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8000 - Miscellaneous Statutes and Regulations


INFORMATION REQUIRED IN PROSPECTUS

SEC. 10.  (a)  Except to the extent otherwise permitted or required pursuant to this subsection or subsections (c), (d), or (e)--

(1)  a prospectus relating to a security other than a security issued by a foreign government or political subdivision thereof, shall contain the information contained in the registration statement, but it need not include the documents referred to in paragraphs (28) to (32), inclusive, of Schedule A;

(2)  a prospectus relating to a security issued by a foreign government or political subdivision thereof shall contain the information contained in the registration statement, but it need not include the documents referred to in paragraphs (13) and (14) of Schedule B;

(3)  notwithstanding the provisions of paragraphs (1) and (2) of this subsection (a) when a prospectus is used more than nine months after the effective date of the registration statement, the information contained therein shall be as of a date not more than sixteen months prior to such use, so far as such information is known to the user of such prospectus or can be furnished by such user without unreasonable effort or expense;

(4)  there may be omitted from any prospectus any of the information required under this subsection (a) which the Commission may by rules or regulations designate as not being necessary or appropriate in the public interest or for the protection of investors.

(b)  In addition to the prospectus permitted or required in subsection (a), the Commission shall by rules or regulations deemed necessary or appropriate in the public interest or for the protection of investors permit the use of a prospectus for the purposes of subsection (b)(1) of section 5 which omits in part or summarizes information in the prospectus specified in subsection (a). A prospectus permitted under this subsection shall, except to the extent the Commission by rules or regulations deemed necessary or appro- priate in the public interest or for the protection of investors otherwise provides, be filed as part of the registration statement but shall not be deemed a part of such registration statement for the purposes of section 11. The Commission may at any time issue an order preventing or suspending the use of a prospectus permitted under this subsection (b), if it has reason to believe that such prospectus has not been filed (if required to be filed as part of the registration statement) or includes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which such prospectus is or is to be used, not misleading. Upon issuance of an order under this subsection, the Commission shall give notice of the issuance of such order and opportunity for hearing by personal service or the sending of confirmed telegraphic notice. The Commission shall vacate or modify the order at any time for good cause or if such prospectus has been filed or amended in accordance with such order.

(c)  Any prospectus shall contain such other information as the Commission may by rules or regulations require as being necessary or appropriate in the public interest or for the protection of investors.

(d)  In the exercise of its powers under subsections (a), (b), or (c), the Commission shall have authority to classify prospectuses according to the nature and circumstances of their use or the nature of the security, issue, issuer, or otherwise, and, by rules and regulations and subject to such terms and conditions as it shall specify therein, to prescribe as to each class the form and contents which it may find appropriate and consistent with the public interest and the protection of investors.

(e)  The statements or information required to be included in a prospectus by or under authority of subsections (a), (b), (c), or (d), when written, shall be placed in a conspicuous part of the prospectus and, except as otherwise permitted by rules or regulations, in type as large as that used generally in the body of the prospectus.

(f)  In any case where a prospectus consists of a radio or television broadcast, copies thereof shall be filed with the Commission under such rules and regulations as it shall prescribe. The Commission may by rules and regulations require the filing with it of forms and prospectuses used in connection with the offer or sale of securities registered under this title.

[Codified to 15 U.S.C. 77j]

[Source:  Section 10 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 81), effective May 27, 1933, as amended by section 205 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 906), effective June 6, 1934; and section 8 of title I of the Act of August 10, 1954 (Pub. L. No. 577; 68 Stat. 685), effective October 8, 1954]

CIVIL LIABILITIES ON ACCOUNT OF FALSE REGISTRATION STATEMENT

SEC. 11.  (a)  In case any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, any person acquiring such security (unless it is proved that at the time of such acquisition he knew of such untruth or omission) may, either at law or in equity, in any court of competent jurisdiction, sue--

(1)  every person who signed the registration statement;

(2)  every person who was a director of (or person performing similar functions) or partner in the issuer at the time of the filing of the part of the registration statement with respect to which his liability is asserted;

(3)  every person who, with his consent, is named in the registration statement as being or about to become a director, person performing similar functions, or partner;

(4)  every accountant, engineer, or appraiser, or any person whose profession gives authority to a statement made by him, who has with his consent been named as having prepared or certified any part of the registration statement, or as having prepared or certified any report or valuation which is used in connection with the registration statement, with respect to the statement in such registration statement, report, or valuation, which purports to have been prepared or certified by him;

(5)  every underwriter with respect to such security.

If such person acquired the security after the issuer has made generally available to its security holders an earning statement covering a period of at least twelve months beginning after the effective date of the registration statement, then the right of recovery under this subsection shall be conditioned on proof that such person acquired the security relying upon such untrue statement in the registration statement or relying upon the registration statement and not knowing of such omission, but such reliance may be established without proof of the reading of the registration statement by such person.

(b)  Notwithstanding the provisions of subsection (a) no person, other than the issuer, shall be liable as provided therein who shall sustain the burden of proof--

(1)  that before the effective date of the part of the registration statement with respect to which his liability is asserted (A) he had resigned from or had taken such steps as are permitted by law to resign from, or ceased or refused to act in, every office, capacity, or relationship in which he was described in the registration statement as acting or agreeing to act, and (B) he had advised the Commission and the issuer in writing that he had taken such action and that he would not be responsible for such part of the registration statement; or

(2)  that if such part of the registration statement became effective without his knowledge, upon becoming aware of such fact he forthwith acted and advised the Commission, in accordance with paragraph (1), and, in addition, gave reasonable public notice that such part of the registration statement had become effective without his knowledge; or

(3)  that (A) as regards any part of the registration statement not purporting to be made on the authority of an expert, and not purporting to be a copy of or extract from a report or valuation of an expert, and not purporting to be made on the authority of a public official document or statement, he had, after reasonable investigation, reasonable ground to believe and did believe, at the time such part of the registration statement became effective, that the statements therein were true and that there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (B) as regards any part of the registration statement purporting to be made upon his authority as an expert or purporting to be a copy of or extract from a report or valuation of himself as an expert, (i) he had, after reasonable investigation, reasonable ground to believe and did believe, at the time such part of the registration statement became effective, that the statements therein were true and that there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) such part of the registration statement did not fairly represent his statement as an expert or was not a fair copy of or extract from his report or valuation as an expert; and (C) as regards any part of the registration statement purporting to be made on the authority of an expert (other than himself) or purporting to be a copy of or extract from a report or valuation of an expert (other than himself), he had no reasonable ground to believe and did not believe, at the time such part of the registration statement became effective, that the statements therein were untrue or that there was an omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that such part of the registration statement did not fairly represent the statement of the expert or was not a fair copy of or extract from the report or valuation of the expert; and (D) as regards any part of the registration statement purporting to be a statement made by an official person or purporting to be a copy of or extract from a public official document, he had no reasonable ground to believe and did not believe, at the time such part of the registration statement became effective, that the statements therein were untrue, or that there was an omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that such part of the registration statement did not fairly represent the statement made by the official person or was not a fair copy of or extract from the public official document.

(c)  In determining, for the purpose of paragraph (3) of subsection (b) of this section, what constitutes reasonable investigation and reasonable ground for belief, the standard of reasonableness shall be that required of a prudent man in the management of his own property.

(d)  If any person becomes an underwriter with respect to the security after the part of the registration statement with respect to which his liability is asserted has become effective, then for the purposes of paragraph (3) of subsection (b) of this section such part of the registration statement shall be considered as having become effective with respect to such person as of the time when he became an underwriter.

(e)  The suit authorized under subsection (a) may be to recover such damages as shall represent the difference between the amount paid for the security (not exceeding the price at which the security was offered to the public) and (1) the value thereof as of the time such suit was brought, or (2) the price at which such security shall have been disposed of in the market before suit, or (3) the price at which such security shall have been disposed of after suit but before judgment if such damages shall be less than the damages representing the difference between the amount paid for the security (not exceeding the price at which the security was offered to the public) and the value thereof as of the time such suit was brought: Provided, That if the defendant proves that any portion or all of such damages represents other than the depreciation in value of such security resulting from such part of the registration statement, with respect to which his liability is asserted, not being true or omitting to state a material fact required to be stated therein or necessary to make the statements therein not misleading, such portion of or all such damages shall not be recoverable. In no event shall any underwriter (unless such underwriter shall have knowingly received from the issuer for acting as an underwriter some benefit, directly or indirectly, in which all other underwriters similarly situated did not share in proportion to their respective interests in the underwriting) be liable in any suit or as a consequence of suits authorized under subsection (a) for damages in excess of the total price at which the securities underwritten by him and distributed to the public were offered to the public. In any suit under this or any other section of this title the court may, in its discretion, require an undertaking for the payment of the costs of such suit, including reasonable attorney's fees, and if judgment shall be rendered against a party litigant, upon the motion of the other party litigant, such costs may be assessed in favor of such party litigant (whether or not such undertaking has been required) if the court believes the suit or the defense to have been without merit, in an amount sufficient to reimburse him for the reasonable expenses incurred by him, in connection with such suit, such costs to be taxed in the manner usually provided for taxing of costs in the court in which the suit was heard.

(f)(1)  Except as provided in paragraph (2), all or any one or more of the persons specified in subsection (a) shall be jointly and severally liable, and every person who becomes liable to make any payment under this section may recover contribution as in cases of contract from any person who, if sued separately, would have been liable to make the same payment, unless the person who has become liable was, and the other was not, guilty of fraudulent misrepresentation.

(2)(A)  The liability of an outside director under subsection (e) shall be determined in accordance with section 21D(f) of the Securities Exchange Act of 1934.

(B)  For purposes of this paragraph, the term "outside director" shall have the meaning given such term by rule or regulation of the Commission.

(g)  In no case shall the amount recoverable under this section exceed the price at which the security was offered to the public.

[Codified to 15 U.S.C. 77k]

[Source:  Section 11 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 82), effective May 27, 1933, as amended by section 206 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 907), effective June 6, 1934; section 201(b) of title II of the Act of December 22, 1995 (Pub. L. No. 104--67; 109 Stat. 762), effective December 22, 1995; section 301(a)(2) of title III of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3235), effective November 3, 1998]

CIVIL LIABILITIES ARISING IN CONNECTION WITH
PROSPECTUSES AND COMMUNICATIONS

SEC. 12. (a)  IN GENERAL. Any person who--

(1)  offers or sells a security in violation of section 5, or

(2)  offers or sells a security (whether or not exempted by the provisions of section 3, other than paragraph (2) and (14) of subsection (a) thereof), by the use of any means or instruments of transportation or communication in interstate commerce or of the mails, by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading (the purchaser not knowing of such untruth or omission), and who shall not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission,

shall be liable, subject to subsection (b), to the person purchasing such security from him, who may sue either at law or in equity in any court of competent jurisdiction, to recover the consideration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if he no longer owns the security.

(b)  LOSS CAUSATION.--In an action described in subsection (a)(2), if the person who offered or sold such security proves that any portion or all of the amount recoverable under subsection (a)(2) represents other than the depreciation in value of the subject security resulting from such part of the prospectus or oral communication, with respect to which the liability of that person is asserted, not being true or omitting to state a material fact required to be stated therein or necessary to make the statement not misleading, then such portion or amount, as the case may be, shall not be recoverable.

[Codified to 15 U.S.C. 77l]

[Source:  Section 12 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 84), effective May 27, 1933, as amended by section 9 of title I of the Act of August 10, 1954 (Pub. L. No. 577; 68 Stat. 686), effective October 8, 1954; section 105 of the Act of December 22, 1995 (Pub. L. No. 104--67; 109 Stat. 757), effective December 22, 1995; section 208(a)(3) of title II of the Act of December 21, 2000 (Pub. L. No. 106--554; 114 Stat. 2763A--435), effective December 21, 2000]

LIMITATION OF ACTIONS

SEC. 13.  No action shall be maintained to enforce any liability created under section 11 or section 12(a)(2) unless brought within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence, or, if the action is to enforce a liability created under section 12(a)(1), unless brought within one year after the violation upon which it is based. In no event shall any such action be brought to enforce a liability created under section 11 or section 12(a)(1) more than three years after the security was bona fide offered to the public, or under section 12(a)(2) more than three years after the sale.

[Codified to 15 U.S.C. 77m]

[Source:  Section 13 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 84), effective May 27, 1933, as amended by section 207 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 908), effective June 6, 1934; section 301(a)(3) of title III of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3235), effective November 3, 1998]

CONTRARY STIPULATIONS VOID

SEC. 14.  Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this title or of the rules and regulations of the Commission shall be void.

[Codified to 15 U.S.C. 77n]

[Source:  Section 14 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 84), effective May 27, 1933]

LIABILITY OF CONTROLLING PERSONS

SEC. 15.  (a)  CONTROLLING PERSONS.--Every person who, by or through stock ownership, agency, or otherwise, or who, pursuant to or in connection with an agreement or understanding with one or more other persons by or through stock ownership, agency, or otherwise, controls any person liable under section 11 or 12, shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person had no knowledge of or reasonable ground to believe in the existence of the facts by reason of which the liability of the controlled person is alleged to exist.

(b)  PROSECUTION OF PERSONS WHO AID AND ABET VIOLATIONS.--For purposes of any action brought by the Commission under subparagraph (b) or (d) of section 20, any person that knowingly or recklessly provides substantial assistance to another person in violation of Miscellaneous Statutes and Regulations>a provision of this Act, or of any rule or regulation issued under this Act, shall be deemed to be in violation of such provision to the same extent as the person to whom such assistance is provided.

[Codified to 15 U.S.C. 77o]

[Source:  Section 15 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 84), effective May 27, 1933, as amended by section 208 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 908), effective June 6, 1934; section 929M(a) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1861), effective July 21, 2010]

ADDITIONAL REMEDIES; LIMITATION ON REMEDIES.

SEC. 16. (a)  REMEDIES ADDITIONAL--Except as provided in subsection (b), the rights and remedies provided by this title shall be in addition to any and all other rights and remedies that may exist at law or in equity.

[Codified to 15 U.S.C. 77p]

[Source:  Section 16 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 84), effective May 27, 1933; as amended by section 101(a) of title I of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3227), effective November 3, 1998]

FRAUDULENT INTERSTATE TRANSACTIONS

SEC. 17.  (a)  It shall be unlawful for any person in the offer or sale of any securities (including security-based swaps) or any security-based swap agreement (as defined in section 3(a)(78) of the Securities Exchange Act) by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly--

(1)  to employ any device, scheme, or artifice to defraud, or

(2)  to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or

(3)  to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.

(b)  It shall be unlawful for any person, by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, to publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof.

(c)  The exemptions provided in section 3 shall not apply to the provisions of this section.

(d)  The authority of the Commission under this section with respect to security-based swap agreements (as defined in section 3(a)(78) of the Securities Exchange Act of 1934) shall be subject to the restrictions and limitations of section 2A(b) of this title.

[Codified to 15 U.S.C. 77q]

[Source:  Section 17 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 84), effective May 27, 1933, as amended by section 10 of title I of the Act of August 10, 1954 (Pub. L. No. 577; 68 Stat. 686), effective October 8, 1954; sections 302(b) and (c) of title III of the Act of December 21, 2000 (Pub. L. No. 106--554; 114 Stat. 2763A--452), effective December 21, 2000; section 762(c)(2) of title VII of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1759 and 1760), effective July 21, 2010]

STATE CONTROL OF SECURITIES

EXEMPTIONS FROM STATE REGULATION OF SECURITIES OFFERINGS

SEC. 18. (a)  SCOPE OF EXEMPTION.--Except as otherwise provided in this section, no law, rule, regulation, or order, or other administrative action of any State or any political subdivision thereof-- Miscellaneous Statutes and Regulations>

(1)  requiring, or with respect to, registration or qualification of securities, or registration or qualification of securities transactions, shall directly or indirectly apply to a security that--

(A)  is a covered security; or

(B)  will be a covered security upon completion of the transaction;

(2)  shall directly or indirectly prohibit, limit, or impose any conditions upon the use of--

(A)  with respect to a covered security described in subsection (b), any offering document that is prepared by or on behalf of the issuer; or

(B)  any proxy statement, report to shareholders, or other disclosure document relating to a covered security or the issuer thereof that is required to be and is filed with the Commission or any national securities organization registered under section 15A of the Securities Exchange Act of 1934, except that this subparagraph does not apply to the laws, rules, regulations, or orders, or other administrative actions of the State of incorporation of the issuer; or

(3)  shall directly or indirectly prohibit, limit, or impose conditions, based on the merits of such offering or issuer, upon the offer or sale of any security described in paragraph (1).

(b)  COVERED SECURITIES.--For purposes of this section, the following are covered securities:

(1)  EXCLUSIVE FEDERAL REGISTRATION OF NATIONALLY TRADED SECURITIES.--A security is a covered security if such security is--

(A)  listed, or authorized for listing, on the New York Stock Exchange or the American Stock Exchange, or listed or authorized for listing, on the National Market System of the Nasdaq Stock Market (or any successor to such entities);

(B)  listed, or authorized for listing, on a national securities exchange (or tier or segment thereof) that has listing standards that the Commission determines by rule (on its own initiative or on the basis of a petition) are substantially similar to the listing standards applicable to securities described in subparagraph (A); or

(C)  security of the same issuer that is equal in seniority or that is a senior security to a security described in subparagraph (A) or (B).

(2)  EXCLUSIVE FEDERAL REGISTRATION OF INVESTMENT COMPANIES.--A security is a covered security if such security is a security issued by an investment company that is registered, or that has filed a registration statement, under the Investment Company Act of 1940.

(3)  SALES TO QUALIFIED PURCHASERS.--A security is a covered security with respect to the offer or sale of the security to qualified purchasers, as defined by the Commission by rule. In prescribing such rule, the Commission may define the term "qualified purchaser" differently with respect to different categories of securities, consistent with the public interest and the protection of investors.

(4)  EXEMPTION IN CONNECTION WITH CERTAIN EXEMPT OFFERINGS.--A security is a covered security with respect to a transaction that is exempt from registration under this title pursuant to--

(A)  paragraph (1) or (3) of section 4, and the issuer of such security files reports with the Commission pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934;

(B)  section 4(4);

(C)  section 4(6);

(D)1   section 3(a), other than the offer or sale of a security that is exempt from such registration pursuant to paragraph (4), 10, or (11) of such section, except that a municipal security that is exempt from such registration pursuant to paragraph (2) of such section is not a covered security with respect to the offer or sale of such security in the State in which the issuer of such security is located; or

(D)1a rule or regulation adopted pursuant to section 3(b)(2) and such security is--

(i)  offered or sold on a national securities exchange; or

(ii)  offered or sold to a qualified purchaser, as defined by the Commission pursuant to paragraph (3) with respect to that purchase or sale;

(E)  Commission rules or regulations issued under section 4(2), except that this subparagraph does not prohibit a State from imposing notice filing requirements that are Miscellaneous Statutes and Regulations>substantially similar to those required by rule or regulation under section 4(2) that are in effect on September 1, 1996.

(c)  PRESERVATION OF AUTHORITY.--

(1)  FRAUD AUTHORITY.--Consistent with this section, the securities commission (or any agency or office performing like functions) of any State shall retain jurisdiction under the laws of such State to investigate and bring enforcement actions, in connection with securities or securities transactions--

(A)  with respect to--

(i)  fraud or deceit; or

(ii)  unlawful conduct by a broker or dealer; and

(B)  in connection to a transaction described under section 4(6), with respect to--

(i)  fraud or deceit; or

(ii)  unlawful conduct by a broker, dealer, funding portal, or issuer.

(2)  PRESERVATION OF FILING REQUIREMENTS.--

(A)  NOTICE FILINGS PERMITTED.--Nothing in this section prohibits the securities commission (or any agency or office performing like functions) of any State from requiring the filing of any document filed with the Commission pursuant to this title, together with annual or periodic reports of the value of securities sold or offered to be sold to persons located in the State (if such sales data is not included in documents filed with the Commission), solely for notice purposes and the assessment of any fee, together with a consent to service of process and any required fee.

(B)  PRESERVATION OF FEES.--

(i)  IN GENERAL.--Until otherwise provided by law, rule, regulation, or order, or other administrative action of any State or any political subdivision thereof, adopted after the date of enactment of the National Securities Markets Improvement Act of 1996, filing or registration fees with respect to securities or securities transactions shall continue to be collected in amounts determined pursuant to State law as in effect on the day before such date.

(ii)  SCHEDULE.--The fees required by this subparagraph shall be paid, and all necessary supporting data on sales or offers for sales required under subparagraph (A), shall be reported on the same schedule as would have been applicable had the issuer not relied on the exemption provided in subsection (a).

(C)  AVAILABILITY OF PREEMPTION CONTINGENT ON PAYMENT OF FEES.--

(i)  IN GENERAL.--During the period beginning on the date of enactment of the National Securities Markets Improvement Act of 1996 and ending 3 years after that date of enactment, the securities commission (or any agency or office performing like functions) of any State may require the registration of securities issued by any issuer who refuses to pay the fees required by subparagraph (B).

(ii)  DELAYS.--For purposes of this subparagraph, delays in payment of fees or underpayments of fees that are promptly remedied shall not constitute refusal to pay fees.

(D)  FEES NOT PERMITTED ON LISTED SECURITIES.--Notwithstanding subparagraphs (A), (B), and (C), no filing or fee may be required with respect to any security that is a covered security pursuant to subsection (b)(1), or will be such a covered security upon completion of the transaction, or is a security of the same issuer that is equal in seniority or that is a senior security to a security that is a covered security pursuant to subsection (b)(1).

(3)  ENFORCEMENT OF REQUIREMENTS.--Nothing in this section shall prohibit the securities commission (or any agency or office performing like functions) of any State from suspending the offer or sale of securities within such State as a result of the failure to submit any filing or fee required under law and permitted under this section.

(F)1   FEES NOT PERMITTED ON CROWDFUNDED SECURITIES.-- Notwithstanding subparagraphs (A), (B), and (C), no filing or fee may be required with respect to any security that is a covered security pursuant to subsection (b)(4)(B), or will be such a covered security upon completion of the transaction, except for the securities commission (or any agency or office performing like functions) of the State of the principal place of business of the issuer, or any State in which purchasers of 50 percent or greater of the aggregate Miscellaneous Statutes and Regulations>amount of the issue are residents, provided that for purposes of this subparagraph, the term 'State' includes the District of Columbia and the territories of the United States.

(d)  DEFINITIONS.--For purposes of this section, the following definitions shall apply:

(1)  OFFERING DOCUMENT.--The term "offering document"--

(A)  has the meaning given the term "prospectus" in section 2(a)(10), but without regard to the provisions of subparagraphs (a) and (b) of that section; and

(B)  includes a communication that is not deemed to offer a security pursuant to a rule of the Commission.

(2)  PREPARED BY OR ON BEHALF OF THE ISSUER.--Not later than 6 months after the date of enactment of the National Securities Markets Improvement Act of 1996, the Commission shall, by rule, define the term "prepared by or on behalf of the issuer" for purposes of this section.

(3)  STATE.--The term "State" has the same meaning as in section 3 of the Securities Exchange Act of 1934.

(4)  SENIOR SECURITY.--The term "senior security" means any bond, debenture, note, or similar obligation or instrument constituting a security and evidencing indebtedness, and any stock of a class having priority over any other class as to distribution of assets or payment of dividends.

[Codified to 15 U.S.C. 77r]

[Source:  Section 18 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 85), effective May 27, 1933; as amended by section 102a of title I of the Act of October 11, 1996 (Pub. L. No. 104--290; 110 Stat. 3417), effective October 11, 1996; sections 301(a)(1)--(4) and 302 of title III of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3235 and 3237), effective November 3, 1998; section 985(a)(2) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1933), effective July 21, 2010; sections 305(a), 305(b)(2), and 305(c) of title III of the Act of April 5, 2012 (Pub. L. No. 112--106; 126 Stat. 322 and 323), effective April 5, 2012; section 401(b) of title IV of the Act of April 5, 2012 (Pub. L. No. 112--106; 126 Stat. 325), effective April 5, 2012]

Note

(b)  CLARIFICATION OF THE PRESERVATION OF STATE ENFORCEMENT AUTHORITY.--

(1)  IN GENERAL.--The amendments made by subsection (a) relate solely to State registration, documentation, and offering requirements, as described under section 18(a) of Securities Act of 1933 (15 U.S.C. 77r(a)), and shall have no impact or limitation on other State authority to take enforcement action with regard to an issuer, funding portal, or any other person or entity using the exemption from registration provided by section 4(6) of that Act.

[Codified to 15 U.S.C. 77r note]

[Source: Section 305(b)(1) of title III of the Act of April 5, 2012 (Pub. L. No. 112-- 106; 125 Stat. 322, effective April 5, 2012]

SPECIAL POWERS OF COMMISSION

SEC. 19.  (a)  The Commission shall have authority from time to time to make, amend, and rescind such rules and regulations as may be necessary to carry out the provisions of this title, including rules and regulations governing registration statements and prospectuses for various classes of securities and issuers, and defining accounting, technical, and trade terms used in this title. Among other things, the Commission shall have authority, for the purposes of this title, to prescribe the form or forms in which required information shall be set forth, the items or details to be shown in the balance sheet and earning statement, and the methods to be followed in the preparation of accounts, in the appraisal or valuation of assets and liabilities, in the determination of depreciation and depletion, in the differentia- tion 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 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. The rules and regulations of the Commission shall be effective upon Miscellaneous Statutes and Regulations>publication in the manner which the Commission shall prescribe. No provision of this title imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule or regulation of the Commission, notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or be determined by judicial or other authority to be invalid for any reason.

(b)  RECOGNITION OF ACCOUNTING STANDARDS.--

(1)  IN GENERAL.--In carrying out its authority under subsection (a) and under section 13(b) of the Securities Exchange Act of 1934, the Commission may recognize, as "generally accepted" for purposes of the securities laws, any accounting principles established by a standard setting body--

(A)  that--

(i)  is organized as a private entity;

(ii)  has, for administrative and operational purposes, a board of trustees (or equivalent body) serving in the public interest, the majority of whom are not, concurrent with their service on such board, and have not been during the 2--year period preceding such service, associated persons of any registered public accounting firm;

(iii)  is funded as provided in section 109 of the Sarbanes--Oxley Act of 2002;

(iv)  has adopted procedures to ensure prompt consideration, by majority vote of its members, of changes to accounting principles necessary to reflect emerging accounting issues and changing business practices; and

(v)  considers, in adopting accounting principles, the need to keep standards current in order to reflect changes in the business environment, the extent to which international covergence on high quality accounting standards is necessary or appropriate in the public interest and for the protection of investors; and

(B)  that the Commission determines has the capacity to assist the Commission in fulfilling the requirements of subsection (a) and section 13(b) of the Securities Exchange Act of 1934, because, at a minimum, the standard setting body is capable of improving the accuracy and effectiveness of financial reporting and the protection of investors under the securities laws.

(2)  ANNUAL REPORT.--A standard setting body described in paragraph (1) shall submit an annual report to the Commission and the public, containing audited financial statements of that standard setting body.

(c)  For the purpose of all investigations which, in the opinion of the Commission, are necessary and proper for the enforcement of this title, any member of the Commission or any officer or officers designated by it are empowered to administer oaths and affirma tions, subpena witnesses, take evidence, and require the production of any books, papers, or other documents which the Commission deems relevant or material to the inquiry. Such attendance of witnesses and the production of such documentary evidence may be required from any place in the United States or any Territory at any designated place of hearing.

(d)(1)  The Commission is authorized to cooperate with any association composed of duly constituted representatives of State governments whose primary assignment is the regulation of the securities business within those States, and which, in the judgment of the Commission, could assist in effectuating greater uniformity in Federal-State securities matters. The Commission shall, at its discretion, cooperate, coordinate, and share information with such an association for the purposes of carrying out the policies and projects set forth in paragraphs (2) and (3).

(2)  It is the declared policy of this subsection that there should be greater Federal and State cooperation in securities matters, including--

(A)  maximum effectiveness of regulation,

(B)  maximum uniformity in Federal and State regulatory standards,

(C)  minimum interference with the business of capital formation, and

(D)  a substantial reduction in costs and paperwork to diminish the burdens of raising investment capital (particularly by small business) and to diminish the costs of the administration of the Government programs involved.

(3)  The purpose of this subsection is to engender cooperation between the Commission, any such association of State securities officials, and other duly constituted securities associations in the following areas:

(A)  the sharing of information regarding the registration or exemption of securities issues applied for in the various States; Miscellaneous Statutes and Regulations>

(B)  the development and maintenance of uniform securities forms and procedures; and

(C)  the development of a uniform exemption from registration for small issuers which can be agreed upon among several States or between the States and the Federal Government. The Commission shall have the authority to adopt such an exemption as agreed upon for Federal purposes. Nothing in this Act shall be construed as authorizing preemption of State law.

(4)  In order to carry out these policies and purposes, the Commission shall conduct an annual conference as well as such other meetings as are deemed necessary, to which representatives from such securities associations, securities self-regulatory organizations, agencies, and private organizations involved in capital formation shall be invited to participate.

(5)  For fiscal year 1982, and for each of the three succeeding fiscal years, there are authorized to be appropriated such amounts as may be necessary and appropriate to carry out the policies, provisions, and purposes of this subsection. Any sums so appropriated shall remain available until expended.

(6)  Notwithstanding any other provision of law, neither the Commission nor any other person shall be required to establish any procedures not specifically required by the securities laws, as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934, or by chapter 5 of title 5, United States Code, in connection with cooperation, coordination, or consultation with--

(A)  any association referred to in paragraph (1) or (3) or any conference or meeting referred to in paragraph (4), while such association, conference, or meeting is carrying out activities in furtherance of the provisions of this subsection; or

(B)  any forum, agency, or organization, or group referred to in section 503 of the Small Business Investment Incentive Act of 1980, while such forum, agency, organization, or group is carrying out activities in furtherance of the provisions of such section 503. As used in this paragraph, the terms "association", "conference", "meeting", "forum", "agency", "organization", and "group" include any committee, subgroup, or representative of such entities.

(e)  EVALUATION OF RULES OR PROGRAMS.--For the purpose of evaluating any rule or program of the Commission issued or carried out under any provision of the securities laws, as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c), and the purposes of considering, proposing, adopting, or engaging in any such rule or program or developing new rules or programs, the Commission may--

(1)  gather information from and communicate with investors or other members of the public;

(2)  engage in such temporary investor testing programs as the Commission determines are in the public interest or would protect investors; and

(3)  consult with academics and consultants, as necessary to carry out this subsection.

(f)  RULE OF CONSTRUCTION.--For purposes of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.), any action taken under subsection (e) shall not be construed to be a collection of information.

(g)  FUNDING FOR THE GASB.--

(1)  IN GENERAL.--The Commission may, subject to the limitations imposed by section 15B of the Securities Exchange Act of 1934 (15 U.S.C. 78o--4), require a national securities association registered under the Securities Exchange Act of 1934 to establish--

(A)  a reasonable annual accounting support fee to adequately fund the annual budget of the Governmental Accounting Standards Board (referred to in this subsection as the GASB'); and

(B)  rules and procedures, in consultation with the principal organizations representing State governors, legislators, local elected officials, and State and local finance officers, to provide for the equitable allocation, assessment, and collection of the accounting support fee established under subparagraph (A) from the members of the association, and the remittance of all such accounting support fees to the Financial Accounting Foundation.

(2)  ANNUAL BUDGET.--For purposes of this subsection, the annual budget of the GASB is the annual budget reviewed and approved according to the internal procedures of the Financial Accounting Foundation. Miscellaneous Statutes and Regulations>

(3)  USE OF FUNDS.--Any fees or funds collected under this subsection shall be used to support the efforts of the GASB to establish standards of financial accounting and reporting recognized as generally accepted accounting principles applicable to State and local governments of the United States.

(4)  LIMITATION ON FEE.--The annual accounting support fees collected under this subsection for a fiscal year shall not exceed the recoverable annual budgeted expenses of the GASB (which may include operating expenses, capital, and accrued items).

(5)  RULES OF CONSTRUCTION.--

(A)  FEES NOT PUBLIC MONIES.--Accounting support fees collected under this subsection and other receipts of the GASB shall not be considered public monies of the United States.

(B)  LIMITATION ON AUTHORITY OF THE COMMISSION.-- Nothing in this subsection shall be construed to--

(i)  provide the Commission or any national securities association direct or indirect oversight of the budget or technical agenda of the GASB; or

(ii)  affect the setting of generally accepted accounting principles by the GASB.

(C)  NONINTERFERENCE WITH STATES.--Nothing in this subsection shall be construed to impair or limit the authority of a State or local government to establish accounting and financial reporting standards.

[Codified to 15 U.S.C. 77s]

[Source:  Section 19 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 85), effective May 27, 1933, as amended by section 209 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 908), effective June 6, 1934; section 308(a)(2) of the Act of February 5, 1976 (Pub. L. No. 94--210; 90 Stat. 57), effective April 5, 1976; section 505 of title V of the Act of October 21, 1980 (Pub. L. No. 96--477; 94 Stat. 2292--2293), effective January 1, 1981; and section 207 of title II of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1252), effective December 4, 1987; section 108(a) of title I of the Act of July 30, 2002 (Pub. L. No. 107--204; 116 Stat. 768), effective July 30, 2002; sections 912 and 978(a) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1824 and 1925), effective July 21, 2010]

1So in original. Two subparagraphs (D) have been enacted. Go back to Text

1So in original. No subparagraph (E) enacted. Go back to Text


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