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8000 - Miscellaneous Statutes and Regulations


SECURITIES ACT OF 1933

AN ACT

To provide full and fair disclosure of the character of securities sold in interstate and foreign commerce and through the mails, and to prevent frauds in the sale thereof, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled.

TITLE I

SHORT TITLE

SECTION 1.  This title may be cited as the "Securities Act of 1933".

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

[Source:  Section 1 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective May 27, 1933]

DEFINITIONS

SEC. 2.  (a)  DEFINITIONS.--When used in this title, unless the context otherwise requires--

(1)  The term "security" means any note, stock, treasury stock, security future, security swap bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

(2)  The term "person" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, any unincorporated organization, or a government or political subdivision thereof. As used in this paragraph the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security.

(3)  The term "sale" or "sell" shall include every contract of sale or disposition of a security or interest in a security, for value. The term "offer to sell", "offer for sale", or "offer" shall include every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value. The terms defined in this paragraph and the term "offer to buy" as used in subsection (c) of section 5 shall not include preliminary negotiations or agreements between an issuer (or any person directly or indirectly controlling or controlled by an issuer, or under direct or indirect common control with an issuer) and any underwriter or among underwriters who are or are to be in privity of contract with an issuer (or any person directly or indirectly controlling or controlled by an issuer, or under direct or indirect common control with an issuer). Any security given or delivered with, or as a bonus on account of, any purchase of securities or any other thing, shall be conclusively presumed to constitute a part of the subject of such purchase and to have been offered and sold for value. The issue or transfer of a right or privilege, when originally issued or transferred with a security, giving the holder of such security the right to convert such security into another security of the same issuer or of another person, or giving a right to subscribe to another security of the same issuer or of another person, which right cannot be exercised until some future date, shall not be deemed to be an offer or sale of such other security; but the issue or transfer of such other security upon the exercise of such right of conversion or subscription shall be deemed a sale of such other security. Any offer or sale of a security futures product by or on behalf of the issuer of the securities underlying the security futures product, an affiliate of the issuer, or an underwriter, shall constitute a contract for sale of, sale of, offer for sale, or offer to sell the underlying securities. Any offer or sale of a security-based swap by or on behalf of the issuer on the securities upon which such security-based swap is based or is referenced, an affiliate of the issuer, or an underwriter, shall constitute a contract for sale of, offer for sale, or offer to sell such securities. The publication or distribution by a broker or dealer of a research report about an emerging growth company that is the subject of a proposed public offering of the common equity securities of such emerging growth company pursuant to a registration statement that the issuer proposes to file, or has filed, or that is effective shall be deemed for purposes of paragraph (10) of this subsection and section 5(c) not to constitute an offer for sale or offer to sell a security, even if the broker or dealer is participating or will participate in the registered offering of the securities of the issuer. As used in this paragraph, the term "research report" means a written, electronic, or oral communication that includes information, opinions, or recommendations with respect to securities of an issuer or an analysis of a security or an issuer, whether or not it provides information reasonably sufficient upon which to base an investment decision.

(4)  The term "issuer" means every person who issues or proposes to issue any security; except that with respect to certificates of deposit, voting-trust certificates, or collateral-trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors (or persons performing similar functions) or of the fixed, restricted management, or unit type, the term "issuer" means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which such securities are issued; except that in the case of an unincorporated association which provides by its articles for limited liability of any or all of its members, or in the case of a trust, committee, or other legal entity, the trustees or members thereof shall not be individually liable as issuers of any security issued by the association, trust, committee, or other legal entity; except that with respect to equipment-trust certificates or like securities, the term "issuer" means the person by whom the equipment or property is or is to be used; and except that with respect to fractional undivided interests in oil, gas, or other mineral rights, the term "issuer" means the owner of any such right or of any interest in such right (whether whole or fractional) who creates fractional interests therein for the purpose of public offering.

(5)  The term "Commission" means the Securities and Exchange Commission.

(6)  The term "Territory" means Puerto Rico, the Philippine Islands,1 the Virgin Islands, and the insular possessions of the United States.

(7)  The term "interstate commerce" means trade or commerce in securities or any transportation or communication relating thereto among the several States or between the District of Columbia or any Territory of the United States and any State or other Territory, or between any foreign country and any State, Territory, or the District of Columbia, or within the District of Columbia.

(8)  The term "registration statement" means the statement provided for in section 6, and includes any amendment thereto and any report, document, or memorandum filed as part of such statement or incorporated therein by reference.

(9)  The term "write" or "written" shall include printed, lithographed, or any means of graphic communication.

(10)  The term "prospectus" means any prospectus, notice, circular, advertisement, letter, or communication, written or by radio or television, which offers any security for sale or confirms the sale of any security; except that (a) a communication sent or given after the effective date of the registration statement (other than a prospectus permitted under subsection (b) of section 10) shall not be deemed a prospectus if it is proved that prior to or at the same time with such communication a written prospectus meeting the requirements Miscellaneous Statutes and Regulations>of subsection (a) of section 10 at the time of2 such communication was sent or given to the person to whom the communication was made, and (b) a notice, circular, advertisement, letter, or communication in respect of a security shall not be deemed to be a prospectus if it states from whom a written prospectus meeting the requirements of section 10 may be obtained and, in addition, does no more than identify the security, state the price thereof, state by whom orders will be executed, and contain such other information as the Commission, by rules or regulations deemed necessary or appropriate in the public interest and for the protection of investors, and subject to such terms and conditions as may be prescribed therein, may permit.

(11)  The term "underwriter" means any person who has purchased from an issuer with a view to, or offers or sells for an issuer in connection with, the distribution of any security, or participates or has a direct or indirect participation in any such undertaking, or participates or has a participation in the direct or indirect underwriting of any such undertaking; but such term shall not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. As used in this paragraph the term "issuer" shall include, in addition to an issuer, any person directly or indirectly controlling or controlled by the issuer, or any person under direct or indirect common control with the issuer.

(12)  The term "dealer" means any person who engages either for all or part of his time, directly or indirectly, as agent, broker, or principal, in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another person.

(13)  The term "insurance company" means a company which is organized as an insurance company, whose primary and predominant business activity is the writing of insurance or the reinsuring of risks underwritten by insurance companies, and which is subject to supervision by the insurance commissioner, or a similar official or agency, of a State or territory or the District of Columbia; or any receiver or similar official or any liquidating agent for such company, in his capacity as such.

(14)  The term "separate account" means an account established and maintained by an insurance company pursuant to the laws of any State or territory of the United States, the District of Columbia, or of Canada or any province thereof, under which income, gains and losses, whether or not realized, from assets allocated to such account, are, in accordance with the applicable contract, credited to or charged against such account without regard to other income, gains, or losses of the insurance company.

(15)  The term "accredited investor" shall mean--

(i)  a bank as defined in section 3(a)(2) whether acting in its individual or fiduciary capacity; an insurance company as defined in paragraph 13 of this subsection; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; a Small Business Investment Company licensed by the Small Business Administration; or an employee benefit plan, including an individual retirement account, which is subject to the provisions of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank, insurance company, or registered investment adviser; or

(ii)  any person who, on the basis of such factors as financial sophistication, net worth, knowledge, and experience in financial matters, or amount of assets under management qualifies as an accredited investor under rules and regulations which the Commission shall prescribe.

(16)  The terms "security future", "narrow-based security index", and "security futures product" have the same meanings as provided in section 3(a)(55) of the Securities Exchange Act of 1934.

(17)  The terms "swap" and "security-based swap" have the same meanings as in section 1a of the Commodity Exchange Act (7 U.S.C. 1a)

(18)  The terms "purchase" or "sale" of a security-based swap shall be deemed to mean the execution, termination (prior to its scheduled maturity date), assignment, exchange, or similar transfer of conveyance of, extinguishing of rights or obligations under, a security-based swap, as the context may require.

(19)  The term "emerging growth company" means an issuer that had total annual gross revenues of less than $1,000,000,000 (as such amount is indexed for inflation every 5 Miscellaneous Statutes and Regulations>years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) during its most recently completed fiscal year. An issuer that is an emerging growth company as of the first day of that fiscal year shall continue to be deemed an emerging growth company until the earliest of--

(A)  the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;

(B)  the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title;

(C)  the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or

(D)  the date on which such issuer is deemed to be a "large accelerated filer", as defined in section 240.12b--2 of title 17, Code of Federal Regulations, or any successor thereto.

(b)  CONSIDERATION OF PROMOTION OF EFFICIENCY, COMPETITION, AND CAPITAL FORMATION.--Whenever pursuant to this title the Commission is engaged in rulemaking and is required to consider or determine whether an action is necessary or appropriate in the public interest, the Commission shall also consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.

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

[Source:  Section 2 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective May 27, 1933, as amended by sections 201 and 210 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 905, 908), effective June 6, 1934; sections 1--4 of title I of the Act of August 10, 1954 (Pub. L. No. 577; 68 Stat. 683), effective October 8, 1954; section 12(a) of the Act of June 25, 1959 (Pub. L. No. 86--70; 73 Stat. 143), effective June 25, 1959; section 7(a) of the Act of July 12, 1960 (Pub. L. No. 86--624; 74 Stat. 412), effective July 12, 1960; section 27(a) of the Act of December 14, 1970 (Pub. L. No. 91--547; 84 Stat. 1433), effective December 14, 1970; section 603 of title VI of the Act of October 21, 1980 (Pub. L. No. 96--477; 94 Stat. 2294), effective October 21, 1980; section 1 of the Act of October 13, 1982 (Pub. L. No. 97--303; 96 Stat. 1409), effective October 13, 1982; and sections 201 and 202 of title II of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1252), effective December 4, 1987; section 106(a) of title I of the Act of October 11, 1996 (Pub. L. No. 104--260; 110 Stat. 3424) effective October 11, 1996; section 301(a)(1) of title III of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3235), effective November 3, 1998; section 208(a)(1) of title II of the Act of December 21, 2000 (Pub. L. No. 106--554; 114 Stat. 2763A--434) effective December 21, 2000; section 768(a) of title VII of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1800), effective July 21, 2010; section 101(a) and 105(a) of title III of the Act of July 21, 2010 (Pub. L. No. 112--106; Stat. 307), effective July 21, 2010; section 101(a) and 105(a) of tile I of the Act of April 5, 2012 (Pub. L. No. 112--106; 126 Stat. 307 and 310), effective April 5, 2012]

SEC. 2A.  SWAP AGREEMENTS

(a)  [Reserved]

(b)  SECURITY-BASED SWAP AGREEMENTS.--

(1)  The definition of security' in section 2(a)(1) of this title does not include any security-based swap agreement (as defined in section 3(a)(78) of the Securities Exchange Act of 1934)

(2)  The Commission is prohibited from registering, or requiring, recommending, or suggesting, the registration under this title of any security-based swap agreement (as defined in section 3(a)(78) of the Securities Exchange Act of 1934). If the Commission becomes aware that a registrant has filed a registration statement with respect to such a swap agreement, the Commission shall promptly so notify the registrant. Any such registration statement with respect to such a swap agreement shall be void and of no force or effect.

(3)  The Commission is prohibited from-- Miscellaneous Statutes and Regulations>

(A)  promulgating, interpreting, or enforcing rules; or

(B)  issuing orders of general applicability;

under this title in a manner that imposes or specifies reporting or recordkeeping requirements, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading with respect to any security-based swap agreement (as defined in section 3(a)(78) of the Securities Exchange Act of 1934).

(4)  References in this title to the purchase' or sale' of a security-based swap agreement shall be deemed to mean the execution, termination (prior to its scheduled maturity date), assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under, a security-based swap agreement (as defined in section 3(a)(78) of the Securities Exchange Act of 1934), as the context may require.

[Codified to 15 U.S.C. 77b--1]

Source: Section 302(a) of title II of the Act of December 21, 2000 (Pub. L. No. 106--554; 114 Stat. 2763A--451), effective December 21, 2000; section 762(c)(1) of title VII of the Act of July 21, 2011 (Pub. L. No. 111--203; 124 Stat. 1759), effective July 21, 2011]

EXEMPTED SECURITIES

SEC. 3.  (a)  Except as hereinafter expressly provided, the provisions of this title shall not apply to any of the following classes of securities:

(1)  Reserved.

(2)  Any security issued or guaranteed by the United States or any territory thereof, or by the District of Columbia, or by any State of the United States, or by any political subdivision of a State or territory, or by any public instrumentality of one or more States or territories, or by any person controlled or supervised by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States; or any certificate of deposit for any of the foregoing; or any security issued or guaranteed by any bank; or any security issued by or representing an interest in or a direct obligation of a Federal Reserve bank; or any interest or participation in any common trust fund or similar fund that is excluded from the definition of the term "investment company" under section 3(c)(3) of the Investment Company Act of 1940; or any security which is an industrial development bond (as defined in section 103(c)(2) of the Internal Revenue Code of 1954) the interest on which is excludable from gross income under section 103(a)(1) of such Code if, by reason of the application of paragraph (4) or (6) of section 103(c) of such Code (determined as if paragraphs (4)(A), (5), and (7) were not included in such section 103(c)), paragraph (1) of such section 103(c) does not apply to such security; or any interest or participation in a single trust fund, or in a collective trust fund maintained by a bank, or any security arising out of a contract issued by an insurance company, which interest, participation, or security is issued in connection with (A) a stock bonus, pension, or profit-sharing plan which meets the requirements for qualification under section 401 of the Internal Revenue Code of 1954, (B) an annuity plan which meets the requirements for the deduction of the employer's contributions under section 404(a)(2) of such Code, (C) a governmental plan as defined in section 414(d) of such Code which has been established by an employer for the exclusive benefit of its employees or their beneficiaries for the purpose of distributing to such employees or their beneficiaries the corpus and income of the funds accumulated under such plan, if under such plan it is impossible, prior to the satisfaction of all liabilities with respect to such employees and their beneficiaries, for any part of the corpus or income to be used for, or diverted to, purposes other than the exclusive benefit of such employees or their beneficiaries, or (D) a church plan, company, or account that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940, other than any plan described in subparagraph (A), (B), (C), or (D) of this paragraph (i) the contributions under which are held in a single trust fund or in a separate account maintained by an insurance company for a single employer and under which an amount in excess of the employer's contribution is allocated to the purchase of securities (other than interests or participations in the trust or separate account itself) issued by the employer or any company directly or indirectly controlling, controlled by, or under common control with the employer, (ii) which covers employees some or all of whom are employees within the meaning of Miscellaneous Statutes and Regulations>section 401(c)(1) of such Code (other than a person participating in a church plan who is described in section 414(e)(3)(B) of the Internal Revenue Code of 1986), or (iii) which is a plan funded by an annuity contract described in section 403(b) of such Code (other than a retirement income account described in section 403(b)(9) of the Internal Revenue Code of 1986, to the extent that the interest or participation in such single trust fund or collective trust fund is issued to a church, a convention or association of churches, or an organization described in section 414(e)(3)(A) of such Code establishing or maintaining the retirement income account or to a trust established by any such entity in connection with the retirement income account). The Commission, by rules and regulations or order, shall exempt from the provisions of section 5 of this title any interest or participation issued in connection with a stock bonus, pension, profit-sharing, or annuity plan which covers employees some or all of whom are employees within the meaning of section 401(c)(1) of the Internal Revenue Code of 1954, if and to the extent that the Commission determines this to be necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of this title. For purposes of this paragraph, a security issued or guaranteed by a bank shall not include any interest or participation in any collective trust fund maintained by a bank; and the term "bank" means any national bank, or any banking institution organized under the laws of any State, territory, or the District of Columbia, the business of which is substantially confined to banking and is supervised by the State or territorial banking commission or similar official; except that in the case of a common trust fund or similar fund, or a collective trust fund, the term "bank" has the same meaning as in the Investment Company Act of 1940;

(3)  Any note, draft, bill of exchange, or banker's acceptance which arises out of a current transaction or the proceeds of which have been or are to be used for current transactions, and which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited;

(4)  Any security issued by a person organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, or reformatory purposes and not for pecuniary profit, and no part of the net earnings of which inures to the benefit of any person, private stockholder, or individual, or any security of a fund that is excluded from the definition of an investment company under section 3(c)(10)(B) of the Investment Company Act of 1940;

(5)  Any security issued (A) by a savings and loan association, building and loan association, cooperative bank, homestead association, or similar institution, which is supervised and examined by State or Federal authority having supervision over any such institution; or (B) by (i) a farmer's cooperative organization exempt from tax under section 521 of the Internal Revenue Code of 1954, (ii) a corporation described in section 501(c)(16) of such Code and exempt from tax under section 501(a) of such Code, or (iii) a corporation described in section 501(c)(2) of such Code which is exempt from tax under section 501(a) of such Code and is organized for the exclusive purpose of holding title to property, collecting income therefrom, and turning over the entire amount thereof, less expenses, to an organization or corporation described in clause (i) or (ii);

(6)  Any security issued by a motor carrier the issuance of which is subject to the provisions of section 214 of the Interstate Commerce Act, or any interest in a railroad equipment trust. For purposes of this paragraph interest in a railroad equipment trust' means any interest in an equipment trust, lease, conditional sales contract, or other similar arrangement entered into, issued, assumed, guaranteed by, or for the benefit of, a common carrier to finance the acquisition of rolling stock, including motive power;

(7)  Certificates issued by a receiver or by a trustee or debtor in possession in a case under title 11 of the United States Code with the approval of the court;

(8)  Any insurance or endowment policy or annuity contract or optional annuity contract, issued by a corporation subject to the supervision of the insurance commissioner, bank commissioner, or agency or officer performing like functions, of any State or Territory of the United States or the District of Columbia;

(9)  Except with respect to a security exchanged in a case under title 11 of the United States Code, any security exchanged by the issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange; Miscellaneous Statutes and Regulations>

(10)  Except with respect to a security exchanged in a case under title 11 of the United States Code, any security which is issued in exchange for one or more bona fide outstanding securities, claims or property interests, or partly in such exchange and partly for cash, where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear, by any court, or by any official or agency of the United States, or by any State or Territorial banking or insurance commission or other governmental authority expressly authorized by law to grant such approval;

(11)  Any security which is a part of an issue offered and sold only to persons resident within a single State or Territory, where the issuer of such security is a person resident and doing business within or, if a corporation, incorporated by and doing business within, such State or Territory.

(12)  Any equity security issued in connection with the acquisition by a holding company of a bank under section 3(a) of the Bank Holding Company Act of 1956 or a savings association under section 10(e) of the Home Owners' Loan Act, if--

(A)  the acquisition occurs solely as part of a reorganization in which security holders exchange their shares of a bank or savings association for shares of a newly formed holding company with no significant assets other than securities of the bank or savings association and the existing subsidiaries of the bank or savings association;

(B)  the security holders receive, after that reorganization, substantially the same proportional share interests in the holding company as they held in the bank or savings association, except for nominal changes in shareholders' interests resulting from lawful elimination of fractional interests and the exercise of dissenting shareholders' rights under State or Federal law;

(C)  the rights and interests of security holders in the holding company are substantially the same as those in the bank or savings association prior to the transaction, other than as may be required by law; and

(D)  the holding company has substantially the same assets and liabilities, on a consolidated basis, as the bank or savings association had prior to the transaction.

For purposes of this paragraph, the term "savings association" means a savings association (as defined in section 3(b) of the Federal Deposit Insurance Act) the deposits of which are insured by the Federal Deposit Insurance Corporation.

(13)  Any security issued by or any interest or participation in any church plan, company or account that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940.

(14)  Any security futures product that is--

(A)  cleared by a clearing agency registered under section 17A of the Securities Exchange Act of 1934 or exempt from registration under subsection (b)(7) of such section 17A; and

(B)  traded on a national securities exchange or a national securities association registered pursuant to section 15A(a) of the Securities Exchange Act of 1934.

(b)  ADDITIONAL EXEMPTIONS.--(1)  SMALL ISSUES EXEMPTIVE AUTHORITY.--The Commission may from time to time by its rules and regulations, and subject to such terms and conditions as may be prescribed therein, add any class of securities to the securities exempted as provided in this section, if it finds that the enforcement of this title with respect to such securities is not necessary in the public interest and for the protection of investors by reason of the small amount involved or the limited character of the public offering; but no issue of securities shall be exempted under this subsection where the aggregate amount at which such issue is offered to the public exceeds $5,000,000.

(2)  ADDITIONAL ISSUES.--The Commission shall by rule or regulation add a class of securities to the securities exempted pursuant to this section in accordance with the following terms and conditions:

(A)  The aggregate offering amount of all securities offered and sold within the prior 12-month period in reliance on the exemption added in accordance with this paragraph shall not exceed $50,000,000.

(B)  The securities may be offered and sold publicly.

(C)  The securities shall not be restricted securities within the meaning of the Federal securities laws and the regulations promulgated thereunder. Miscellaneous Statutes and Regulations>

(D)  The civil liability provision in section 12(a)(2) shall apply to any person offering or selling such securities.

(E)  The issuer may solicit interest in the offering prior to filing any offering statement, on such terms and conditions as the Commission may prescribe in the public interest or for the protection of investors.

(F)  The Commission shall require the issuer to file audited financial statements with the Commission annually.

(G)  Such other terms, conditions, or requirements as the Commission may determine necessary in the public interest and for the protection of investors, which may include--

(i)  a requirement that the issuer prepare and electronically file with the Commission and distribute to prospective investors an offering statement, and any related documents, in such form and with such content as prescribed by the Commission, including audited financial statements, a description of the issuer's business operations, its financial condition, its corporate governance principles, its use of investor funds, and other appropriate matters; and

(ii)  disqualification provisions under which the exemption shall not be available to the issuer or its predecessors, affiliates, officers, directors, underwriters, or other related persons, which shall be substantially similar to the disqualification provisions contained in the regulations adopted in accordance with section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (15 U.S.C. 77d note).

(3)  LIMITATION.--Only the following types of securities may be exempted under a rule or regulation adopted pursuant to paragraph (2): equity securities, debt securities, and debt securities convertible or exchangeable to equity interests, including any guarantees of such securities.

(4)  PERIODIC DISCLOSURES.--Upon such terms and conditions as the Commission determines necessary in the public interest and for the protection of investors, the Commission by rule or regulation may require an issuer of a class of securities exempted under paragraph (2) to make available to investors and file with the Commission periodic disclosures regarding the issuer, its business operations, its financial condition, its corporate governance principles, its use of investor funds, and other appropriate matters, and also may provide for the suspension and termination of such a requirement with respect to that issuer.

(5)  ADJUSTMENT.--Not later than 2 years after the date of enactment of the Small Company Capital Formation Act of 2011 and every 2 years thereafter, the Commission shall review the offering amount limitation described in paragraph (2)(A) and shall increase such amount as the Commission determines appropriate. If the Commission determines not to increase such amount, it shall report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate on its reasons for not increasing the amount.

(c)  SECURITIES ISSUED BY SMALL INVESTMENT COMPANY.--The Commission may from time to time by its rules and regulations and subject to such terms and conditions as may be prescribed therein, add to the securities exempted as provided in this section any class of securities issued by a small business investment company under the Small Business Investment Act of 1958 if it finds, having regard to the purposes of that Act, that the enforcement of this Act with respect to such securities is not necessary in the public interest and for the protection of investors.

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

[Source:  Section 3 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 75), effective May 27, 1933, as amended by section 202 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 906), effective June 6, 1934; section 214 of title II of the Act of February 4, 1887, as added by the Act of August 9, 1935 (Pub. L. No. 255; 49 Stat. 557), and amended by section 15 of the Act of June 29, 1938 (Pub. L. No. 777; 52 Stat. 1240), effective June 29, 1938; the Act of May 15, 1945 (Pub. L. No. 55; 59 Stat. 167), effective May 15, 1945; section 5 of title I of the Act of August 10, 1954 (Pub. L. No. 577; 68 Stat. 684), effective October 8, 1954; section 307(a) of title III of the Act of August 21, 1958 (Pub. L. No. 85--699; 72 Stat. 694), effective August 21, 1958; section 401(a) of title IV of the Act of August 10, 1970 (Pub. L. No. 91--373; 84 Stat. 718), effective with respect to securities sold after January 1, 1970; section 27(b), (c) of the Act of Miscellaneous Statutes and Regulations>December 14, 1970 (Pub. L. No. 91--547; 84 Stat. 1434), effective December 14, 1970; the Act of December 19, 1970 (Pub. L. No. 91--565; 84 Stat. 1480), effective December 19, 1970; section 6(a) of the Act of December 22, 1970 (Pub. L. No. 91--567; 84 Stat. 1498), effective with respect to securities sold after January 1, 1970; section 308(a)(1) of the Act of February 5, 1976 (Pub. L. No. 94--210; 90 Stat. 56, 57), effective April 5, 1976; section 18 of the Act of May 21, 1978 (Pub. L. No. 95--283; 92 Stat. 275), effective May 21, 1978; section 2 of the Act of October 6, 1978 (Pub. L. No. 95--425; 92 Stat. 962), effective October 6, 1978; section 306 of title III of the Act of November 6, 1978 (Pub. L. No. 95--598; 92 Stat. 2674), effective October 1, 1979; section 301 of title III of the Act of October 21, 1980 (Pub. L. No. 96--477; 94 Stat. 2291), effective October 21, 1980; section 701 of title VII of the Act of October 21, 1980 (Pub. L. No. 96--477; 94 Stat. 2294), effective October 21, 1980; sections 203 and 204 of title II of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1252), effective December 4, 1987; section 320 of title III of the Act of September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2225), effective September 23, 1994; section 3 of the Act of December 8, 1995 (Pub. L. No. 104--62; 109 Stat. 685), effective December 8, 1995; section 508(b) of title V of the Act of October 11, 1996 (Pub. L. No. 104--290; 110 Stat. 3447), effective October 11, 1996; section 221(a) of title II of the Act of November 12, 1999 (Pub. L. No. 106--102; 113 Stat. 1401), effective May 12, 2001; section 208(a)(2) of title II of the Act of December 21, 2000 (Pub. L. No. 106--554; 114 Stat. 2763A--435), effective December 21, 2000; section 1(b) of the Act of October 25, 2004 (Pub. L. No. 108--359; 118 Stat. 1666), effective October 25, 2004; section 985(a)(1) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1933), effective July 21, 2010; section 401(a) of title IV of the Act of April 5, 2012 (Pub. L. No. 112--106; 126 Stat. 323, 324, and 325), effective April 5, 2012; section 2 of the Act of July 9, 2012 (Pub. L. No. 112--142; 126 Stat. 989), effective July 9, 2012; section (2) of the Act of July 9, 2012 (Pub. L. No. 112--142; 126 Stat. 989), effective July 9, 2012]

EXEMPTED TRANSACTIONS

SEC. 4.  (a)  The provisions of section 5 shall not apply to--

(1)  transactions by any person other than an issuer, underwriter, or dealer.

(2)  transactions by an issuer not involving any public offering.

(3)  transactions by a dealer (including an underwriter no longer acting as an underwriter in respect of the security involved in such transaction), except--

(A)  transactions taking place prior to the expiration of forty days after the first date upon which the security was bona fide offered to the public by the issuer or by or through an underwriter,

(B)  transactions in a security as to which a registration statement has been filed taking place prior to the expiration of forty days after the effective date of such registration statement or prior to the expiration of forty days after the first date upon which the security was bona fide offered to the public by the issuer or by or through an underwriter after such effective date, whichever is later (excluding in the computation of such forty days any time during which a stop order issued under section 8 is in effect as to the security), or such shorter period as the Commission may specify by rules and regulations or order, and

(C)  transactions as to securities constituting the whole or a part of an unsold allotment to or subscription by such dealer as a participant in the distribution of such securities by the issuer or by or through an underwriter.

With respect to transactions referred to in clause (B), if securities of the issuer have not previously been sold pursuant to an earlier effective registration statement the applicable period, instead of forty days, shall be ninety days, or such shorter period as the Commission may specify by rules and regulations or order.

(4)  brokers' transactions executed upon customers' orders on any exchange or in the over-the-counter market but not the solicitation of such orders.

(5)  transactions involving offers or sales by an issuer solely to one or more accredited investors, if the aggregate offering price of an issue of securities offered in reliance on this paragraph does not exceed the amount allowed under section 3(b)(1)1 of this title, if there is no advertising or public solicitation in connection with the transaction by the issuer or anyone acting on the issuer's behalf, and if the issuer files such notice with the Commission as the Commission shall prescribe.

(6)  transactions involving the offer or sale of securities by an issuer (including all entities controlled by or under common control with the issuer), provided that-- Miscellaneous Statutes and Regulations>

(A)  the aggregate amount sold to all investors by the issuer, including any amount sold in reliance on the exemption provided under this paragraph during the 12-month period preceding the date of such transaction, is not more than $1,000,000;

(B)  the aggregate amount sold to any investor by an issuer, including any amount sold in reliance on the exemption provided under this paragraph during the 12-month period preceding the date of such transaction, does not exceed--

(i)  the greater of $2,000 or 5 percent of the annual income or net worth of such investor, as applicable, if either the annual income or the net worth of the investor is less than $100,000; and

(ii)  10 percent of the annual income or net worth of such investor, as applicable, not to exceed a maximum aggregate amount sold of $100,000, if either the annual income or net worth of the investor is equal to or more than $100,000;

(C)  the transaction is conducted through a broker or funding portal that complies with the requirements of section 4A(a); and

(D)  the issuer complies with the requirements of section 4A(b).

(b)  Offers and sales exempt under section 230.506 of title 17, Code of Federal Regulations (as revised pursuant to section 201 of the Jumpstart Our Business Startups Act) shall not be deemed public offerings under the Federal securities laws as a result of general advertising or general solicitation.

(b)(1)  With respect to securities offered and sold in compliance with Rule 506 of Regulation D under this Act, no person who meets the conditions set forth in paragraph (2) shall be subject to registration as a broker or dealer pursuant to section 15(a)(1) of this title, solely because--

(A)  that person maintains a platform or mechanism that permits the offer, sale, purchase, or negotiation of or with respect to securities, or permits general solicitations, general advertisements, or similar or related activities by issuers of such securities, whether online, in person, or through any other means;

(B)  that person or any person associated with that person co-invests in such securities; or

(C)  that person or any person associated with that person provides ancillary services with respect to such securities.

(2)  The exemption provided in paragraph (1) shall apply to any person described in such paragraph if--

(A)  such person and each person associated with that person receives no compensation in connection with the purchase or sale of such security;

(B)  such person and each person associated with that person does not have possession of customer funds or securities in connection with the purchase or sale of such security; and

(C)  such person is not subject to a statutory disqualification as defined in section 3(a)(39) of this title and does not have any person associated with that person subject to such a statutory disqualification.

(3)  For the purposes of this subsection, the term "ancillary services" means--

(A)  the provision of due diligence services, in connection with the offer, sale, purchase, or negotiation of such security, so long as such services do not include, for separate compensation, investment advice or recommendations to issuers or investors; and

(B)  the provision of standardized documents to the issuers and investors, so long as such person or entity does not negotiate the terms of the issuance for and on behalf of third parties and issuers are not required to use the standardized documents as a condition of using the service.

(d)  LIMITATION.--Notwithstanding any other provision of this section, an emerging growth company or any person authorized to act on behalf of an emerging growth company may engage in oral or written communications with potential investors that are qualified institutional buyers or institutions that are accredited investors, as such terms are respectively defined in section 230.144A and section 230.501(a) of title 17, Code of Federal Regulations, or any successor thereto, to determine whether such investors might have an interest in a contemplated securities offering, either prior to or following the date of filing of a registration statement with respect to such securities with the Commission, subject to the requirement of subsection (b)(2).

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

Miscellaneous Statutes and Regulations>

[Source:  Section 4 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 77), effective May 27, 1933, as amended by section 203 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 906), effective June 6, 1934; section 6 of title I of the Act of August 10, 1954 (Pub. L. No. 577; 68 Stat. 684), effective October 8, 1954; section 12 of the Act of August 20, 1964 (Pub. L. No. 88--467; 78 Stat. 580), effective August 20, 1964; section 30 of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 169), effective June 4, 1975; and section 601 of title VI of the Act of October 21, 1980 (Pub. L. No. 96--477; 94 Stat. 2294), effective October 21, 1980; section 944(a) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1897), effective July 21, 2010; section 201(b) and (c) of title II of the Act of April 5, 2012 (Pub. L. No. 112--106; 125 Stat. 314), effective April 5, 2012; section 302(a) of title III of the Act of April 5, 2012 (Pub. L. No. 112--106; 125 Stat. 315), effective April 5, 2012; section 401(c) of title IV of the Act of April 5, 2012 (Pub. L. No. 112--106; 126 Stat. 325), effective April 5, 2012]

Note

SEC. 201.  MODIFICATION OF EXEMPTION.

(a)  MODIFICATION OF RULES.--

(1)  Not later than 90 days after the date of the enactment of this Act, the Securities and Exchange Commission shall revise its rules issued in section 230.506 of title 17, Code of Federal Regulations, to provide that the prohibition against general solicitation or general advertising contained in section 230.502(c) of such title shall not apply to offers and sales of securities made pursuant to section 230.506, provided that all purchasers of the securities are accredited investors. Such rules shall require the issuer to take reasonable steps to verify that purchasers of the securities are accredited investors, using such methods as determined by the Commission. Section 230.506 of title 17, Code of Federal Regulations, as revised pursuant to this section, shall continue to be treated as a regulation issued under section 4(2) of the Securities Act of 1933 (15 U.S.C. 77d(2)).

(2)  Not later than 90 days after the date of enactment of this Act, the Securities and Exchange Commission shall revise subsection (d)(1) of section 230.144A of title 17, Code of Federal Regulations, to provide that securities sold under such revised exemption may be offered to persons other than qualified institutional buyers, including by means of general solicitation or general advertising, provided that securities are sold only to persons that the seller and any person acting on behalf of the seller reasonably believe is a qualified institutional buyer.

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

[Source: Section 201(a) of title II of the Act of April 5, 2012 (Pub. L. No. 112--106; 125 Stat. 313), effective April 5, 2012]

Note

(c)  RULEMAKING.--Not later than 270 days after the date of enactment of this Act, the Securities and Exchange Commission (in this title referred to as the "Commission'') shall issue such rules as the Commission determines may be necessary or appropriate for the protection of investors to carry out sections 4(6) and section 4A of the Securities Act of 1933, as added by this title. In carrying out this section, the Commission shall consult with any securities commission (or any agency or office performing like functions) of the States, any territory of the United States, and the District of Columbia, which seeks to consult with the Commission, and with any applicable national securities association.

(d)  DISQUALIFICATION.--

(1)  IN GENERAL.--Not later than 270 days after the date of enactment of this Act, the Commission shall, by rule, establish disqualification provisions under which--

(A)  an issuer shall not be eligible to offer securities pursuant to section 4(6) of the Securities Act of 1933, as added by this title; and

(B)  a broker or funding portal shall not be eligible to effect or participate in transactions pursuant to that section 4(6).

(2)  INCLUSIONS.--Disqualification provisions required by this subsection shall-- Miscellaneous Statutes and Regulations>

(A)  be substantially similar to the provisions of section 230.262 of title 17, Code of Federal Regulations (or any successor thereto); and

(B)  disqualify any offering or sale of securities by a person that--

(i)  is subject to a final order of a State securities commission (or an agency or officer of a State performing like functions), a State authority that supervises or examines banks, savings associations, or credit unions, a State insurance commission (or an agency or officer of a State performing like functions), an appropriate Federal banking agency, or the National Credit Union Administration, that--

(I)  bars the person from--

(aa)  association with an entity regulated by such commission, authority, agency, or officer;

(bb)  engaging in the business of securities, insurance, or banking; or

(cc)  engaging in savings association or credit union activities; or

(II)  constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct within the 10-year period ending on the date of the filing of the offer or sale; or

(ii)  has been convicted of any felony or misdemeanor in connection with the purchase or sale of any security or involving the making of any false filing with the Commission.

Codified to 15 U.S.C. 77d note]

[Source: Section 302(c) and (d) of title III of the Act of April 5, 2012 (Pub. L. No. 112--106; 125 Stat. 320), effective April 5, 2012]

SEC. 4A. REQUIREMENTS WITH RESPECT TO CERTAIN SMALL TRANSACTIONS.

(a)  REQUIREMENTS ON INTERMEDIARIES.--A person acting as an intermediary in a transaction involving the offer or sale of securities for the account of others pursuant to section 4(6) shall--

(1)  register with the Commission as--

(A)  a broker; or

(B)  a funding portal (as defined in section 3(a)(80) of the Securities Exchange Act of 1934);

(2)  register with any applicable self-regulatory organization (as defined in section 3(a)(26) of the Securities Exchange Act of 1934);

(3)  provide such disclosures, including disclosures related to risks and other investor education materials, as the Commission shall, by rule, determine appropriate;

(4)  ensure that each investor--

(A)  reviews investor-education information, in accordance with standards established by the Commission, by rule;

(B)  positively affirms that the investor understands that the investor is risking the loss of the entire investment, and that the investor could bear such a loss; and

(C)  answers questions demonstrating--

(i)  an understanding of the level of risk generally applicable to investments in startups, emerging businesses, and small issuers;

(ii)  an understanding of the risk of illiquidity; and

(iii)  an understanding of such other matters as the Commission determines appropriate, by rule;

(5)  take such measures to reduce the risk of fraud with respect to such transactions, as established by the Commission, by rule, including obtaining a background and securities enforcement regulatory history check on each officer, director, and person holding more than 20 percent of the outstanding equity of every issuer whose securities are offered by such person;

(6)  not later than 21 days prior to the first day on which securities are sold to any investor (or such other period as the Commission may establish), make available to the Commission and to potential investors any information provided by the issuer pursuant to subsection (b);

(7)  ensure that all offering proceeds are only provided to the issuer when the aggregate capital raised from all investors is equal to or greater than a target offering amount, and allow all investors to cancel their commitments to invest, as the Commission shall, by rule, determine appropriate; Miscellaneous Statutes and Regulations>

(8)  make such efforts as the Commission determines appropriate, by rule, to ensure that no investor in a 12-month period has purchased securities offered pursuant to section 4(6) that, in the aggregate, from all issuers, exceed the investment limits set forth in section 4(6)(B);

(9)  take such steps to protect the privacy of information collected from investors as the Commission shall, by rule, determine appropriate;

(10)  not compensate promoters, finders, or lead generators for providing the broker or funding portal with the personal identifying information of any potential investor;

(11)  prohibit its directors, officers, or partners (or any person occupying a similar status or performing a similar function) from having any financial interest in an issuer using its services; and

(12)  meet such other requirements as the Commission may, by rule, prescribe, for the protection of investors and in the public interest.

(b)  REQUIREMENTS FOR ISSUERS.--For purposes of section 4(6), an issuer who offers or sells securities shall--

(1)  file with the Commission and provide to investors and the relevant broker or funding portal, and make available to potential investors--

(A)  the name, legal status, physical address, and website address of the issuer;

(B)  the names of the directors and officers (and any persons occupying a similar status or performing a similar function), and each person holding more than 20 percent of the shares of the issuer;

(C)  a description of the business of the issuer and the anticipated business plan of the issuer;

(D)  a description of the financial condition of the issuer, including, for offerings that, together with all other offerings of the issuer under section 4(6) within the preceding 12-month period, have, in the aggregate, target offering amounts of--

(i)  $100,000 or less--

(I)  the income tax returns filed by the issuer for the most recently completed year (if any); and

(II)  financial statements of the issuer, which shall be certified by the principal executive officer of the issuer to be true and complete in all material respects;

(ii)  more than $100,000, but not more than $500,000, financial statements reviewed by a public accountant who is independent of the issuer, using professional standards and procedures for such review or standards and procedures established by the Commission, by rule, for such purpose; and

(iii)  more than $500,000 (or such other amount as the Commission may establish, by rule), audited financial statements;

(E)  a description of the stated purpose and intended use of the proceeds of the offering sought by the issuer with respect to the target offering amount;

(F)  the target offering amount, the deadline to reach the target offering amount, and regular updates regarding the progress of the issuer in meeting the target offering amount;

(G)  the price to the public of the securities or the method for determining the price, provided that, prior to sale, each investor shall be provided in writing the final price and all required disclosures, with a reasonable opportunity to rescind the commitment to purchase the securities;

(H)  a description of the ownership and capital structure of the issuer, including--

(i)  terms of the securities of the issuer being offered and each other class of security of the issuer, including how such terms may be modified, and a summary of the differences between such securities, including how the rights of the securities being offered may be materially limited, diluted, or qualified by the rights of any other class of security of the issuer;

(ii)  a description of how the exercise of the rights held by the principal shareholders of the issuer could negatively impact the purchasers of the securities being offered;

(iii)  the name and ownership level of each existing shareholder who owns more than 20 percent of any class of the securities of the issuer;

(iv)  how the securities being offered are being valued, and examples of methods for how such securities may be valued by the issuer in the future, including during subsequent corporate actions; and

(v)  the risks to purchasers of the securities relating to minority ownership in the issuer, the risks associated with corporate actions, including additional issuances of shares, a Miscellaneous Statutes and Regulations>sale of the issuer or of assets of the issuer, or transactions with related parties; and

(I)  such other information as the Commission may, by rule, prescribe, for the protection of investors and in the public interest;

(2)  not advertise the terms of the offering, except for notices which direct investors to the funding portal or broker;

(3)  not compensate or commit to compensate, directly or indirectly, any person to promote its offerings through communication channels provided by a broker or funding portal, without taking such steps as the Commission shall, by rule, require to ensure that such person clearly discloses the receipt, past or prospective, of such compensation, upon each instance of such promotional communication;

(4)  not less than annually, file with the Commission and provide to investors reports of the results of operations and financial statements of the issuer, as the Commission shall, by rule, determine appropriate, subject to such exceptions and termination dates as the Commission may establish, by rule; and

(5)  comply with such other requirements as the Commission may, by rule, prescribe, for the protection of investors and in the public interest.

(c)  LIABILITY FOR MATERIAL MISSTATEMENTS AND OMISSIONS.--

(1)  ACTIONS AUTHORIZED.--

(A)  IN GENERAL.--Subject to paragraph (2), a person who purchases a security in a transaction exempted by the provisions of section 4(6) may bring an action against an issuer described in paragraph (2), either at law or in equity in any court of competent jurisdiction, to recover the consideration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if such person no longer owns the security.

(B)  LIABILITY.--An action brought under this paragraph shall be subject to the provisions of section 12(b) and section 13, as if the liability were created under section 12(a)(2).

(2)  APPLICABILITY.--An issuer shall be liable in an action under paragraph (1), if the issuer--

(A)  by the use of any means or instruments of transportation or communication in interstate commerce or of the mails, by any means of any written or oral communication, in the offering or sale of a security in a transaction exempted by the provisions of section 4(6), makes an untrue statement of a material fact or omits to state a material fact required to be stated or necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading, provided that the purchaser did not know of such untruth or omission; and

(B)  does not sustain the burden of proof that such issuer did not know, and in the exercise of reasonable care could not have known, of such untruth or omission.

(3)  DEFINITION.--As used in this subsection, the term "issuer" includes any person who is a director or partner of the issuer, and the principal executive officer or officers, principal financial officer, and controller or principal accounting officer of the issuer (and any person occupying a similar status or performing a similar function) that offers or sells a security in a transaction exempted by the provisions of section 4(6), and any person who offers or sells the security in such offering.

(d)  INFORMATION AVAILABLE TO STATES.--The Commission shall make, or shall cause to be made by the relevant broker or funding portal, the information described in subsection (b) and such other information as the Commission, by rule, determines appropriate, available to the securities commission (or any agency or office performing like functions) of each State and territory of the United States and the District of Columbia.

(e)  RESTRICTIONS ON SALES.--Securities issued pursuant to a transaction described in section 4(6)--

(1)  may not be transferred by the purchaser of such securities during the 1-year period beginning on the date of purchase, unless such securities are transferred--

(A)  to the issuer of the securities;

(B)  to an accredited investor;

(C)  as part of an offering registered with the Commission; or Miscellaneous Statutes and Regulations>

(D)  to a member of the family of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similar circumstance, in the discretion of the Commission; and

(2)  shall be subject to such other limitations as the Commission shall, by rule, establish.

(f)  APPLICABILITY.--Section 4(6) shall not apply to transactions involving the offer or sale of securities by any issuer that--

(1)  is not organized under and subject to the laws of a State or territory of the United States or the District of Columbia; on 13 or section 15(d) of the Securities Exchange Act of 1934;

(2)  is subject to the requirement to file reports pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934;

(3)  is an investment company, as defined in section 3 of the Investment Company Act of 1940, or is excluded from the definition of investment company by section 3(b) or section 3(c) of that Act; or

(4)  the Commission, by rule or regulation, determines appropriate.

(g)  RULE OF CONSTRUCTION.--Nothing in this section or section 4(6) shall be construed as preventing an issuer from raising capital through methods not described under section 4(6).

(h)  CERTAIN CALCULATIONS.--

(1)  DOLLAR AMOUNTS.--Dollar amounts in section 4(6) and subsection (b) of this section shall be adjusted by the Commission not less frequently than once every 5 years, by notice published in the Federal Register to reflect any change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics.

(2)  INCOME AND NET WORTH.--The income and net worth of a natural person under section 4(6)(B) shall be calculated in accordance with any rules of the Commission under this title regarding the calculation of the income and net worth, respectively, of an accredited investor.

[Codified to 15 U.S.C. 77d--1]

[Source: Section 4A added by section 302(b) of title III of the Act of April 5, 2012 (Pub. L. No. 112--106; 126 stat. 316), effective April 5, 2012]

PROHIBITIONS RELATING TO INTERSTATE COMMERCE
AND THE MAILS

SEC. 5.  (a)  Unless a registration statement is in effect as to a security, it shall be unlawful for any person, directly or indirectly--

(1)  to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to sell security through the use or medium of any prospectus or otherwise; or

(2)  to carry or cause to be carried through the mails or in interstate commerce, by any means or instruments of transportation, any such security for the purpose of sale or for delivery after sale.

(b)  It shall be unlawful for any person, directly or indirectly--

(1)  to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to carry or transmit any prospectus relating to any security with respect to which a registration statement has been filed under this title, unless such prospectus meets the requirements of section 10; or

(2)  to carry or cause to be carried through the mails or in interstate commerce any such security for the purpose of sale or for delivery after sale, unless accompanied or preceded by a prospectus that meets the requirements of subsection (a) of section 10.

(c)  It shall be unlawful for any person, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of any prospectus or otherwise any security, unless a registration statement has been filed as to such security, or while the registration statement is the subject of a refusal order to stop order or (prior to the effective date of the registration statement) any public proceeding or examination under section 8.

(d)  LIMITATION.--Notwithstanding any other provision of this section, an emerging growth company or any person authorized to act on behalf of an emerging growth company Miscellaneous Statutes and Regulations>may engage in oral or written communications with potential investors that are qualified institutional buyers or institutions that are accredited investors, as such terms are respectively defined in section 230.144A and section 230.501(a) of title 17, Code of Federal Regulations, or any successor thereto, to determine whether such investors might have an interest in a contemplated securities offering, either prior to or following the date of filing of a registration statement with respect to such securities with the Commission, subject to the requirement of subsection (b)(2).

(e)  Not withstanding the provisions of section 3 or 4, unless a registration statement meeting the requirements of section 10(a) is in effect as to a security-base swap, it shall be unlawful for any person, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell, offer to buy or purchase or sell a security-based swap to any person who is not an eligible contract participant as defined in section 1a(18) of the Commodity Exchange Act (7 U.S.C. 1a(18)).

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

[Source:  Section 5 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 77), effective May 27, 1933, as amended by section 204 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 906), effective June 6, 1934; section 7 of title I of the Act of August 10, 1954 (Pub. L. No. 577; 68 Stat. 684), effective October 8, 1954; section 768(b) of title VII of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1801), effective July 21, 2010; section 105(c) of title I of the Act of April 5, 2012 (Pub. L. No. 112--106; 126 Stat. 311), effective April 5, 2012]

REGISTRATION OF SECURITIES

SEC (6). (a)  METHOD OF REGISTRATION--Any security may be registered with the Commission under the terms and conditions hereinafter provided, by filing a registration statement in triplicate, at least one of which shall be signed by each issuer, its principal executive officer or officers, its principal financial officer, its comptroller or principal accounting officer, and the majority of its board of directors or persons performing similar functions (or, if there is no board of directors or persons performing similar functions, by the majority of the persons or board having the power of management of the issuer), and in case the issuer is a foreign or Territorial person by its duly authorized representative in the United States; except that when such registration statement relates to a security issued by a foreign government, or political subdivision thereof, it need be signed only by the underwriter of such security. Signatures of all such persons when written on the said registration statements shall be presumed to have been so written by authority of the person whose signature is so affixed and the burden of proof, in the event such authority shall be denied, shall be upon the party denying the same. The affixing of any signature without the authority of the purported signer shall constitute a violation of this subchapter. A registration statement shall be deemed effective only as to the securities specified therein as proposed to be offered.

(b)  REGISTRATION FEE.--

(1)  FEE PAYMENT REQUIRED.--At the time of filing a registration statement, the applicant shall pay to the Commission a fee at a rate that shall be equal to $92 per $1,000,000 of the maximum aggregate price at which such securities are proposed to be offered, except that during fiscal year 2003 and any succeeding fiscal year such fee shall be adjusted pursuant to paragraph (2).

(2)  ANNUAL ADJUSTMENT.--For each fiscal year, the Commission shall by order adjust the rate required by paragraph (1) for such fiscal year to a rate that, when applied to the baseline estimate of the aggregate maximum offering prices for such fiscal year, is reasonably likely to produce aggregate fee collections under this subsection that are equal to the target fee collection amount for such fiscal year.

(3)  PRO RATA APPLICATION.--The rates per $1,000,000 required by this subsection shall be applied pro rata to amounts and balances of less than $1,000,000.

(4)  REVIEW AND EFFECTIVE DATE.--In exercising its authority under this subsection, the Commission shall not be required to comply with the provisions of section 553 of title Miscellaneous Statutes and Regulations>5. An adjusted rate prescribed under paragraph (2) and published under paragraph (5) shall not be subject to judicial review. An adjusted rate prescribed under paragraph (2) shall take effect on the first day of the fiscal year to which such rate applies;

(5)  PUBLICATION.--The Commission shall publish in the Federal Register notices of the rate applicable under this subsection and under sections 78m(e) and 78n(g)(1) of this title for each fiscal year not later than August 31 of the fiscal year preceding the fiscal year to which such rate applies, together with any estimates or projections on which such rate is based; and

(6)  DEFINITIONS.--

For purposes of this subsection:

(A)  TARGET FEE COLLECTION AMOUNT.--The target fee collection amount for each fiscal year is determined according to the following table:

Target fee
Fiscal year Collection amount
2002 $377,000,000
2003 $435,000,000
2004 $467,000,000
2005 $570,000,000
2006 $689,000,000
2007 $214,000,000
2008 $234,000,000
2009 $284,000,000
2010 $334,000,000
2011 $394,000,000
2012 $425,000,000
2013 $455,000,000
2014 $485,000,000
2015 $515,000,000
2016 $550,000,000
2017 $585,000,000
2018 $620,000,000
2019 $660,000,000
2020 $705,000,000
2021 and each fiscal year thereafter An amount that is equal to the target fee
thereafter collection amount for the prior fiscal year, adjusted by the rate of inflation.

(B)  Baseline estimate of the aggregate maximum offering prices The baseline estimate of the aggregate maximum offering prices for any fiscal year is the baseline estimate of the aggregate maximum offering price at which securities are proposed to be offered pursuant to registration statements filed with the Commission during such fiscal year as determined by the Commission, after consultation with the Congressional Budget Office and the Office of Management and Budget, using the methodology required for projections pursuant to section 907 of title 2.

(c)  TIME REGISTRATION EFFECTIVE.--The filing with the Commission of a registration statement, or of an amendment to a registration statement, shall be deemed to have taken place upon the receipt thereof, but the filing of a registration statement shall not be deemed to have taken place unless it is accompanied by a United States postal money order or a certified bank check or cash for the amount of the fee required under subsection (b) of this section.

(d)  INFORMATION AVAILABLE TO PUBLIC.--The information contained in or filed with any registration statement shall be made available to the public under such regulations as the Commission may prescribe, and copies thereof, photostatic or otherwise, shall be furnished to every applicant at such reasonable charge as the Commission may prescribe.

(e)  EMERGING GROWTH COMPANIES.--

(1)  IN GENERAL.--Any emerging growth company, prior to its initial public offering date, may confidentially submit to the Commission a draft registration statement, for Miscellaneous Statutes and Regulations>confidential nonpublic review by the staff of the Commission prior to public filing, provided that the initial confidential submission and all amendments thereto shall be publicly filed with the Commission not later than 21 days before the date on which the issuer conducts a road show, as such term is defined in section 230.433(h)(4) of title 17, Code of Federal Regulations, or any successor thereto.

(2)  CONFIDENTIALITY.--Notwithstanding any other provision of this title, the Commission shall not be compelled to disclose any information provided to or obtained by the Commission pursuant to this subsection. For purposes of section 552 of title 5, United States Code, this subsection shall be considered a statute described in subsection (b)(3)(B) of such section 552. Information described in or obtained pursuant to this subsection shall be deemed to constitute confidential information for purposes of section 24(b)(2) of the Securities Exchange Act of 1934.

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

[Source:  Section 6 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 78), effective May 27, 1933, as amended by section 1 of the Act of October 22, 1965 (Pub. L. No. 89--289; 79 Stat. 1051), effective January 1, 1966; and section 205 of title II of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1252), effective December 4, 1987; section 404 of title IV of the Act of October 11, 1996 (Pub. L. No. 104--290; 110 Stat. 3441), effective October 11, 1996; section 991(b)(1) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1951), effective July 21, 2010; section 106(a) of title I of the Act of April 5, 2012 (Pub. L. No. 112--106; 126 Stat. 312), effective April 5, 2012]

INFORMATION REQUIRED IN REGISTRATION STATEMENT

Sec. 7. (a)  INFORMATION REQUIRED IN REGISTRATION STATEMENTS.--(1)  IN GENERAL.--The registration statement, when relating to a security other than a security issued by foreign government, or political subdivision thereof, shall contain the information, and be accompanied by the documents, specified in Schedule A, and when relating to a security issued by a foreign government, or political subdivision thereof, shall contain the information, and be accompanied by the documents, specified in Schedule B; except that the Commission may by rules or regulations provide that any such information or document need not be included in respect of any class of issuers or securities if it finds that the requirement of such information or document is inapplicable to such class and that disclosure fully adequate for the protection of investors is otherwise required to be included within the registration statement. If any accountant, engineer, or appraiser, or any person whose profession gives authority to a statement made by him, is named as having prepared or certified any part of the registration statement, or is named as having prepared or certified a report or valuation for use in connection with the registration statement, the written consent of such person shall be filed with the registration statement. If any such person is named as having prepared or certified a report or valuation (other than a public official document or statement) which is used in connection with the registration statement, but is not named as having prepared or certified such report or valuation for use in connection with the registration statement, the written consent of such person shall be filed with the registration statement unless the Commission dispenses with such filing as impracticable or as involving undue hardship on the person filing the registration statement. Any such registration statement shall contain such other information, and be accompanied by such other documents, as the Commission may by rules or regulations require as being necessary or appropriate in the public interest or for the protection of investors.

(2)  TREATMENT OF EMERGING GROWTH COMPANIES.--An emerging growth company--

(A)  need not present more than 2 years of audited financial statements in order for the registration statement of such emerging growth company with respect to an initial public offering of its common equity securities to be effective, and in any other registration statement to be filed with the Commission, an emerging growth company need not present selected financial data in accordance with section 229.301 of title 17, Code of Federal Regulations, for any period prior to the earliest audited period presented in connection with its initial public offering; and Miscellaneous Statutes and Regulations>

(B)  may not be required to comply with any new or revised financial accounting standard until such date that a company that is not an issuer (as defined under section 2(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(a))) is required to comply with such new or revised accounting standard, if such standard applies to companies that are not issuers.

(b)(1)  The Commission shall prescribe special rules with respect to registration statements filed by any issuer that is a blank check company. Such rules may, as the Commission determines necessary or appropriate in the public interest or for the protection of investors--

(A)  require such issuers to provide timely disclosure, prior to or after such statement becomes effective under section 8, of (i) information regarding the company to be acquired and the specific application of the proceeds of the offering, or (ii) additional information necessary to prevent such statement from being misleading;

(B)  place limitations on the use of such proceeds and the distribution of securities by such issuer until the disclosures required under subparagraph (A) have been made; and

(C)  provide a right of rescission to shareholders of such securities.

(2)  the Commission may, as it determines consistent with the public interest and the protection of investors, by rule or order exempt any issuer or class of issuers from the rules prescribed under paragraph (1).

(3)  For purposes of paragraph (1) of this subsection, the term "blank check company" means any development stage company that is issuing a penny stock (within the meaning of section 3(a)(51) of the Securities Exchange Act of 1984) and that--

(A)  has no specific business plan or purpose; or

(B)  has indicated that its business plan is to merge with an unidentified company or companies.

(c)  DISCLOSURE REQUIREMENTS.--

(1)  IN GENERAL.--The Commission shall adopt regulations under this subsection requiring each issuer of an asset-backed security to disclose, for each tranche or class of security, information regarding the assets backing that security.

(2)  CONTENT OF REGULATIONS.--In adopting regulations under this subsection, the Commission shall--

(A)  set standards for the format of the data provided by issuers of an asset-backed security, which shall, to the extent feasible, facilitate comparison of such data across securities in similar types of asset classes; and

(B)  require issuers of asset-backed securities, at a minimum, to disclose asset-level or loan-level data, if such data are necessary for investors to independently perform due diligence, including--

(i)  data having unique identifiers relating to loan brokers or originators;

(ii)  the nature and extent of the compensation of the broker or originator of the assets backing the security; and

(iii)  the amount of risk retention by the originator and the securitizer of such assets.

(d)  REGISTRATION STATEMENT FOR ASSET-BACKED SECURITIES.--Not later than 180 days after the date of enactment of this subsection, the Commission shall issue rules relating to the registration statement required to be filed by any issuer of an asset-backed security (as that term is defined in section 3(a)(77) of the Securities Exchange Act of 1934) that require any issuer of an asset-backed security--

(1)  to perform a review of the assets underlying the asset-backed security; and

(2)  to disclose the nature of the review under paragraph (1).

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

[Source:  Section 7 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 78), effective May 27, 1933; as amended by section 508 of title V of the Act of October 15, 1990 (Pub. L. No. 101--429; 104 Stat. 956), effective October 15, 1990; section 942(b) and 945 of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1897 and 1898), effective July 21, 2010; section 102(b)(1) of title I of the Act of April 5, 2012 (Pub. L. No. 112--106; 125 Stat. 309), effective April 5, 2012]

Miscellaneous Statutes and Regulations>

Note

(c)  OTHER DISCLOSURES.--An emerging growth company may comply with section 229.303(a) of title 17, Code of Federal Regulations, or any successor thereto, by providing information required by such section with respect to the financial statements of the emerging growth company for each period presented pursuant to section 7(a) of the Securities Act of 1933 (15 U.S.C. 77g(a)). An emerging growth company may comply with section 229.402 of title 17, Code of Federal Regulations, or any successor thereto, by disclosing the same information as any issuer with a market value of outstanding voting and nonvoting common equity held by non-affiliates of less than $75,000,000.

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

[Source: Section 102 of title I of the Act of April 5, 2012 (Pub. L. No. 112--106; 126 Stat. 309), effective April 5, 2012]

TAKING EFFECT OF REGISTRATION STATEMENTS AND
AMENDMENTS THERETO

SEC. 8. (a) Except as hereinafter provided, the effective date of a registration statement shall be the twentieth day after the filing thereof or such earlier date as the Commission may determine, having due regard to the adequacy of the information respecting the issuer theretofore available to the public, to the facility with which the nature of the securities to be registered, their relationship to the capital structure of the issuer and the rights of holders thereof can be understood, and to the public interest and the protection of investors. If any amendment to any such statement is filed prior to the effective date of such statement, the registration statement shall be deemed to have been filed when such amendment was filed; except that an amendment filed with the consent of the Commission, prior to the effective date of the registration statement, or filed pursuant to an order of the Commission, shall be treated as a part of the registration statement.

(b)  If it appears to the Commission that a registration statement is on its face incomplete or inaccurate in any material respect, the Commission may, after notice by personal service or the sending of confirmed telegraphic notice not later than ten days after the filing of the registration statement, and opportunity for hearing (at a time fixed by the Commission) within ten days after such notice by personal service or the sending of such telegraphic notice, issue an order prior to the effective date of registration refusing to permit such statement to become effective until it has been amended in accordance with such order. When such statement has been amended in accordance with such order the Commission shall so declare and the registration shall become effective at the time provided in subsection (a) or upon the date of such declaration, whichever date is the later.

(c)  An amendment filed after the effective date of the registration statement, if such amendment, upon its face, appears to the Commission not to be incomplete or inaccurate in any material respect, shall become effective on such date as the Commission may determine, having due regard to the public interest and the protection of investors.

(d)  If it appears to the Commission at any time that the registration statement includes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, the Commission may, after notice by personal service or the sending of confirmed telegraphic notice, and after opportunity for hearing (at a time fixed by the Commission) within fifteen days after such notice by personal service or the sending of such telegraphic notice, issue a stop order suspending the effectiveness of the registration statement. When such statement has been amended in accordance with such stop order, the Commission shall so declare and thereupon the stop order shall cease to be effective.

(e)  The Commission is hereby empowered to make an examination in any case in order to determine whether a stop order should issue under subsection (d). In making such examination the Commission or any officer or officers designated by it shall have access to and may demand the production of any books and papers of, and may administer oaths and affirmations to and examine, the issuer, underwriter, or any other person, in respect of any matter relevant to the examination, and may, in its discretion, require the production of a balance sheet exhibiting the assets and liabilities of the issuer, or its income statement, or both, to be certified to by a public or certified accountant approved by the Commission. If the issuer or underwriter shall fail to cooperate, or shall obstruct or refuse to permit the making of an examination, such conduct shall be proper ground for the issuance of a stop order.

(f)  Any notice required under this section shall be sent to or served on the issuer, or, in case of a foreign government or political subdivision thereof, to or on the underwriter, or, in the case of a foreign or Territorial person, to or on its duly authorized representative in the United States named in the registration statement, properly directed in each case of telegraphic notice to the address given in such statement.

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

[Source:  Section 8 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 79), effective May 27, 1933, as amended by section 301 of title III of the Act of August 22, 1940 (Pub. L. No. 768; 54 Stat. 857), effective August 22, 1940]

CEASE-AND-DESIST PROCEEDINGS

SEC. 8A. (A) AUTHORITY OF THE COMMISSION.--If the Commission finds, after notice and opportunity for hearing, that any person is violating, has violated, or is about to violate any provision of this title, or any rule or regulation thereunder, the Commission may publish its findings and enter an order requiring such person, and any other person that is, was, or would be a cause of the violation, due to an act or omission the person knew or should have known would contribute to such violation, to cease and desist from committing or causing such violation and any future violation of the same provision, rule, or regulation. Such order may, in addition to requiring a person to cease and desist from committing or causing a violation, require such person to comply, or to take steps to effect compliance, with such provision, rule, or regulation, upon such terms and conditions and within such time as the Commission may specify in such order. Any such order may, as the Commission deems appropriate, require future compliance or steps to effect future compliance, either permanently or for such period of time as the Commission may specify, with such provision, rule, or regulation with respect to any security, any issuer, or any other person.

(b)  HEARING.--The notice instituting proceedings pursuant to subsection (a) shall fix a hearing date not earlier than 30 days nor later than 60 days after service of the notice unless an earlier or a later date is set by the Commission with the consent of any respondent so served.

(c)  TEMPORARY ORDER.--

(1)  IN GENERAL.--Whenever the Commission determines that the alleged violation or threatened violation specified in the notice instituting proceedings pursuant to subsection (a), or the continuation thereof, is likely to result in significant dissipation or conversion of assets, significant harm to investors, or substantial harm to the public interest, including, but not limited to, losses to the Securities Investor Protection Corporation, prior to the completion of the proceedings, the Commission may enter a temporary order requiring the respondent to cease and desist from the violation or threatened violation and to take such action to prevent the violation or threatened violation and to prevent dissipation or conversion of assets, significant harm to investors, or substantial harm to the public interest as the Commission deems appropriate pending completion of such proceeding. Such an order shall be entered only after notice and opportunity for a hearing, unless the Commission determines that notice and hearing prior to entry would be impracticable or contrary to the public interest. A temporary order shall become effective upon service upon the respondent and, unless set aside, limited, or suspended by the Commission or a court of competent jurisdiction, shall remain effective and enforceable pending the completion of the proceedings.

(2)  APPLICABILITY.--This subsection shall apply only to a respondent that acts, or, at the time of the alleged misconduct acted, as a broker, dealer, investment adviser, investment company, municipal securities dealer, government securities broker, government securities dealer, or transfer agent, or is, or was at the time of the alleged misconduct, an associated person of, or a person seeking to become associated with, any of the foregoing.

(d)  REVIEW OF TEMPORARY ORDERS.--

(1)  COMMISSION REVIEW.--At any time after the respondent has been served with a temporary cease-and-desist order pursuant to subsection (c), the respondent may apply to the Commission to have the order set aside, limited, or suspended. If the respondent has been served with a temporary cease-and-desist order entered without a prior Commission hearing, the respondent may, within 10 days after the date on which the order was served, request a hearing on such application and the Commission shall hold a hearing and render a decision on such application at the earliest possible time.

(2)  JUDICIAL REVIEW.--Within--

(A)  10 days after the date the respondent was served with a temporary cease-and-desist order entered with a prior Commission hearing, or

(B)  10 days after the Commission renders a decision on an application and hearing under paragraph (1), with respect to any temporary cease-and-desist order entered without a prior Commission hearing,

the respondent may apply to the United States district court for the district in which the respondent resides or has its principal place of business, or for the District of Columbia, for an order setting aside, limiting, or suspending the effectiveness or enforcement of the order, and the court shall have jurisdiction to enter such an order. A respondent served with a temporary cease-and-desist order entered without a prior Commission hearing may not apply to the court except after hearing and decision by the Commission on the respondent's application under paragraph (1) of this subsection.

(3)  NO AUTOMATIC STAY OF TEMPORARY ORDER.--The commencement of proceedings under paragraph (2) of this subsection shall not, unless specifically ordered by the court, operate as a stay of the Commission's order.

(4)  EXCLUSIVE REVIEW.--Section 9(a) of this title shall not apply to a temporary order entered pursuant to this section.

(e)  AUTHORITY TO ENTER AN ORDER REQUIRING AN ACCOUNTING AND DISGORGEMENT.--In any cease-and-desist proceeding under subsection (a), the Commission may enter an order requiring accounting and disgorgement, including reasonable interest. The Commission is authorized to adopt rules, regulations, and orders concerning payments to investors, rates of interest, periods of accrual, and such other matters as it deems appropriate to implement this subsection.

(f)  AUTHORITY OF THE COMMISSION TO PROHIBIT PERSONS FROM SERVING AS OFFICERS OR DIRECTORS.--In any cease-and-desist proceeding under subsection (a), the Commission may issue an order to prohibit, conditionally or unconditionally, and permanently or for such period of time as it shall determine, any person who has violated section 17(a)(1) or the rules or regulations thereunder, from acting as an officer or director of any issuer that has a class of securities registered pursuant to section 12 of the Securities Exchange Act of 1934, or that is required to file reports pursuant to section 15(d) of that Act, if the conduct of that person demonstrates unfitness to serve as an officer or director of any such issuer.

(g)  AUTHORITY TO IMPOSE MONEY PENALTIES.--

(1)  GROUNDS.--In any cease-and-desist proceeding under subsection (a), the Commission may impose a civil penalty on a person if the Commission finds, on the record, after notice and opportunity for hearing, that--

(A)  such person--

(i)  is violating or has violated any provision of this title, or any rule or regulation issued under this title; or

(ii)  is or was a cause of the violation of any provision of this title, or any rule or regulation thereunder; and

(B)  such penalty is in the public interest.

(2)  MAXIMUM AMOUNT OF PENALTY.--

(A)  FIRST TIER.--The maximum amount of a penalty for each act or omission described in paragraph (1) shall by $7,500 for a natural person or $75,000 for any other person.

(B)  SECOND TIER.--Notwithstanding subparagraph (A), the maximum amount of penalty for each such act or omission shall be $75,000 for a natural person or $375,000 for any other person, if the act or omission described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.

(C)  THIRD TIER.--Notwithstanding subparagraphs (A) and (B), the maximum amount of penalty for each such act or omission shall be $150,000 for a natural person or $725,000 for any other person, if--

(i)  the act or omission described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement; and

(ii)  such act or omission directly or indirectly resulted in--

(I)  substantial losses or created a significant risk of substantial losses to other persons; or

(II)  substantial pecuniary gain to the person who committed the act or omission.

(3)  EVIDENCE CONCERNING ABILITY TO PAY.--In any proceeding in which the Commission may impose a penalty under this section, a respondent may present evidence of the ability of the respondent to pay such penalty. The Commission may, in its discretion, consider such evidence in determining whether such penalty is in the public interest. Such evidence may relate to the extent of the ability of the respondent to continue in business and the collectability of a penalty, taking into account any claims of the United States or third parties upon the assets of the respondent and the amount of the assets of the respondent.

[Codified to 15 U.S.C. 77h--1]

[Source:  Section 8A of title I of the Act of May 27, 1933 (Pub. L. No. 22), effective May 27, 1933, as added by section 102 of title I of the Act of October 15, 1990 (Pub. L. No. 101--429; 104 Stat. 933), effective October 15, 1990; as amended by section 1105(b) of title XI of the Act of July 30, 2002 (Pub. L. No. 107--204; 116 Stat. 809), effective July 30, 2002; section 929P(a)(1) of title IX of the Act of July 21, 2010 (Pub. L. 111--203; 124 Stat. 1862), effective July 21, 2010]


COURT REVIEW OF ORDERS

SEC. 9.  (a)  Any person aggrieved by an order of the Commission may obtain a review of such order in the court of appeals of the United States, within any circuit wherein such person resides or has his principal place of business, or in the United States Court of Appeals for the District of Columbia, by filing in such Court, within sixty days after the entry of such order, a written petition praying that the order of the Commission be modified or be set aside in whole or in part. A copy of such petition shall be forthwith transmitted by the clerk of the court to the Commission, and thereupon the Commission shall file in the court the record upon which the order complained of was entered, as provided in section 2112 of title 28, United States Code. No objection to the order of the Commission shall be considered by the court unless such objection shall have been urged before the Commission. The finding of the Commission as to the facts, if supported by evidence, shall be conclusive. If either party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for failure to adduce such evidence in the hearing before the Commission, the court may order such additional evidence to be taken before the Commission and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper. The Commission may modify its findings as to the facts, by reason of the additional evidence so taken, and it shall file such modified or new findings, which, if supported by evidence, shall be conclusive, and its recommendation, if any, for the modification or setting aside of the original order. The jurisdiction of the court shall be exclusive and its judgment and decree, affirming, modifying, or setting aside, in whole or in part, any order of the Commission, shall be final, subject to review by the Supreme Court of the United States upon certiorari or certification as provided in section 1254 of title 28, United States Code.

(b)  The commencement of proceedings under subsection (a) shall not, unless specifically ordered by the court, operate as a stay of the Commission's order.

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

[Source:  Section 9 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 80), effective May 27, 1933, as amended by the Act of June 7, 1934 (Pub. L. No. 298; 48 Stat. 926), effective June 7, 1934; section 32(a) of the Act of June 25, 1948 (Pub. L. No. 773; 62 Stat. 991), effective September 1, 1948; section 127 of the Act of May 24, 1949 (Pub. L. No. 72; 63 Stat. 107), effective September 1, 1948; section 9 of the Act of August 28, 1958 (Pub. L. No. 85--791; 72 Stat. 945), effective August 28, 1958; and section 206 of title II of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1252), effective December 4, 1987]

1 Presidential Proclamation No. 2695, effective July 4, 1946, 11 Fed. Reg. 7517, 60 Stat. 1352, granted independence to the Philippine Islands. Go back to Text

2 So in original. The word "of" probably should be omitted. Go back to Text

1So in original. Two subsections (b) have been enacted. Go back to Text


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Last updated September 16, 2013 regs@fdic.gov