Each depositor insured to at least $250,000 per insured bank

Home > Regulation & Examinations > Laws & Regulations > FDIC Law, Regulations, Related Acts



[Table of Contents] [Previous Page] [Next Page] [Search]

8000 - Miscellaneous Statutes and Regulations


HEARINGS BY COMMISSION

SEC. 22.  Hearings may be public and may be held before the Commission, any member or members thereof, or any officer or officers of the Commission designated by it, and appropriate records thereof shall be kept.

[Codified to 15 U.S.C. 78v]

[Source:  Section 22 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 901), effective July 1, 1934]

RULES, REGULATIONS, AND ORDERS; ANNUAL REPORTS

SEC. 23.  (a)(1)  The Commission, the Board of Governors of the Federal Reserve System, and the other agencies enumerated in section 3(a)(34) of this title shall each have power to make such rules and regulations as may be necessary or appropriate to implement the provisions of this title for which they are responsible or for the execution of the functions vested in them by this title, and may for such purposes classify persons, securities, transactions, statements, applications, reports, and other matters within their respective jurisdictions, and prescribe greater, lesser, or different requirements for different classes thereof. No provision of this title imposing any liability shall apply to any act done or omitted in good faith in conformity with a rule, regulation, or order of the Commission, the Board of Governors of the Federal Reserve System, other agency enumerated in section organization, notwithstanding that such rule, regulation, or order may thereafter be amended or rescinded or determined by judicial or other authority to be invalid for any reason.

(2)  The Commission and the Secretary of the Treasury, in making rules and regulations pursuant to any provisions of this title, shall consider among other matters the impact any such rule or regulation would have on competition. The Commission and the Secretary of the Treasury shall not adopt any such rule or regulation which would impose a burden on competition not necessary or appropriate in furtherance of the purposes of this title. The Commission and the Secretary of the Treasury shall include in the statement of basis and purpose incorporated in any rule or regulation adopted under this title, the reasons for the Commission's or the Secretary's determination that any burden on competition imposed by such rule or regulation is necessary or appropriate in furtherance of the purposes of this title.

(3)  The Commission and the Secretary, in making rules and regulations pursuant to any provision of this title, considering any application for registration in accordance with section 19(a) of this title, or reviewing any proposed rule change of a self-regulatory organization in accordance with section 19(b) of this copying all written statements filed with the Commission and the Secretary and all written communications between the Commission or the Secretary and any person relating to the proposed rule, regulation, application, or proposed rule change; Provided, however, That the Commission and the Secretary shall not be required to keep in a public file or make available for copying any such statement or communication which it may withhold from the public in accordance with the provisions of section 552 of title 5, United States Code.

(b)(1)  The Commission, the Board of Governors of the Federal Reserve System, and the other agencies enumerated in section 3(a)(34) of this title shall each make an annual report to the Congress on its work for the preceding year, and shall include in each such report whatever information, data, and recommendations for further legislation it considers advisable with regard to matters within its respective jurisdiction under this title.

(2)  The appropriate regulatory agency for a self-regulatory organization shall include in its annual report to the Congress for each fiscal year, a summary of its oversight activities under this title with respect to such self-regulatory organization, including a description of any examination conducted as part of such activities of any such organization, any material recommendation presented as part of such activities to such organization for changes in its organization or rules, and any action by such organization in response to any such recommendation.

(3)  The appropriate regulatory agency for any class of municipal securities dealers shall include in its annual report to the Congress for each fiscal year a summary of its regulatory activities pursuant to this title with respect to such municipal securities dealers, including the nature of and reason for any sanction imposed pursuant to this title against any such municipal securities dealer.

(4)  The Commission shall also include in its annual report to the Congress for each fiscal year--

(A)  a summary of the Commission's oversight activities with respect to self-regulatory organizations for which it is not the appropriate regulatory agency, including a description of any examination of any such organization, any material recommendation presented to any such organization for changes in its organization or rules, and any action by any such organization in response to any such recommendations;

(B)  a statement and analysis of the expenses and operations of each self-regulatory organization in connection with the performance of its responsibilities under this title, for which purpose data pertaining to such expenses and operations shall be made available by such organization to the Commission at its request;

(C)  the steps the Commission has taken and the progress it has made toward ending the physical movement of the securities certificate in connection with the settlement of securities transactions, and its recommendations, if any, for legislation to eliminate the securities certificate; provisions of this title received, the number granted, and the basis upon which any such exemption was granted;

(D)  the number of requests for exemptions from provisions of this chapter received, the number granted, and the basis upon which any such exemption was granted;

(E)  a summary of the Commission's regulatory activities with respect to municipal securities dealers for which it is not the appropriate regulatory agency, including the nature of, and reason for, any sanction imposed in proceedings against such municipal securities dealers;

(F)  a statement of the time elapsed between the filing of reports pursuant to section 13(f) of this title and the public availability of the information contained therein, the costs involved in the Commission's processing of such reports and tabulating such information, the manner in which the Commission uses such information, and the steps the Commission has taken and the progress it has made toward requiring such reports to be filed and such information to be made available to the public in machine language;

(G)  information concerning (i) the effects its rules and regulations are having on the viability of small brokers and dealers; (ii) its attempts to reduce any unnecessary reporting burden on such brokers and dealers; and (iii) its efforts to help to assure the continued participation of small brokers and dealers in the United States securities markets;

(H)  a statement detailing its administration of the Freedom of Information Act, section 552 of title 5, United States Code, including a copy of the report filed pursuant to subsection (d) of such section; and

(I)  the steps that have been taken and the progress that has been made in promoting the timely public dissemination and availability for analytical purposes (on a fair, reasonable, and nondiscriminatory basis) of information concerning government securities transactions and quotations, and its recommendations, if any, for legislation to assure timely dissemination of (i) information on transactions in regularly traded government securities sufficient to permit the determination of the prevailing market price for such securities, and (ii) reports of the highest published bids and lowest published offers for government securities (including the size at which persons are willing to trade with respect to such bids and offers).

(c)  The Commission, by rule, shall prescribe the procedure applicable to every case pursuant to this title of adjudication (as defined in section 551 of title 5, United States Code) not required to be determined on the record after notice and opportunity for hearing. Such rules shall, as a minimum, provide that prompt notice shall be given of any adverse action or final disposition and that such notice and the entry of any order shall be accompanied by a statement of written reasons.

(d)  CEASE-AND-DESIST PROCEDURES.--Within 1 year after the date of enactment of this subsection, the Commission shall establish regulations providing for the expeditious conduct of hearings and rendering of decisions under section 21C of this title, section 8A of the Securities Act of 1933, section 9(f) of the Investment Company Act of 1940, and section 203(k) of the Investment Advisers Act of 1940.

[Codified to 15 U.S.C. 78w]

[Source:  Section 23 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 901), effective July 1, 1934, as amended by section 203(a) of the Act of August 23, 1935 (Pub. L. No. 305; 49 Stat. 704), effective August 23, 1935; section 8 of the Act of May 27, 1936 (Pub. L. No. 621; 49 Stat. 1379), effective May 27, 1936; section 10 of the Act of August 20, 1964 (Pub. L. No. 88--467; 78 Stat. 580), effective August 20, 1964; and section 18 of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 156), effective June 4, 1975; section 102(j) of title I of the Act of October 28, 1986 (Pub. L. No. 99--571; 100 Stat. 3220), effective July 25, 1987; sections 324 and 325 of title III of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1259), effective December 4, 1987; and section 204 of title II of the Act of October 15, 1990 (Pub. L. No. 101--429; 104 Stat. 940), effective October 15, 1990; section 107 of title I of the Act of December 17, 1993 (Pub. L. No. 103--202; 107 Stat. 2351), effective December 17, 1993; section 401(a)(3) of title IV of the Act of October 13, 2006 (Pub. L. No. 109--351; 120 Stat. 1973), effective October 13, 2006; section 376(4) of title III of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1569), effective July 21, 2010]

PUBLIC AVAILABILITY OF INFORMATION

SEC. 24.  (a)  "RECORDS" RECORDS.--For purposes of section 552 of title 5 the term "records" includes all applications, statements, reports, contracts, correspondence, notices, and other documents filed with or otherwise obtained by the Commission pursuant to this chapter or otherwise.

(b)  DISCLOSURE OR PERSONAL USE.--It shall be unlawful for any member, officer, or employee of the Commission to disclose to any person other than a member, officer, or employee of the Commission, or to use for personal benefit, any information contained in any application, statement, report, contract, correspondence, notice, or other document filed with or otherwise obtained by the Commission--

(1)  in contravention of the rules and regulations of the Commission under section 552 of title 5, or

(2)  in circumstances where the Commission has determined pursuant to such rules to accord confidential treatment to such information.

(c)  CONFIDENTIAL DISCLOSURES.--The Commission may, in its discretion and upon a showing that such information is needed, provide all "records" (as defined in subsection (a) of this section) and other information in its possession to such persons, both domestic and foreign, as the Commission by rule deems appropriate if the person receiving such records or information provides such assurances of confidentiality as the Commission deems appropriate.

(d)  RECORDS OBTAINED FROM FOREIGN SECURITIES AUTHORITIES.--Except as provided in subsection (g) of this section, the Commission shall not be compelled to disclose records obtained from a foreign securities authority if--

(1)  the foreign securities authority has in good faith determined and represented to the Commission that public disclosure of such records would violate the laws applicable to that foreign securities authority, and

(2)  the Commission obtains such records pursuant to--

(A)  such procedure as the Commission may authorize for use in connection with the administration or enforcement of the securities laws, or

(B)  a memorandum of understanding. For purposes of section 552 of title 5, this subsection shall be considered a statute described in subsection (b)(3)(B) of such section 552.

(e)  FREEDOM OF INFORMATION ACT.--For purposes of section 552(b)(8) of title 5, United States Code, (commonly referred to as the Freedom of Information Act)--

(1)  the Commission is an agency responsible for the regulation or supervision of financial institutions; and

(2)  any entity for which the Commission is responsible for regulating, supervising, or examining under this title is a financial institution.

(f)  Sharing privileged information with other authorities.--

(1)  PRIVILEGED INFORMATION PROVIDED BY THE COMMISSION.--The Commission shall not be deemed to have waived any privilege applicable to any information by transferring that information to or permitting that information to be used by--

(A)  any agency (as defined in section 6 of title 18);

(B)  the Public Company Accounting Oversight Board;

(C)  any self-regulatory organization;

(D)  any foreign securities authority;

(E)  any foreign law enforcement authority; or

(F)  any State securities or law enforcement authority.

(2)  NONDISCLOSURE OF PRIVILEGED INFORMATION PROVIDED TO THE COMMISSION.--The Commission shall not be compelled to disclose privileged information obtained from any foreign securities authority, or foreign law enforcement authority, if the authority has in good faith determined and represented to the Commission that the information is privileged.

(3)  NONWAIVER OF PRIVILEGED INFORMATION PROVIDED TO THE COMMISSION.--

(A)  IN GENERAL.--Federal agencies, State securities and law enforcement authorities, self-regulatory organizations, and the Public Company Accounting Oversight Board shall not be deemed to have waived any privilege applicable to any information by transferring that information to or permitting that information to be used by the Commission.

(B)  EXCEPTION.--The provisions of subparagraph (A) shall not apply to a self-regulatory organization or the Public Company Accounting Oversight Board with respect to information used by the Commission in an action against such organization.

(4)  DEFINITIONS.--For purposes of this subsection--

(A)  the term "privilege'' includes any work-product privilege, attorney-client privilege, governmental privilege, or other privilege recognized under Federal, State, or foreign law;

(B)  the term "foreign law enforcement authority'' means any foreign authority that is empowered under foreign law to detect, investigate or prosecute potential violations of law; and

(C)  the term "State securities or law enforcement authority'' means the authority of any State or territory that is empowered under State or territory law to detect, investigate, or prosecute potential violations of law.

(g)  SAVINGS PROVISION.--Nothing in this section shall--

(1)  alter the Commission's responsibilities under the Right to Financial Privacy Act (12 U.S.C. 3401 et seq.), as limited by section 78u(h) of this title, with respect to transfers of records covered by such statutes, or

(2)  authorize the Commission to withhold information from the Congress or prevent the Commission from complying with an order of a court of the United States in an action commenced by the United States or the Commission.

[Codified to 15 U.S.C. 78x]

[Source:  Section 24 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 901), effective July 1, 1934, as amended by section 203(a) of the Act of August 23, 1935 (Pub. L. No. 305; 49 Stat. 704), effective August 23, 1935; section 19 of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 158), effective June 4, 1975; section 202(a) of title II of the Act of November 15, 1990 (Pub. L. No. 101--550; 104 Stat. 2715), effective November 15, 1990; sections 929I(a), and 929K of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1857 and 1860), effective July 21, 2010; section 1(a) of the Act of October 5, 2010 (Pub. L. No. 111--257; 124 Stat. 2646), effective October 5, 2010]

COURT REVIEW OF ORDERS AND RULES

SEC. 25.  (a)(1)  A person aggrieved by a final order of the Commission entered pursuant to this title may obtain review of the order in the United States Court of Appeals for the circuit in which he resides or has his principal place of business, or for the District of Columbia Circuit, by filing in such court, within sixty days after the entry of the order, a written petition requesting that the order be modified or set aside in whole or in part.

(2)  A copy of the petition shall be transmitted forthwith by the clerk of the court to a member of the Commission or an officer designated by the Commission for that purpose. Thereupon the Commission shall file in the court the record on which the order complained of is entered, as provided in section 2112 of title 28, United States Code, and the Federal Rules of Appellate Procedure.

(3)  On the filing of the petition, the court has jurisdiction, which becomes exclusive on the filing of the record, to affirm or modify and enforce or to set aside the order in whole or in part.

(4)  The findings of the Commission as to the facts, if supported by substantial evidence, are conclusive.

(5)  If either party applies to the court for leave to adduce additional evidence and shows to the satisfaction of the court that the additional evidence is material and that there was reasonable ground for failure to adduce it before the Commission, the court may remand the case to the Commission for further proceedings, in whatever manner and on whatever conditions the court considers appropriate. If the case is remanded to the Commission, it shall file in the court a supplemental record containing any new evidence, any further or modified findings, and any new order.

(b)(1)  A person adversely affected by a rule of the Commission promulgated pursuant to section 6, 9(h)(2), 11, 11A, 15(c)(5) or (6), 15A, 17, 17A, or 19 of this title may obtain review of this rule in the United States Court of Appeals for the circuit in which he resides or has his principal place of business or for the District of Columbia Circuit, by filing in such court, within sixty days after the promulgation of the rule, a written petition requesting that the rule be set aside.

(2)  A copy of the petition shall be transmitted forthwith by the clerk of the court to a member of the Commission or an officer designated for that purpose. Thereupon, the Commission shall file in the court the rule under review and any documents referred to therein, the Commission's notice of proposed rulemaking and any documents referred to therein, all written submissions and the transcript of any oral presentations in the rulemaking, factual information not included in the foregoing that was considered by the Commission in the promulgation of the rule or proffered by the Commission as pertinent to the rule, the report of any advisory committee received or considered by the Commission in the rulemaking, and any other materials prescribed by the court.

(3)  On the filing of the petition, the court has jurisdiction, which becomes exclusive on the filing of the materials set forth in paragraph (2) of this subsection, to affirm and enforce or to set aside the rule.

(4)  The findings of the Commission as to the facts identified by the Commission as the basis, in whole or in part, of the rule, if supported by substantial evidence, are conclusive. The court shall affirm and enforce the rule unless the Commission's action in promulgating the rule is found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; contrary to constitutional right, power, privilege, or immunity; in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; or without observance of procedure required by law.

(5)  If proceedings have been instituted under this subsection in two or more courts of appeals with respect to the same rule, the Commission shall file the materials set forth in paragraph (2) of this subsection in that court in which a proceeding was first instituted. The other courts shall thereupon transfer all such proceedings to the court in which the materials have been filed. For the convenience of the parties in the interest of justice that court may thereafter transfer all the proceedings to any other court of appeals.

(c)(1)  No objection to an order or rule of the Commission, for which review is sought under this section, may be considered by the court unless it was urged before the Commission or there was reasonable ground for failure to do so.

(2)  The filing of a petition under this section does not operate as a stay of the Commission's order or rule. Until the court's jurisdiction becomes exclusive, the Commission may stay its order or rule pending judicial review if it finds that justice so requires. After the filing of a petition under this section, the court, on whatever conditions may be required and to the extent necessary to prevent irreparable injury, may issue all necessary and appropriate process to stay the order or rule or to preserve status or rights pending its review; but (notwithstanding section 705 of title 5, United States Code) no such process may be issued by the court before the filing of the record or the materials set forth in subsection (b)(2) of this section unless: (A) the Commission has denied a stay or failed to grant requested relief, (B) a reasonable period has expired since the filing of an application for a stay without a decision by the Commission, or (C) there was reasonable ground for failure to apply to the Commission.

(3)  When the same order or rule is the subject of one or more petitions for review filed under this section and an action for enforcement filed in a district court of the United States under section 21(d) or (e) of this title, that court in which the petition or the action is first filed has jurisdiction with respect to the order or rule to the exclusion of any other court, and thereupon all such proceedings shall be transferred to that court; but, for the convenience of the parties in the interest of justice, that court may thereafter transfer all the proceedings to any other court of appeals or district court of the United States, whether or not a petition for review or an action for enforcement was originally filed in the transferee court. The scope of review by a district court under section 21(d) or (e) of this title is in all cases the same as by a court of appeals under this section.

(d)(1)  For purposes of the preceding subsections of this section, the term "Commission" includes the agencies enumerated in section 3(a)(34) of this title insofar as such agencies are acting pursuant to this title and the Secretary of the Treasury insofar as he is acting pursuant to section 15C of this title.

(2)  For purposes of subsection (a)(4) of this section and section 706 of title 5, United States Code, an order of the Commission pursuant to section 19(a) of this title denying registration to a clearing agency for which the Commission is not the appropriate regulatory agency or pursuant to section 19(b) of this title disapproving a proposed rule change by such a clearing agency shall be deemed to be an order of the appropriate regulatory agency for such clearing agency insofar as such order was entered by reason of a determination by such appropriate regulatory agency pursuant to section 19(a)(2)(C) or 19(b)(4)(C) of this title that such registration or proposed rule change would be inconsistent with the safeguarding of securities or funds.

[Codified to 15 U.S.C. 78y]

[Source:  Section 25 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 901), effective July 1, 1934, 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 May 24, 1949; section 10 of the Act of August 28, 1958 (Pub. L. No. 85--791; 72 Stat. 945), effective August 28, 1958; and section 20 of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 158), effective June 4, 1975; section 102(k) of title I of the Act of October 28, 1986 (Pub. L. No. 99--571; 100 Stat. 3220), effective July 25, 1987; and section 6(b) of the Act of October 16, 1990 (Pub. L. No. 101--432; 104 Stat. 975), effective October 16, 1990]

UNLAWFUL REPRESENTATIONS

SEC. 26.  No action or failure to act by the Commission or the Board of Governors of the Federal Reserve System, in the administration of this title shall be construed to mean that the particular authority has in any way passed upon the merits of, or given approval to, any security or any transaction or transactions therein, nor shall such action or failure to act with regard to any statement or report filed with or examined by such authority pursuant to this title or rules and regulations thereunder, be deemed a finding by such authority that such statement or report is true and accurate on its face or that it is not false or misleading. It shall be unlawful to make, or cause to be made, to any prospective purchaser or seller of a security any representation that any such action or failure to act by any such authority is to be so construed or has such effect.

[Codified to 15 U.S.C. 78z]

[Source:  Section 26 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 902), effective July 1, 1934, as amended by section 203(a) of the Act of August 23, 1935 (Pub. L. No. 305; 49 Stat. 704), effective August 23, 1935; section 301(b)(5) of title III of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3236), effective November 3, 1998]

JURISDICTION OF OFFENSES AND SUITS

SEC. 27.  (a)  IN GENERAL.--The District courts of the United States, and the United States courts of any Territory or other place subject to the jurisdiction of the United States shall have exclusive jurisdiction of violations of this title or the rules and regulations thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by this title or the rules and regulations thereunder. Any criminal proceeding may be brought in the district wherein any act or transaction constituting the violation occurred. Any suit or action to enforce any liability or duty created by this title or rules and regulations thereunder, or to enjoin any violation of such title or rules and regulations, may be brought in any such district or in the district wherein the defendant is found or is an inhabitant or transacts business, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found. In any action or proceeding instituted by the Commission under this title in a United States district court for any judicial district, a subpoena issued to compel the attendance of a witness or the production of documents or tangible things (or both) at a hearing or trial may be served at any place within the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not apply to a subpoena issued under the preceding sentence. Judgments and decrees so rendered shall be subject to review as costs shall be assessed for or against the Commission in any proceeding under this title brought by or against it in the Supreme Court or such other courts.

(b)  EXTRATERRITORIAL JURISDICTION.--The district courts of the United States and the United States courts of any Territory shall have jurisdiction of an action or proceeding brought or instituted by the Commission or the United States alleging a violation of the antifraud provisions of this title involving--

(1)  conduct within the United States that constitutes significant steps in furtherance of the violation, even if the securities transaction occurs outside the United States and involves only foreign investors; or

(2)  conduct occurring outside the United States that has a foreseeable substantial effect within the United States.

[Codified to 15 U.S.C. 78aa]

[Source:  Section 27 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 902), effective July 1, 1934, as amended by the Act of June 25, 1936 (Pub. L. No. 796; 49 Stat. 1921), effective June 25, 1936; section 32(b) 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 May 24, 1949; section 326 of title III of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1259), effective December 4, 1987; section 929E(b) and 929P(b)(2) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1853), effective July 21, 2010]

SPECIAL PROVISION RELATING TO STATUTE OF LIMITATIONS ON PRIVATE CAUSES OF ACTION

SEC. 27A.  (a)  EFFECT ON PENDING CAUSES OF ACTION.--The limitation period for any private civil action implied under section 10(b) of this Act that was commenced on or before June 19, 1991, shall be the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991.

(b)  EFFECT ON DISMISSED CAUSES OF ACTION.--Any private civil action implied under section 10(b) of this Act that was commenced on or before June 19, 1991--

(1)  which was dismissed as time barred subsequent to June 19, 1991, and

(2)  which would have been timely filed under the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991,

shall be reinstated on motion by the plaintiff not later than 60 days after the date of enactment of this section.

[Codified to 12 U.S.C. 78aa--1]

[Source:  Section 27A of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 904), effective October 1, 1934, as added by section 476 of title IV of the Act of December 19, 1991 (Pub. L. No. 102--242; 105 Stat. 2387), effective December 19, 1991]

EFFECT ON EXISTING LAW

SEC. 28.  (a)  LIMITATION ON JUDGMENTS.--

(1)  IN GENERAL.--No person permitted to maintain a suit for damages under the provisions of this title shall recover, through satisfaction of judgment in 1 or more actions, a total amount in excess of the actual damages to that person on account of the act complained of. Except as otherwise specifically provided in this title, nothing in this title shall affect the jurisdiction of the securities commission (or any agency or officer performing like functions) of any State over any security or any person insofar as it does not conflict with the provisions of this title or the rules and regulations under this title.

(2)  RULE OF CONSTRUCTION.--Except as provided in subsection (f), the rights and remedies provided by this title shall be in addition to any and all other rights and remedies that may exist at law or in equity.

(3)  STATE BUCKET SHOP LAWS.--No State law which prohibits or regulates the making or promoting of wagering or gaming contracts, or the operation of 'bucket shops' or other similar or related activities, shall invalidate--

(A)  any put, call, straddle, option, privilege, or other security subject to this title (except any security that has a pari-mutuel payout or otherwise is determined by the Commission, acting by rule, regulation, or order, to be appropriately subject to such laws), or apply to any activity which is incidental or related to the offer, purchase, sale, exercise, settlement, or closeout of any such security;

(B)  any security-based swap between eligible contract participants; or

(C)  any security-based swap effected on a national securities exchange registered pursuant to section 6(b).

(4)  OTHER STATE PROVISIONS.--No provision of State law regarding the offer, sale, or distribution of securities shall apply to any transaction in a security-based swap or a security futures product, except that this paragraph may not be construed as limiting any State antifraud law of general applicability. A security-based swap may not be regulated as an insurance contract under any provision of State law.

(b)  Nothing in this title shall be construed to modify existing law with regard to the binding effect (1) on any member of or participant in any self-regulatory organization of any action taken by the authorities of such organization to settle disputes between its members or participants, (2) on any municipal securities dealer or municipal securities broker of any action taken pursuant to a procedure established by the Municipal Securities Rulemaking Board to settle disputes between municipal securities dealers and municipal securities brokers, or (3) of any action described in paragraph (1) or (2) on any person who has agreed to be bound thereby.

(c)  The stay, setting aside, or modification pursuant to section 19(e) of this title of any disciplinary member thereof, person associated with a member, or participant therein, shall not affect the validity or force of any action taken as a result of such sanction by the self-regulatory organization prior to such stay, setting aside, or modification: Provided, That such action is not inconsistent with the provisions of this title or the rules or regulations thereunder. The rights of any person acting in good faith which arise out of any such action shall not be affected in any way by such stay, setting aside, or modification.

(d)  No State or political subdivision thereof shall impose any tax on any change in beneficial or record ownership of securities effected through the facilities of a registered clearing agency or registered transfer agent or any nominee thereof or custodian therefor or upon the delivery or transfer of securities to or through or receipt from such agency or agent or any nominee thereof or custodian therefor, unless such transfer or delivery or receipt would otherwise be taxable by such State or political subdivision if the facilities of such registered clearing agency, registered transfer agent, or any nominee thereof or custodian therefor were not physically located in the taxing State or political subdivision. No State or political subdivision thereof shall impose any tax on securities which are deposited in or retained by a registered clearing agency, registered transfer agent, or any nominee thereof or custodian therefor, unless such securities would otherwise be taxable by such State or political subdivision if the facilities of such registered clearing agency, registered transfer agent, or any nominee thereof or custodian therefor were not physically located in the taxing State or political subdivision.

(e)(1)  No person using the mails, or any means or instrumentality of interstate commerce, in the exercise of investment discretion with respect to an account shall be deemed to have acted unlawfully or to have breached a fiduciary duty under State or Federal law unless expressly provided to the contrary by a law enacted by the Congress or any State subsequent to the 1975 solely by reason of his having caused the account to pay a member of an exchange, broker, or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission another member of an exchange, broker, or dealer would have charged for effecting that transaction, if such person determined in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such member, broker, or dealer, viewed in terms of either that particular transaction or his overall responsibilities with respect to the accounts as to which he exercises investment discretion. This subsection is exclusive and plenary insofar as conduct is covered by the foregoing, unless otherwise expressly provided by contract: Provided, however, That nothing in this subsection shall be construed to impair or limit the power of the Commission under any other provision of this title or otherwise.

(2)  A person exercising investment discretion with respect to an account shall make such disclosure of his policies and practices with respect to commissions that will be paid for effecting securities transactions, at such times and in such manner, as the appropriate regulatory agency, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.

(3)  For purposes of this subsection a person provides brokerage and research services insofar as he--

(A)  furnishes advice, either directly or through publications or writings, as to the value of securities, the advisability of investing in, purchasing, or selling securities, and the availability of securities or purchasers or sellers of securities;

(B)  furnishes analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and the performance of accounts; or

(C)  effects securities transactions and performs functions incidental thereto (such as clearance, settlement, and custody) or required in connection therewith by rules of the Commission or a self-regulatory organization of which such person is a member or person associated with a member or in which such person is a participant.

(4)  The provisions of this subsection shall not apply with regard to securities that are security futures products.

(f)  LIMITATIONS ON REMEDIES--

(1)  CLASS ACTION LIMITATIONS--No covered class action based upon the statutory or common law of any State or subdivision thereof may be maintained in any State or Federal court by any private party alleging--

(A)  a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security; or

(B)  that the defendant used or employed any manipulative or deceptive device or contrivance in connection with the purchase or sale of a covered security.

(2)  REMOVAL OF COVERED CLASS ACTIONS--Any covered class action brought in any State court involving a covered security, as set forth in paragraph (1), shall be removable to the Federal district court for the district in which the action is pending, and shall be subject to paragraph (1).

(3)  PRESERVATION OF CERTAIN ACTIONS--

(A)  ACTIONS UNDER STATE LAW OF STATE OF INCORPORATION--

(i)  ACTIONS PRESERVED--Notwithstanding paragraph (1) or (2), a covered class action described in clause (ii) of this subparagraph that is based upon the statutory or common law of the State in which the issuer is incorporated (in the case of corporation) or organized (in the case of any other entity) may be maintained in a State or Federal court by a private party.

(ii)  PERMISSIBLE ACTIONS--A covered class action is described in this clause if it involves--

(I)  the purchase or sale of securities by the issuer or an affiliate of the issuer exclusively from or to holders of equity securities of the issuer; or

(II)  any recommendation, position, or other communication with respect to the sale of securities of an issuer that--

(aa)  is made by or on behalf of the issuer or an affiliate of the issuer to holders of equity securities of the issuer; and

(bb)  concerns decisions of such equity holders with respect to voting their securities, acting in response to a tender or exchange offer, or exercising dissenters' or appraisal rights.

(B)  STATE ACTIONS--

(i)  IN GENERAL--Notwithstanding any other provision of this subsection, nothing in this subsection may be construed to preclude a State or political subdivision thereof or a State pension plan from bringing an action involving a covered security on its own behalf, or as a member of a class comprised solely of other States, political subdivisions, or State pension plans that are named plaintiffs, and that have authorized participation, in such action.

(ii)  STATE PENSION PLAN DEFINED--For purposes of this subparagraph the term "State pension plan" means a pension plan established and maintained for its employees by the government of a State or political subdivision thereof, or by any agency or instrumentality thereof.

(C)  ACTIONS UNDER CONTRACTUAL AGREEMENTS BETWEEN ISSUERS AND INDENTURE TRUSTEES--Notwithstanding paragraph (1) or (2), a covered class action that seeks to enforce a contractual agreement between an issuer and an indenture trustee may be maintained in a State or Federal court by a party to the agreement or a successor to such party.

(D)  REMAND OF REMOVED ACTIONS--In an action that has been removed from a State court pursuant to paragraph (2), if the Federal court determines that the action may be maintained in State court pursuant to this subsection, the Federal court shall remand such action to such State court.

(4)  PRESERVATION OF STATE JURISDICTION--The securities commission (or any agency or office performing like functions) of any State shall retain jurisdiction under the laws of such State to investigate and bring enforcement actions.

(5)  DEFINITIONS--For purposes of this subsection, the following definitions shall apply:

(A)  AFFILIATE OF THE ISSUER--The term "affiliate of the issuer" means a person that directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with, the issuer.

(B)  COVERED CLASS ACTION--The term "covered class action" means--(i) any single lawsuit in which--

(I)  damages are sought on behalf of more than 50 persons or prospective class members, and questions of law or fact common to those persons or members of the prospective class, without reference to issues of individualized reliance on an alleged misstatement or omission, predominate over any questions affecting only individual persons or members; or

(II)  one or more named parties seek to recover damages on a representative basis on behalf of themselves and other unnamed parties similarly situated, and questions of law or fact common to those persons or members of the prospective class predominate over any questions affecting only individual persons or members; or

(ii)  any group of lawsuits filed in or pending in the same court and involving common questions of law or fact, in which--

(I)  damages are sought on behalf of more than 50 persons; and

(II)  the lawsuits are joined, consolidated, or otherwise proceed as a single action for any purpose.

(C)  EXCEPTION FOR DERIVATIVE ACTIONS--Notwithstanding subparagraph (B), the term "covered class action" does not include an exclusively derivative action brought by one or more shareholders on behalf of a corporation.

(D)  COUNTING OF CERTAIN CLASS MEMBERS--For purposes of this paragraph, a corporation, investment company, pension plan, partnership, or other entity, shall be treated as one person or prospective class member, but only if the entity is not established for the purpose of participating in the action.

(E)  COVERED SECURITY--The term "covered security" means a security that satisfies the standards for a covered security specified in paragraph (1) or (2) of section 18(b) of the Securities Act of 1933, at the time during which it is alleged that the misrepresentation, omission, or manipulative or deceptive conduct occurred, except that such term shall not include any debt security that is exempt from registration under the Securities Act of 1933 pursuant to rules issued by the Commission under section 4(2) of that Act.

(F)  RULE OF CONSTRUCTION--Nothing in this paragraph shall be construed to affect the discretion of a State court in determining whether actions filed in such court should be joined, consolidated, or otherwise allowed to proceed as a single action.

[Codified to 15 U.S.C. 78bb]

[Source:  Section 28 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 903), effective July 1, 1934, as amended by section 21 of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 160), effective June 4, 1975; section 4 of the Act of October 13, 1982 (Pub. L. No. 97--303; 96 Stat. 1409), effective October 13, 1982; sections 327, 328 and 329 of title III of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1259), effective December 4, 1987; section 103(b) of title I of the Act of October 11, 1997 (Pub. L. No. 104--290; 110 Stat. 3422), effective October 11, 1996; section 101(b) of title I of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3230), effective November 3, 1998; sections 203(a)(2), and 210 of title II of the Act of December 21, 2000 (Pub. L. No. 106--554; 114 Stat. 2763A--422 and 436), effective December 21, 2000; section 767 of title VII of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1799), effective July 21, 2010]

VALIDITY OF CONTRACTS

SEC. 29.  (a)  Any condition, stipulation, or provision binding any person to waive compliance with any provision of this title or of any rule or regulation thereunder, or of any rule of a self-regulatory organization shall be void.

(b)  Every contract made in violation of any provision of this title or of any rule or regulation thereunder, and every contract (including any contract for listing a security on an exchange) heretofore or hereafter made, the performance of which involves the violation of, or the continuance of any relationship or practice in violation of, any provision of this title or any rule or regulation thereunder, shall be void (1) as regards the rights of any person who, in violation of any such provision, rule, or regulation, shall have made or engaged in the performance of any such contract, and (2) as regards the rights of any person who, not being a party to such contract, shall have acquired any right thereunder with actual knowledge of the facts by reason of which the making or performance of such contract was in violation of any such provision, rule, or regulation: Provided, (A) That no contract shall be void by reason of this subsection because of any violation of any rule or regulation prescribed pursuant to paragraph (3) of subsection (c) of section 15 of this title, and (B) that no contract shall be deemed to be void by reason of this subsection in any action maintained in reliance upon this subsection, by any person to or for whom any broker or dealer sells, or from or for whom any broker or dealer purchases, a security in violation of any rule or regulation prescribed pursuant to paragraph (1) or (2) of subsection (c) of section 15 of this title, unless such action is brought within one year after the discovery that such sale or purchase involves such violation and within three years after such violation. The Commission may, in a rule or regulation prescribed pursuant to such paragraph (2) of such section 15(c), designate such rule or regulation, or portion thereof, as a rule or regulation, or portion thereof, a contract in violation of which shall not be void by reason of this subsection.

(c)  Nothing in this title shall be construed (1) to affect the validity of any loan or extension of credit (or any extension or renewal thereof) made or of any lien created prior or subsequent to the enactment of this title, unless at the time of the making of such loan or extension of credit (or extension or renewal thereof) or the creating of such lien, the person making such loan or extension of credit (or extension or renewal thereof) or acquiring such lien shall have actual knowledge of facts by reason of which the making of such loan or extension of credit (or extension or renewal thereof) or the acquisition of such lien is a violation of the provisions of this title or any rule or regulation thereunder, or (2) to afford a defense to the collection of any debt or obligation or the enforcement of any lien by any person who shall have acquired such debt, obligation, or lien in good faith for value and without actual knowledge of the violation of any provision of this title or any rule or regulation thereunder affecting the legality of such debt, obligation, or lien.

[Codified to 15 U.S.C. 78cc]

[Source:  Section 29 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 903), effective July 1, 1934, as amended by section 3 of the Act of June 25, 1938 (Pub. L. No. 719; 52 Stat. 1076), effective June 25, 1938; section 507 of title V of the Act of October 15, 1990 (Pub. L. No. 101--429; 104 Stat. 956), effective October 15, 1990; sections 927 and 929T of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1852 amd 1867), effective July 21, 2010]


[Table of Contents] [Previous Page] [Next Page] [Search]

Last updated September 16, 2013 regs@fdic.gov