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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amended or rescinded or determined by judicial or other authority to be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, other than the Office of Thrift Supervision, 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.
{{12-29-06 p.9258.10}}
(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
{{12-29-06 p.9258.11}}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]
PUBLIC AVAILABILITY OF
INFORMATION
SEC. 24. (a) For purposes of
section 552 of title 5, United
States Code, 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 title or otherwise.
(b) 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, United
States Code, 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)) and other information in
its possession to such persons, both domestic and foreign, as the
Commission by rule deems approprite 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 (e), 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, United States Code, this subsection shall be
considered a statute described in subsection (b)(3)(B) of such section
552.
{{12-29-06 p.9258.12}}
(e) SAVINGS PROVISIONS.--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 21(h) of this Act, 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]
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.
{{2-26-99 p.9258.13}}
(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.
{{2-26-99 p.9258.14}}
[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. 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. 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.
[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]
{{6-29-01 p.9258.15}}
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) 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; but no
person permitted to maintain a suit for damages under the provisions of
this title shall recover, through satisfaction of judgment in one or
more actions, a total amount in excess of his actual damages 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 thereunder. 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 any put, call, straddle, option, privilege, or other
security subject to this title, or apply to any activity which is
incidental or related to the offer, purchase, sale, exercise,
settlement, or closeout of any such security. No provision of State law
regarding the offer, sale, or distribution of securities shall apply to
any transaction in a security futures product, except that this
sentence shall not be construed as limiting any State antifraud law of
general applicability.
(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
{{6-29-01 p.9258.16}}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 wih 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--
{{6-29-01 p.9258.17}}
(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
{{6-29-01 p.9258.18}}
(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]
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 an exchange required
thereby 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
{{2-26-99 p.9258.19}}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]
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