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8000 - FDIC Miscellaneous Statutes and Regulations
GOVERNMENT SECURITIES BROKERS AND DEALERS
SEC. 15C. (a)(1)(A) It shall be unlawful for any
government securities broker or government securities dealer (other
than a registered broker or dealer or a financial institution) to make
use of the mails or any means or instrumentality of
interstate
{{2-28-94 p.9228.07}}commerce to
effect any transaction in, or to induce or attempt to induce the
purchase or sale of, any government security unless such government
securities broker or government securities dealer is registered in
accordance with paragraph (2) of this subsection.
(B)(i) It shall be unlawful for any government securities broker
or government securities dealer that is a registered broker or dealer
or a financial institution to 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 government
security unless such government securities broker or government
securities dealer has filed with the appropriate regulatory agency
written notice that it is a government securities broker or government
securities dealer. When such a government securities broker or
government securities dealer ceases to act as such it shall file with
the appropriate regulatory agency a written notice that it is no longer
acting as a government securities broker or government securities
dealer.
(ii) Such notices shall be in such form and contain such
information concerning a government securities broker or government
securities dealer that is a financial institution and any persons
associated with such government securities broker or government
securities dealer as the Board of Governors of the Federal Reserve
System shall, by rule, after consultation with each appropriate
regulatory agency (including the Commission), prescribe as necessary or
appropriate in the public interest or for the protection of investors.
Such notices shall be in such form and contain such information
concerning a government securities broker or government securities
dealer that is a registered broker or dealer and any persons associated
with such government securities broker or government securities dealer
as the Commission shall, by rule, prescribe as necessary or appropriate
in the public interest or for the protection of investors.
(iii) Each appropriate regulatory agency (other than the
Commission) shall make available to the Commission the notices which
have been filed with it under this subparagraph, and the Commission
shall maintain and make available to the public such notices and the
notices it receives under this subparagraph.
(2) A government securities broker or a government securities
dealer subject to the registration requirement of paragraph (1)(A) of
this subsection may be registered by filing with the Commission an
application for registration in such form and containing such
information and documents concerning such government securities broker
or government securities dealer and any persons associated with such
government securities broker or government securities dealer as the
Commission, by rule, may prescribe as necessary or appropriate in the
public interest or for the protection of investors. Within 45 days of
the date of filing of such application (or within such longer period as
to which the applicant consents), the Commission shall--
(i) by order grant registration, or
(ii) 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 120 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 government
securities broker or government securities dealer has become a member
of a national securities exchange registered under section 6 of this
title, or a securities association registered under section 15A of this
title, unless the Commission has exempted such government securities
broker or government securities dealer, by rule or order, from such
membership. The Commission may extend the time for the conclusion of
such proceedings for up to 90 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 the registration of a government
securities broker or a government securities dealer 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
{{2-28-94 p.9228.08}}finding or if it
finds that if the applicant were so registered, its registration would
be subject to suspension or revocation under subsection (c) of this
section.
(3) Any provision of this title (other than
section 5 or paragraph (1) of
this subsection) 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 government securities
broker or government securities dealer registered or having filed
notice under paragraph (1) of this subsection or any person acting on
behalf of such government securities broker or government securities
dealer, irrespective of any use of the mails or any means or
instrumentality of interstate commerce in connection therewith.
(4) No government securities broker or government securities
dealer that is required to register under paragraph (1)(A) and that is
not a member of the Securities Investor Protection Corporation shall
effect any transaction in any security in contravention of such rules
as the Commission shall prescribe pursuant to this subsection to assure
that its customers receive complete, accurate, and timely disclosure of
the inapplicability of Securities Investor Protection Corporation
coverage to their accounts.
(5) The Secretary of the Treasury (hereinafter in this section
referred to as the "Secretary"), by rule or order, upon the
Secretary's own motion or upon application, may conditionally or
unconditionally exempt any government securities broker or government
securities dealer, or class of government securities brokers or
government securities dealers, from any provision of subsection (a),
(b), or (d) of this section other than subsection (d)(3) or the rules
thereunder, if the Secretary finds that such exemption is consistent
with the public interest, the protection of investors, and the purposes
of this title.
(b)(1) The Secretary shall propose and adopt rules to effect the
purposes of this title with respect to transactions in government
securities effected by government securities brokers and government
securities dealers as follows:
(A) Such rules shall provide safeguards with respect to the
financial responsibility and related practices of government securities
brokers and government securities dealers including, but not limited
to, capital adequacy standards, the acceptance of custody and use of
customers' securities, the carrying and use of customers' deposits or
credit balances, and the transfer and control of government securities
subject to repurchase agreements and in similar transactions.
(B) Such rules shall require every government securities broker
and government securities dealer to make reports to and furnish copies
of records to the appropriate regulatory agency, and to file with the
appropriate regulatory agency, annually or more frequently, a balance
sheet and income statement certified by an independent public
accountant, prepared on a calendar or fiscal year basis, and such other
financial statements (which shall, as the Secretary specifies, be
certified) and information concerning its financial condition as
required by such rules.
(C) Such rules shall require records to be made and kept by
government securities brokers and government securities dealers and
shall specify the periods for which such records shall be preserved.
(2) RISK ASSESSMENT FOR HOLDING COMPANY SYSTEMS.--
(A) Obligations to obtain, maintain, and report
information.--Every person who is registered as a government
securities broker or government securities dealer under this section
shall obtain such information and make and keep such records as the
Secretary by rule prescribes concerning the registered person's
policies, procedures, or systems for monitoring and controlling
financial and operational risks to it resulting from the activities of
any of its associated persons, other than a natural person. Such
records shall describe, in the aggregate, each of the financial and
securities activities conducted by, and customary sources of capital
and funding of, those of its associated persons whose business
activities are reasonably likely to have a material impact on the
financial or operational condition of such registered person, including
its capital, its liquidity, or its ability to conduct or finance its
operations. The Secretary, by rule, may require summary
{{2-28-94 p.9228.09}}reports of such
information to be filed with the registered person's appropriate
regulatory agency no more frequently than quarterly.
(B) AUTHORITY TO REQUIRE ADDITIONAL INFORMATION.--If, as
a result of adverse market conditions or based on reports provided
pursuant to subparagraph (A) of this paragraph or other available
information, the appropriate regulatory agency reasonably concludes
that it has concerns regarding the financial or operational condition
of any government securities broker or government securities dealer
registered under this section, such agency may require the registered
person to make reports concerning the financial and securities
activities of any of such person's associated persons, other than a
natural person, whose business activities are reasonably likely to have
a material impact on the financial or operational condition of such
registered person. The appropriate regulatory agency, in requiring
reports pursuant to this subparagraph, shall specify the information
required, the period for which it is required, the time and date on
which the information must be furnished, and whether the information is
to be furnished directly to the appropriate regulatory agency or to a
self-regulatory organization with primary responsibility for examining
the registered person's financial and operational condition.
(C) Special provisions with respect to associated persons
subject to federal banking agency regulation.--
(i) COOPERATION IN IMPLEMENTATION.--In developing and
implementing reporting requirements pursuant to subparagraph (A) of
this paragraph with respect to associated persons subject to
examination by or reporting requirements of a Federal banking agency,
the Secretary shall consult with and consider the views of each such
Federal banking agency. If a Federal banking agency comments in writing
on a proposed rule of the Secretary under this paragraph that has been
published for comment, the Secretary shall respond in writing to such
written comment before adopting the proposed rule. The Secretary shall,
at the request of a Federal banking agency, publish such comment and
response in the Federal Register at the time of publishing the adopted
rule.
(ii) USE OF BANKING AGENCY REPORTS.--A registered
government securities broker or government securities dealer shall be
in compliance with any recordkeeping or reporting requirement adopted
pursuant to subparagraph (A) of this paragraph concerning an associated
person that is subject to examination by or reporting requirements of a
Federal banking agency if such government securities broker or
government securities dealer utilizes for such recordkeeping or
reporting requirement copies of reports filed by the associated person
with the Federal banking agency pursuant to section 5211 of the Revised
Statutes, section 9 of the Federal Reserve Act,
section 7(a) of the Federal
Deposit Insurance Act, section 10(b) of the Home Owners' Loan Act, or
section 8 of the Bank Holding
Company Act of 1956. The Secretary may, however, by rule adopted
pursuant to subparagraph (A), require any registered government
securities broker or government securities dealer filing such reports
with the appropriate regulatory agency to obtain, maintain, or report
supplemental information if the Secretary makes an explicit finding,
based on information provided by the appropriate regulatory agency,
that such supplemental information is necessary to inform the
appropriate regulatory agency regarding potential risks to such
government securities broker or government securities dealer. Prior to
requiring any such supplemental information, the Secretary shall first
request the Federal banking agency to expand its reporting requirements
to include such information.
(iii) Procedure for requiring additional
information.--Prior to making a request pursuant to subparagraph
(B) of this paragraph for information with respect to an associated
person that is subject to examination by or reporting requirements of a
Federal banking agency, the appropriate regulatory agency shall--
(I) notify such banking agency of the information required with
respect to such associated person; and
(II) consult with such agency to determine whether the
information required is available from such agency and for other
purposes, unless the appropriate regulatory agency determines that
any delay resulting from such consultation would be
inconsistent
{{2-28-94 p.9228.10}}with ensuring the
financial and operational condition of the government securities broker
or government securities dealer or the stability or integrity of the
securities markets.
(iv) EXCLUSION FOR EXAMINATION REPORTS.--Nothing in this
subparagraph shall be construed to permit the Secretary or an
appropriate regulatory agency to require any registered government
securities broker or government securities dealer to obtain, maintain,
or furnish any examination report of any Federal banking agency or any
supervisory recommendations or analysis contained therein.
(v) CONFIDENTIALITY OF INFORMATION PROVIDED.--No
information provided to or obtained by an appropriate regulatory agency
from any Federal banking agency pursuant to a request under clause
(iii) of this subparagraph regarding any associated person which is
subject to examination by or reporting requirements of a Federal
banking agency may be disclosed to any other person (other than a
self-regulatory organization), without the prior written approval of
the Federal banking agency. Nothing in this clause shall authorize the
Secretary or any appropriate regulatory agency to withhold information
from Congress, or prevent the Secretary or any appropriate regulatory
agency from complying with a request for information from any other
Federal department or agency requesting the information for purposes
within the scope of its jurisdiction, or complying with an order of a
court of the United States in an action brought by the United States or
the Commission.
(vi) Notice to banking agencies concerning financial and
operational condition concerns.--The Secretary or appropriate
regulatory agency shall notify the Federal banking agency of any
concerns of the Secretary or the appropriate regulatory agency
regarding significant financial or operational risks resulting from the
activities of any government securities broker or government securities
dealer to any associated person thereof which is subject to examination
by or reporting requirements of the Federal banking agency.
(vii) DEFINITION.--For purposes of this subparagraph,
the term Federal banking agency' shall have the same meaning as the
term appropriate Federal banking agency' in section 3(q) of the
Federal Deposit Insurance Act (12
U.S.C. 1813(q)).
(D) EXEMPTIONS.--The Secretary by rule or order may
exempt any person or class of persons, under such terms and conditions
and for such periods as the Secretary shall provide in such rule or
order, from the provisions of this paragraph, and the rules thereunder.
In granting such exemptions, the Secretary shall consider, among other
factors--
(i) whether information of the type required under this paragraph
is available from a supervisory agency (as defined in section 1101(6)
of the Right to Financial Privacy Act of 1978
(12 U.S.C. 3401(6)), a State
insurance commission or similar State agency, the Commodity Futures
Trading Commission, or a similar foreign regulator;
(ii) the primary business of any associated person;
(iii) the nature and extent of domestic or foreign regulation of
the associated person's activities;
(iv) the nature and extent of the registered person's securities
transactions; and
(v) with respect to the registered person and its associated
persons, on a consolidated basis, the amount and proportion of assets
devoted to, and revenues derived from, activities in the United States
securities markets.
(E) Conformity with requirements under
section 17(h).--In
exercising authority pursuant to subparagraph (A) of this paragraph
concerning information with respect to associated persons of government
securities brokers and government securities dealers who are also
associated persons of registered brokers or dealers reporting to the
Commission pursuant to section 17(h) of this title, the requirements
relating to such associated persons shall conform, to the greatest
extent practicable, to the requirements under section 17(h).
(F) Authority to limit disclosure of
information.--Notwithstanding any other provision of law, the
Secretary and any appropriate regulatory agency shall not be compelled
to disclose any information required to be reported under this
paragraph, or any
{{8-30-02 p.9228.11}}information
supplied to the Secretary or any appropriate regulatory agency by any
domestic or foreign regulatory agency that relates to the financial or
operational condition of any associated person of a registered
government securities broker or a government securities dealer. Nothing
in this paragraph shall authorize the Secretary or any appropriate
regulatory agency to withhold information from Congress, or prevent the
Secretary or any appropriate regulatory agency from complying with a
request for information from any other Federal department or agency
requesting the information for purposes within the scope of its
jurisdiction, or complying with an order of a court of the United
States in an action brought by the United States or the Commission. For
purposes of section 552 of title
5, United States Code, this paragraph shall be considered a statute
described in subsection (b)(3)(B) of such section 552.
(3)(A) With respect to any financial institution that has filed
notice as a government securities broker or government securities
dealer or that is required to file notice under subsection (a)(1)(B),
the appropriate regulatory agency for such government securities broker
or government securities dealer may issue such rules and regulations
with respect to transactions in government securities as may be
necessary to prevent fraudulent and manipulative acts and practices and
to promote just and equitable principles of trade. If the Secretary of
the Treasury determines, and notifies the appropriate regulatory
agency, 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 appropriate regulatory agency 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.
(B) The appropriate regulatory agency shall consult with and
consider the views of the Secretary prior to approving or amending a
rule or regulation under this paragraph, except where the appropriate
regulatory agency determines that an emergency exists requiring
expeditious and summary action and publishes its reasons therefor. If
the Secretary comments in writing to the appropriate regulatory agency
on a proposed rule or regulation that has been published for comment,
the appropriate regulatory agency shall respond in writing to such
written comment before approving the proposed rule or regulation.
(C) In promulgating rules under this section, the appropriate
regulatory agency shall consider the sufficiency and appropriateness of
then existing laws and rules applicable to government securities
brokers, government securities dealers, and persons associated with
government securities brokers and government securities dealers.
(4) Rules promulgated and orders issued under this section
shall--
(A) be designed to prevent fraudulent and manipulative acts and
practices and to protect the integrity, liquidity, and efficiency of
the market for government securities, investors, and the public
interest; and
(B) not be designed to permit unfair discrimination between
customers, issuers, government securities brokers, or government
securities dealers, or to impose any burden on competition not
necessary or appropriate in furtherance of the purposes of this title.
(5) In promulgating rules and issuing orders under this section,
the Secretary--
(A) may appropriately classify government securities brokers and
government securities dealers (taking into account relevant matters,
including types of business done, nature of securities other than
government securities purchased or sold, and character of business
organization) and persons associated with government securities brokers
and government securities dealers;
(B) may determine, to the extent consistent with paragraph (2) of
this subsection and with the public interest, the protection of
investors, and the purposes of this title, not to apply, in whole or in
part, certain rules under this section, or to apply greater, lesser, or
different standards, to certain classes of government securities
brokers, government securities dealers, or persons associated with
government securities brokers or government securities
dealers;
{{8-30-02 p.9228.12}}
(C) shall consider the sufficiency and appropriateness of then
existing laws and rules applicable to government securities brokers,
government securities dealers, and persons associated with government
securities brokers and government securities dealers; and
(D) shall consult with and consider the views of the Commission
and the Board of Governors of the Federal Reserve System, except where
the Secretary determines that an emergency exists requiring expeditious
or summary action and publishes its reasons for such determination.
(6) If the Commission or the Board of Governors of the Federal
Reserve System comments in writing on a proposed rule of the Secretary
that has been published for comment, the Secretary shall respond in
writing to such written comment before approving the proposed rule.
(7) 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
attempt to induce the purchase or sale of, any government security in
contravention of any rule under this section.
(c)(1) With respect to any government securities broker or
government securities dealer registered or required to register under
subsection (a)(1)(A) of this section--
(A) The Commission, by order, shall censure, place limitations on
the activities, functions, or operations of, suspend for a period not
exceeding 12 months, or revoke the registration of such government
securities broker or government securities 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 government securities broker or government
securities dealer, or any person associated with such government
securities broker or government securities dealer (whether prior or
subsequent to becoming so associated), has committed or omitted any act
or omission enumerated in subparagraph (A), (D), (E), (H) or (G) of
paragraph (4) of section 15(b) of this title, 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
is enjoined from any action, conduct, or practice specified in
subparagraph (C) of such paragraph (4).
(B) Pending final determination whether registration of any
government securities broker or government securities dealer 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 government securities
broker or registered government securities dealer may, upon such terms
and conditions as the Commission may deem necessary 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 government securities broker or
registered government securities dealer is no longer in existence or
has ceased to do business as a government securities broker or
government securities dealer, the Commission, by order, shall cancel
the registration of such government securities broker or government
securities dealer.
(C) The Commission, by order, shall censure or place limitations
on the activities or functions of any person associated, seeking to
become associated, or, at the time of the alleged misconduct,
associated or seeking to become associated government securities broker
or government securities dealer registered or required to register
under subsection (a)(1)(A) of this section or suspend for a period not
exceeding 12 months or bar any such person from being associated
with such a government securities brokeror government securities
dealer, if the Commission finds, on the record after notice and
opportunity for hearing, that such censure, placing of limitations,
suspension, or bar is in the public interest and that such person
has committed or omitted any act or is subject to an order of
finding enumerated in subparagraph (A), (D), (E), (H) or (G) of
paragraph (4) of section 15(b) of this title, has been con victed
of any offense specified in subparagraph (B) of such paragraph (4)
within 10
{{2-28-94 p.9228.13}}years of the
commencement of the proceedings under this paragraph, or is enjoined
from any action, conduct, or practice specified in subparagraph (C) of
such paragraph (4).
(2)(A) With respect to any government securities broker or
government securities dealer which is not registered or required to
register under subsection (a)(1)(A) of this section, the appropriate
regulatory agency for such government securities broker or government
securities dealer may, in the manner and for the reasons specified in
paragraph (1)(A) of this subsection, censure, place limitations on the
activities, functions, or operations of, suspend for a period not
exceeding 12 months, or bar from acting as a government securities
broker or government securities dealer any such government securities
broker or government securities dealer, and may sanction any person
associated with such government securities broker or government
securities dealer in the manner and for the reasons specified in
paragraph (1)(C) of this subsection.
(B) In addition, where applicable, such appropriate regulatory
agency may, in accordance with section 8 of the Federal Deposit
Insurance Act (12 U.S.C. 1818),
section 5 of the Home Owners' Loan Act of 1933
(12 U.S.C. 1464), or section 407
of the National Housing Act (12 U.S.C. 1730), enforce compliance by
such government securities broker or government securities dealer or
any person associated with such government securities broker or
government securities dealer with the provisions of this section and
the rules thereunder.
(C) For purposes of subparagraph (B) of this paragraph, any
violation of any such provision shall constitute adequate basis for the
issuance of any order under section 8(b) or 8(c) of the Federal Deposit
Insurance Act, section 5(d)(2) or 5(d)(3) of the Home Owners' Loan Act
of 1933, or section 407(e) or 407(f) of the National Housing Act, and
the customers of any such government securities broker or government
securities dealer shall be deemed, respectively, "depositors" as
that term is used in section 8(c) of the Federal Deposit Insurance Act,
"savings account holders" as that term is used in section 5(d)(3)
of the Home Owners' Loan Act of 1933, or "insured members" as
that term is used in section 407(f) of the National Housing Act.
(D) Nothing in this paragraph shall be construed to affect in any
way the powers of such appropriate regulatory agency to proceed against
such government securities broker or government securities dealer under
any other provision of law.
(E) Each appropriate regulatory agency (other than the
Commission) shall promptly notify the Commission after it has imposed
any sanction under this paragraph on a government securities broker or
government securities dealer, or a person associated with a government
securities broker or government securities dealer, and the Commission
shall maintain, and make available to the public, a record of such
sanctions and any sanctions imposed by it under this subsection.
(3) It shall be unlawful for any person as to whom an order
entered pursuant to paragraph (1) or (2) of this subsection suspending
or barring him from being associated with a government securities
broker or government securities dealer is in effect willfully to
become, or to be, associated with a government securities broker or
government securities dealer without the consent of the appropriate
regulatory agency, and it shall be unlawful for any government
securities broker or government securities dealer to permit such a
person to become, or remain, a person associated with it without the
consent of the appropriate regulatory agency, if such government
securities broker or government securities dealer knew, or, in the
exercise of reasonable care should have known, of such order.
(d)(1) All records of a government securities broker or government
securities dealer are subject at any time, or from time to time, to
such reasonable periodic, special, or other examinations by
representatives of the appropriate regulatory agency for such
government securities broker or government securities dealer as such
appropriate regulatory agency deems necessary or appropriate in the
public interest, for the protection of investors, or otherwise in
furtherance of the purposes of this title.
(2) Information received by an appropriate regulatory agency, the
Secretary, or the Commission from or with respect to any government
securities broker, government securities dealer, any person associated
with a government securities broker or government
{{2-28-94 p.9228.14}}securities
dealer, or any other person subject to this section or rules
promulgated thereunder, may be made available by the Secretary or the
recipient agency to the Commission, the Secretary, the Department of
Justice, the Commodity Futures Trading Commission, any appropriate
regulatory agency, any self-regulatory organization, or any Federal
Reserve Bank.
(3) GOVERNMENT SECURITIES TRADE RECONSTRUCTION.--
(A) FURNISHING RECORDS.--Every government securities
broker and government securities dealer shall furnish to the Commission
on request such records of government securities transactions,
including records of the date and time of execution of trades, as the
Commission may require to reconstruct trading in the course of a
particular inquiry or investigation being conducted by the Commission
for enforcement or surveillance purposes. In requiring information
pursuant to this paragraph, the Commission shall specify the
information required, the period for which it is required, the time and
date on which the information must be furnished, and whether the
information is to be furnished directly to the Commission, to the
Federal Reserve Bank of New York, or to an appropriate regulatory
agency or self-regulatory organization with responsibility for
examining the government securities broker or government securities
dealer. The Commission may require that such information be furnished
in machine readable form notwithstanding any limitation in subparagraph
(B). In utilizing its authority to require information in machine
readable form, the Commission shall minimize the burden such
requirement may place on small government securities brokers and
dealers.
(B) LIMITATION; CONSTRUCTION.--The Commission shall not
utilize its authority under this paragraph to develop regular reporting
requirements, except that the Commission may require information to be
furnished under this paragraph as frequently as necessary for
particular inquiries or investigations for enforcement or surveillance
purposes. This paragraph shall not be construed as requiring, or as
authorizing the Commission to require, any government securities broker
or government securities dealer to obtain or maintain any information
for purposes of this paragraph which is not otherwise maintained by
such broker or dealer in accordance with any other provision of law or
usual and customary business practice. The Commission shall, where
feasible, avoid requiring any information to be furnished under this
paragraph that the Commission may obtain from the Federal Reserve Bank
of New York.
(C) PROCEDURES FOR REQUIRING INFORMATION.--At the time
the Commission requests any information pursuant to subparagraph (A)
with respect to any government securities broker or government
securities dealer for which the Commission is not the appropriate
regulatory agency, the Commission shall notify the appropriate
regulatory agency for such government securities broker or government
securities dealer and, upon request, furnish to the appropriate
regulatory agency any information supplied to the Commission.
(D) CONSULTATION.--Within 90 days after the date of
enactment of this paragraph, and annually thereafter, or upon the
request of any other appropriate regulatory agency, the Commission
shall consult with the other appropriate regulatory agencies to
determine the availability of records that may be required to be
furnished under this paragraph and, for those records available
directly from the other appropriate regulatory agencies, to develop a
procedure for furnishing such records expeditiously upon the
Commission's request.
(E) EXCLUSION FOR EXAMINATION REPORTS.--Nothing in this
paragraph shall be construed so as to permit the Commission to require
any government securities broker or government securities dealer to
obtain, maintain, or furnish any examination report of any appropriate
regulatory agency other than the Commission or any supervisory
recommendations or analysis contained in any such examination report.
(F) AUTHORITY TO LIMIT DISCLOSURE OF INFORMATION.--
Notwithstanding any other provision of law, the Commission and the
appropriate regulatory agencies shall not be compelled to disclose
any information required or obtained under this paragraph. Nothing in
this paragraph shall authorize the Commission or any appropriate
regulatory
{{4-29-05 p.9228.15}}agency to
withhold information from Congress, or prevent the Commission or any
appropriate regulatory agency 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 from
complying with an order of a court of the United States in an action
brought by the United States, the Commission, or the appropriate
regulatory agency. For purposes of
section 552 of title 5, United
States Code, this subparagraph shall be considered a statute described
in subsection (b)(3)(B) of such section 552.
(e)(1) It shall be unlawful for any government securities
broker or government securities dealer registered or required to
register with the Commission under subsection (a)(1)(A) to effect any
transaction in, or induce or attempt to induce the purchase or sale of,
any government security, unless such government securities broker or
government securities dealer is a member of a national securities
exchange registered under section
6 of this title or a securities association registered under
section 15A of this title.
(2) The Commission, after consultation with the
Secretary, 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
government securities broker or government securities dealer or class
of government securities brokers or government securities dealers
specified in such rule or order.
(f) LARGE POSITION REPORTING.--
(1) REPORTING REQUIREMENTS.--The Secretary may
adopt rules to require specified persons holding, maintaining, or
controlling large positions in to-be-issued or recently issued Treasury
securities to file such reports regarding such positions as the
Secretary determines to be necessary and appropriate for the purpose of
monitoring the impact in the Treasury securities market of
concentrations of positions in Treasury securities and for the purpose
of otherwise assisting the Commission in the enforcement of this title,
taking into account any impact of such rules on the efficiency and
liquidity of the Treasury securities market and the cost to taxpayers
of funding the Federal debt. Unless otherwise specified by the
Secretary, reports required under this subsection shall be filed with
the Federal Reserve Bank of New York, acting as agent for the
Secretary. Such reports shall, on a timely basis, be provided directly
to the Commission by the person with whom they are filed.
(2) RECORDKEEPING REQUIREMENTS.--Rules under
this subsection may require persons holding, maintaining, or
controlling large positions in Treasury securities to make and keep for
prescribed periods such records as the Secretary determines are
necessary or appropriate to ensure that such persons can comply with
reporting requirements under this subsection.
(3) AGGREGATION RULES.--Rules under this
subsection--
(A) may prescribe the manner in which positions and
accounts shall be aggregated for the purpose of this subsection,
including aggregation on the basis of common ownership or control; and
(B) may define which persons (individually or as a group) hold,
maintain, or control large positions.
(4) Definitional authority: determination of reporting
threshold.--
(A) In prescribing rules under this subsection, the Secretary
may, consistent with the purpose of this subsection, define terms used
in this subsection that are not otherwise defined in
section 3 of this title.
(B) Rules under this subsection shall specify--
(i) the minimum size of positions subject to reporting under this
subsection, which shall be no less than the size that provides the
potential for manipulation or control of the supply or price, or the
cost of financing arrangements, of an issue or the portion thereof that
is available for trading;
(ii) the types of positions (which may include financing
arrangements) to be reported;
(iii) the securities to be covered; and
(iv) the form and manner in which reports shall be transmitted,
which may include transmission in machine readable form.
(5) EXEMPTIONS.--Consistent with the public interest and
the protection of investors, the Secretary by rule or order may exempt
in whole or in part, conditionally or unconditionally, any person or
class of persons, or any transaction or class of transactions, from the
requirements of this subsection.
{{4-29-05 p.9228.16}}
(6) Limitation on disclosure of
information.--Notwithstanding any other provision of law, the
Secretary and 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 Secretary or the
Commission to withhold information from Congress, or prevent the
Secretary or 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 from
complying with an order of a court of the United States in an action
brought by the United States, the Secretary, or the Commission. For
purposes of section 552 of title 5, United States Code, this paragraph
shall be considered a statute described in subsection (b)(3)(B) of such
section 552.
(g)(1) Nothing in this section except paragraph (2) of this
subsection shall be construed to impair or limit the authority under
any other provision of law of the Commission, the Secretary of the
Treasury, the Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Federal Deposit Insurance Corporation,
the Director of the Office of Thrift Supervision, the Federal Savings
and Loan Insurance Corporation, the Secretary of Housing and Urban
Development, and the Government National Mortgage Association.
(2) Notwithstanding any other provision of this title, the
Commission shall not have any authority to make investigations of,
require the filing of a statement by, or take any other action under
this title against a government securities broker or government
securities dealer, or any person associated with a government
securities broker or government securities dealer, for any violation or
threatened violation of the provisions of this section, other than
subsection (d)(3) or the rules or regulations thereunder, unless the
Commission is the appropriate regulatory agency for such government
securities broker or government securities dealer. Nothing in the
preceding sentence shall be construed to limit the authority of the
Commission with respect to violations or threatened violations of any
provision of this title other than this section (except subsection
(d)(3)), the rules or regulations under any such other provision, or
investigations pursuant to section
21(a)(2) of this title to assist a foreign securities
authority.
(h) EMERGENCY AUTHORITY.--The Secretary may, by order,
take any action with respect to a matter or action subject to
regulation by the Secretary under this section, or the rules of the
Secretary under this section, involving a government security or a
market therein (or significant portion or segment of that market), that
the Commission may take under section 12(k)(2) with respect to
transactions in securities (other than exempted securities) or a market
therein (or significant poriton or segment of that market).
[Codified to 15 U.S.C. 78o--5]
[Source: Section 101 of title I of the Act of October 28,
1986 (Pub. L. No. 99--571; 100 Stat. 3208), effective July 25, 1987, as
amended by section 801(a) of title VIII of the Act of December 4, 1987
(Pub. L. No. 100--181; 101 Stat. 1265), effective December 4, 1987;
section 744(u)(3) of title VII of the Act of August 9, 1989 (Pub. L.
No. 101--73; 103 Stat. 441), effective August 9, 1989; section 4 of the
Act of October 16, 1990 (Pub. L. No. 101--432; 104 Stat. 970),
effective October 16, 1990; section 203(c)(1) of title II of the Act of
November 15, 1990 (Pub. L. 101--550; 104 Stat. 2718), effective
November 15, 1990; sections 102, 103(b), 104, 106(a), 108, and
109(b)(1) of title I of the Act of December 17, 1993 (Pub. L. No.
103--202; 107 Stat. 2345, 2346, 2347, 2349, 2351, 2352, respectively),
effective December 7, 1993; section 301(b)(10) of title III of the Act
of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3236), effective
November 3, 1998; section 604(c)(1)(B) of title VI of the Act of July
30, 2002 (Pub. L. No. 107--204; 116 Stat. 796), effective July 30,
2002; section 7803(d) of title VII of the Act of December 17, 2004
(Pub. L. No. 108--458; 118 Stat. 3863), effective December 17,
2004]
SEC. 15D. SECURITIES ANALYSTS AND RESEARCH REPORTS.
(a) ANALYST PROTECTIONS.--The Commission, or upon the
authorization and direction of the Commission, a registered securities
association or national securities exchange, shall have adopted, not
later than 1 year after the date of enactment of this section, rules
reasonably designed to address conflicts of interest that can arise
when securities anlaysts recommend equity securities in research
reports and public appearances, in order to improve
{{12-29-06 p.9229}}the objectivity
of research and provide investors with more useful and reliable
information, including rules designed--
(1) to foster greater public confidence in securities research,
and to protect the objectivity and independence of securities analysts,
by--
(A) restricting the prepublication clearance or approval of
research reports by persons employed by the broker or dealer who are
engaged in investment banking activities, or persons not directly
responsible for investment research, other than legal or compliance
staff;
(B) limiting the supervision and compensatory evaluation of
securities analysts to officials employed by the broker or dealer who
are not engaged in investment banking activities; and
(C) requiring that a broker or dealer and persons employed by a
broker or dealer who are involved with investment banking activities
may not, directly or indirectly, retaliate against or threaten to
retaliate against any securities analyst employed by that broker or
dealer or its affiliates as a result of an adverse, negative, or
otherwise unfavorable research report that may adversely affect the
present or prospective investment banking relationship of the broker or
dealer with the issuer that is the subject of the research report,
except that such rules may not limit the authority of a broker or
dealer to discipline a securities analyst for causes other than such
research report in accordance with the policies and procedures of the
firm;
(2) to define periods during which brokers or dealers who have
participated, or are to participate, in a public offering of securities
as underwriters or dealers should not publish or otherwise distribute
research reports relating to such securities or to the issuer of such
securities;
(3) to establish structural and institutional safeguards within
registered brokers or dealers to assure that securities analysts are
separated by appropriate informational partitions within the firm from
the review, pressure, or oversight of those whose involvement in
investment banking activities might potentially bias their judgment or
supervision; and
(4) to address such other issues as the Commission, or such
association or exchange determines appropriate.
(b) DISCLOSURE.--The Commission, or upon the authorization
and direction of the Commission, a registered securities association or
national securities exchange, shall have adopted, not later than 1 year
after the date of enactment of this section, rules reasonably designed
to require each securities analyst to disclose in public appearances,
and each registered broker or dealer to disclose in each research
report, as applicable, conflicts of interest that are known or should
have been known by the securities analyst or the broker or dealer, to
exist at the time of the appearance or the date of distribution of the
report, including--
(1) the extent to which the securities analyst has debt or equity
investments in the issuer that is the subject of the appearance or
research report;
(2) whether any compensation has been received by the registered
broker or dealer, or any affiliate thereof, including the securities
analyst, from the issuer that is the subject of the appearance or
research report, subject to such exemptions as the Commission may
determine appropriate and necessary to prevent disclosure by virtue of
this paragraph of material non-public information regarding specific
potential future investment banking transactions of such issuer, as is
appropriate in the public interest and consistent with the protection
of investors;
(3) whether an issuer, the securities of which are recommended in
the appearance or research report, currently is, or during the 1--year
period preceding the date of the appearance or date of distribution of
the report has been, a client of the registered broker or dealer, and
if so, stating the types of services provided to the issuer;
(4) whether the securities analyst received compensation with
respect to a research report, based upon (among any other factors) the
investment banking revenues (either generally or specifically earned
from the issuer being analyzed) of the registered broker or dealer;
and
{{12-29-06 p.9230}}
(5) such other disclosures of conflicts of interest that are
material to investors, research analysts, or the broker or dealer as
the Commission, or such association or exchange, determines
appropriate.
(c) DEFINITIONS.--In this section--
(1) the term "securities analyst" means any associated
person of a registered broker or dealer that is principally responsible
for, and any associated person who reports directly or indirectly to a
securities analyst in connection with, the preparation of the substance
of a research report, whether or not any such person has the job title
of "securities analyst"; and
(2) the term "research report" means a written or
electronic communication that includes an analysis of equity securities
of individual companies or industries, and that provides information
reasonably sufficient upon which to base an investment decision.
[Codified to 15 U.S.C. 78o--6]
[Source: Section 501(a) of title V of the Act of July 30, 2002
(Pub. L. No. 107--204; 116 Stat. 791), effective July 30,
2002]
SEC. 15E. REGISTRATION OF NATIONALLY RECOGNIZED STATISTICAL
RATING ORGANIZATIONS.
(a) REGISTRATION PROCEDURES.--
(1) APPLICATION FOR REGISTRATION.--
(A) IN GENERAL.--A credit rating agency that elects to
be treated as a nationally recognized statistical rating organization
for purposes of this title (in this section referred to as the
applicant'), shall furnish to the Commission an application for
registration, in such form as the Commission shall require, by rule or
regulation issued in accordance with subsection (n), and containing the
information described in subparagraph (B).
(B) REQUIRED INFORMATION.--An application for
registration under this section shall contain information regarding--
(i) credit ratings performance measurement statistics over
short-term, mid-term, and long-term periods (as applicable) of the
applicant;
(ii) the procedures and methodologies that the applicant uses in
determining credit ratings;
(iii) policies or procedures adopted and implemented by the
applicant to prevent the misuse, in violation of this title (or the
rules and regulations hereunder), of material, nonpublic information;
(iv) the organizational structure of the applicant;
(v) whether or not the applicant has in effect a code of ethics,
and if not, the reasons therefor;
(vi) any conflict of interest relating to the issuance of credit
ratings by the applicant;
(vii) the categories described in any of clauses (i) through (v)
of section 3(a)(62)(B) with respect to which the applicant intends to
apply for registration under this section;
(viii) on a confidential basis, a list of the 20 largest issuers
and subscribers that use the credit rating services of the applicant,
by amount of net revenues received therefrom in the fiscal year
immediately preceding the date of submission of the application;
(ix) on a confidential basis, as to each applicable category of
obligor described in any of clauses (i) through (v) of section
3(a)(62)(B), written certifications described in subparagraph (C),
except as provided in subparagraph (D); and
(x) any other information and documents concerning the applicant
and any person associated with such applicant as the Commission, by
rule, may prescribe as necessary or appropriate in the public interest
or for the protection of investors.
(C) WRITTEN CERTIFICATIONS.--Written certifications
required by subparagraph (B)(ix)--
{{10-31-07 p.9231}}
(i) shall be provided from not fewer than 10 qualified
institutional buyers, none of which is affiliated with the applicant;
(ii) may address more than one category of obligors described in
any of clauses (i) through (v) of section 3(a)(62)(B);
(iii) shall include not fewer than 2 certifications for each such
category of obligor; and
(iv) shall state that the qualified institutional buyer--
(I) meets the definition of a qualified institutional buyer under
section 3(a)(64); and
(II) has used the credit ratings of the applicant for at least
the 3 years immediately preceding the date of the certification in the
subject category or categories of obligors.
(D) EXEMPTION FROM CERTIFICATION REQUIREMENT.--A written
certification under subparagraph (B)(ix) is not required with respect
to any credit rating agency which has received, or been the subject of,
a no-action letter from the staff of the Commission prior to August 2,
2006, stating that such staff would not recommend enforcement action
against any broker or dealer that considers credit ratings issued by
such credit rating agency to be ratings from a nationally recognized
statistical rating organization.
(E) Limitation on liability of qualified institutional
buyers.--No qualified institutional buyer shall be liable in any
private right of action for any opinion or statement expressed in a
certification made pursuant to subparagraph (B)(ix).
(2) REVIEW OF APPLICATION.--
(A) INITIAL DETERMINATION.--Not later than 90 days after
the date on which the application for registration is furnished to the
Commission under paragraph (1) (or within such longer period as to
which the applicant consents) the Commission shall--
(i) by order, grant such registration for ratings in the subject
category or categories of obligors, as described in clauses (i) through
(v) of section 3(a)(62)(B); or
(ii) institute proceedings to determine whether registration
should be denied.
(B) CONDUCT OF PROCEEDINGS.--
(i) CONTENT.--Proceedings referred to in subparagraph
(A)(ii) shall--
(I) include notice of the grounds for denial under consideration
and an opportunity for hearing; and
(II) be concluded not later than 120 days after the date on which
the application for registration is furnished to the Commission under
paragraph (1).
(ii) DETERMINATION.--At the conclusion of such
proceedings, the Commission, by order, shall grant or deny such
application for registration.
(iii) EXTENSION AUTHORIZED.--The Commission may extend
the time for conclusion of such proceedings for not longer than 90
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.
(C) GROUNDS FOR DECISION.--The Commission shall grant
registration under this subsection--
(i) if the Commission finds that the requirements of this section
are satisfied; and
(ii) unless the Commission finds (in which case the Commission
shall deny such registration) that--
(I) the applicant does not have adequate financial and managerial
resources to consistently produce credit ratings with integrity and to
materially comply with the procedures and methodologies disclosed under
partagraph (1)(B) and with subsections (g), (h), (i), and (j); or
(II) if the applicant were so registered, its registration would
be subject to suspension or revocation under subsection (d).
(3) PUBLIC AVAILABILITY OF INFORMATION.--Subject to
section 24, the Commission shall, by rule, require a nationally
recognized statistical rating organization, upon the granting of
registration under this section, to make the information and documents
submitted to the Commission in its completed application for
registration, or in any amendment submitted under paragraph (1) or (2)
of subsection (b), publicly available on its
{{10-31-07 p.9232}}
website, or through another comparable, readily accessible means, except
as provided in clauses (viii) and (ix) of paragraph (1)(B).
(b) UPDATE OF REGISTRATION.--
(1) UPDATE.--Each nationally recognized statistical
rating organization shall promptly amend its application for
registration under this section if any information or document provided
therein becomes materially inaccurate, except that a nationally
recognized statistical rating organization is not required to amend--
(A) the information required to be furnished under subsection
(a)(1)(B)(i) by furnishing information under this paragraph, but shall
amend such information in the annual submission of the organization
under paragraph (2) of this subsection; or
(B) the certifications required to be provided under subsection
(a)(1)(B)(ix) by furnishing information under this paragraph.
(2) CERTIFICATION.--Not later than 90 days after the end
of each calendar year, each nationally recognized statistical rating
organization shall furnish to the Commission an amendment to its
registration, in such form as the Commission, by rule, may prescribe as
necessary or appropriate in the public interest or for the protection
of investors--
(A) certifying that the information and documents in the
application for registration of such nationally recognized statistical
rating organization (other than the certifications required under
subsection (a)(1)(B)(ix)) continue to be accurate; and
(B) listing any material change that occurred to such information
or documents during the previous calendar year.
(c) ACCOUNTABILITY FOR RATINGS PROCEDURES.--
(1) AUTHORITY.--The Commission shall have exclusive
authority to enforce the provisions of this section in accordance with
this title with respect to any nationally recognized statistical rating
organization, if such nationally recognized statistical rating
organization issues credit ratings in material contravention of those
procedures relating to such nationally recognized statistical rating
organization, including procedures relating to the prevention of misuse
of nonpublic information and conflicts of interest, that such
nationally recognized statistical rating organization--
(A) includes in its application for registration under subsection
(a)(1)(B)(ii); or
(B) makes and disseminates in reports pursuant to section 17(a)
or the rules and regulations thereunder.
(2) LIMITATION.--The rules and regulations that the
Commission may prescribe pursuant to this title, as they apply to
nationally recognized statistical rating organizations, shall be
narrowly tailored to meet the requirements of this title applicable to
nationally recognized statistical rating organizations. Notwithstanding
any other provision of law, neither the Commission nor any State (or
political subdivision thereof) may regulate the substance of credit
ratings or the procedures and methodologies by which any nationally
recognized statistical rating organization determines credit ratings.
(d) Censure, Denial, or Suspension of Registration; Notice and
Hearing.--The Commission, by order, shall censure, place
limitations on the activities, functions, or operations of, suspend for
a period not exceeding 12 months, or revoke the registration of any
nationally recognized statistical rating organization if the Commission
finds, on the record after notice and opportunity for hearing, that
such censure, placing of limitations, suspension, or revocation is
necessary for the protection of investors and in the public interest
and that such nationally recognized statistical rating organization, or
any person associated with such an organization, whether prior to or
subsequent to becoming so associated--
(1) has committed or omitted any act, or is subject to an order
or finding, enumerated in subparagraph (A), (D), (E), (H), or (G) of
section 15(b)(4), has been convicted of any offense specified in
section 15(b)(4)(B), or is enjoined from any action, conduct, or
practice specified in subparagraph (C) of section 15(b)(4), during the
10-year period preceding the date of commencement of the proceedings
under this subsection, or at any time thereafter;
(2) has been convicted during the 10-year period preceding the
date on which an application for registration is furnished to the
Commission under this section, or at any time thereafter,
of--
{{12-29-06 p.9233}}
(A) any crime that is punishable by imprisonment for 1 or more
years, and that is not described in section 15(b)(4)(B); or
(B) a substantially equivalent crime by a foreign court of
competent jurisdiction;
(3) is subject to any order of the Commission barring or
suspending the right of the person to be associated with a nationally
recognized statistical rating organization;
(4) fails to furnish the certifications required under subsection
(b)(2); or
(5) fails to maintain adequate financial and managerial resources
to consistently produce credit ratings with integrity.
(e) TERMINATION OF REGISTRATION.--
(1) VOLUNTARY WITHDRAWAL.--A nationally recognized
statistical rating organization may, upon such terms and conditions as
the Commission may establish as necessary in the public interest or for
the protection of investors, withdraw from registration by furnishing a
written notice of withdrawal to the Commission.
(2) COMMISSION AUTHORITY.--In addition to any other
authority of the Commission under this title, if the Commission finds
that a nationally recognized statistical rating organization is no
longer in existence or has ceased to do business as a credit rating
agency, the Commission, by order, shall cancel the registration under
this section of such nationally recognized statistical rating
organization.
(f) REPRESENTATIONS.--
(1) Ban on representations of sponsorship by united states
or agency thereof.--It shall be unlawful for any nationally
recognized statistical rating organization to represent or imply in any
manner whatsoever that such nationally recognized statistical rating
organization has been designated, sponsored, recommended, or approved,
or that the abilities or qualifications thereof have in any respect
been passed upon, by the United States or any agency, officer, or
employee thereof.
(2) Ban on representation as nrsro of unregistered credit
rating agencies.--It shall be unlawful for any credit rating agency
that is not registered under this section as a nationally recognized
statistical rating organization to state that such credit rating agency
is a nationally recognized statistical rating organization registered
under this title.
(3) Statement of registration under securities exchange act
of 1934 provisions.--No provision of paragraph (1) shall be
construed to prohibit a statement that a nationally recognized
statistical rating organization is a nationally recognized statistical
rating organization under this title, if such statement is true in fact
and if the effect of such registration is not misrepresented.
(g) PREVENTION OF MISUSE OF NONPUBLIC INFORMATION.--
(1) ORGANIZATION POLICIES AND PROCEDURES.--Each
nationally recognized statistical rating organization shall establish,
maintain, and enforce written policies and procedures reasonably
designed, taking into consideration the nature of the business of such
nationally recognized statistical rating organization, to prevent the
misuse in vioaltion of this title, or the rules or regulations
hereunder, of material, nonpublic information by such nationally
recognized statistical rating organization or any person associated
with such nationally recognized statistical rating organization.
(2) COMMISSION AUTHORITY.--The Commission shall issue
final rules in accordance with subsection (n) to require specific
policies or procedures that are reasonably designed to prevent misuse
in violation of this title (or the rules or regulations hereunder) of
material, nonpublic information.
(h) MANAGEMENT OF CONFLICTS OF INTEREST.--
(1) ORGANIZATION POLICIES AND PROCEDURES.--Each
nationally recognized statistical rating organization shall establish,
maintain, and enforce written policies and procedures reasonably
designed, taking into consideration the nature of the business of such
nationally recognized statistical rating organization and affiliated
persons and affiliated companies thereof, to address and manage any
conflicts of interest that can arise from such business.
(2) COMMISSION AUTHORITY.--The Commission shall issue
final rules in accordance with subsection (n) to prohibit, or require
the management and disclosure of, any conflicts
{{12-29-06 p.9234}}
of interest relating to the issuance of credit ratings by a nationally
recognized statistical rating organization, including, without
limitation, conflicts of interest relating to--
(A) the manner in which a nationally recognized statistical
rating organization is compensated by the obligor, or any affiliate of
the obligor, for issuing credit ratings or providing related services;
(B) the provision of consulting, advisory, or other services by a
nationally recognized statistical rating organization, or any person
associated with such nationally recognized statistical rating
organization, to the obligor, or any affiliate of the obligor;
(C) business relationships, ownership interests, or any other
financial or personal interests between a nationally recognized
statistical rating organization, or any person associated with such
nationally recognized statistical rating organization, and the obligor,
or any affiliate of the obligor;
(D) any affiliation of a nationally recognized statistical rating
organization, or any person associated with such nationally recognized
statistical rating organization, with any person that underwrites the
securities or money market instruments that are the subject of a credit
rating; and
(E) any other potential conflict of interest, as the Commission
deems necessary or appropriate in the public interest or for the
protection of investors.
(i) PROHIBITED CONDUCT.--
(1) PROHIBITED ACTS AND PRACTICES.--The Commission shall
issue final rules in accordance with subsection (n) to prohibit any act
or practice relating to the issuance of credit ratings by a nationally
recognized statistical rating organization that the Commission
determines to be unfair, coercive, or abusive, including any act or
practice relating to--
(A) conditioning or threatening to condition the issuance of a
credit rating on the purchase by the obligor or an affiliate thereof of
other services or products, including pre-credit rating assessment
products, of the nationally recognized statistical rating organization
or any person associated with such nationally recognized statistical
rating organization;
(B) lowering or threatening to lower a credit rating on, or
refusing to rate, securities or money market instruments issued by an
asset pool or as part of any asset-backed or mortgage-backed securities
transaction, unless a portion of the assets within such pool or part of
such transaction, as applicable, also is rated by the nationally
recognized statistical rating organization; or
(C) modifying or threatening to modify a credit rating or
otherwise departing from its adopted systematic procedures and
methodologies in determining credit ratings, based on whether the
obligor, or an affiliate of the obligor, purchases or will purchase the
credit rating or any other service or product of the nationally
recognized statistical rating organization or any person associated
with such organization.
(2) RULE OF CONSTRUCTION.--Nothing in paragraph (1), or
in any rules or regulations adopted thereunder, may be construed to
modify, impair, or supersede the operation of any of the antitrust laws
(as defined in the first section of the Clayton Act, except that such
term includes section 5 of the Federal Trade Commission Act, to the
extent that such section 5 applies to unfair methods of competition).
(j) DESIGNATION OF COMPLIANCE OFFICER.--Each nationally
recognized statistical rating organization shall designate an
individual responsible for administering the policies and procedures
that are required to be established pursuant to subsections (g) and
(h), and for ensuring compliance with the securities laws and the rules
and regulations thereunder, including those promulgated by the
Commission pursuant to this section.
(k) STATEMENTS OF FINANCIAL CONDITION.--Each nationally
recognized statistical rating organization shall, on a confidential
basis, furnish to the Commission, at intervals determined by the
Commission, such financial statements, certified (if required by the
rules or regulations of the Commission) by an independent public
accountant, and information concerning its financial condition, as the
Commission, by rule, may prescribe as necessary or appropriate in the
public interest or for the protection of investors.
{{2-29-08 p.9234.01}}
(l) SOLE METHOD OF REGISTRATION.--
(1) IN GENERAL.--On and after the effective date of this
section, a credit rating agency may only be registered as a nationally
recognized statistical rating organization for any purpose in
accordance with this section.
(2) PROHIBITION ON RELIANCE ON NO-ACTION RELIEF.--On and
after the effective date of this section--
(A) an entity that, before that date, received advice, approval,
or a no-action letter from the Commission or staff thereof to be
treated as a nationally recognized statistical rating organization
pursuant to the Commission rule at section 240.15c3--1 of title 17,
Code of Federal Regulations, may represent itself or act as a
nationally recognized statistical rating organization only--
(i) during Commission consideration of the application, if such
entity has furnished an application for registration under this
section; and
(ii) on and after the date of approval of its application for
registration under this section; and
(B) the advice, approval, or no-action letter described in
subparagraph (A) shall be void.
(3) NOTICE TO OTHER AGENCIES.--Not later than 30 days
after the date of enactment of this section, the Commission shall give
notice of the actions undertaken pursuant to this section to each
Federal agency which employs in its rules and regulations the term
nationally recognized statistical rating organization' (as that term
is used under Commission rule 15c3--1 (17 C.F.R. 240.15c3--1), as in
effect on the date of enactment of this section).
(m) RULES OF CONSTRUCTION.--
(1) No waiver of rights, privileges, or
defenses.--Registration under and compliance with this section does
not constitute a waiver of, or otherwise diminish, any right,
privilege, or defense that a nationally recognized statistical rating
organization may otherwise have under any provision of State or Federal
law, including any rule, regulation, or order thereunder.
(2) NO PRIVATE RIGHT OF ACTION.--Nothing in this section
may be construed as creating any private right of action, and no report
furnished by a nationally recognized statistical rating organization in
accordance with this section or section 17 shall create a private right
of action under section 18 or any other provision of law.
(n) REGULATIONS.--
(1) NEW PROVISIONS.--Such rules and regulations as are
required by this section or are otherwise necessary to carry out this
section, including the application form required under subsection (a)--
(A) shall be issued by the Commission in final form, not later
than 270 days after the date of enactment of this section; and
(B) shall become effective not later than 270 days after the date
of enactment of this section.
(2) REVIEW OF EXISTING REGULATIONS.--Not later than 270
days after the date of enactment of this section, the Commission
shall--
(A) review the existing rules and regulations which employ the
term nationally recognized statistical rating organization' or
NRSRO'; and
(B) amend or revise such rules and regulations in accordance with
the purposes of this section, as the Commission may prescribe as
necessary or appropriate in the public interest or for the protection
of investors.
(o) NRSROS SUBJECT TO COMMISSION AUTHORITY.--
(1) IN GENERAL.--No provision of the laws of any State
or political subdivision thereof requiring the registration, licensing,
or qualification as a credit rating agency or a nationally recognized
statistical rating organization shall apply to any nationally
recognized statistical rating organization or person employed by or
working under the control of a nationally recognized statistical rating
organization.
(2) LIMITATION.--Nothing in this subsection prohibits
the securities commission (or any agency or office performing like
functions) of any State from investigating and bringing an enforcement
action with respect to fraud or deceit against any nationally
recognized
{{2-29-08 p.9234.02}}
statistical rating organization or person associated with a nationally
recognized statistical rating organization.
(p) APPLICABILITY.--This section, other than subsection
(n), which shall apply on the date of enactment of this section, shall
apply on the earlier of--
(1) the date on which regulations are issued in final form under
subsection (n)(1); or
(2) 270 days after the date of enactment of this section.
[Codified to 15 U.S.C. 78o--7]
[Source: Section 15E of the Act of June 6, 1934 (Pub. L. No. 291)
effective October 1, 1934, as added by section 4(a) of the Act of
September 29, 2006 (Pub. L. No. 109--291; 120 Stat. 1327), effective
September 29, 2006]
DIRECTORS, OFFICERS, AND PRINCIPAL
STOCKHOLDERS
SEC. 16. DIRECTORS, OFFICERS, AND PRINCIPAL STOCKHOLDERS.
(a) DISCLOSURES REQUIRED.--
(1) Directors, Officers, and Principal Stockholders Required
to File.--Every person who is directly or indirectly the beneficial
owner of more than 10 percent of any class of any equity security
(other than an exempted security) which is registered pursuant to
section 12, or who is a director or an officer of the issuer of such
security, shall file the statements required by this subsection with
the Commission (and, if such security is registered on a national
securities exchange, also with the exchange).
(2) TIME OF FILING.--The statements required by this
subsection shall be filed--
(A) at the time of the registration of such security on a
national securities exchange or by the effective date of a registration
statement filed pursuant to section 12(g);
(B) within 10 days after he or she becomes such beneficial owner,
director, or officer;
(C) if there has been a change in such ownership, or if such
person shall have purchased or sold a security-based swap agreement (as
defined in section 206(b) of the Gramm--Leach--Bliley Act (15 U.S.C.
78c note)) involving such equity security, before the end of the second
business day following the day on which the subject transaction has
been executed, or at such other time as the Commission shall establish,
by rule, in any case in which the Commission determines that such
2--day period is not feasible.
(3) CONTENTS OF STATEMENTS.--A statement filed--
(A) under subparagraph (A) or (B) of paragraph (2) shall contain
a statement of the amount of all equity securities of such issuer of
which the filing person is the beneficial owner; and
(B) under subparagraph (C) of such paragraph shall indicate
ownership by the filing person at the date of filing, any such changes
in such ownership, and such purchases and sales of the security-based
swap agreements as have occurred since the most recent such filing
under such subparagraph.
(4) ELECTRONIC FILING AND AVAILABILITY.--Beginning not
later than 1 year after the date of enactment of the Sarbanes--Oxley
Act of 2002--
(A) a statement filed under subparagraph (C) of paragraph (2)
shall be filed electronically;
(B) the Commission shall provide each such statement on a
publicly accessible Internet site not later than the end of the
business day following that filing; and
(C) the issuer (if the issuer maintains a corporate website)
shall provide that statement on that corporate website, not later than
the end of the business day following that filing.
(b) For the purpose of preventing the unfair use of information
which may have been obtained by such beneficial owner, director, or
officer by reason of his relationship to the issuer, any profit
realized by him from any purchase and sale, or any sale and purchase,
of any equity security of such issuer (other than an exempted security)
or a security-based swap agreement (as defined in section 206B of the
Gramm-Leach-Bliley Act) involving any such equity security within any
period of less than six months, unless such security or security-based
swap agreement was acquired in good faith in connection with a debt
previously contracted, shall inure to and be recoverable by the issuer,
irrespective of any
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intention on the part of such beneficial owner, director, or officer in
entering into such transaction of holding the security or
security-based swap agreement purchased or of not repurchasing the
security or security-based swap agreement sold for a period exceeding
six months. Suit to recover such profit may be instituted at law or in
equity in any court of competent jurisdiction by the issuer, or by the
owner of any security of the issuer in the name and in behalf of the
issuer if the issuer shall fail or refuse to bring such suit within
sixty days after request or shall fail diligently to prosecute the same
thereafter; but no such suit shall be brought more than two years after
the date such profit was realized. This subsection shall not be
construed to cover any transaction where such beneficial owner was not
such both at the time of the purchase and sale, or the sale and
purchase, of the security or security-based swap agreement (as defined
in section 206B of the Gramm-Leach-Bliley Act) involved, or any
transaction or transactions which the Commission by rules and
regulations may exempt as not comprehended within the purpose of this
subsection.
(c) It shall be unlawful for any such beneficial owner, director,
or officer, directly or indirectly, to sell any equity security of such
issuer (other than an exempted security), if the person selling the
security or his principal (1) does not own the security sold, or (2) if
owning the security, does not deliver it against such sale within
twenty days thereafter, or does not within five days after such sale
deposit it in the mails or other usual channels of transportation; but
no person shall be deemed to have violated this subsection if he proves
that notwithstanding the exercise of good faith he was unable to make
such delivery or deposit within such time, or that to do so would cause
undue inconvenience or expense.
(d) The provisions of subsection (b) of this section shall not
apply to any purchase and sale, or sale and purchase, and the
provisions of subsection (c) of this section shall not apply to any
sale, of an equity security not then or theretofore held by him in an
investment account, by a dealer in the ordinary course of his business
and incident to the establishment or maintenance by him of a primary or
secondary market (otherwise than on a national securities exchange or
an exchange exempted from registration under section 5 of this title)
for such security. The Commission may, by such rules and regulations as
it deems necessary or appropriate in the public interest, define and
prescribe terms and conditions with respect to securities held in an
investment account and transactions made in the ordinary course of
business and incident to the establishment or maintenance of a primary
or secondary market.
(e) The provisions of this section shall not apply to foreign or
domestic arbitrage transaction unless made in contravention of such
rules and regulations as the Commission may adopt in order to carry out
the purpose of this section.
(f) Treatment of Transactions in Security Futures
Products.--The provisions of this section shall apply to ownership
of and transactions in security futures products.
(g) 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 3A(b) of this title.
[Codified to 15 U.S.C. 78p]
[Source: Section 16 of the Act of June 6, 1934
(Pub. L. No. 291; 48 Stat. 896), effective October 1, 1934, as amended
by section 8 of the Act of August 20, 1964 (Pub. L. No. 88--467; 78
Stat. 579), effective August 20, 1964; section 208(b)(3) of title II
and 303(g) and (h) of title III of the Act of December 21, 2000
(Pub. L. No. 106--554; 114 Stat.2763A--435, 455 and 456,
respectively), effective December 21, 2000; section 403(a) of title IV
of the Act of July 30, 2002 (Pub. L. No. 107--204; 116 Stat. 788),
effective August 29, 2002]
ACCOUNTS AND RECORDS, REPORTS, EXAMINATIONS
OF EXCHANGES,
MEMBERS, AND OTHERS
SEC. 17 (a)(1) Every national exchange securities exchange, member
thereof, broker or dealer who transacts a business in securities
through the medium of any such member, registered securities
association, registered broker or dealer, registered municipal
securities dealer, registered securities information processor,
registered transfer agent, nationally recognized statistical rating
organization, and registered clearing agency and the Municipal
Securities Rulemaking Board shall make and keep for prescribed periods
such records,
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furnish such copies thereof, and make and disseminate such reports as
the Commission, by rule, prescribes as necessary or appropriate in the
public interest, for the protection of investors, or otherwise in
furtherance of the purposes of this title. Any report that a nationally
recognized statistical rating organization is required by Commission
rules under this paragraph to make and disseminate to the Commission
shall be deemed furnished to the Commission.
(2) Every registered clearing agency shall also make and keep for
prescribed periods such records, furnish such copies thereof, and make
and disseminate such reports, as the appropriate regulatory agency for
such clearing agency, by rule, prescribes as necessary or appropriate
for the safeguarding of securities and funds in the custody or control
of such clearing agency or for which it is responsible.
(3) Every registered transfer agent shall make and keep for
prescribed periods such records, furnish such copies thereof, and make
such reports as the appropriate regulatory agency for such transfer
agent, by rule, prescribes as necessary or appropriate in furtherance
of the purposes of section 17A of this title.
Any report that a nationally recognized statistical rating organization
is required by Commission rules under this paragraph to make and
disseminate tothe Commission shall be deemed furnished to the
Commission.
(b) RECORDS SUBJECT TO EXAMINATION.--
(1) PROCEDURES FOR COOPERATION WITH OTHER AGENCIES.--All
records of persons described in subsection (a) of this section are
subject at any time, or from time to time, to such reasonable periodic,
special, or other examinations by representatives of the Commission and
the appropriate regulatory agency for such persons as the Commission or
the appropriate regulatory agency for such persons deems necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of this title: Provided,
however, That the Commission shall, prior to conducting any such
examination of a--
(A) registered clearing agency, registered transfer agent, or
registered municipal securities dealer for which it is not the
appropriate regulatory agency, give notice to the appropriate
regulatory agency for such clearing agency, transfer agent, or
municipal securities dealer of such proposed examination and consult
with such appropriate regulatory agency concerning the feasibility and
desirability of coordinating such examination with examinations
conducted by such appropriate regulatory agency with a view to avoiding
unnecessary regulatory duplication or undue regulatory burdens for such
clearing agency, transfer agent, or municipal securities dealer; or
(B) broker or dealer registered pursuant to section 15(b)(11),
exchange registered pursuant to section 6(g), or national securities
association registered pursuant to section 15A(k) gives notice to the
Commodity Futures Trading Commission of such proposed examination and
consults with the Commodity Futures Trading Commission concerning the
feasibility and desirability of coordinating such examination with
examinations conducted by the Commodity Futures Trading Commission in
order to avoid unnecessary regulatory duplication or undue regulatory
burdens for such broker or dealer or exchange.
(2) FURNISHING DATA AND REPORTS TO CFTC.--The Commission
shall notify the Commodity Futures Trading Commission of any
examination conducted of any broker or dealer registered pursuant to
section 15(b)(11), exchange registered pursuant to section 6(g), or
national securities association registered pursuant to section 15A(k)
and, upon request, furnish to the Commodity Futures Trading Commission
any examination report and data supplied to, or prepared by, the
Commission in connection with such examination.
(3) USE OF CFTC REPORTS.--Prior to conducting an
examination under paragraph (1), the Commission shall use the reports
of examinations, if the information available therein is sufficient for
the purposes of the examination, of--
(A) any broker or dealer registered pursuant to section
15(b)(11);
(B) exchange registered pursuant to section 6(g); or
(C) national securities association registered pursuant to
section 15A(k); that is made by the Commodity Futures Trading
Commission, a national securities association registered pursuant to
section 15A(k), or an exchange registered pursuant to section 6(g).
(4) RULES OF CONSTRUCTION.--
{{12-29-06 p.9234.05}}
(A) Notwithstanding any other provision of this subsection, the
records of a broker or dealer registered pursuant to section 15(b)(11),
an exchange registered pursuant to section 6(g), or a national
securities association registered pursuant to section 15A(k) described
in this subparagraph shall not be subject to routine periodic
examinations by the Commission.
(B) Any recordkeeping rules adopted under this subsection for a
broker or dealer registered pursuant to section 15(b)(11), an exchange
registered pursuant to section 6(g), or a national securities
association registered pursuant to section 15A(k) shall be limited to
records with respect to persons, accounts, agreements, contracts, and
transactions involving security futures products.
(C) Nothing in the proviso in paragraph (1) shall be construed to
impair or limit (other than by the requirement of prior consultation)
the power of the Commission under this subsection to examine any
clearing agency, transfer agent, or municipal securities dealer or to
affect in any way the power of the Commission under any other provision
of this title or otherwise to inspect, examine, or investigate any such
clearing agency, transfer agent, or municipal securities dealer.
(c)(1) Every clearing agency, transfer agent, and municipal
securities dealer for which the Commission is not the appropriate
regulatory agency shall (A) file with the appropriate regulatory agency
for such clearing agency, transfer agent, or municipal securities
dealer a copy of any application, notice, proposal, report, or document
filed with the Commission by reason of its being a clearing agency,
transfer agent, or municipal securities dealer and (B) file with the
Commission a copy of any application, notice, proposal, report, or
document filed with such appropriate regulatory agency by reason of its
being a clearing agency, transfer agent, or municipal securities
dealer. The Municipal Securities Rulemaking Board shall file with each
agency enumerated in section 3(a)(34)(A) of this title copies of every
proposed rule change filed with the Commission pursuant to section
19(b) of this title.
(2) The appropriate regulatory agency for a clearing agency,
transfer agent, or municipal securities dealer for which the Commission
is not the appropriate regulatory agency shall file with the Commission
notice of the commencement of any proceeding and a copy of any order
entered by such appropriate regulatory agency against any clearing
agency, transfer agent, municipal securities dealer, or person
associated with a tranfer agent or municipal securities dealer, and the
Commission shall file with such appropriate regulatory agency, if any,
notice of the commencement of any proceeding and a copy of any order
entered by the Commission against the clearing agency, transfer agent,
or municipal securities dealer, or against any person associated with a
transfer agent or municipal securities dealer for which the agency is
the appropriate regulatory agency.
(3) The Commission and the appropriate regulatory agency for a
clearing agency, transfer agent, or municipal securities dealer for
which the Commission is not the appropriate regulatory agency shall
each notify the other and make a report of any examination conducted by
it of such clearing agency, transfer agent, or municipal securities
dealer, and, upon request, furnish to the other a copy of such report
and any data supplied to it in connection with such examination.
(4) The Commission or the appropriate regulatory agency may
specify that documents required to be filed pursuant to this subsection
with the Commission or such agency, respectively, may be retained by
the originating clearing agency, transfer agent, or municipal
securities dealer, or filed with another appropriate regulatory agency.
The Commission or the appropriate regulatory agency (as the case may
be) making such a specification shall continue to have access to the
document on request.
(d)(1) The Commission, by rule or order, as it deems necessary or
appropriate in the public interest and for the protection of investors,
to foster cooperation and coordination among self-regulatory
organization, or to remove impediments to and foster the development of
a national market system and national system for the clearance and
settlement of securities transactions, may--
(A) with respect to any person who is a member of or
participant in more than one self-regulatory organization, relieve any
such self-regulatory organization of any responsiblity under this title
(i) to receive regulatory reports from such person, (ii) to examine
such person for compliance, or to enforce compliance by such person
with specified provisions of this title, the rules and regulations
thereunder, and its own rules, or (iii) to carry out other specified
regulatory functions with respect to such person, and
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(B) allocate among self-regulatory organizations the
authority to adopt rules with respect to matters as to which, in the
absences of such allocation, such self-regulatory organizations share
authority under this title.
In making any such rule or entering any such order, the Commission
shall take into consideration the regulatory capabilities and
procedures of the self-regulatory organizations, availability of staff,
convenience of location, unnecessary regulatory duplication, and such
other factors as the Commission may consider germane to the protection
of investors, cooperation and coordination among self-regulatory
organizations, and the development of a national market system and of a
national system for clearance and settlement of securities
transactions. The Commission, by rule or order, as it deems necessary
or appropriate in the public interest and for the protection of
investors, may require any self-regulatory organization relieved of any
responsibility pursuant to this paragraph, and any person with respect
to whom such responsibility relates, to take such steps as are
specified in any such rule or order to notify customers of, and persons
doing business with, such person of the limited nature of such
self-regulatory organization's responsibility for such person's acts,
practices, and course of business.
(2) A self-regulatory organization shall furnish copies of any
report of examination of any person who is a member of or a participant
in such self-regulatory organization to any other self-regulatory
organization of which such person is a member or in which such person
is a participant upon the request of such person, such other
self-regulatory organization, or the Commission.
(e)(1)(A) Every registered broker or dealer shall annually file
with the Commission a balance sheet and income statement certified by a
registered public accounting firm, prepared on a calendar or fiscal
year basis, and such other financial statements (which shall, as the
Commission specifies, be certified) and information concerning its
financial condition as the Commission, by rule may prescribe as
necessary or appropriate in the public interest or for the protection
of investors.
(B) Every registered broker and dealer shall annually send to its
customers its certified balance sheet and such other financial
statements and information concerning its financial condition as the
Commission, by rule, may prescribe pursuant to subsection (a) of this
section.
(C) The Commission, by rule or order, may conditionally or
unconditionally exempt any registered broker or dealer, or class of
such brokers or dealers, from any provision of this paragraph if the
Commission determines that such exemption is consistent with the public
interest and the protection of investors.
(2) The Commission, by rule, as it deems necessary or appropriate
in the public interest or for the protection of investors, may
prescribe the form and content of financial statements filed pursuant
to this title and the accounting principles and accounting standards
used in their preparation.
(f)(1) Every national securities exchange, member thereof,
registered securities association, broker, dealer, municipal securities
dealer, government securities broker, government securities dealer,
registered transfer agent, registered clearing agency, participant
therein, member of the Federal Reserve System, and bank whose deposits
are insured by the Federal Deposit Insurance Corporation shall--
(A) report to the Commission or other person designated by the
Commission and, in the case of securities issued pursuant to chapter 31
of title 31, United States Code, such information about missing, lost,
counterfeit, or stolen securities, in such form and within such time as
the Commission, by rule, determines is necessary or appropriate in the
public interest or for the protection of investors; such information
shall be available on request for a reasonable fee, to any such
exchange, member, association, broker, dealer, municipal securities
dealer, transfer agent, clearing agency, participant, member of the
Federal Reserve System, or insured bank, and such other persons as the
Commission, by rule, designates; and
(B) make such inquiry with respect to information reported
pursuant to this subsection as the Commission by rule, prescribes as
necessary or appropriate in the public interest or for the protection
of investors, to determine whether securities in their custody
or
{{12-29-06 p.9234.07}}
control, for which they are responsible, or in which they are effecting,
clearing, or settling a transaction have been reported as missing,
lost, counterfeit, or stolen.
(2) Every member of a national securities exchange, broker,
dealer, registered transfer agent, and registered clearing agency,
shall require that each of its partners, directors, officers, and
employees be fingerprinted and shall submit such fingerprints, or cause
the same to be submitted, to the Attorney General of the United States
for identification and appropriate processing. The Commission, by rule,
may exempt from the provisions of this paragraph upon specified terms,
conditions, and periods, any class of partners, directors, officers, or
employees of any such member, broker, dealer, transfer agent, or
clearing agency, if the Commission finds that such action is not
inconsistent with the public interest or the protection of investors.
Notwithstanding any other provision of law, in providing identification
and processing functions, the Attorney General shall provide the
Commission and self-regulatory organizations designated by the
Commission with access to all criminal history record information.
(3)(A) In order to carry out the authority under paragraph (1)
above, the Commission or its designee may enter into agreement with the
Attorney General to use the facilities of the National Crime
Information Center ("NCIC") to receive, store, and disseminate
information in regard to missing, lost, counterfeit, or stolen
securities and to permit direct inquiry access to NCIC's file on such
securities for the financial community.
(B) In order to carry out the authority under paragraph (1) of
this subsection, the Commission or its designee and the Secretary of
the Treasury shall enter into an agreement whereby the Commission or
its designee will receive, store, and disseminate information in the
possession, and which comes into the possession, of the Department of
the Treasury in regard to missing, lost, counterfeit, or stolen
securities.
(4) In regard to paragraphs (1), (2), and (3), above insofar as
such paragraphs apply to any bank or member of the Federal Reserve
System, the Commission may delegate its authority to:
(A) the Comptroller of the Currency as to national banks;
(B) the Federal Reserve Board in regard to any member of the
Federal Reserve System which is not a national bank; and
(C) the Federal Deposit Insurance Corporation for any State bank
which is insured by the Federal Deposit Insurance Corporation but which
is not a member of the Federal Reserve System.
(5) The Commission shall encourage the insurance industry to
require their insured to report expeditiously instances of missing,
lost, counterfeit, or stolen securities to the Commission or to such
other person as the Commission may, by rule, designate to receive such
information.
(g) Any broker, dealer, or other person extending credit who is
subject to the rules and regulations prescribed by the Board of
Governors of the Federal Reserve System pursuant to this title shall
make such reports to the Board as it may require as necessary or
appropriate to enable it to perform the functions conferred upon it by
this title. If any such broker, dealer, or other person shall fail to
make any such report or fail to furnish full information therein, or,
if in the judgment of the Board it is otherwise necessary, such broker,
dealer, or other person shall permit such inspections to be made by the
Board with respect to the business operations of such broker, dealer,
or other person as the Board may deem necessary to enable it to obtain
the required information.
(h) RISK ASSESSMENT FOR HOLDING COMPANY SYSTEMS.--
(1) Obligations to obtain, maintain, and report
information.--Every person who is (A) a registered broker or
dealer, or
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(B) a registered municipal securities dealer for which the
Commission is the appropriate regulatory agency, shall obtain such
information and make and keep such records as the Commission by rule
prescribes concerning the registered person's policies, procedures, or
systems for monitoring and controlling financial and operational risks
to it resulting from the activities of any of its associated persons,
other than a natural person. Such records shall describe, in the
aggregate, each of the financial and securities activities conducted
by, and the customary sources of capital and funding of, those of its
associated persons whose business activities are reasonably likely to
have a material impact on the financial or operational condition of
such registered person, including its net capital, its liquidity, or
its ability to conduct or finance its operations. The Commission, by
rule, may require summary reports of such information to be filed with
the Commission no more frequently than quarterly.
(2) AUTHORITY TO REQUIRE ADDITIONAL INFORMATION.--If, as
a result of adverse market conditions or based on reports provided to
the Commission pursuant to paragraph (1) of this subsection or other
available information, the Commission reasonably concludes that it has
concerns regarding the financial or operational condition of (A) any
registered broker or dealer, or (B) any registered municipal securities
dealer, government securities broker, or government securities dealer
for which the Commission is the appropriate regulatory agency, the
Commission may require the registered person to make reports concerning
the financial and securities activities of any of such person's
associated persons, other than a natural person, whose business
activities are reasonably likely to have a material impact on the
financial or operational condition of such registered person. The
Commission, in requiring reports pursuant to this paragraph, shall
specify the information required, the period for which it is required,
the time and date on which the information must be furnished, and
whether the information is to be furnished directly to the Commission
or to a self-regulatory organization with primary responsibility for
examining the registered person's financial and operational condition.
(3) Special provisions with respect to associated persons
subject to federal
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