for the collection and

dissemination of information on such foreign investment;

(c) the close observation of foreign investment in the United

States;

(d) the preparation of reports and analyses of trends and of

significant developments in appropriate categories of such

investment;

(e) the compilation of data and preparation of evaluations of

significant investment transactions; and

(f) the submission to the Committee of appropriate reports,

analyses, data and recommendations relating to foreign investment

in the United States, including recommendations as to how

information on foreign investment can be kept current.

Sec. 3. The Secretary of the Treasury is authorized, without

further approval of the President, to make reasonable use of the

resources of the Exchange Stabilization Fund, in accordance with

section 10 of the Gold Reserve Act of 1934, as amended (31 U.S.C.

822a) (31 U.S.C. 5302), to pay any of the expenses directly

incurred by the Secretary of Commerce in the performance of the

functions and activities provided by this order. This authority

shall be in effect for one year, unless revoked prior thereto.

Sec. 4. All departments and agencies are directed to provide, to

the extent permitted by law, such information and assistance as may

be requested by the Committee or the Secretary of Commerce in

carrying out their functions and activities under this order.

Sec. 5. Information which has been submitted or received in

confidence shall not be publicly disclosed, except to the extent

required by law; and such information shall be used by the

Committee only for the purpose of carrying out the functions and

activities prescribed by this order. Information or documentary

material filed pursuant to Section 1(b)(5) or Section 7 of this

Order shall be treated in accordance with paragraph (b) of Section

721 of the Defense Production Act (50 U.S.C. App. 2170(b)).

Sec. 6. Nothing in this order shall affect the data-gathering,

regulatory, or enforcement authority of any existing department or

agency over foreign investment, and the review of individual

investments provided by this order shall not in any way supersede

or prejudice any other process provided by law.

Sec. 7. (1) Investigations. (a) The Committee is designated to

receive notices and other information, to determine whether

investigations should be undertaken, and to make investigations,

pursuant to Section 721(a) of the Defense Production Act (50 U.S.C.

App. 2170(a)). (b) If the Committee determines that an

investigation should be undertaken, such investigation shall

commence no later than 30 days after receipt by the Committee of

written notification of the proposed or pending merger,

acquisition, or takeover. Such investigation shall be completed no

later than 45 days after such determination. (c) If one or more

Committee members differ with a Committee decision not to undertake

an investigation, the Chairman shall submit a report of the

Committee to the President setting forth the differing views and

presenting the issues for his decision within 25 days after receipt

by the Committee of written notification of the proposed or pending

merger, acquisition, or takeover. (d) A unanimous decision by the

Committee not to undertake an investigation with regard to a notice

shall conclude action under this section on such notice. The

Chairman shall advise the President of said decision.

(2) Report to the President. Upon completion or termination of

any investigation, the Committee shall report to the President and

present a recommendation. Any such report shall include

information relevant to subparagraphs (1) and (2) of Section 721(d)

of the Defense Production Act. If the Committee is unable to reach

a unanimous recommendation, the Chairman shall submit a report of

the Committee to the President setting forth the differing views

and presenting the issues for his decision.

Sec. 8. The Chairman of the Committee, in consultation with other

members of the Committee, is hereby delegated the authority to

issue regulations to implement Section 721 of the Defense

Production Act (50 U.S.C. App. 2170).

EX. ORD. NO. 12631. WORKING GROUP ON FINANCIAL MARKETS

Ex. Ord. No. 12631, Mar. 18, 1988, 53 F.R. 9421, provided:

By virtue of the authority vested in me as President by the

Constitution and laws of the United States of America, and in order

to establish a Working Group on Financial Markets, it is hereby

ordered as follows:

Section 1. Establishment. (a) There is hereby established a

Working Group on Financial Markets (Working Group). The Working

Group shall be composed of:

(1) the Secretary of the Treasury, or his designee;

(2) the Chairman of the Board of Governors of the Federal Reserve

System, or his designee;

(3) the Chairman of the Securities and Exchange Commission, or

his designee; and

(4) the Chairman of the Commodity Futures Trading Commission, or

her designee.

(b) The Secretary of the Treasury, or his designee, shall be the

Chairman of the Working Group.

Sec. 2. Purposes and Functions. (a) Recognizing the goals of

enhancing the integrity, efficiency, orderliness, and

competitiveness of our Nation's financial markets and maintaining

investor confidence, the Working Group shall identify and consider:

(1) the major issues raised by the numerous studies on the events

in the financial markets surrounding October 19, 1987, and any of

those recommendations that have the potential to achieve the goals

noted above; and

(2) the actions, including governmental actions under existing

laws and regulations (such as policy coordination and contingency

planning), that are appropriate to carry out these recommendations.

(b) The Working Group shall consult, as appropriate, with

representatives of the various exchanges, clearinghouses,

self-regulatory bodies, and with major market participants to

determine private sector solutions wherever possible.

(c) The Working Group shall report to the President initially

within 60 days (and periodically thereafter) on its progress and,

if appropriate, its views on any recommended legislative changes.

Sec. 3. Administration. (a) The heads of Executive departments,

agencies, and independent instrumentalities shall, to the extent

permitted by law, provide the Working Group such information as it

may require for the purpose of carrying out this Order.

(b) Members of the Working Group shall serve without additional

compensation for their work on the Working Group.

(c) To the extent permitted by law and subject to the

availability of funds therefor, the Department of the Treasury

shall provide the Working Group with such administrative and

support services as may be necessary for the performance of its

functions. Ronald Reagan.

-CITE-

15 USC Sec. 78c 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78c. Definitions and application

-STATUTE-

(a) Definitions

When used in this chapter, unless the context otherwise requires

-

(1) The term ''exchange'' means any organization, association,

or group of persons, whether incorporated or unincorporated,

which constitutes, maintains, or provides a market place or

facilities for bringing together purchasers and sellers of

securities or for otherwise performing with respect to securities

the functions commonly performed by a stock exchange as that term

is generally understood, and includes the market place and the

market facilities maintained by such exchange.

(2) The term ''facility'' when used with respect to an exchange

includes its premises, tangible or intangible property whether on

the premises or not, any right to the use of such premises or

property or any service thereof for the purpose of effecting or

reporting a transaction on an exchange (including, among other

things, any system of communication to or from the exchange, by

ticker or otherwise, maintained by or with the consent of the

exchange), and any right of the exchange to the use of any

property or service.

(3)(A) The term ''member'' when used with respect to a national

securities exchange means (i) any natural person permitted to

effect transactions on the floor of the exchange without the

services of another person acting as broker, (ii) any registered

broker or dealer with which such a natural person is associated,

(iii) any registered broker or dealer permitted to designate as a

representative such a natural person, and (iv) any other

registered broker or dealer which agrees to be regulated by such

exchange and with respect to which the exchange undertakes to

enforce compliance with the provisions of this chapter, the rules

and regulations thereunder, and its own rules. For purposes of

sections 78f(b)(1), 78f(b)(4), 78f(b)(6), 78f(b)(7), 78f(d),

78q(d), 78s(d), 78s(e), 78s(g), 78s(h), and 78u of this title,

the term ''member'' when used with respect to a national

securities exchange also means, to the extent of the rules of the

exchange specified by the Commission, any person required by the

Commission to comply with such rules pursuant to section 78f(f)

of this title.

(B) The term ''member'' when used with respect to a registered

securities association means any broker or dealer who agrees to

be regulated by such association and with respect to whom the

association undertakes to enforce compliance with the provisions

of this chapter, the rules and regulations thereunder, and its

own rules.

(4) Broker. -

(A) In general. - The term ''broker'' means any person

engaged in the business of effecting transactions in securities

for the account of others.

(B) Exception for certain bank activities. - A bank shall not

be considered to be a broker because the bank engages in any

one or more of the following activities under the conditions

described:

(i) Third party brokerage arrangements. - The bank enters

into a contractual or other written arrangement with a broker

or dealer registered under this chapter under which the

broker or dealer offers brokerage services on or off the

premises of the bank if -

(I) such broker or dealer is clearly identified as the

person performing the brokerage services;

(II) the broker or dealer performs brokerage services in

an area that is clearly marked and, to the extent

practicable, physically separate from the routine

deposit-taking activities of the bank;

(III) any materials used by the bank to advertise or

promote generally the availability of brokerage services

under the arrangement clearly indicate that the brokerage

services are being provided by the broker or dealer and not

by the bank;

(IV) any materials used by the bank to advertise or

promote generally the availability of brokerage services

under the arrangement are in compliance with the Federal

securities laws before distribution;

(V) bank employees (other than associated persons of a

broker or dealer who are qualified pursuant to the rules of

a self-regulatory organization) perform only clerical or

ministerial functions in connection with brokerage

transactions including scheduling appointments with the

associated persons of a broker or dealer, except that bank

employees may forward customer funds or securities and may

describe in general terms the types of investment vehicles

available from the bank and the broker or dealer under the

arrangement;

(VI) bank employees do not receive incentive compensation

for any brokerage transaction unless such employees are

associated persons of a broker or dealer and are qualified

pursuant to the rules of a self-regulatory organization,

except that the bank employees may receive compensation for

the referral of any customer if the compensation is a

nominal one-time cash fee of a fixed dollar amount and the

payment of the fee is not contingent on whether the

referral results in a transaction;

(VII) such services are provided by the broker or dealer

on a basis in which all customers that receive any services

are fully disclosed to the broker or dealer;

(VIII) the bank does not carry a securities account of

the customer except as permitted under clause (ii) or

(viii) of this subparagraph; and

(IX) the bank, broker, or dealer informs each customer

that the brokerage services are provided by the broker or

dealer and not by the bank and that the securities are not

deposits or other obligations of the bank, are not

guaranteed by the bank, and are not insured by the Federal

Deposit Insurance Corporation.

(ii) Trust activities. - The bank effects transactions in a

trustee capacity, or effects transactions in a fiduciary

capacity in its trust department or other department that is

regularly examined by bank examiners for compliance with

fiduciary principles and standards, and -

(I) is chiefly compensated for such transactions,

consistent with fiduciary principles and standards, on the

basis of an administration or annual fee (payable on a

monthly, quarterly, or other basis), a percentage of assets

under management, or a flat or capped per order processing

fee equal to not more than the cost incurred by the bank in

connection with executing securities transactions for

trustee and fiduciary customers, or any combination of such

fees; and

(II) does not publicly solicit brokerage business, other

than by advertising that it effects transactions in

securities in conjunction with advertising its other trust

activities.

(iii) Permissible securities transactions. - The bank

effects transactions in -

(I) commercial paper, bankers acceptances, or commercial

bills;

(II) exempted securities;

(III) qualified Canadian government obligations as

defined in section 24 of title 12, in conformity with

section 78o-5 of this title and the rules and regulations

thereunder, or obligations of the North American

Development Bank; or

(IV) any standardized, credit enhanced debt security

issued by a foreign government pursuant to the March 1989

plan of then Secretary of the Treasury Brady, used by such

foreign government to retire outstanding commercial bank

loans.

(iv) Certain stock purchase plans. -

(I) Employee benefit plans. - The bank effects

transactions, as part of its transfer agency activities, in

the securities of an issuer as part of any pension,

retirement, profit-sharing, bonus, thrift, savings,

incentive, or other similar benefit plan for the employees

of that issuer or its affiliates (as defined in section

1841 of title 12), if the bank does not solicit

transactions or provide investment advice with respect to

the purchase or sale of securities in connection with the

plan.

(II) Dividend reinvestment plans. - The bank effects

transactions, as part of its transfer agency activities, in

the securities of an issuer as part of that issuer's

dividend reinvestment plan, if -

(aa) the bank does not solicit transactions or provide

investment advice with respect to the purchase or sale of

securities in connection with the plan; and

(bb) the bank does not net shareholders' buy and sell

orders, other than for programs for odd-lot holders or

plans registered with the Commission.

(III) Issuer plans. - The bank effects transactions, as

part of its transfer agency activities, in the securities

of an issuer as part of a plan or program for the purchase

or sale of that issuer's shares, if -

(aa) the bank does not solicit transactions or provide

investment advice with respect to the purchase or sale of

securities in connection with the plan or program; and

(bb) the bank does not net shareholders' buy and sell

orders, other than for programs for odd-lot holders or

plans registered with the Commission.

(IV) Permissible delivery of materials. - The exception

to being considered a broker for a bank engaged in

activities described in subclauses (I), (II), and (III)

will not be affected by delivery of written or electronic

plan materials by a bank to employees of the issuer,

shareholders of the issuer, or members of affinity groups

of the issuer, so long as such materials are -

(aa) comparable in scope or nature to that permitted by

the Commission as of November 12, 1999; or

(bb) otherwise permitted by the Commission.

(v) Sweep accounts. - The bank effects transactions as part

of a program for the investment or reinvestment of deposit

funds into any no-load, open-end management investment

company registered under the Investment Company Act of 1940

(15 U.S.C. 80a-1 et seq.) that holds itself out as a money

market fund.

(vi) Affiliate transactions. - The bank effects

transactions for the account of any affiliate of the bank (as

defined in section 1841 of title 12) other than -

(I) a registered broker or dealer; or

(II) an affiliate that is engaged in merchant banking, as

described in section 1843(k)(4)(H) of title 12.

(vii) Private securities offerings. - The bank -

(I) effects sales as part of a primary offering of

securities not involving a public offering, pursuant to

section 3(b), 4(2), or 4(6) of the Securities Act of 1933

(15 U.S.C. 77c(b), 77d(2), 77d(6)) or the rules and

regulations issued thereunder;

(II) at any time after the date that is 1 year after

November 12, 1999, is not affiliated with a broker or

dealer that has been registered for more than 1 year in

accordance with this chapter, and engages in dealing,

market making, or underwriting activities, other than with

respect to exempted securities; and

(III) if the bank is not affiliated with a broker or

dealer, does not effect any primary offering described in

subclause (I) the aggregate amount of which exceeds 25

percent of the capital of the bank, except that the

limitation of this subclause shall not apply with respect

to any sale of government securities or municipal

securities.

(viii) Safekeeping and custody activities. -

(I) In general. - The bank, as part of customary banking

activities -

(aa) provides safekeeping or custody services with

respect to securities, including the exercise of warrants

and other rights on behalf of customers;

(bb) facilitates the transfer of funds or securities,

as a custodian or a clearing agency, in connection with

the clearance and settlement of its customers'

transactions in securities;

(cc) effects securities lending or borrowing

transactions with or on behalf of customers as part of

services provided to customers pursuant to division (aa)

or (bb) or invests cash collateral pledged in connection

with such transactions;

(dd) holds securities pledged by a customer to another

person or securities subject to purchase or resale

agreements involving a customer, or facilitates the

pledging or transfer of such securities by book entry or

as otherwise provided under applicable law, if the bank

maintains records separately identifying the securities

and the customer; or

(ee) serves as a custodian or provider of other related

administrative services to any individual retirement

account, pension, retirement, profit sharing, bonus,

thrift savings, incentive, or other similar benefit plan.

(II) Exception for carrying broker activities. - The

exception to being considered a broker for a bank engaged

in activities described in subclause (I) shall not apply if

the bank, in connection with such activities, acts in the

United States as a carrying broker (as such term, and

different formulations thereof, are used in section

78o(c)(3) of this title and the rules and regulations

thereunder) for any broker or dealer, unless such carrying

broker activities are engaged in with respect to government

securities (as defined in paragraph (42) of this

subsection).

(ix) Identified banking products. - The bank effects

transactions in identified banking products as defined in

section 206 of the Gramm-Leach-Bliley Act.

(x) Municipal securities. - The bank effects transactions

in municipal securities.

(xi) De minimis exception. - The bank effects, other than

in transactions referred to in clauses (i) through (x), not

more than 500 transactions in securities in any calendar

year, and such transactions are not effected by an employee

of the bank who is also an employee of a broker or dealer.

(C) Execution by broker or dealer. - The exception to being

considered a broker for a bank engaged in activities described

in clauses (ii), (iv), and (viii) of subparagraph (B) shall not

apply if the activities described in such provisions result in

the trade in the United States of any security that is a

publicly traded security in the United States, unless -

(i) the bank directs such trade to a registered broker or

dealer for execution;

(ii) the trade is a cross trade or other substantially

similar trade of a security that -

(I) is made by the bank or between the bank and an

affiliated fiduciary; and

(II) is not in contravention of fiduciary principles

established under applicable Federal or State law; or

(iii) the trade is conducted in some other manner permitted

under rules, regulations, or orders as the Commission may

prescribe or issue.

(D) Fiduciary capacity. - For purposes of subparagraph

(B)(ii), the term ''fiduciary capacity'' means -

(i) in the capacity as trustee, executor, administrator,

registrar of stocks and bonds, transfer agent, guardian,

assignee, receiver, or custodian under a uniform gift to

minor act, or as an investment adviser if the bank receives a

fee for its investment advice;

(ii) in any capacity in which the bank possesses investment

discretion on behalf of another; or

(iii) in any other similar capacity.

(E) Exception for entities subject to section 78o(e). - The

term ''broker'' does not include a bank that -

(i) was, on the day before November 12, 1999, subject to

section 78o(e) of this title; and

(ii) is subject to such restrictions and requirements as

the Commission considers appropriate.

(5) Dealer. -

(A) In general. - The term ''dealer'' means any person

engaged in the business of buying and selling securities for

such person's own account through a broker or otherwise.

(B) Exception for person not engaged in the business of

dealing. - The term ''dealer'' does not include a person that

buys or sells securities for such person's own account, either

individually or in a fiduciary capacity, but not as a part of a

regular business.

(C) Exception for certain bank activities. - A bank shall not

be considered to be a dealer because the bank engages in any of

the following activities under the conditions described:

(i) Permissible securities transactions. - The bank buys or

sells -

(I) commercial paper, bankers acceptances, or commercial

bills;

(II) exempted securities;

(III) qualified Canadian government obligations as

defined in section 24 of title 12, in conformity with

section 78o-5 of this title and the rules and regulations

thereunder, or obligations of the North American

Development Bank; or

(IV) any standardized, credit enhanced debt security

issued by a foreign government pursuant to the March 1989

plan of then Secretary of the Treasury Brady, used by such

foreign government to retire outstanding commercial bank

loans.

(ii) Investment, trustee, and fiduciary transactions. - The

bank buys or sells securities for investment purposes -

(I) for the bank; or

(II) for accounts for which the bank acts as a trustee or

fiduciary.

(iii) Asset-backed transactions. - The bank engages in the

issuance or sale to qualified investors, through a grantor

trust or other separate entity, of securities backed by or

representing an interest in notes, drafts, acceptances,

loans, leases, receivables, other obligations (other than

securities of which the bank is not the issuer), or pools of

any such obligations predominantly originated by -

(I) the bank;

(II) an affiliate of any such bank other than a broker or

dealer; or

(III) a syndicate of banks of which the bank is a member,

if the obligations or pool of obligations consists of

mortgage obligations or consumer-related receivables.

(iv) Identified banking products. - The bank buys or sells

identified banking products, as defined in section 206 of the

Gramm-Leach-Bliley Act.

(6) The term ''bank'' means (A) a banking institution organized

under the laws of the United States, (B) a member bank of the

Federal Reserve System, (C) any other banking institution,

whether incorporated or not, doing business under the laws of any

State or of the United States, a substantial portion of the

business of which consists of receiving deposits or exercising

fiduciary powers similar to those permitted to national banks

under the authority of the Comptroller of the Currency pursuant

to section 92a of title 12, and which is supervised and examined

by State or Federal authority having supervision over banks, and

which is not operated for the purpose of evading the provisions

of this chapter, and (D) a receiver, conservator, or other

liquidating agent of any institution or firm included in clauses

(A), (B), or (C) of this paragraph.

(7) The term ''director'' means any director of a corporation

or any person performing similar functions with respect to any

organization, whether incorporated or unincorporated.

(8) The term ''issuer'' means any person who issues or proposes

to issue any security; except that with respect to certificates

of deposit for securities, voting-trust certificates, or

collateral-trust certificates, or with respect to certificates of

interest or shares in an unincorporated investment trust not

having a board of directors or of the fixed, restricted

management, or unit type, the term ''issuer'' means the person or

persons performing the acts and assuming the duties of depositor

or manager pursuant to the provisions of the trust or other

agreement or instrument under which such securities are issued;

and except that with respect to equipment-trust certificates or

like securities, the term ''issuer'' means the person by whom the

equipment or property is, or is to be, used.

(9) The term ''person'' means a natural person, company,

government, or political subdivision, agency, or instrumentality

of a government.

(10) The term ''security'' means any note, stock, treasury

stock, security future, bond, debenture, certificate of interest

or participation in any profit-sharing agreement or in any oil,

gas, or other mineral royalty or lease, any collateral-trust

certificate, preorganization certificate or subscription,

transferable share, investment contract, voting-trust

certificate, certificate of deposit for a security, any put,

call, straddle, option, or privilege on any security, certificate

of deposit, or group or index of securities (including any

interest therein or based on the value thereof), or any put,

call, straddle, option, or privilege entered into on a national

securities exchange relating to foreign currency, or in general,

any instrument commonly known as a ''security''; or any

certificate of interest or participation in, temporary or interim

certificate for, receipt for, or warrant or right to subscribe to

or purchase, any of the foregoing; but shall not include currency

or any note, draft, bill of exchange, or banker's acceptance

which has a maturity at the time of issuance of not exceeding

nine months, exclusive of days of grace, or any renewal thereof

the maturity of which is likewise limited.

(11) The term ''equity security'' means any stock or similar

security; or any security future on any such security; or any

security convertible, with or without consideration, into such a

security, or carrying any warrant or right to subscribe to or

purchase such a security; or any such warrant or right; or any

other security which the Commission shall deem to be of similar

nature and consider necessary or appropriate, by such rules and

regulations as it may prescribe in the public interest or for the

protection of investors, to treat as an equity security.

(12)(A) The term ''exempted security'' or ''exempted

securities'' includes -

(i) government securities, as defined in paragraph (42) of

this subsection;

(ii) municipal securities, as defined in paragraph (29) of

this subsection;

(iii) any interest or participation in any common trust fund

or similar fund that is excluded from the definition of the

term ''investment company'' under section 3(c)(3) of the

Investment Company Act of 1940 (15 U.S.C. 80a-3(c)(3));

(iv) any interest or participation in a single trust fund, or

a collective trust fund maintained by a bank, or any security

arising out of a contract issued by an insurance company, which

interest, participation, or security is issued in connection

with a qualified plan as defined in subparagraph (C) of this

paragraph;

(v) any security issued by or any interest or participation

in any pooled income fund, collective trust fund, collective

investment fund, or similar fund that is excluded from the

definition of an investment company under section 3(c)(10)(B)

of the Investment Company Act of 1940 (15 U.S.C.

80a-3(c)(10)(B));

(vi) solely for purposes of sections 78l, 78m, 78n, and 78p

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 (15

U.S.C. 80a-3(c)(14)); and

(vii) such other securities (which may include, among others,

unregistered securities, the market in which is predominantly

intrastate) as the Commission may, by such rules and

regulations as it deems consistent with the public interest and

the protection of investors, either unconditionally or upon

specified terms and conditions or for stated periods, exempt

from the operation of any one or more provisions of this

chapter which by their terms do not apply to an ''exempted

security'' or to ''exempted securities''.

(B)(i) Notwithstanding subparagraph (A)(i) of this paragraph,

government securities shall not be deemed to be ''exempted

securities'' for the purposes of section 78q-1 of this title.

(ii) Notwithstanding subparagraph (A)(ii) of this paragraph,

municipal securities shall not be deemed to be ''exempted

securities'' for the purposes of sections 78o and 78q-1 of this

title.

(C) For purposes of subparagraph (A)(iv) of this paragraph, the

term ''qualified plan'' means (i) a stock bonus, pension, or

profit-sharing plan which meets the requirements for

qualification under section 401 of title 26, (ii) an annuity plan

which meets the requirements for the deduction of the employer's

contribution under section 404(a)(2) of title 26, or (iii) a

governmental plan as defined in section 414(d) of title 26 which

has been established by an employer for the exclusive benefit of

its employees or their beneficiaries for the purpose of

distributing to such employees or their beneficiaries the corpus

and income of the funds accumulated under such plan, if under

such plan it is impossible, prior to the satisfaction of all

liabilities with respect to such employees and their

beneficiaries, for any part of the corpus or income to be used

for, or diverted to, purposes other than the exclusive benefit of

such employees or their beneficiaries, other than any plan

described in clause (i), (ii), or (iii) of this subparagraph

which (I) covers employees some or all of whom are employees

within the meaning of section 401(c) of title 26, or (II) is a

plan funded by an annuity contract described in section 403(b) of

title 26.

(13) The terms ''buy'' and ''purchase'' each include any

contract to buy, purchase, or otherwise acquire. For security

futures products, such term includes any contract, agreement, or

transaction for future delivery.

(14) The terms ''sale'' and ''sell'' each include any contract

to sell or otherwise dispose of. For security futures products,

such term includes any contract, agreement, or transaction for

future delivery.

(15) The term ''Commission'' means the Securities and Exchange

Commission established by section 78d of this title.

(16) The term ''State'' means any State of the United States,

the District of Columbia, Puerto Rico, the Virgin Islands, or any

other possession of the United States.

(17) The term ''interstate commerce'' means trade, commerce,

transportation, or communication among the several States, or

between any foreign country and any State, or between any State

and any place or ship outside thereof. The term also includes

intrastate use of (A) any facility of a national securities

exchange or of a telephone or other interstate means of

communication, or (B) any other interstate instrumentality.

(18) The term ''person associated with a broker or dealer'' or

''associated person of a broker or dealer'' means any partner,

officer, director, or branch manager of such broker or dealer (or

any person occupying a similar status or performing similar

functions), any person directly or indirectly controlling,

controlled by, or under common control with such broker or

dealer, or any employee of such broker or dealer, except that any

person associated with a broker or dealer whose functions are

solely clerical or ministerial shall not be included in the

meaning of such term for purposes of section 78o(b) of this title

(other than paragraph (6) thereof).

(19) The terms ''investment company'', ''affiliated person'',

''insurance company'', ''separate account'', and ''company'' have

the same meanings as in the Investment Company Act of 1940 (15

U.S.C. 80a-1 et seq.).

(20) The terms ''investment adviser'' and ''underwriter'' have

the same meanings as in the Investment Advisers Act of 1940 (15

U.S.C. 80b-1 et seq.).

(21) The term ''person associated with a member'' or

''associated person of a member'' when used with respect to a

member of a national securities exchange or registered securities

association means any partner, officer, director, or branch

manager of such member (or any person occupying a similar status

or performing similar functions), any person directly or

indirectly controlling, controlled by, or under common control

with such member, or any employee of such member.

(22)(A) The term ''securities information processor'' means any

person engaged in the business of (i) collecting, processing, or

preparing for distribution or publication, or assisting,

participating in, or coordinating the distribution or publication

of, information with respect to transactions in or quotations for

any security (other than an exempted security) or (ii)

distributing or publishing (whether by means of a ticker tape, a

communications network, a terminal display device, or otherwise)

on a current and continuing basis, information with respect to

such transactions or quotations. The term ''securities

information processor'' does not include any bona fide newspaper,

news magazine, or business or financial publication of general

and regular circulation, any self-regulatory organizations, any

bank, broker, dealer, building and loan, savings and loan, or

homestead association, or cooperative bank, if such bank, broker,

dealer, association, or cooperative bank would be deemed to be a

securities information processor solely by reason of functions

performed by such institutions as part of customary banking,

brokerage, dealing, association, or cooperative bank activities,

or any common carrier, as defined in section 153 of title 47,

subject to the jurisdiction of the Federal Communications

Commission or a State commission, as defined in section 153 of

title 47, unless the Commission determines that such carrier is

engaged in the business of collecting, processing, or preparing

for distribution or publication, information with respect to

transactions in or quotations for any security.

(B) The term ''exclusive processor'' means any securities

information processor or self-regulatory organization which,

directly or indirectly, engages on an exclusive basis on behalf

of any national securities exchange or registered securities

association, or any national securities exchange or registered

securities association which engages on an exclusive basis on its

own behalf, in collecting, processing, or preparing for

distribution or publication any information with respect to (i)

transactions or quotations on or effected or made by means of any

facility of such exchange or (ii) quotations distributed or

published by means of any electronic system operated or

controlled by such association.

(23)(A) The term ''clearing agency'' means any person who acts

as an intermediary in making payments or deliveries or both in

connection with transactions in securities or who provides

facilities for comparison of data respecting the terms of

settlement of securities transactions, to reduce the number of

settlements of securities transactions, or for the allocation of

securities settlement responsibilities. Such term also means any

person, such as a securities depository, who (i) acts as a

custodian of securities in connection with a system for the

central handling of securities whereby all securities of a

particular class or series of any issuer deposited within the

system are treated as fungible and may be transferred, loaned, or

pledged by bookkeeping entry without physical delivery of

securities certificates, or (ii) otherwise permits or facilitates

the settlement of securities transactions or the hypothecation or

lending of securities without physical delivery of securities

certificates.

(B) The term ''clearing agency'' does not include (i) any

Federal Reserve bank, Federal home loan bank, or Federal land

bank; (ii) any national securities exchange or registered

securities association solely by reason of its providing

facilities for comparison of data respecting the terms of

settlement of securities transactions effected on such exchange

or by means of any electronic system operated or controlled by

such association; (iii) any bank, broker, dealer, building and

loan, savings and loan, or homestead association, or cooperative

bank if such bank, broker, dealer, association, or cooperative

bank would be deemed to be a clearing agency solely by reason of

functions performed by such institution as part of customary

banking, brokerage, dealing, association, or cooperative banking

activities, or solely by reason of acting on behalf of a clearing

agency or a participant therein in connection with the furnishing

by the clearing agency of services to its participants or the use

of services of the clearing agency by its participants, unless

the Commission, by rule, otherwise provides as necessary or

appropriate to assure the prompt and accurate clearance and

settlement of securities transactions or to prevent evasion of

this chapter; (iv) any life insurance company, its registered

separate accounts, or a subsidiary of such insurance company

solely by reason of functions commonly performed by such entities

in connection with variable annuity contracts or variable life

policies issued by such insurance company or its separate

accounts; (v) any registered open-end investment company or unit

investment trust solely by reason of functions commonly performed

by it in connection with shares in such registered open-end

investment company or unit investment trust, or (vi) any person

solely by reason of its performing functions described in

paragraph (25)(E) of this subsection.

(24) The term ''participant'' when used with respect to a

clearing agency means any person who uses a clearing agency to

clear or settle securities transactions or to transfer, pledge,

lend, or hypothecate securities. Such term does not include a

person whose only use of a clearing agency is (A) through another

person who is a participant or (B) as a pledgee of securities.

(25) The term ''transfer agent'' means any person who engages

on behalf of an issuer of securities or on behalf of itself as an

issuer of securities in (A) countersigning such securities upon

issuance; (B) monitoring the issuance of such securities with a

view to preventing unauthorized issuance, a function commonly

performed by a person called a registrar; (C) registering the

transfer of such securities; (D) exchanging or converting such

securities; or (E) transferring record ownership of securities by

bookkeeping entry without physical issuance of securities

certificates. The term ''transfer agent'' does not include any

insurance company or separate account which performs such

functions solely with respect to variable annuity contracts or

variable life policies which it issues or any registered clearing

agency which performs such functions solely with respect to

options contracts which it issues.

(26) The term ''self-regulatory organization'' means any

national securities exchange, registered securities association,

or registered clearing agency, or (solely for purposes of

sections 78s(b), 78s(c), and 78w(b) (FOOTNOTE 1) of this title)

the Municipal Securities Rulemaking Board established by section

78o-4 of this title.

(FOOTNOTE 1) See References in Text note below.

(27) The term ''rules of an exchange'', ''rules of an

association'', or ''rules of a clearing agency'' means the

constitution, articles of incorporation, bylaws, and rules, or

instruments corresponding to the foregoing, of an exchange,

association of brokers and dealers, or clearing agency,

respectively, and such of the stated policies, practices, and

interpretations of such exchange, association, or clearing agency

as the Commission, by rule, may determine to be necessary or

appropriate in the public interest or for the protection of

investors to be deemed to be rules of such exchange, association,

or clearing agency.

(28) The term ''rules of a self-regulatory organization'' means

the rules of an exchange which is a national securities exchange,

the rules of an association of brokers and dealers which is a

registered securities association, the rules of a clearing agency

which is a registered clearing agency, or the rules of the

Municipal Securities Rulemaking Board.

(29) The term ''municipal securities'' means securities which

are direct obligations of, or obligations guaranteed as to

principal or interest by, a State or any political subdivision

thereof, or any agency or instrumentality of a State or any

political subdivision thereof, or any municipal corporate

instrumentality of one or more States, or any security which is

an industrial development bond (as defined in section 103(c)(2)

(FOOTNOTE 1) of title 26) the interest on which is excludable

from gross income under section 103(a)(1) (FOOTNOTE 1) of title

26 if, by reason of the application of paragraph (4) or (6) of

section 103(c) (FOOTNOTE 1) of title 26 (determined as if

paragraphs (4)(A), (5), and (7) were not included in such section

103(c)), (FOOTNOTE 1) paragraph (1) of such section 103(c)

(FOOTNOTE 1) does not apply to such security.

(30) The term ''municipal securities dealer'' means any person

(including a separately identifiable department or division of a

bank) engaged in the business of buying and selling municipal

securities for his own account, through a broker or otherwise,

but does not include -

(A) any person insofar as he buys or sells such securities

for his own account, either individually or in some fiduciary

capacity, but not as a part of a regular business; or

(B) a bank, unless the bank is engaged in the business of

buying and selling municipal securities for its own account

other than in a fiduciary capacity, through a broker or

otherwise: Provided, however, That if the bank is engaged in

such business through a separately identifiable department or

division (as defined by the Municipal Securities Rulemaking

Board in accordance with section 78o-4(b)(2)(H) of this title),

the department or division and not the bank itself shall be

deemed to be the municipal securities dealer.

(31) The term ''municipal securities broker'' means a broker

engaged in the business of effecting transactions in municipal

securities for the account of others.

(32) The term ''person associated with a municipal securities

dealer'' when used with respect to a municipal securities dealer

which is a bank or a division or department of a bank means any

person directly engaged in the management, direction,

supervision, or performance of any of the municipal securities

dealer's activities with respect to municipal securities, and any

person directly or indirectly controlling such activities or

controlled by the municipal securities dealer in connection with

such activities.

(33) The term ''municipal securities investment portfolio''

means all municipal securities held for investment and not for

sale as part of a regular business by a municipal securities

dealer or by a person, directly or indirectly, controlling,

controlled by, or under common control with a municipal

securities dealer.

(34) The term ''appropriate regulatory agency'' means -

(A) When used with respect to a municipal securities dealer:

(i) the Comptroller of the Currency, in the case of a

national bank or a bank operating under the Code of Law for

the District of Columbia, or a subsidiary or a department or

division of any such bank;

(ii) the Board of Governors of the Federal Reserve System,

in the case of a State member bank of the Federal Reserve

System, a subsidiary or a department or division thereof, a

bank holding company, a subsidiary of a bank holding company

which is a bank other than a bank specified in clause (i) or

(iii) of this subparagraph, or a subsidiary or a department

or division of such subsidiary;

(iii) the Federal Deposit Insurance Corporation, in the

case of a bank insured by the Federal Deposit Insurance

Corporation (other than a member of the Federal Reserve

System), or a subsidiary or department or division thereof;

and

(iv) the Commission in the case of all other municipal

securities dealers.

(B) When used with respect to a clearing agency or transfer

agent:

(i) the Comptroller of the Currency, in the case of a

national bank or a bank operating under the Code of Law for

the District of Columbia, or a subsidiary of any such bank;

(ii) the Board of Governors of the Federal Reserve System,

in the case of a State member bank of the Federal Reserve

System, a subsidiary thereof, a bank holding company, or a

subsidiary of a bank holding company which is a bank other

than a bank specified in clause (i) or (iii) of this

subparagraph;

(iii) the Federal Deposit Insurance Corporation, in the

case of a bank insured by the Federal Deposit Insurance

Corporation (other than a member of the Federal Reserve

System), or a subsidiary thereof; and

(iv) the Commission in the case of all other clearing

agencies and transfer agents.

(C) When used with respect to a participant or applicant to

become a participant in a clearing agency or a person

requesting or having access to services offered by a clearing

agency:

(i) The Comptroller of the Currency, in the case of a

national bank or a bank operating under the Code of Law for

the District of Columbia when the appropriate regulatory

agency for such clearing agency is not the Commission;

(ii) the Board of Governors of the Federal Reserve System

in the case of a State member bank of the Federal Reserve

System, a bank holding company, or a subsidiary of a bank

holding company, or a subsidiary of a bank holding company

which is a bank other than a bank specified in clause (i) or

(iii) of this subparagraph when the appropriate regulatory

agency for such clearing agency is not the Commission;

(iii) the Federal Deposit Insurance Corporation, in the

case of a bank insured by the Federal Deposit Insurance

Corporation (other than a member of the Federal Reserve

System) when the appropriate regulatory agency for such

clearing agency is not the Commission; and

(iv) the Commission in all other cases.

(D) When used with respect to an institutional investment

manager which is a bank the deposits of which are insured in

accordance with the Federal Deposit Insurance Act (12 U.S.C.

1811 et seq.):

(i) the Comptroller of the Currency, in the case of a

national bank or a bank operating under the Code of Law for

the District of Columbia;

(ii) the Board of Governors of the Federal Reserve System,

in the case of any other member bank of the Federal Reserve

System; and

(iii) the Federal Deposit Insurance Corporation, in the

case of any other insured bank.

(E) When used with respect to a national securities exchange

or registered securities association, member thereof, person

associated with a member thereof, applicant to become a member

thereof or to become associated with a member thereof, or

person requesting or having access to services offered by such

exchange or association or member thereof, or the Municipal

Securities Rulemaking Board, the Commission.

(F) When used with respect to a person exercising investment

discretion with respect to an account;

(i) the Comptroller of the Currency, in the case of a

national bank or a bank operating under the Code of Law for

the District of Columbia;

(ii) the Board of Governors of the Federal Reserve System

in the case of any other member bank of the Federal Reserve

System;

(iii) the Federal Deposit Insurance Corporation, in the

case of any other bank the deposits of which are insured in

accordance with the Federal Deposit Insurance Act (12 U.S.C.

1811 et seq.); and

(iv) the Commission in the case of all other such persons.

(G) When used with respect to a government securities broker

or government securities dealer, or person associated with a

government securities broker or government securities dealer:

(i) the Comptroller of the Currency, in the case of a

national bank, a bank in the District of Columbia examined by

the Comptroller of the Currency, or a Federal branch or

Federal agency of a foreign bank (as such terms are used in

the International Banking Act of 1978 (12 U.S.C. 3101 et

seq.));

(ii) the Board of Governors of the Federal Reserve System,

in the case of a State member bank of the Federal Reserve

System, a foreign bank, an uninsured State branch or State

agency of a foreign bank, a commercial lending company owned

or controlled by a foreign bank (as such terms are used in

the International Banking Act of 1978), or a corporation

organized or having an agreement with the Board of Governors

of the Federal Reserve System pursuant to section 25 or

section 25A of the Federal Reserve Act (12 U.S.C. 601 et

seq., 611 et seq.);

(iii) the Federal Deposit Insurance Corporation, in the

case of a bank insured by the Federal Deposit Insurance

Corporation (other than a member of the Federal Reserve

System or a Federal savings bank) or an insured State branch

of a foreign bank (as such terms are used in the

International Banking Act of 1978);

(iv) the Director of the Office of Thrift Supervision, in

the case of a savings association (as defined in section 3(b)

of the Federal Deposit Insurance Act (12 U.S.C. 1813(b))) the

deposits of which are insured by the Federal Deposit

Insurance Corporation; (FOOTNOTE 2)

(FOOTNOTE 2) So in original. Probably should be followed by

''and''.

(v) the Commission, in the case of all other government

securities brokers and government securities dealers.

(H) When used with respect to an institution described in

subparagraph (D), (F), or (G) of section 1841(c)(2), or held

under section 1843(f) of title 12 -

(i) the Comptroller of the Currency, in the case of a

national bank or a bank in the District of Columbia examined

by the Comptroller of the Currency;

(ii) the Board of Governors of the Federal Reserve System,

in the case of a State member bank of the Federal Reserve

System or any corporation chartered under section 25A of the

Federal Reserve Act (12 U.S.C. 611 et seq.);

(iii) the Federal Deposit Insurance Corporation, in the

case of any other bank the deposits of which are insured in

accordance with the Federal Deposit Insurance Act (12 U.S.C.

1811 et seq.); or

(iv) the Commission in the case of all other such

institutions.

As used in this paragraph, the terms ''bank holding company'' and

''subsidiary of a bank holding company'' have the meanings given

them in section 1841 of title 12, and the term ''District of

Columbia savings and loan association'' means any association

subject to examination and supervision by the Office of Thrift

Supervision under section 1466a of title 12.

(35) A person exercises ''investment discretion'' with respect

to an account if, directly or indirectly, such person (A) is

authorized to determine what securities or other property shall

be purchased or sold by or for the account, (B) makes decisions

as to what securities or other property shall be purchased or

sold by or for the account even though some other person may have

responsibility for such investment decisions, or (C) otherwise

exercises such influence with respect to the purchase and sale of

securities or other property by or for the account as the

Commission, by rule, determines, in the public interest or for

the protection of investors, should be subject to the operation

of the provisions of this chapter and the rules and regulations

thereunder.

(36) A class of persons or markets is subject to ''equal

regulation'' if no member of the class has a competitive

advantage over any other member thereof resulting from a

disparity in their regulation under this chapter which the

Commission determines is unfair and not necessary or appropriate

in furtherance of the purposes of this chapter.

(37) The term ''records'' means accounts, correspondence,

memorandums, tapes, discs, papers, books, and other documents or

transcribed information of any type, whether expressed in

ordinary or machine language.

(38) The term ''market maker'' means any specialist permitted

to act as a dealer, any dealer acting in the capacity of block

positioner, and any dealer who, with respect to a security, holds

himself out (by entering quotations in an inter-dealer

communications system or otherwise) as being willing to buy and

sell such security for his own account on a regular or continuous

basis.

(39) A person is subject to a ''statutory disqualification''

with respect to membership or participation in, or association

with a member of, a self-regulatory organization, if such person

-

(A) has been and is expelled or suspended from membership or

participation in, or barred or suspended from being associated

with a member of, any self-regulatory organization, foreign

equivalent of a self-regulatory organization, foreign or

international securities exchange, contract market designated

pursuant to section 5 of the Commodity Exchange Act (7 U.S.C.

7), or any substantially equivalent foreign statute or

regulation, or futures association registered under section 17

of such Act (7 U.S.C. 21), or any substantially equivalent

foreign statute or regulation, or has been and is denied

trading privileges on any such contract market or foreign

equivalent;

(B) is subject to -

(i) an order of the Commission, other appropriate

regulatory agency, or foreign financial regulatory authority

-

(I) denying, suspending for a period not exceeding 12

months, or revoking his registration as a broker, dealer,

municipal securities dealer, government securities broker,

or government securities dealer or limiting his activities

as a foreign person performing a function substantially

equivalent to any of the above; or

(II) barring or suspending for a period not exceeding 12

months his being associated with a broker, dealer,

municipal securities dealer, government securities broker,

government securities dealer, or foreign person performing

a function substantially equivalent to any of the above;

(ii) an order of the Commodity Futures Trading Commission

denying, suspending, or revoking his registration under the

Commodity Exchange Act (7 U.S.C. 1 et seq.); or

(iii) an order by a foreign financial regulatory authority

denying, suspending, or revoking the person's authority to

engage in transactions in contracts of sale of a commodity

for future delivery or other instruments traded on or subject

to the rules of a contract market, board of trade, or foreign

equivalent thereof;

(C) by his conduct while associated with a broker, dealer,

municipal securities dealer, government securities broker, or

government securities dealer, or while associated with an

entity or person required to be registered under the Commodity

Exchange Act, has been found to be a cause of any effective

suspension, expulsion, or order of the character described in

subparagraph (A) or (B) of this paragraph, and in entering such

a suspension, expulsion, or order, the Commission, an

appropriate regulatory agency, or any such self-regulatory

organization shall have jurisdiction to find whether or not any

person was a cause thereof;

(D) by his conduct while associated with any broker, dealer,

municipal securities dealer, government securities broker,

government securities dealer, or any other entity engaged in

transactions in securities, or while associated with an entity

engaged in transactions in contracts of sale of a commodity for

future delivery or other instruments traded on or subject to

the rules of a contract market, board of trade, or foreign

equivalent thereof, has been found to be a cause of any

effective suspension, expulsion, or order by a foreign or

international securities exchange or foreign financial

regulatory authority empowered by a foreign government to

administer or enforce its laws relating to financial

transactions as described in subparagraph (A) or (B) of this

paragraph;

(E) has associated with him any person who is known, or in

the exercise of reasonable care should be known, to him to be a

person described by subparagraph (A), (B), (C), or (D) of this

paragraph; or

(F) has committed or omitted any act, or is subject to an

order or finding, enumerated in subparagraph (D), (E), (H), or

(G) of paragraph (4) of section 78o(b) of this title, has been

convicted of any offense specified in subparagraph (B) of such

paragraph (4) or any other felony within ten years of the date

of the filing of an application for membership or participation

in, or to become associated with a member of, such

self-regulatory organization, is enjoined from any action,

conduct, or practice specified in subparagraph (C) of such

paragraph (4), has willfully made or caused to be made in any

application for membership or participation in, or to become

associated with a member of, a self-regulatory organization,

report required to be filed with a self-regulatory

organization, or proceeding before a self-regulatory

organization, any statement which was at the time, and in the

light of the circumstances under which it was made, false or

misleading with respect to any material fact, or has omitted to

state in any such application, report, or proceeding any

material fact which is required to be stated therein.

(40) The term ''financial responsibility rules'' means the

rules and regulations of the Commission or the rules and

regulations prescribed by any self-regulatory organization

relating to financial responsibility and related practices which

are designated by the Commission, by rule or regulation, to be

financial responsibility rules.

(41) The term ''mortgage related security'' means a security

that is rated in one of the two highest rating categories by at

least one nationally recognized statistical rating organization,

and either:

(A) represents ownership of one or more promissory notes or

certificates of interest or participation in such notes

(including any rights designed to assure servicing of, or the

receipt or timeliness of receipt by the holders of such notes,

certificates, or participations of amounts payable under, such

notes, certificates, or participations), which notes:

(i) are directly secured by a first lien on a single parcel

of real estate, including stock allocated to a dwelling unit

in a residential cooperative housing corporation, upon which

is located a dwelling or mixed residential and commercial

structure, on a residential manufactured home as defined in

section 5402(6) of title 42, whether such manufactured home

is considered real or personal property under the laws of the

State in which it is to be located, or on one or more parcels

of real estate upon which is located one or more commercial

structures; and

(ii) were originated by a savings and loan association,

savings bank, commercial bank, credit union, insurance

company, or similar institution which is supervised and

examined by a Federal or State authority, or by a mortgagee

approved by the Secretary of Housing and Urban Development

pursuant to sections 1709 and 1715b of title 12, or, where

such notes involve a lien on the manufactured home, by any

such institution or by any financial institution approved for

insurance by the Secretary of Housing and Urban Development

pursuant to section 1703 of title 12; or

(B) is secured by one or more promissory notes or

certificates of interest or participations in such notes (with

or without recourse to the issuer thereof) and, by its terms,

provides for payments of principal in relation to payments, or

reasonable projections of payments, on notes meeting the

requirements of subparagraphs (A)(i) and (ii) or certificates

of interest or participations in promissory notes meeting such

requirements.

For the purpose of this paragraph, the term ''promissory note'',

when used in connection with a manufactured home, shall also

include a loan, advance, or credit sale as evidence (FOOTNOTE 3)

by a retail installment sales contract or other instrument.

(FOOTNOTE 3) So in original. Probably should be ''evidenced''.

(42) The term ''government securities'' means -

(A) securities which are direct obligations of, or

obligations guaranteed as to principal or interest by, the

United States;

(B) securities which are issued or guaranteed by corporations

in which the United States has a direct or indirect interest

and which are designated by the Secretary of the Treasury for

exemption as necessary or appropriate in the public interest or

for the protection of investors;

(C) securities issued or guaranteed as to principal or

interest by any corporation the securities of which are

designated, by statute specifically naming such corporation, to

constitute exempt securities within the meaning of the laws

administered by the Commission;

(D) for purposes of sections 78o-5 and 78q-1 of this title,

any put, call, straddle, option, or privilege on a security

described in subparagraph (A), (B), or (C) other than a put,

call, straddle, option, or privilege -

(i) that is traded on one or more national securities

exchanges; or

(ii) for which quotations are disseminated through an

automated quotation system operated by a registered

securities association; or

(E) for purposes of sections 78o, 78o-5, and 78q-1 of this

title as applied to a bank, a qualified Canadian government

obligation as defined in section 24 of title 12.

(43) The term ''government securities broker'' means any person

regularly engaged in the business of effecting transactions in

government securities for the account of others, but does not

include -

(A) any corporation the securities of which are government

securities under subparagraph (B) or (C) of paragraph (42) of

this subsection; or

(B) any person registered with the Commodity Futures Trading

Commission, any contract market designated by the Commodity

Futures Trading Commission, such contract market's affiliated

clearing organization, or any floor trader on such contract

market, solely because such person effects transactions in

government securities that the Commission, after consultation

with the Commodity Futures Trading Commission, has determined

by rule or order to be incidental to such person's

futures-related business.

(44) The term ''government securities dealer'' means any person

engaged in the business of buying and selling government

securities for his own account, through a broker or otherwise,

but does not include -

(A) any person insofar as he buys or sells such securities

for his own account, either individually or in some fiduciary

capacity, but not as a part of a regular business;

(B) any corporation the securities of which are government

securities under subparagraph (B) or (C) of paragraph (42) of

this subsection;

(C) any bank, unless the bank is engaged in the business of

buying and selling government securities for its own account

other than in a fiduciary capacity, through a broker or

otherwise; or

(D) any person registered with the Commodity Futures Trading

Commission, any contract market designated by the Commodity

Futures Trading Commission, such contract market's affiliated

clearing organization, or any floor trader on such contract

market, solely because such person effects transactions in

government securities that the Commission, after consultation

with the Commodity Futures Trading Commission, has determined

by rule or order to be incidental to such person's

futures-related business.

(45) The term ''person associated with a government securities

broker or government securities dealer'' means any partner,

officer, director, or branch manager of such government

securities broker or government securities dealer (or any person

occupying a similar status or performing similar functions), and

any other employee of such government securities broker or

government securities dealer who is engaged in the management,

direction, supervision, or performance of any activities relating

to government securities, and any person directly or indirectly

controlling, controlled by, or under common control with such

government securities broker or government securities dealer.

(46) The term ''financial institution'' means -

(A) a bank (as defined in paragraph (6) of this subsection);

(B) a foreign bank (as such term is used in the International

Banking Act of 1978); and

(C) a savings association (as defined in section 3(b) of the

Federal Deposit Insurance Act (12 U.S.C. 1813(b))) the deposits

of which are insured by the Federal Deposit Insurance

Corporation.

(47) The term ''securities laws'' means the Securities Act of

1933 (15 U.S.C. 77a et seq.), the Securities Exchange Act of 1934

(15 U.S.C. 78a et seq.), the Sarbanes-Oxley Act of 2002 (15

U.S.C. 7201 et seq.), the Public Utility Holding Company Act of

1935 (15 U.S.C. 79a et seq.) (15 U.S.C. 79 et seq.), the Trust

Indenture Act of 1939 (15 U.S.C. 77aaa et seq.), the Investment

Company Act of 1940 (15 U.S.C. 80a-1 et seq.), the Investment

Advisers Act of 1940 (15 U.S.C. 80b et seq.) (15 U.S.C. 80b-1 et

seq.), and the Securities Investor Protection Act of 1970 (15

U.S.C. 78aaa et seq.).

(48) The term ''registered broker or dealer'' means a broker or

dealer registered or required to register pursuant to section 78o

or 78o-4 of this title, except that in paragraph (3) of this

subsection and sections 78f and 78o-3 of this title the term

means such a broker or dealer and a government securities broker

or government securities dealer registered or required to

register pursuant to section 78o-5(a)(1)(A) of this title.

(49) The term ''person associated with a transfer agent'' and

''associated person of a transfer agent'' mean any person (except

an employee whose functions are solely clerical or ministerial)

directly engaged in the management, direction, supervision, or

performance of any of the transfer agent's activities with

respect to transfer agent functions, and any person directly or

indirectly controlling such activities or controlled by the

transfer agent in connection with such activities.

(50) The term ''foreign securities authority'' means any

foreign government, or any governmental body or regulatory

organization empowered by a foreign government to administer or

enforce its laws as they relate to securities matters.

(51)(A) The term ''penny stock'' means any equity security

other than a security that is -

(i) registered or approved for registration and traded on a

national securities exchange that meets such criteria as the

Commission shall prescribe by rule or regulation for purposes

of this paragraph;

(ii) authorized for quotation on an automated quotation

system sponsored by a registered securities association, if

such system (I) was established and in operation before January

1, 1990, and (II) meets such criteria as the Commission shall

prescribe by rule or regulation for purposes of this paragraph;

(iii) issued by an investment company registered under the

Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.);

(iv) excluded, on the basis of exceeding a minimum price, net

tangible assets of the issuer, or other relevant criteria, from

the definition of such term by rule or regulation which the

Commission shall prescribe for purposes of this paragraph; or

(v) exempted, in whole or in part, conditionally or

unconditionally, from the definition of such term by rule,

regulation, or order prescribed by the Commission.

(B) The Commission may, by rule, regulation, or order,

designate any equity security or class of equity securities

described in clause (i) or (ii) of subparagraph (A) as within the

meaning of the term ''penny stock'' if such security or class of

securities is traded other than on a national securities exchange

or through an automated quotation system described in clause (ii)

of subparagraph (A).

(C) In exercising its authority under this paragraph to

prescribe rules, regulations, and orders, the Commission shall

determine that such rule, regulation, or order is consistent with

the public interest and the protection of investors.

(52) The term ''foreign financial regulatory authority'' means

any (A) foreign securities authority, (B) other governmental body

or foreign equivalent of a self-regulatory organization empowered

by a foreign government to administer or enforce its laws

relating to the regulation of fiduciaries, trusts, commercial

lending, insurance, trading in contracts of sale of a commodity

for future delivery, or other instruments traded on or subject to

the rules of a contract market, board of trade, or foreign

equivalent, or other financial activities, or (C) membership

organization a function of which is to regulate participation of

its members in activities listed above.

(53)(A) The term ''small business related security'' means a

security that is rated in 1 of the 4 highest rating categories by

at least 1 nationally recognized statistical rating organization,

and either -

(i) represents an interest in 1 or more promissory notes or

leases of personal property evidencing the obligation of a

small business concern and originated by an insured depository

institution, insured credit union, insurance company, or

similar institution which is supervised and examined by a

Federal or State authority, or a finance company or leasing

company; or

(ii) is secured by an interest in 1 or more promissory notes

or leases of personal property (with or without recourse to the

issuer or lessee) and provides for payments of principal in

relation to payments, or reasonable projections of payments, on

notes or leases described in clause (i).

(B) For purposes of this paragraph -

(i) an ''interest in a promissory note or a lease of personal

property'' includes ownership rights, certificates of interest

or participation in such notes or leases, and rights designed

to assure servicing of such notes or leases, or the receipt or

timely receipt of amounts payable under such notes or leases;

(ii) the term ''small business concern'' means a business

that meets the criteria for a small business concern

established by the Small Business Administration under section

632(a) of this title;

(iii) the term ''insured depository institution'' has the

same meaning as in section 3 of the Federal Deposit Insurance

Act (12 U.S.C. 1813); and

(iv) the term ''insured credit union'' has the same meaning

as in section 1752 of title 12.

(54) Qualified investor. -

(A) Definition. - Except as provided in subparagraph (B), for

purposes of this chapter, the term ''qualified investor'' means

-

(i) any investment company registered with the Commission

under section 8 of the Investment Company Act of 1940 (15

U.S.C. 80a-8);

(ii) any issuer eligible for an exclusion from the

definition of investment company pursuant to section 3(c)(7)

of the Investment Company Act of 1940 (15 U.S.C.

80a-3(c)(7));

(iii) any bank (as defined in paragraph (6) of this

subsection), savings association (as defined in section 3(b)

of the Federal Deposit Insurance Act (12 U.S.C. 1813(b))),

broker, dealer, insurance company (as defined in section

2(a)(13) of the Securities Act of 1933 (15 U.S.C.

77b(a)(13))), or business development company (as defined in

section 2(a)(48) of the Investment Company Act of 1940 (15

U.S.C. 80a-2(a)(48)));

(iv) any small business investment company licensed by the

United States Small Business Administration under section

301(c) (15 U.S.C. 681(c)) or (d) (FOOTNOTE 4) of the Small

Business Investment Act of 1958;

(FOOTNOTE 4) See References in Text note below.

(v) any State sponsored employee benefit plan, or any other

employee benefit plan, within the meaning of the Employee

Retirement Income Security Act of 1974 (29 U.S.C. 1001 et

seq.), other than an individual retirement account, if the

investment decisions are made by a plan fiduciary, as defined

in section 3(21) of that Act (29 U.S.C. 1002(21)), which is

either a bank, savings and loan association, insurance

company, or registered investment adviser;

(vi) any trust whose purchases of securities are directed

by a person described in clauses (i) through (v) of this

subparagraph;

(vii) any market intermediary exempt under section 3(c)(2)

of the Investment Company Act of 1940 (15 U.S.C.

80a-3(c)(2));

(viii) any associated person of a broker or dealer other

than a natural person;

(ix) any foreign bank (as defined in section 1(b)(7) of the

International Banking Act of 1978 (12 U.S.C. 3101(7)));

(x) the government of any foreign country;

(xi) any corporation, company, or partnership that owns and

invests on a discretionary basis, not less than $25,000,000

in investments;

(xii) any natural person who owns and invests on a

discretionary basis, not less than $25,000,000 in

investments;

(xiii) any government or political subdivision, agency, or

instrumentality of a government who owns and invests on a

discretionary basis not less than $50,000,000 in investments;

or

(xiv) any multinational or supranational entity or any

agency or instrumentality thereof.

(B) Altered thresholds for asset-backed securities and loan

participations. - For purposes of subsection (a)(5)(C)(iii) of

this section and section 206(a)(5) of the Gramm-Leach-Bliley

Act, the term ''qualified investor'' has the meaning given such

term by subparagraph (A) of this paragraph except that clauses

(xi) and (xii) shall be applied by substituting ''$10,000,000''

for ''$25,000,000''.

(C) Additional authority. - The Commission may, by rule or

order, define a ''qualified investor'' as any other person,

taking into consideration such factors as the financial

sophistication of the person, net worth, and knowledge and

experience in financial matters.

(55)(A) The term ''security future'' means a contract of sale

for future delivery of a single security or of a narrow-based

security index, including any interest therein or based on the

value thereof, except an exempted security under paragraph (12)

of this subsection as in effect on January 11, 1983 (other than

any municipal security as defined in paragraph (29) of this

subsection as in effect on January 11, 1983). The term ''security

future'' does not include any agreement, contract, or transaction

excluded from the Commodity Exchange Act (7 U.S.C. 1 et seq.)

under section 2(c), 2(d), 2(f), or 2(g) of the Commodity Exchange

Act (7 U.S.C. 2(c), (d), (f), (g)) (as in effect on December 21,

2000) or sections 27 to 27f of title 7.

(B) The term ''narrow-based security index'' means an index -

(i) that has 9 or fewer component securities;

(ii) in which a component security comprises more than 30

percent of the index's weighting;

(iii) in which the five highest weighted component securities

in the aggregate comprise more than 60 percent of the index's

weighting; or

(iv) in which the lowest weighted component securities

comprising, in the aggregate, 25 percent of the index's

weighting have an aggregate dollar value of average daily

trading volume of less than $50,000,000 (or in the case of an

index with 15 or more component securities, $30,000,000),

except that if there are two or more securities with equal

weighting that could be included in the calculation of the

lowest weighted component securities comprising, in the

aggregate, 25 percent of the index's weighting, such securities

shall be ranked from lowest to highest dollar value of average

daily trading volume and shall be included in the calculation

based on their ranking starting with the lowest ranked

security.

(C) Notwithstanding subparagraph (B), an index is not a

narrow-based security index if -

(i)(I) it has at least nine component securities;

(II) no component security comprises more than 30 percent of

the index's weighting; and

(III) each component security is -

(aa) registered pursuant to section 78l of this title;

(bb) one of 750 securities with the largest market

capitalization; and

(cc) one of 675 securities with the largest dollar value of

average daily trading volume;

(ii) a board of trade was designated as a contract market by

the Commodity Futures Trading Commission with respect to a

contract of sale for future delivery on the index, before

December 21, 2000;

(iii)(I) a contract of sale for future delivery on the index

traded on a designated contract market or registered

derivatives transaction execution facility for at least 30 days

as a contract of sale for future delivery on an index that was

not a narrow-based security index; and

(II) it has been a narrow-based security index for no more

than 45 business days over 3 consecutive calendar months;

(iv) a contract of sale for future delivery on the index is

traded on or subject to the rules of a foreign board of trade

and meets such requirements as are jointly established by rule

or regulation by the Commission and the Commodity Futures

Trading Commission;

(v) no more than 18 months have passed since December 21,

2000, and -

(I) it is traded on or subject to the rules of a foreign

board of trade;

(II) the offer and sale in the United States of a contract

of sale for future delivery on the index was authorized

before December 21, 2000; and

(III) the conditions of such authorization continue to be

met; or

(vi) a contract of sale for future delivery on the index is

traded on or subject to the rules of a board of trade and meets

such requirements as are jointly established by rule,

regulation, or order by the Commission and the Commodity

Futures Trading Commission.

(D) Within 1 year after December 21, 2000, the Commission and

the Commodity Futures Trading Commission jointly shall adopt

rules or regulations that set forth the requirements under clause

(iv) of subparagraph (C).

(E) An index that is a narrow-based security index solely

because it was a narrow-based security index for more than 45

business days over 3 consecutive calendar months pursuant to

clause (iii) of subparagraph (C) shall not be a narrow-based

security index for the 3 following calendar months.

(F) For purposes of subparagraphs (B) and (C) of this paragraph

-

(i) the dollar value of average daily trading volume and the

market capitalization shall be calculated as of the preceding 6

full calendar months; and

(ii) the Commission and the Commodity Futures Trading

Commission shall, by rule or regulation, jointly specify the

method to be used to determine market capitalization and dollar

value of average daily trading volume.

(56) The term ''security futures product'' means a security

future or any put, call, straddle, option, or privilege on any

security future.

(57)(A) The term ''margin'', when used with respect to a

security futures product, means the amount, type, and form of

collateral required to secure any extension or maintenance of

credit, or the amount, type, and form of collateral required as a

performance bond related to the purchase, sale, or carrying of a

security futures product.

(B) The terms ''margin level'' and ''level of margin'', when

used with respect to a security futures product, mean the amount

of margin required to secure any extension or maintenance of

credit, or the amount of margin required as a performance bond

related to the purchase, sale, or carrying of a security futures

product.

(C) The terms ''higher margin level'' and ''higher level of

margin'', when used with respect to a security futures product,

mean a margin level established by a national securities exchange

registered pursuant to section 78f(g) of this title that is

higher than the minimum amount established and in effect pursuant

to section 78g(c)(2)(B) of this title.

(58) Audit committee. - The term ''audit committee'' means -

(A) a committee (or equivalent body) established by and

amongst the board of directors of an issuer for the purpose of

overseeing the accounting and financial reporting processes of

the issuer and audits of the financial statements of the

issuer; and

(B) if no such committee exists with respect to an issuer,

the entire board of directors of the issuer.

(59) Registered public accounting firm. - The term ''registered

public accounting firm'' has the same meaning as in section 2 of

the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201).

(b) Power to define technical, trade, accounting, and other terms

The Commission and the Board of Governors of the Federal Reserve

System, as to matters within their respective jurisdictions, shall

have power by rules and regulations to define technical, trade,

accounting, and other terms used in this chapter, consistently with

the provisions and purposes of this chapter.

(c) Application to governmental departments or agencies

No provision of this chapter shall apply to, or be deemed to

include, any executive department or independent establishment of

the United States, or any lending agency which is wholly owned,

directly or indirectly, by the United States, or any officer,

agent, or employee of any such department, establishment, or

agency, acting in the course of his official duty as such, unless

such provision makes specific reference to such department,

establishment, or agency.

(d) Issuers of municipal securities

No issuer of municipal securities or officer or employee thereof

acting in the course of his official duties as such shall be deemed

to be a ''broker'', ''dealer'', or ''municipal securities dealer''

solely by reason of buying, selling, or effecting transactions in

the issuer's securities.

(e) Charitable organizations

(1) Exemption

Notwithstanding any other provision of this chapter, but

subject to paragraph (2) of this subsection, a charitable

organization, as defined in section 3(c)(10)(D) of the Investment

Company Act of 1940 (15 U.S.C. 80a-3(c)(10)(D)), or any trustee,

director, officer, employee, or volunteer of such a charitable

organization acting within the scope of such person's employment

or duties with such organization, shall not be deemed to be a

''broker'', ''dealer'', ''municipal securities broker'',

''municipal securities dealer'', ''government securities

broker'', or ''government securities dealer'' for purposes of

this chapter solely because such organization or person buys,

holds, sells, or trades in securities for its own account in its

capacity as trustee or administrator of, or otherwise on behalf

of or for the account of -

(A) such a charitable organization;

(B) a fund that is excluded from the definition of an

investment company under section 3(c)(10)(B) of the Investment

Company Act of 1940 (15 U.S.C. 80a-3(c)(10)(B)); or

(C) a trust or other donative instrument described in section

3(c)(10)(B) of the Investment Company Act of 1940 (15 U.S.C.

80a-3(c)(10)(B)), or the settlors (or potential settlors) or

beneficiaries of any such trust or other instrument.

(2) Limitation on compensation

The exemption provided under paragraph (1) shall not be

available to any charitable organization, or any trustee,

director, officer, employee, or volunteer of such a charitable

organization, unless each person who, on or after 90 days after

December 8, 1995, solicits donations on behalf of such charitable

organization from any donor to a fund that is excluded from the

definition of an investment company under section 3(c)(10)(B) of

the Investment Company Act of 1940 (15 U.S.C. 80a-3(c)(10)(B)),

is either a volunteer or is engaged in the overall fund raising

activities of a charitable organization and receives no

commission or other special compensation based on the number or

the value of donations collected for the fund.

(f) Consideration of promotion of efficiency, competition, and

capital formation

Whenever pursuant to this chapter 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.

(g) Church plans

No church plan described in section 414(e) of title 26, no person

or entity eligible to establish and maintain such a plan under

title 26, 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 (15 U.S.C. 80a-3(c)(14)), 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 chapter -

(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 (15 U.S.C. 80a-3(c)(14)); 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.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 3, 48 Stat. 882; Aug. 23,

1935, ch. 614, Sec. 203(a), 49 Stat. 704; Proc. No. 2695, eff.

July 4, 1946, 11 F.R. 7517, 60 Stat. 1352; Pub. L. 86-70, Sec.

12(b), June 25, 1959, 73 Stat. 143; Pub. L. 86-624, Sec. 7(b), July

12, 1960, 74 Stat. 412; Pub. L. 88-467, Sec. 2, Aug. 20, 1964, 78

Stat. 565; Pub. L. 91-373, title IV, Sec. 401(b), Aug. 10, 1970, 84

Stat. 718; Pub. L. 91-547, Sec. 28(a), (b), Dec. 14, 1970, 84 Stat.

1435; Pub. L. 91-567, Sec. 6(b), Dec. 22, 1970, 84 Stat. 1499; Pub.

L. 94-29, Sec. 3, June 4, 1975, 89 Stat. 97; Pub. L. 95-283, Sec.

16, May 21, 1978, 92 Stat. 274; Pub. L. 96-477, title VII, Sec.

702, Oct. 21, 1980, 94 Stat. 2295; Pub. L. 97-303, Sec. 2, Oct. 13,

1982, 96 Stat. 1409; Pub. L. 98-376, Sec. 6(a), Aug. 10, 1984, 98

Stat. 1265; Pub. L. 98-440, title I, Sec. 101, Oct. 3, 1984, 98

Stat. 1689; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095;

Pub. L. 99-571, title I, Sec. 102(a)-(d), Oct. 28, 1986, 100 Stat.

3214-3216; Pub. L. 100-181, title III, Sec. 301-306, Dec. 4, 1987,

101 Stat. 1253, 1254; Pub. L. 100-704, Sec. 6(a), Nov. 19, 1988,

102 Stat. 4681; Pub. L. 101-73, title VII, Sec. 744(u)(1), Aug. 9,

1989, 103 Stat. 441; Pub. L. 101-429, title V, Sec. 503, Oct. 15,

1990, 104 Stat. 952; Pub. L. 101-550, title II, Sec. 203(b), 204,

Nov. 15, 1990, 104 Stat. 2717, 2718; Pub. L. 103-202, title I, Sec.

106(b)(2)(A), 109(a), Dec. 17, 1993, 107 Stat. 2350, 2352; Pub. L.

103-325, title II, Sec. 202, title III, Sec. 347(a), Sept. 23,

1994, 108 Stat. 2198, 2241; Pub. L. 104-62, Sec. 4(a), (b), Dec. 8,

1995, 109 Stat. 684; Pub. L. 104-290, title I, Sec. 106(b), title

V, Sec. 508(c), Oct. 11, 1996, 110 Stat. 3424, 3447; Pub. L.

105-353, title III, Sec. 301(b)(1)-(4), Nov. 3, 1998, 112 Stat.

3235, 3236; Pub. L. 106-102, title II, Sec. 201, 202, 207, 208,

221(b), 231(b)(1), Nov. 12, 1999, 113 Stat. 1385, 1390, 1394, 1395,

1401, 1406; Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec. 201),

Dec. 21, 2000, 114 Stat. 2763, 2763A-413; Pub. L. 107-204, Sec.

2(b), title II, Sec. 205(a), title VI, Sec. 604(c)(1)(A), July 30,

2002, 116 Stat. 749, 773, 796.)

-REFTEXT-

REFERENCES IN TEXT

This chapter, referred to in subsecs. (a), (b), (c), (e)(1), (f),

and (g), was in the original ''this title''. See References in

Text note set out under section 78a of this title.

The Investment Company Act of 1940, referred to in subsec.

(a)(4)(B)(v), (19), (47), (51)(A)(iii), is title I of act Aug. 20,

1940, ch. 686, 54 Stat. 789, as amended, which is classified

generally to subchapter I (Sec. 80a-1 et seq.) of chapter 2D of

this title. For complete classification of this Act to the Code,

see section 80a-51 of this title and Tables.

This chapter, referred to in subsec. (a)(4)(B)(vii)(II), was in

the original ''this Act''. See References in Text note set out

under section 78a of this title.

Section 206 of the Gramm-Leach-Bliley Act, referred to in subsec.

(a)(4)(B)(ix), (5)(C)(iv), (54)(B), is section 206 of Pub. L.

106-102, which is set out as a note below.

The Investment Advisers Act of 1940, referred to in subsec.

(a)(20), (47), is title II of act Aug. 20, 1940, ch. 686, 54 Stat.

847, as amended, which is classified generally to subchapter II

(Sec. 80b-1 et seq.) of chapter 2D of this title. For complete

classification of this Act to the Code, see section 80b-20 of this

title and Tables.

Section 78w(b) of this title, referred to in subsec. (a)(26), was

omitted from the Code.

Section 103 of title 26, referred to in subsec. (a)(29), which

related to interest on certain governmental obligations, was

amended generally by Pub. L. 99-514, title XIII, Sec. 1301(a), Oct.

22, 1986, 100 Stat. 2602, and, as so amended, relates to interest

on State and local bonds. Section 103(b)(2) (formerly section

103(c)(2)), which prior to the general amendment defined industrial

development bond, relates to the applicability of the interest

exclusion to arbitrage bonds.

The Federal Deposit Insurance Act, referred to in subsec.

(a)(34)(D), (F)(iii), (H)(iii), is act Sept. 21, 1950, ch. 967,

Sec. 2, 64 Stat. 873, as amended, which is classified generally to

chapter 16 (Sec. 1811 et seq.) of Title 12, Banks and Banking. For

complete classification of this Act to the Code, see Short Title

note set out under section 1811 of Title 12 and Tables.

The International Banking Act of 1978, referred to in subsec.

(a)(34)(G)(i) to (iii), (46)(B), is Pub. L. 95-369, Sept. 17, 1978,

92 Stat. 607, which enacted sections 347d, 611a, and 3101 to 3111

of Title 12, amended sections 72, 378, 614, 615, 618, 619, 1813,

1815, 1817, 1818, 1820, 1821, 1822, 1823, 1828, 1829b, 1831b, and

1841 of Title 12, and enacted provisions set out as notes under

sections 36, 247, 601, 611a, and 3101 of Title 12. For complete

classification of this Act to the Code, see Short Title note set

out under section 3101 of Title 12 and Tables.

Section 25 of the Federal Reserve Act, referred to in subsec.

(a)(34)(G)(ii), is classified to subchapter I (Sec. 601 et seq.) of

chapter 6 of Title 12, Banks and Banking. Section 25A of the

Federal Reserve Act, referred to in subsec. (a)(34)(G)(ii),

(H)(ii), is classified to subchapter II (Sec. 611 et seq.) of

chapter 6 of Title 12.

The Commodity Exchange Act, referred to in subsec.

(a)(39)(B)(ii), (C), (55)(A), is act Sept. 21, 1922, ch. 369, 42

Stat. 998, as amended, which is classified generally to chapter 1

(Sec. 1 et seq.) of Title 7, Agriculture. For complete

classification of this Act to the Code, see section 1 of Title 7

and Tables.

The Securities Act of 1933, referred to in subsec. (a)(47), is

act May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended, which

is classified generally to subchapter I (Sec. 77a et seq.) of

chapter 2A of this title. For complete classification of this Act

to the Code, see section 77a of this title and Tables.

The Securities Exchange Act of 1934, referred to in subsec.

(a)(47), is act June 6, 1934, ch. 404, 48 Stat. 881, as amended,

which is classified generally to this chapter (Sec. 78a et seq.).

For complete classification of this Act to the Code, see section

78a of this title and Tables.

The Sarbanes-Oxley Act of 2002, referred to in subsec. (a)(47),

is Pub. L. 107-204, July 30, 2002, 1974, 116 Stat. 745, which is

classified principally to chapter 98 (Sec. 7201 et seq.) of this

title. Section 2 of the Act enacted section 7201 of this title and

amended this section. For complete classification of this Act to

the Code, see Tables.

The Public Utility Holding Company Act of 1935, referred to in

subsec. (a)(47), is act Aug. 26, 1935, ch. 687, title I, 49 Stat.

838, as amended, which is classified generally to chapter 2C (Sec.

79 et seq.) of this title. For complete classification of this Act

to the Code, see section 79 of this title and Tables.

The Trust Indenture Act of 1939, referred to in subsec. (a)(47),

is title III of act May 27, 1933, ch. 38, as added Aug. 3, 1939,

ch. 411, 53 Stat. 1149, as amended, which is classified generally

to subchapter III (Sec. 77aaa et seq.) of chapter 2A of this

title. For complete classification of this Act to the Code, see

section 77aaa of this title and Tables.

The Securities Investor Protection Act of 1970, referred to in

subsec. (a)(47), is Pub. L. 91-598, Dec. 30, 1970, 84 Stat. 1636,

as amended, which is classified generally to chapter 2B-1 (Sec.

78aaa et seq.) of this title. For complete classification of this

Act to the Code, see section 78aaa of this title and Tables.

Section 301(d) of the Small Business Investment Act of 1958,

referred to in subsec. (a)(54)(A)(iv), was classified to section

681(d) of this title and was repealed by Pub. L. 104-208, div. D,

title II, Sec. 208(b)(3)(A), Sept. 30, 1996, 110 Stat. 3009-742.

The Employee Retirement Income Security Act of 1974, referred to

in subsec. (a)(54)(A)(v), is Pub. L. 93-406, Sept. 2, 1974, 88

Stat. 832, as amended, which is classified principally to chapter

18 (Sec. 1001 et seq.) of Title 29, Labor. For complete

classification of this Act to the Code, see Short Title note set

out under section 1001 of Title 29 and Tables.

-COD-

CODIFICATION

Words ''Philippine Islands'' deleted from definition of term

''State'' in subsec. (a)(16) under authority of Proc. No. 2695,

which granted independence to the Philippine Islands. Proc. No.

2695 was issued pursuant to section 1394 of Title 22, Foreign

Relations and Intercourse, and is set out as a note under that

section.

-MISC3-

AMENDMENTS

2002 - Subsec. (a)(39)(F). Pub. L. 107-204, Sec. 604(c)(1)(A),

inserted '', or is subject to an order or finding,'' before

''enumerated'' and substituted ''(H), or (G)'' for ''or (G)''.

Subsec. (a)(47). Pub. L. 107-204, Sec. 2(b), inserted ''the

Sarbanes-Oxley Act of 2002,'' before ''the Public Utility Holding

Company Act of 1935''.

Subsec. (a)(58), (59). Pub. L. 107-204, Sec. 205(a), added pars.

(58) and (59).

2000 - Subsec. (a)(10). Pub. L. 106-554, Sec. 1(a)(5) (title II,

Sec. 201(1)), inserted ''security future,'' after ''treasury

stock,''.

Subsec. (a)(11). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

201(2)), added par. (11) and struck out former par. (11) which read

as follows: ''The term 'equity security' means any stock or similar

security; or any security convertible, with or without

consideration, into such a security, or carrying any warrant or

right to subscribe to or purchase such a security; or any such

warrant or right; or any other security which the Commission shall

deem to be of similar nature and consider necessary or appropriate,

by such rules and regulations as it may prescribe in the public

interest or for the protection of investors, to treat as an equity

security.''

Subsec. (a)(13), (14). Pub. L. 106-554, Sec. 1(a)(5) (title II,

Sec. 201(3), (4)), inserted at end ''For security futures products,

such term includes any contract, agreement, or transaction for

future delivery.''

Subsec. (a)(55) to (57). Pub. L. 106-554, Sec. 1(a)(5) (title II,

Sec. 201(5)), added pars. (55) to (57).

1999 - Subsec. (a)(4). Pub. L. 106-102, Sec. 201, inserted

heading and amended text of par. (4) generally. Prior to

amendment, text read as follows: ''The term 'broker' means any

person engaged in the business of effecting transactions in

securities for the account of others, but does not include a

bank.''

Subsec. (a)(5). Pub. L. 106-102, Sec. 202, inserted heading and

amended text of par. (5) generally. Prior to amendment, text read

as follows: ''The term 'dealer' means any person engaged in the

business of buying and selling securities for his own account,

through a broker or otherwise, but does not include a bank, or any

person insofar as he buys or sells securities for his own account,

either individually or in some fiduciary capacity, but not as a

part of a regular business.''

Subsec. (a)(12)(A)(iii). Pub. L. 106-102, Sec. 221(b), amended

cl. (iii) generally. Prior to amendment, cl. (iii) read as

follows: ''any interest or participation in any common trust fund

or similar fund maintained by a bank exclusively for the collective

investment and reinvestment of assets contributed thereto by such

bank in its capacity as trustee, executor, administrator, or

guardian;''.

Subsec. (a)(34)(H). Pub. L. 106-102, Sec. 231(b)(1), which

directed insertion of subpar. (H) at end of par. (34), was executed

by inserting subpar. (H) after subpar. (G) and before concluding

provisions to reflect the probable intent of Congress.

Subsec. (a)(42)(E). Pub. L. 106-102, Sec. 208, added subpar. (E).

Subsec. (a)(54). Pub. L. 106-102, Sec. 207, added par. (54).

1998 - Subsec. (a)(10). Pub. L. 105-353, Sec. 301(b)(1),

substituted ''deposit for'' for ''deposit, for''.

Subsec. (a)(12)(A)(vi). Pub. L. 105-353, Sec. 301(b)(2),

realigned margins.

Subsec. (a)(22)(A). Pub. L. 105-353, Sec. 301(b)(3), substituted

''section 153'' for ''section 153(h)'' and for ''section 153(t)''.

Subsec. (a)(39)(B)(i). Pub. L. 105-353, Sec. 301(b)(4),

substituted ''of the Commission'' for ''to the Commission'' in

introductory provisions.

1996 - Subsec. (a)(12)(A)(vi), (vii). Pub. L. 104-290, Sec.

508(c)(1), added cl. (vi) and redesignated former cl. (vi) as

(vii).

Subsecs. (f), (g). Pub. L. 104-290, Sec. 106(b), 508(c)(2), added

subsecs. (f) and (g), respectively.

1995 - Subsec. (a)(12)(A)(iv) to (vi). Pub. L. 104-62, Sec. 4(a),

struck out ''and'' at end of cl. (iv), added cl. (v), and

redesignated former cl. (v) as (vi).

Subsec. (e). Pub. L. 104-62, Sec. 4(b), added subsec. (e).

1994 - Subsec. (a)(41)(A)(i). Pub. L. 103-325, Sec. 347(a),

substituted ''on a residential'' for ''or on a residential'' and

inserted before semicolon '', or on one or more parcels of real

estate upon which is located one or more commercial structures''.

Subsec. (a)(53). Pub. L. 103-325, Sec. 202, added par. (53).

1993 - Subsec. (a)(12)(B)(ii). Pub. L. 103-202, Sec.

106(b)(2)(A), substituted ''sections 78o and 78q-1'' for ''sections

78o, 78o-3 (other than subsection (g)(3)), and 78q-1''.

Subsec. (a)(34)(G)(ii) to (iv). Pub. L. 103-202, Sec. 109(a)(1),

amended cls. (ii) to (iv) generally. Prior to amendment, cls. (ii)

to (iv) read as follows:

''(ii) the Board of Governors of the Federal Reserve System, in

the case of a State member bank of the Federal Reserve System, a

foreign bank, a State branch or a State agency of a foreign bank,

or a commercial lending company owned or controlled by a foreign

bank (as such terms are used in the International Banking Act of

1978);

''(iii) the Federal Deposit Insurance Corporation, in the case of

a bank insured by the Federal Deposit Insurance Corporation (other

than a member of the Federal Reserve System or a Federal savings

bank);

''(iv) the Director of the Office of Thrift Supervision, in the

case of a savings association the deposits of which are insured by

the Federal Deposit Insurance Corporation;''.

Subsec. (a)(46). Pub. L. 103-202, Sec. 109(a)(2), amended par.

(46) generally. Prior to amendment, par. (46) read as follows:

''The term 'financial institution' means (A) a bank (as such term

is defined in paragraph (6) of this subsection), (B) a foreign

bank, and (C) an insured institution (as such term is defined in

section 1724 of title 12).''

Subsec. (a)(52). Pub. L. 103-202, Sec. 109(a)(3), redesignated

par. (51) defining ''foreign financial regulatory authority'' as

(52).

1990 - Subsec. (a)(39)(A). Pub. L. 101-550, Sec. 203(b)(1),

inserted ''foreign equivalent of a self-regulatory organization,

foreign or international securities exchange,'' after

''self-regulatory organization,'', ''or any substantially

equivalent foreign statute or regulation,'' after ''(7 U.S.C. 7),''

and ''(7 U.S.C. 21),'', and ''or foreign equivalent'' after

''contract market''.

Subsec. (a)(39)(B). Pub. L. 101-550, Sec. 203(b)(2), added

subpar. (B) and struck out former subpar. (B) which read as

follows: ''is subject to an order of the Commission or other

appropriate regulatory agency denying, suspending for a period not

exceeding twelve months, or revoking his registration as a broker,

dealer, municipal securities dealer, government securities broker,

or government securities dealer, or barring or suspending for a

period not exceeding 12 months his being associated with a broker,

dealer, municipal securities dealer, government securities broker,

or government securities dealer, or is subject to an order of the

Commodity Futures Trading Commission denying, suspending, or

revoking his registration under the Commodity Exchange Act (7

U.S.C. 1 et seq.);''.

Subsec. (a)(39)(D). Pub. L. 101-550, Sec. 203(b)(4), added

subpar. (D). Former subpar. (D) redesignated (E).

Subsec. (a)(39)(E). Pub. L. 101-550, Sec. 203(b)(3), (5),

redesignated subpar. (D) as (E) and substituted ''(A), (B), (C), or

(D)'' for ''(A), (B), or (C)''. Former subpar. (E) redesignated

(F).

Subsec. (a)(39)(F). Pub. L. 101-550, Sec. 203(b)(3), (6),

redesignated subpar. (E) as (F), substituted ''(D), (E), or (G)''

for ''(D) or (E)'', and inserted ''or any other felony'' before

''within ten years''.

Subsec. (a)(51). Pub. L. 101-550, Sec. 204, added par. (51)

defining ''foreign financial regulatory authority''.

Pub. L. 101-429 added par. (51) defining ''penny stock''.

1989 - Subsec. (a)(34). Pub. L. 101-73, Sec. 744(u)(1)(B),

substituted ''Office of Thrift Supervision'' for ''Federal Home

Loan Bank Board'' in concluding provisions.

Subsec. (a)(34)(G)(iv) to (vi). Pub. L. 101-73, Sec.

744(u)(1)(A), added cl. (iv), redesignated cl. (vi) as (v), and

struck out former cls. (iv) and (v) which read as follows:

''(iv) the Federal Home Loan Bank Board, in the case of a Federal

savings and loan association, Federal savings bank, or District of

Columbia savings and loan association;

''(v) the Federal Savings and Loan Insurance Corporation, in the

case of an institution insured by the Federal Savings and Loan

Insurance Corporation (other than a Federal savings and loan

association, Federal savings bank, or District of Columbia savings

and loan association);''.

1988 - Subsec. (a)(50). Pub. L. 100-704 added par. (50).

1987 - Subsec. (a)(6)(C). Pub. L. 100-181, Sec. 301, substituted

''under the authority of the Comptroller of the Currency pursuant

to section 92a of title 12'' for ''under section 11(k) of the

Federal Reserve Act, as amended''.

Subsec. (a)(16). Pub. L. 100-181, Sec. 302, struck out reference

to Canal Zone.

Subsec. (a)(22)(B). Pub. L. 100-181, Sec. 303, substituted

''association, or any'' and ''own behalf, in'' for ''association or

any'' and ''own behalf in'', respectively.

Subsec. (a)(34)(C)(ii). Pub. L. 100-181, Sec. 304, substituted

''State'' for ''state''.

Subsec. (a)(39)(B). Pub. L. 100-181, Sec. 305, substituted

''months, or revoking'' for ''months, revoking'' and ''barring or

suspending for a period not exceeding 12 months his'' for ''barring

his''.

Subsec. (a)(47). Pub. L. 100-181, Sec. 306(1), added par. (47).

Subsec. (a)(49). Pub. L. 100-181, Sec. 306(2), added par. (49).

1986 - Subsec. (a)(12). Pub. L. 99-571, Sec. 102(a), in amending

par. (12) generally, expanded definition of ''exempted security''

or ''exempted securities'' to include government securities as

defined in par. (42) of this subsection, provided that such

securities not be deemed exempt for purposes of section 78q-1 of

this title, substituted section 78o-3(g)(3) of this title for

section 78o-3(b)(6), (11), and (g)(2) of this title in provision

relating to municipal securities as not being ''exempted

securities'' and defined ''qualified plan'' to mean qualified stock

bonus, pension, or profit-sharing plan, qualified annuity plan, or

governmental plan.

Pub. L. 99-514 substituted ''Internal Revenue Code of 1986'' for

''Internal Revenue Code of 1954'', which for purposes of

codification was translated as ''title 26'' thus requiring no

change in text.

Subsec. (a)(29). Pub. L. 99-514 substituted ''Internal Revenue

Code of 1986'' for ''Internal Revenue Code of 1954'', which for

purposes of codification was translated as ''title 26'' thus

requiring no change in text.

Subsec. (a)(34). Pub. L. 99-571, Sec. 102(b)(2), inserted '', and

the term 'District of Columbia savings and loan association' means

any association subject to examination and supervision by the

Federal Home Loan Bank Board under section 1466a of title 12'' in

concluding provisions.

Subsec. (a)(34)(G). Pub. L. 99-571, Sec. 102(b)(1), added subpar.

(G).

Subsec. (a)(39)(B). Pub. L. 99-571, Sec. 102(c)(1)(A), which

directed insertion of ''or other appropriate regulatory agency''

after ''Commission'' was executed by making the insertion after

''Commission'' the first place appearing as the probable intent of

Congress.

Pub. L. 99-571, Sec. 102(c)(1)(B), substituted ''municipal

securities dealer, government securities broker, or government

securities dealer'' for ''or municipal securities dealer'' in two

places.

Subsec. (a)(39)(C). Pub. L. 99-571, Sec. 102(c)(2), substituted

''municipal securities dealer, government securities broker, or

government securities dealer'' for ''or municipal securities

dealer'' and inserted '', an appropriate regulatory agency,'' after

''the Commission''.

Subsec. (a)(42) to (46), (48). Pub. L. 99-571, Sec. 102(d), added

pars. (42) to (46) and (48).

1984 - Subsec. (a)(39)(A). Pub. L. 98-376, Sec. 6(a)(1), inserted

'', contract market designated pursuant to section 5 of the

Commodity Exchange Act (7 U.S.C. 7), or futures association

registered under section 17 of such Act (7 U.S.C. 21), or has been

and is denied trading privileges on any such contract market''.

Subsec. (a)(39)(B). Pub. L. 98-376, Sec. 6(a)(2), inserted '', or

is subject to an order of the Commodity Futures Trading Commission

denying, suspending, or revoking his registration under the

Commodity Exchange Act (7 U.S.C. 1 et seq.)''.

Subsec. (a)(39)(C). Pub. L. 98-376, Sec. 6(a)(3), inserted ''or

while associated with an entity or person required to be registered

under the Commodity Exchange Act,''.

Subsec. (a)(41). Pub. L. 98-440 added par. (41).

1982 - Subsec. (a)(10). Pub. L. 97-303 inserted ''any put, call,

straddle, option, or privilege on any security, certificate of

deposit, or group or index of securities (including any interest

therein or based on the value thereof), or any put, call, straddle,

option, or privilege entered into on a national securities exchange

relating to foreign currency,'' after ''for a security,''.

1980 - Subsec. (a)(12). Pub. L. 96-477 included within definition

of ''exempted security'' interests or participation in single trust

funds, provided that qualifying interests, participation, or

securities could be issued in connection with certain governmental

plans as defined in section 414(d) of title 26, substituted

provisions relating to securities arising out of contracts issued

by insurance companies for provisions relating to separate accounts

maintained by insurance companies, and excluded from definition of

''exempted security'' any plans described in cls. (A), (B), or (C)

of par. (12) which were funded by annuity contracts described in

section 403(b) of title 26.

1978 - Subsec. (a)(40). Pub. L. 95-283 added par. (40).

1975 - Subsec. (a)(3). Pub. L. 94-29, Sec. 3(1), redefined term

''member'' to recognize the elimination of fixed commission rates

in the case of exchanges, inserted definition of term when used in

the case of registered securities associations, expanded definition

of term when used with respect to an exchange to include any

natural person permitted to effect transactions on the floor of an

exchange without the services of another person acting as broker,

any registered broker or dealer with which such natural person is

associated, any registered broker or dealer permitted to designate

a natural person as its representative on the floor of an exchange,

and any other registered broker or dealer which agrees to be

regulated by an exchange and with respect to whom the exchange has

undertaken to enforce compliance with its rules, this chapter, and

the rules and regulations thereunder, introduced the concept of

including among members any person required to comply with the

rules of an exchange to the extent specified by the Commission in

accordance with section 78f(f) of this title, and expanded

definition of term when used with respect to a registered

securities association to include any broker or dealer who has

agreed to be regulated and with respect to whom the association

undertakes to enforce compliance with its own rules, this chapter,

and the rules and regulations thereunder.

Subsec. (a)(9). Pub. L. 94-29, Sec. 3(2), substituted ''a natural

person, company, government, or political subdivision, agency, or

instrumentality of a government'' for ''an individual, a

corporation, a partnership, an association, a joint-stock company,

a business trust, or an unincorporated organization''.

Subsec. (a)(12). Pub. L. 94-29, Sec. 3(3), brought brokers and

dealers engaged exclusively in municipal securities business within

the registration provisions of this chapter by transferring the

existing description of municipal securities to subsec. (a)(29) and

by inserting in its place provisions revoking the exempt status of

municipal securities for purposes of sections 78o, 78o-3 (except

subsections (b)(6), (b)(11), and (g)(2) thereof) and 78q-1 of this

title.

Subsec. (a)(17). Pub. L. 94-29, Sec. 3(4), expanded definition of

''interstate commerce'' to establish that the intrastate use of any

facility of an exchange, any telephones or other interstate means

of communication, or any other interstate instrumentality

constitutes a use of the jurisdictional means for purposes of this

chapter.

Subsec. (a)(18). Pub. L. 94-29, Sec. 3(4), expanded definition to

include persons under common control with the broker or dealer and

struck out references to the classification of the persons,

including employees, controlled by a broker or a dealer.

Subsec. (a)(19). Pub. L. 94-29, Sec. 3(4), substituted ''

'separate account', and 'company' '' for ''and 'separate

account'.''

Subsec. (a)(21). Pub. L. 94-29, Sec. 3(5), broadened definition

of term ''person associated with a member'' to encompass a person

associated with a broker or dealer which is a member of an exchange

by restating directly the definition of a ''person associated with

a broker or dealer'' in subsec. (a)(18).

Subsec. (a)(22) to (39). Pub. L. 94-29, Sec. 3(6), added pars.

(22) to (39).

Subsec. (b). Pub. L. 94-29, Sec. 3(7), substituted ''accounting,

and other terms used in this chapter, consistently with the

provisions and purposes of this chapter'' for ''and accounting

terms used in this chapter insofar as such definitions are not

inconsistent with the provisions of this chapter''.

Subsec. (d). Pub. L. 94-29, Sec. 3(8), added subsec. (d).

1970 - Subsec. (a)(12). Pub. L. 91-567 inserted provisions which

brought within definition of ''exempted security'' any security

which is an industrial development bond the interest on which is

excludable from gross income under section 103(a)(1) of title 26

if, by reason of the application of section 103(c)(4) or (6) of

title 26, section 103(c)(1) does not apply to such security. Such

amendment was also made by Pub. L. 91-373.

Pub. L. 91-547, Sec. 28(a), struck out reference to industrial

development bonds the interest on which is excludable from gross

income under section 103(a)(1) of title 26; and included as

exempted securities interests or participations in common trust

funds maintained by a bank for collective investment of assets held

by it in a fiduciary capacity; interests or participations in bank

collective trust funds maintained for funding of employees'

stock-bonus, pension, or profit-sharing plans; interests or

participations in separate accounts maintained by insurance

companies for funding certain stock-bonus, pension, or

profit-sharing plans which meet the requirements for qualification

under section 401 of title 26; and such other securities as the

Commission by rules and regulations deems necessary in the public

interest.

Pub. L. 91-373 inserted provisions which brought within

definition of ''exempted security'' any security which is an

industrial development bond the interest on which is excludable

from gross income under section 103(a)(1) of title 26 if, by reason

of the application of section 103(c)(4) or (6) of title 26, section

103(c)(1) does not apply to such security. Such amendment was also

made by Pub. L. 91-567.

Subsec. (a)(19). Pub. L. 91-547, Sec. 28(b), provided for term

''separate account'' the same meaning as in the Investment Company

Act of 1940.

1964 - Subsec. (a)(18) to (21). Pub. L. 88-467 added pars. (18)

to (21).

1960 - Subsec. (a)(16). Pub. L. 86-624 struck out reference to

Hawaii.

1959 - Subsec. (a)(16). Pub. L. 86-70 struck out reference to

Alaska.

-CHANGE-

CHANGE OF NAME

Act Aug. 23, 1935, substituted ''Board of Governors of the

Federal Reserve System'' for ''Federal Reserve Board''.

-MISC4-

EFFECTIVE DATE OF 1999 AMENDMENT

Amendment by sections 201, 202, 207, and 208 of Pub. L. 106-102

effective at the end of the 18-month period beginning on Nov. 12,

1999, see section 209 of Pub. L. 106-102, set out as a note under

section 1828 of Title 12, Banks and Banking.

Amendment by section 221(b) of Pub. L. 106-102 effective 18

months after Nov. 12, 1999, see section 225 of Pub. L. 106-102, set

out as a note under section 77c of this title.

EFFECTIVE DATE OF 1995 AMENDMENT

Amendment by Pub. L. 104-62 applicable as defense to any claim in

administrative and judicial actions pending on or commenced after

Dec. 8, 1995, that any person, security, interest, or participation

of type described in Pub. L. 104-62 is subject to the Securities

Act of 1933, the Securities Exchange Act of 1934, the Investment

Company Act of 1940, the Investment Advisers Act of 1940, or any

State statute or regulation preempted as provided in section 80a-3a

of this title, except as specifically provided in such statutes,

see section 7 of Pub. L. 104-62, set out as a note under section

77c of this title.

EFFECTIVE DATE OF 1994 AMENDMENT

Amendment by section 347(a) of Pub. L. 103-325 effective upon

date of promulgation of final regulations under section 347(c) of

Pub. L. 103-325, see section 347(d) of Pub. L. 103-325, set out as

an Effective Date of 1994 Amendment note under section 24 of Title

12, Banks and Banking.

EFFECTIVE DATE OF 1990 AMENDMENT

Amendment by Pub. L. 101-429 effective 12 months after Oct. 15,

1990, or upon issuance of final regulations initially implementing

such amendment, whichever is earlier, with provision to commence

rulemaking proceedings to implement such amendment note later than

180 days after Oct. 15, 1990, and with provisions relating to civil

penalties and accounting and disgorgement, see section 1(c)(2),

(3)(A), (C) of Pub. L. 101-429, set out in a note under section 77g

of this title.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-704, except for amendment by section 6,

not applicable to actions occurring before Nov. 19, 1988, see

section 9 of Pub. L. 100-704, set out as a note under section 78o

of this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99-571 effective 270 days after Oct. 28,

1986, see section 401 of Pub. L. 99-571, set out as an Effective

Date note under section 78o-5 of this title.

EFFECTIVE DATE OF 1984 AMENDMENT

Section 7 of Pub. L. 98-376 provided that: ''The amendments made

by this Act (amending this section and sections 78o, 78t, 78u, and

78ff of this title) shall become effective immediately upon

enactment of this Act (Aug. 10, 1984).''

EFFECTIVE DATE OF 1975 AMENDMENT

Amendment by Pub. L. 94-29 effective June 4, 1975, except for

amendment of subsec. (a)(12) by Pub. L. 94-29 to be effective 180

days after June 4, 1975, with provisions of subsec. (a)(3), as

amended by Pub. L. 94-29, or rules or regulations thereunder, not

to apply in a way so as to deprive any person of membership in any

national securities exchange (or its successor) of which such

person was, on June 4, 1975, a member or a member firm as defined

in the constitution of such exchange, or so as to deny membership

in any such exchange (or its successor) to any natural person who

is or becomes associated with such member or member firm, see

section 31(a) of Pub. L. 94-29, set out as a note under section 78b

of this title.

EFFECTIVE DATE OF 1970 AMENDMENTS

For effective date of amendment by Pub. L. 91-567, see section

6(d) of Pub. L. 91-567, set out as a note under section 77c of this

title.

Amendment by Pub. L. 91-547 effective Dec. 14, 1970, see section

30 of Pub L. 91-547, set out as a note under section 80a-52 of this

title.

For effective date of amendment by Pub. L. 91-373, see section

401(c) of Pub. L. 91-373, set out as a note under section 77c of

this title.

EFFECTIVE DATE OF 1964 AMENDMENT

Section 13 of Pub. L. 88-467 provided that: ''The amendments made

by this Act shall take effect as follows:

''(1) The effective date of section 12(g)(1) of the Securities

Exchange Act of 1934, as added by section 3(c) of this Act (section

78l(g)(1) of this title), shall be July 1, 1964.

''(2) The effective date of the amendments to sections 12(b) and

15(a) of the Securities Exchange Act of 1934 (sections 78l(b) and

78o(a) of this title), contained in sections 3(a) and 6(a),

respectively, of this Act shall be July 1, 1964.

''(3) All other amendments contained in this Act (amending this

section and sections 77d, 78l, 78m, 78n, 78o, 78o-3, 78p, 78t, 78w,

and 78ff of this title) shall take effect on the date of its

enactment (Aug. 20, 1964).''

CONSTRUCTION OF 1993 AMENDMENT

Amendment by Pub. L. 103-202 not to be construed to govern

initial issuance of any public debt obligation or to grant any

authority to (or extend any authority of) the Securities and

Exchange Commission, any appropriate regulatory agency, or a

self-regulatory organization to prescribe any procedure, term, or

condition of such initial issuance, to promulgate any rule or

regulation governing such initial issuance, or to otherwise

regulate in any manner such initial issuance, see section 111 of

Pub. L. 103-202, set out as a note under section 78o-5 of this

title.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of Securities and Exchange Commission,

with certain exceptions, to Chairman of such Commission, see Reorg.

Plan No. 10 of 1950, Sec. 1, 2, eff. May 24, 1950, 15 F.R. 3175,

64 Stat. 1265, set out under section 78d of this title.

-MISC5-

STATE OPT OUT

Section 347(e) of Pub. L. 103-325 provided that:

''Notwithstanding the amendments made by this section (amending

this section and section 24 of Title 12, Banks and Banking), a note

that is directly secured by a first lien on one or more parcels of

real estate upon which is located one or more commercial structures

shall not be considered to be a mortgage related security under

section 3(a)(41) of the Securities Exchange Act of 1934 (15 U.S.C.

78c(a)(41)) in any State that, prior to the expiration of 7 years

after the date of enactment of this Act (Sept. 23, 1994), enacts a

statute that specifically refers to this section and either

prohibits or provides for a more limited authority to purchase,

hold, or invest in such securities by any person, trust,

corporation, partnership, association, business trust, or business

entity or class thereof than is provided by the amendments made by

this subsection. The enactment by any State of any statute of the

type described in the preceding sentence shall not affect the

validity of any contractual commitment to purchase, hold, or invest

that was made prior thereto, and shall not require the sale or

other disposition of any securities acquired prior thereto.''

-CROSS-

DEFINITIONS

Pub. L. 106-554, Sec. 1(a)(5) (title III, Sec. 301(b)), Dec. 21,

2000, 114 Stat. 2763, 2763A-451, provided that: ''As used in the

amendment made by subsection (a) (enacting sections 206A to 206C of

Pub. L. 106 - 102, set out below), the term 'security' has the same

meaning as in section 2(a)(1) of the Securities Act of 1933 (15

U.S.C. 77b(a)(1)) or section 3(a)(10) of the Securities Exchange

Act of 1934 (15 U.S.C. 78c(a)(10)).''

Pub. L. 106-102, title II, Sec. 206, Nov. 12, 1999, 113 Stat.

1393, provided that:

''(a) Definition of Identified Banking Product. - For purposes of

paragraphs (4) and (5) of section 3(a) of the Securities Exchange

Act of 1934 (15 U.S.C. 78c(a)(4), (5)), the term 'identified

banking product' means -

''(1) a deposit account, savings account, certificate of

deposit, or other deposit instrument issued by a bank;

''(2) a banker's acceptance;

''(3) a letter of credit issued or loan made by a bank;

''(4) a debit account at a bank arising from a credit card or

similar arrangement;

''(5) a participation in a loan which the bank or an affiliate

of the bank (other than a broker or dealer) funds, participates

in, or owns that is sold -

''(A) to qualified investors; or

''(B) to other persons that -

''(i) have the opportunity to review and assess any

material information, including information regarding the

borrower's creditworthiness; and

''(ii) based on such factors as financial sophistication,

net worth, and knowledge and experience in financial matters,

have the capability to evaluate the information available, as

determined under generally applicable banking standards or

guidelines; or

''(6) any swap agreement, including credit and equity swaps,

except that an equity swap that is sold directly to any person

other than a qualified investor (as defined in section 3(a)(54)

of the Securities Act of 1934 (15 U.S.C. 78c(a)(54))) shall not

be treated as an identified banking product.

''(b) Definition of Swap Agreement. - For purposes of subsection

(a)(6), the term 'swap agreement' means any individually negotiated

contract, agreement, warrant, note, or option that is based, in

whole or in part, on the value of, any interest in, or any

quantitative measure or the occurrence of any event relating to,

one or more commodities, securities, currencies, interest or other

rates, indices, or other assets, but does not include any other

identified banking product, as defined in paragraphs (1) through

(5) of subsection (a).

''(c) Classification Limited. - Classification of a particular

product as an identified banking product pursuant to this section

shall not be construed as finding or implying that such product is

or is not a security for any purpose under the securities laws, or

is or is not an account, agreement, contract, or transaction for

any purpose under the Commodity Exchange Act (7 U.S.C. 1 et seq.).

''(d) Incorporated Definitions. - For purposes of this section,

the terms 'bank' and 'qualified investor' have the same meanings as

given in section 3(a) of the Securities Exchange Act of 1934 (15

U.S.C. 78c(a)), as amended by this Act.''

Pub. L. 106-102, title II, Sec. 206A - 206C, as added by Pub. L.

106-554, Sec. 1(a)(5) (title III, Sec. 301(a)), Dec. 21, 2000, 114

Stat. 2763, 2763A-449, provided that:

''SEC. 206A. SWAP AGREEMENT.

''(a) In General. - Except as provided in subsection (b), as used

in this section, the term 'swap agreement' means any agreement,

contract, or transaction between eligible contract participants (as

defined in section 1a(12) of the Commodity Exchange Act (7 U.S.C.

1a(12)) as in effect on the date of the enactment of this section

(Dec. 21, 2000)), other than a person that is an eligible contract

participant under section 1a(12)(C) of the Commodity Exchange Act,

the material terms of which (other than price and quantity) are

subject to individual negotiation, and that -

''(1) is a put, call, cap, floor, collar, or similar option of

any kind for the purchase or sale of, or based on the value of,

one or more interest or other rates, currencies, commodities,

indices, quantitative measures, or other financial or economic

interests or property of any kind;

''(2) provides for any purchase, sale, payment or delivery

(other than a dividend on an equity security) that is dependent

on the occurrence, non-occurrence, or the extent of the

occurrence of an event or contingency associated with a potential

financial, economic, or commercial consequence;

''(3) provides on an executory basis for the exchange, on a

fixed or contingent basis, of one or more payments based on the

value or level of one or more interest or other rates,

currencies, commodities, securities, instruments of indebtedness,

indices, quantitative measures, or other financial or economic

interests or property of any kind, or any interest therein or

based on the value thereof, and that transfers, as between the

parties to the transaction, in whole or in part, the financial

risk associated with a future change in any such value or level

without also conveying a current or future direct or indirect

ownership interest in an asset (including any enterprise or

investment pool) or liability that incorporates the financial

risk so transferred, including any such agreement, contract, or

transaction commonly known as an interest rate swap, including a

rate floor, rate cap, rate collar, cross-currency rate swap,

basis swap, currency swap, equity index swap, equity swap, debt

index swap, debt swap, credit spread, credit default swap, credit

swap, weather swap, or commodity swap;

''(4) provides for the purchase or sale, on a fixed or

contingent basis, of any commodity, currency, instrument,

interest, right, service, good, article, or property of any kind;

or

''(5) is any combination or permutation of, or option on, any

agreement, contract, or transaction described in any of

paragraphs (1) through (4).

''(b) Exclusions. - The term 'swap agreement' does not include -

''(1) any put, call, straddle, option, or privilege on any

security, certificate of deposit, or group or index of

securities, including any interest therein or based on the value

thereof;

''(2) any put, call, straddle, option, or privilege entered

into on a national securities exchange registered pursuant to

section 6(a) of the Securities Exchange Act of 1934 (15 U.S.C.

78f(a)) relating to foreign currency;

''(3) any agreement, contract, or transaction providing for the

purchase or sale of one or more securities on a fixed basis;

''(4) any agreement, contract, or transaction providing for the

purchase or sale of one or more securities on a contingent basis,

unless such agreement, contract, or transaction predicates such

purchase or sale on the occurrence of a bona fide contingency

that might reasonably be expected to affect or be affected by the

creditworthiness of a party other than a party to the agreement,

contract, or transaction;

''(5) any note, bond, or evidence of indebtedness that is a

security as defined in section 2(a)(1) of the Securities Act of

1933 (15 U.S.C. 77b(a)(1)) or section 3(a)(10) of the Securities

Exchange Act of 1934 (15 U.S.C. 78c(a)(10)); or

''(6) any agreement, contract, or transaction that is -

''(A) based on a security; and

''(B) entered into directly or through an underwriter (as

defined in section 2(a) of the Securities Act of 1933 (15

U.S.C. 77b(a))) by the issuer of such security for the purposes

of raising capital, unless such agreement, contract, or

transaction is entered into to manage a risk associated with

capital raising.

''(c) Rule of Construction Regarding Master Agreements. - As used

in this section, the term 'swap agreement' shall be construed to

include a master agreement that provides for an agreement,

contract, or transaction that is a swap agreement pursuant to

subsections (a) and (b), together with all supplements to any such

master agreement, without regard to whether the master agreement

contains an agreement, contract, or transaction that is not a swap

agreement pursuant to subsections (a) and (b), except that the

master agreement shall be considered to be a swap agreement only

with respect to each agreement, contract, or transaction under the

master agreement that is a swap agreement pursuant to subsections

(a) and (b).

''SEC. 206B. SECURITY-BASED SWAP AGREEMENT.

''As used in this section, the term 'security-based swap

agreement' means a swap agreement (as defined in section 206A) of

which a material term is based on the price, yield, value, or

volatility of any security or any group or index of securities, or

any interest therein.

''SEC. 206C. NON-SECURITY-BASED SWAP AGREEMENT.

''As used in this section, the term 'non-security-based swap

agreement' means any swap agreement (as defined in section 206A)

that is not a security-based swap agreement (as defined in section

206B).''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 77b, 77g, 77r, 77r-1,

77s, 77z-2, 78c-1, 78j-1, 78m, 78o-4, 78o-5, 78q, 78w, 78y, 78mm,

78ccc, 78fff-2, 78lll, 80a-2, 80a-3a, 80a-30, 80b-2, 80b-4, 6102,

6603, 6821, 6827, 7201, 7246 of this title; title 2 section 1602;

title 5 section 4802; title 6 section 131; title 7 sections 1a, 2,

6c, 6d, 7a, 12a, 27; title 10 sections 4357, 6975, 9356; title 11

sections 101, 523; title 12 sections 24, 371c-1, 1441b, 1464, 1757,

1787, 1821, 1828, 1831l, 2290; title 22 sections 282k, 283h, 283ii,

285h, 286k-1, 290i-9, 290l-7, 290m, 290o-7; title 26 sections 543,

1234B, 1256, 7603; title 28 section 1658; title 29 section 1021;

title 31 sections 3121, 9110.

-CITE-

15 USC Sec. 78c-1 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78c-1. Swap agreements

-STATUTE-

(a) Non-security-based swap agreements

The definition of ''security'' in section 78c(a)(10) of this

title does not include any non-security-based swap agreement (as

defined in section 206C of the Gramm-Leach-Bliley Act).

(b) Security-based swap agreements

(1) The definition of ''security'' in section 78c(a)(10) of this

title does not include any security-based swap agreement (as

defined in section 206B of the Gramm-Leach-Bliley Act).

(2) The Commission is prohibited from registering, or requiring,

recommending, or suggesting, the registration under this chapter of

any security-based swap agreement (as defined in section 206B of

the Gramm-Leach-Bliley Act). If the Commission becomes aware that a

registrant has filed a registration application with respect to

such a swap agreement, the Commission shall promptly so notify the

registrant. Any such registration with respect to such a swap

agreement shall be void and of no force or effect.

(3) Except as provided in section 78p(a) of this title with

respect to reporting requirements, the Commission is prohibited

from -

(A) promulgating, interpreting, or enforcing rules; or

(B) issuing orders of general applicability;

under this chapter in a manner that imposes or specifies reporting

or recordkeeping requirements, procedures, or standards as

prophylactic measures against fraud, manipulation, or insider

trading with respect to any security-based swap agreement (as

defined in section 206B of the Gramm-Leach-Bliley Act).

(4) References in this chapter to the ''purchase'' or ''sale'' of

a security-based swap agreement (as defined in section 206B of the

Gramm-Leach-Bliley Act) shall be deemed to mean the execution,

termination (prior to its scheduled maturity date), assignment,

exchange, or similar transfer or conveyance of, or extinguishing of

rights or obligations under, a security-based swap agreement, as

the context may require.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 3A, as added Pub. L. 106-554,

Sec. 1(a)(5) (title III, Sec. 303(a)), Dec. 21, 2000, 114 Stat.

2763, 2763A-452.)

-REFTEXT-

REFERENCES IN TEXT

Sections 206B and 206C of the Gramm-Leach-Bliley Act, referred to

in text, are sections 206B and 206C of Pub. L. 106-102, which are

set out in a note under section 78c of this title.

This chapter, referred to in subsec. (b)(2) to (4), was in the

original ''this title''. See References in Text note set out under

section 78a of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 78i, 78o, 78p, 78t, 78u-1

of this title.

-CITE-

15 USC Sec. 78d 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78d. Securities and Exchange Commission

-STATUTE-

(a) Establishment; composition; limitations on commissioners; terms

of office

There is hereby established a Securities and Exchange Commission

(hereinafter referred to as the ''Commission'') to be composed of

five commissioners to be appointed by the President by and with the

advice and consent of the Senate. Not more than three of such

commissioners shall be members of the same political party, and in

making appointments members of different political parties shall be

appointed alternately as nearly as may be practicable. No

commissioner shall engage in any other business, vocation, or

employment than that of serving as commissioner, nor shall any

commissioner participate, directly or indirectly, in any

stock-market operations or transactions of a character subject to

regulation by the Commission pursuant to this chapter. Each

commissioner shall hold office for a term of five years and until

his successor is appointed and has qualified, except that he shall

not so continue to serve beyond the expiration of the next session

of Congress subsequent to the expiration of said fixed term of

office, and except (1) any commissioner appointed to fill a vacancy

occurring prior to the expiration of the term for which his

predecessor was appointed shall be appointed for the remainder of

such term, and (2) the terms of office of the commissioners first

taking office after June 6, 1934, shall expire as designated by the

President at the time of nomination, one at the end of one year,

one at the end of two years, one at the end of three years, one at

the end of four years, and one at the end of five years, after June

6, 1934.

(b) Appointment and compensation of staff and leasing authority

(1) Appointment and compensation

The Commission shall appoint and compensate officers,

attorneys, economists, examiners, and other employees in

accordance with section 4802 of title 5.

(2) Reporting of information

In establishing and adjusting schedules of compensation and

benefits for officers, attorneys, economists, examiners, and

other employees of the Commission under applicable provisions of

law, the Commission shall inform the heads of the agencies

referred to under section 1833b of title 12 and Congress of such

compensation and benefits and shall seek to maintain

comparability with such agencies regarding compensation and

benefits.

(3) Leasing authority

Nothwithstanding (FOOTNOTE 1) any other provision of law, the

Commission is authorized to enter directly into leases for real

property for office, meeting, storage, and such other space as is

necessary to carry out its functions, and shall be exempt from

any General Services Administration space management regulations

or directives.

(FOOTNOTE 1) So in original. Probably should be

''Notwithstanding''.

(c) Acceptance of travel support for Commission activities from

non-Federal sources; regulations

Notwithstanding any other provision of law, in accordance with

regulations which the Commission shall prescribe to prevent

conflicts of interest, the Commission may accept payment and

reimbursement, in cash or in kind, from non-Federal agencies,

organizations, and individuals for travel, subsistence, and other

necessary expenses incurred by Commission members and employees in

attending meetings and conferences concerning the functions or

activities of the Commission. Any payment or reimbursement accepted

shall be credited to the appropriated funds of the Commission. The

amount of travel, subsistence, and other necessary expenses for

members and employees paid or reimbursed under this subsection may

exceed per diem amounts established in official travel regulations,

but the Commission may include in its regulations under this

subsection a limitation on such amounts.

(d) Acceptance of relocation expenses from former employers by

professional fellows program participants

Notwithstanding any other provision of law, former employers of

participants in the Commission's professional fellows programs may

pay such participants their actual expenses for relocation to

Washington, District of Columbia, to facilitate their participation

in such programs, and program participants may accept such

payments.

(e) Fee payments

Notwithstanding any other provision of law, whenever any fee is

required to be paid to the Commission pursuant to any provision of

the securities laws or any other law, the Commission may provide by

rule that such fee shall be paid in a manner other than in cash 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.

(f) Reimbursement of expenses for assisting foreign securities

authorities

Notwithstanding any other provision of law, the Commission may

accept payment and reimbursement, in cash or in kind, from a

foreign securities authority, or made on behalf of such authority,

for necessary expenses incurred by the Commission, its members, and

employees in carrying out any investigation pursuant to section

78u(a)(2) of this title or in providing any other assistance to a

foreign securities authority. Any payment or reimbursement

accepted shall be considered a reimbursement to the appropriated

funds of the Commission.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 4, 48 Stat. 885; Oct. 28,

1949, ch. 782, title XI, Sec. 1106(a), 63 Stat. 972; Pub. L.

86-619, Sec. 3, July 12, 1960, 74 Stat. 408; Pub. L. 86-771, Sept.

13, 1960, 74 Stat. 913; Pub. L. 88-426, title III, Sec. 305(20),

Aug. 14, 1964, 78 Stat. 425; Pub. L. 98-38, Sec. 1, June 6, 1983,

97 Stat. 205; Pub. L. 100-181, title III, Sec. 307, Dec. 4, 1987,

101 Stat. 1254; Pub. L. 101-550, title I, Sec. 103, title II, Sec.

207, Nov. 15, 1990, 104 Stat. 2713, 2721; Pub. L. 104-290, title

IV, Sec. 406, Oct. 11, 1996, 110 Stat. 3444; Pub. L. 105-353, title

II, Sec. 203, Nov. 3, 1998, 112 Stat. 3234; Pub. L. 107-123, Sec.

8(d)(2), Jan. 16, 2002, 115 Stat. 2399.)

-REFTEXT-

REFERENCES IN TEXT

This chapter, referred to in subsec. (a), was in the original

''this title'' and ''this Act'', respectively. See References in

Text note set out under section 78a of this title.

-MISC2-

AMENDMENTS

2002 - Subsec. (b)(1), (2). Pub. L. 107-123 added pars. (1) and

(2) and struck out former pars. (1) and (2), which authorized the

Commission to appoint and compensate officers, attorneys,

examiners, and other experts as needed, and to select, appoint, and

compensate professional economists.

1998 - Subsec. (b)(2), (3). Pub. L. 105-353 added par. (2) and

redesignated former par. (2) as (3).

1996 - Subsec. (e). Pub. L. 104-290 inserted before period at end

''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''.

1990 - Subsec. (b). Pub. L. 101-550, Sec. 103, inserted heading,

designated existing provision as par. (1) and inserted heading, and

added par. (2).

Subsec. (f). Pub. L. 101-550, Sec. 207, added subsec. (f).

1987 - Subsec. (e). Pub. L. 100-181 added subsec. (e).

1983 - Subsecs. (c), (d). Pub. L. 98-38 added subsecs. (c) and

(d).

1964 - Subsec. (a). Pub. L. 88-426 repealed provisions which

prescribed the compensation of the Chairman and the Commissioners.

1960 - Subsec. (a). Pub. L. 86-771 authorized the chairman to

receive an additional $500 a year.

Pub. L. 86-619 increased the salary of each commissioner from

$15,000 to $20,000 a year, and provided for continuation in office

of a commissioner upon termination of his term until a successor is

appointed and has qualified, not beyond expiration of next session

of Congress subsequent to the expiration of said fixed term of

office.

1949 - Subsec. (b). Act Oct. 28, 1949, substituted

''Classification Act of 1949'' for ''Classification Act of 1923''.

EFFECTIVE DATE OF 2002 AMENDMENT

Amendment by Pub. L. 107-123 effective Oct. 1, 2001, see section

11 of Pub. L. 107-123, set out as a note under section 78ee of this

title.

EFFECTIVE DATE OF 1964 AMENDMENT

For effective date of amendment by Pub. L. 88-426, see section

501 of Pub. L. 88-426.

REPEALS

Act Oct. 28, 1949, ch. 782, set out in the credit of this

section, was repealed (subject to a savings clause) by Pub. L.

89-554, Sept. 6, 1966, Sec. 8, 80 Stat. 632, 655.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of Securities and Exchange Commission,

with certain exceptions, to Chairman of such Commission, see Reorg.

Plan No. 10 of 1950, Sec. 1, 2, eff. May 24, 1950, 15 F.R. 3175,

64 Stat. 1265, set out below.

-MISC5-

COMPENSATION OF CHAIRMAN AND COMMISSIONERS

Compensation of Chairman and Commissioners, see sections 5314 and

5315 of Title 5, Government Organization and Employees.

1950 REORGANIZATION PLAN NO. 10

15 F.R. 3175, 64 STAT. 1265

Prepared by the President and transmitted to the Senate and the

House of Representatives in Congress assembled, March 13, 1950,

pursuant to the provisions of the Reorganization Act of 1949,

approved June 20, 1949 (see 5 U.S.C. 901 et seq.).

SECURITIES AND EXCHANGE COMMISSION

SECTION 1. TRANSFER OF FUNCTIONS TO THE CHAIRMAN

(a) Subject to the provisions of subsection (b) of this section

there are hereby transferred from the Securities and Exchange

Commission, hereinafter referred to as the Commission, to the

Chairman of the Commission, hereinafter referred to as the

Chairman, the executive and administrative functions of the

Commission, including functions of the Commission with respect to

(1) the appointment and supervision of personnel employed under the

Commission, (2) the distribution of business among such personnel

and among administrative units of the Commission, and (3) the use

and expenditure of funds.

(b)(1) In carrying out any of his functions under the provisions

of this section the Chairman shall be governed by general policies

of the Commission and by such regulatory decisions, findings, and

determinations as the Commission may by law be authorized to make.

(2) The appointment by the Chairman of the heads of major

administrative units under the Commission shall be subject to the

approval of the Commission.

(3) Personnel employed regularly and full time in the immediate

offices of Commissioners other than the Chairman shall not be

affected by the provisions of this reorganization plan.

(4) There are hereby reserved to the Commission its functions

with respect to revising budget estimates and with respect to

determining upon the distribution of appropriated funds according

to major programs and purposes.

SEC. 2. PERFORMANCE OF TRANSFERRED FUNCTIONS

The Chairman may from time to time make such provisions as he

shall deem appropriate authorizing the performance by any officer,

employee, or administrative unit under his jurisdiction of any

function transferred to the Chairman by the provisions of section 1

of this reorganization plan.

SEC. 3. DESIGNATION OF CHAIRMAN

The functions of the Commission with respect to choosing a

Chairman from among the Commissioners composing the Commission are

hereby transferred to the President.

MESSAGE OF THE PRESIDENT

To the Congress of the United States:

I transmit herewith Reorganization Plan No. 10 of 1950, prepared

in accordance with the Reorganization Act of 1949 and providing for

reorganizations in the Securities and Exchange Commission. My

reasons for transmitting this plan are stated in an accompanying

general message.

After investigation I have found and hereby declare that each

reorganization included in Reorganization Plan No. 10 of 1950 is

necessary to accomplish one or more of the purposes set forth in

section 2(a) of the Reorganization Act of 1949.

The taking effect of the reorganizations included in this plan

may not in itself result in substantial immediate savings.

However, many benefits in improved operations are probable during

the next years which will result in a reduction in expenditures as

compared with those that would be otherwise necessary. An

itemization of these reductions in advance of actual experience

under this plan is not practicable. Harry S. Truman.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 77uuu, 78c, 79z-5,

80a-45, 80b-18 of this title.

-CITE-

15 USC Sec. 78d-1 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78d-1. Delegation of functions by Commission

-STATUTE-

(a) Authorization; functions delegable; eligible persons;

application of other laws

In addition to its existing authority, the Securities and

Exchange Commission shall have the authority to delegate, by

published order or rule, any of its functions to a division of the

Commission, an individual Commissioner, an administrative law

judge, or an employee or employee board, including functions with

respect to hearing, determining, ordering, certifying, reporting,

or otherwise acting as to any work, business, or matter. Nothing

in this section shall be deemed to supersede the provisions of

section 556(b) of title 5, or to authorize the delegation of the

function of rulemaking as defined in subchapter II of chapter 5 of

title 5, with reference to general rules as distinguished from

rules of particular applicability, or of the making of any rule

pursuant to section 78s(c) of this title.

(b) Right of review; procedure

With respect to the delegation of any of its functions, as

provided in subsection (a) of this section, the Commission shall

retain a discretionary right to review the action of any such

division of the Commission, individual Commissioner, administrative

law judge, employee, or employee board, upon its own initiative or

upon petition of a party to or intervenor in such action, within

such time and in such manner as the Commission by rule shall

prescribe. The vote of one member of the Commission shall be

sufficient to bring any such action before the Commission for

review. A person or party shall be entitled to review by the

Commission if he or it is adversely affected by action at a

delegated level which (1) denies any request for action pursuant to

section 77h(a) or section 77h(c) of this title or the first

sentence of section 78l(d) of this title; (2) suspends trading in a

security pursuant to section 78l(k) of this title; or (3) is

pursuant to any provision of this chapter in a case of

adjudication, as defined in section 551 of title 5, not required by

this chapter to be determined on the record after notice and

opportunity for hearing (except to the extent there is involved a

matter described in section 554(a)(1) through (6) of such title 5).

(c) Finality of delegated action

If the right to exercise such review is declined, or if no such

review is sought within the time stated in the rules promulgated by

the Commission, then the action of any such division of the

Commission, individual Commissioner, administrative law judge,

employee, or employee board, shall, for all purposes, including

appeal or review thereof, be deemed the action of the Commission.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 4A, as added Pub. L. 100-181,

title III, Sec. 308(a), Dec. 4, 1987, 101 Stat. 1254.)

-MISC1-

PRIOR PROVISIONS

A prior section 78d-1, Pub. L. 87-592, Sec. 1, Aug. 20, 1962, 76

Stat. 394; Pub. L. 94-29, Sec. 25, June 4, 1975, 89 Stat. 163; Pub.

L. 95-251, Sec. 2(a)(4), Mar. 27, 1978, 92 Stat. 183, provided for

subject matter similar to the provisions comprising this section,

prior to repeal by section 308(b) of Pub. L. 100-181.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 78d-2 of this title.

-CITE-

15 USC Sec. 78d-2 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78d-2. Transfer of functions with respect to assignment of

personnel to chairman

-STATUTE-

In addition to the functions transferred by the provisions of

Reorganization Plan Numbered 10 of 1950 (64 Stat. 1265), there are

hereby transferred from the Commission to the Chairman of the

Commission the functions of the Commission with respect to the

assignment of Commission personnel, including Commissioners, to

perform such functions as may have been delegated by the Commission

to the Commission personnel, including Commissioners, pursuant to

section 78d-1 of this title.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 4B, as added Pub. L. 100-181,

title III, Sec. 308(a), Dec. 4, 1987, 101 Stat. 1255.)

-REFTEXT-

REFERENCES IN TEXT

Reorganization Plan Numbered 10 of 1950 (64 Stat. 1265), referred

to in text, is set out as a note under section 78d of this title.

-MISC2-

PRIOR PROVISIONS

A prior section 78d-2, Pub. L. 87-592, Sec. 2, Aug. 20, 1962, 76

Stat. 395, provided for subject matter similar to the provisions

comprising this section, prior to repeal by section 308(b) of Pub.

L. 100-181.

-CITE-

15 USC Sec. 78d-3 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78d-3. Appearance and practice before the Commission

-STATUTE-

(a) Authority to censure

The Commission may censure any person, or deny, temporarily or

permanently, to any person the privilege of appearing or practicing

before the Commission in any way, if that person is found by the

Commission, after notice and opportunity for hearing in the matter

-

(1) not to possess the requisite qualifications to represent

others;

(2) to be lacking in character or integrity, or to have engaged

in unethical or improper professional conduct; or

(3) to have willfully violated, or willfully aided and abetted

the violation of, any provision of the securities laws or the

rules and regulations issued thereunder.

(b) Definition

With respect to any registered public accounting firm or

associated person, for purposes of this section, the term

''improper professional conduct'' means -

(1) intentional or knowing conduct, including reckless conduct,

that results in a violation of applicable professional standards;

and

(2) negligent conduct in the form of -

(A) a single instance of highly unreasonable conduct that

results in a violation of applicable professional standards in

circumstances in which the registered public accounting firm or

associated person knows, or should know, that heightened

scrutiny is warranted; or

(B) repeated instances of unreasonable conduct, each

resulting in a violation of applicable professional standards,

that indicate a lack of competence to practice before the

Commission.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 4C, as added Pub. L. 107-204,

title VI, Sec. 602, July 30, 2002, 116 Stat. 794.)

-CITE-

15 USC Sec. 78e 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78e. Transactions on unregistered exchanges

-STATUTE-

It shall be unlawful for any broker, dealer, or exchange,

directly or indirectly, to make use of the mails or any means or

instrumentality of interstate commerce for the purpose of using any

facility of an exchange within or subject to the jurisdiction of

the United States to effect any transaction in a security, or to

report any such transaction, unless such exchange (1) is registered

as national securities exchange under section 78f of this title, or

(2) is exempted from such registration upon application by the

exchange because, in the opinion of the Commission, by reason of

the limited volume of transactions effected on such exchange, it is

not practicable and not necessary or appropriate in the public

interest or for the protection of investors to require such

registration.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 5, 48 Stat. 885.)

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of Securities and Exchange Commission,

with certain exceptions, to Chairman of such Commission, see Reorg.

Plan No. 10 of 1950, Sec. 1, 2, eff. May 24, 1950, 15 F.R. 3175,

64 Stat. 1265, set out under section 78d of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 78o, 78o-4, 78o-5, 78p,

78hh of this title; title 25 section 646.

-CITE-

15 USC Sec. 78f 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78f. National securities exchanges

-STATUTE-

(a) Registration; application

An exchange may be registered as a national securities exchange

under the terms and conditions hereinafter provided in this section

and in accordance with the provisions of section 78s(a) of this

title, by filing with the Commission an application for

registration in such form as the Commission, by rule, may prescribe

containing the rules of the exchange and such other information and

documents as the Commission, by rule, may prescribe as necessary or

appropriate in the public interest or for the protection of

investors.

(b) Determination by Commission requisite to registration of

applicant as a national securities exchange

An exchange shall not be registered as a national securities

exchange unless the Commission determines that -

(1) Such exchange is so organized and has the capacity to be

able to carry out the purposes of this chapter and to comply, and

(subject to any rule or order of the Commission pursuant to

section 78q(d) or 78s(g)(2) of this title) to enforce compliance

by its members and persons associated with its members, with the

provisions of this chapter, the rules and regulations thereunder,

and the rules of the exchange.

(2) Subject to the provisions of subsection (c) of this

section, the rules of the exchange provide that any registered

broker or dealer or natural person associated with a registered

broker or dealer may become a member of such exchange and any

person may become associated with a member thereof.

(3) The rules of the exchange assure a fair representation of

its members in the selection of its directors and administration

of its affairs and provide that one or more directors shall be

representative of issuers and investors and not be associated

with a member of the exchange, broker, or dealer.

(4) The rules of the exchange provide for the equitable

allocation of reasonable dues, fees, and other charges among its

members and issuers and other persons using its facilities.

(5) The rules of the exchange are designed to prevent

fraudulent and manipulative acts and practices, to promote just

and equitable principles of trade, to foster cooperation and

coordination with persons engaged in regulating, clearing,

settling, processing information with respect to, and

facilitating transactions in securities, to remove impediments to

and perfect the mechanism of a free and open market and a

national market system, and, in general, to protect investors and

the public interest; and are not designed to permit unfair

discrimination between customers, issuers, brokers, or dealers,

or to regulate by virtue of any authority conferred by this

chapter matters not related to the purposes of this chapter or

the administration of the exchange.

(6) The rules of the exchange provide that (subject to any rule

or order of the Commission pursuant to section 78q(d) or

78s(g)(2) of this title) its members and persons associated with

its members shall be appropriately disciplined for violation of

the provisions of this chapter, the rules or regulations

thereunder, or the rules of the exchange, by expulsion,

suspension, limitation of activities, functions, and operations,

fine, censure, being suspended or barred from being associated

with a member, or any other fitting sanction.

(7) The rules of the exchange are in accordance with the

provisions of subsection (d) of this section, and in general,

provide a fair procedure for the disciplining of members and

persons associated with members, the denial of membership to any

person seeking membership therein, the barring of any person from

becoming associated with a member thereof, and the prohibition or

limitation by the exchange of any person with respect to access

to services offered by the exchange or a member thereof.

(8) The rules of the exchange do not impose any burden on

competition not necessary or appropriate in furtherance of the

purposes of this chapter.

(9) The rules of the exchange prohibit the listing of any

security issued in a limited partnership rollup transaction (as

such term is defined in paragraphs (4) and (5) of section 78n(h)

of this title), unless such transaction was conducted in

accordance with procedures designed to protect the rights of

limited partners, including -

(A) the right of dissenting limited partners to one of the

following:

(i) an appraisal and compensation;

(ii) retention of a security under substantially the same

terms and conditions as the original issue;

(iii) approval of the limited partnership rollup

transaction by not less than 75 percent of the outstanding

securities of each of the participating limited partnerships;

(iv) the use of a committee of limited partners that is

independent, as determined in accordance with rules

prescribed by the exchange, of the general partner or

sponsor, that has been approved by a majority of the

outstanding units of each of the participating limited

partnerships, and that has such authority as is necessary to

protect the interest of limited partners, including the

authority to hire independent advisors, to negotiate with the

general partner or sponsor on behalf of the limited partners,

and to make a recommendation to the limited partners with

respect to the proposed transaction; or

(v) other comparable rights that are prescribed by rule by

the exchange and that are designed to protect dissenting

limited partners;

(B) the right not to have their voting power unfairly reduced

or abridged;

(C) the right not to bear an unfair portion of the costs of a

proposed limited partnership rollup transaction that is

rejected; and

(D) restrictions on the conversion of contingent interests or

fees into non-contingent interests or fees and restrictions on

the receipt of a non-contingent equity interest in exchange for

fees for services which have not yet been provided.

As used in this paragraph, the term ''dissenting limited

partner'' means a person who, on the date on which soliciting

material is mailed to investors, is a holder of a beneficial

interest in a limited partnership that is the subject of a

limited partnership rollup transaction, and who casts a vote

against the transaction and complies with procedures established

by the exchange, except that for purposes of an exchange or

tender offer, such person shall file an objection in writing

under the rules of the exchange during the period during which

the offer is outstanding.

(c) Denial of membership in national exchanges; denial of

association with member; conditions; limitation of membership

(1) A national securities exchange shall deny membership to (A)

any person, other than a natural person, which is not a registered

broker or dealer or (B) any natural person who is not, or is not

associated with, a registered broker or dealer.

(2) A national securities exchange may, and in cases in which the

Commission, by order, directs as necessary or appropriate in the

public interest or for the protection of investors shall, deny

membership to any registered broker or dealer or natural person

associated with a registered broker or dealer, and bar from

becoming associated with a member any person, who is subject to a

statutory disqualification. A national securities exchange shall

file notice with the Commission not less than thirty days prior to

admitting any person to membership or permitting any person to

become associated with a member, if the exchange knew, or in the

exercise of reasonable care should have known, that such person was

subject to a statutory disqualification. The notice shall be in

such form and contain such information as the Commission, by rule,

may prescribe as necessary or appropriate in the public interest or

for the protection of investors.

(3)(A) A national securities exchange may deny membership to, or

condition the membership of, a registered broker or dealer if (i)

such broker or dealer does not meet such standards of financial

responsibility or operational capability or such broker or dealer

or any natural person associated with such broker or dealer does

not meet such standards of training, experience, and competence as

are prescribed by the rules of the exchange or (ii) such broker or

dealer or person associated with such broker or dealer has engaged

and there is a reasonable likelihood he may again engage in acts or

practices inconsistent with just and equitable principles of

trade. A national securities exchange may examine and verify the

qualifications of an applicant to become a member and the natural

persons associated with such an applicant in accordance with

procedures established by the rules of the exchange.

(B) A national securities exchange may bar a natural person from

becoming a member or associated with a member, or condition the

membership of a natural person or association of a natural person

with a member, if such natural person (i) does not meet such

standards of training, experience, and competence as are prescribed

by the rules of the exchange or (ii) has engaged and there is a

reasonable likelihood he may again engage in acts or practices

inconsistent with just and equitable principles of trade. A

national securities exchange may examine and verify the

qualifications of an applicant to become a person associated with a

member in accordance with procedures established by the rules of

the exchange and require any person associated with a member, or

any class of such persons, to be registered with the exchange in

accordance with procedures so established.

(C) A national securities exchange may bar any person from

becoming associated with a member if such person does not agree (i)

to supply the exchange with such information with respect to its

relationship and dealings with the member as may be specified in

the rules of the exchange and (ii) to permit the examination of its

books and records to verify the accuracy of any information so

supplied.

(4) A national securities exchange may limit (A) the number of

members of the exchange and (B) the number of members and

designated representatives of members permitted to effect

transactions on the floor of the exchange without the services of

another person acting as broker: Provided, however, That no

national securities exchange shall have the authority to decrease

the number of memberships in such exchange, or the number of

members and designated representatives of members permitted to

effect transactions on the floor of such exchange without the

services of another person acting as broker, below such number in

effect on May 1, 1975, or the date such exchange was registered

with the Commission, whichever is later: And provided further, That

the Commission, in accordance with the provisions of section 78s(c)

of this title, may amend the rules of any national securities

exchange to increase (but not to decrease) or to remove any

limitation on the number of memberships in such exchange or the

number of members or designated representatives of members

permitted to effect transactions on the floor of the exchange

without the services of another person acting as broker, if the

Commission finds that such limitation imposes a burden on

competition not necessary or appropriate in furtherance of the

purposes of this chapter.

(d) Discipline of national securities exchange members and persons

associated with members; summary proceedings

(1) In any proceeding by a national securities exchange to

determine whether a member or person associated with a member

should be disciplined (other than a summary proceeding pursuant to

paragraph (3) of this subsection), the exchange shall bring

specific charges, notify such member or person of, and give him an

opportunity to defend against, such charges, and keep a record. A

determination by the exchange to impose a disciplinary sanction

shall be supported by a statement setting forth -

(A) any act or practice in which such member or person

associated with a member has been found to have engaged, or which

such member or person has been found to have omitted;

(B) the specific provision of this chapter, the rules or

regulations thereunder, or the rules of the exchange which any

such act or practice, or omission to act, is deemed to violate;

and

(C) the sanction imposed and the reasons therefor.

(2) In any proceeding by a national securities exchange to

determine whether a person shall be denied membership, barred from

becoming associated with a member, or prohibited or limited with

respect to access to services offered by the exchange or a member

thereof (other than a summary proceeding pursuant to paragraph (3)

of this subsection), the exchange shall notify such person of, and

give him an opportunity to be heard upon, the specific grounds for

denial, bar, or prohibition or limitation under consideration and

keep a record. A determination by the exchange to deny membership,

bar a person from becoming associated with a member, or prohibit or

limit a person with respect to access to services offered by the

exchange or a member thereof shall be supported by a statement

setting forth the specific grounds on which the denial, bar, or

prohibition or limitation is based.

(3) A national securities exchange may summarily (A) suspend a

member or person associated with a member who has been and is

expelled or suspended from any self-regulatory organization or

barred or suspended from being associated with a member of any

self-regulatory organization, (B) suspend a member who is in such

financial or operating difficulty that the exchange determines and

so notifies the Commission that the member cannot be permitted to

continue to do business as a member with safety to investors,

creditors, other members, or the exchange, or (C) limit or prohibit

any person with respect to access to services offered by the

exchange if subparagraph (A) or (B) of this paragraph is applicable

to such person or, in the case of a person who is not a member, if

the exchange determines that such person does not meet the

qualification requirements or other prerequisites for such access

and such person cannot be permitted to continue to have such access

with safety to investors, creditors, members, or the exchange. Any

person aggrieved by any such summary action shall be promptly

afforded an opportunity for a hearing by the exchange in accordance

with the provisions of paragraph (1) or (2) of this subsection.

The Commission, by order, may stay any such summary action on its

own motion or upon application by any person aggrieved thereby, if

the Commission determines summarily or after notice and opportunity

for hearing (which hearing may consist solely of the submission of

affidavits or presentation of oral arguments) that such stay is

consistent with the public interest and the protection of

investors.

(e) Commissions, allowances, discounts, and other fees

(1) On and after June 4, 1975, no national securities exchange

may impose any schedule or fix rates of commissions, allowances,

discounts, or other fees to be charged by its members: Provided,

however, That until May 1, 1976, the preceding provisions of this

paragraph shall not prohibit any such exchange from imposing or

fixing any schedule of commissions, allowances, discounts, or other

fees to be charged by its members for acting as broker on the floor

of the exchange or as odd-lot dealer: And provided further, That

the Commission, in accordance with the provisions of section 78s(b)

of this title as modified by the provisions of paragraph (3) of

this subsection, may -

(A) permit a national securities exchange, by rule, to impose a

reasonable schedule or fix reasonable rates of commissions,

allowances, discounts, or other fees to be charged by its members

for effecting transactions on such exchange prior to November 1,

1976, if the Commission finds that such schedule or fixed rates

of commissions, allowances, discounts, or other fees are in the

public interest; and

(B) permit a national securities exchange, by rule, to impose a

schedule or fix rates of commissions, allowances, discounts, or

other fees to be charged by its members for effecting

transactions on such exchange after November 1, 1976, if the

Commission finds that such schedule or fixed rates of

commissions, allowances, discounts, or other fees (i) are

reasonable in relation to the costs of providing the service for

which such fees are charged (and the Commission publishes the

standards employed in adjudging reasonableness) and (ii) do not

impose any burden on competition not necessary or appropriate in

furtherance of the purposes of this chapter, taking into

consideration the competitive effects of permitting such schedule

or fixed rates weighed against the competitive effects of other

lawful actions which the Commission is authorized to take under

this chapter.

(2) Notwithstanding the provisions of section 78s(c) of this

title, the Commission, by rule, may abrogate any exchange rule

which imposes a schedule or fixes rates of commissions, allowances,

discounts, or other fees, if the Commission determines that such

schedule or fixed rates are no longer reasonable, in the public

interest, or necessary to accomplish the purposes of this chapter.

(3)(A) Before approving or disapproving any proposed rule change

submitted by a national securities exchange which would impose a

schedule or fix rates of commissions, allowances, discounts, or

other fees to be charged by its members for effecting transactions

on such exchange, the Commission shall afford interested persons

(i) an opportunity for oral presentation of data, views, and

arguments and (ii) with respect to any such rule concerning

transactions effected after November 1, 1976, if the Commission

determines there are disputed issues of material fact, to present

such rebuttal submissions and to conduct (or have conducted under

subparagraph (B) of this paragraph) such cross-examination as the

Commission determines to be appropriate and required for full

disclosure and proper resolution of such disputed issues of

material fact.

(B) The Commission shall prescribe rules and make rulings

concerning any proceeding in accordance with subparagraph (A) of

this paragraph designed to avoid unnecessary costs or delay. Such

rules or rulings may (i) impose reasonable time limits on each

interested person's oral presentations, and (ii) require any

cross-examination to which a person may be entitled under

subparagraph (A) of this paragraph to be conducted by the

Commission on behalf of that person in such manner as the

Commission determines to be appropriate and required for full

disclosure and proper resolution of disputed issues of material

fact.

(C)(i) If any class of persons, the members of which are entitled

to conduct (or have conducted) cross-examination under

subparagraphs (A) and (B) of this paragraph and which have, in the

view of the Commission, the same or similar interests in the

proceeding, cannot agree upon a single representative of such

interests for purposes of cross-examination, the Commission may

make rules and rulings specifying the manner in which such

interests shall be represented and such cross-examination

conducted.

(ii) No member of any class of persons with respect to which the

Commission has specified the manner in which its interests shall be

represented pursuant to clause (i) of this subparagraph shall be

denied, pursuant to such clause (i), the opportunity to conduct (or

have conducted) cross-examination as to issues affecting his

particular interests if he satisfies the Commission that he has

made a reasonable and good faith effort to reach agreement upon

group representation and there are substantial and relevant issues

which would not be presented adequately by group representation.

(D) A transcript shall be kept of any oral presentation and

cross-examination.

(E) In addition to the bases specified in section 78y(a) of this

title, a reviewing Court may set aside an order of the Commission

under section 78s(b) of this title approving an exchange rule

imposing a schedule or fixing rates of commissions, allowances,

discounts, or other fees, if the Court finds -

(1) a Commission determination under subparagraph (A) of this

paragraph that an interested person is not entitled to conduct

cross-examination or make rebuttal submissions, or

(2) a Commission rule or ruling under subparagraph (B) of this

paragraph limiting the petitioner's cross-examination or rebuttal

submissions,

has precluded full disclosure and proper resolution of disputed

issues of material fact which were necessary for fair determination

by the Commission.

(f) Compliance of non-members with exchange rules

The Commission, by rule or order, as it deems necessary or

appropriate in the public interest and for the protection of

investors, to maintain fair and orderly markets, or to assure equal

regulation, may require -

(1) any person not a member or a designated representative of a

member of a national securities exchange effecting transactions

on such exchange without the services of another person acting as

a broker, or

(2) any broker or dealer not a member of a national securities

exchange effecting transactions on such exchange on a regular

basis,

to comply with such rules of such exchange as the Commission may

specify.

(g) Notice registration of security futures product exchanges

(1) Registration required

An exchange that lists or trades security futures products may

register as a national securities exchange solely for the

purposes of trading security futures products if -

(A) the exchange is a board of trade, as that term is defined

by the Commodity Exchange Act (7 U.S.C. 1a(2)) (7 U.S.C. 1 et

seq.), that -

(i) has been designated a contract market by the Commodity

Futures Trading Commission and such designation is not

suspended by order of the Commodity Futures Trading

Commission; or

(ii) is registered as a derivative transaction execution

facility under section 5a of the Commodity Exchange Act (7

U.S.C. 7a) and such registration is not suspended by the

Commodity Futures Trading Commission; and

(B) such exchange does not serve as a market place for

transactions in securities other than -

(i) security futures products; or

(ii) futures on exempted securities or groups or indexes of

securities or options thereon that have been authorized under

section 2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C.

2(a)(1)(C)).

(2) Registration by notice filing

(A) Form and content

An exchange required to register only because such exchange

lists or trades security futures products may register for

purposes of this section by filing with the Commission a

written notice in such form as the Commission, by rule, may

prescribe containing the rules of the exchange and such other

information and documents concerning such exchange, comparable

to the information and documents required for national

securities exchanges under subsection (a) of this section, as

the Commission, by rule, may prescribe as necessary or

appropriate in the public interest or for the protection of

investors. If such exchange has filed documents with the

Commodity Futures Trading Commission, to the extent that such

documents contain information satisfying the Commission's

informational requirements, copies of such documents may be

filed with the Commission in lieu of the required written

notice.

(B) Immediate effectiveness

Such registration shall be effective contemporaneously with

the submission of notice, in written or electronic form, to the

Commission, except that such registration shall not be

effective if such registration would be subject to suspension

or revocation.

(C) Termination

Such registration shall be terminated immediately if any of

the conditions for registration set forth in this subsection

are no longer satisfied.

(3) Public availability

The Commission shall promptly publish in the Federal Register

an acknowledgment of receipt of all notices the Commission

receives under this subsection and shall make all such notices

available to the public.

(4) Exemption of exchanges from specified provisions

(A) Transaction exemptions

An exchange that is registered under paragraph (1) of this

subsection shall be exempt from, and shall not be required to

enforce compliance by its members with, and its members shall

not, solely with respect to those transactions effected on such

exchange in security futures products, be required to comply

with, the following provisions of this chapter and the rules

thereunder:

(i) Subsections (b)(2), (b)(3), (b)(4), (b)(7), (b)(9),

(c), (d), and (e) of this section.

(ii) Section 78h of this title.

(iii) Section 78k of this title.

(iv) Subsections (d), (f), and (k) of section 78q of this

title.

(v) Subsections (a), (f), and (h) of section 78s of this

title.

(B) Rule change exemptions

An exchange that registered under paragraph (1) of this

subsection shall also be exempt from submitting proposed rule

changes pursuant to section 78s(b) of this title, except that -

(i) such exchange shall file proposed rule changes related

to higher margin levels, fraud or manipulation,

recordkeeping, reporting, listing standards, or decimal

pricing for security futures products, sales practices for

security futures products for persons who effect transactions

in security futures products, or rules effectuating such

exchange's obligation to enforce the securities laws pursuant

to section 78s(b)(7) of this title;

(ii) such exchange shall file pursuant to sections

78s(b)(1) and 78s(b)(2) of this title proposed rule changes

related to margin, except for changes resulting in higher

margin levels; and

(iii) such exchange shall file pursuant to section

78s(b)(1) of this title proposed rule changes that have been

abrogated by the Commission pursuant to section 78s(b)(7)(C)

of this title.

(5) Trading in security futures products

(A) In general

Subject to subparagraph (B), it shall be unlawful for any

person to execute or trade a security futures product until the

later of -

(i) 1 year after December 21, 2000; or

(ii) such date that a futures association registered under

section 17 of the Commodity Exchange Act (7 U.S.C. 21) has

met the requirements set forth in section 78o-3(k)(2) of this

title.

(B) Principal-to-principal transactions

Notwithstanding subparagraph (A), a person may execute or

trade a security futures product transaction if -

(i) the transaction is entered into -

(I) on a principal-to-principal basis between parties

trading for their own accounts or as described in section

1a(12)(B)(ii) of the Commodity Exchange Act (7 U.S.C.

1a(12)(B)(ii)); and

(II) only between eligible contract participants (as

defined in subparagraphs (A), (B)(ii), and (C) of such

section 1a(12) (7 U.S.C. 1a(12)(A), (B)(ii), (C))) at the

time at which the persons enter into the agreement,

contract, or transaction; and

(ii) the transaction is entered into on or after the later

of -

(I) 8 months after December 21, 2000; or

(II) such date that a futures association registered

under section 17 of the Commodity Exchange Act (7 U.S.C.

21) has met the requirements set forth in section

78o-3(k)(2) of this title.

(h) Trading in security futures products

(1) Trading on exchange or association required

It shall be unlawful for any person to effect transactions in

security futures products that are not listed on a national

securities exchange or a national securities association

registered pursuant to section 78o-3(a) of this title.

(2) Listing standards required

Except as otherwise provided in paragraph (7), a national

securities exchange or a national securities association

registered pursuant to section 78o-3(a) of this title may trade

only security futures products that (A) conform with listing

standards that such exchange or association files with the

Commission under section 78s(b) of this title and (B) meet the

criteria specified in section 2(a)(1)(D)(i) of the Commodity

Exchange Act (7 U.S.C. 2(a)(1)(D)(i)).

(3) Requirements for listing standards and conditions for trading

Such listing standards shall -

(A) except as otherwise provided in a rule, regulation, or

order issued pursuant to paragraph (4), require that any

security underlying the security future, including each

component security of a narrow-based security index, be

registered pursuant to section 78l of this title;

(B) require that if the security futures product is not cash

settled, the market on which the security futures product is

traded have arrangements in place with a registered clearing

agency for the payment and delivery of the securities

underlying the security futures product;

(C) be no less restrictive than comparable listing standards

for options traded on a national securities exchange or

national securities association registered pursuant to section

78o-3(a) of this title;

(D) except as otherwise provided in a rule, regulation, or

order issued pursuant to paragraph (4), require that the

security future be based upon common stock and such other

equity securities as the Commission and the Commodity Futures

Trading Commission jointly determine appropriate;

(E) require that the security futures product is cleared by a

clearing agency that has in place provisions for linked and

coordinated clearing with other clearing agencies that clear

security futures products, which permits the security futures

product to be purchased on one market and offset on another

market that trades such product;

(F) require that only a broker or dealer subject to

suitability rules comparable to those of a national securities

association registered pursuant to section 78o-3(a) of this

title effect transactions in the security futures product;

(G) require that the security futures product be subject to

the prohibition against dual trading in section 4j of the

Commodity Exchange Act (7 U.S.C. 6j) and the rules and

regulations thereunder or the provisions of section 78k(a) of

this title and the rules and regulations thereunder, except to

the extent otherwise permitted under this chapter and the rules

and regulations thereunder;

(H) require that trading in the security futures product not

be readily susceptible to manipulation of the price of such

security futures product, nor to causing or being used in the

manipulation of the price of any underlying security, option on

such security, or option on a group or index including such

securities;

(I) require that procedures be in place for coordinated

surveillance among the market on which the security futures

product is traded, any market on which any security underlying

the security futures product is traded, and other markets on

which any related security is traded to detect manipulation and

insider trading;

(J) require that the market on which the security futures

product is traded has in place audit trails necessary or

appropriate to facilitate the coordinated surveillance required

in subparagraph (I);

(K) require that the market on which the security futures

product is traded has in place procedures to coordinate trading

halts between such market and any market on which any security

underlying the security futures product is traded and other

markets on which any related security is traded; and

(L) require that the margin requirements for a security

futures product comply with the regulations prescribed pursuant

to section 78g(c)(2)(B) of this title, except that nothing in

this subparagraph shall be construed to prevent a national

securities exchange or national securities association from

requiring higher margin levels for a security futures product

when it deems such action to be necessary or appropriate.

(4) Authority to modify certain listing standard requirements

(A) Authority to modify

The Commission and the Commodity Futures Trading Commission,

by rule, regulation, or order, may jointly modify the listing

standard requirements specified in subparagraph (A) or (D) of

paragraph (3) to the extent such modification fosters the

development of fair and orderly markets in security futures

products, is necessary or appropriate in the public interest,

and is consistent with the protection of investors.

(B) Authority to grant exemptions

The Commission and the Commodity Futures Trading Commission,

by order, may jointly exempt any person from compliance with

the listing standard requirement specified in subparagraph (E)

of paragraph (3) to the extent such exemption fosters the

development of fair and orderly markets in security futures

products, is necessary or appropriate in the public interest,

and is consistent with the protection of investors.

(5) Requirements for other persons trading security future

products

It shall be unlawful for any person (other than a national

securities exchange or a national securities association

registered pursuant to section 78o-3(a) of this title) to

constitute, maintain, or provide a marketplace or facilities for

bringing together purchasers and sellers of security future

products or to otherwise perform with respect to security future

products the functions commonly performed by a stock exchange as

that term is generally understood, unless a national securities

association registered pursuant to section 78o-3(a) of this title

or a national securities exchange of which such person is a

member -

(A) has in place procedures for coordinated surveillance

among such person, the market trading the securities underlying

the security future products, and other markets trading related

securities to detect manipulation and insider trading;

(B) has rules to require audit trails necessary or

appropriate to facilitate the coordinated surveillance required

in subparagraph (A); and

(C) has rules to require such person to coordinate trading

halts with markets trading the securities underlying the

security future products and other markets trading related

securities.

(6) Deferral of options on security futures trading

No person shall offer to enter into, enter into, or confirm the

execution of any put, call, straddle, option, or privilege on a

security future, except that, after 3 years after December 21,

2000, the Commission and the Commodity Futures Trading Commission

may by order jointly determine to permit trading of puts, calls,

straddles, options, or privileges on any security future

authorized to be traded under the provisions of this chapter and

the Commodity Exchange Act (7 U.S.C. 1 et seq.).

(7) Deferral of linked and coordinated clearing

(A) Notwithstanding paragraph (2), until the compliance date, a

national securities exchange or national securities association

registered pursuant to section 78o-3(a) of this title may trade a

security futures product that does not -

(i) conform with any listing standard promulgated to meet the

requirement specified in subparagraph (E) of paragraph (3); or

(ii) meet the criterion specified in section

2(a)(1)(D)(i)(IV) of the Commodity Exchange Act (7 U.S.C.

2(a)(1)(D)(i)(IV)).

(B) The Commission and the Commodity Futures Trading Commission

shall jointly publish in the Federal Register a notice of the

compliance date no later than 165 days before the compliance

date.

(C) For purposes of this paragraph, the term ''compliance

date'' means the later of -

(i) 180 days after the end of the first full calendar month

period in which the average aggregate comparable share volume

for all security futures products based on single equity

securities traded on all national securities exchanges, any

national securities associations registered pursuant to section

78o-3(a) of this title, and all other persons equals or exceeds

10 percent of the average aggregate comparable share volume of

options on single equity securities traded on all national

securities exchanges and any national securities associations

registered pursuant to section 78o-3(a) of this title; or

(ii) 2 years after the date on which trading in any security

futures product commences under this chapter.

(i) Rules to avoid duplicative regulation of dual registrants

Consistent with this chapter, each national securities exchange

registered pursuant to subsection (a) of this section shall issue

such rules as are necessary to avoid duplicative or conflicting

rules applicable to any broker or dealer registered with the

Commission pursuant to section 78o(b) of this title (except

paragraph (11) thereof), that is also registered with the Commodity

Futures Trading Commission pursuant to section 4f(a) of the

Commodity Exchange Act (7 U.S.C. 6f(a)) (except paragraph (2)

thereof), with respect to the application of -

(1) rules of such national securities exchange of the type

specified in section 78o(c)(3)(B) of this title involving

security futures products; and

(2) similar rules of national securities exchanges registered

pursuant to subsection (g) of this section and national

securities associations registered pursuant to section 78o-3(k)

of this title involving security futures products.

(j) Procedures and rules for security future products

A national securities exchange registered pursuant to subsection

(a) of this section shall implement the procedures specified in

subsection (h)(5)(A) of this section and adopt the rules specified

in subparagraphs (B) and (C) of subsection (h)(5) of this section

not later than 8 months after the date of receipt of a request from

an alternative trading system for such implementation and rules.

(k) Rules relating to security futures products traded on foreign

boards of trade

(1) To the extent necessary or appropriate in the public

interest, to promote fair competition, and consistent with the

promotion of market efficiency, innovation, and expansion of

investment opportunities, the protection of investors, and the

maintenance of fair and orderly markets, the Commission and the

Commodity Futures Trading Commission shall jointly issue such

rules, regulations, or orders as are necessary and appropriate to

permit the offer and sale of a security futures product traded on

or subject to the rules of a foreign board of trade to United

States persons.

(2) The rules, regulations, or orders adopted under paragraph (1)

shall take into account, as appropriate, the nature and size of the

markets that the securities underlying the security futures product

reflect.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 6, 48 Stat. 885; Pub. L.

94-29, Sec. 4, June 4, 1975, 89 Stat. 104; Pub. L. 100-181, title

III, Sec. 309-312, Dec. 4, 1987, 101 Stat. 1255; Pub. L. 103-202,

title III, Sec. 303(b), Dec. 17, 1993, 107 Stat. 2365; Pub. L.

106-554, Sec. 1(a)(5) (title II, Sec. 202(a), 206(a), (i), (k)(2),

(l)), Dec. 21, 2000, 114 Stat. 2763, 2763A-416, 2763A-426,

2763A-433, 2763A-434.)

-REFTEXT-

REFERENCES IN TEXT

This chapter, referred to in subsecs. (b) to (e), (g)(4)(A),

(h)(3)(G), (7)(C)(ii), and (i), was in the original ''this

title''. This chapter, referred to in subsec. (h)(6), was in the

original ''this Act''. See References in Text note set out under

section 78a of this title.

The Commodity Exchange Act, referred to in subsecs. (g)(1)(A) and

(h)(6), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended,

which is classified generally to chapter 1 (Sec. 1 et seq.) of

Title 7, Agriculture. For complete classification of this Act to

the Code, see section 1 of Title 7 and Tables.

-MISC2-

AMENDMENTS

2000 - Subsec. (g). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

202(a)), added subsec. (g).

Subsec. (h). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

206(a)), added subsec. (h).

Subsec. (i). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

206(i)), added subsec. (i).

Subsec. (j). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

206(k)(2)), added subsec. (j).

Subsec. (k). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

206(l)), added subsec. (k).

1993 - Subsec. (b)(9). Pub. L. 103-202 added par. (9).

1987 - Subsec. (c)(2). Pub. L. 100-181, Sec. 309, substituted

''protection of investors shall'' for ''protection shall''.

Subsec. (c)(3)(A). Pub. L. 100-181, Sec. 310, substituted

''associated'' for ''association''.

Subsec. (c)(4). Pub. L. 100-181, Sec. 311, substituted ''may

limit (A)'' for ''may (A) limit''.

Subsec. (e)(1). Pub. L. 100-181, Sec. 312(1), substituted

''paragraph (3) of this subsection'' for ''paragraph (4) of this

section''.

Subsec. (e)(3), (4). Pub. L. 100-181, Sec. 312(2), (3),

redesignated par. (4) as (3) and, in subpar. (E), substituted

''fixing'' for ''fixes'' in introductory provisions, ''subparagraph

(A) of this paragraph'' for ''paragraph (4)(A) of this subsection''

in cl. (1), and ''subparagraph (B) of this paragraph'' for

''paragraph (4)(B) of this subsection'' in cl. (2), and struck out

former par. (3) which read as follows: ''Until December 31, 1976,

the Commission, on a regular basis, shall file with the Speaker of

the House and the President of the Senate information concerning

the effect on the public interest, protection of investors, and

maintenance of fair and orderly markets of the absence of any

schedule or fixed rates of commissions, allowances, discounts, or

other fees to be charged by members of any national securities

exchange for effecting transactions on such exchange.''

1975 - Pub. L. 94-29 restructured the entire section and, in

addition, authorized the Commission to require an exchange to file

such documents and information as it deems necessary or appropriate

in the public interest or for the protection of investors and to

prescribe the form and substance of an exchange's application for

registration, expanded to eight the number of explicit statutory

requirements that must be satisfied before an exchange may be

registered as a national securities exchange, set forth the

authority of a national securities exchange to admit or deny

persons membership or association with members, prescribed exchange

procedures for instituting disciplinary actions, denying

membership, and summarily suspending members or persons associated

with members, specified the authority of national securities

exchanges to impose schedules or fix rates of commissions,

allowances, discounts, or other fees to be charged by its members

for transacting business on the exchange, and empowered the

Commission to regulate any broker or dealer who effects

transactions on an exchange on a regular basis but who is not a

member of that exchange and any person who effects transactions on

an exchange without the services of another person acting as

broker.

EFFECTIVE DATE OF 1993 AMENDMENT

Section 304 of title III of Pub. L. 103-202 provided that:

''(a) Effective Date. -

''(1) In general. - The amendments made by section 303

(amending this section and section 78o-3 of this title) shall

become effective 12 months after the date of enactment of this

Act (Dec. 17, 1993).

''(2) Rulemaking authority. - Notwithstanding paragraph (1),

the authority of the Securities and Exchange Commission, a

registered securities association, and a national securities

exchange to commence rulemaking proceedings for the purpose of

issuing rules pursuant to the amendments made by section 303 is

effective on the date of enactment of this Act.

''(3) Review of filings prior to effective date. - Prior to the

effective date of regulations promulgated pursuant to this title

(amending this section and sections 78n and 78o-3 of this title

and enacting provisions set out as notes under sections 78a and

78n of this title), the Securities and Exchange Commission shall

continue to review and declare effective registration statements

and amendments thereto relating to limited partnership rollup

transactions in accordance with applicable regulations then in

effect.

''(b) Effect on Existing Authority. - The amendments made by this

title (amending this section and sections 78n and 78o-3 of this

title) shall not limit the authority of the Securities and Exchange

Commission, a registered securities association, or a national

securities exchange under any provision of the Securities Exchange

Act of 1934 (15 U.S.C. 78a et seq.), or preclude the Commission or

such association or exchange from imposing, under any other such

provision, a remedy or procedure required to be imposed under such

amendments.''

EFFECTIVE DATE OF 1975 AMENDMENT

Amendment by Pub. L. 94-29 effective June 4, 1975, except for

amendment of subsecs. (a) through (d) by Pub. L. 94-29 to be

effective 180 days after June 4, 1975, with provisions of subsecs.

(b)(2) and (c)(6), as amended by Pub. L. 94-29, or rules or

regulations thereunder, not to apply in a way so as to deprive any

person of membership in any national securities exchange (or its

successor) of which such person was, on June 4, 1975, a member or a

member firm as defined in the constitution of such exchange, or so

as to deny membership in any such exchange (or its successor) to a

natural person who is or becomes associated with such member or

member firm, see section 31(a) of Pub. L. 94-29, set out as a note

under section 78b of this title.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of Securities and Exchange Commission,

with certain exceptions, to Chairman of such Commission, see Reorg.

Plan No. 10 of 1950, Sec. 1, 2, eff. May 24, 1950, 15 F.R. 3175,

64 Stat. 1265, set out under section 78d of this title.

-MISC5-

CHANGES IN ORGANIZATION AND RULES OF NATIONAL SECURITIES EXCHANGES

AND REGISTERED SECURITIES ASSOCIATIONS

Section 31(b) of Pub. L. 94-29 provided that: ''If it appears to

the Commission at any time within one year of the effective date of

any amendment made by this Act (see Short Title of 1975 Amendment

note under section 78a of this title) to the Securities Exchange

Act of 1934 that the organization or rules of any national

securities exchange or registered securities association registered

with the Commission on the date of enactment of this Act (June 4,

1975) do not comply with such Act as amended, the Commission shall

so notify such exchange or association in writing, specifying the

respects in which the exchange or association is not in compliance

with such Act. On and after the one hundred eightieth day following

the date of receipt of such notice by a national securities

exchange or registered securities association, the Commission,

without regard to the provisions of section 19(h) of the Securities

Exchange Act of 1934 (section 78s(h) of this title), as amended by

this Act, is authorized by order, to suspend the registration of

any such exchange or association or impose limitations on the

activities, functions, and operations of any such exchange or

association, if the Commission finds, after notice and opportunity

for hearing, that the organization or rules of such exchange or

association do not comply with such Act. Any such suspension or

limitation shall continue in effect until the Commission, by order,

declares that such exchange or association is in compliance with

such requirements.''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 78c, 78e, 78g, 78k-1,

78o, 78o-3, 78o-5, 78q, 78q-1, 78s, 78u, 78y, 78hh, 80a-2, 80b-2 of

this title; title 5 section 8477; title 7 sections 2, 7a-2; title

29 section 1002.

-CITE-

15 USC Sec. 78g 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78g. Margin requirements

-STATUTE-

(a) Rules and regulations for extension of credit; standard for

initial extension; undermargined accounts

For the purpose of preventing the excessive use of credit for the

purchase or carrying of securities, the Board of Governors of the

Federal Reserve System shall, prior to October 1, 1934, and from

time to time thereafter, prescribe rules and regulations with

respect to the amount of credit that may be initially extended and

subsequently maintained on any security (other than an exempted

security or a security futures product). For the initial extension

of credit, such rules and regulations shall be based upon the

following standard: An amount not greater than whichever is the

higher of -

(1) 55 per centum of the current market price of the security,

or

(2) 100 per centum of the lowest market price of the security

during the preceding thirty-six calendar months, but not more

than 75 per centum of the current market price.

Such rules and regulations may make appropriate provision with

respect to the carrying of undermargined accounts for limited

periods and under specified conditions; the withdrawal of funds or

securities; the substitution or additional purchases of securities;

the transfer of accounts from one lender to another; special or

different margin requirements for delayed deliveries, short sales,

arbitrage transactions, and securities to which paragraph (2) of

this subsection does not apply; the bases and the methods to be

used in calculating loans, and margins and market prices; and

similar administrative adjustments and details. For the purposes

of paragraph (2) of this subsection, until July 1, 1936, the lowest

price at which a security has sold on or after July 1, 1933, shall

be considered as the lowest price at which such security has sold

during the preceding thirty-six calendar months.

(b) Lower and higher margin requirements

Notwithstanding the provisions of subsection (a) of this section,

the Board of Governors of the Federal Reserve System, may, from

time to time, with respect to all or specified securities or

transactions, or classes of securities, or classes of transactions,

by such rules and regulations (1) prescribe such lower margin

requirements for the initial extension or maintenance of credit as

it deems necessary or appropriate for the accommodation of commerce

and industry, having due regard to the general credit situation of

the country, and (2) prescribe such higher margin requirements for

the initial extension or maintenance of credit as it may deem

necessary or appropriate to prevent the excessive use of credit to

finance transactions in securities.

(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), except

as provided in paragraph (2), 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) of this section;

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) Margin regulations

(A) Compliance with margin rules required

It shall be unlawful for any broker, dealer, or member of a

national securities exchange to, directly or indirectly, extend

or maintain credit to or for, or collect margin from any

customer on, any security futures product unless such

activities comply with the regulations -

(i) which the Board shall prescribe pursuant to

subparagraph (B); or

(ii) if the Board determines to delegate the authority to

prescribe such regulations, which the Commission and the

Commodity Futures Trading Commission shall jointly prescribe

pursuant to subparagraph (B).

If the Board delegates the authority to prescribe such

regulations under clause (ii) and the Commission and the

Commodity Futures Trading Commission have not jointly

prescribed such regulations within a reasonable period of time

after the date of such delegation, the Board shall prescribe

such regulations pursuant to subparagraph (B).

(B) Criteria for issuance of rules

The Board shall prescribe, or, if the authority is delegated

pursuant to subparagraph (A)(ii), the Commission and the

Commodity Futures Trading Commission shall jointly prescribe,

such regulations to establish margin requirements, including

the establishment of levels of margin (initial and maintenance)

for security futures products under such terms, and at such

levels, as the Board deems appropriate, or as the Commission

and the Commodity Futures Trading Commission jointly deem

appropriate -

(i) to preserve the financial integrity of markets trading

security futures products;

(ii) to prevent systemic risk;

(iii) to require that -

(I) the margin requirements for a security future product

be consistent with the margin requirements for comparable

option contracts traded on any exchange registered pursuant

to section 78f(a) of this title; and

(II) initial and maintenance margin levels for a security

future product not be lower than the lowest level of

margin, exclusive of premium, required for any comparable

option contract traded on any exchange registered pursuant

to section 78f(a) of this title, other than an option on a

security future;

except that nothing in this subparagraph shall be construed to

prevent a national securities exchange or national securities

association from requiring higher margin levels for a

security future product when it deems such action to be

necessary or appropriate; and

(iv) to ensure that the margin requirements (other than

levels of margin), including the type, form, and use of

collateral for security futures products, are and remain

consistent with the requirements established by the Board,

pursuant to subparagraphs (A) and (B) of paragraph (1).

(3) 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.

(d) Unlawful credit extension in violation of rules and

regulations; exceptions to application of rules, etc.

(1) Prohibition

It shall be unlawful for any person not subject to subsection

(c) of this section 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) of this section 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.

(e) Effective date of this section and rules and regulations

The provisions of this section or the rules and regulations

thereunder shall not apply on or before July 1, 1937, to any loan

or extension of credit made prior to June 6, 1934, or to the

maintenance, renewal, or extension of any such loan or credit,

except to the extent that the Board of Governors of the Federal

Reserve System may by rules and regulations prescribe as necessary

to prevent the circumvention of the provisions of this section or

the rules and regulations thereunder by means of withdrawals of

funds or securities, substitutions of securities, or additional

purchases or by any other device.

(f) Unlawful receipt of credit; exemptions

(1) It is unlawful for any United States person, or any foreign

person controlled by a United States person or acting on behalf of

or in conjunction with such person, to obtain, receive, or enjoy

the beneficial use of a loan or other extension of credit from any

lender (without regard to whether the lender's office or place of

business is in a State or the transaction occurred in whole or in

part within a State) for the purpose of (A) purchasing or carrying

United States securities, or (B) purchasing or carrying within the

United States of any other securities, if, under this section or

rules and regulations prescribed thereunder, the loan or other

credit transaction is prohibited or would be prohibited if it had

been made or the transaction had otherwise occurred in a lender's

office or other place of business in a State.

(2) For the purposes of this subsection -

(A) The term ''United States person'' includes a person which

is organized or exists under the laws of any State or, in the

case of a natural person, a citizen or resident of the United

States; a domestic estate; or a trust in which one or more of the

foregoing persons has a cumulative direct or indirect beneficial

interest in excess of 50 per centum of the value of the trust.

(B) The term ''United States security'' means a security (other

than an exempted security) issued by a person incorporated under

the laws of any State, or whose principal place of business is

within a State.

(C) The term ''foreign person controlled by a United States

person'' includes any noncorporate entity in which United States

persons directly or indirectly have more than a 50 per centum

beneficial interest, and any corporation in which one or more

United States persons, directly or indirectly, own stock

possessing more than 50 per centum of the total combined voting

power of all classes of stock entitled to vote, or more than 50

per centum of the total value of shares of all classes of stock.

(3) The Board of Governors of the Federal Reserve System may, in

its discretion and with due regard for the purposes of this

section, by rule or regulation exempt any class of United States

persons or foreign persons controlled by a United States person

from the application of this subsection.

(g) Effect of bona fide agreement for delayed delivery of mortgage

related security

Subject to such rules and regulations as the Board of Governors

of the Federal Reserve System may adopt in the public interest and

for the protection of investors, no member of a national securities

exchange or broker or dealer shall be deemed to have extended or

maintained credit or arranged for the extension or maintenance of

credit for the purpose of purchasing a security, within the meaning

of this section, by reason of a bona fide agreement for delayed

delivery of a mortgage related security or a small business related

security against full payment of the purchase price thereof upon

such delivery within one hundred and eighty days after the

purchase, or within such shorter period as the Board of Governors

of the Federal Reserve System may prescribe by rule or regulation.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 7, 48 Stat. 886; Aug. 23,

1935, ch. 614, Sec. 203(a), 49 Stat. 704; Pub. L. 90-437, July 29,

1968, 82 Stat. 452; Pub. L. 91-508, title III, Sec. 301(a), Oct.

26, 1970, 84 Stat. 1124; Pub. L. 98-440, title I, Sec. 102, Oct. 3,

1984, 98 Stat. 1690; Pub. L. 103-325, title II, Sec. 203, Sept. 23,

1994, 108 Stat. 2199; Pub. L. 104-290, title I, Sec. 104(a), Oct.

11, 1996, 110 Stat. 3422; Pub. L. 105-353, title III, Sec.

301(b)(5), (6), Nov. 3, 1998, 112 Stat. 3236; Pub. L. 106-554, Sec.

1(a)(5) (title II, Sec. 206(b)), Dec. 21, 2000, 114 Stat. 2763,

2763A-429.)

-MISC1-

AMENDMENTS

2000 - Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

206(b)(1)), inserted ''or a security futures product'' after

''exempted security'' in introductory provisions.

Subsec. (c)(1)(A). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

206(b)(2)), inserted ''except as provided in paragraph (2),'' after

''security),''.

Subsec. (c)(2), (3). Pub. L. 106-554, Sec. 1(a)(5) (title II,

Sec. 206(b)(3), (4)), added par. (2) and redesignated former par.

(2) as (3).

1998 - Subsecs. (a), (b). Pub. L. 105-353, Sec. 301(b)(5),

substituted ''Board of Governors of the Federal Reserve System''

for ''Federal Reserve Board''.

Subsec. (d). Pub. L. 105-353, Sec. 301(b)(6), substituted

''exceptions'' for ''exception'' in heading.

1996 - Subsec. (c). Pub. L. 104-290, Sec. 104(a)(1), amended

heading and text of subsec. (c) generally. Prior to amendment,

text read as follows: ''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 -

''(1) 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 shall prescribe under

subsections (a) and (b) of this section;

''(2) without collateral or on any collateral other than

securities, except in accordance with such rules and regulations

as the Board of Governors of the Federal Reserve System may

prescribe (A) 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 of Governors of the Federal Reserve

System, and (B) 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 paragraph (1) of this

subsection.''

Subsec. (d). Pub. L. 104-290, Sec. 104(a)(2), amended heading and

text of subsec. (d) generally. Prior to amendment, text read as

follows: ''It shall be unlawful for any person not subject to

subsection (c) of this section 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 of Governors of the Federal

Reserve System 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)

of this section and the rules and regulations thereunder. This

subsection and the rules and regulations thereunder shall not apply

(A) to a loan made by a person not in the ordinary course of his

business, (B) to a loan on an exempted security, (C) to a loan to a

dealer to aid in the financing of the distribution of securities to

customers not through the medium of a national securities exchange,

(D) to a loan by a bank on a security other than an equity

security, or (E) to such other loans as the Board of Governors of

the Federal Reserve System shall, by such rules and regulations 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.''

1994 - Subsec. (g). Pub. L. 103-325 inserted ''or a small

business related security'' after ''mortgage related security''.

1984 - Subsec. (g). Pub. L. 98-440 added subsec. (g).

1970 - Subsec. (f). Pub. L. 91-508 added subsec. (f).

1968 - Subsec. (a). Pub. L. 90-437, Sec. 1(1), struck out

''registered on a national securities exchange'' after ''(other

than an exempted security)''.

Subsec. (c). Pub. L. 90-437, Sec. 1(2), struck out ''who

transacts a business in securities through the medium of any such

member'' after ''any broker or dealer'', in par. (1) struck out

''registered on a national securities exchange'' after ''(other

than an exempted security)'', and in par. (2) substituted ''other

than securities'' for ''other than exempted securities and/or

securities registered upon a national securities exchange''.

Subsec. (d). Pub. L. 90-437, Sec. 1(3), struck out ''registered

on a national securities exchange'' after ''the purpose of

purchasing or carrying any security'', and ''registered on national

securities exchanges'' after ''the purpose of purchasing or

carrying securities''.

-CHANGE-

CHANGE OF NAME

Act Aug. 23, 1935, in subsec. (e), substituted ''Board of

Governors of the Federal Reserve System'' for ''Federal Reserve

Board''.

-MISC4-

EFFECTIVE DATE OF 1970 AMENDMENT

Amendment by Pub. L. 91-508 effective on first day of seventh

calendar month which begins after Oct. 26, 1970, except as

otherwise provided in section 401(c) of Pub. L. 91-508, see section

401(a) of Pub. L. 91-508, set out as a note under section 1951 of

Title 12, Banks and Banking.

Section 401(c) of Pub. L. 91-508 provided that: ''The Board of

Governors of the Federal Reserve System may by regulation provide

that the amendment made by title III (amending this section) shall

be effective on any date not earlier than the publication of the

regulation in the Federal Register and not later than the first day

of the thirteenth calendar month which begins after the date of

enactment (Oct. 26, 1970).''

VALIDITY OF RULES AND REGULATIONS

Section 301(b) of Pub. L. 91-508 provided that: ''The amendment

made by subsection (a) of this section (amending this section) does

not affect the continuing validity of any rule or regulation under

section 7 of the Securities Exchange Act of 1934 (this section) in

effect prior to the effective date of the amendment.''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 78c, 78f, 78m, 78o, 78hh,

80a-2, 80a-54 of this title; title 7 section 2; title 31 section

5315.

-CITE-

15 USC Sec. 78h 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78h. Restrictions on borrowing and lending by members,

brokers, and dealers

-STATUTE-

It shall be unlawful for any registered broker or dealer, member

of a national securities exchange, or broker or dealer who

transacts a business in securities through the medium of any member

of a national securities exchange, directly or indirectly -

(a) In contravention of such rules and regulations as the

Commission shall prescribe for the protection of investors to

hypothecate or arrange for the hypothecation of any securities

carried for the account of any customer under circumstances (1)

that will permit the commingling of his securities without his

written consent with the securities of any other customer, (2) that

will permit such securities to be commingled with the securities of

any person other than a bona fide customer, or (3) that will permit

such securities to be hypothecated, or subjected to any lien or

claim of the pledgee, for a sum in excess of the aggregate

indebtedness of such customers in respect of such securities.

(b) To lend or arrange for the lending of any securities carried

for the account of any customer without the written consent of such

customer or in contravention of such rules and regulations as the

Commission shall prescribe for the protection of investors.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 8, 48 Stat. 888; Aug. 23,

1935, ch. 614, Sec. 203(a), 49 Stat. 704; Pub. L. 94-29, Sec. 5,

June 4, 1975, 89 Stat. 109; Pub. L. 98-440, title I, Sec. 103, Oct.

3, 1984, 98 Stat. 1690; Pub. L. 103-325, title II, Sec. 204, Sept.

23, 1994, 108 Stat. 2199; Pub. L. 104-290, title I, Sec. 104(b),

Oct. 11, 1996, 110 Stat. 3423.)

-MISC1-

AMENDMENTS

1996 - Pub. L. 104-290 redesignated subsecs. (b) and (c) as (a)

and (b), respectively, and struck out former subsec. (a) which

related to borrowing in ordinary course of business as broker or

dealer on any security, except exempted security, registered on

national securities exchange.

1994 - Subsec. (a). Pub. L. 103-325 inserted ''or a small

business related security'' after ''mortgage related security'' in

last sentence.

1984 - Subsec. (a). Pub. L. 98-440 inserted provision that no

person shall be deemed to have borrowed within the ordinary course

of business, within the meaning of this subsection, by reason of a

bona fide agreement for delayed delivery of a mortgage related

security under certain conditions.

1975 - Pub. L. 94-29, Sec. 5(1), substituted ''any registered

broker or dealer, member of a national securities exchange, or

broker or dealer who transacts a business in securities through the

medium of any member of a national securities exchange'' for ''any

member of a national securities exchange, or any broker or dealer

who transacts a business in securities through the medium of any

such member'' in provisions preceding subsec. (a).

Subsecs. (b) to (d). Pub. L. 94-29, Sec. 5(2), redesignated

subsecs. (c) and (d) as (b) and (c), respectively, and in subsec.

(c) as so redesignated inserted ''or in contravention of such rules

and regulations as the Commissioner shall prescribe for the

protection of investors'' after ''written consent of such

customer''. Former subsec. (b), which covered the maximum

allowable aggregate indebtedness of brokers, was struck out.

-CHANGE-

CHANGE OF NAME

Act Aug. 23, 1935, substituted ''Board of Governors of the

Federal Reserve System'' for ''Federal Reserve Board''.

-MISC4-

EFFECTIVE DATE OF 1975 AMENDMENT

Amendment by Pub. L. 94-29 effective June 4, 1975, see section

31(a) of Pub. L. 94-29, set out as a note under section 78b of this

title.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of Securities and Exchange Commission,

with certain exceptions, to Chairman of such Commission, see Reorg.

Plan No. 10 of 1950, Sec. 1, 2, eff. May 24, 1950, 15 F.R. 3175,

64 Stat. 1265, set out under section 78d of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 78f, 78o, 78o-3, 78hh of

this title; title 7 section 6d.

-CITE-

15 USC Sec. 78i 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78i. Manipulation of security prices

-STATUTE-

(a) Transactions relating to purchase or sale of security

It shall be unlawful for any person, directly or indirectly, by

the use of the mails or any means or instrumentality of interstate

commerce, or of any facility of any national securities exchange,

or for any member of a national securities exchange -

(1) For the purpose of creating a false or misleading

appearance of active trading in any security registered on a

national securities exchange, or a false or misleading appearance

with respect to the market for any such security, (A) to effect

any transaction in such security which involves no change in the

beneficial ownership thereof, or (B) to enter an order or orders

for the purchase of such security with the knowledge that an

order or orders of substantially the same size, at substantially

the same time, and at substantially the same price, for the sale

of any such security, has been or will be entered by or for the

same or different parties, or (C) to enter any order or orders

for the sale of any such security with the knowledge that an

order or orders of substantially the same size, at substantially

the same time, and at substantially the same price, for the

purchase of such security, has been or will be entered by or for

the same or different parties.

(2) To effect, alone or with one or more other persons, a

series of transactions in any security registered on a national

securities exchange or in connection with any security-based swap

agreement (as defined in section 206B of the Gramm-Leach-Bliley

Act) with respect to such security creating actual or apparent

active trading in such security, or raising or depressing the

price of such security, for the purpose of inducing the purchase

or sale of such security by others.

(3) If a dealer or broker, or other person selling or offering

for sale or purchasing or offering to purchase the security or a

security-based swap agreement (as defined in section 206B of the

Gramm-Leach-Bliley Act) with respect to such security, to induce

the purchase or sale of any security registered on a national

securities exchange or any security-based swap agreement (as

defined in section 206B of the Gramm-Leach-Bliley Act) with

respect to such security by the circulation or dissemination in

the ordinary course of business of information to the effect that

the price of any such security will or is likely to rise or fall

because of market operations of any one or more persons conducted

for the purpose of raising or depressing the price of such

security.

(4) If a dealer or broker, or the person selling or offering

for sale or purchasing or offering to purchase the security or a

security-based swap agreement (as defined in section 206B of the

Gramm-Leach-Bliley Act) with respect to such security, to make,

regarding any security registered on a national securities

exchange or any security-based swap agreement (as defined in

section 206B of the Gramm-Leach-Bliley Act) with respect to such

security, for the purpose of inducing the purchase or sale of

such security or such security-based swap agreement, any

statement which was at the time and in the light of the

circumstances under which it was made, false or misleading with

respect to any material fact, and which he knew or had reasonable

ground to believe was so false or misleading.

(5) For a consideration, received directly or indirectly from a

dealer or broker, or other person selling or offering for sale or

purchasing or offering to purchase the security or a

security-based swap agreement (as defined in section 206B of the

Gramm-Leach-Bliley Act) with respect to such security, to induce

the purchase of any security registered on a national securities

exchange or any security-based swap agreement (as defined in

section 206B of the Gramm-Leach-Bliley Act) with respect to such

security by the circulation or dissemination of information to

the effect that the price of any such security will or is likely

to rise or fall because of the market operations of any one or

more persons conducted for the purpose of raising or depressing

the price of such security.

(6) To effect either alone or with one or more other persons

any series of transactions for the purchase and/or sale of any

security registered on a national securities exchange for the

purpose of pegging, fixing, or stabilizing the price of such

security in contravention of such rules and regulations as the

Commission may prescribe as necessary or appropriate in the

public interest or for the protection of investors.

(b) Transactions relating to puts, calls, straddles, or options

It shall be unlawful for any person to effect, by use of any

facility of a national securities exchange, in contravention of

such rules and regulations as the Commission may prescribe as

necessary or appropriate in the public interest or for the

protection of investors -

(1) any transaction in connection with any security whereby any

party to such transaction acquires (A) any put, call, straddle,

or other option or privilege of buying the security from or

selling the security to another without being bound to do so; or

(B) any security futures product on the security; or

(2) any transaction in connection with any security with

relation to which he has, directly or indirectly, any interest in

any (A) such put, call, straddle, option, or privilege; or (B)

such security futures product; or

(3) any transaction in any security for the account of any

person who he has reason to believe has, and who actually has,

directly or indirectly, any interest in any (A) such put, call,

straddle, option, or privilege; or (B) such security futures

product with relation to such security.

(c) Endorsement or guarantee of puts, calls, straddles, or options

It shall be unlawful for any member of a national securities

exchange directly or indirectly to endorse or guarantee the

performance of any put, call, straddle, option, or privilege in

relation to any security registered on a national securities

exchange, in contravention of such rules and regulations as the

Commission may prescribe as necessary or appropriate in the public

interest or for the protection of investors.

(d) Registered warrant, right, or convertible security not included

in ''put'', ''call'', ''straddle'', or ''option''

The terms ''put'', ''call'', ''straddle'', ''option'', or

''privilege'' as used in this section shall not include any

registered warrant, right, or convertible security.

(e) Persons liable; suits at law or in equity

Any person who willfully participates in any act or transaction

in violation of subsections (a), (b), or (c) of this section, shall

be liable to any person who shall purchase or sell any security at

a price which was affected by such act or transaction, and the

person so injured may sue in law or in equity in any court of

competent jurisdiction to recover the damages sustained as a result

of any such act or transaction. In any such suit the court may, in

its discretion, require an undertaking for the payment of the costs

of such suit, and assess reasonable costs, including reasonable

attorneys' fees, against either party litigant. Every person who

becomes liable to make any payment under this subsection may

recover contribution as in cases of contract from any person who,

if joined in the original suit, would have been liable to make the

same payment. No action shall be maintained to enforce any

liability created under this section, unless brought within one

year after the discovery of the facts constituting the violation

and within three years after such violation.

(f) Subsection (a) not applicable to exempted securities

The provisions of subsection (a) of this section shall not apply

to an exempted security.

(g) Foreign currencies and security futures products

(1) Notwithstanding any other provision of law, the Commission

shall have the authority to regulate the trading of any put, call,

straddle, option, or privilege on any security, certificate of

deposit, or group or index of securities (including any interest

therein or based on the value thereof), or any put, call, straddle,

option, or privilege entered into on a national securities exchange

relating to foreign currency (but not, with respect to any of the

foregoing, an option on a contract for future delivery other than a

security futures product).

(2) Notwithstanding the Commodity Exchange Act (7 U.S.C. 1 et

seq.), the Commission shall have the authority to regulate the

trading of any security futures product to the extent provided in

the securities laws.

(h) Limitations on practices that affect market volatility

It shall be unlawful for any person, by the use of the mails or

any means or instrumentality of interstate commerce or of any

facility of any national securities exchange, to use or employ any

act or practice in connection with the purchase or sale of any

equity security in contravention of such rules or regulations as

the Commission may adopt, consistent with the public interest, the

protection of investors, and the maintenance of fair and orderly

markets -

(1) to prescribe means reasonably designed to prevent

manipulation of price levels of the equity securities market or a

substantial segment thereof; and

(2) to prohibit or constrain, during periods of extraordinary

market volatility, any trading practice in connection with the

purchase or sale of equity securities that the Commission

determines (A) has previously contributed significantly to

extraordinary levels of volatility that have threatened the

maintenance of fair and orderly markets; and (B) is reasonably

certain to engender such levels of volatility if not prohibited

or constrained.

In adopting rules under paragraph (2), the Commission shall,

consistent with the purposes of this subsection, minimize the

impact on the normal operations of the market and a natural

person's freedom to buy or sell any equity security.

(i) Limitation on Commission authority

The authority of the Commission under this section with respect

to security-based swap agreements (as defined in section 206B of

the Gramm-Leach-Bliley Act) shall be subject to the restrictions

and limitations of section 78c-1(b) of this title.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 9, 48 Stat. 889; Pub. L.

97-303, Sec. 3, Oct. 13, 1982, 96 Stat. 1409; Pub. L. 101-432, Sec.

6(a), Oct. 16, 1990, 104 Stat. 975; Pub. L. 106-554, Sec. 1(a)(5)

(title II, Sec. 205(a)(1), (2), title III, Sec. 303(b), (c)), Dec.

21, 2000, 114 Stat. 2763, 2763A-425, 2763A-426, 2763A-453,

2763A-454.)

-REFTEXT-

REFERENCES IN TEXT

Section 206B of the Gramm-Leach-Bliley Act, referred to in

subsecs. (a)(2) to (5) and (i), is section 206B of Pub. L. 106-102,

which is set out in a note under section 78c of this title.

The Commodity Exchange Act, referred to in subsec. (g)(2), is act

Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended, which is

classified generally to chapter 1 (Sec. 1 et seq.) of Title 7,

Agriculture. For complete classification of this Act to the Code,

see section 1 of Title 7 and Tables.

-MISC2-

AMENDMENTS

2000 - Subsec. (a)(2) to (5). Pub. L. 106-554, Sec. 1(a)(5)

(title III, Sec. 303(b)), amended pars. (2) to (5) generally.

Prior to amendment, pars. (2) to (5) read as follows:

''(2) To effect, alone or with one or more other persons, a

series of transactions in any security registered on a national

securities exchange creating actual or apparent active trading in

such security or raising or depressing the price of such security,

for the purpose of inducing the purchase or sale of such security

by others.

''(3) If a dealer or broker, or other person selling or offering

for sale or purchasing or offering to purchase the security, to

induce the purchase or sale of any security registered on a

national securities exchange by the circulation or dissemination in

the ordinary course of business of information to the effect that

the price of any such security will or is likely to rise or fall

because of market operations of any one or more persons conducted

for the purpose of raising or depressing the prices of such

security.

''(4) If a dealer or broker, or other person selling or offering

for sale or purchasing or offering to purchase the security, to

make, regarding any security registered on a national securities

exchange, for the purpose of inducing the purchase or sale of such

security, any statement which was at the time and in the light of

the circumstances under which it was made, false or misleading with

respect to any material fact, and which he knew or had reasonable

ground to believe was so false or misleading.

''(5) For a consideration, received directly or indirectly from a

dealer or broker, or other person selling or offering for sale or

purchasing or offering to purchase the security, to induce the

purchase or sale of any security registered on a national

securities exchange by the circulation or dissemination of

information to the effect that the price of any such security will

or is likely to rise or fall because of the market operations of

any one or more persons conducted for the purpose of raising or

depressing the price of such security.''

Subsec. (b)(1). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

205(a)(1)(A)), inserted ''(A)'' after ''acquires'' and substituted

''; or (B) any security futures product on the security; or'' for

''; or''.

Subsec. (b)(2). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

205(a)(1)(B)), inserted ''(A)'' after ''interest in any'' and

substituted ''; or (B) such security futures product; or'' for '';

or''.

Subsec. (b)(3). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

205(a)(1)(C)), inserted ''(A)'' after ''interest in any'' and '';

or (B) such security futures product'' after ''privilege''.

Subsec. (g). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

205(a)(2)), designated existing provisions as par. (1), inserted

''other than a security futures product'' after ''future

delivery'', and added par. (2).

Subsec. (i). Pub. L. 106-554, Sec. 1(a)(5) (title III, Sec.

303(c)), added subsec. (i).

1990 - Subsec. (h). Pub. L. 101-432 added subsec. (h).

1982 - Subsec. (f). Pub. L. 97-303, Sec. 3(1), substituted ''The

provisions of subsection (a) of this section shall not apply'' for

''The provisions of this section shall not apply''.

Subsec. (g). Pub. L. 97-303, Sec. 3(2), added subsec. (g).

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of Securities and Exchange Commission,

with certain exceptions, to Chairman of such Commission, see Reorg.

Plan No. 10 of 1950, Sec. 1, 2, eff. May 24, 1950, 15 F.R. 3175,

64 Stat. 1265, set out under section 78d of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 78j, 78y, 78hh of this

title.

-CITE-

15 USC Sec. 78j 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78j. Manipulative and deceptive devices

-STATUTE-

It shall be unlawful for any person, directly or indirectly, by

the use of any means or instrumentality of interstate commerce or

of the mails, or of any facility of any national securities

exchange -

(a)(1) To effect a short sale, or to use or employ any

stop-loss order in connection with the purchase or sale, of any

security registered on a national securities exchange, in

contravention of such rules and regulations as the Commission may

prescribe as necessary or appropriate in the public interest or

for the protection of investors.

(2) Paragraph (1) of this subsection shall not apply to

security futures products.

(b) To use or employ, in connection with the purchase or sale

of any security registered on a national securities exchange or

any security not so registered, or any securities-based swap

agreement (as defined in section 206B of the Gramm-Leach-Bliley

Act), any manipulative or deceptive device or contrivance in

contravention of such rules and regulations as the Commission may

prescribe as necessary or appropriate in the public interest or

for the protection of investors.

Rules promulgated under subsection (b) of this section that

prohibit fraud, manipulation, or insider trading (but not rules

imposing or specifying reporting or recordkeeping requirements,

procedures, or standards as prophylactic measures against fraud,

manipulation, or insider trading), and judicial precedents decided

under subsection (b) of this section and rules promulgated

thereunder that prohibit fraud, manipulation, or insider trading,

shall apply to security-based swap agreements (as defined in

section 206B of the Gramm-Leach-Bliley Act) to the same extent as

they apply to securities. Judicial precedents decided under

section 77q(a) of this title and sections 78i, 78o, 78p, 78t, and

78u-1 of this title, and judicial precedents decided under

applicable rules promulgated under such sections, shall apply to

security-based swap agreements (as defined in section 206B of the

Gramm-Leach-Bliley Act) to the same extent as they apply to

securities.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 10, 48 Stat. 891; Pub. L.

106-554, Sec. 1(a)(5) (title II, Sec. 206(g), title III, Sec.

303(d)), Dec. 21, 2000, 114 Stat. 2763, 2763A-432, 2763A-454.)

-REFTEXT-

REFERENCES IN TEXT

Section 206B of the Gramm-Leach-Bliley Act, referred to in text,

is section 206B of Pub. L. 106-102, which is set out in a note

under section 78c of this title.

-MISC2-

AMENDMENTS

2000 - Pub. L. 106-554, Sec. 1(a)(5) (title III, Sec. 303(d)(2)),

inserted concluding provisions at end.

Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

206(g)), designated existing provisions as par. (1) and added par.

(2).

Subsec. (b). Pub. L. 106-554, Sec. 1(a)(5) (title III, Sec.

303(d)(1)), inserted ''or any securities-based swap agreement (as

defined in section 206B of the Gramm-Leach-Bliley Act),'' before

''any manipulative or deceptive device''.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of Securities and Exchange Commission,

with certain exceptions, to Chairman of such Commission, see Reorg.

Plan No. 10 of 1950, Sec. 1, 2, eff. May 24, 1950, 15 F.R. 3175,

64 Stat. 1265, set out under section 78d of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 78k, 78u, 78u-3, 78aa-1,

78hh, 3904 of this title; title 42 section 9675.

-CITE-

15 USC Sec. 78j-1 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78j-1. Audit requirements

-STATUTE-

(a) In general

Each audit required pursuant to this chapter of the financial

statements of an issuer by a registered public accounting firm

shall include, in accordance with generally accepted auditing

standards, as may be modified or supplemented from time to time by

the Commission -

(1) procedures designed to provide reasonable assurance of

detecting illegal acts that would have a direct and material

effect on the determination of financial statement amounts;

(2) procedures designed to identify related party transactions

that are material to the financial statements or otherwise

require disclosure therein; and

(3) an evaluation of whether there is substantial doubt about

the ability of the issuer to continue as a going concern during

the ensuing fiscal year.

(b) Required response to audit discoveries

(1) Investigation and report to management

If, in the course of conducting an audit pursuant to this

chapter to which subsection (a) of this section applies, the

registered public accounting firm detects or otherwise becomes

aware of information indicating that an illegal act (whether or

not perceived to have a material effect on the financial

statements of the issuer) has or may have occurred, the firm

shall, in accordance with generally accepted auditing standards,

as may be modified or supplemented from time to time by the

Commission -

(A)(i) determine whether it is likely that an illegal act has

occurred; and

(ii) if so, determine and consider the possible effect of the

illegal act on the financial statements of the issuer,

including any contingent monetary effects, such as fines,

penalties, and damages; and

(B) as soon as practicable, inform the appropriate level of

the management of the issuer and assure that the audit

committee of the issuer, or the board of directors of the

issuer in the absence of such a committee, is adequately

informed with respect to illegal acts that have been detected

or have otherwise come to the attention of such firm in the

course of the audit, unless the illegal act is clearly

inconsequential.

(2) Response to failure to take remedial action

If, after determining that the audit committee of the board of

directors of the issuer, or the board of directors of the issuer

in the absence of an audit committee, is adequately informed with

respect to illegal acts that have been detected or have otherwise

come to the attention of the firm in the course of the audit of

such firm, the registered public accounting firm concludes that -

(A) the illegal act has a material effect on the financial

statements of the issuer;

(B) the senior management has not taken, and the board of

directors has not caused senior management to take, timely and

appropriate remedial actions with respect to the illegal act;

and

(C) the failure to take remedial action is reasonably

expected to warrant departure from a standard report of the

auditor, when made, or warrant resignation from the audit

engagement;

the registered public accounting firm shall, as soon as

practicable, directly report its conclusions to the board of

directors.

(3) Notice to Commission; response to failure to notify

An issuer whose board of directors receives a report under

paragraph (2) shall inform the Commission by notice not later

than 1 business day after the receipt of such report and shall

furnish the registered public accounting firm making such report

with a copy of the notice furnished to the Commission. If the

registered public accounting firm fails to receive a copy of the

notice before the expiration of the required 1-business-day

period, the registered public accounting firm shall -

(A) resign from the engagement; or

(B) furnish to the Commission a copy of its report (or the

documentation of any oral report given) not later than 1

business day following such failure to receive notice.

(4) Report after resignation

If a registered public accounting firm resigns from an

engagement under paragraph (3)(A), the firm shall, not later than

1 business day following the failure by the issuer to notify the

Commission under paragraph (3), furnish to the Commission a copy

of the report of the firm (or the documentation of any oral

report given).

(c) Auditor liability limitation

No registered public accounting firm shall be liable in a private

action for any finding, conclusion, or statement expressed in a

report made pursuant to paragraph (3) or (4) of subsection (b) of

this section, including any rule promulgated pursuant thereto.

(d) Civil penalties in cease-and-desist proceedings

If the Commission finds, after notice and opportunity for hearing

in a proceeding instituted pursuant to section 78u-3 of this title,

that a registered public accounting firm has willfully violated

paragraph (3) or (4) of subsection (b) of this section, the

Commission may, in addition to entering an order under section

78u-3 of this title, impose a civil penalty against the registered

public accounting firm and any other person that the Commission

finds was a cause of such violation. The determination to impose a

civil penalty and the amount of the penalty shall be governed by

the standards set forth in section 78u-2 of this title.

(e) Preservation of existing authority

Except as provided in subsection (d) of this section, nothing in

this section shall be held to limit or otherwise affect the

authority of the Commission under this chapter.

(f) Definitions

As used in this section, the term ''illegal act'' means an act or

omission that violates any law, or any rule or regulation having

the force of law. As used in this section, the term ''issuer''

means an issuer (as defined in section 78c of this title), the

securities of which are registered under section 78l of this title,

or that is required to file reports pursuant to section 78o(d) of

this title, or that files or has filed a registration statement

that has not yet become effective under the Securities Act of 1933

(15 U.S.C. 77a et seq.), and that it has not withdrawn.

(g) Prohibited activities

Except as provided in subsection (h) of this section, it shall be

unlawful for a registered public accounting firm (and any

associated person of that firm, to the extent determined

appropriate by the Commission) that performs for any issuer any

audit required by this chapter or the rules of the Commission under

this chapter or, beginning 180 days after the date of commencement

of the operations of the Public Company Accounting Oversight Board

established under section 7211 of this title (in this section

referred to as the ''Board''), the rules of the Board, to provide

to that issuer, contemporaneously with the audit, any non-audit

service, including -

(1) bookkeeping or other services related to the accounting

records or financial statements of the audit client;

(2) financial information systems design and implementation;

(3) appraisal or valuation services, fairness opinions, or

contribution-in-kind reports;

(4) actuarial services;

(5) internal audit outsourcing services;

(6) management functions or human resources;

(7) broker or dealer, investment adviser, or investment banking

services;

(8) legal services and expert services unrelated to the audit;

and

(9) any other service that the Board determines, by regulation,

is impermissible.

(h) Preapproval required for non-audit services

A registered public accounting firm may engage in any non-audit

service, including tax services, that is not described in any of

paragraphs (1) through (9) of subsection (g) of this section for an

audit client, only if the activity is approved in advance by the

audit committee of the issuer, in accordance with subsection (i) of

this section.

(i) Preapproval requirements

(1) In general

(A) Audit committee action

All auditing services (which may entail providing comfort

letters in connection with securities underwritings or

statutory audits required for insurance companies for purposes

of State law) and non-audit services, other than as provided in

subparagraph (B), provided to an issuer by the auditor of the

issuer shall be preapproved by the audit committee of the

issuer.

(B) De minimus exception

The preapproval requirement under subparagraph (A) is waived

with respect to the provision of non-audit services for an

issuer, if -

(i) the aggregate amount of all such non-audit services

provided to the issuer constitutes not more than 5 percent of

the total amount of revenues paid by the issuer to its

auditor during the fiscal year in which the nonaudit services

are provided;

(ii) such services were not recognized by the issuer at the

time of the engagement to be non-audit services; and

(iii) such services are promptly brought to the attention

of the audit committee of the issuer and approved prior to

the completion of the audit by the audit committee or by 1 or

more members of the audit committee who are members of the

board of directors to whom authority to grant such approvals

has been delegated by the audit committee.

(2) Disclosure to investors

Approval by an audit committee of an issuer under this

subsection of a non-audit service to be performed by the auditor

of the issuer shall be disclosed to investors in periodic reports

required by section 78m(a) of this title.

(3) Delegation authority

The audit committee of an issuer may delegate to 1 or more

designated members of the audit committee who are independent

directors of the board of directors, the authority to grant

preapprovals required by this subsection. The decisions of any

member to whom authority is delegated under this paragraph to

preapprove an activity under this subsection shall be presented

to the full audit committee at each of its scheduled meetings.

(4) Approval of audit services for other purposes

In carrying out its duties under subsection (m)(2) of this

section, if the audit committee of an issuer approves an audit

service within the scope of the engagement of the auditor, such

audit service shall be deemed to have been preapproved for

purposes of this subsection.

(j) Audit partner rotation

It shall be unlawful for a registered public accounting firm to

provide audit services to an issuer if the lead (or coordinating)

audit partner (having primary responsibility for the audit), or the

audit partner responsible for reviewing the audit, has performed

audit services for that issuer in each of the 5 previous fiscal

years of that issuer.

(k) Reports to audit committees

Each registered public accounting firm that performs for any

issuer any audit required by this chapter shall timely report to

the audit committee of the issuer -

(1) all critical accounting policies and practices to be used;

(2) all alternative treatments of financial information within

generally accepted accounting principles that have been discussed

with management officials of the issuer, ramifications of the use

of such alternative disclosures and treatments, and the treatment

preferred by the registered public accounting firm; and

(3) other material written communications between the

registered public accounting firm and the management of the

issuer, such as any management letter or schedule of unadjusted

differences.

(l) Conflicts of interest

It shall be unlawful for a registered public accounting firm to

perform for an issuer any audit service required by this chapter,

if a chief executive officer, controller, chief financial officer,

chief accounting officer, or any person serving in an equivalent

position for the issuer, was employed by that registered

independent public accounting firm and participated in any capacity

in the audit of that issuer during the 1-year period preceding the

date of the initiation of the audit.

(m) Standards relating to audit committees

(1) Commission rules

(A) In general

Effective not later than 270 days after July 30, 2002, the

Commission shall, by rule, direct the national securities

exchanges and national securities associations to prohibit the

listing of any security of an issuer that is not in compliance

with the requirements of any portion of paragraphs (2) through

(6).

(B) Opportunity to cure defects

The rules of the Commission under subparagraph (A) shall

provide for appropriate procedures for an issuer to have an

opportunity to cure any defects that would be the basis for a

prohibition under subparagraph (A), before the imposition of

such prohibition.

(2) Responsibilities relating to registered public accounting

firms

The audit committee of each issuer, in its capacity as a

committee of the board of directors, shall be directly

responsible for the appointment, compensation, and oversight of

the work of any registered public accounting firm employed by

that issuer (including resolution of disagreements between

management and the auditor regarding financial reporting) for the

purpose of preparing or issuing an audit report or related work,

and each such registered public accounting firm shall report

directly to the audit committee.

(3) Independence

(A) In general

Each member of the audit committee of the issuer shall be a

member of the board of directors of the issuer, and shall

otherwise be independent.

(B) Criteria

In order to be considered to be independent for purposes of

this paragraph, a member of an audit committee of an issuer may

not, other than in his or her capacity as a member of the audit

committee, the board of directors, or any other board committee

-

(i) accept any consulting, advisory, or other compensatory

fee from the issuer; or

(ii) be an affiliated person of the issuer or any

subsidiary thereof.

(C) Exemption authority

The Commission may exempt from the requirements of

subparagraph (B) a particular relationship with respect to

audit committee members, as the Commission determines

appropriate in light of the circumstances.

(4) Complaints

Each audit committee shall establish procedures for -

(A) the receipt, retention, and treatment of complaints

received by the issuer regarding accounting, internal

accounting controls, or auditing matters; and

(B) the confidential, anonymous submission by employees of

the issuer of concerns regarding questionable accounting or

auditing matters.

(5) Authority to engage advisers

Each audit committee shall have the authority to engage

independent counsel and other advisers, as it determines

necessary to carry out its duties.

(6) Funding

Each issuer shall provide for appropriate funding, as

determined by the audit committee, in its capacity as a committee

of the board of directors, for payment of compensation -

(A) to the registered public accounting firm employed by the

issuer for the purpose of rendering or issuing an audit report;

and

(B) to any advisers employed by the audit committee under

paragraph (5).

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 10A, as added Pub. L. 104-67,

title III, Sec. 301(a), Dec. 22, 1995, 109 Stat. 762; amended Pub.

L. 107-204, title II, Sec. 201(a), 202-204, 205(b), (d), 206, title

III, Sec. 301, July 30, 2002, 116 Stat. 771-775.)

-REFTEXT-

REFERENCES IN TEXT

This chapter, referred to in subsecs. (a), (b)(1), (e), (g), (k),

and (l), was in the original ''this title''. See References in

Text note set out under section 78a of this title.

The Securities Act of 1933, referred to in subsec. (f), is title

I of act May 27, 1933, ch. 38, 48 Stat. 74, as amended, which is

classified generally to subchapter I (Sec. 77a et seq.) of chapter

2A of this title. For complete classification of this Act to the

Code, see section 77a of this title and Tables.

-MISC2-

AMENDMENTS

2002 - Subsec. (a). Pub. L. 107-204, Sec. 205(b)(1), substituted

''a registered public accounting firm'' for ''an independent public

accountant'' in introductory provisions.

Subsec. (b)(1). Pub. L. 107-204, Sec. 205(b)(2), (4)(A), in

introductory provisions, substituted ''the registered public

accounting firm'' for ''the independent public accountant'' and

''the firm'' for ''the accountant''.

Subsec. (b)(1)(B). Pub. L. 107-204, Sec. 205(b)(4)(B),

substituted ''such firm'' for ''such accountant''.

Subsec. (b)(2). Pub. L. 107-204, Sec. 205(b)(2), (4)(A), (B), in

introductory provisions, substituted ''the firm'' for ''the

accountant'', ''such firm'' for ''such accountant'', and ''the

registered public accounting firm'' for ''the independent public

accountant'' and, in concluding provisions, substituted ''the

registered public accounting firm'' for ''the independent public

accountant''.

Subsec. (b)(3). Pub. L. 107-204, Sec. 205(b)(2), substituted

''the registered public accounting firm'' for ''the independent

public accountant'' wherever appearing in introductory provisions.

Subsec. (b)(4). Pub. L. 107-204, Sec. 205(b)(1), (4)(A), (C),

substituted ''a registered public accounting firm'' for ''an

independent public accountant'', ''the firm'' for ''the

accountant'', and ''the report of the firm'' for ''the accountant's

report''.

Subsec. (c). Pub. L. 107-204, Sec. 205(b)(3), substituted ''No

registered public accounting firm'' for ''No independent public

accountant''.

Subsec. (d). Pub. L. 107-204, Sec. 205(b)(1), (2), substituted

''a registered public accounting firm'' for ''an independent public

accountant'' and ''the registered public accounting firm'' for

''the independent public accountant''.

Subsec. (f). Pub. L. 107-204, Sec. 205(d), substituted

''Definitions'' for ''Definition'' in heading and inserted at end

''As used in this section, the term 'issuer' means an issuer (as

defined in section 78c of this title), the securities of which are

registered under section 78l of this title, or that is required to

file reports pursuant to section 78o(d) of this title, or that

files or has filed a registration statement that has not yet become

effective under the Securities Act of 1933 (15 U.S.C. 77a et seq.),

and that it has not withdrawn.''

Subsecs. (g), (h). Pub. L. 107-204, Sec. 201(a), added subsecs.

(g) and (h).

Subsec. (i). Pub. L. 107-204, Sec. 202, added subsec. (i).

Subsec. (j). Pub. L. 107-204, Sec. 203, added subsec. (j).

Subsec. (k). Pub. L. 107-204, Sec. 204, added subsec. (k).

Subsec. (l). Pub. L. 107-204, Sec. 206, added subsec. (l).

Subsec. (m). Pub. L. 107-204, Sec. 301, added subsec. (m).

EFFECTIVE DATE

Section 301(b) of Pub. L. 104-67 provided that: ''The amendment

made by subsection (a) (enacting this section) shall apply to each

annual report -

''(1) for any period beginning on or after January 1, 1996,

with respect to any registrant that is required to file selected

quarterly financial data pursuant to the rules or regulations of

the Securities and Exchange Commission; and

''(2) for any period beginning on or after January 1, 1997,

with respect to any other registrant.''

CONSTRUCTION

Section 203 of Pub. L. 104-67 provided that: ''Nothing in this

Act (see Short Title of 1995 Amendment note set out under section

78a of this title) or the amendments made by this Act shall be

deemed to create or ratify any implied private right of action, or

to prevent the Commission, by rule or regulation, from restricting

or otherwise regulating private actions under the Securities

Exchange Act of 1934 (15 U.S.C. 78a et seq.).''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 78l, 7231, 7233 of this

title; title 18 section 1520.

-CITE-

15 USC Sec. 78k 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78k. Trading by members of exchanges, brokers, and dealers

-STATUTE-

(a) Trading for own account or account of associated person;

exceptions

(1) It shall be unlawful for any member of a national securities

exchange to effect any transaction on such exchange for its own

account, the account of an associated person, or an account with

respect to which it or an associated person thereof exercises

investment discretion: Provided, however, That this paragraph shall

not make unlawful -

(A) any transaction by a dealer acting in the capacity of

market maker;

(B) any transaction for the account of an odd-lot dealer in a

security in which he is so registered;

(C) any stabilizing transaction effected in compliance with

rules under section 78j(b) of this title to facilitate a

distribution of a security in which the member effecting such

transaction is participating;

(D) any bona fide arbitrage transaction, any bona fide hedge

transaction involving a long or short position in an equity

security and a long or short position in a security entitling the

holder to acquire or sell such equity security, or any risk

arbitrage transaction in connection with a merger, acquisition,

tender offer, or similar transaction involving a

recapitalization;

(E) any transaction for the account of a natural person, the

estate of a natural person, or a trust created by a natural

person for himself or another natural person;

(F) any transaction to offset a transaction made in error;

(G) any other transaction for a member's own account provided

that (i) such member is primarily engaged in the business of

underwriting and distributing securities issued by other persons,

selling securities to customers, and acting as broker, or any one

or more of such activities, and whose gross income normally is

derived principally from such business and related activities and

(ii) such transaction is effected in compliance with rules of the

Commission which, as a minimum, assure that the transaction is

not inconsistent with the maintenance of fair and orderly markets

and yields priority, parity, and precedence in execution to

orders for the account of persons who are not members or

associated with members of the exchange;

(H) any transaction for an account with respect to which such

member or an associated person thereof exercises investment

discretion if such member -

(i) has obtained, from the person or persons authorized to

transact business for the account, express authorization for

such member or associated person to effect such transactions

prior to engaging in the practice of effecting such

transactions;

(ii) furnishes the person or persons authorized to transact

business for the account with a statement at least annually

disclosing the aggregate compensation received by the exchange

member in effecting such transactions; and

(iii) complies with any rules the Commission has prescribed

with respect to the requirements of clauses (i) and (ii); and

(I) any other transaction of a kind which the Commission, by

rule, determines is consistent with the purposes of this

paragraph, the protection of investors, and the maintenance of

fair and orderly markets.

(2) The Commission, by rule, as it deems necessary or appropriate

in the public interest and for the protection of investors, to

maintain fair and orderly markets, or to assure equal regulation of

exchange markets and markets occurring otherwise than on an

exchange, may regulate or prohibit:

(A) transactions on a national securities exchange not unlawful

under paragraph (1) of this subsection effected by any member

thereof for its own account (unless such member is acting in the

capacity of market maker or odd-lot dealer), the account of an

associated person, or an account with respect to which such

member or an associated person thereof exercises investment

discretion;

(B) transactions otherwise than on a national securities

exchange effected by use of the mails or any means or

instrumentality of interstate commerce by any member of a

national securities exchange, broker, or dealer for the account

of such member, broker, or dealer (unless such member, broker, or

dealer is acting in the capacity of a market maker) (FOOTNOTE 1)

the account of an associated person, or an account with respect

to which such member, broker, or dealer or associated person

thereof exercises investment discretion; and

(FOOTNOTE 1) So in original. Probably should be followed by a

comma.

(C) transactions on a national securities exchange effected by

any broker or dealer not a member thereof for the account of such

broker or dealer (unless such broker or dealer is acting in the

capacity of market maker), the account of an associated person,

or an account with respect to which such broker or dealer or

associated person thereof exercises investment discretion.

(3) The provisions of paragraph (1) of this subsection insofar as

they apply to transactions on a national securities exchange

effected by a member thereof who was a member on February 1, 1978

shall not become effective until February 1, 1979. Nothing in this

paragraph shall be construed to impair or limit the authority of

the Commission to regulate or prohibit such transactions prior to

February 1, 1979, pursuant to paragraph (2) of this subsection.

(b) Registration of members as odd-lot dealers and specialists

When not in contravention of such rules and regulations as the

Commission may prescribe as necessary or appropriate in the public

interest and for the protection of investors, to maintain fair and

orderly markets, or to remove impediments to and perfect the

mechanism of a national market system, the rules of a national

securities exchange may permit (1) a member to be registered as an

odd-lot dealer and as such to buy and sell for his own account so

far as may be reasonably necessary to carry on such odd-lot

transactions, and (2) a member to be registered as a specialist.

Under the rules and regulations of the Commission a specialist may

be permitted to act as a broker and dealer or limited to acting as

a broker or dealer. It shall be unlawful for a specialist or an

official of the exchange to disclose information in regard to

orders placed with such specialist which is not available to all

members of the exchange, to any person other than an official of

the exchange, a representative of the Commission, or a specialist

who may be acting for such specialist: Provided, however, That the

Commission, by rule, may require disclosure to all members of the

exchange of all orders placed with specialists, under such rules

and regulations as the Commission may prescribe as necessary or

appropriate in the public interest or for the protection of

investors. It shall also be unlawful for a specialist permitted to

act as a broker and dealer to effect on the exchange as broker any

transaction except upon a market or limited price order.

(c) Exemptions from provisions of section and rules and regulations

If because of the limited volume of transactions effected on an

exchange, it is in the opinion of the Commission impracticable and

not necessary or appropriate in the public interest or for the

protection of investors to apply any of the foregoing provisions of

this section or the rules and regulations thereunder, the

Commission shall have power, upon application of the exchange and

on a showing that the rules of such exchange are otherwise adequate

for the protection of investors, to exempt such exchange and its

members from any such provision or rules and regulations.

(d) Prohibition on extension of credit by broker-dealer

It shall be unlawful for a member of a national securities

exchange who is both a dealer and a broker, or for any person who

both as a broker and a dealer transacts a business in securities

through the medium of a member or otherwise, to effect through the

use of any facility of a national securities exchange or of the

mails or of any means or instrumentality of interstate commerce, or

otherwise in the case of a member, (1) any transaction in

connection with which, directly or indirectly, he extends or

maintains or arranges for the extension or maintenance of credit to

or for a customer on any security (other than an exempted security)

which was a part of a new issue in the distribution of which he

participated as a member of a selling syndicate or group within

thirty days prior to such transaction: Provided, That credit shall

not be deemed extended by reason of a bona fide delayed delivery of

(i) any such security against full payment of the entire purchase

price thereof upon such delivery within thirty-five days after such

purchase or (ii) any mortgage related security or any small

business related security against full payment of the entire

purchase price thereof upon such delivery within one hundred and

eighty days after such purchase, or within such shorter period as

the Commission may prescribe by rule or regulation, or (2) any

transaction with respect to any security (other than an exempted

security) unless, if the transaction is with a customer, he

discloses to such customer in writing at or before the completion

of the transaction whether he is acting as a dealer for his own

account, as a broker for such customer, or as a broker for some

other person.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 11, 48 Stat. 891; Aug. 10,

1954, ch. 667, title II, Sec. 201, 68 Stat. 686; Pub. L. 94-29,

Sec. 6, June 4, 1975, 89 Stat. 110; Pub. L. 95-283, Sec. 18(a), May

21, 1978, 92 Stat. 275; Pub. L. 98-440, title I, Sec. 104, Oct. 3,

1984, 98 Stat. 1690; Pub. L. 103-68, Sec. 1, Aug. 11, 1993, 107

Stat. 691; Pub. L. 103-325, title II, Sec. 205, Sept. 23, 1994, 108

Stat. 2199.)

-MISC1-

AMENDMENTS

1994 - Subsec. (d)(1)(ii). Pub. L. 103-325 inserted ''or any

small business related security'' after ''mortgage related

security''.

1993 - Subsec. (a)(1)(E). Pub. L. 103-68, Sec. 1(1), struck out

''(other than an investment company)'' after ''trust''.

Subsec. (a)(1)(H), (I). Pub. L. 103-68, Sec. 1(2)-(4), added

subpar. (H) and redesignated former subpar. (H) as (I).

1984 - Subsec. (d)(1). Pub. L. 98-440 designated existing

provisions of par. (1) as cl. (i) and added cl. (ii).

1978 - Subsec. (a)(3). Pub. L. 95-283 substituted ''February 1,

1978'' for ''May 1, 1975'', and ''February 1, 1979'' for ''May 1,

1978'' in two places.

1975 - Subsec. (a). Pub. L. 94-29, Sec. 6(2), prohibited stock

exchange members from effecting any transaction on the exchange for

its own account, the account of an associated person, or an account

with respect to which the member or an associated person exercises

investment discretion, exempted from that prohibition 8 types of

transactions, and authorized the Commission, as it deems necessary

or appropriate in the public interest or for the protection of

investors, to regulate or prohibit the specifically exempted

transactions, certain transactions otherwise that on a national

securities exchange, and transactions on a national securities

exchange effected by a broker or dealer not a member thereof for

the account of such broker or dealer, the account of an associated

person, or an account with respect to which such broker, dealer, or

associated person exercises investment discretion.

Subsec. (b). Pub. L. 94-29, Sec. 6(2), struck out requirement

that specialist's dealings be limited to those transactions

reasonably necessary to permit him to maintain a fair and orderly

market, expanded the Commission's rulemaking authority in the area

of specialist's dealings so that the Commission may define

responsibilities and restrict activities of specialists in response

to changing conditions in the market, expanded the standards to be

followed by the Commission in exercising its rulemaking power to

include the maintenance of fair and orderly markets and the removal

of impediments to and the perfection of the mechanism of a national

market system, and inserted specific reference to the Commission's

power to limit the activity of a specialist to that of a broker or

dealer.

Subsec. (e). Pub. L. 94-29, Sec. 6(3), struck out subsec. (e)

which directed the Commission to make a study, to be submitted on

or before Jan. 3, 1936, of the feasibility of segregating the

functions of dealer and broker.

1954 - Subsec. (d). Act Aug. 10, 1954, reduced from 6 months to

30 days the prohibition period against extending credit to

purchasers of a new issue by dealers.

EFFECTIVE DATE OF 1978 AMENDMENT

Section 18(b) of Pub. L. 95-283 provided that: ''The amendment

made by subsection (a) of this section (amending this section)

shall be effective as of May 1, 1978.''

EFFECTIVE DATE OF 1975 AMENDMENT

Amendment by Pub. L. 94-29 effective June 4, 1975, see section

31(a) of Pub. L. 94-29, set out as a note under section 78b of this

title.

EFFECTIVE DATE OF 1954 AMENDMENT

Amendment by act Aug. 10, 1954, effective 60 days after Aug. 10,

1954, see note under section 77b of this title.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of Securities and Exchange Commission,

with certain exceptions, to Chairman of such Commission, see Reorg.

Plan No. 10 of 1950, Sec. 1, 2, eff. May 24, 1950, 15 F.R. 3175,

64 Stat. 1265, set out under section 78d of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 78f, 78o, 78y, 78hh of

this title; title 7 section 2.

-CITE-

15 USC Sec. 78k-1 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78k-1. National market system for securities; securities

information processors

-STATUTE-

(a) Congressional findings; facilitating establishment of national

market system for securities; designation of qualified

securities

(1) The Congress finds that -

(A) The securities markets are an important national asset

which must be preserved and strengthened.

(B) New data processing and communications techniques create

the opportunity for more efficient and effective market

operations.

(C) It is in the public interest and appropriate for the

protection of investors and the maintenance of fair and orderly

markets to assure -

(i) economically efficient execution of securities

transactions;

(ii) fair competition among brokers and dealers, among

exchange markets, and between exchange markets and markets

other than exchange markets;

(iii) the availability to brokers, dealers, and investors of

information with respect to quotations for and transactions in

securities;

(iv) the practicability of brokers executing investors'

orders in the best market; and

(v) an opportunity, consistent with the provisions of clauses

(i) and (iv) of this subparagraph, for investors' orders to be

executed without the participation of a dealer.

(D) The linking of all markets for qualified securities through

communication and data processing facilities will foster

efficiency, enhance competition, increase the information

available to brokers, dealers, and investors, facilitate the

offsetting of investors' orders, and contribute to best execution

of such orders.

(2) The Commission is directed, therefore, having due regard for

the public interest, the protection of investors, and the

maintenance of fair and orderly markets, to use its authority under

this chapter to facilitate the establishment of a national market

system for securities (which may include subsystems for particular

types of securities with unique trading characteristics) in

accordance with the findings and to carry out the objectives set

forth in paragraph (1) of this subsection. The Commission, by

rule, shall designate the securities or classes of securities

qualified for trading in the national market system from among

securities other than exempted securities. (Securities or classes

of securities so designated hereinafter (FOOTNOTE 1) in this

section referred to as ''qualified securities''.)

(FOOTNOTE 1) So in original. Probably should be ''are

hereinafter''.

(3) The Commission is authorized in furtherance of the directive

in paragraph (2) of this subsection -

(A) to create one or more advisory committees pursuant to the

Federal Advisory Committee Act (which shall be in addition to the

National Market Advisory Board established pursuant to subsection

(d) of this section) and to employ one or more outside experts;

(B) by rule or order, to authorize or require self-regulatory

organizations to act jointly with respect to matters as to which

they share authority under this chapter in planning, developing,

operating, or regulating a national market system (or a subsystem

thereof) or one or more facilities thereof; and

(C) to conduct studies and make recommendations to the Congress

from time to time as to the possible need for modifications of

the scheme of self-regulation provided for in this chapter so as

to adapt it to a national market system.

(b) Securities information processors; registration; withdrawal of

registration; access to services; censure; suspension or

revocation of registration

(1) Except as otherwise provided in this section, it shall be

unlawful for any securities information processor unless registered

in accordance with this subsection, directly or indirectly, to make

use of the mails or any means or instrumentality of interstate

commerce to perform the functions of a securities information

processor. The Commission, by rule or order, upon its own motion

or upon application, may conditionally or unconditionally exempt

any securities information processor or class of securities

information processors or security or class of securities from any

provision of this section or the rules or regulations thereunder,

if the Commission finds that such exemption is consistent with the

public interest, the protection of investors, and the purposes of

this section, including the maintenance of fair and orderly markets

in securities and the removal of impediments to and perfection of

the mechanism of a national market system: Provided, however, That

a securities information processor not acting as the exclusive

processor of any information with respect to quotations for or

transactions in securities is exempt from the requirement to

register in accordance with this subsection unless the Commission,

by rule or order, finds that the registration of such securities

information processor is necessary or appropriate in the public

interest, for the protection of investors, or for the achievement

of the purposes of this section.

(2) A securities information processor may be registered by

filing with the Commission an application for registration in such

form as the Commission, by rule, may prescribe containing the

address of its principal office, or offices, the names of the

securities and markets for which it is then acting and for which it

proposes to act as a securities information processor, and such

other information and documents as the Commission, by rule, may

prescribe with regard to performance capability, standards and

procedures for the collection, processing, distribution, and

publication of information with respect to quotations for and

transactions in securities, personnel qualifications, financial

condition, and such other matters as the Commission determines to

be germane to the provisions of this chapter and the rules and

regulations thereunder, or necessary or appropriate in furtherance

of the purposes of this section.

(3) The Commission shall, upon the filing of an application for

registration pursuant to paragraph (2) of this subsection, publish

notice of the filing and afford interested persons an opportunity

to submit written data, views, and arguments concerning such

application. Within ninety days of the date of the publication of

such notice (or within such longer period as to which the applicant

consents) the Commission shall -

(A) by order grant such registration, or

(B) institute proceedings to determine whether registration

should be denied. Such proceedings shall include notice of the

grounds for denial under consideration and opportunity for

hearing and shall be concluded within one hundred eighty days of

the date of publication of notice of the filing of the

application for registration. At the conclusion of such

proceedings the Commission, by order, shall grant or deny such

registration. The Commission may extend the time for the

conclusion of such proceedings for up to sixty days if it finds

good cause for such extension and publishes its reasons for so

finding or for such longer periods as to which the applicant

consents.

The Commission shall grant the registration of a securities

information processor if the Commission finds that such securities

information processor is so organized, and has the capacity, to be

able to assure the prompt, accurate, and reliable performance of

its functions as a securities information processor, comply with

the provisions of this chapter and the rules and regulations

thereunder, carry out its functions in a manner consistent with the

purposes of this section, and, insofar as it is acting as an

exclusive processor, operate fairly and efficiently. The

Commission shall deny the registration of a securities information

processor if the Commission does not make any such finding.

(4) A registered securities information processor may, upon such

terms and conditions as the Commission deems necessary or

appropriate in the public interest or for the protection of

investors, withdraw from registration by filing a written notice of

withdrawal with the Commission. If the Commission finds that any

registered securities information processor is no longer in

existence or has ceased to do business in the capacity specified in

its application for registration, the Commission, by order, shall

cancel the registration.

(5)(A) If any registered securities information processor

prohibits or limits any person in respect of access to services

offered, directly or indirectly, by such securities information

processor, the registered securities information processor shall

promptly file notice thereof with the Commission. The notice shall

be in such form and contain such information as the Commission, by

rule, may prescribe as necessary or appropriate in the public

interest or for the protection of investors. Any prohibition or

limitation on access to services with respect to which a registered

securities information processor is required by this paragraph to

file notice shall be subject to review by the Commission on its own

motion, or upon application by any person aggrieved thereby filed

within thirty days after such notice has been filed with the

Commission and received by such aggrieved person, or within such

longer period as the Commission may determine. Application to the

Commission for review, or the institution of review by the

Commission on its own motion, shall not operate as a stay of such

prohibition or limitation, unless the Commission otherwise orders,

summarily or after notice and opportunity for hearing on the

question of a stay (which hearing may consist solely of the

submission of affidavits or presentation of oral arguments). The

Commission shall establish for appropriate cases an expedited

procedure for consideration and determination of the question of a

stay.

(B) In any proceeding to review the prohibition or limitation of

any person in respect of access to services offered by a registered

securities information processor, if the Commission finds, after

notice and opportunity for hearing, that such prohibition or

limitation is consistent with the provisions of this chapter and

the rules and regulations thereunder and that such person has not

been discriminated against unfairly, the Commission, by order,

shall dismiss the proceeding. If the Commission does not make any

such finding or if it finds that such prohibition or limitation

imposes any burden on competition not necessary or appropriate in

furtherance of the purposes of this chapter, the Commission, by

order, shall set aside the prohibition or limitation and require

the registered securities information processor to permit such

person access to services offered by the registered securities

information processor.

(6) The Commission, by order, may censure or place limitations

upon the activities, functions, or operations of any registered

securities information processor or suspend for a period not

exceeding twelve months or revoke the registration of any such

processor, if the Commission finds, on the record after notice and

opportunity for hearing, that such censure, placing of limitations,

suspension, or revocation is in the public interest, necessary or

appropriate for the protection of investors or to assure the

prompt, accurate, or reliable performance of the functions of such

securities information processor, and that such securities

information processor has violated or is unable to comply with any

provision of this chapter or the rules or regulations thereunder.

(c) Rules and regulations covering use of mails or other means or

instrumentalities of interstate commerce; reports of purchase

or sale of qualified securities; limiting registered securities

transactions to national securities exchanges

(1) No self-regulatory organization, member thereof, securities

information processor, broker, or dealer shall make use of the

mails or any means or instrumentality of interstate commerce to

collect, process, distribute, publish, or prepare for distribution

or publication any information with respect to quotations for or

transactions in any security other than an exempted security, to

assist, participate in, or coordinate the distribution or

publication of such information, or to effect any transaction in,

or to induce or attempt to induce the purchase or sale of, any such

security in contravention of such rules and regulations as the

Commission shall prescribe as necessary or appropriate in the

public interest, for the protection of investors, or otherwise in

furtherance of the purposes of this chapter to -

(A) prevent the use, distribution, or publication of

fraudulent, deceptive, or manipulative information with respect

to quotations for and transactions in such securities;

(B) assure the prompt, accurate, reliable, and fair collection,

processing, distribution, and publication of information with

respect to quotations for and transactions in such securities and

the fairness and usefulness of the form and content of such

information;

(C) assure that all securities information processors may, for

purposes of distribution and publication, obtain on fair and

reasonable terms such information with respect to quotations for

and transactions in such securities as is collected, processed,

or prepared for distribution or publication by any exclusive

processor of such information acting in such capacity;

(D) assure that all exchange members, brokers, dealers,

securities information processors, and, subject to such

limitations as the Commission, by rule, may impose as necessary

or appropriate for the protection of investors or maintenance of

fair and orderly markets, all other persons may obtain on terms

which are not unreasonably discriminatory such information with

respect to quotations for and transactions in such securities as

is published or distributed by any self-regulatory organization

or securities information processor;

(E) assure that all exchange members, brokers, and dealers

transmit and direct orders for the purchase or sale of qualified

securities in a manner consistent with the establishment and

operation of a national market system; and

(F) assure equal regulation of all markets for qualified

securities and all exchange members, brokers, and dealers

effecting transactions in such securities.

(2) The Commission, by rule, as it deems necessary or appropriate

in the public interest or for the protection of investors, may

require any person who has effected the purchase or sale of any

qualified security by use of the mails or any means or

instrumentality of interstate commerce to report such purchase or

sale to a registered securities information processor, national

securities exchange, or registered securities association and

require such processor, exchange, or association to make

appropriate distribution and publication of information with

respect to such purchase or sale.

(3)(A) The Commission, by rule, is authorized to prohibit brokers

and dealers from effecting transactions in securities registered

pursuant to section 78l(b) of this title otherwise than on a

national securities exchange, if the Commission finds, on the

record after notice and opportunity for hearing, that -

(i) as a result of transactions in such securities effected

otherwise than on a national securities exchange the fairness or

orderliness of the markets for such securities has been affected

in a manner contrary to the public interest or the protection of

investors;

(ii) no rule of any national securities exchange unreasonably

impairs the ability of any dealer to solicit or effect

transactions in such securities for his own account or

unreasonably restricts competition among dealers in such

securities or between dealers acting in the capacity of market

makers who are specialists in such securities and such dealers

who are not specialists in such securities, and

(iii) the maintenance or restoration of fair and orderly

markets in such securities may not be assured through other

lawful means under this chapter.

The Commission may conditionally or unconditionally exempt any

security or transaction or any class of securities or transactions

from any such prohibition if the Commission deems such exemption

consistent with the public interest, the protection of investors,

and the maintenance of fair and orderly markets.

(B) For the purposes of subparagraph (A) of this paragraph, the

ability of a dealer to solicit or effect transactions in securities

for his own account shall not be deemed to be unreasonably impaired

by any rule of an exchange fairly and reasonably prescribing the

sequence in which orders brought to the exchange must be executed

or which has been adopted to effect compliance with a rule of the

Commission promulgated under this chapter.

(4) The Commission is directed to review any and all rules of

national securities exchanges which limit or condition the ability

of members to effect transactions in securities otherwise than on

such exchanges.

(5) No national securities exchange or registered securities

association may limit or condition the participation of any member

in any registered clearing agency.

(d) National Market Advisory Board

(1) Not later than one hundred eighty days after June 4, 1975,

the Commission shall establish a National Market Advisory Board

(hereinafter in this section referred to as the ''Advisory Board'')

to be composed of fifteen members, not all of whom shall be from

the same geographical area of the United States, appointed by the

Commission for a term specified by the Commission of not less than

two years or more than five years. The Advisory Board shall

consist of persons associated with brokers and dealers (who shall

be a majority) and persons not so associated who are representative

of the public and, to the extent feasible, have knowledge of the

securities markets of the United States.

(2) It shall be the responsibility of the Advisory Board to

formulate and furnish to the Commission its views on significant

regulatory proposals made by the Commission or any self-regulatory

organization concerning the establishment, operation, and

regulation of the markets for securities in the United States.

(3)(A) The Advisory Board shall study and make recommendations to

the Commission as to the steps it finds appropriate to facilitate

the establishment of a national market system. In so doing, the

Advisory Board shall assume the responsibilities of any advisory

committee appointed to advise the Commission with respect to the

national market system which is in existence at the time of the

establishment of the Advisory Board.

(B) The Advisory Board shall study the possible need for

modifications of the scheme of self-regulation provided for in this

chapter so as to adapt it to a national market system, including

the need for the establishment of a new self-regulatory

organization (hereinafter in this section referred to as a

''National Market Regulatory Board'' or ''Regulatory Board'') to

administer the national market system. In the event the Advisory

Board determines a National Market Regulatory Board should be

established, it shall make recommendations as to:

(i) the point in time at which a Regulatory Board should be

established;

(ii) the composition of a Regulatory Board;

(iii) the scope of the authority of a Regulatory Board;

(iv) the relationship of a Regulatory Board to the Commission

and to existing self-regulatory organizations; and

(v) the manner in which a Regulatory Board should be funded.

The Advisory Board shall report to the Congress, on or before

December 31, 1976, the results of such study and its

recommendations, including such recommendations for legislation as

it deems appropriate.

(C) In carrying out its responsibilities under this paragraph,

the Advisory Board shall consult with self-regulatory

organizations, brokers, dealers, securities information processors,

issuers, investors, representatives of Government agencies, and

other persons interested or likely to participate in the

establishment, operation, or regulation of the national market

system.

(e) National markets system for security futures products

(1) Consultation and cooperation required

With respect to security futures products, the Commission and

the Commodity Futures Trading Commission shall consult and

cooperate so that, to the maximum extent practicable, their

respective regulatory responsibilities may be fulfilled and the

rules and regulations applicable to security futures products may

foster a national market system for security futures products if

the Commission and the Commodity Futures Trading Commission

jointly determine that such a system would be consistent with the

congressional findings in subsection (a)(1) of this section. In

accordance with this objective, the Commission shall, at least 15

days prior to the issuance for public comment of any proposed

rule or regulation under this section concerning security futures

products, consult and request the views of the Commodity Futures

Trading Commission.

(2) Application of rules by order of CFTC

No rule adopted pursuant to this section shall be applied to

any person with respect to the trading of security futures

products on an exchange that is registered under section 78f(g)

of this title unless the Commodity Futures Trading Commission has

issued an order directing that such rule is applicable to such

persons.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 11A, as added Pub. L. 94-29,

Sec. 7, June 4, 1975, 89 Stat. 111; amended Pub. L. 98-620, title

IV, Sec. 402(14), Nov. 8, 1984, 98 Stat. 3358; Pub. L. 100-181,

title III, Sec. 313, 314, Dec. 4, 1987, 101 Stat. 1256; Pub. L.

106-554, Sec. 1(a)(5) (title II, Sec. 206(c)), Dec. 21, 2000, 114

Stat. 2763, 2763A-430.)

-REFTEXT-

REFERENCES IN TEXT

The Federal Advisory Committee Act, referred to in subsec.

(a)(3)(A), is Pub. L. 92-436, Oct. 6, 1972, 86 Stat. 770, as

amended, which is set out in the Appendix to Title 5, Government

Organization and Employees.

-MISC2-

AMENDMENTS

2000 - Subsec. (e). Pub. L. 106-554 added subsec. (e).

1987 - Subsec. (b)(2). Pub. L. 100-181, Sec. 313(1), substituted

''transactions'' for ''transaction''.

Subsec. (c)(4). Pub. L. 100-181, Sec. 313(2), struck out ''On or

before the ninetieth day following June 4, 1975, the Commission

shall (i) report to the Congress the results of its review,

including the effects on competition of such rules, and (ii)

commence a proceeding in accordance with the provisions of section

78s(c) of this title to amend any such rule imposing a burden on

competition which does not appear to the Commission to be necessary

or appropriate in furtherance of the purposes of this chapter. The

Commission shall conclude any such proceeding within ninety days of

the date of publication of notice of its commencement.''

Subsec. (e). Pub. L. 100-181, Sec. 314, struck out subsec. (e)

which read as follows: ''The Commission is authorized and directed

to make a study of the extent to which persons excluded from the

definitions of 'broker' and 'dealer' maintain accounts on behalf of

public customers for buying and selling securities registered under

section 78l of this title and whether such exclusions are

consistent with the protection of investors and the other purposes

of this chapter. The Commission shall report to the Congress, on

or before December 31, 1976, the results of its study together with

such recommendations for legislation as it deems advisable.''

1984 - Subsec. (c)(4). Pub. L. 98-620 struck out designation

''(A)'' after ''(4)'', and struck out subpar. (B) which provided

that review pursuant to section 78y(b) of this title of any rule

promulgated by the Commission in accordance with any proceeding

commenced pursuant to this paragraph would, except as to causes the

court considers of greater importance, take precedence on the

docket over all other causes and had to be assigned for

consideration at the earliest practicable date and expedited in

every way.

EFFECTIVE DATE OF 1984 AMENDMENT

Amendment by Pub. L. 98-620 not applicable to cases pending on

Nov. 8, 1984, see section 403 of Pub. L. 98-620, set out as an

Effective Date note under section 1657 of Title 28, Judiciary and

Judicial Procedure.

EFFECTIVE DATE

Section effective June 4, 1975, except for subsec. (b) which is

effective 180 days after June 4, 1975, see section 31(a) of Pub. L.

94-29, set out as a note under section 78b of this title.

TERMINATION OF ADVISORY COMMITTEES

Advisory committees established after Jan. 5, 1973, to terminate

not later than the expiration of the 2-year period beginning on the

date of their establishment, unless, in the case of a committee

established by the President or an officer of the Federal

Government, such committee is renewed by appropriate action prior

to the expiration of such 2-year period, or in the case of a

committee established by the Congress, its duration is otherwise

provided for by law. See section 14 of Pub. L. 92-463, Oct. 6,

1972, 86 Stat. 776, set out in the Appendix to Title 5, Government

Organization and Employees.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 78n, 78y of this title.

-CITE-

15 USC Sec. 78l 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78l. Registration requirements for securities

-STATUTE-

(a) General requirement of registration

It shall be unlawful for any member, broker, or dealer to effect

any transaction in any security (other than an exempted security)

on a national securities exchange unless a registration is

effective as to such security for such exchange in accordance with

the provisions of this chapter and the rules and regulations

thereunder. The provisions of this subsection shall not apply in

respect of a security futures product traded on a national

securities exchange.

(b) Procedure for registration; information

A security may be registered on a national securities exchange by

the issuer filing an application with the exchange (and filing with

the Commission such duplicate originals thereof as the Commission

may require), which application shall contain -

(1) Such information, in such detail, as to the issuer and any

person directly or indirectly controlling or controlled by, or

under direct or indirect common control with, the issuer, and any

guarantor of the security as to principal or interest or both, as

the Commission may by rules and regulations require, as necessary

or appropriate in the public interest or for the protection of

investors, in respect of the following:

(A) the organization, financial structure, and nature of the

business;

(B) the terms, position, rights, and privileges of the

different classes of securities outstanding;

(C) the terms on which their securities are to be, and during

the preceding three years have been, offered to the public or

otherwise;

(D) the directors, officers, and underwriters, and each

security holder of record holding more than 10 per centum of

any class of any equity security of the issuer (other than an

exempted security), their remuneration and their interests in

the securities of, and their material contracts with, the

issuer and any person directly or indirectly controlling or

controlled by, or under direct or indirect common control with,

the issuer;

(E) remuneration to others than directors and officers

exceeding $20,000 per annum;

(F) bonus and profit-sharing arrangements;

(G) management and service contracts;

(H) options existing or to be created in respect of their

securities;

(I) material contracts, not made in the ordinary course of

business, which are to be executed in whole or in part at or

after the filing of the application or which were made not more

than two years before such filing, and every material patent or

contract for a material patent right shall be deemed a material

contract;

(J) balance sheets for not more than the three preceding

fiscal years, certified if required by the rules and

regulations of the Commission by a registered public accounting

firm;

(K) profit and loss statements for not more than the three

preceding fiscal years, certified if required by the rules and

regulations of the Commission by a registered public accounting

firm; and

(L) any further financial statements which the Commission may

deem necessary or appropriate for the protection of investors.

(2) Such copies of articles of incorporation, bylaws, trust

indentures, or corresponding documents by whatever name known,

underwriting arrangements, and other similar documents of, and

voting trust agreements with respect to, the issuer and any

person directly or indirectly controlling or controlled by, or

under direct or indirect common control with, the issuer as the

Commission may require as necessary or appropriate for the proper

protection of investors and to insure fair dealing in the

security.

(3) Such copies of material contracts, referred to in paragraph

(1)(I) above, as the Commission may require as necessary or

appropriate for the proper protection of investors and to insure

fair dealing in the security.

(c) Additional or alternative information

If in the judgment of the Commission any information required

under subsection (b) of this section is inapplicable to any

specified class or classes of issuers, the Commission shall require

in lieu thereof the submission of such other information of

comparable character as it may deem applicable to such class of

issuers.

(d) Effective date of registration; withdrawal of registration

If the exchange authorities certify to the Commission that the

security has been approved by the exchange for listing and

registration, the registration shall become effective thirty days

after the receipt of such certification by the Commission or within

such shorter period of time as the Commission may determine. A

security registered with a national securities exchange may be

withdrawn or stricken from listing and registration in accordance

with the rules of the exchange and, upon such terms as the

Commission may deem necessary to impose for the protection of

investors, upon application by the issuer or the exchange to the

Commission; whereupon the issuer shall be relieved from further

compliance with the provisions of this section and section 78m of

this title and any rules or regulations under such sections as to

the securities so withdrawn or stricken. An unissued security may

be registered only in accordance with such rules and regulations as

the Commission may prescribe as necessary or appropriate in the

public interest or for the protection of investors.

(e) Exemption from provisions of section for period ending not

later than July 1, 1935

Notwithstanding the foregoing provisions of this section, the

Commission may by such rules and regulations as it deems necessary

or appropriate in the public interest or for the protection of

investors, permit securities listed on any exchange at the time the

registration of such exchange as a national securities exchange

becomes effective, to be registered for a period ending not later

than July 1, 1935, without complying with the provisions of this

section.

(f) Unlisted trading privileges for security originally listed on

another national exchange

(1)(A) Notwithstanding the preceding subsections of this section,

any national securities exchange, in accordance with the

requirements of this subsection and the rules hereunder, may extend

unlisted trading privileges to -

(i) any security that is listed and registered on a national

securities exchange, subject to subparagraph (B); and

(ii) any security that is otherwise registered pursuant to this

section, or that would be required to be so registered except for

the exemption from registration provided in subparagraph (B) or

(G) of subsection (g)(2) of this section, subject to subparagraph

(E) of this paragraph.

(B) A national securities exchange may not extend unlisted

trading privileges to a security described in subparagraph (A)(i)

during such interval, if any, after the commencement of an initial

public offering of such security, as is or may be required pursuant

to subparagraph (C).

(C) Not later than 180 days after October 22, 1994, the

Commission shall prescribe, by rule or regulation, the duration of

the interval referred to in subparagraph (B), if any, as the

Commission determines to be necessary or appropriate for the

maintenance of fair and orderly markets, the protection of

investors and the public interest, or otherwise in furtherance of

the purposes of this chapter. Until the earlier of the effective

date of such rule or regulation or 240 days after October 22, 1994,

such interval shall begin at the opening of trading on the day on

which such security commences trading on the national securities

exchange with which such security is registered and end at the

conclusion of the next day of trading.

(D) The Commission may prescribe, by rule or regulation such

additional procedures or requirements for extending unlisted

trading privileges to any security as the Commission deems

necessary or appropriate for the maintenance of fair and orderly

markets, the protection of investors and the public interest, or

otherwise in furtherance of the purposes of this chapter.

(E) No extension of unlisted trading privileges to securities

described in subparagraph (A)(ii) may occur except pursuant to a

rule, regulation, or order of the Commission approving such

extension or extensions. In promulgating such rule or regulation

or in issuing such order, the Commission -

(i) shall find that such extension or extensions of unlisted

trading privileges is consistent with the maintenance of fair and

orderly markets, the protection of investors and the public

interest, and otherwise in furtherance of the purposes of this

chapter;

(ii) shall take account of the public trading activity in such

securities, the character of such trading, the impact of such

extension on the existing markets for such securities, and the

desirability of removing impediments to and the progress that has

been made toward the development of a national market system; and

(iii) shall not permit a national securities exchange to extend

unlisted trading privileges to such securities if any rule of

such national securities exchange would unreasonably impair the

ability of a dealer to solicit or effect transactions in such

securities for its own account, or would unreasonably restrict

competition among dealers in such securities or between such

dealers acting in the capacity of market makers who are

specialists and such dealers who are not specialists.

(F) An exchange may continue to extend unlisted trading

privileges in accordance with this paragraph only if the exchange

and the subject security continue to satisfy the requirements for

eligibility under this paragraph, including any rules and

regulations issued by the Commission pursuant to this paragraph,

except that unlisted trading privileges may continue with regard to

securities which had been admitted on such exchange prior to July

1, 1964, notwithstanding the failure to satisfy such requirements.

If unlisted trading privileges in a security are discontinued

pursuant to this subparagraph, the exchange shall cease trading in

that security, unless the exchange and the subject security

thereafter satisfy the requirements of this paragraph and the rules

issued hereunder.

(G) For purposes of this paragraph -

(i) a security is the subject of an initial public offering if

-

(I) the offering of the subject security is registered under

the Securities Act of 1933 (15 U.S.C. 77a et seq.); and

(II) the issuer of the security, immediately prior to filing

the registration statement with respect to the offering, was

not subject to the reporting requirements of section 78m or

78o(d) of this title; and

(ii) an initial public offering of such security commences at

the opening of trading on the day on which such security

commences trading on the national securities exchange with which

such security is registered.

(2)(A) At any time within 60 days of commencement of trading on

an exchange of a security pursuant to unlisted trading privileges,

the Commission may summarily suspend such unlisted trading

privileges on the exchange. Such suspension shall not be

reviewable under section 78y of this title and shall not be deemed

to be a final agency action for purposes of section 704 of title 5.

Upon such suspension -

(i) the exchange shall cease trading in the security by the

close of business on the date of such suspension, or at such time

as the Commission may prescribe by rule or order for the

maintenance of fair and orderly markets, the protection of

investors and the public interest, or otherwise in furtherance of

the purposes of this chapter; and

(ii) if the exchange seeks to extend unlisted trading

privileges to the security, the exchange shall file an

application to reinstate its ability to do so with the Commission

pursuant to such procedures as the Commission may prescribe by

rule or order for the maintenance of fair and orderly markets,

the protection of investors and the public interest, or otherwise

in furtherance of the purposes of this chapter.

(B) A suspension under subparagraph (A) shall remain in effect

until the Commission, by order, grants approval of an application

to reinstate, as described in subparagraph (A)(ii).

(C) A suspension under subparagraph (A) shall not affect the

validity or force of an extension of unlisted trading privileges in

effect prior to such suspension.

(D) The Commission shall not approve an application by a national

securities exchange to reinstate its ability to extend unlisted

trading privileges to a security unless the Commission finds, after

notice and opportunity for hearing, that the extension of unlisted

trading privileges pursuant to such application is consistent with

the maintenance of fair and orderly markets, the protection of

investors and the public interest, and otherwise in furtherance of

the purposes of this chapter. If the application is made to

reinstate unlisted trading privileges to a security described in

paragraph (1)(A)(ii), the Commission -

(i) shall take account of the public trading activity in such

security, the character of such trading, the impact of such

extension on the existing markets for such a security, and the

desirability of removing impediments to and the progress that has

been made toward the development of a national market system; and

(ii) shall not grant any such application if any rule of the

national securities exchange making application under this

subsection would unreasonably impair the ability of a dealer to

solicit or effect transactions in such security for its own

account, or would unreasonably restrict competition among dealers

in such security or between such dealers acting in the capacity

of marketmakers who are specialists and such dealers who are not

specialists.

(3) Notwithstanding paragraph (2), the Commission shall by rules

and regulations suspend unlisted trading privileges in whole or in

part for any or all classes of securities for a period not

exceeding twelve months, if it deems such suspension necessary or

appropriate in the public interest or for the protection of

investors or to prevent evasion of the purposes of this chapter.

(4) On the application of the issuer of any security for which

unlisted trading privileges on any exchange have been continued or

extended pursuant to this subsection, or of any broker or dealer

who makes or creates a market for such security, or of any other

person having a bona fide interest in the question of termination

or suspension of such unlisted trading privileges, or on its own

motion, the Commission shall by order terminate, or suspend for a

period not exceeding twelve months, such unlisted trading

privileges for such security if the Commission finds, after

appropriate notice and opportunity for hearing, that such

termination or suspension is necessary or appropriate in the public

interest or for the protection of investors.

(5) In any proceeding under this subsection in which appropriate

notice and opportunity for hearing are required, notice of not less

than ten days to the applicant in such proceeding, to the issuer of

the security involved, to the exchange which is seeking to continue

or extend or has continued or extended unlisted trading privileges

for such security, and to the exchange, if any, on which such

security is listed and registered, shall be deemed adequate notice,

and any broker or dealer who makes or creates a market for such

security, and any other person having a bona fide interest in such

proceeding, shall upon application be entitled to be heard.

(6) Any security for which unlisted trading privileges are

continued or extended pursuant to this subsection shall be deemed

to be registered on a national securities exchange within the

meaning of this chapter. The powers and duties of the Commission

under this chapter shall be applicable to the rules of an exchange

in respect of any such security. The Commission may, by such rules

and regulations as it deems necessary or appropriate in the public

interest or for the protection of investors, either unconditionally

or upon specified terms and conditions, or for stated periods,

exempt such securities from the operation of any provision of

section 78m, 78n, or 78p of this title.

(g) Registration of securities by issuer; exemptions

(1) Every issuer which is engaged in interstate commerce, or in a

business affecting interstate commerce, or whose securities are

traded by use of the mails or any means or instrumentality of

interstate commerce shall -

(A) within one hundred and twenty days after the last day of

its first fiscal year ended after July 1, 1964, on which the

issuer has total assets exceeding $1,000,000 and a class of

equity security (other than an exempted security) held of record

by seven hundred and fifty or more persons; and

(B) within one hundred and twenty days after the last day of

its first fiscal year ended after two years from July 1, 1964, on

which the issuer has total assets exceeding $1,000,000 and a

class of equity security (other than an exempted security) held

of record by five hundred or more but less than seven hundred and

fifty persons,

register such security by filing with the Commission a registration

statement (and such copies thereof as the Commission may require)

with respect to such security containing such information and

documents as the Commission may specify comparable to that which is

required in an application to register a security pursuant to

subsection (b) of this section. Each such registration statement

shall become effective sixty days after filing with the Commission

or within such shorter period as the Commission may direct. Until

such registration statement becomes effective it shall not be

deemed filed for the purposes of section 78r of this title. Any

issuer may register any class of equity security not required to be

registered by filing a registration statement pursuant to the

provisions of this paragraph. The Commission is authorized to

extend the date upon which any issuer or class of issuers is

required to register a security pursuant to the provisions of this

paragraph.

(2) The provisions of this subsection shall not apply in respect

of -

(A) any security listed and registered on a national securities

exchange.

(B) any security issued by an investment company registered

pursuant to section 80a-8 of this title.

(C) any security, other than permanent stock, guaranty stock,

permanent reserve stock, or any similar certificate evidencing

nonwithdrawable capital, issued by a savings and loan

association, building and loan association, cooperative bank,

homestead association, or similar institution, which is

supervised and examined by State or Federal authority having

supervision over any such institution.

(D) any security of an issuer organized and operated

exclusively for religious, educational, benevolent, fraternal,

charitable, or reformatory purposes and not for pecuniary profit,

and no part of the net earnings of which inures to the benefit of

any private shareholder or individual; or any security of a fund

that is excluded from the definition of an investment company

under section 80a-3(c)(10)(B) of this title.

(E) any security of an issuer which is a ''cooperative

association'' as defined in the Agricultural Marketing Act,

approved June 15, 1929, as amended (12 U.S.C. 1141 et seq.), or a

federation of such cooperative associations, if such federation

possesses no greater powers or purposes than cooperative

associations so defined.

(F) any security issued by a mutual or cooperative organization

which supplies a commodity or service primarily for the benefit

of its members and operates not for pecuniary profit, but only if

the security is part of a class issuable only to persons who

purchase commodities or services from the issuer, the security is

transferable only to a successor in interest or occupancy of

premises serviced or to be served by the issuer, and no dividends

are payable to the holder of the security.

(G) any security issued by an insurance company if all of the

following conditions are met:

(i) Such insurance company is required to and does file an

annual statement with the Commissioner of Insurance (or other

officer or agency performing a similar function) of its

domiciliary State, and such annual statement conforms to that

prescribed by the National Association of Insurance

Commissioners or in the determination of such State

commissioner, officer or agency substantially conforms to that

so prescribed.

(ii) Such insurance company is subject to regulation by its

domiciliary State of proxies, consents, or authorizations in

respect of securities issued by such company and such

regulation conforms to that prescribed by the National

Association of Insurance Commissioners.

(iii) After July 1, 1966, the purchase and sales of

securities issued by such insurance company by beneficial

owners, directors, or officers of such company are subject to

regulation (including reporting) by its domiciliary State

substantially in the manner provided in section 78p of this

title.

(H) any interest or participation in any collective trust funds

maintained by a bank or in a separate account maintained by an

insurance company which interest or participation is issued in

connection with (i) a stock-bonus, pension, or profit-sharing

plan which meets the requirements for qualification under section

401 of title 26, or (ii) an annuity plan which meets the

requirements for deduction of the employer's contribution under

section 404(a)(2) of title 26.

(3) The Commission may by rules or regulations or, on its own

motion, after notice and opportunity for hearing, by order, exempt

from this subsection any security of a foreign issuer, including

any certificate of deposit for such a security, if the Commission

finds that such exemption is in the public interest and is

consistent with the protection of investors.

(4) Registration of any class of security pursuant to this

subsection shall be terminated ninety days, or such shorter period

as the Commission may determine, after the issuer files a

certification with the Commission that the number of holders of

record of such class of security is reduced to less than three

hundred persons. The Commission shall after notice and opportunity

for hearing deny termination of registration if it finds that the

certification is untrue. Termination of registration shall be

deferred pending final determination on the question of denial.

(5) For the purposes of this subsection the term ''class'' shall

include all securities of an issuer which are of substantially

similar character and the holders of which enjoy substantially

similar rights and privileges. The Commission may for the purpose

of this subsection define by rules and regulations the terms

''total assets'' and ''held of record'' as it deems necessary or

appropriate in the public interest or for the protection of

investors in order to prevent circumvention of the provisions of

this subsection. For purposes of this subsection, a security

futures product shall not be considered a class of equity security

of the issuer of the securities underlying the security futures

product.

(h) Exemption by rules and regulations from certain provisions of

section

The Commission may by rules and regulations, or upon application

of an interested person, by order, after notice and opportunity for

hearing, exempt in whole or in part any issuer or class of issuers

from the provisions of subsection (g) of this section or from

section 78m, 78n, or 78o(d) of this title or may exempt from

section 78p of this title any officer, director, or beneficial

owner of securities of any issuer, any security of which is

required to be registered pursuant to subsection (g) hereof, upon

such terms and conditions and for such period as it deems necessary

or appropriate, if the Commission finds, by reason of the number of

public investors, amount of trading interest in the securities, the

nature and extent of the activities of the issuer, income or assets

of the issuer, or otherwise, that such action is not inconsistent

with the public interest or the protection of investors. The

Commission may, for the purposes of any of the above-mentioned

sections or subsections of this chapter, classify issuers and

prescribe requirements appropriate for each such class.

(i) Securities issued by banks

In respect of any securities issued by banks and savings

associations the deposits of which are insured in accordance with

the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), the

powers, functions, and duties vested in the Commission to

administer and enforce this section and sections 78j-1(m), 78m,

78n(a), 78n(c), 78n(d), 78n(f), and 78p of this title, and sections

7241, 7242, 7243, 7244, 7261(b), 7262, 7264, and 7265 of this

title, (1) with respect to national banks and banks operating under

the Code of Law for the District of Columbia are vested in the

Comptroller of the Currency, (2) with respect to all other member

banks of the Federal Reserve System are vested in the Board of

Governors of the Federal Reserve System, (3) with respect to all

other insured banks are vested in the Federal Deposit Insurance

Corporation, and (4) with respect to savings associations the

accounts of which are insured by the Federal Deposit Insurance

Corporation are vested in the Office of Thrift Supervision. The

Comptroller of the Currency, the Board of Governors of the Federal

Reserve System, the Federal Deposit Insurance Corporation, and the

Office of Thrift Supervision shall have the power to make such

rules and regulations as may be necessary for the execution of the

functions vested in them as provided in this subsection. In

carrying out their responsibilities under this subsection, the

agencies named in the first sentence of this subsection shall issue

substantially similar regulations to regulations and rules issued

by the Commission under this section and sections 78j-1(m), 78m,

78n(a), 78n(c), 78n(d), 78n(f), and 78p of this title, and sections

7241, 7242, 7243, 7244, 7261(b), 7262, 7264, and 7265 of this

title, unless they find that implementation of substantially

similar regulations with respect to insured banks and insured

institutions are not necessary or appropriate in the public

interest or for protection of investors, and publish such findings,

and the detailed reasons therefor, in the Federal Register. Such

regulations of the above-named agencies, or the reasons for failure

to publish such substantially similar regulations to those of the

Commission, shall be published in the Federal Register within 120

days of October 28, 1974, and, thereafter, within 60 days of any

changes made by the Commission in its relevant regulations and

rules.

(j) Denial, suspension, or revocation of registration; notice and

hearing

The Commission is authorized, by order, as it deems necessary or

appropriate for the protection of investors to deny, to suspend the

effective date of, to suspend for a period not exceeding twelve

months, or to revoke the registration of a security, if the

Commission finds, on the record after notice and opportunity for

hearing, that the issuer, of such security has failed to comply

with any provision of this chapter or the rules and regulations

thereunder. No member of a national securities exchange, broker,

or dealer shall make use of the mails or any means or

instrumentality of interstate commerce to effect any transaction

in, or to induce the purchase or sale of, any security the

registration of which has been and is suspended or revoked pursuant

to the preceding sentence.

(k) Trading suspensions; emergency authority

(1) Trading suspensions

If in its opinion the public interest and the protection of

investors so require, the Commission is authorized by order -

(A) summarily to suspend trading in any security (other than

an exempted security) for a period not exceeding 10 business

days, and

(B) summarily to suspend all trading on any national

securities exchange or otherwise, in securities other than

exempted securities, for a period not exceeding 90 calendar

days.

The action described in subparagraph (B) shall not take effect

unless the Commission notifies the President of its decision and

the President notifies the Commission that the President does not

disapprove of such decision. If the actions described in

subparagraph (A) or (B) involve a security futures product, the

Commission shall consult with and consider the views of the

Commodity Futures Trading Commission.

(2) Emergency orders

(A) The Commission, in an emergency, may by order summarily

take such action to alter, supplement, suspend, or impose

requirements or restrictions with respect to any matter or action

subject to regulation by the Commission or a self-regulatory

organization under this chapter, as the Commission determines is

necessary in the public interest and for the protection of

investors -

(i) to maintain or restore fair and orderly securities

markets (other than markets in exempted securities); or

(ii) to ensure prompt, accurate, and safe clearance and

settlement of transactions in securities (other than exempted

securities).

(B) An order of the Commission under this paragraph (2) shall

continue in effect for the period specified by the Commission,

and may be extended, except that in no event shall the

Commission's action continue in effect for more than 10 business

days, including extensions. If the actions described in

subparagraph (A) involve a security futures product, the

Commission shall consult with and consider the views of the

Commodity Futures Trading Commission. In exercising its authority

under this paragraph, the Commission shall not be required to

comply with the provisions of section 553 of title 5 or with the

provisions of section 78s(c) of this title.

(3) Termination of emergency actions by President

The President may direct that action taken by the Commission

under paragraph (1)(B) or paragraph (2) of this subsection shall

not continue in effect.

(4) Compliance with orders

No member of a national securities exchange, broker, or dealer

shall make use of the mails or any means or instrumentality of

interstate commerce to effect any transaction in, or to induce

the purchase or sale of, any security in contravention of an

order of the Commission under this subsection unless such order

has been stayed, modified, or set aside as provided in paragraph

(5) of this subsection or has ceased to be effective upon

direction of the President as provided in paragraph (3).

(5) Limitations on review of orders

An order of the Commission pursuant to this subsection shall be

subject to review only as provided in section 78y(a) of this

title. Review shall be based on an examination of all the

information before the Commission at the time such order was

issued. The reviewing court shall not enter a stay, writ of

mandamus, or similar relief unless the court finds, after notice

and hearing before a panel of the court, that the Commission's

action is arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law.

(6) ''Emergency'' defined

For purposes of this subsection, the term ''emergency'' means a

major market disturbance characterized by or constituting -

(A) sudden and excessive fluctuations of securities prices

generally, or a substantial threat thereof, that threaten fair

and orderly markets, or

(B) a substantial disruption of the safe or efficient

operation of the national system for clearance and settlement

of securities, or a substantial threat thereof.

(l) Issuance of any security in contravention of rules and

regulations; application to annuity contracts and variable life

policies

It shall be unlawful for an issuer, any class of whose securities

is registered pursuant to this section or would be required to be

so registered except for the exemption from registration provided

by subsection (g)(2)(B) or (g)(2)(G) of this section, by the use of

any means or instrumentality of interstate commerce, or of the

mails, to issue, either originally or upon transfer, any of such

securities in a form or with a format which contravenes such rules

and regulations as the Commission may prescribe as necessary or

appropriate for the prompt and accurate clearance and settlement of

transactions in securities. The provisions of this subsection

shall not apply to variable annuity contracts or variable life

policies issued by an insurance company or its separate accounts.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 12, 48 Stat. 892; May 27,

1936, ch. 462, Sec. 1, 49 Stat. 1375; Aug. 10, 1954, ch. 667, title

II, Sec. 202, 68 Stat. 686; Pub. L. 88-467, Sec. 3, Aug. 20, 1964,

78 Stat. 565; Pub. L. 90-439, Sec. 1, July 29, 1968, 82 Stat. 454;

Pub. L. 91-547, Sec. 28(c), Dec. 14, 1970, 84 Stat. 1435; Pub. L.

93-495, title I, Sec. 105(b), Oct. 28, 1974, 88 Stat. 1503; Pub. L.

94-29, Sec. 8, 9, June 4, 1975, 89 Stat. 117, 118; Pub. L. 99-514,

Sec. 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 100-181, title III,

Sec. 314, Dec. 4, 1987, 101 Stat. 1256; Pub. L. 101-73, title VII,

Sec. 744(u)(2), Aug. 9, 1989, 103 Stat. 441; Pub. L. 101-432, Sec.

2, Oct. 16, 1990, 104 Stat. 963; Pub. L. 103-389, Sec. 2, Oct. 22,

1994, 108 Stat. 4081; Pub. L. 104-62, Sec. 4(d), Dec. 8, 1995, 109

Stat. 685; Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec. 206(e),

208(b)(1), (2)), Dec. 21, 2000, 114 Stat. 2763, 2763A-431,

2763A-435; Pub. L. 107-204, Sec. 3(b)(4), title II, Sec. 205(c)(1),

July 30, 2002, 116 Stat. 749, 774.)

-REFTEXT-

REFERENCES IN TEXT

This chapter, referred to in subsecs. (a), (f), (j), and

(k)(2)(A), was in the original ''this title''. See References in

Text note set out under section 78a of this title.

The Securities Act of 1933, referred to in subsec.

(f)(1)(G)(i)(I), is act May 27, 1933, ch. 38, title I, 48 Stat. 74,

as amended, which is classified generally to subchapter I (Sec. 77a

et seq.) of chapter 2A of this title. For complete classification

of this Act to the Code, see section 77a of this title and Tables.

The Agricultural Marketing Act, approved June 15, 1929, as

amended, referred to in subsec. (g)(2)(E), is act June 15, 1929,

ch. 24, 46 Stat. 11, as amended, which is classified generally to

chapter 7A (Sec. 1141 et seq.) of Title 12, Banks and Banking. For

complete classification of this Act to the Code, see section

1141j(f) of Title 12 and Tables.

The Federal Deposit Insurance Act, referred to in subsec. (i), is

act Sept. 21, 1950, ch. 967, Sec. 2, 64 Stat. 873, as amended,

which is classified generally to chapter 16 (Sec. 1811 et seq.) of

Title 12, Banks and Banking. For complete classification of this

Act to the Code, see Short Title note set out under section 1811 of

Title 12 and Tables.

-MISC2-

AMENDMENTS

2002 - Subsec. (b)(1)(J), (K). Pub. L. 107-204, Sec. 205(c)(1),

substituted ''a registered public accounting firm'' for

''independent public accountants''.

Subsec. (i). Pub. L. 107-204, Sec. 3(b)(4)(B), substituted ''and

78p of this title, and sections 7241, 7242, 7243, 7244, 7261(b),

7262, 7264, and 7265 of this title,'' for ''and 78p of this

title,'' in two places.

Pub. L. 107-204, Sec. 3(b)(4)(A), substituted ''this section and

sections 78j-1(m), 78m'' for ''this section and sections 78m'' in

two places.

2000 - Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

208(b)(1)), inserted at end ''The provisions of this subsection

shall not apply in respect of a security futures product traded on

a national securities exchange.''

Subsec. (g)(5). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

208(b)(2)), inserted at end ''For purposes of this subsection, a

security futures product shall not be considered a class of equity

security of the issuer of the securities underlying the security

futures product.''

Subsec. (k)(1). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

206(e)(1)), inserted at end ''If the actions described in

subparagraph (A) or (B) involve a security futures product, the

Commission shall consult with and consider the views of the

Commodity Futures Trading Commission.''

Subsec. (k)(2)(B). Pub. L. 106-554, Sec. 1(a)(5) (title II, Sec.

206(e)(2)), inserted after first sentence ''If the actions

described in subparagraph (A) involve a security futures product,

the Commission shall consult with and consider the views of the

Commodity Futures Trading Commission.''

1995 - Subsec. (g)(2)(D). Pub. L. 104-62 inserted before period

at end ''; or any security of a fund that is excluded from the

definition of an investment company under section 80a-3(c)(10)(B)

of this title''.

1994 - Subsec. (f)(1), (2). Pub. L. 103-389, Sec. 2(a), added

pars. (1) and (2) and struck out former pars. (1) and (2) which

related to extension of unlisted trading privileges for securities

originally listed on another national exchange and approval process

for application for extension of such privileges, respectively.

Subsec. (f)(3). Pub. L. 103-389, Sec. 2(b), substituted

''Notwithstanding paragraph (2), the Commission'' for ''The

Commission''.

1990 - Subsec. (k). Pub. L. 101-432 amended subsec. (k)

generally. Prior to amendment, subsec. (k) read as follows: ''If

in its opinion the public interest and the protection of investors

so require, the Commission is authorized summarily to suspend

trading in any security (other than an exempted security) for a

period not exceeding ten days, or with the approval of the

President, summarily to suspend all trading on any national

securities exchange or otherwise, in securities other than exempted

securities, for a period not exceeding ninety days. No member of a

national securities exchange, broker, or dealer shall make use of

the mails or any means or instrumentality of interstate commerce to

effect any transaction in, or to induce the purchase or sale of,

any security in which trading is so suspended.''

1989 - Subsec. (i). Pub. L. 101-73, in first sentence, inserted

''and savings associations'' after ''securities issued by banks'',

struck out ''or institutions the accounts of which are insured by

the Federal Savings and Loan Insurance Corporation'' before '', the

powers, functions, and duties'', inserted new cl. (4) and struck

out former cl. (4) which read ''with respect to institutions the

accounts of which are insured by the Federal Savings and Loan

Insurance Corporation are vested in the Federal Home Loan Bank

Board'', and, in second sentence, substituted ''Office of Thrift

Supervision'' for ''Federal Home Loan Bank Board''.

1987 - Subsec. (m). Pub. L. 100-181 struck out subsec. (m) which

read as follows: ''The Commission is authorized and directed to

make a study and investigation of the practice of recording the

ownership of securities in the records of the issuer in other than

the name of the beneficial owner of such securities to determine

(1) whether such practice is consistent with the purposes of this

chapter, with particular reference to subsection (g) of this

section and sections 78m, 78n, 78o(d), 78p, and 78q-1 of this

title, and (2) whether steps can be taken to facilitate

communications between issuers and the beneficial owners of their

securities while at the same time retaining the benefits of such

practice. The Commission shall report to the Congress its

preliminary findings within six months after June 4, 1975, and its

final conclusions and recommendations within one year of such

date.''

1986 - Subsec. (g)(2)(H). Pub. L. 99-514 substituted ''Internal

Revenue Code of 1986'' for ''Internal Revenue Code of 1954'', which

for purposes of codification was translated as ''title 26'' thus

requiring no change in text.

1975 - Subsec. (f)(1). Pub. L. 94-29, Sec. 8(1), added subpar.

(C) and in provisions following subpar. (C), substituted ''is

based'' for ''was originally based'' and ''remains listed and

registered on a national securities exchange'' for ''shall remain

listed and registered on any other national securities exchange''.

Subsec. (f)(2). Pub. L. 94-29, Sec. 8(1), substituted ''after

notice and opportunity for hearing'' for ''after appropriate notice

and opportunity for hearing'' and ''consistent with the maintenance

of fair and orderly markets and the protection of investors'' for

''necessary or appropriate in the public interest or for the

protection of investors'' in existing provisions and added the

enumeration of matters to be taken into account by the Commission

in considering an application for the extension of unlisted trading

privileges to a security not listed and registered on a national

securities exchange.

Subsec. (f)(6). Pub. L. 94-29, Sec. 8(2), substituted ''this

chapter'' for ''section 78s(b) of this title''.

Subsecs. (j) to (m). Pub. L. 94-29, Sec. 9, added subsecs. (j) to

(m).

1974 - Subsec. (i). Pub. L. 93-495 added coverage of institutions

insured by the Federal Savings and Loan Insurance Corporation, cl.

(4), and provisions authorizing the Federal Home Loan Bank Board to

promulgate necessary rules and regulations, and substituted

provisions relating to issuance of regulations in order to

implement agency responsibility under this subsec. for provisions

relating to the binding effect of rules, regulations, forms or

orders issued or adopted by the Commission pursuant to this

chapter.

1970 - Subsec. (g)(2)(H). Pub. L. 91-547 added subpar. (H).

1968 - Subsec. (i). Pub. L. 90-439 inserted ''78n(d), 78n(f),''

after ''78n(c)''.

1964 - Subsec. (b)(1)(I) to (L). Pub. L. 88-467, Sec. 3(a)(1),

(2), added subpar. (I) and redesignated former subpars. (I) to (K)

as (J) to (L), respectively.

Subsec. (b)(3). Pub. L. 88-467, Sec. 3(a)(3), added par. (3).

Subsec. (f)(1). Pub. L. 88-467, Sec. 3(b), designated first par.

as (1), redesignated cl. (1) as cl. (A) and substituted therein

''July 1, 1964'' for ''March 1, 1934'', redesignated cl. (2) as cl.

(B) and struck out the provision for continuation of unlisted

trading privileges, which is now incorporated in concluding

sentence, and struck out cl. (3) which permitted a national

security exchange to extend unlisted trading privileges to any

security in respect to which there was available information

substantially equivalent to that available in respect to a security

duly listed and registered on a national securities exchange, so

long as the registration statement was effective and the reports

and data continued to be filed.

Subsec. (f)(2). Pub. L. 88-467, Sec. 3(b), designated first

sentence of second par. as (2) and substituted therein ''finds,

after appropriate notice and opportunity for hearing, that the

extension'' for ''finds that the continuation or extension'', and

struck out second through sixth sentences of such second par. which

related as follows: the second sentence, to notice and opportunity

for hearing, now incorporated in par. (2); the third sentence, to

conditions (respecting sufficiently widespread public distribution

and sufficient public trading activity) for approval of application

to extend unlisted trading privileges to any security pursuant to

former clauses (2) and (3) of subsec. (f); the fourth sentence, to

terms and conditions (subjecting issuer, officers, and directors of

issuer, and beneficial owners of more than 10 per centum of the

securities to duties equivalent to duties if the securities were

registered on a national security exchange) for approval of

application to extend unlisted trading privileges to any security

pursuant to former clause (3) of subsec. (f); the fifth sentence,

to requirement for differentiation by national security exchanges

between quotations or transactions in listed securities and in

securities with unlisted trading privileges, now covered by section

78s(b) of this title; the sixth sentence, to grouping under

separate headings of quotations or transactions in listed

securities and in securities with unlisted trading privileges, in

the publication of quotations or transactions.

Subsec. (f)(3). Pub. L. 88-467, Sec. 3(b), designated third par.

as (3).

Subsec. (f)(4). Pub. L. 88-467, Sec. 3(b), designated second

sentence of fourth par. as (4), struck out ''by reason of

inadequate public distribution of such security in the vicinity of

said exchange, or by reason of inadequate public trading activity

or of the character of trading therein on said exchange,'' before

''such termination or suspension is necessary'', and struck out

first sentence of fourth par. which provided for the termination

under certain conditions of unlisted trading privileges continued

for any security pursuant to former cl. (1) of subsec. (f), now

incorporated in par. (1)(A) of subsec. (f).

Subsec. (f)(5), (6). Pub. L. 88-467, Sec. 3(b), designated fifth

and sixth pars. as (5) and (6).

Subsecs. (g) to (i). Pub. L. 88-467, Sec. 3(c)-(e), added

subsecs. (g) to (i).

1954 - Subsec. (d). Act Aug. 10, 1954, repealed last sentence

requiring that rules and regulations limit the registration of

unissued security to specified cases.

1936 - Subsec. (f). Act May 27, 1936, amended first par. and

added subsequent pars.

EFFECTIVE DATE OF 1995 AMENDMENT

Amendment by Pub. L. 104-62 applicable as defense to any claim in

administrative and judicial actions pending on or commenced after

Dec. 8, 1995, that any person, security, interest, or participation

of type described in Pub. L. 104-62 is subject to the Securities

Act of 1933, the Securities Exchange Act of 1934, the Investment

Company Act of 1940, the Investment Advisers Act of 1940, or any

State statute or regulation preempted as provided in section 80a-3a

of this title, except as specifically provided in such statutes,

see section 7 of Pub. L. 104-62, set out as a note under section

77c of this title.

EFFECTIVE DATE OF 1975 AMENDMENT

Amendment by Pub. L. 94-29 effective June 4, 1975, see section

31(a) of Pub. L. 94-29, set out as a note under section 78b of this

title.

EFFECTIVE DATE OF 1970 AMENDMENT

Amendment by Pub. L. 91-547 effective Dec. 14, 1970, see section

30 of Pub. L. 91-547, set out as a note under section 80a-52 of

this title.

EFFECTIVE DATE OF 1964 AMENDMENT

Amendment by section 3(a), (c) of Pub. L. 88-467 effective July

1, 1964, and amendment by section 3(b), (d), (e) of Pub. L. 88-467

effective Aug. 20, 1964, see section 13 of Pub. L. 88-467, set out

as a note under section 78c of this title.

EFFECTIVE DATE OF 1954 AMENDMENT

Amendment by act Aug. 10, 1954, effective 60 days after Aug. 10,

1954, see note under section 77b of this title.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of Securities and Exchange Commission,

with certain exceptions, to Chairman of such Commission, see Reorg.

Plan No. 10 of 1950, Sec. 1, 2, eff. May 24, 1950, 15 F.R. 3175,

64 Stat. 1265, set out under section 78d of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 77h-1, 77t, 78c, 78d-1,

78f, 78j-1, 78k-1, 78l-1, 78m, 78n, 78o, 78p, 78q-1, 78u, 78u-3,

78dd-1, 78hh, 78hh-1, 80a-53, 3904 of this title; title 6 section

131; title 7 sections 1a, 2; title 12 section 3305; title 16

section 824c; title 18 sections 1348, 1514A; title 26 sections 162,

409; title 42 section 9675; title 43 section 1625.

-CITE-

15 USC Sec. 78l-1 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78l-1. Applications for unlisted trading privileges deemed

filed under section 78l of this title

-STATUTE-

Any application to continue unlisted trading privileges for any

security heretofore filed by any exchange and approved by the

Commission pursuant to clause (1) of subsection (f) of section 78l

of this title and rules and regulations thereunder shall be deemed

to have been filed and approved pursuant to clause (1) of said

subsection (f).

-SOURCE-

(May 27, 1936, ch. 462, Sec. 2, 49 Stat. 1377.)

-COD-

CODIFICATION

Section was not enacted as a part of the Securities Exchange Act

of 1934 which comprises this chapter.

-CITE-

15 USC Sec. 78m 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78m. Periodical and other reports

-STATUTE-

(a) Reports by issuer of security; contents

Every issuer of a security registered pursuant to section 78l of

this title shall file with the Commission, in accordance with such

rules and regulations as the Commission may prescribe as necessary

or appropriate for the proper protection of investors and to insure

fair dealing in the security -

(1) such information and documents (and such copies thereof) as

the Commission shall require to keep reasonably current the

information and documents required to be included in or filed

with an application or registration statement filed pursuant to

section 78l of this title, except that the Commission may not

require the filing of any material contract wholly executed

before July 1, 1962.

(2) such annual reports (and such copies thereof), certified if

required by the rules and regulations of the Commission by

independent public accountants, and such quarterly reports (and

such copies thereof), as the Commission may prescribe.

Every issuer of a security registered on a national securities

exchange shall also file a duplicate original of such information,

documents, and reports with the exchange.

(b) Form of report; books, records, and internal accounting;

directives

(1) The Commission may prescribe, in regard to reports made

pursuant to this chapter, the form or forms in which the required

information shall be set forth, the items or details to be shown in

the balance sheet and the earning statement, and the methods to be

followed in the preparation of reports, in the appraisal or

valuation of assets and liabilities, in the determination of

depreciation and depletion, in the differentiation of recurring and

nonrecurring income, in the differentiation of investment and

operating income, and in the preparation, where the Commission

deems it necessary or desirable, of separate and/or consolidated

balance sheets or income accounts of any person directly or

indirectly controlling or controlled by the issuer, or any person

under direct or indirect common control with the issuer; but in the

case of the reports of any person whose methods of accounting are

prescribed under the provisions of any law of the United States, or

any rule or regulation thereunder, the rules and regulations of the

Commission with respect to reports shall not be inconsistent with

the requirements imposed by such law or rule or regulation in

respect of the same subject matter (except that such rules and

regulations of the Commission may be inconsistent with such

requirements to the extent that the Commission determines that the

public interest or the protection of investors so requires).

(2) Every issuer which has a class of securities registered

pursuant to section 78l of this title and every issuer which is

required to file reports pursuant to section 78o(d) of this title

shall -

(A) make and keep books, records, and accounts, which, in

reasonable detail, accurately and fairly reflect the transactions

and dispositions of the assets of the issuer;

(B) devise and maintain a system of internal accounting

controls sufficient to provide reasonable assurances that -

(i) transactions are executed in accordance with management's

general or specific authorization;

(ii) transactions are recorded as necessary (I) to permit

preparation of financial statements in conformity with

generally accepted accounting principles or any other criteria

applicable to such statements, and (II) to maintain

accountability for assets;

(iii) access to assets is permitted only in accordance with

management's general or specific authorization; and

(iv) the recorded accountability for assets is compared with

the existing assets at reasonable intervals and appropriate

action is taken with respect to any differences; and

(C) notwithstanding any other provision of law, pay the

allocable share of such issuer of a reasonable annual accounting

support fee or fees, determined in accordance with section 7219

of this title.

(3)(A) With respect to matters concerning the national security

of the United States, no duty or liability under paragraph (2) of

this subsection shall be imposed upon any person acting in

cooperation with the head of any Federal department or agency

responsible for such matters if such act in cooperation with such

head of a department or agency was done upon the specific, written

directive of the head of such department or agency pursuant to

Presidential authority to issue such directives. Each directive

issued under this paragraph shall set forth the specific facts and

circumstances with respect to which the provisions of this

paragraph are to be invoked. Each such directive shall, unless

renewed in writing, expire one year after the date of issuance.

(B) Each head of a Federal department or agency of the United

States who issues a directive pursuant to this paragraph shall

maintain a complete file of all such directives and shall, on

October 1 of each year, transmit a summary of matters covered by

such directives in force at any time during the previous year to

the Permanent Select Committee on Intelligence of the House of

Representatives and the Select Committee on Intelligence of the

Senate.

(4) No criminal liability shall be imposed for failing to comply

with the requirements of paragraph (2) of this subsection except as

provided in paragraph (5) of this subsection.

(5) No person shall knowingly circumvent or knowingly fail to

implement a system of internal accounting controls or knowingly

falsify any book, record, or account described in paragraph (2).

(6) Where an issuer which has a class of securities registered

pursuant to section 78l of this title or an issuer which is

required to file reports pursuant to section 78o(d) of this title

holds 50 per centum or less of the voting power with respect to a

domestic or foreign firm, the provisions of paragraph (2) require

only that the issuer proceed in good faith to use its influence, to

the extent reasonable under the issuer's circumstances, to cause

such domestic or foreign firm to devise and maintain a system of

internal accounting controls consistent with paragraph (2). Such

circumstances include the relative degree of the issuer's ownership

of the domestic or foreign firm and the laws and practices

governing the business operations of the country in which such firm

is located. An issuer which demonstrates good faith efforts to use

such influence shall be conclusively presumed to have complied with

the requirements of paragraph (2).

(7) For the purpose of paragraph (2) of this subsection, the

terms ''reasonable assurances'' and ''reasonable detail'' mean such

level of detail and degree of assurance as would satisfy prudent

officials in the conduct of their own affairs.

(c) Alternative reports

If in the judgment of the Commission any report required under

subsection (a) of this section is inapplicable to any specified

class or classes of issuers, the Commission shall require in lieu

thereof the submission of such reports of comparable character as

it may deem applicable to such class or classes of issuers.

(d) Reports by persons acquiring more than five per centum of

certain classes of securities

(1) Any person who, after acquiring directly or indirectly the

beneficial ownership of any equity security of a class which is

registered pursuant to section 78l of this title, or any equity

security of an insurance company which would have been required to

be so registered except for the exemption contained in section

78l(g)(2)(G) of this title, or any equity security issued by a

closed-end investment company registered under the Investment

Company Act of 1940 (15 U.S.C. 80a-1 et seq.) or any equity

security issued by a Native Corporation pursuant to section

1629c(d)(6) of title 43, is directly or indirectly the beneficial

owner of more than 5 per centum of such class shall, within ten

days after such acquisition, send to the issuer of the security at

its principal executive office, by registered or certified mail,

send to each exchange where the security is traded, and file with

the Commission, a statement containing such of the following

information, and such additional information, as the Commission may

by rules and regulations, prescribe as necessary or appropriate in

the public interest or for the protection of investors -

(A) the background, and identity, residence, and citizenship

of, and the nature of such beneficial ownership by, such person

and all other persons by whom or on whose behalf the purchases

have been or are to be effected;

(B) the source and amount of the funds or other consideration

used or to be used in making the purchases, and if any part of

the purchase price is represented or is to be represented by

funds or other consideration borrowed or otherwise obtained for

the purpose of acquiring, holding, or trading such security, a

description of the transaction and the names of the parties

thereto, except that where a source of funds is a loan made in

the ordinary course of business by a bank, as defined in section

78c(a)(6) of this title, if the person filing such statement so

requests, the name of the bank shall not be made available to the

public;

(C) if the purpose of the purchases or prospective purchases is

to acquire control of the business of the issuer of the

securities, any plans or proposals which such persons may have to

liquidate such issuer, to sell its assets to or merge it with any

other persons, or to make any other major change in its business

or corporate structure;

(D) the number of shares of such security which are

beneficially owned, and the number of shares concerning which

there is a right to acquire, directly or indirectly, by (i) such

person, and (ii) by each associate of such person, giving the

background, identity, residence, and citizenship of each such

associate; and

(E) information as to any contracts, arrangements, or

understandings with any person with respect to any securities of

the issuer, including but not limited to transfer of any of the

securities, joint ventures, loan or option arrangements, puts or

calls, guaranties of loans, guaranties against loss or guaranties

of profits, division of losses or profits, or the giving or

withholding of proxies, naming the persons with whom such

contracts, arrangements, or understandings have been entered

into, and giving the details thereof.

(2) If any material change occurs in the facts set forth in the

statements to the issuer and the exchange, and in the statement

filed with the Commission, an amendment shall be transmitted to the

issuer and the exchange and shall be filed with the Commission, in

accordance with such rules and regulations as the Commission may

prescribe as necessary or appropriate in the public interest or for

the protection of investors.

(3) When two or more persons act as a partnership, limited

partnership, syndicate, or other group for the purpose of

acquiring, holding, or disposing of securities of an issuer, such

syndicate or group shall be deemed a ''person'' for the purposes of

this subsection.

(4) In determining, for purposes of this subsection, any

percentage of a class of any security, such class shall be deemed

to consist of the amount of the outstanding securities of such

class, exclusive of any securities of such class held by or for the

account of the issuer or a subsidiary of the issuer.

(5) The Commission, by rule or regulation or by order, may permit

any person to file in lieu of the statement required by paragraph

(1) of this subsection or the rules and regulations thereunder, a

notice stating the name of such person, the number of shares of any

equity securities subject to paragraph (1) which are owned by him,

the date of their acquisition and such other information as the

Commission may specify, if it appears to the Commission that such

securities were acquired by such person in the ordinary course of

his business and were not acquired for the purpose of and do not

have the effect of changing or influencing the control of the

issuer nor in connection with or as a participant in any

transaction having such purpose or effect.

(6) The provisions of this subsection shall not apply to -

(A) any acquisition or offer to acquire securities made or

proposed to be made by means of a registration statement under

the Securities Act of 1933 (15 U.S.C. 77a et seq.);

(B) any acquisition of the beneficial ownership of a security

which, together with all other acquisitions by the same person of

securities of the same class during the preceding twelve months,

does not exceed 2 per centum of that class;

(C) any acquisition of an equity security by the issuer of such

security;

(D) any acquisition or proposed acquisition of a security which

the Commission, by rules or regulations or by order, shall exempt

from the provisions of this subsection as not entered into for

the purpose of, and not having the effect of, changing or

influencing the control of the issuer or otherwise as not

comprehended within the purposes of this subsection.

(e) Purchase of securities by issuer

(1) It shall be unlawful for an issuer which has a class of

equity securities registered pursuant to section 78l of this title,

or which is a closed-end investment company registered under the

Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), to

purchase any equity security issued by it if such purchase is in

contravention of such rules and regulations as the Commission, in

the public interest or for the protection of investors, may adopt

(A) to define acts and practices which are fraudulent, deceptive,

or manipulative, and (B) to prescribe means reasonably designed to

prevent such acts and practices. Such rules and regulations may

require such issuer to provide holders of equity securities of such

class with such information relating to the reasons for such

purchase, the source of funds, the number of shares to be

purchased, the price to be paid for such securities, the method of

purchase, and such additional information, as the Commission deems

necessary or appropriate in the public interest or for the

protection of investors, or which the Commission deems to be

material to a determination whether such security should be sold.

(2) For the purpose of this subsection, a purchase by or for the

issuer or any person controlling, controlled by, or under common

control with the issuer, or a purchase subject to control of the

issuer or any such person, shall be deemed to be a purchase by the

issuer. The Commission shall have power to make rules and

regulations implementing this paragraph in the public interest and

for the protection of investors, including exemptive rules and

regulations covering situations in which the Commission deems it

unnecessary or inappropriate that a purchase of the type described

in this paragraph shall be deemed to be a purchase by the issuer

for purposes of some or all of the provisions of paragraph (1) of

this subsection.

(3) At the time of filing such statement as the Commission may

require by rule pursuant to paragraph (1) of this subsection, the

person making the filing shall pay to the Commission a fee at a

rate that, subject to paragraphs (5) and (6), is equal to $92 per

$1,000,000 of the value of securities proposed to be purchased.

The fee shall be reduced with respect to securities in an amount

equal to any fee paid with respect to any securities issued in

connection with the proposed transaction under section 6(b) of the

Securities Act of 1933 (15 U.S.C. 77f(b)), or the fee paid under

that section shall be reduced in an amount equal to the fee paid to

the Commission in connection with such transaction under this

paragraph.

(4) Offsetting collections. - Fees collected pursuant to this

subsection for any fiscal year shall be deposited and credited as

offsetting collections to the account providing appropriations to

the Commission, and, except as provided in paragraph (9), shall not

be collected for any fiscal year except to the extent provided in

advance in appropriation Acts. No fees collected pursuant to this

subsection for fiscal year 2002 or any succeeding fiscal year shall

be deposited and credited as general revenue of the Treasury.

(5) Annual adjustment. - For each of the fiscal years 2003

through 2011, the Commission shall by order adjust the rate

required by paragraph (3) for such fiscal year to a rate that is

equal to the rate (expressed in dollars per million) that is

applicable under section 6(b) of the Securities Act of 1933 (15

U.S.C. 77f(b)) for such fiscal year.

(6) Final rate adjustment. - For fiscal year 2012 and all of the

succeeding fiscal years, the Commission shall by order adjust the

rate required by paragraph (3) for all of such fiscal years to a

rate that is equal to the rate (expressed in dollars per million)

that is applicable under section 6(b) of the Securities Act of 1933

(15 U.S.C. 77f(b)) for all of such fiscal years.

(7) Pro rata application. - The rates per $1,000,000 required by

this subsection shall be applied pro rata to amounts and balances

of less than $1,000,000.

(8) Review and effective date. - In exercising its authority

under this subsection, the Commission shall not be required to

comply with the provisions of section 553 of title 5. An adjusted

rate prescribed under paragraph (5) or (6) and published under

paragraph (10) shall not be subject to judicial review. Subject to

paragraphs (4) and (9) -

(A) an adjusted rate prescribed under paragraph (5) shall take

effect on the later of -

(i) the first day of the fiscal year to which such rate

applies; or

(ii) five days after the date on which a regular

appropriation to the Commission for such fiscal year is

enacted; and

(B) an adjusted rate prescribed under paragraph (6) shall take

effect on the later of -

(i) the first day of fiscal year 2012; or

(ii) five days after the date on which a regular

appropriation to the Commission for fiscal year 2012 is

enacted.

(9) Lapse of appropriation. - 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 5 days after the date such

a regular appropriation is enacted.

(10) Publication. - The rate applicable under this subsection for

each fiscal year is published pursuant to section 6(b)(10) of the

Securities Act of 1933 (15 U.S.C. 77f(b)(10)).

(f) Reports by institutional investment managers

(1) Every institutional investment manager which uses the mails,

or any means or instrumentality of interstate commerce in the

course of its business as an institutional investment manager and

which exercises investment discretion with respect to accounts

holding equity securities of a class described in subsection (d)(1)

of this section having an aggregate fair market value on the last

trading day in any of the preceding twelve months of at least

$100,000,000 or such lesser amount (but in no case less than

$10,000,000) as the Commission, by rule, may determine, shall file

reports with the Commission in such form, for such periods, and at

such times after the end of such periods as the Commission, by

rule, may prescribe, but in no event shall such reports be filed

for periods longer than one year or shorter than one quarter. Such

reports shall include for each such equity security held on the

last day of the reporting period by accounts (in aggregate or by

type as the Commission, by rule, may prescribe) with respect to

which the institutional investment manager exercises investment

discretion (other than securities held in amounts which the

Commission, by rule, determines to be insignificant for purposes of

this subsection), the name of the issuer and the title, class,

CUSIP number, number of shares or principal amount, and aggregate

fair market value of each such security. Such reports may also

include for accounts (in aggregate or by type) with respect to

which the institutional investment manager exercises investment

discretion such of the following information as the Commission, by

rule, prescribes -

(A) the name of the issuer and the title, class, CUSIP number,

number of shares or principal amount, and aggregate fair market

value or cost or amortized cost of each other security (other

than an exempted security) held on the last day of the reporting

period by such accounts;

(B) the aggregate fair market value or cost or amortized cost

of exempted securities (in aggregate or by class) held on the

last day of the reporting period by such accounts;

(C) the number of shares of each equity security of a class

described in subsection (d)(1) of this section held on the last

day of the reporting period by such accounts with respect to

which the institutional investment manager possesses sole or

shared authority to exercise the voting rights evidenced by such

securities;

(D) the aggregate purchases and aggregate sales during the

reporting period of each security (other than an exempted

security) effected by or for such accounts; and

(E) with respect to any transaction or series of transactions

having a market value of at least $500,000 or such other amount

as the Commission, by rule, may determine, effected during the

reporting period by or for such accounts in any equity security

of a class described in subsection (d)(1) of this section -

(i) the name of the issuer and the title, class, and CUSIP

number of the security;

(ii) the number of shares or principal amount of the security

involved in the transaction;

(iii) whether the transaction was a purchase or sale;

(iv) the per share price or prices at which the transaction

was effected;

(v) the date or dates of the transaction;

(vi) the date or dates of the settlement of the transaction;

(vii) the broker or dealer through whom the transaction was

effected;

(viii) the market or markets in which the transaction was

effected; and

(ix) such other related information as the Commission, by

rule, may prescribe.

(2) The Commission, by rule, or order, may exempt, conditionally

or unconditionally, any institutional investment manager or

security or any class of institutional investment managers or

securities from any or all of the provisions of this subsection or

the rules thereunder.

(3) The Commission shall make available to the public for a

reasonable fee a list of all equity securities of a class described

in subsection (d)(1) of this section, updated no less frequently

than reports are required to be filed pursuant to paragraph (1) of

this subsection. The Commission shall tabulate the information

contained in any report filed pursuant to this subsection in a

manner which will, in the view of the Commission, maximize the

usefulness of the information to other Federal and State

authorities and the public. Promptly after the filing of any such

report, the Commission shall make the information contained therein

conveniently available to the public for a reasonable fee in such

form as the Commission, by rule, may prescribe, except that the

Commission, as it determines to be necessary or appropriate in the

public interest or for the protection of investors, may delay or

prevent public disclosure of any such information in accordance

with section 552 of title 5. Notwithstanding the preceding

sentence, any such information identifying the securities held by

the account of a natural person or an estate or trust (other than a

business trust or investment company) shall not be disclosed to the

public.

(4) In exercising its authority under this subsection, the

Commission shall determine (and so state) that its action is

necessary or appropriate in the public interest and for the

protection of investors or to maintain fair and orderly markets or,

in granting an exemption, that its action is consistent with the

protection of investors and the purposes of this subsection. In

exercising such authority the Commission shall take such steps as

are within its power, including consulting with the Comptroller

General of the United States, the Director of the Office of

Management and Budget, the appropriate regulatory agencies, Federal

and State authorities which, directly or indirectly, require

reports from institutional investment managers of information

substantially similar to that called for by this subsection,

national securities exchanges, and registered securities

associations, (A) to achieve uniform, centralized reporting of

information concerning the securities holdings of and transactions

by or for accounts with respect to which institutional investment

managers exercise investment discretion, and (B) consistently with

the objective set forth in the preceding subparagraph, to avoid

unnecessarily duplicative reporting by, and minimize the compliance

burden on, institutional investment managers. Federal authorities

which, directly or indirectly, require reports from institutional

investment managers of information substantially similar to that

called for by this subsection shall cooperate with the Commission

in the performance of its responsibilities under the preceding

sentence. An institutional investment manager which is a bank, the

deposits of which are insured in accordance with the Federal

Deposit Insurance Act (12 U.S.C. 1811 et seq.), shall file with the

appropriate regulatory agency a copy of every report filed with the

Commission pursuant to this subsection.

(5)(A) For purposes of this subsection the term ''institutional

investment manager'' includes any person, other than a natural

person, investing in or buying and selling securities for its own

account, and any person exercising investment discretion with

respect to the account of any other person.

(B) The Commission shall adopt such rules as it deems necessary

or appropriate to prevent duplicative reporting pursuant to this

subsection by two or more institutional investment managers

exercising investment discretion with respect to the same amount.

(FOOTNOTE 1)

(FOOTNOTE 1) So in original. Probably should be ''account.''

(g) Statement of equity security ownership

(1) Any person who is directly or indirectly the beneficial owner

of more than 5 per centum of any security of a class described in

subsection (d)(1) of this section shall send to the issuer of the

security and shall file with the Commission a statement setting

forth, in such form and at such time as the Commission may, by

rule, prescribe -

(A) such person's identity, residence, and citizenship; and

(B) the number and description of the shares in which such

person has an interest and the nature of such interest.

(2) If any material change occurs in the facts set forth in the

statement sent to the issuer and filed with the Commission, an

amendment shall be transmitted to the issuer and shall be filed

with the Commission, in accordance with such rules and regulations

as the Commission may prescribe as necessary or appropriate in the

public interest or for the protection of investors.

(3) When two or more persons act as a partnership, limited

partnership, syndicate, or other group for the purpose of

acquiring, holding, or disposing of securities of an issuer, such

syndicate or group shall be deemed a ''person'' for the purposes of

this subsection.

(4) In determining, for purposes of this subsection, any

percentage of a class of any security, such class shall be deemed

to consist of the amount of the outstanding securities of such

class, exclusive of any securities of such class held by or for the

account of the issuer or a subsidiary of the issuer.

(5) In exercising its authority under this subsection, the

Commission shall take such steps as it deems necessary or

appropriate in the public interest or for the protection of

investors (A) to achieve centralized reporting of information

regarding ownership, (B) to avoid unnecessarily duplicative

reporting by and minimize the compliance burden on persons required

to report, and (C) to tabulate and promptly make available the

information contained in any report filed pursuant to this

subsection in a manner which will, in the view of the Commission,

maximize the usefulness of the information to other Federal and

State agencies and the public.

(6) The Commission may, by rule or order, exempt, in whole or in

part, any person or class of persons from any or all of the

reporting requirements of this subsection as it deems necessary or

appropriate in the public interest or for the protection of

investors.

(h) Large trader reporting

(1) Identification requirements for large traders

For the purpose of monitoring the impact on the securities

markets of securities transactions involving a substantial volume

or a large fair market value or exercise value and for the

purpose of otherwise assisting the Commission in the enforcement

of this chapter, each large trader shall -

(A) provide such information to the Commission as the

Commission may by rule or regulation prescribe as necessary or

appropriate, identifying such large trader and all accounts in

or through which such large trader effects such transactions;

and

(B) identify, in accordance with such rules or regulations as

the Commission may prescribe as necessary or appropriate, to

any registered broker or dealer by or through whom such large

trader directly or indirectly effects securities transactions,

such large trader and all accounts directly or indirectly

maintained with such broker or dealer by such large trader in

or through which such transactions are effected.

(2) Recordkeeping and reporting requirements for brokers and

dealers

Every registered broker or dealer shall make and keep for

prescribed periods such records as the Commission by rule or

regulation prescribes as necessary or appropriate in the public

interest, for the protection of investors, or otherwise in

furtherance of the purposes of this chapter, with respect to

securities transactions that equal or exceed the reporting

activity level effected directly or indirectly by or through such

registered broker or dealer of or for any person that such broker

or dealer knows is a large trader, or any person that such broker

or dealer has reason to know is a large trader on the basis of

transactions in securities effected by or through such broker or

dealer. Such records shall be available for reporting to the

Commission, or any self-regulatory organization that the

Commission shall designate to receive such reports, on the

morning of the day following the day the transactions were

effected, and shall be reported to the Commission or a

self-regulatory organization designated by the Commission

immediately upon request by the Commission or such a

self-regulatory organization. Such records and reports shall be

in a format and transmitted in a manner prescribed by the

Commission (including, but not limited to, machine readable

form).

(3) Aggregation rules

The Commission may prescribe rules or regulations governing the

manner in which transactions and accounts shall be aggregated for

the purpose of this subsection, including aggregation on the

basis of common ownership or control.

(4) Examination of broker and dealer records

All records required to be made and kept by registered brokers

and dealers pursuant to this subsection with respect to

transactions effected by large traders are subject at any time,

or from time to time, to such reasonable periodic, special, or

other examinations by representatives of the Commission as the

Commission deems necessary or appropriate in the public interest,

for the protection of investors, or otherwise in furtherance of

the purposes of this chapter.

(5) Factors to be considered in Commission actions

In exercising its authority under this subsection, the

Commission shall take into account -

(A) existing reporting systems;

(B) the costs associated with maintaining information with

respect to transactions effected by large traders and reporting

such information to the Commission or self-regulatory

organizations; and

(C) the relationship between the United States and

international securities markets.

(6) Exemptions

The Commission, by rule, regulation, or order, consistent with

the purposes of this chapter, may exempt any person or class of

persons or any transaction or class of transactions, either

conditionally or upon specified terms and conditions or for

stated periods, from the operation of this subsection, and the

rules and regulations thereunder.

(7) Authority of Commission to limit disclosure of information

Notwithstanding any other provision of law, the Commission

shall not be compelled to disclose any information required to be

kept or reported under this subsection. Nothing in this

subsection shall authorize the Commission to withhold information

from Congress, or prevent the Commission from complying with a

request for information from any other Federal department or

agency requesting 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. For purposes of section 552 of title 5, this

subsection shall be considered a statute described in subsection

(b)(3)(B) of such section 552.

(8) Definitions

For purposes of this subsection -

(A) the term ''large trader'' means every person who, for his

own account or an account for which he exercises investment

discretion, effects transactions for the purchase or sale of

any publicly traded security or securities by use of any means

or instrumentality of interstate commerce or of the mails, or

of any facility of a national securities exchange, directly or

indirectly by or through a registered broker or dealer in an

aggregate amount equal to or in excess of the identifying

activity level;

(B) the term ''publicly traded security'' means any equity

security (including an option on individual equity securities,

and an option on a group or index of such securities) listed,

or admitted to unlisted trading privileges, on a national

securities exchange, or quoted in an automated interdealer

quotation system;

(C) the term ''identifying activity level'' means

transactions in publicly traded securities at or above a level

of volume, fair market value, or exercise value as shall be

fixed from time to time by the Commission by rule or

regulation, specifying the time interval during which such

transactions shall be aggregated;

(D) the term ''reporting activity level'' means transactions

in publicly traded securities at or above a level of volume,

fair market value, or exercise value as shall be fixed from

time to time by the Commission by rule, regulation, or order,

specifying the time interval during which such transactions

shall be aggregated; and

(E) the term ''person'' has the meaning given in section

78c(a)(9) of this title and also includes two or more persons

acting as a partnership, limited partnership, syndicate, or

other group, but does not include a foreign central bank.

(i) Accuracy of financial reports

Each financial report that contains financial statements, and

that is required to be prepared in accordance with (or reconciled

to) generally accepted accounting principles under this chapter and

filed with the Commission shall reflect all material correcting

adjustments that have been identified by a registered public

accounting firm in accordance with generally accepted accounting

principles and the rules and regulations of the Commission.

(j) Off-balance sheet transactions

Not later than 180 days after July 30, 2002, the Commission shall

issue final rules providing that each annual and quarterly

financial report required to be filed with the Commission shall

disclose all material off-balance sheet transactions, arrangements,

obligations (including contingent obligations), and other

relationships of the issuer with unconsolidated entities or other

persons, that may have a material current or future effect on

financial condition, changes in financial condition, results of

operations, liquidity, capital expenditures, capital resources, or

significant components of revenues or expenses.

(k) Prohibition on personal loans to executives

(1) In general

It shall be unlawful for any issuer (as defined in section 7201

of this title), directly or indirectly, including through any

subsidiary, to extend or maintain credit, to arrange for the

extension of credit, or to renew an extension of credit, in the

form of a personal loan to or for any director or executive

officer (or equivalent thereof) of that issuer. An extension of

credit maintained by the issuer on July 30, 2002, shall not be

subject to the provisions of this subsection, provided that there

is no material modification to any term of any such extension of

credit or any renewal of any such extension of credit on or after

July 30, 2002.

(2) Limitation

Paragraph (1) does not preclude any home improvement and

manufactured home loans (as that term is defined in section 1464

of title 12), consumer credit (as defined in section 1602 of this

title), or any extension of credit under an open end credit plan

(as defined in section 1602 of this title), or a charge card (as

defined in section 1637(c)(4)(e) of this title), or any extension

of credit by a broker or dealer registered under section 78o of

this title to an employee of that broker or dealer to buy, trade,

or carry securities, that is permitted under rules or regulations

of the Board of Governors of the Federal Reserve System pursuant

to section 78g of this title (other than an extension of credit

that would be used to purchase the stock of that issuer), that is

-

(A) made or provided in the ordinary course of the consumer

credit business of such issuer;

(B) of a type that is generally made available by such issuer

to the public; and

(C) made by such issuer on market terms, or terms that are no

more favorable than those offered by the issuer to the general

public for such extensions of credit.

(3) Rule of construction for certain loans

Paragraph (1) does not apply to any loan made or maintained by

an insured depository institution (as defined in section 3 of the

Federal Deposit Insurance Act (12 U.S.C. 1813)), if the loan is

subject to the insider lending restrictions of section 375b of

title 12.

(l) Real time issuer disclosures

Each issuer reporting under subsec. (a) of this section or

section 78o(d) of this title shall disclose to the public on a

rapid and current basis such additional information concerning

material changes in the financial condition or operations of the

issuer, in plain English, which may include trend and qualitative

information and graphic presentations, as the Commission

determines, by rule, is necessary or useful for the protection of

investors and in the public interest.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 13, 48 Stat. 894; Pub. L.

88-467, Sec. 4, Aug. 20, 1964, 78 Stat. 569; Pub. L. 90-439, Sec.

2, July 29, 1968, 82 Stat. 454; Pub. L. 91-567, Sec. 1, 2, Dec. 22,

1970, 84 Stat. 1497; Pub. L. 94-29, Sec. 10, June 4, 1975, 89 Stat.

119; Pub. L. 94-210, title III, Sec. 308(b), Feb. 5, 1976, 90 Stat.

57; Pub. L. 95-213, title I, Sec. 102, title II, Sec. 202, 203,

Dec. 19, 1977, 91 Stat. 1494, 1498, 1499; Pub. L. 98-38, Sec. 2(a),

June 6, 1983, 97 Stat. 205; Pub. L. 100-181, title III, Sec. 315,

316, Dec. 4, 1987, 101 Stat. 1256; Pub. L. 100-241, Sec. 12(d),

Feb. 3, 1988, 101 Stat. 1810; Pub. L. 100-418, title V, Sec. 5002,

Aug. 23, 1988, 102 Stat. 1415; Pub. L. 101-432, Sec. 3, Oct. 16,

1990, 104 Stat. 964; Pub. L. 107-123, Sec. 5, Jan. 16, 2002, 115

Stat. 2395; Pub. L. 107-204, title I, Sec. 109(h), title IV, Sec.

401(a), 402(a), 409, July 30, 2002, 116 Stat. 771, 785, 787, 791.)

-REFTEXT-

REFERENCES IN TEXT

This chapter, referred to in subsecs. (b)(1), (h)(1), (2), (4),

(6), and (i), was in the original ''this title''. See References

in Text note set out under section 78a of this title.

The Investment Company Act of 1940, referred to in subsecs.

(d)(1) and (e)(1), is title I of act Aug. 22, 1940, ch. 686, 54

Stat. 789, as amended, which is classified generally to subchapter

I (Sec. 80a-1 et seq.) of chapter 2D of this title. For complete

classification of this Act to the Code, see section 80a-51 of this

title and Tables.

The Securities Act of 1933, referred to in subsec. (d)(6)(A), is

act May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended, which

is classified generally to subchapter I (Sec. 77a et seq.) of

chapter 2A of this title. For complete classification of this Act

to the Code, see section 77a of this title and Tables.

The Federal Deposit Insurance Act, referred to in subsec. (f)(4),

is act Sept. 21, 1950, ch. 967, Sec. 2, 64 Stat. 873, as amended,

which is classified generally to chapter 16 (Sec. 1811 et seq.) of

Title 12, Banks and Banking. For complete classification of this

Act to the Code, see Short Title note set out under section 1811 of

Title 12 and Tables.

Section 7201 of this title, referred to in subsec. (k)(1), was in

the original ''section 2 of the Sarbanes-Oxley Act of 2002'', Pub.

L. 107-204, which enacted section 201 of this title and amended

section 78c of this title.

-MISC2-

AMENDMENTS

2002 - Subsec. (b)(2)(C). Pub. L. 107-204, Sec. 109(h), added

subpar. (C).

Subsec. (e)(3). Pub. L. 107-123, Sec. 5(1), substituted ''a fee

at a rate that, subject to paragraphs (5) and (6), is equal to $92

per $1,000,000 of the value of securities proposed to be

purchased'' for ''a fee of 1/50 of 1 per centum of the value of

securities proposed to be purchased''.

Subsec. (e)(4) to (10). Pub. L. 107-123, Sec. 5(2), added pars.

(4) to (10).

Subsecs. (i), (j). Pub. L. 107-204, Sec. 401(a), added subsecs.

(i) and (j).

Subsec. (k). Pub. L. 107-204, Sec. 402(a), added subsec. (k).

Subsec. (l). Pub. L. 107-204, Sec. 409, added subsec. (l).

1990 - Subsec. (h). Pub. L. 101-432 added subsec. (h).

1988 - Subsec. (b)(4) to (7). Pub. L. 100-418 added pars. (4) to

(7).

Subsec. (d)(1). Pub. L. 100-241 inserted ''or any equity security

issued by a Native Corporation pursuant to section 1629c(d)(6) of

title 43''.

1987 - Subsec. (c). Pub. L. 100-181, Sec. 315, struck out ''of''

after ''thereof''.

Subsec. (h). Pub. L. 100-181, Sec. 316, struck out subsec. (h)

which required Commission to report to Congress within thirty

months of Dec. 19, 1977, with respect to effectiveness of ownership

reporting requirements contained in this chapter and desirability

and feasibility of reducing or otherwise modifying the 5 per centum

threshold used in subsecs. (d)(1) and (g)(1) of this section.

1983 - Subsec. (e)(3). Pub. L. 98-38 added par. (3).

1977 - Subsec. (b). Pub. L. 95-213, Sec. 102, designated existing

provisions as par. (1) and added pars. (2) and (3).

Subsec. (d)(1). Pub. L. 95-213, Sec. 202, inserted references to

residence and citizenship of persons and to nature of beneficial

ownership of persons in subpar. (A), and inserted references to

background, identity, residence, and citizenship of associates of

persons in subpar. (D).

Subsecs. (g), (h). Pub. L. 95-213, Sec. 203, added subsecs. (g)

and (h).

1976 - Subsec. (b). Pub. L. 94-210 substituted provisions

relating to exceptions for inconsistent rules and regulations, for

provisions relating to reporting requirements for carriers subject

to the provisions of section 20 of title 49, or other carriers

required to make reports of the same general character as those

required under section 20 of title 49.

1975 - Subsec. (f). Pub. L. 94-29 added subsec. (f).

1970 - Subsec. (d)(1). Pub. L. 91-567, Sec. 1(a), included equity

securities of insurance companies which would have been required to

be registered except for the exemption contained in section

78l(g)(2)(G) of this title, and substituted ''5 per centum'' for

''10 per centum''.

Subsec. (d)(5), (6). Pub. L. 91-567, Sec. 1(b), added par. (5)

and redesignated former par. (5) as (6).

Subsec. (e)(2). Pub. L. 91-567, Sec. 2, inserted provisions

empowering the Commission to make rules and regulations

implementing the paragraph in the public interest and for the

protection of investors.

1968 - Subsecs. (d), (e). Pub. L. 90-439 added subsecs. (d) and

(e).

1964 - Subsec. (a). Pub. L. 88-467 substituted provisions which

require the issuer of a security registered pursuant to section 78l

of this title to file reports with the Commission rather than with

the exchange and to furnish the exchange with duplicate originals

and prohibit the Commission from requiring the filing of any

material contract wholly executed before July 1, 1962 for former

provisions which required the issuer of a security registered on a

national securities exchange to file certain reports with the

exchange and to file duplicates with the Commission.

EFFECTIVE DATE OF 2002 AMENDMENT

Amendment by Pub. L. 107-123 effective Oct. 1, 2001, except that

authorities provided by subsec. (e)(9) of this section to not apply

until Oct. 1, 2002, see section 11 of Pub. L. 107-123, set out as a

note under section 78ee of this title.

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-210 not applicable to any report by any

person with respect to a fiscal year of such person which began

before Feb. 5, 1976, see section 308(d)(2) of Pub. L. 94-210, set

out as a note under section 80a-3 of this title.

EFFECTIVE DATE OF 1975 AMENDMENT

Amendment by Pub. L. 94-29 effective June 4, 1975, see section

31(a) of Pub. L. 94-29, set out as a note under section 78b of this

title.

EFFECTIVE DATE OF 1964 AMENDMENT

Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see section

13 of Pub. L. 88-467, set out as a note under section 78c of this

title.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of Securities and Exchange Commission,

with certain exceptions, to Chairman of such Commission, see Reorg.

Plan No. 10 of 1950, Sec. 1, 2, eff. May 24, 1950, 15 F.R. 3175,

64 Stat. 1265, set out under section 78d of this title.

-MISC5-

CONSULTATION

Pub. L. 106-102, title II, Sec. 241, Nov. 12, 1999, 113 Stat.

1407, provided that:

''(a) In General. - The Securities and Exchange Commission shall

consult and coordinate comments with the appropriate Federal

banking agency before taking any action or rendering any opinion

with respect to the manner in which any insured depository

institution or depository institution holding company reports loan

loss reserves in its financial statement, including the amount of

any such loan loss reserve.

''(b) Definitions. - For purposes of subsection (a), the terms

'insured depository institution', 'depository institution holding

company', and 'appropriate Federal banking agency' have the same

meaning as given in section 3 of the Federal Deposit Insurance Act

(12 U.S.C. 1813).''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 77f, 77r, 77s, 77z-2,

77nnn, 78c, 78j-1, 78l, 78n, 78o, 78u-5, 78w, 78hh, 80a-8, 80a-29,

80a-54, 80a-63, 773, 7201, 7241, 7261, 7262, 7264, 7265, 7266 of

this title; title 7 section 12a; title 11 section 1145; title 12

section 1817; title 16 section 824c; title 18 section 1350; title

22 section 2197; title 26 sections 162, 952, 964; title 29 section

1343; title 43 section 1629c.

-CITE-

15 USC Sec. 78n 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78n. Proxies

-STATUTE-

(a) Solicitation of proxies in violation of rules and regulations

It shall be unlawful for any person, by the use of the mails or

by any means or instrumentality of interstate commerce or of any

facility of a national securities exchange or otherwise, in

contravention of such rules and regulations as the Commission may

prescribe as necessary or appropriate in the public interest or for

the protection of investors, to solicit or to permit the use of his

name to solicit any proxy or consent or authorization in respect of

any security (other than an exempted security) registered pursuant

to section 78l of this title.

(b) Giving or refraining from giving proxy in respect of any

security carried for account of customer

(1) It shall be unlawful for any member of a national securities

exchange, or any broker or dealer registered under this chapter, or

any bank, association, or other entity that exercises fiduciary

powers, in contravention of such rules and regulations as the

Commission may prescribe as necessary or appropriate in the public

interest or for the protection of investors, to give, or to refrain

from giving a proxy, consent, authorization, or information

statement in respect of any security registered pursuant to section

78l of this title, or any security issued by an investment company

registered under the Investment Company Act of 1940 (15 U.S.C.

80a-1 et seq.), and carried for the account of a customer.

(2) With respect to banks, the rules and regulations prescribed

by the Commission under paragraph (1) shall not require the

disclosure of the names of beneficial owners of securities in an

account held by the bank on December 28, 1985, unless the

beneficial owner consents to the disclosure. The provisions of

this paragraph shall not apply in the case of a bank which the

Commission finds has not made a good faith effort to obtain such

consent from such beneficial owners.

(c) Information to holders of record prior to annual or other

meeting

Unless proxies, consents, or authorizations in respect of a

security registered pursuant to section 78l of this title, or a

security issued by an investment company registered under the

Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), are

solicited by or on behalf of the management of the issuer from the

holders of record of such security in accordance with the rules and

regulations prescribed under subsection (a) of this section, prior

to any annual or other meeting of the holders of such security,

such issuer shall, in accordance with rules and regulations

prescribed by the Commission, file with the Commission and transmit

to all holders of record of such security information substantially

equivalent to the information which would be required to be

transmitted if a solicitation were made, but no information shall

be required to be filed or transmitted pursuant to this subsection

before July 1, 1964.

(d) Tender offer by owner of more than five per centum of class of

securities; exceptions

(1) It shall be unlawful for any person, directly or indirectly,

by use of the mails or by any means or instrumentality of

interstate commerce or of any facility of a national securities

exchange or otherwise, to make a tender offer for, or a request or

invitation for tenders of, any class of any equity security which

is registered pursuant to section 78l of this title, or any equity

security of an insurance company which would have been required to

be so registered except for the exemption contained in section

78l(g)(2)(G) of this title, or any equity security issued by a a

closed-end investment company registered under the Investment

Company Act of 1940 (15 U.S.C. 80a-1 et seq.), if, after

consummation thereof, such person would, directly or indirectly, be

the beneficial owner of more than 5 per centum of such class,

unless at the time copies of the offer or request or invitation are

first published or sent or given to security holders such person

has filed with the Commission a statement containing such of the

information specified in section 78m(d) of this title, and such

additional information as the Commission may by rules and

regulations prescribe as necessary or appropriate in the public

interest or for the protection of investors. All requests or

invitations for tenders or advertisements making a tender offer or

requesting or inviting tenders of such a security shall be filed as

a part of such statement and shall contain such of the information

contained in such statement as the Commission may by rules and

regulations prescribe. Copies of any additional material

soliciting or requesting such tender offers subsequent to the

initial solicitation or request shall contain such information as

the Commission may by rules and regulations prescribe as necessary

or appropriate in the public interest or for the protection of

investors, and shall be filed with the Commission not later than

the time copies of such material are first published or sent or

given to security holders. Copies of all statements, in the form

in which such material is furnished to security holders and the

Commission, shall be sent to the issuer not later than the date

such material is first published or sent or given to any security

holders.

(2) When two or more persons act as a partnership, limited

partnership, syndicate, or other group for the purpose of

acquiring, holding, or disposing of securities of an issuer, such

syndicate or group shall be deemed a ''person'' for purposes of

this subsection.

(3) In determining, for purposes of this subsection, any

percentage of a class of any security, such class shall be deemed

to consist of the amount of the outstanding securities of such

class, exclusive of any securities of such class held by or for the

account of the issuer or a subsidiary of the issuer.

(4) Any solicitation or recommendation to the holders of such a

security to accept or reject a tender offer or request or

invitation for tenders shall be made in accordance with such rules

and regulations as the Commission may prescribe as necessary or

appropriate in the public interest or for the protection of

investors.

(5) Securities deposited pursuant to a tender offer or request or

invitation for tenders may be withdrawn by or on behalf of the

depositor at any time until the expiration of seven days after the

time definitive copies of the offer or request or invitation are

first published or sent or given to security holders, and at any

time after sixty days from the date of the original tender offer or

request or invitation, except as the Commission may otherwise

prescribe by rules, regulations, or order as necessary or

appropriate in the public interest or for the protection of

investors.

(6) Where any person makes a tender offer, or request or

invitation for tenders, for less than all the outstanding equity

securities of a class, and where a greater number of securities is

deposited pursuant thereto within ten days after copies of the

offer or request or invitation are first published or sent or given

to security holders than such person is bound or willing to take up

and pay for, the securities taken up shall be taken up as nearly as

may be pro rata, disregarding fractions, according to the number of

securities deposited by each depositor. The provisions of this

subsection shall also apply to securities deposited within ten days

after notice of an increase in the consideration offered to

security holders, as described in paragraph (7), is first published

or sent or given to security holders.

(7) Where any person varies the terms of a tender offer or

request or invitation for tenders before the expiration thereof by

increasing the consideration offered to holders of such securities,

such person shall pay the increased consideration to each security

holder whose securities are taken up and paid for pursuant to the

tender offer or request or invitation for tenders whether or not

such securities have been taken up by such person before the

variation of the tender offer or request or invitation.

(8) The provisions of this subsection shall not apply to any

offer for, or request or invitation for tenders of, any security -

(A) if the acquisition of such security, together with all

other acquisitions by the same person of securities of the same

class during the preceding twelve months, would not exceed 2 per

centum of that class;

(B) by the issuer of such security; or

(C) which the Commission, by rules or regulations or by order,

shall exempt from the provisions of this subsection as not

entered into for the purpose of, and not having the effect of,

changing or influencing the control of the issuer or otherwise as

not comprehended within the purposes of this subsection.

(e) Untrue statement of material fact or omission of fact with

respect to tender offer

It shall be unlawful for any person to make any untrue statement

of a material fact or omit to state any material fact necessary in

order to make the statements made, in the light of the

circumstances under which they are made, not misleading, or to

engage in any fraudulent, deceptive, or manipulative acts or

practices, in connection with any tender offer or request or

invitation for tenders, or any solicitation of security holders in

opposition to or in favor of any such offer, request, or

invitation. The Commission shall, for the purposes of this

subsection, by rules and regulations define, and prescribe means

reasonably designed to prevent, such acts and practices as are

fraudulent, deceptive, or manipulative.

(f) Election or designation of majority of directors of issuer by

owner of more than five per centum of class of securities at

other than meeting of security holders

If, pursuant to any arrangement or understanding with the person

or persons acquiring securities in a transaction subject to

subsection (d) of this section or subsection (d) of section 78m of

this title, any persons are to be elected or designated as

directors of the issuer, otherwise than at a meeting of security

holders, and the persons so elected or designated will constitute a

majority of the directors of the issuer, then, prior to the time

any such person takes office as a director, and in accordance with

rules and regulations prescribed by the Commission, the issuer

shall file with the Commission, and transmit to all holders of

record of securities of the issuer who would be entitled to vote at

a meeting for election of directors, information substantially

equivalent to the information which would be required by subsection

(a) or (c) of this section to be transmitted if such person or

persons were nominees for election as directors at a meeting of

such security holders.

(g) Filing fees

(1)(A) At the time of filing such preliminary proxy solicitation

material as the Commission may require by rule pursuant to

subsection (a) of this section that concerns an acquisition,

merger, consolidation, or proposed sale or other disposition of

substantially all the assets of a company, the person making such

filing, other than a company registered under the Investment

Company Act of 1940 (15 U.S.C. 80a-1 et seq.), shall pay to the

Commission the following fees:

(i) for preliminary proxy solicitation material involving an

acquisition, merger, or consolidation, if there is a proposed

payment of cash or transfer of securities or property to

shareholders, a fee at a rate that, subject to paragraphs (5) and

(6), is equal to $92 per $1,000,000 of such proposed payment, or

of the value of such securities or other property proposed to be

transferred; and

(ii) for preliminary proxy solicitation material involving a

proposed sale or other disposition of substantially all of the

assets of a company, a fee at a rate that, subject to paragraphs

(5) and (6), is equal to $92 per $1,000,000 of the cash or of the

value of any securities or other property proposed to be received

upon such sale or disposition.

(B) The fee imposed under subparagraph (A) shall be reduced with

respect to securities in an amount equal to any fee paid to the

Commission with respect to such securities in connection with the

proposed transaction under section 77f(b) of this title, or the fee

paid under that section shall be reduced in an amount equal to the

fee paid to the Commission in connection with such transaction

under this subsection. Where two or more companies involved in an

acquisition, merger, consolidation, sale, or other disposition of

substantially all the assets of a company must file such proxy

material with the Commission, each shall pay a proportionate share

of such fee.

(2) At the time of filing such preliminary information statement

as the Commission may require by rule pursuant to subsection (c) of

this section, the issuer shall pay to the Commission the same fee

as required for preliminary proxy solicitation material under

paragraph (1) of this subsection.

(3) At the time of filing such statement as the Commission may

require by rule pursuant to subsection (d)(1) of this section, the

person making the filing shall pay to the Commission a fee at a

rate that, subject to paragraphs (5) and (6), is equal to $92 per

$1,000,000 of the aggregate amount of cash or of the value of

securities or other property proposed to be offered. The fee shall

be reduced with respect to securities in an amount equal to any fee

paid with respect to such securities in connection with the

proposed transaction under section 6(b) of the Securities Act of

1933 (15 U.S.C. 77f(b)), or the fee paid under that section shall

be reduced in an amount equal to the fee paid to the Commission in

connection with such transaction under this subsection.

(4) Offsetting collections. - Fees collected pursuant to this

subsection for any fiscal year shall be deposited and credited as

offsetting collections to the account providing appropriations to

the Commission, and, except as provided in paragraph (9), shall not

be collected for any fiscal year except to the extent provided in

advance in appropriation Acts. No fees collected pursuant to this

subsection for fiscal year 2002 or any succeeding fiscal year shall

be deposited and credited as general revenue of the Treasury.

(5) Annual adjustment. - For each of the fiscal years 2003

through 2011, the Commission shall by order adjust each of the

rates required by paragraphs (1) and (3) for such fiscal year to a

rate that is equal to the rate (expressed in dollars per million)

that is applicable under section 6(b) of the Securities Act of 1933

(15 U.S.C. 77f(b)) for such fiscal year.

(6) Final rate adjustment. - For fiscal year 2012 and all of the

succeeding fiscal years, the Commission shall by order adjust each

of the rates required by paragraphs (1) and (3) for all of such

fiscal years to a rate that is equal to the rate (expressed in

dollars per million) that is applicable under section 6(b) of the

Securities Act of 1933 (15 U.S.C. 77f(b)) for all of such fiscal

years.

(7) Pro rata application. - The rates per $1,000,000 required by

this subsection shall be applied pro rata to amounts and balances

of less than $1,000,000.

(8) Review and effective date. - In exercising its authority

under this subsection, the Commission shall not be required to

comply with the provisions of section 553 of title 5. An adjusted

rate prescribed under paragraph (5) or (6) and published under

paragraph (10) shall not be subject to judicial review. Subject to

paragraphs (4) and (9) -

(A) an adjusted rate prescribed under paragraph (5) shall take

effect on the later of -

(i) the first day of the fiscal year to which such rate

applies; or

(ii) five days after the date on which a regular

appropriation to the Commission for such fiscal year is

enacted; and

(B) an adjusted rate prescribed under paragraph (6) shall take

effect on the later of -

(i) the first day of fiscal year 2012; or

(ii) five days after the date on which a regular

appropriation to the Commission for fiscal year 2012 is

enacted.

(9) Lapse of appropriation. - 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 5 days after the date such

a regular appropriation is enacted.

(10) Publication. - The rate applicable under this subsection for

each fiscal year is published pursuant to section 6(b)(10) of the

Securities Act of 1933 (15 U.S.C. 77f(b)(10)).

(11) Notwithstanding any other provision of law, the Commission

may impose fees, charges, or prices for matters not involving any

acquisition, merger, consolidation, sale, or other disposition of

assets described in this subsection, as authorized by section 9701

of title 31, or otherwise.

(h) Proxy solicitations and tender offers in connection with

limited partnership rollup transactions

(1) Proxy rules to contain special provisions

It shall be unlawful for any person to solicit any proxy,

consent, or authorization concerning a limited partnership rollup

transaction, or to make any tender offer in furtherance of a

limited partnership rollup transaction, unless such transaction

is conducted in accordance with rules prescribed by the

Commission under subsections (a) and (d) of this section as

required by this subsection. Such rules shall -

(A) permit any holder of a security that is the subject of

the proposed limited partnership rollup transaction to engage

in preliminary communications for the purpose of determining

whether to solicit proxies, consents, or authorizations in

opposition to the proposed limited partnership rollup

transaction, without regard to whether any such communication

would otherwise be considered a solicitation of proxies, and

without being required to file soliciting material with the

Commission prior to making that determination, except that -

(i) nothing in this subparagraph shall be construed to

limit the application of any provision of this chapter

prohibiting, or reasonably designed to prevent, fraudulent,

deceptive, or manipulative acts or practices under this

chapter; and

(ii) any holder of not less than 5 percent of the

outstanding securities that are the subject of the proposed

limited partnership rollup transaction who engages in the

business of buying and selling limited partnership interests

in the secondary market shall be required to disclose such

ownership interests and any potential conflicts of interests

in such preliminary communications;

(B) require the issuer to provide to holders of the

securities that are the subject of the limited partnership

rollup transaction such list of the holders of the issuer's

securities as the Commission may determine in such form and

subject to such terms and conditions as the Commission may

specify;

(C) prohibit compensating any person soliciting proxies,

consents, or authorizations directly from security holders

concerning such a limited partnership rollup transaction -

(i) on the basis of whether the solicited proxy, consent,

or authorization either approves or disapproves the proposed

limited partnership rollup transaction; or

(ii) contingent on the approval, disapproval, or completion

of the limited partnership rollup transaction;

(D) set forth disclosure requirements for soliciting material

distributed in connection with a limited partnership rollup

transaction, including requirements for clear, concise, and

comprehensible disclosure with respect to -

(i) any changes in the business plan, voting rights, form

of ownership interest, or the compensation of the general

partner in the proposed limited partnership rollup

transaction from each of the original limited partnerships;

(ii) the conflicts of interest, if any, of the general

partner;

(iii) whether it is expected that there will be a

significant difference between the exchange values of the

limited partnerships and the trading price of the securities

to be issued in the limited partnership rollup transaction;

(iv) the valuation of the limited partnerships and the

method used to determine the value of the interests of the

limited partners to be exchanged for the securities in the

limited partnership rollup transaction;

(v) the differing risks and effects of the limited

partnership rollup transaction for investors in different

limited partnerships proposed to be included, and the risks

and effects of completing the limited partnership rollup

transaction with less than all limited partnerships;

(vi) the statement by the general partner required under

subparagraph (E);

(vii) such other matters deemed necessary or appropriate by

the Commission;

(E) require a statement by the general partner as to whether

the proposed limited partnership rollup transaction is fair or

unfair to investors in each limited partnership, a discussion

of the basis for that conclusion, and an evaluation and a

description by the general partner of alternatives to the

limited partnership rollup transaction, such as liquidation;

(F) provide that, if the general partner or sponsor has

obtained any opinion (other than an opinion of counsel),

appraisal, or report that is prepared by an outside party and

that is materially related to the limited partnership rollup

transaction, such soliciting materials shall contain or be

accompanied by clear, concise, and comprehensible disclosure

with respect to -

(i) the analysis of the transaction, scope of review,

preparation of the opinion, and basis for and methods of

arriving at conclusions, and any representations and

undertakings with respect thereto;

(ii) the identity and qualifications of the person who

prepared the opinion, the method of selection of such person,

and any material past, existing, or contemplated

relationships between the person or any of its affiliates and

the general partner, sponsor, successor, or any other

affiliate;

(iii) any compensation of the preparer of such opinion,

appraisal, or report that is contingent on the transaction's

approval or completion; and

(iv) any limitations imposed by the issuer on the access

afforded to such preparer to the issuer's personnel,

premises, and relevant books and records;

(G) provide that, if the general partner or sponsor has

obtained any opinion, appraisal, or report as described in

subparagraph (F) from any person whose compensation is

contingent on the transaction's approval or completion or who

has not been given access by the issuer to its personnel and

premises and relevant books and records, the general partner or

sponsor shall state the reasons therefor;

(H) provide that, if the general partner or sponsor has not

obtained any opinion on the fairness of the proposed limited

partnership rollup transaction to investors in each of the

affected partnerships, such soliciting materials shall contain

or be accompanied by a statement of such partner's or sponsor's

reasons for concluding that such an opinion is not necessary in

order to permit the limited partners to make an informed

decision on the proposed transaction;

(I) require that the soliciting material include a clear,

concise, and comprehensible summary of the limited partnership

rollup transaction (including a summary of the matters referred

to in clauses (i) through (vii) of subparagraph (D) and a

summary of the matter referred to in subparagraphs (F), (G),

and (H)), with the risks of the limited partnership rollup

transaction set forth prominently in the fore part thereof;

(J) provide that any solicitation or offering period with

respect to any proxy solicitation, tender offer, or information

statement in a limited partnership rollup transaction shall be

for not less than the lesser of 60 calendar days or the maximum

number of days permitted under applicable State law; and

(K) contain such other provisions as the Commission

determines to be necessary or appropriate for the protection of

investors in limited partnership rollup transactions.

(2) Exemptions

The Commission may, consistent with the public interest, the

protection of investors, and the purposes of this chapter, exempt

by rule or order any security or class of securities, any

transaction or class of transactions, or any person or class of

persons, in whole or in part, conditionally or unconditionally,

from the requirements imposed pursuant to paragraph (1) or from

the definition contained in paragraph (4).

(3) Effect on Commission authority

Nothing in this subsection limits the authority of the

Commission under subsection (a) or (d) of this section or any

other provision of this chapter or precludes the Commission from

imposing, under subsection (a) or (d) of this section or any

other provision of this chapter, a remedy or procedure required

to be imposed under this subsection.

(4) ''Limited partnership rollup transaction'' defined

Except as provided in paragraph (5), as used in this

subsection, the term ''limited partnership rollup transaction''

means a transaction involving the combination or reorganization

of one or more limited partnerships, directly or indirectly, in

which -

(A) some or all of the investors in any of such limited

partnerships will receive new securities, or securities in

another entity, that will be reported under a transaction

reporting plan declared effective before December 17, 1993, by

the Commission under section 78k-1 of this title;

(B) any of the investors' limited partnership securities are

not, as of the date of filing, reported under a transaction

reporting plan declared effective before December 17, 1993, by

the Commission under section 78k-1 of this title;

(C) investors in any of the limited partnerships involved in

the transaction are subject to a significant adverse change

with respect to voting rights, the term of existence of the

entity, management compensation, or investment objectives; and

(D) any of such investors are not provided an option to

receive or retain a security under substantially the same terms

and conditions as the original issue.

(5) Exclusions from definition

Notwithstanding paragraph (4), the term ''limited partnership

rollup transaction'' does not include -

(A) a transaction that involves only a limited partnership or

partnerships having an operating policy or practice of

retaining cash available for distribution and reinvesting

proceeds from the sale, financing, or refinancing of assets in

accordance with such criteria as the Commission determines

appropriate;

(B) a transaction involving only limited partnerships wherein

the interests of the limited partners are repurchased,

recalled, or exchanged in accordance with the terms of the

preexisting limited partnership agreements for securities in an

operating company specifically identified at the time of the

formation of the original limited partnership;

(C) a transaction in which the securities to be issued or

exchanged are not required to be and are not registered under

the Securities Act of 1933 (15 U.S.C. 77a et seq.);

(D) a transaction that involves only issuers that are not

required to register or report under section 78l of this title,

both before and after the transaction;

(E) a transaction, except as the Commission may otherwise

provide by rule for the protection of investors, involving the

combination or reorganization of one or more limited

partnerships in which a non-affiliated party succeeds to the

interests of a general partner or sponsor, if -

(i) such action is approved by not less than 66 2/3 percent

of the outstanding units of each of the participating limited

partnerships; and

(ii) as a result of the transaction, the existing general

partners will receive only compensation to which they are

entitled as expressly provided for in the preexisting limited

partnership agreements; or

(F) a transaction, except as the Commission may otherwise

provide by rule for the protection of investors, in which the

securities offered to investors are securities of another

entity that are reported under a transaction reporting plan

declared effective before December 17, 1993, by the Commission

under section 78k-1 of this title, if -

(i) such other entity was formed, and such class of

securities was reported and regularly traded, not less than

12 months before the date on which soliciting material is

mailed to investors; and

(ii) the securities of that entity issued to investors in

the transaction do not exceed 20 percent of the total

outstanding securities of the entity, exclusive of any

securities of such class held by or for the account of the

entity or a subsidiary of the entity.

-SOURCE-

(June 6, 1934, ch. 404, title I, Sec. 14, 48 Stat. 895; Pub. L.

88-467, Sec. 5, Aug. 20, 1964, 78 Stat. 569; Pub. L. 90-439, Sec.

3, July 29, 1968, 82 Stat. 455; Pub. L. 91-567, Sec. 3-5, Dec. 22,

1970, 84 Stat. 1497; Pub. L. 98-38, Sec. 2(b), June 6, 1983, 97

Stat. 205; Pub. L. 99-222, Sec. 2, Dec. 28, 1985, 99 Stat. 1737;

Pub. L. 101-550, title III, Sec. 302, Nov. 15, 1990, 104 Stat.

2721; Pub. L. 103-202, title III, Sec. 302(a), Dec. 17, 1993, 107

Stat. 2359; Pub. L. 105-353, title III, Sec. 301(b)(7), Nov. 3,

1998, 112 Stat. 3236; Pub. L. 107-123, Sec. 6, Jan. 16, 2002, 115

Stat. 2396.)

-REFTEXT-

REFERENCES IN TEXT

This chapter, referred to in subsecs. (b) and (h)(1)(A), (2),

(3), was in the original ''this title''. See References in Text

note set out under section 78a of this title.

The Investment Company Act of 1940, referred to in subsecs.

(b)(1), (c), (d)(1), and (g)(1)(A), is title I of act Aug. 22,

1940, ch. 686, 54 Stat. 789, as amended, which is classified

generally to subchapter I (Sec. 80a-1 et seq.) of chapter 2D of

this title. For complete classification of this Act to the Code,

see section 80a-51 of this title and Tables.

The Securities Act of 1933, referred to in subsec. (h)(5)(C), is

act May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended, which

is classified generally to subchapter I (Sec. 77a et seq.) of

chapter 2A of this title. For complete classification of this Act

to the Code, see section 77a of this title and Tables.

-MISC2-

AMENDMENTS

2002 - Subsec. (g)(1)(A)(i), (ii), (3). Pub. L. 107-123, Sec.

6(1), substituted ''a fee at a rate that, subject to paragraphs (5)

and (6), is equal to $92 per $1,000,000 of'' for ''a fee of 1/50 of

1 per centum of''.

Subsec. (g)(4) to (11). Pub. L. 107-123, Sec. 6(2), (3), added

pars. (4) to (10) and redesignated former par. (4) as (11).

1998 - Subsec. (g)(4). Pub. L. 105-353 substituted

''consolidation, sale,'' for ''consolidation sale,''.

1993 - Subsec. (h). Pub. L. 103-202 added subsec. (h).

1990 - Subsec. (b)(1). Pub. L. 101-550, Sec. 302(a), substituted

''section 78l of this title, or any security issued by an

investment company registered under the Investment Company Act of

1940,'' for ''section 78l of this title'' and ''authorization, or

information statement'' for ''or authorization''.

Subsec. (c). Pub. L. 101-550, Sec. 302(b), substituted ''title,

or a security issued by an investment company registered under the

Investment Company Act of 1940,'' for ''title''.

1985 - Subsec. (b). Pub. L. 99-222 designated existing provision

as par. (1), inserted ''or any bank, association, or other entity

that exercises fiduciary powers,'' after ''under this chapter,'',

and added par. (2).

1983 - Subsec. (g). Pub. L. 98-38 added subsec. (g).

1970 - Subsec. (d)(1). Pub. L. 91-567, Sec. 3, included equity

securities of an insurance company which would have been required

to be registered except for the exemption contained in section

78l(g)(2)(G) of this title, and substituted ''5 per centum'' for

''10 per centum''.

Subsec. (d)(8). Pub. L. 91-567, Sec. 4, struck out cl. (A) which

excluded offers for, or invitations for tenders of, securities

proposed to be made by means of a registration statement under the

Securities Act of 1933, and redesignated cls. (B) to (D) as (A) to

(C), respectively.

Subsec. (e). Pub. L. 91-567, Sec. 5, inserted provisions

requiring the Commission, for the purposes of the subsection, by

rules and regulations to define, and prescribe means reasonably

designed to prevent, such acts and practices as are fraudulent,

deceptive, or manipulative.

1968 - Subsecs. (d) to (f). Pub. L. 90-439 added subsecs. (d) to

(f).

1964 - Subsec. (a). Pub. L. 88-467, Sec. 5(a), substituted

provisions which make it unlawful for any person, in contravention

of the Commission's rules and regulations, to solicit, or to permit

the use of his name to solicit, proxies in respect of any security

registered pursuant to section 78l of this title for former

provisions which limited the Commission's rulemaking authority to

proxies relating to securities listed and registered on a national

securities exchange.

Subsec. (b). Pub. L. 88-467, Sec. 5(b), substituted provisions

which make it unlawful for members of a national securities

exchange and brokers and dealers registered under this chapter, in

contravention of such rules as may be prescribed by the Commission,

to give, or to refrain from giving proxies, consents, and other

authorizations in respect of any security registered under section

78l of this title carried for the account of customers for former

provisions which limited the Commission's rulemaking authority only

to the giving of proxies in respect to listed securities carried

for the account of customers by members of the national securities

exchanges and by brokers or dealers who conduct business through

the medium of an exchange member, and deleted the reference to

brokers and dealers who transacted business through the medium of

an exchange member as being now covered by brokers and dealers

registered under this chapter.

Subsec. (c). Pub. L. 88-467, Sec. 5(c), added subsec. (c).

EFFECTIVE DATE OF 2002 AMENDMENT

Amendment by Pub. L. 107-123 effective Oct. 1, 2001, except that

authorities provided by subsec. (g)(9) of this section to not apply

until Oct. 1, 2002, see section 11 of Pub. L. 107-123, set out as a

note under section 78ee of this title.

EFFECTIVE DATE OF 1990 AMENDMENT

Section 303 of Pub. L. 101-550 provided that: ''The amendments

made by section 302 of this title (amending this section) shall

take effect upon the expiration of 180 days after the date of

enactment of this Act (Nov. 15, 1990).''

EFFECTIVE DATE OF 1985 AMENDMENT

Section 3 of Pub. L. 99-222 provided that: ''The amendments made

by this Act (amending this section) shall become effective one year

after the date of enactment of this Act (Dec. 28, 1985).''

EFFECTIVE DATE OF 1964 AMENDMENT

Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see section

13 of Pub. L. 88-467, set out as a note under section 78c of this

title.

REGULATIONS

Section 302(b) of Pub. L. 103-202 provided that: ''The Securities

and Exchange Commission shall conduct rulemaking proceedings and

prescribe final regulations under the Securities Act of 1933 (15

U.S.C. 77a et seq.) and the Securities Exchange Act of 1934 (15

U.S.C. 78a et seq.) to implement the requirements of section 14(h)

of the Securities Exchange Act of 1934 (15 U.S.C. 78n(h)), as

amended by subsection (a), and such regulations shall become

effective not later than 12 months after the date of enactment of

this Act (Dec. 17, 1993).''

CONSTRUCTION OF 1993 AMENDMENT

Amendment by Pub. L. 103-202 not to limit authority of Securities

and Exchange Commission, a registered securities association, or a

national securities exchange under any provision of this chapter or

preclude the Commission or such association or exchange from

imposing a remedy or procedure required to be imposed under such

amendment, see section 304(b) of Pub. L. 103-202, set out in an

Effective Date of 1993 Amendment note under section 78f of this

title.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of Securities and Exchange Commission,

with certain exceptions, to Chairman of such Commission, see Reorg.

Plan No. 10 of 1950, Sec. 1, 2, eff. May 24, 1950, 15 F.R. 3175,

64 Stat. 1265, set out under section 78d of this title.

-MISC5-

STUDY AND REPORT ON SHAREHOLDER ACCESS TO PROXY STATEMENTS

Pub. L. 104-290, title V, Sec. 510(b), Oct. 11, 1996, 110 Stat.

3450, provided that:

''(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 (15 U.S.C.

78n) 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 (Oct. 11, 1996), 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.''

EVALUATION OF FAIRNESS OPINION PREPARATION, DISCLOSURE, AND USE

Section 302(c) of Pub. L. 103-202 provided that:

''(1) Evaluation required. - The Comptroller General of the

United States shall, within 18 months after the date of enactment

of this Act (Dec. 17, 1993), conduct a study of -

''(A) the use of fairness opinions in limited partnership

rollup transactions;

''(B) the standards which preparers use in making

determinations of fairness;

''(C) the scope of review, quality of analysis, qualifications

and methods of selection of preparers, costs of preparation, and

any limitations imposed by issuers on such preparers;

''(D) the nature and quality of disclosures provided with

respect to such opinions;

''(E) any conflicts of interest with respect to the preparation

of such opinions; and

''(F) the usefulness of such opinions to limited partners.

''(2) Report required. - Not later than the end of the 18-month

period referred to in paragraph (1), the Comptroller General of the

United States shall submit to the Congress a report on the

evaluation required by paragraph (1).''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 77f, 78c, 78f, 78l, 78o,

78o-3, 78hh of this title.

-CITE-

15 USC Sec. 78o 01/06/03

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 2B - SECURITIES EXCHANGES

-HEAD-

Sec. 78o. Registration and regulation of brokers and dealers

-STATUTE-

(a) Registration of all persons utilizing exchange facilities to

effect transactions; exemptions

(1) It shall be unlawful for any broker or dealer which is either

a person other than a natural person or a natural person not

associated with a broker or dealer which is a person other than a

natural person (other than such a broker or dealer whose business

is exclusively intrastate and who does not make use of any facility

of a national securities exchange) to make use of the mails or any

means or instrumentality of interstate commerce to effect any

transactions in, or to induce or attempt to induce the purchase or

sale of, any security (other than an exempted security or

commercial paper, bankers' acceptances, or commercial bills) unless

such broker or dealer is registered in accordance with subsection

(b) of this section.

(2) The Commission, by rule or order, as it deems consistent with

the public interest and the protection of investors, may

conditionally or unconditionally exempt from paragraph (1) of this

subsection any broker or dealer or class of brokers or dealers

specified in such rule or order.

(b) Manner of registration of brokers and dealers

(1) A broker or dealer may be registered by filing with the

Commission an application for registration in such form and

containing such information and documents concerning such broker or

dealer and any persons associated with such broker or dealer as the

Commission, by rule, may prescribe as necessary or appropriate in

the public interest or for the protection of investors. Within

forty-five days of the date of the filing of such application (or

within such longer period as to which the applicant consents), the

Commission shall -

(A) by order grant registration, or

(B) institute proceedings to determine whether registration

should be denied. Such proceedings shall include notice of the

grounds for denial under consideration and opportunity for

hearing and shall be concluded within one hundred twenty days of

the date of the filing of the application for registration. At

the conclusion of such proceedings, the Commission, by order,

shall grant or deny such registration. The order granting

registration shall not be effective until such broker or dealer

has become a member of a registered securities association, or

until such broker or dealer has become a member of a national

securities exchange if such broker or dealer effects transactions

solely on that exchange, unless the Commission has exempted such

broker or dealer, by rule or order, from such membership. The

Commission may extend the time for conclusion of such proceedings

for up to ninety days if it finds good cause for such extension

and publishes its reasons for so finding or for such longer

period as to which the applicant consents.

The Commission shall grant such registration if the Commission

finds that the requirements of this section are satisfied. The

Commission shall deny such registration if it does not make such a

finding or if it finds that if the applicant were so registered,

its registration would be subject to suspension or revocation under

paragraph (4) of this subsection.

(2)(A) An application for registration of a broker or dealer to

be formed or organized may be made by a broker or dealer to which

the broker or dealer to be formed or organized is to be the

successor. Such application, in such form as the Commission, by

rule, may prescribe, shall contain such information and documents

concerning the applicant, the successor, and any persons associated

with the applicant or the successor, as the Commission, by rule,

may prescribe as necessary or appropriate in the public interest or

for the protection of investors. The grant or denial of

registration to such an applicant shall be in accordance with the

procedures set forth in paragraph (1) of this subsection. If the

Commission grants such registration, the registration shall

terminate on the forty-fifth day after the effective date thereof,

unless prior thereto the successor shall, in accordance with such

rules and regulations as the Commission may prescribe, adopt the

application for registration as its own.

(B) Any person who is a broker or dealer solely by reason of

acting as a municipal securities dealer or municipal securities

broker, who so acts through a separately identifiable department or

division, and who so acted in such a manner on June 4, 1975, may,

in accordance with such terms and conditions as the Commission, by

rule, prescribes as necessary and appropriate in the public

interest and for the protection of investors, register such

separately identifiable department or division in accordance with

this subsection. If any such department or division is so

registered, the department or division and not such person himself

shall be the broker or dealer for purposes of this chapter.

(C) Within six months of the date of the granting of registration

to a broker or dealer, the Commission, or upon the authorization

and direction of the Commission, a registered securities

association or national securities exchange of which such broker or

dealer is a member, shall conduct an inspection of the broker or

dealer to determine whether it is operating in conformity with the

provisions of this chapter and the rules and regulations

thereunder: Provided, however, That the Commission may delay such

inspection of any class of brokers or dealers for a period not to

exceed six months.

(3) Any provision of this chapter (other than section 78e of this

title and subsection (a) of this section) which prohibits any act,

practice, or course of business if the mails or any means or

instrumentality of interstate commerce is used in connection

therewith shall also prohibit any such act, practice, or course of

business by any registered broker or dealer or any person acting on

behalf of such a broker or dealer, irrespective of any use of the

mails or any means or instrumentality of interstate commerce in

connection therewith.

(4) The Commission, by order, shall censure, place limitations on

the activities, functions, or operations of, suspend for a period

not exceeding twelve months, or revoke the registration of any

broker or dealer if it finds, on the record after notice and

opportunity for hearing, that such censure, placing of limitations,

suspension, or revocation is in the public interest and that such

broker or dealer, whether prior or subsequent to becoming such, or

any person associated with such broker or dealer, whether prior or

subsequent to becoming so associated -

(A) has willfully made or caused to be made in any application

for registration or report required to be filed with the

Commission or with any other appropriate regulatory agency under

this chapter, or in any proceeding before the Commission with

respect to registration, any statement which was at the time and

in the light of the circumstances under which it was made false

or misleading with respect to any material fact, or has omitted

to state in any such application or report any material fact

which is required to be stated therein.

(B) has been convicted within ten years preceding the filing of

any application for registration or at any time thereafter of any

felony or misdemeanor or of a substantially equivalent crime by a

foreign court of competent jurisdiction which the Commission

finds -

(i) involves the purchase or sale of any security, the taking

of a false oath, the making of a false report, bribery,

perjury, burglary, any substantially equivalent activity

however denominated by the laws of the relevant foreign

government, or conspiracy to commit any such offense;

(ii) arises out of the conduct of the business of a broker,

dealer, municipal securities dealer, government securities

broker, government securities dealer, investment adviser, bank,

insurance company, fiduciary, transfer agent, foreign person

performing a function substantially equivalent to any of the

above, or entity or person required to be registered under the

Commodity Exchange Act (7 U.S.C. 1 et seq.) or any

substantially equivalent foreign statute or regulation;

(iii) involves the larceny, theft, robbery, extortion,

forgery, counterfeiting, fraudulent concealment, embezzlement,

fraudulent conversion, or misappropriation of funds, or

securities, or substantially equivalent activity however

denominated by the laws of the relevant foreign government; or

(iv) involves the violation of section 152, 1341, 1342, or

1343 or chapter 25 or 47 of title 18 or a violation of a

substantially equivalent foreign statute.

(C) is permanently or temporarily enjoined by order, judgment,

or decree of any court of competent jurisdiction from acting as

an investment adviser, underwriter, broker, dealer, municipal

securities dealer, government securities broker, government

securities dealer, transfer agent, foreign person performing a

function substantially equivalent to any of the above, or entity

or person required to be registered under the Commodity Exchange

Act or any substantially equivalent foreign statute or

regulation, or as an affiliated person or employee of any

investment company, bank, insurance company, foreign entity

substantially equivalent to any of the above, or entity or person

required to be registered under the Commodity Exchange Act or any

substantially equivalent foreign statute or regulation, or from

engaging in or continuing any conduct or practice in connection

with any such activity, or in connection with the purchase or

sale of any security.

(D) has willfully violated any provision of the Securities Act

of 1933 (15 U.S.C. 77a et seq.), the Investment Advisers Act of

1940 (15 U.S.C. 80b-1 et seq.), the Investment Company Act of

1940 (15 U.S.C. 80a-1 et seq.), the Commodity Exchange Act, this

chapter, the rules or regulations under any of such statutes, or

the rules of the Municipal Securities Rulemaking Board, or is

unable to comply with any such provision.

(E) has willfully aided, abetted, counseled, commanded,

induced, or procured the violation by any other person of any

provision of the Securities Act of 1933, the Investment Advisers

Act of 1940, the Investment Company Act of 1940, the Commodity

Exchange Act, this chapter, the rules or regulations under any of

such statutes, or the rules of the Municipal Securities

Rulemaking Board, or has failed reasonably to supervise, with a

view to preventing violations of the provisions of such statutes,

rules, and regulations, another person who commits such a

violation, if such other person is subject to his supervision.

For the purposes of this subparagraph (E) no person shall be

deemed to have failed reasonably to supervise any other person,

if -

(i) there have been established procedures, and a system for

applying such procedures, which would reasonably be expected to

prevent and detect, insofar as practicable, any such violation

by such other person, and

(ii) such person has reasonably discharged the duties and

obligations incumbent upon him by reason of such procedures and

system without reasonable cause to believe that such procedures

and system were not being complied with.

(F) is subject to any order of the Commission barring or

suspending the right of the person to be associated with a broker

or dealer;

(G) has been found by a foreign financial regulatory authority

to have -

(i) made or caused to be made in any application for

registration or report required to be filed with a foreign

financial regulatory authority, or in any proceeding before a

foreign financial regulatory authority with respect to

registration, any statement that was at the time and in the

light of the circumstances under which it was made false or

misleading with respect to any material fact, or has omitted to

state in any application or report to the foreign financial

regulatory authority any material fact that is required to be

stated therein;

(ii) violated any foreign statute or regulation regarding

transactions in securities, or contracts of sale of a commodity

for future delivery, traded on or subject to the rules of a

contract market or any board of trade;

(iii) aided, abetted, counseled, commanded, induced, or

procured the violation by any person of any provision of any

statutory provisions enacted by a foreign government, or rules

or regulations thereunder, empowering a foreign financial

regulatory authority regarding transactions in securities, or

contracts of sale of a commodity for future delivery, traded on

or subject to the rules of a contract market or any board of

trade, or has been found, by a foreign financial regulatory

authority, to have failed reasonably to supervise, with a view

to preventing violations of such statutory provisions, rules,

and regulations, another person who commits such a violation,

if such other person is subject to his supervision; or

(H) is subject to any final order of a State securities

commission (or any agency or officer performing like functions),

State authority that supervises or examines banks, savings

associations, or credit unions, State insurance commission (or

any agency or office performing like functions), an appropriate

Federal banking agency (as defined in section 3 of the Federal

Deposit Insurance Act (12 U.S.C. 1813(q))), or the National

Credit Union Administration, that -

(i) bars such person from association with an entity

regulated by such commission, authority, agency, or officer, or

from engaging in the business of securities, insurance,

banking, savings association activities, or credit union

activities; or

(ii) constitutes a final order based on violations of any

laws or regulations that prohibit fraudulent, manipulative, or

deceptive conduct.

(5) Pending final determination whether any registration under

this subsection shall be revoked, the Commission, by order, may

suspend such registration, if such suspension appears to the

Commission, after notice and opportunity for hearing, to be

necessary or appropriate in the public interest or for the

protection of investors. Any registered broker or dealer may, upon

such terms and conditions as the Commission deems necessary or

appropriate in the public interest or for the protection of

investors, withdraw from registration by filing a written notice of

withdrawal with the Commission. If the Commission finds that any

registered broker or dealer is no longer in existence or has ceased

to do business as a broker or dealer, the Commission, by order,

shall cancel the registration of such broker or dealer.

(6)(A) With respect to any person who is associated, who is

seeking to become associated, or, at the time of the alleged

misconduct, who was associated or was seeking to become associated

with a broker or dealer, or any person participating, or, at the

time of the alleged misconduct, who was participating, in an

offering of any penny stock, the Commission, by order, shall

censure, place limitations on the activities or functions of such

person, or suspend for a period not exceeding 12 months, or bar

such person from being associated with a broker or dealer, or from

participating in an offering of penny stock, if the Commission

finds, on the record after notice and opportunity for a hearing,

that such censure, placing of limitations, suspension, or bar is in

the public interest and that such person -

(i) has committed or omitted any act, or is subject to an order

or finding, enumerated in subparagraph (A), (D), or (E) of

paragraph (4) of this subsection;

(ii) has been convicted of any offense specified in

subparagraph (B) of such paragraph (4) within 10 years of the

commencement of the proceedings under this paragraph; or

(iii) is enjoined from any action, conduct, or practice

specified in subparagraph (C) of such paragraph (4).

(B) It shall be unlawful -

(i) for any person as to whom an order under subparagraph (A)

is in effect, without the consent of the Commission, willfully to

become, or to be, associated with a broker or dealer in

contravention of such order, or to participate in an offering of

penny stock in contravention of such order;

(ii) for any broker or dealer to permit such a person, without

the consent of the Commission, to become or remain, a person

associated with the broker or dealer in contravention of such

order, if such broker or dealer knew, or in the exercise of

reasonable care should have known, of such order; or

(iii) for any broker or dealer to permit such a person, without

the consent of the Commission, to participate in an offering of

penny stock in contravention of such order, if such broker or

dealer knew, or in the exercise of reasonable care should have

known, of such order and of such participation.

(C) For purposes of this paragraph, the term ''person

participating in an offering of penny stock'' includes any person

acting as any promoter, finder, consultant, agent, or other person

who engages in activities with a broker, dealer, or issuer for

purposes of the issuance or trading in any penny stock, or inducing

or attempting to induce the purchase or sale of any penny stock.

The Commission may, by rule or regulation, define such term to

include other activities, and may, by rule, regulation, or order,

exempt any person or class of persons, in whole or in part,

conditionally or unconditionally, from such term.

(7) No registered broker or dealer or government securities

broker or government securities dealer registered (or required to

register) under section 78o-5(a)(1)(A) of this title shall effect

any transaction in, or induce the purchase or sale of, any security

unless such broker or dealer meets such standards of operational

capability and such broker or dealer and all natural persons

associated with such broker or dealer meet such standards of

training, experience, competence, and such other qualifications as

the Commission finds necessary or appropriate in the public

interest or for the protection of investors. The Commission shall

establish such standards by rules and regulations, which may -

(A) specify that all or any portion of such standards shall be

applicable to any class of brokers and dealers and persons

associated with brokers and dealers;

(B) require persons in any such class to pass tests prescribed

in accordance with such rules and regulations, which tests shall,

with respect to any class of partners, officers, or supervisory

employees (which latter term may be defined by the Commission's

rules and regulations and as so defined shall include branch

managers of brokers or dealers) engaged in the management of the

broker or dealer, include questions relating to bookkeeping,

accounting, internal control over cash and securities,

supervision of employees, maintenance of records, and other

appropriate matters; and

(C) provide that persons in any such class other than brokers

and dealers and partners, officers, and supervisory employees of

brokers or dealers, may be qualified solely on the basis of

compliance with such standards of training and such other

qualifications as the Commission finds appropriate.

The Commission, by rule, may prescribe reasonable fees and charges

to defray its costs in carrying out this paragraph, including, but

not limited to, fees for any test administered by it or under its

direction. The Commission may cooperate with registered securities

associations and national securities exchanges in devising and

administering tests and may require registered brokers and dealers

and persons associated with such brokers and dealers to pass tests

administered by or on behalf of any such association or exchange

and to pay such association or exchange reasonable fees or charges

to defray the costs incurred by such association or exchange in

administering such tests.

(8) It shall be unlawful for any registered broker or dealer to

effect any transaction in, or induce or attempt to induce the

purchase or sale of, any security (other than or (FOOTNOTE 1)

commercial paper, bankers' acceptances, or commercial bills),

unless such broker or dealer is a member of a securities

association registered pursuant to section 78o-3 of this title or

effects transactions in securities solely on a national securities

exchange of which it is a member.

(FOOTNOTE 1) So in original. The word ''or'' probably should

not appear.

(9) The Commission by rule or order, as it deems consistent with

the public interest and the protection of investors, may

conditionally or unconditionally exempt from paragraph (8) of this

subsection any broker or dealer or class of brokers or dealers

specified in such rule or order.

(10) For the purposes of determining whether a person is subject

to a statutory disqualification under section 78f(c)(2),

78o-3(g)(2), or 78q-1(b)(4)(A) of this title, the term

''Commission'' in paragraph (4)(B) of this subsection shall mean

''exchange'', ''association'', or ''clearing agency'',

respectively.

(11) Broker/dealer registration with respect to transactions in

security futures products. -

(A) Notice registration. -

(i) Contents of notice. - Notwithstanding paragraphs (1) and

(2), a broker or dealer required to register only because it

effects transactions in security futures products on an

exchange registered pursuant to section 78f(g) of this title

may register for purposes of this section by filing with the

Commission a written notice in such form and containing such

information concerning such broker or dealer and any persons

associated with such broker or dealer as the Commission, by

rule, may prescribe as necessary or appropriate in the public

interest or for the protection of investors. A broker or

dealer may not register under this paragraph unless that broker

or dealer is a member of a national securities association

registered under section 78o-3(k) of this title.

(ii) Immediate effectiveness. - Such registration shall be

effective contemporaneously with the submission of notice, in

written or electronic form, to the Commission, except that such

registration shall not be effective if the registration would

be subject to suspension or revocation under paragraph (4).

(iii) Suspension. - Such registration shall be suspended

immediately if a national securities association registered

pursuant to section 78o-3(k) of this title suspends the

membership of that broker or dealer.

(iv) Termination. - Such registration shall be terminated

immediately if any of the above stated conditions for

registration set forth in this paragraph are no longer

satisfied.

(B) Exemptions for registered brokers and dealers. - A broker

or dealer registered pursuant to the requirements of subparagraph

(A) shall be exempt from the following provisions of this chapter

and the rules thereunder with respect to transactions in security

futures products:

(i) Section 78h of this title.

(ii) Section 78k of this title.

(iii) Subsections (c)(3) and (c)(5) of this section.

(iv) Section 78o-4 of this title.

(v) Section 78o-5 of this title.

(vi) Subsections (d), (e), (f), (g), (h), and (i) of section

78q of this title.

(12) Exemption for security futures product exchange members. -

(A) Registration exemption. - A natural person shall be exempt

from the registration requirements of this section if such person

-

(i) is a member of a designated contract market registered

with the Commission as an exchange pursuant to section 78f(g)

of this title;

(ii) effects transactions only in securities on the exchange

of which such person is a member; and

(iii) does not directly accept or solicit orders from public

customers or provide advice to public customers in connection

with the trading of security futures products.

(B) Other exemptions. - A natural person exempt from

registration pursuant to subparagraph (A) shall also be exempt

from the following provisions of this chapter and the rules

thereunder:

(i) Section 78h of this title.

(ii) Section 78k of this title.

(iii) Subsections (c)(3), (c)(5), and (e) of this section.

(iv) Section 78o-4 of this title.

(v) Section 78o-5 of this title.

(vi) Subsections (d), (e), (f), (g), (h), and (i) of section

78q of this title.

(c) Use of manipulative or deceptive devices; contravention of

rules and regulations

(1)(A) No broker or dealer shall make use of the mails or any

means or instrumentality of interstate commerce to effect any

transaction in, or to induce or attempt to induce the purchase or

sale of, any security (other than commercial paper, bankers'

acceptances, or commercial bills) otherwise than on a national

securities exchange of which it is a member, or any security-based

swap agreement (as defined in section 206B of the

Gramm-Leach-Bliley Act), by means of any manipulative, deceptive,

or other fraudulent device or contrivance.

(B) No municipal securities dealer shall make use of the mails or

any means or instrumentality of interstate commerce to effect any

transaction in, or to induce or attempt to induce the purchase or

sale of, any municipal security or any security-based swap

agreement (as defined in section 206B of the Gramm-Leach-Bliley

Act) involving a municipal security by means of any manipulative,

deceptive, or other fraudulent device or contrivance.

(C) No government securities broker or government securities

dealer shall make use of the mails or any means or instrumentality

of interstate commerce to effect any transaction in, or to induce

or to attempt to induce the purchase or sale of, any government

security or any security-based swap agreement (as defined in

section 206B of the Gramm-Leach-Bliley Act) involving a government

security by means of any manipulative, deceptive, or other

fraudulent device or contrivance.

(2)(A) No broker or dealer shall make use of the mails or any

means or instrumentality of interstate commerce to effect any

transaction in, or to induce or attempt to induce the purchase or

sale of, any security (other than an exempted security or

commercial paper, bankers' acceptances, or commercial bills)

otherwise than on a national securities exchange of which it is a

member, in connection with which such broker or dealer engages in

any fraudulent, deceptive, or manipulative act or practice, or

makes any fictitious quotation.

(B) No municipal securities dealer shall make use of the mails or

any means or instrumentality of interstate commerce to effect any

transaction in, or to induce or attempt to induce the purchase or

sale of, any municipal security in connection with which such

municipal securities dealer engages in any fraudulent, deceptive,

or manipulative act or practice, or makes any fictitious quotation.

(C) No government securities broker or government securities

dealer shall make use of the mails or any means or instrumentality

of interstate commerce to effect any transaction in, or induce or

attempt to induce the purchase or sale of, any government security

in connection with which such government securities broker or

government securities dealer engages in any fraudulent, deceptive,

or manipulative act or practice, or makes any fictitious quotation.

(D) The Commission shall, for the purposes of this paragraph, by

rules and regulations define, and prescribe means reasonably

designed to prevent, such acts and practices as are fraudulent,

deceptive, or manipulative and such quotations as are fictitious.

(E) The Commission shall, prior to adopting any rule or

regulation under subparagraph (C), consult with and consider the

views of the Secretary of the Treasury and each appropriate

regulatory agency. If the Secretary of the Treasury or any

appropriate regulatory agency comments in writing on a proposed

rule or regulation of the Commission under such subparagraph (C)

that has been published for comment, the Commission shall respond

in writing to such written comment before adopting the proposed

rule. If the Secretary of the Treasury determines, and notifies

the Commission, that such rule or regulation, if implemented,

would, or as applied does (i) adversely affect the liquidity or

efficiency of the market for government securities; or (ii) impose

any burden on competition not necessary or appropriate in

furtherance of the purposes of this section, the Commission shall,

prior to adopting the proposed rule or regulation, find that such

rule or regulation is necessary and appropriate in furtherance of

the purposes of this section notwithstanding the Secretary's

determination.

(3)(A) No broker or dealer (other than a government securities

broker or government securities dealer, except a registered broker

or dealer) shall make use of the mails or any means or

instrumentality of interstate commerce to effect any transaction

in, or to induce or attempt to induce the purchase or sale of, any

security (other than an exempted security (except a government

security) or commercial paper, bankers' acceptances, or commercial

bills) in contravention of such rules and regulations as the

Commission shall prescribe as necessary or appropriate in the

public interest or for the protection of investors to provide

safeguards with respect to the financial responsibility and related

practices of brokers and dealers including, but not limited to, the

acceptance of custody and use of customers' securities and the

carrying and use of customers' deposits or credit balances. Such

rules and regulations shall (A) require the maintenance of reserves

with respect to customers' deposits or credit balances, and (B) no

later than September 1, 1975, establish minimum financial

responsibility requirements for all brokers and dealers.

(B) Consistent with this chapter, the Commission, in consultation

with the Commodity Futures Trading Commission, shall issue such

rules, regulations, or orders as are necessary to avoid duplicative

or conflicting regulations applicable to any broker or dealer

registered with the Commission pursuant to subsection (b) of this

section (except paragraph (11) thereof), that is also registered

with the Commodity Futures Trading Commission pursuant to section

4f(a) of the Commodity Exchange Act (7 U.S.C. 6f(a)) (except

paragraph (2) thereof), with respect to the application of: (i) the

provisions of section 78h of this title, subsection (c)(3) of this

section, and section 78q of this title and the rules and

regulations thereunder related to the treatment of customer funds,

securities, or property, maintenance of books and records,

financial reporting, or other financial responsibility rules,

involving security futures products; and (ii) similar provisions of

the Commodity Exchange Act (7 U.S.C. 1 et seq.) and rules and

regulations thereunder involving security futures products.

(4) If the Commission finds, after notice and opportunity for a

hearing, that any person subject to the provisions of section 78l,

78m, 78n of this title or subsection (d) of this section or any

rule or regulation thereunder has failed to comply with any such

provision, rule, or regulation in any material respect, the

Commission may publish its findings and issue an order requiring

such person, and any person who was a cause of the failure to

comply due to an act or omission the person knew or should have

known would contribute to the failure to comply, to comply, or to

take steps to effect compliance, with such provision or such rule

or regulation thereunder upon such terms and conditions and within

such time as the Commission may specify in such order.

(5) No dealer (other than a specialist registered on a national

securities exchange) acting in the capacity of market maker or

otherwise shall make use of the mails or any means or

instrumentality of interstate commerce to effect any transaction

in, or to induce or attempt to induce the purchase or sale of, any

security (other than an exempted security or a municipal security)

in contravention of such specified and appropriate standards with

respect to dealing as the Commission, by rule, shall prescribe as

necessary or appropriate in the public interest and for the

protection of investors, to maintain fair and orderly markets, or

to remove impediments to and perfect the mechanism of a national

market system. Under the rules of the Commission a dealer in a

security may be prohibited from acting as a broker in that

security.

(6) No broker or dealer shall make use of the mails or any means

or instrumentality of interstate commerce to effect any transaction

in, or to induce or attempt to induce the purchase or sale of, any

security (other than an exempted security, municipal security,

commercial paper, bankers' acceptances, or commercial bills) in

contravention of such rules and regulations as the Commission shall

prescribe as necessary or appropriate in the public interest and

for the protection of investors or to perfect or remove impediments

to a national system for the prompt and accurate clearance and

settlement of securities transactions, with respect to the time and

method of, and the form and format of documents used in connection

with, making settlements of and payments for transactions in

securities, making transfers and deliveries of securities, and

closing accounts. Nothing in this paragraph shall be construed (A)

to affect the authority of the Board of Governors of the Federal

Reserve System, pursuant to section 78g of this title, to prescribe

rules and regulations for the purpose of preventing the excessive

use of credit for the purchase or carrying of securities, or (B) to

authorize the Commission to prescribe rules or regulations for such

purpose.

(7) In connection with any bid for or purchase of a government

security related to an offering of government securities by or on

behalf of an issuer, no government securities broker, government

securities dealer, or bidder for or purchaser of securities in such

offering shall knowingly or willfully make any false or misleading

written statement or omit any fact necessary to make any written

statement made not misleading.

(8) Prohibition of referral fees. - No broker or dealer, or

person associated with a broker or dealer, may solicit or accept,

directly or indirectly, remuneration for assisting an attorney in

obtaining the representation of any person in any private action

arising under this chapter or under the Securities Act of 1933 (15

U.S.C. 77a et seq.).

(d) Filing of supplementary and periodic information

Each issuer which has filed a registration statement containing

an undertaking which is or becomes operative under this subsection

as in effect prior to August 20, 1964, and each issuer which shall

after such date file a registration statement which has become

effect