关键词：Securities

21 SECURITIES ACT OF 1933 Sec. 10
1 See also section 24(e) of the Investment Company Act of 1940, infra.
which, if supported by evidence, shall be conclusive, and its recommendation,
if any, for the modification or setting aside of the
original order. The jurisdiction of the court shall be exclusive and
its judgment and decree, affirming, modifying, or setting aside, in
whole or in part, any order of the Commission, shall be final, subject
to review by the Supreme Court of the United States upon
certiorari or certification as provided in section 1254 of title 28,
United States Code.
(b) The commencement of proceedings under subsection (a)
shall not, unless specifically ordered by the court, operate as a stay
of the Commission’s order.
INFORMATION REQUIRED IN PROSPECTUS
SEC. 10. ø77j¿ (a) Except to the extent otherwise permitted or
required pursuant to this subsection or subsections (c), (d), or (e)—
(1) a prospectus relating to a security other than a security
issued by a foreign government or political subdivision thereof,
shall contain the information contained in the registration
statement, but it need not include the documents referred to
in paragraphs (28) to (32), inclusive, of schedule A;
(2) a prospectus relating to a security issued by a foreign
government or political subdivision thereof shall contain the
information contained in the registration statement, but it
need not include the documents referred to in paragraphs (13)
and (14) of schedule B;
(3) notwithstanding the provisions of paragraphs (1) and
(2) of this subsection (a) when a prospectus is used more than
nine months after the effective date of the registration statement,
the information contained therein shall be as of a date
not more than sixteen months prior to such use, so far as such
information is known to the user of such prospectus or can be
furnished by such user without unreasonable effort or expense;
1
(4) there may be omitted from any prospectus any of the
information required under this subsection (a) which the Commission
may by rules or regulations designate as not being
necessary or appropriate in the public interest or for the protection
of investors.
(b) In addition to the prospectus permitted or required in subsection
(a), the Commission shall by rules or regulations deemed
necessary or appropriate in the public interest or for the protection
of investors permit the use of a prospectus for the purposes of subsection
(b)(1) of section 5 which omits in part or summarizes information
in the prospectus specified in subsection (a). A prospectus
permitted under this subsection shall, except to the extent the
Commission by rules or regulations deemed necessary or appropriate
in the public interest or for the protection of investors otherwise
provides, be filed as part of the registration statement but
shall not be deemed a part of such registration statement for the
purposes of section 11. The Commission may at any time issue an
order preventing or suspending the use of a prospectus permitted
under this subsection (b), if it has reason to believe that such pro

Sec. 11 SECURITIES ACT OF 1933 22
1 See also section 24(e) of the Investment Company Act of 1940, infra.
spectus has not been filed (if required to be filed as part of the registration
statement) or includes any untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which such prospectus is or is to be
used, not misleading. Upon issuance of an order under this
subsection, the Commission shall give notice of the issuance of such
order and opportunity for hearing by personal service or the sending
of confirmed telegraphic notice. The Commission shall vacate or
modify the order at any time for good cause or if such prospectus
has been filed or amended in accordance with such order.
(c) Any prospectus shall contain such other information as the
Commission may by rules or regulations require as being necessary
or appropriate in the public interest or for the protection of investors.
(d) In the exercise of its powers under subsections (a), (b), or
(c), the Commission shall have authority to classify prospectuses
according to the nature and circumstances of their use or the nature
of the security, issue, issuer, or otherwise, and, by rules and
regulations and subject to such terms and conditions as it shall
specify therein, to prescribe as to each class the form and contents
which it may find appropriate and consistent with the public interest
and the protection of investors.
(e) The statements or information required to be included in a
prospectus by or under authority of subsections (a), (b), (c), or (d),
when written, shall be placed in a conspicuous part of the prospectus
and, except as otherwise permitted by rules or regulations,
in type as large as that used generally in the body of the prospectus.
(f) In any case where a prospectus consists of a radio or television
broadcast, copies thereof shall be filed with the Commission
under such rules and regulations as it shall prescribe. The Commission
may by rules and regulations require the filing with it of
forms and prospectuses used in connection with the offer or sale of
securities registered under this title.
CIVIL LIABILITIES ON ACCOUNT OF FALSE REGISTRATION STATEMENT
SEC. 11. ø77k¿ (a) In case any part of the registration statement,
when such part became effective,1 contained an untrue statement
of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein
not misleading, any person acquiring such security (unless it is
proved that at the time of such acquisition he knew of such untruth
or omission) may, either at law or in equity, in any court of
competent jurisdiction, sue—
(1) every person who signed the registration statement;
(2) every person who was a director of (or person performing
similar functions) or partner in, the issuer at the time
of the filing of the part of the registration statement with respect
to which his liability is asserted;

23 SECURITIES ACT OF 1933 Sec. 11
(3) every person who, with his consent, is named in the
registration statement as being or about to become a director,
person performing similar functions or partner;
(4) every accountant, engineer, or appraiser, or any person
whose profession gives authority to a statement made by him,
who has with his consent been named as having prepared or
certified any part of the registration statement, or as having
prepared or certified any report or valuation which is used in
connection with the registration statement, with respect to the
statement in such registration statement, report, or valuation,
which purports to have been prepared or certified by him;
(5) every underwriter with respect to such security.
If such person acquired the security after the issuer has made generally
available to its security holders an earning statement covering
a period of at least twelve months beginning after the effective
date of the registration statement, then the right of recovery
under this subsection shall be conditioned on proof that such person
acquired the security relying upon such untrue statement in
the registration statement or relying upon the registration statement
and not knowing of such omission, but such reliance may be
established without proof of the reading of the registration statement
by such person.
(b) Notwithstanding the provisions of subsection (a) no person,
other than the issuer, shall be liable as provided therein who shall
sustain the burden of proof—
(1) that before the effective date of the part of the registration
statement with respect to which his liability is asserted
(A) he had resigned from or had taken such steps as are permitted
by law to resign from, or ceased or refused to act in,
every office, capacity, or relationship in which he was described
in the registration statement as acting or agreeing to act, and
(B) he had advised the Commission and the issuer in writing
that he had taken such action and that he would not be
responsible for such part of the registration statement; or
(2) that if such part of the registration statement became
effective without his knowledge, upon becoming aware of such
fact he forthwith acted and advised the Commission, in accordance
with paragraph (1), and, in addition, gave reasonable public
notice that such part of the registration statement had become
effective without his knowledge; or
(3) that (A) as regards any part of the registration statement
not purporting to be made on the authority of an expert,
and not purporting to be a copy of or extract from a report or
valuation of an expert, and not purporting to be made on the
authority of a public official document or statement, he had,
after reasonable investigation, reasonable ground to believe
and did believe, at the time such part of the registration statement
became effective, that the statements therein were true
and that there was no omission to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading; and (B) as regards any part of
the registration statement purporting to be made upon his authority
as an expert or purporting to be a copy of or extract
from a report or valuation of himself as an expert, (i) he had,

Sec. 11 SECURITIES ACT OF 1933 24
after reasonable investigation, reasonable ground to believe
and did believe, at the time such part of the registration statement
became effective, that the statements therein were true
and that there was no omission to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading, or (ii) such part of the registration
statement did not fairly represent his statement as an expert
or was not a fair copy of or extract from his report or valuation
as an expert; and (C) as regards any part of the registration
statement purporting to be made on the authority of an
expert (other than himself) or purporting to be a copy of or extract
from a report or valuation of an expert (other than himself),
he had no reasonable ground to believe and did not believe,
at the time such part of the registration statement became
effective, that the statements therein were untrue or that
there was an omission to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that such part of the registration statement did
not fairly represent the statement of the expert or was not a
fair copy of or extract from the report or valuation of the expert;
and (D) as regards any part of the registration statement
purporting to be a statement made by an official person or purporting
to be a copy of or extract from a public official document,
he had no reasonable ground to believe and did not believe,
at the time such part of the registration statement became
effective, that the statements therein were untrue, or
that there was an ommission to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading, or that such part of the registration
statement did not fairly represent the statement made by the
official person or was not a fair copy of or extract from the public
official document.
(c) In determining, for the purpose of paragraph (3) of subsection
(b) of this section, what constitutes reasonable investigation
and reasonable ground for belief, the standard of reasonableness
shall be that required of a prudent man in the management of his
own property.
(d) If any person becomes an underwriter with respect to the
security after the part of the registration statement with respect to
which his liability is asserted has become effective, then for the
purposes of paragraph (3) of subsection (b) of this section such part
of the registration statement shall be considered as having become
effective with respect to such person as of the time when he became
an underwriter.
(e) The suit authorized under subsection (a) may be to recover
such damages as shall represent the difference between the
amount paid for the security (not exceeding the price at which the
security was offered to the public) and (1) the value thereof as of
the time such suit was brought, or (2) the price at which such security
shall have been disposed of in the market before suit, or (3)
the price at which such security shall have been disposed of after
suit but before judgment if such damages shall be less than the
damages representing the difference between the amount paid for
the security (not exceeding the price at which the security was of

25 SECURITIES ACT OF 1933 Sec. 12
fered to the public) and the value thereof as of the time such suit
was brought: Provided, That if the defendant proves that any portion
or all of such damages represents other than the depreciation
in value of such security resulting from such part of the registration
statement, with respect to which his liability is asserted, not
being true or omitting to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
such portion of or all such damages shall not be recoverable.
In no event shall any underwriter (unless such underwriter
shall have knowingly received from the issuer for acting as an
underwriter some benefit, directly or indirectly, in which all other
underwriters similarly situated did not share in proportion to their
respective interests in the underwriting) be liable in any suit or as
a consequence of suits authorized under subsection (a) for damages
in excess of the total price at which the securities underwritten by
him and distributed to the public were offered to the public. In any
suit under this or any other section of this title the court may, in
its discretion, require an undertaking for the payment of the costs
of such suit, including reasonable attorney’s fees, and if judgment
shall be rendered against a party litigant, upon the motion of the
other party litigant, such costs may be assessed in favor of such
party litigant (whether or not such undertaking has been required)
if the court believes the suit or the defense to have been without
merit, in an amount sufficient to reimburse him for the reasonable
expenses incurred by him, in connection with such suit, such costs
to be taxed in the manner usually provided for taxing of costs in
the court in which the suit was heard.
(f)(1) Except as provided in paragraph (2), all or any one or
more of the persons specified in subsection (a) shall be jointly and
severally liable, and every person who becomes liable to make any
payment under this section may recover contribution as in cases of
contract from any person who, if sued separately, would have been
liable to make the same payment, unless the person who has become
liable was, and the other was not, guilty of fraudulent misrepresentation.
(2)(A) The liability of an outside director under subsection (e)
shall be determined in accordance with section 21D(f) of the Securities
Exchange Act of 1934.
(B) For purposes of this paragraph, the term ‘‘outside director’’
shall have the meaning given such term by rule or regulation of
the Commission.
(g) In no case shall the amount recoverable under this section
exceed the price at which the security was offered to the public.
CIVIL LIABILITIES ARISING IN CONNECTION WITH PROSPECTUSES AND
COMMUNICATIONS
SEC. 12. ø77l¿ (a) IN GENERAL.—Any person who—
(1) offers or sells a security in violation of section 5, or
(2) offers or sells a security (whether or not exempted by
the provisions of section 3, other than paragraphs (2) and (14)
of subsection (a) thereof), by the use of any means or instruments
of transportation or communication in interstate commerce
or of the mails, by means of a prospectus or oral communication,
which includes an untrue statement of a material fact

Sec. 13 SECURITIES ACT OF 1933 26
1 See also section 24(e) of the Investment Company Act of 1940, infra.
or omits to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they
were made, not misleading (the purchaser not knowing of such
untruth or omission), and who shall not sustain the burden of
proof that he did not know, and in the exercise of reasonable
care could not have known, of such untruth or omission,
shall be liable, subject to subsection (b), to the person purchasing
such security from him, who may sue either at law or in equity in
any court of competent jurisdiction, to recover the consideration
paid for such security with interest thereon, less the amount of any
income received thereon, upon the tender of such security, or for
damages if he no longer owns the security.
(b) LOSS CAUSATION.—In an action described in subsection
(a)(2), if the person who offered or sold such security proves that
any portion or all of the amount recoverable under subsection (a)(2)
represents other than the depreciation in value of the subject security
resulting from such part of the prospectus or oral communication,
with respect to which the liability of that person is asserted,
not being true or omitting to state a material fact required to be
stated therein or necessary to make the statement not misleading,
then such portion or amount, as the case may be, shall not be
recoverable.
LIMITATION OF ACTIONS
SEC. 13. ø77m¿ No action shall be maintained to enforce any
liability created under section 11 or section 12(a)(2) unless brought
within one year after the discovery of the untrue statement or the
omission, or after such discovery should have been made by the
exercise of reasonable diligence, or, if the action is to enforce a liability
created under section 12(a)(1), unless brought within one
year after the violation upon which it is based. In no event shall
any such action be brought to enforce a liability created under section
11 or section 12(a)(1) more than three years after the security
was bona fide offered to the public, or under section 12(a)(2) more
than three years after the sale. 1
CONTRARY STIPULATIONS VOID
SEC. 14. ø77n¿ Any condition, stipulation, or provision binding
any person acquiring any security to waive compliance with any
provision of this title or of the rules and regulations of the Commission
shall be void.
LIABILITY OF CONTROLLING PERSONS
SEC. 15. ø77o¿ Every person who, by or through stock ownership,
agency, or otherwise, or who, pursuant to or in connection
with an agreement or understanding with one or more other persons
by or through stock ownership, agency, or otherwise, controls
any person liable under section 11 or 12, shall also be liable jointly
and severally with and to the same extent as such controlled person
to any person to whom such controlled person is liable, unless
the controlling person had no knowledge of or reasonable ground

27 SECURITIES ACT OF 1933 Sec. 16
2 Section 16 of the Securities Act of 1933 was amended to add limitations on remedies by section
101 of the Securities Litigation Uniform Standards Act of 1998. Section 2 of that Act contained
the following findings:
SEC. 2. FINDINGS.
The Congress finds that—
(1) the Private Securities Litigation Reform Act of 1995 sought to prevent abuses in private
securities fraud lawsuits;
(2) since enactment of that legislation, considerable evidence has been presented to Congress
that a number of securities class action lawsuits have shifted from Federal to State
courts;
(3) this shift has prevented that Act from fully achieving its objectives;
(4) State securities regulation is of continuing importance, together with Federal regulation
of securities, to protect investors and promote strong financial markets; and
(5) in order to prevent certain State private securities class action lawsuits alleging fraud
from being used to frustrate the objectives of the Private Securities Litigation Reform Act
of 1995, it is appropriate to enact national standards for securities class action lawsuits involving
nationally traded securities, while preserving the appropriate enforcement powers
of State securities regulators and not changing the current treatment of individual lawsuits.
Section 101(c) of that Act contained the following effective date provision for the amendment
to section 16 of the Securities Act of 1933 and section 28(f) of the Securities Exchange Act of
1934:
(c) APPLICABILITY.—The amendments made by this section shall not affect or apply to any action
commenced before and pending on the date of enactment of this Act.
In addition, section 102 of the Securities Litigation Uniform Standards Act contained the following
provision with respect to reciprocal subpoena enforcement:
SEC. 102. PROMOTION OF RECIPROCAL SUBPOENA ENFORCEMENT.
(a) COMMISSION ACTION.—The Securities and Exchange Commission, in consultation with
State securities commissions (or any agencies or offices performing like functions), shall seek
to encourage the adoption of State laws providing for reciprocal enforcement by State securities
commissions of subpoenas issued by another State securities commission seeking to compel persons
to attend, testify in, or produce documents or records in connection with an action or investigation
by a State securities commission of an alleged violation of State securities laws.
(b) REPORT.—Not later than 24 months after the date of enactment of this Act, the Securities
and Exchange Commission (hereafter in this section referred to as the ‘‘Commission’’) shall
submit a report to the Congress—
(1) identifying the States that have adopted laws described in subsection (a);
(2) describing the actions undertaken by the Commission and State securities commissions
to promote the adoption of such laws; and
(3) identifying any further actions that the Commission recommends for such purposes.
to believe in the existence of the facts by reason of which the liability
of the controlled person is alleged to exist.
SEC. 16. ø77p¿ ADDITIONAL REMEDIES; LIMITATION ON REMEDIES.2
(a) REMEDIES ADDITIONAL.—Except as provided in subsection
(b), the rights and remedies provided by this title shall be in addition
to any and all other rights and remedies that may exist at law
or in equity.
(b) 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—
(1) an untrue statement or omission of a material fact in
connection with the purchase or sale of a covered security; or
(2) that the defendant used or employed any manipulative
or deceptive device or contrivance in connection with the purchase
or sale of a covered security.
(c) REMOVAL OF COVERED CLASS ACTIONS.—Any covered class
action brought in any State court involving a covered security, as
set forth in subsection (b), shall be removable to the Federal district
court for the district in which the action is pending, and shall
be subject to subsection (b).
(d) PRESERVATION OF CERTAIN ACTIONS.—

Sec. 16 SECURITIES ACT OF 1933 28
(1) ACTIONS UNDER STATE LAW OF STATE OF INCORPORATION.—
(A) ACTIONS PRESERVED.—Notwithstanding subsection
(b) or (c), a covered class action described in subparagraph
(B) of this paragraph that is based upon the statutory or
common law of the State in which the issuer is incorporated
(in the case of a corporation) or organized (in the
case of any other entity) may be maintained in a State or
Federal court by a private party.
(B) PERMISSIBLE ACTIONS.—A covered class action is
described in this subparagraph 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 the
issuer that—
(I) is made by or on behalf of the issuer or an
affiliate of the issuer to holders of equity securities
of the issuer; and
(II) concerns decisions of those equity holders
with respect to voting their securities, acting in
response to a tender or exchange offer, or exercising
dissenters’ or appraisal rights.
(2) STATE ACTIONS.—
(A) IN GENERAL.—Notwithstanding any other provision
of this section, nothing in this section 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.
(B) STATE PENSION PLAN DEFINED.—For purposes of
this paragraph, the term ‘‘State pension plan’’ means a
pension plan established and maintained for its employees
by the government of the State or political subdivision
thereof, or by any agency or instrumentality thereof.
(3) ACTIONS UNDER CONTRACTUAL AGREEMENTS BETWEEN
ISSUERS AND INDENTURE TRUSTEES.—Notwithstanding subsection
(b) or (c), 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.
(4) REMAND OF REMOVED ACTIONS.—In an action that has
been removed from a State court pursuant to subsection (c), 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.
(e) 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.

29 SECURITIES ACT OF 1933 Sec. 16
(f) DEFINITIONS.—For purposes of this section, the following
definitions shall apply:
(1) 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.
(2) COVERED CLASS ACTION.—
(A) IN GENERAL.—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.
(B) EXCEPTION FOR DERIVATIVE ACTIONS.—Notwithstanding
subparagraph (A), the term ‘‘covered class action’’
does not include an exclusively derivative action brought
by one or more shareholders on behalf of a corporation.
(C) 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.
(D) 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.
(3) 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) 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

Sec. 17 SECURITIES ACT OF 1933 30
exempt from registration under this title pursuant to rules
issued by the Commission under section 4(2).
FRAUDULENT INTERSTATE TRANSACTIONS
SEC. 17. ø77q¿ (a) It shall be unlawful for any person in the
offer or sale of any securities or any security-based swap agreement
(as defined in section 206B of the Gramm-Leach-Bliley Act) by the
use of any means or instruments of transportation or communication
in interstate commerce or by use of the mails, directly or
indirectly—
(1) to employ any device, scheme, or artifice to defraud, or
(2) to obtain money or property by means of any untrue
statement of a material fact or any omission to state a material
fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading;
or
(3) to engage in any transaction, practice, or course of business
which operates or would operate as a fraud or deceit upon
the purchaser.
(b) It shall be unlawful for any person, by the use of any
means or instruments of transportation or communication in interstate
commerce or by the use of the mails, to publish, give publicity
to, or circulate any notice, circular, advertisement, newspaper, article,
letter, investment service, or communication which, though not
purporting to offer a security for sale, describes such security for
a consideration received or to be received, directly or indirectly,
from an issuer, underwriter, or dealer, without fully disclosing the
receipt, whether past or prospective, of such consideration and the
amount thereof.
(c) The exemptions provided in section 3 shall not apply to the
provisions of this section.
(d) The authority of the Commission under this section with respect
to security-based swap agreements (as defined in section
206B of the Gramm-Leach-Bliley Act) shall be subject to the
restrictions and limitations of section 2A(b) of this title.
SEC. 18. ø77r¿ EXEMPTION FROM STATE REGULATION OF SECURITIES
OFFERINGS.
(a) SCOPE OF EXEMPTION.—Except as otherwise provided in
this section, no law, rule, regulation, or order, or other administrative
action of any State or any political subdivision thereof—
(1) requiring, or with respect to, registration or qualification
of securities, or registration or qualification of securities
transactions, shall directly or indirectly apply to a security
that—
(A) is a covered security; or
(B) will be a covered security upon completion of the
transaction;
(2) shall directly or indirectly prohibit, limit, or impose any
conditions upon the use of—
(A) with respect to a covered security described in subsection
(b), any offering document that is prepared by or
on behalf of the issuer; or

31 SECURITIES ACT OF 1933 Sec. 18
(B) any proxy statement, report to shareholders, or
other disclosure document relating to a covered security or
the issuer thereof that is required to be and is filed with
the Commission or any national securities organization
registered under section 15A of the Securities Exchange
Act of 1934, except that this subparagraph does not apply
to the laws, rules, regulations, or orders, or other administrative
actions of the State of incorporation of the issuer;
or
(3) shall directly or indirectly prohibit, limit, or impose
conditions, based on the merits of such offering or issuer, upon
the offer or sale of any security described in paragraph (1).
(b) COVERED SECURITIES.—For purposes of this section, the following
are covered securities:
(1) EXCLUSIVE FEDERAL REGISTRATION OF NATIONALLY
TRADED SECURITIES.—A security is a covered security if such
security is—
(A) listed, or authorized for listing, on the New York
Stock Exchange or the American Stock Exchange, or listed,
or authorized for listing, on the National Market System
of the Nasdaq Stock Market (or any successor to such
entities);
(B) listed, or authorized for listing, on a national securities
exchange (or tier or segment thereof) that has listing
standards that the Commission determines by rule (on its
own initiative or on the basis of a petition) are substantially
similar to the listing standards applicable to securities
described in subparagraph (A); or
(C) is a security of the same issuer that is equal in seniority
or that is a senior security to a security described
in subparagraph (A) or (B).
(2) EXCLUSIVE FEDERAL REGISTRATION OF INVESTMENT
COMPANIES.—A security is a covered security if such security is
a security issued by an investment company that is registered,
or that has filed a registration statement, under the Investment
Company Act of 1940.
(3) SALES TO QUALIFIED PURCHASERS.—A security is a covered
security with respect to the offer or sale of the security
to qualified purchasers, as defined by the Commission by rule.
In prescribing such rule, the Commission may define the term
‘‘qualified purchaser’’ differently with respect to different categories
of securities, consistent with the public interest and the
protection of investors.
(4) EXEMPTION IN CONNECTION WITH CERTAIN EXEMPT OFFERINGS.—
A security is a covered security with respect to a
transaction that is exempt from registration under this title
pursuant to—
(A) paragraph (1) or (3) of section 4, and the issuer of
such security files reports with the Commission pursuant
to section 13 or 15(d) of the Securities Exchange Act of
1934;
(B) section 4(4);
(C) section 3(a), other than the offer or sale of a security
that is exempt from such registration pursuant to

Sec. 18 SECURITIES ACT OF 1933 32
paragraph (4), (10), or (11) of such section, except that a
municipal security that is exempt from such registration
pursuant to paragraph (2) of such section is not a covered
security with respect to the offer or sale of such security
in the State in which the issuer of such security is located;
or
(D) Commission rules or regulations issued under section
4(2), except that this subparagraph does not prohibit
a State from imposing notice filing requirements that are
substantially similar to those required by rule or regulation
under section 4(2) that are in effect on September 1,
1996.
(c) PRESERVATION OF AUTHORITY.—
(1) FRAUD AUTHORITY.—Consistent with this section, the
securities commission (or any agency or office performing like
functions) of any State shall retain jurisdiction under the laws
of such State to investigate and bring enforcement actions with
respect to fraud or deceit, or unlawful conduct by a broker or
dealer, in connection with securities or securities transactions.
(2) PRESERVATION OF FILING REQUIREMENTS.—
(A) NOTICE FILINGS PERMITTED.—Nothing in this
section prohibits the securities commission (or any agency
or office performing like functions) of any State from requiring
the filing of any document filed with the Commission
pursuant to this title, together with annual or periodic
reports of the value of securities sold or offered to be sold
to persons located in the State (if such sales data is not
included in documents filed with the Commission), solely
for notice purposes and the assessment of any fee, together
with a consent to service of process and any required fee.
(B) PRESERVATION OF FEES.—
(i) IN GENERAL.—Until otherwise provided by law,
rule, regulation, or order, or other administrative action
of any State, or any political subdivision thereof,
adopted after the date of enactment of the National
Securities Markets Improvement Act of 1996, filing or
registration fees with respect to securities or securities
transactions shall continue to be collected in amounts
determined pursuant to State law as in effect on the
day before such date.
(ii) SCHEDULE.—The fees required by this subparagraph
shall be paid, and all necessary supporting
data on sales or offers for sales required under subparagraph
(A), shall be reported on the same
schedule as would have been applicable had the issuer
not relied on the exemption provided in subsection (a).
(C) AVAILABILITY OF PREEMPTION CONTINGENT ON PAYMENT
OF FEES.—
(i) IN GENERAL.—During the period beginning on
the date of enactment of the National Securities
Markets Improvement Act of 1996 and ending 3 years
after that date of enactment, the securities commission
(or any agency or office performing like functions)
of any State may require the registration of securities

33 SECURITIES ACT OF 1933 Sec. 19
issued by any issuer who refuses to pay the fees required
by subparagraph (B).
(ii) DELAYS.—For purposes of this subparagraph,
delays in payment of fees or underpayments of fees
that are promptly remedied shall not constitute a refusal
to pay fees.
(D) FEES NOT PERMITTED ON LISTED SECURITIES.—Notwithstanding
subparagraphs (A), (B), and (C), no filing or
fee may be required with respect to any security that is a
covered security pursuant to subsection (b)(1), or will be
such a covered security upon completion of the transaction,
or is a security of the same issuer that is equal in seniority
or that is a senior security to a security that is a covered
security pursuant to subsection (b)(1).
(3) ENFORCEMENT OF REQUIREMENTS.—Nothing in this section
shall prohibit the securities commission (or any agency or
office performing like functions) of any State from suspending
the offer or sale of securities within such State as a result of
the failure to submit any filing or fee required under law and
permitted under this section.
(d) DEFINITIONS.—For purposes of this section, the following
definitions shall apply:
(1) OFFERING DOCUMENT.—The term ‘‘offering document’’—
(A) has the meaning given the term ‘‘prospectus’’ in
section 2(a)(10), but without regard to the provisions of
subparagraphs (a) and (b) of that section; and
(B) includes a communication that is not deemed to
offer a security pursuant to a rule of the Commission.
(2) PREPARED BY OR ON BEHALF OF THE ISSUER.—Not later
than 6 months after the date of enactment of the National
Securities Markets Improvement Act of 1996, the Commission
shall, by rule, define the term ‘‘prepared by or on behalf of the
issuer’’ for purposes of this section.
(3) STATE.—The term ‘‘State’’ has the same meaning as in
section 3 of the Securities Exchange Act of 1934.
(4) SENIOR SECURITY.—The term ‘‘senior security’’ means
any bond, debenture, note, or similar obligation or instrument
constituting a security and evidencing indebtedness, and any
stock of a class having priority over any other class as to distribution
of assets or payment of dividends.
SPECIAL POWERS OF COMMISSION
SEC. 19. ø77s¿ (a) The Commission shall have authority from
time to time to make, amend, and rescind such rules and regulations
as may be necessary to carry out the provisions of this title,
including rules and regulations governing registration statements
and prospectuses for various classes of securities and issuers, and
defining accounting, technical and trade terms used in this title.
Among other things, the Commission shall have authority, for the
purposes of this title, to prescribe the form or forms in which required
information shall be set forth, the items or details to be
shown in the balance sheet and earning statement, and the methods
to be followed in the preparation of accounts, in the appraisal
or valuation of assets and liabilities, in the determination of depre

Sec. 19 SECURITIES ACT OF 1933 34
ciation and depletion, in the differentiation of recurring and nonrecurring
income, in the differentiation of investment and operating
income, and in the preparation, where the Commission deems
it necessary or desirable, of consolidated balance sheets or income
accounts of any person directly or indirectly controlling or controlled
by the issuer, or any person under direct or indirect common
control with the issuer. The rules and regulations of the Commission
shall be effective upon publication in the manner which the
Commission shall prescribe. No provision of this title imposing any
liability shall apply to any act done or omitted in good faith in conformity
with any rule or regulation of the Commission, notwithstanding
that such rule or regulation may, after such act or omission,
be amended or rescinded or be determined by judicial or other
authority to be invalid for any reason.
(b) RECOGNITION OF ACCOUNTING STANDARDS.—
(1) IN GENERAL.—In carrying out its authority under subsection
(a) and under section 13(b) of the Securities Exchange
Act of 1934, the Commission may recognize, as ‘‘generally
accepted’’ for purposes of the securities laws, any accounting
principles established by a standard setting body—
(A) that—
(i) is organized as a private entity;
(ii) has, for administrative and operational purposes,
a board of trustees (or equivalent body) serving
in the public interest, the majority of whom are not,
concurrent with their service on such board, and have
not been during the 2-year period preceding such service,
associated persons of any registered public accounting
firm;
(iii) is funded as provided in section 109 of the
Sarbanes-Oxley Act of 2002;
(iv) has adopted procedures to ensure prompt consideration,
by majority vote of its members, of changes
to accounting principles necessary to reflect emerging
accounting issues and changing business practices;
and
(v) considers, in adopting accounting principles,
the need to keep standards current in order to reflect
changes in the business environment, the extent to
which international convergence on high quality accounting
standards is necessary or appropriate in the
public interest and for the protection of investors; and
(B) that the Commission determines has the capacity
to assist the Commission in fulfilling the requirements of
subsection (a) and section 13(b) of the Securities Exchange
Act of 1934, because, at a minimum, the standard setting
body is capable of improving the accuracy and effectiveness
of financial reporting and the protection of investors
under the securities laws.
(2) ANNUAL REPORT.—A standard setting body described in
paragraph (1) shall submit an annual report to the Commission
and the public, containing audited financial statements of
that standard setting body.

35 SECURITIES ACT OF 1933 Sec. 19
(c) For the purpose of all investigations which, in the opinion
of the Commission, are necessary and proper for the enforcement
of this title, any member of the Commission or any officer or officers
designated by it are empowered to administer oaths and affirmations,
subpena witnesses, take evidence, and require the production
of any books, papers, or other documents which the Commission
deems relevant or material to the inquiry. Such attendance of
witnesses and the production of such documentary evidence may be
required from any place in the United States or any Territory at
any designated place of hearing.
(d)(1) The Commission is authorized to cooperate with any
association composed of duly constituted representatives of State
governments whose primary assignment is the regulation of the
securities business within those States, and which, in the judgment
of the Commission, could assist in effectuating greater uniformity
in Federal-State securities matters. The Commission shall, at its
discretion, cooperate, coordinate, and share information with such
an association for the purposes of carrying out the policies and
projects set forth in paragraphs (2) and (3).
(2) It is the declared policy of this subsection that there should
be greater Federal and State cooperation in securities matters,
including—
(A) maximum effectiveness of regulation,
(B) maximum uniformity in Federal and State regulatory
standards,
(C) minimum interference with the business of capital formation,
and
(D) a substantial reduction in costs and paperwork to diminish
the burdens of raising investment capital (particularly
by small business) and to diminish the costs of the administration
of the Government programs involved.
(3) The purpose of this subsection is to engender cooperation
between the Commission, any such association of State securities
officials, and other duly constituted securities associations in the
following areas:
(A) the sharing of information regarding the registration or
exemption of securities issues applied for in the various States;
(B) the development and maintenance of uniform securities
forms and procedures; and
(C) the development of a uniform exemption from registration
for small issuers which can be agreed upon among several
States or between the States and the Federal Government. The
Commission shall have the authority to adopt such an exemption
as agreed upon for Federal purposes. Nothing in this Act
shall be construed as authorizing preemption of State law.
(4) In order to carry out these policies and purposes, the Commission
shall conduct an annual conference as well as such other
meetings as are deemed necessary, to which representatives from
such securities associations, securities self-regulatory organizations,
agencies, and private organizations involved in capital formation
shall be invited to participate.
(5) For fiscal year 1982, and for each of the three succeeding
fiscal years, there are authorized to be appropriated such amounts
as may be necessary and appropriate to carry out the policies, pro

Sec. 20 SECURITIES ACT OF 1933 36
1 So in law. Should read ‘‘paragraph (1) or (3)’’.
visions, and purposes of this subsection. Any sums so appropriated
shall remain available until expended.
(6) Notwithstanding any other provision of law, neither the
Commission nor any other person shall be required to establish any
procedures not specifically required by the securities laws, as that
term is defined in section 3(a)(47) of the Securities Exchange Act
of 1934, or by chapter 5 of title 5, United States Code, in connection
with cooperation, coordination, or consultation with—
(A) any association referred to in paragraph (1) of (3) 1 or
any conference or meeting referred to in paragraph (4), while
such association, conference, or meeting is carrying out activities
in furtherance of the provisions of this subsection; or
(B) any forum, agency or organization, or group referred to
in section 503 of the Small Business Investment Incentive Act
of 1980, while such forum, agency, organization, or group is
carrying out activities in furtherance of the provisions of such
section 503.
As used in this paragraph, the terms ‘‘association’’, ‘‘conference’’,
‘‘meeting’’, ‘‘forum’’, ‘‘agency’’, ‘‘organization’’, and ‘‘group’’ include
any committee, subgroup, or representative of such entities.
INJUNCTIONS AND PROSECUTION OF OFFENSES
SEC. 20. ø77t¿ (a) Whenever it shall appear to the Commission,
either upon complaint or otherwise, that the provisions of this title,
or of any rule or regulation prescribed under authority thereof,
have been or are about to be violated, it may, in its discretion,
either require or permit such person to file with it a statement in
writing, under oath, or otherwise, as to all the facts and circumstances
concerning the subject matter which it believes to be
in the public interest to investigate, and may investigate such
facts.
(b) Whenever it shall appear to the Commission that any person
is engaged or about to engage in any acts or practices which
constitute or will constitute a violation of the provisions of this
title, or of any rule or regulation prescribed under authority
thereof, the Commission may, in its discretion, bring an action in
any district court of the United States, or United States court of
any Territory, to enjoin such acts or practices, and upon a proper
showing, a permanent or temporary injunction or restraining order
shall be granted without bond. The Commission may transmit such
evidence as may be available concerning such acts or practices to
the Attorney General who may, in his discretion, institute the necessary
criminal proceedings under this title. Any such criminal proceeding
may be brought either in the district wherein the transmittal
of the prospectus or security complained of begins, or in the
district wherein such prospectus or security is received.
(c) Upon application of the Commission, the district courts of
the United States and the United States courts of any Territory
shall have jurisdiction to issue writs of mandamus commanding
any person to comply with the provisions of this title or any order
of the Commission made in pursuance thereof.
(d) MONEY PENALTIES IN CIVIL ACTIONS.—

37 SECURITIES ACT OF 1933 Sec. 20
1 So in law. Probably should be clauses (i) and (ii).
(1) AUTHORITY OF COMMISSION.—Whenever it shall appear
to the Commission that any person has violated any provision
of this title, the rules or regulations thereunder, or a ceaseand-
desist order entered by the Commission pursuant to section
8A of this title, other than by committing a violation subject
to a penalty pursuant to section 21A of the Securities Exchange
Act of 1934, the Commission may bring an action in a
United States district court to seek, and the court shall have
jurisdiction to impose, upon a proper showing, a civil penalty
to be paid by the person who committed such violation.
(2) AMOUNT OF PENALTY.—
(A) FIRST TIER.—The amount of the penalty shall be
determined by the court in light of the facts and circumstances.
For each violation, the amount of the penalty
shall not exceed the greater of (i) $5,000 for a natural person
or $50,000 for any other person, or (ii) the gross
amount of pecuniary gain to such defendant as a result of
the violation.
(B) SECOND TIER.—Notwithstanding subparagraph (A),
the amount of penalty for each such violation shall not exceed
the greater of (i) $50,000 for a natural person or
$250,000 for any other person, or (ii) the gross amount of
pecuniary gain to such defendant as a result of the violation,
if the violation described in paragraph (1) involved
fraud, deceit, manipulation, or deliberate or reckless disregard
of a regulatory requirement.
(C) THIRD TIER.—Notwithstanding subparagraphs (A)
and (B), the amount of penalty for each such violation
shall not exceed the greater of (i) $100,000 for a natural
person or $500,000 for any other person, or (ii) the gross
amount of pecuniary gain to such defendant as a result of
the violation, if—
(I) 1 the violation described in paragraph (1) involved
fraud, deceit, manipulation, or deliberate or
reckless disregard of a regulatory requirement; and
(II) 1 such violation directly or indirectly resulted
in substantial losses or created a significant risk of
substantial losses to other persons.
(3) PROCEDURES FOR COLLECTION.—
(A) PAYMENT OF PENALTY TO TREASURY.—A penalty
imposed under this section shall be payable into the Treasury
of the United States, except as otherwise provided in
section 308 of the Sarbanes-Oxley Act of 2002.
(B) COLLECTION OF PENALTIES.—If a person upon
whom such a penalty is imposed shall fail to pay such penalty
within the time prescribed in the court’s order, the
Commission may refer the matter to the Attorney General
who shall recover such penalty by action in the appropriate
United States district court.
(C) REMEDY NOT EXCLUSIVE.—The actions authorized
by this subsection may be brought in addition to any other

Sec. 20 SECURITIES ACT OF 1933 38
action that the Commission or the Attorney General is
entitled to bring.
(D) JURISDICTION AND VENUE.—For purposes of section
22 of this title, actions under this section shall be actions
to enforce a liability or a duty created by this title.
(4) SPECIAL PROVISIONS RELATING TO A VIOLATION OF A
CEASE-AND-DESIST ORDER.—In an action to enforce a cease-anddesist
order entered by the Commission pursuant to section
8A, each separate violation of such order shall be a separate
offense, except that in the case of a violation through a continuing
failure to comply with such an order, each day of the
failure to comply with the order shall be deemed a separate
offense.
(e) AUTHORITY OF A COURT TO PROHIBIT PERSONS FROM SERVING
AS OFFICERS AND DIRECTORS.—In any proceeding under subsection
(b), the court may prohibit, conditionally or unconditionally,
and permanently or for such period of time as it shall determine,
any person who violated section 17(a)(1) of this title from acting as
an officer or director of any issuer that has a class of securities registered
pursuant to section 12 of the Securities Exchange Act of
1934 or that is required to file reports pursuant to section 15(d) of
such Act if the person’s conduct demonstrates unfitness to serve as
an officer or director of any such issuer.
(f) PROHIBITION OF ATTORNEYS’ FEES PAID FROM COMMISSION
DISGORGEMENT FUNDS.—Except as otherwise ordered by the court
upon motion by the Commission, or, in the case of an administrative
action, as otherwise ordered by the Commission, funds disgorged
as the result of an action brought by the Commission in
Federal court, or as a result of any Commission administrative action,
shall not be distributed as payment for attorneys’ fees or expenses
incurred by private parties seeking distribution of the disgorged
funds.
(g) AUTHORITY OF A COURT TO PROHIBIT PERSONS FROM PARTICIPATING
IN AN OFFERING OF PENNY STOCK.—
(1) IN GENERAL.—In any proceeding under subsection (a)
against any person participating in, or, at the time of the
alleged misconduct, who was participating in, an offering of
penny stock, the court may prohibit that person from participating
in an offering of penny stock, conditionally or unconditionally,
and permanently or for such period of time as the
court shall determine.
(2) DEFINITION.—For purposes of this subsection, the term
‘‘person participating in an offering of penny stock’’ includes
any person engaging in activities with a broker, dealer, or
issuer for purposes of issuing, trading, or inducing or attempting
to induce the purchase or sale of, any penny stock. The
Commission may, by rule or regulation, define such term to include
other activities, and may, by rule, regulation, or order,
exempt any person or class of persons, in whole or in part, conditionally
or unconditionally, from inclusion in such term.

39 SECURITIES ACT OF 1933 Sec. 23
1 Subsection (c) of section 22, which related to the immunity from prosecution of an individual
compelled to testify or produce evidence, after claiming his privilege against self-incrimination,
was repealed by the Organized Crime Control Act of 1970 (Pub. L. 91–542, 84 Stat. 929), which
made applicable in lieu thereof 18 U.S.C. 6001, 6002, 6004. [Printed in appendix to this volume.]
HEARINGS BY COMMISSION
SEC. 21. ø77u¿ All hearings shall be public and may be held
before the Commission or an officer or officers of the Commission
designated by it, and appropriate records thereof shall be kept.
JURISDICTION OF OFFENSES AND SUITS
SEC. 22. ø77v¿ (a) The district courts of the United States and
United States courts of any Territory shall have jurisdiction of offenses
and violations under this title and under the rules and regulations
promulgated by the Commission in respect thereto, and,
concurrent with State and Territorial courts, except as provided in
section 16 with respect to covered class actions, of all suits in equity
and actions at law brought to enforce any liability or duty created
by this title. Any such suit or action may be brought in the
district wherein the defendant is found or is an inhabitant or
transacts business, or in the district where the offer or sale took
place, if the defendant participated therein, 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 provided
in sections 1254, 1291, 1292, and 1294 of title 28, United
States Code. Except as provided in section 16(c), no case arising
under this title and brought in any State court of competent jurisdiction
shall be removed to any court of the United States. No 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) In case of contumacy or refusal to obey a subpena issued
to any person, any of the said United States courts, within the
jurisdiction of which said person guilty of contumacy or refusal to
obey is found or resides, upon application by the Commission may
issue to such person an order requiring such person to appear before
the Commission, or one of its examiners designated by it, there
to produce documentary evidence if so ordered, or there to give evidence
touching the matter in question; and any failure to obey such
order of the court may be punished by said court as a contempt
thereof. 1
UNLAWFUL REPRESENTATIONS
SEC. 23. ø77w¿ Neither the fact that the registration statement
for a security has been filed or is in effect nor the fact that
a stop order is not in effect with respect thereto shall be deemed
a finding by the Commission that registration statement is true
and accurate on its face or that it does not contain an untrue statement
of fact or omit to state a material fact, or be held to mean
that the Commission has in any way passed upon the merits of, or
given approval to, such security. It shall be unlawful to make, or
cause to be made, to any prospective purchaser any representation
contrary to the foregoing provisions of this section

Sec. 24 SECURITIES ACT OF 1933 40
2 See also 18 U.S.C. 3623. [Printed in appendix to this volume.]
PENALTIES
SEC. 24. ø77x¿ Any person who willfully violates any of the
provisions of this title, or the rules and regulations promulgated by
the Commission under authority thereof, or any person who willfully,
in a registration statement filed under this title, makes any
untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, shall upon conviction be fined not
more than $10,000 or imprisoned not more than five years, or
both. 2
JURISDICTION OF OTHER GOVERNMENT AGENCIES OVER SECURITIES
SEC. 25. ø77y¿ Nothing in this title shall relieve any person
from submitting to the respective supervisory units of the Government
of the United States information, reports, or other documents
that are now or may hereafter be required by any provision of law.
SEPARABILITY OF PROVISIONS
SEC. 26. ø77z¿ If any provision of this Act, or the application
of such provision to any person or circumstance, shall be held invalid,
the remainder of this Act, or the application of such provision
to persons or circumstances other than those as to which it is held
invalid, shall not be affected thereby.
SEC. 27. ø77z–1¿ PRIVATE SECURITIES LITIGATION.
(a) PRIVATE CLASS ACTIONS.—
(1) IN GENERAL.—The provisions of this subsection shall
apply to each private action arising under this title that is
brought as a plaintiff class action pursuant to the Federal
Rules of Civil Procedure.
(2) CERTIFICATION FILED WITH COMPLAINT.—
(A) IN GENERAL.—Each plaintiff seeking to serve as a
representative party on behalf of a class shall provide a
sworn certification, which shall be personally signed by
such plaintiff and filed with the complaint, that—
(i) states that the plaintiff has reviewed the complaint
and authorized its filing;
(ii) states that the plaintiff did not purchase the
security that is the subject of the complaint at the
direction of plaintiff’s counsel or in order to participate
in any private action arising under this title;
(iii) states that the plaintiff is willing to serve as
a representative party on behalf of a class, including
providing testimony at deposition and trial, if necessary;
(iv) sets forth all of the transactions of the plaintiff
in the security that is the subject of the complaint
during the class period specified in the complaint;
(v) identifies any other action under this title,
filed during the 3-year period preceding the date on
which the certification is signed by the plaintiff, in

41 SECURITIES ACT OF 1933 Sec. 27
which the plaintiff has sought to serve, or served, as
a representative party on behalf of a class; and
(vi) states that the plaintiff will not accept any
payment for serving as a representative party on behalf
of a class beyond the plaintiff’s pro rata share of
any recovery, except as ordered or approved by the
court in accordance with paragraph (4).
(B) NONWAIVER OF ATTORNEY-CLIENT PRIVILEGE.—The
certification filed pursuant to subparagraph (A) shall not
be construed to be a waiver of the attorney-client privilege.
(3) APPOINTMENT OF LEAD PLAINTIFF.—
(A) EARLY NOTICE TO CLASS MEMBERS.—
(i) IN GENERAL.—Not later than 20 days after the
date on which the complaint is filed, the plaintiff or
plaintiffs shall cause to be published, in a widely circulated
national business-oriented publication or wire
service, a notice advising members of the purported
plaintiff class—
(I) of the pendency of the action, the claims
asserted therein, and the purported class period;
and
(II) that, not later than 60 days after the date
on which the notice is published, any member of
the purported class may move the court to serve
as lead plaintiff of the purported class.
(ii) MULTIPLE ACTIONS.—If more than one action
on behalf of a class asserting substantially the same
claim or claims arising under this title is filed, only
the plaintiff or plaintiffs in the first filed action shall
be required to cause notice to be published in accordance
with clause (i).
(iii) ADDITIONAL NOTICES MAY BE REQUIRED UNDER
FEDERAL RULES.—Notice required under clause (i)
shall be in addition to any notice required pursuant to
the Federal Rules of Civil Procedure.
(B) APPOINTMENT OF LEAD PLAINTIFF.—
(i) IN GENERAL.—Not later than 90 days after the
date on which a notice is published under subparagraph
(A)(i), the court shall consider any motion made
by a purported class member in response to the notice,
including any motion by a class member who is not
individually named as a plaintiff in the complaint or
complaints, and shall appoint as lead plaintiff the
member or members of the purported plaintiff class
that the court determines to be most capable of adequately
representing the interests of class members
(hereafter in this paragraph referred to as the ‘‘most
adequate plaintiff’’) in accordance with this subparagraph.
(ii) CONSOLIDATED ACTIONS.—If more than one action
on behalf of a class asserting substantially the
same claim or claims arising under this title has been
filed, and any party has sought to consolidate those
actions for pretrial purposes or for trial, the court

Sec. 27 SECURITIES ACT OF 1933 42
shall not make the determination required by clause
(i) until after the decision on the motion to consolidate
is rendered. As soon as practicable after such decision
is rendered, the court shall appoint the most adequate
plaintiff as lead plaintiff for the consolidated actions
in accordance with this subparagraph.
(iii) REBUTTABLE PRESUMPTION.—
(I) IN GENERAL.—Subject to subclause (II), for
purposes of clause (i), the court shall adopt a presumption
that the most adequate plaintiff in any
private action arising under this title is the
person or group of persons that—
(aa) has either filed the complaint or
made a motion in response to a notice under
subparagraph (A)(i);
(bb) in the determination of the court, has
the largest financial interest in the relief
sought by the class; and
(cc) otherwise satisfies the requirements
of Rule 23 of the Federal Rules of Civil
Procedure.
(II) REBUTTAL EVIDENCE.—The presumption
described in subclause (I) may be rebutted only
upon proof by a member of the purported plaintiff
class that the presumptively most adequate
plaintiff—
(aa) will not fairly and adequately protect
the interests of the class; or
(bb) is subject to unique defenses that
render such plaintiff incapable of adequately
representing the class.
(iv) DISCOVERY.—For purposes of this subparagraph,
discovery relating to whether a member or
members of the purported plaintiff class is the most
adequate plaintiff may be conducted by a plaintiff only
if the plaintiff first demonstrates a reasonable basis
for a finding that the presumptively most adequate
plaintiff is incapable of adequately representing the
class.
(v) SELECTION OF LEAD COUNSEL.—The most adequate
plaintiff shall, subject to the approval of the
court, select and retain counsel to represent the class.
(vi) RESTRICTIONS ON PROFESSIONAL PLAINTIFFS.—
Except as the court may otherwise permit, consistent
with the purposes of this section, a person may be a
lead plaintiff, or an officer, director, or fiduciary of a
lead plaintiff, in no more than 5 securities class actions
brought as plaintiff class actions pursuant to the
Federal Rules of Civil Procedure during any 3-year
period.
(4) RECOVERY BY PLAINTIFFS.—The share of any final judgment
or of any settlement that is awarded to a representative
party serving on behalf of a class shall be equal, on a per share
basis, to the portion of the final judgment or settlement

43 SECURITIES ACT OF 1933 Sec. 27
awarded to all other members of the class. Nothing in this
paragraph shall be construed to limit the award of reasonable
costs and expenses (including lost wages) directly relating to
the representation of the class to any representative party
serving on behalf of the class.
(5) RESTRICTIONS ON SETTLEMENTS UNDER SEAL.—The
terms and provisions of any settlement agreement of a class
action shall not be filed under seal, except that on motion of
any party to the settlement, the court may order filing under
seal for those portions of a settlement agreement as to which
good cause is shown for such filing under seal. For purposes of
this paragraph, good cause shall exist only if publication of a
term or provision of a settlement agreement would cause direct
and substantial harm to any party.
(6) RESTRICTIONS ON PAYMENT OF ATTORNEYS’ FEES AND
EXPENSES.—Total attorneys’ fees and expenses awarded by the
court to counsel for the plaintiff class shall not exceed a reasonable
percentage of the amount of any damages and prejudgment
interest actually paid to the class.
(7) DISCLOSURE OF SETTLEMENT TERMS TO CLASS MEMBERS.—
Any proposed or final settlement agreement that is
published or otherwise disseminated to the class shall include
each of the following statements, along with a cover page summarizing
the information contained in such statements:
(A) STATEMENT OF PLAINTIFF RECOVERY.—The amount
of the settlement proposed to be distributed to the parties
to the action, determined in the aggregate and on an average
per share basis.
(B) STATEMENT OF POTENTIAL OUTCOME OF CASE.—
(i) AGREEMENT ON AMOUNT OF DAMAGES.—If the
settling parties agree on the average amount of damages
per share that would be recoverable if the plaintiff
prevailed on each claim alleged under this title, a
statement concerning the average amount of such
potential damages per share.
(ii) DISAGREEMENT ON AMOUNT OF DAMAGES.—If
the parties do not agree on the average amount of
damages per share that would be recoverable if the
plaintiff prevailed on each claim alleged under this
title, a statement from each settling party concerning
the issue or issues on which the parties disagree.
(iii) INADMISSIBILITY FOR CERTAIN PURPOSES.—A
statement made in accordance with clause (i) or (ii)
concerning the amount of damages shall not be admissible
in any Federal or State judicial action or administrative
proceeding, other than an action or proceeding
arising out of such statement.
(C) STATEMENT OF ATTORNEYS’ FEES OR COSTS
SOUGHT.—If any of the settling parties or their counsel intend
to apply to the court for an award of attorneys’ fees
or costs from any fund established as part of the settlement,
a statement indicating which parties or counsel intend
to make such an application, the amount of fees and
costs that will be sought (including the amount of such

Sec. 27 SECURITIES ACT OF 1933 44
fees and costs determined on an average per share basis),
and a brief explanation supporting the fees and costs
sought.
(D) IDENTIFICATION OF LAWYERS’ REPRESENTATIVES.—
The name, telephone number, and address of one or more
representatives of counsel for the plaintiff class who will
be reasonably available to answer questions from class
members concerning any matter contained in any notice of
settlement published or otherwise disseminated to the
class.
(E) REASONS FOR SETTLEMENT.—A brief statement explaining
the reasons why the parties are proposing the
settlement.
(F) OTHER INFORMATION.—Such other information as
may be required by the court.
(8) ATTORNEY CONFLICT OF INTEREST.—If a plaintiff class
is represented by an attorney who directly owns or otherwise
has a beneficial interest in the securities that are the subject
of the litigation, the court shall make a determination of
whether such ownership or other interest constitutes a conflict
of interest sufficient to disqualify the attorney from representing
the plaintiff class.
(b) STAY OF DISCOVERY; PRESERVATION OF EVIDENCE.—
(1) IN GENERAL.—In any private action arising under this
title, all discovery and other proceedings shall be stayed during
the pendency of any motion to dismiss, unless the court finds,
upon the motion of any party, that particularized discovery is
necessary to preserve evidence or to prevent undue prejudice
to that party.
(2) PRESERVATION OF EVIDENCE.—During the pendency of
any stay of discovery pursuant to this subsection, unless otherwise
ordered by the court, any party to the action with actual
notice of the allegations contained in the complaint shall treat
all documents, data compilations (including electronically recorded
or stored data), and tangible objects that are in the custody
or control of such person and that are relevant to the allegations,
as if they were the subject of a continuing request for
production of documents from an opposing party under the
Federal Rules of Civil Procedure.
(3) SANCTION FOR WILLFUL VIOLATION.—A party aggrieved
by the willful failure of an opposing party to comply with paragraph
(2) may apply to the court for an order awarding appropriate
sanctions.
(4) CIRCUMVENTION OF STAY OF DISCOVERY.—Upon a
proper showing, a court may stay discovery proceedings in any
private action in a State court as necessary in aid of its jurisdiction,
or to protect or effectuate its judgments, in an action
subject to a stay of discovery pursuant to this subsection.
(c) SANCTIONS FOR ABUSIVE LITIGATION.—
(1) MANDATORY REVIEW BY COURT.—In any private action
arising under this title, upon final adjudication of the action,
the court shall include in the record specific findings regarding
compliance by each party and each attorney representing any
party with each requirement of Rule 11(b) of the Federal Rules

45 SECURITIES ACT OF 1933 Sec. 27
of Civil Procedure as to any complaint, responsive pleading, or
dispositive motion.
(2) MANDATORY SANCTIONS.—If the court makes a finding
under paragraph (1) that a party or attorney violated any
requirement of Rule 11(b) of the Federal Rules of Civil Procedure
as to any complaint, responsive pleading, or dispositive
motion, the court shall impose sanctions on such party or attorney
in accordance with Rule 11 of the Federal Rules of Civil
Procedure. Prior to making a finding that any party or attorney
has violated Rule 11 of the Federal Rules of Civil Procedure,
the court shall give such party or attorney notice and an
opportunity to respond.
(3) PRESUMPTION IN FAVOR OF ATTORNEYS’ FEES AND
COSTS.—
(A) IN GENERAL.—Subject to subparagraphs (B) and
(C), for purposes of paragraph (2), the court shall adopt a
presumption that the appropriate sanction—
(i) for failure of any responsive pleading or dispositive
motion to comply with any requirement of
Rule 11(b) of the Federal Rules of Civil Procedure is
an award to the opposing party of the reasonable
attorneys’ fees and other expenses incurred as a direct
result of the violation; and
(ii) for substantial failure of any complaint to comply
with any requirement of Rule 11(b) of the Federal
Rules of Civil Procedure is an award to the opposing
party of the reasonable attorneys’ fees and other expenses
incurred in the action.
(B) REBUTTAL EVIDENCE.—The presumption described
in subparagraph (A) may be rebutted only upon proof by
the party or attorney against whom sanctions are to be
imposed that—
(i) the award of attorneys’ fees and other expenses
will impose an unreasonable burden on that party or
attorney and would be unjust, and the failure to make
such an award would not impose a greater burden on
the party in whose favor sanctions are to be imposed;
or
(ii) the violation of Rule 11(b) of the Federal Rules
of Civil Procedure was de minimis.
(C) SANCTIONS.—If the party or attorney against
whom sanctions are to be imposed meets its burden under
subparagraph (B), the court shall award the sanctions that
the court deems appropriate pursuant to Rule 11 of the
Federal Rules of Civil Procedure.
(d) DEFENDANT’S RIGHT TO WRITTEN INTERROGATORIES.—In
any private action arising under this title in which the plaintiff
may recover money damages only on proof that a defendant acted
with a particular state of mind, the court shall, when requested by
a defendant, submit to the jury a written interrogatory on the issue
of each such defendant’s state of mind at the time the alleged
violation occurred.

Sec. 27A SECURITIES ACT OF 1933 46
SEC. 27A. ø77z–2¿ APPLICATION OF SAFE HARBOR FOR FORWARDLOOKING
STATEMENTS.
(a) APPLICABILITY.—This section shall apply only to a forwardlooking
statement made by—
(1) an issuer that, at the time that the statement is made,
is subject to the reporting requirements of section 13(a) or
section 15(d) of the Securities Exchange Act of 1934;
(2) a person acting on behalf of such issuer;
(3) an outside reviewer retained by such issuer making a
statement on behalf of such issuer; or
(4) an underwriter, with respect to information provided by
such issuer or information derived from information provided
by the issuer.
(b) EXCLUSIONS.—Except to the extent otherwise specifically
provided by rule, regulation, or order of the Commission, this
section shall not apply to a forward-looking statement—
(1) that is made with respect to the business or operations
of the issuer, if the issuer—
(A) during the 3-year period preceding the date on
which the statement was first made—
(i) was convicted of any felony or misdemeanor
described in clauses (i) through (iv) of section
15(b)(4)(B) of the Securities Exchange Act of 1934; or
(ii) has been made the subject of a judicial or
administrative decree or order arising out of a governmental
action that—
(I) prohibits future violations of the antifraud
provisions of the securities laws;
(II) requires that the issuer cease and desist
from violating the antifraud provisions of the
securities laws; or
(III) determines that the issuer violated the
antifraud provisions of the securities laws;
(B) makes the forward-looking statement in connection
with an offering of securities by a blank check company;
(C) issues penny stock;
(D) makes the forward-looking statement in connection
with a rollup transaction; or
(E) makes the forward-looking statement in connection
with a going private transaction; or
(2) that is—
(A) included in a financial statement prepared in
accordance with generally accepted accounting principles;
(B) contained in a registration statement of, or otherwise
issued by, an investment company;
(C) made in connection with a tender offer;
(D) made in connection with an initial public offering;
(E) made in connection with an offering by, or relating
to the operations of, a partnership, limited liability company,
or a direct participation investment program; or
(F) made in a disclosure of beneficial ownership in a
report required to be filed with the Commission pursuant
to section 13(d) of the Securities Exchange Act of 1934.
(c) SAFE HARBOR.—

47 SECURITIES ACT OF 1933 Sec. 27A
1 So in law. Should be a comma rather than semicolon.
(1) IN GENERAL.—Except as provided in subsection (b), in
any private action arising under this title that is based on an
untrue statement of a material fact or omission of a material
fact necessary to make the statement not misleading, a person
referred to in subsection (a) shall not be liable with respect to
any forward-looking statement, whether written or oral, if and
to the extent that—
(A) the forward-looking statement is—
(i) identified as a forward-looking statement, and
is accompanied by meaningful cautionary statements
identifying important factors that could cause actual
results to differ materially from those in the forwardlooking
statement; or
(ii) immaterial; or
(B) the plaintiff fails to prove that the forward-looking
statement—
(i) if made by a natural person, was made with
actual knowledge by that person that the statement
was false or misleading; or
(ii) if made by a business entity; 1 was—
(I) made by or with the approval of an executive
officer of that entity, and
(II) made or approved by such officer with actual
knowledge by that officer that the statement
was false or misleading.
(2) ORAL FORWARD-LOOKING STATEMENTS.—In the case of
an oral forward-looking statement made by an issuer that is
subject to the reporting requirements of section 13(a) or section
15(d) of the Securities Exchange Act of 1934, or by a person
acting on behalf of such issuer, the requirement set forth in
paragraph (1)(A) shall be deemed to be satisfied—
(A) if the oral forward-looking statement is accompanied
by a cautionary statement—
(i) that the particular oral statement is a forwardlooking
statement; and
(ii) that the actual results could differ materially
from those projected in the forward-looking statement;
and
(B) if—
(i) the oral forward-looking statement is accompanied
by an oral statement that additional information
concerning factors that could cause actual results
to differ materially from those in the forward-looking
statement is contained in a readily available written
document, or portion thereof;
(ii) the accompanying oral statement referred to in
clause (i) identifies the document, or portion thereof,
that contains the additional information about those
factors relating to the forward-looking statement; and
(iii) the information contained in that written document
is a cautionary statement that satisfies the
standard established in paragraph (1)(A).

Sec. 27A SECURITIES ACT OF 1933 48
(3) AVAILABILITY.—Any document filed with the Commission
or generally disseminated shall be deemed to be readily
available for purposes of paragraph (2).
(4) EFFECT ON OTHER SAFE HARBORS.—The exemption provided
for in paragraph (1) shall be in addition to any exemption
that the Commission may establish by rule or regulation
under subsection (g).
(d) DUTY TO UPDATE.—Nothing in this section shall impose
upon any person a duty to update a forward-looking statement.
(e) DISPOSITIVE MOTION.—On any motion to dismiss based
upon subsection (c)(1), the court shall consider any statement cited
in the complaint and cautionary statement accompanying the forward-
looking statement, which are not subject to material dispute,
cited by the defendant.
(f) STAY PENDING DECISION ON MOTION.—In any private action
arising under this title, the court shall stay discovery (other than
discovery that is specifically directed to the applicability of the
exemption provided for in this section) during the pendency of any
motion by a defendant for summary judgment that is based on the
grounds that—
(1) the statement or omission upon which the complaint is
based is a forward-looking statement within the meaning of
this section; and
(2) the exemption provided for in this section precludes a
claim for relief.
(g) EXEMPTION AUTHORITY.—In addition to the exemptions provided
for in this section, the Commission may, by rule or regulation,
provide exemptions from or under any provision of this title,
including with respect to liability that is based on a statement or
that is based on projections or other forward-looking information,
if and to the extent that any such exemption is consistent with the
public interest and the protection of investors, as determined by
the Commission.
(h) EFFECT ON OTHER AUTHORITY OF COMMISSION.—Nothing in
this section limits, either expressly or by implication, the authority
of the Commission to exercise similar authority or to adopt similar
rules and regulations with respect to forward-looking statements
under any other statute under which the Commission exercises
rulemaking authority.
(i) DEFINITIONS.—For purposes of this section, the following
definitions shall apply:
(1) FORWARD-LOOKING STATEMENT.—The term ‘‘forwardlooking
statement’’ means—
(A) a statement containing a projection of revenues,
income (including income loss), earnings (including earnings
loss) per share, capital expenditures, dividends, capital
structure, or other financial items;
(B) a statement of the plans and objectives of management
for future operations, including plans or objectives
relating to the products or services of the issuer;
(C) a statement of future economic performance, including
any such statement contained in a discussion and
analysis of financial condition by the management or in

49 SECURITIES ACT OF 1933 Sec. 28
the results of operations included pursuant to the rules
and regulations of the Commission;
(D) any statement of the assumptions underlying or
relating to any statement described in subparagraph (A),
(B), or (C);
(E) any report issued by an outside reviewer retained
by an issuer, to the extent that the report assesses a forward-
looking statement made by the issuer; or
(F) a statement containing a projection or estimate of
such other items as may be specified by rule or regulation
of the Commission.
(2) INVESTMENT COMPANY.—The term ‘‘investment company’’
has the same meaning as in section 3(a) of the Investment
Company Act of 1940.
(3) PENNY STOCK.—The term ‘‘penny stock’’ has the same
meaning as in section 3(a)(51) of the Securities Exchange Act
of 1934, and the rules and regulations, or orders issued pursuant
to that section.
(4) GOING PRIVATE TRANSACTION.—The term ‘‘going private
transaction’’ has the meaning given that term under the rules
or regulations of the Commission issued pursuant to section
13(e) of the Securities Exchange Act of 1934.
(5) SECURITIES LAWS.—The term ‘‘securities laws’’ has the
same meaning as in section 3 of the Securities Exchange Act
of 1934.
(6) PERSON ACTING ON BEHALF OF AN ISSUER.—The term
‘‘person acting on behalf of an issuer’’ means an officer, director,
or employee of the issuer.
(7) OTHER TERMS.—The terms ‘‘blank check company’’,
‘‘rollup transaction’’, ‘‘partnership’’, ‘‘limited liability company’’,
‘‘executive officer of an entity’’ and ‘‘direct participation investment
program’’, have the meanings given those terms by rule
or regulation of the Commission.
SEC. 28. ø77z–3¿ GENERAL EXEMPTIVE AUTHORITY.
The Commission, by rule or regulation, may conditionally or
unconditionally exempt any person, security, or transaction, or any
class or classes of persons, securities, or transactions, from any provision
or provisions of this title or of any rule or regulation issued
under this title, to the extent that such exemption is necessary or
appropriate in the public interest, and is consistent with the protection
of investors.
SCHEDULE A
ø77aa¿ (1) The name under which the issuer is doing or intends
to do business;
(2) the name of the State or other sovereign power under which
the issuer is organized;
(3) the location of the issuer’s principal business office, and if
the issuer is a foreign or territorial person, the name and address
of its agent in the United States authorized to receive notice;
(4) the names and addresses of the directors or persons performing
similar functions, and the chief executive, financial and accounting
officers, chosen or to be chosen if the issuer be a corpora

Sec. 28 SECURITIES ACT OF 1933 50
tion, association, trust, or other entity; of all partners, if the issuer
be a partnership; and of the issuer, if the issuer be an individual;
and of the promoters in the case of a business to be formed, or
formed within two years prior to the filing of the registration statement;
(5) the names and addresses of the underwriters;
(6) the names and addresses of all persons, if any, owning of
record or beneficially, if known, more than 10 per centum of any
class of stock of the issuer, or more than 10 per centum in the
aggregate of the outstanding stock of the issuer as of a date within
twenty days prior to the filing of the registration statement;
(7) the amount of securities of the issuer held by any person
specified in paragraphs (4), (5), and (6) of this schedule, as of a
date within twenty days prior to the filing of the registration statement,
and, if possible, as of one year prior thereto, and the amount
of the securities, for which the registration statement is filed, to
which such persons have indicated their intention to subscribe;
(8) the general character of the business actually transacted or
to be transacted by the issuer;
(9) a statement of the capitalization of the issuer, including the
authorized and outstanding amounts of its capital stock and the
proportion thereof paid up, the number and classes of shares in
which such capital stock is divided, par value thereof, or if it has
no par value, the stated or assigned value thereof, a description of
the respective voting rights, preferences, conversion and exchange
rights, rights to dividends, profits, or capital of each class, with respect
to each other class, including the retirement and liquidation
rights or values thereof;
(10) a statement of the securities, if any, covered by options
outstanding or to be created in connection with the security to be
offered, together with the names and addresses of all persons, if
any, to be allotted more than 10 per centum in the aggregate of
such options;
(11) the amount of capital stock of each class issued or included
in the shares of stock to be offered;
(12) the amount of the funded debt outstanding and to be created
by the security to be offered, with a brief description of the
date, maturity, and character of such debt, rate of interest, character
of amortization provisions, and the security, if any, therefor.
If substitution of any security is permissible, a summarized statement
of the conditions under which such substitution is permitted.
If substitution is permissible without notice, a specific statement to
that effect;
(13) the specific purposes in detail and the approximate
amounts to be devoted to such purposes, so far as determinable, for
which the security to be offered is to supply funds, and if the funds
are to be raised in part from other sources, the amounts thereof
and the sources thereof, shall be stated;
(14) the remuneration, paid or estimated to be paid, by the
issuer or its predecessor, directly or indirectly, during the past year
and ensuing year to (a) the directors or persons performing similar
functions, and (b) its officers and other persons, naming them
wherever such remuneration exceeded $25,000 during any such
year;

51 SECURITIES ACT OF 1933 Sec. 28
(15) the estimated net proceeds to be derived from the security
to be offered;
(16) the price at which it is proposed that the security shall be
offered to the public or the method by which such price is computed
and any variation therefrom at which any portion of such security
is proposed to be offered to any persons or classes of persons, other
than the underwriters, naming them or specifying the class. A variation
in price may be proposed prior to the date of the public offering
of the security, but the Commission shall immediately be notified
of such variation;
(17) all commissions or discounts paid or to be paid, directly or
indirectly, by the issuer to the underwriters in respect of the sale
of the security to be offered. Commissions shall include all cash,
securities, contracts, or anything else of value, paid, to be set aside,
disposed of, or understandings with or for the benefit of any other
persons in which any underwriter is interested, made, in connection
with the sale of such security. A commission paid or to be paid
in connection with the sale of such security by a person in which
the issuer has an interest or which is controlled or directed by, or
under common control with, the issuer shall be deemed to have
been paid by the issuer. Where any such commission is paid the
amount of such commission paid to each underwriter shall be
stated;
(18) the amount or estimated amounts, itemized in reasonable
detail, of expenses, other than commissions specified in paragraph
(17) of this schedule, incurred or borne by or for the account of the
issuer in connection with the sale of the security to be offered or
properly chargeable thereto, including legal, engineering, certification,
authentication, and other charges;
(19) the net proceeds derived from any security sold by the
issuer during the two years preceding the filing of the registration
statement, the price at which such security was offered to the public,
and the names of the principal underwriters of such security;
(20) any amount paid within two years preceding the filing of
the registration statement or intended to be paid to any promoter
and the consideration for any such payment;
(21) the names and addresses of the vendors and the purchase
price of any property, or good will, acquired or to be acquired, not
in the ordinary course of business, which is to be defrayed in whole
or in part from the proceeds of the security to be offered, the
amount of any commission payable to any person in connection
with such acquisition, and the name or names of such person or
persons, together with any expense incurred or to be incurred in
connection with such acquisition, including the cost of borrowing
money to finance such acquisition;
(22) full particulars of the nature and extent of the interest, if
any, of every director, principal executive officer, and of every
stockholder holding more than 10 per centum of any class of stock
or more than 10 per centum in the aggregate of the stock of the
issuer, in any property acquired, not in the ordinary course of business
of the issuer, within two years preceding the filing of the registration
statement or proposed to be acquired at such date;
(23) the names and addresses of counsel who have passed on
the legality of the issue;
Sec. 28 SECURITIES ACT OF 1933 52
(24) dates of and parties to, and the general effect concisely
stated of every material contract made, not in the ordinary course
of business, which contract is to be executed in whole or in part at
or after the filing of the registration statement or which contract
has been made not more than two years before such filing. Any
management contract or contract providing for special bonuses or
profit-sharing arrangements, and every material patent or contract
for a material patent right, and every contract by or with a public
utility company or an affiliate thereof, providing for the giving or
receiving of technical or financial advice or service (if such contract
may involve a charge to any party thereto at a rate in excess of
$2,500 per year in cash or securities or anything else of value),
shall be deemed a material contract;
(25) a balance sheet as of a date not more than ninety days
prior to the date of the filing of the registration statement showing
all of the assets of the issuer, the nature and cost thereof, whenever
determinable, in such detail and in such form as the Commission
shall prescribe (with intangible items segregated), including
any loan in excess of $20,000 to any officer, director, stockholder
or person directly or indirectly controlling or controlled by the
issuer, or person under direct or indirect common control with the
issuer. All the liabilities of the issuer in such detail and such form
as the Commission shall prescribe, including surplus of the issuer
showing how and from what sources such surplus was created, all
as of a date not more than ninety days prior to the filing of the
registration statement. If such statement be not certified by an
independent public or certified accountant, in addition to the balance
sheet required to be submitted under this schedule, a similar
detailed balance sheet of the assets and liabilities of the issuer, certified
by an independent public or certified accountant, of a date
not more than one year prior to the filing of the registration statement,
shall be submitted;
(26) a profit and loss statement of the issuer showing earnings
and income, the nature and source thereof, and the expenses and
fixed charges in such detail and such form as the Commission shall
prescribe for the latest fiscal year for which such statement is
available and for the two preceding fiscal years, year by year, or,
if such issuer has been in actual business for less than three years,
then for such time as the issuer has been in actual business, year
by year. If the date of the filing of the registration statement is
more than six months after the close of the last fiscal year, a statement
from such closing date to the latest practicable date. Such
statement shall show what the practice of the issuer has been during
the three years or lesser period as to the character of the
charges, dividends or other distributions made against its various
surplus accounts, and as to depreciation, depletion, and maintenance
charges, in such detail and form as the Commission shall
prescribe, and if stock dividends or avails from the sale of rights
have been credited to income, they shall be shown separately with
a statement of the basis upon which the credit is computed. Such
statement shall also differentiate between any recurring and nonrecurring
income and between any investment and operating income.
Such statement shall be certified by an independent public
or certified accountant;
53 SECURITIES ACT OF 1933 Sec. 28
(27) if the proceeds, or any part of the proceeds, of the security
to be issued is to be applied directly or indirectly to the purchase
of any business, a profit and loss statement of such business certified
by an independent public or certified accountant, meeting the
requirements of paragraph (26) of this schedule, for the three preceding
fiscal years, together with a balance sheet, similarly certified,
of such business, meeting the requirements of paragraph
(25) of this schedule of a date not more than ninety days prior to
the filing of the registration statement or at the date such business
was acquired by the issuer if the business was acquired by the
issuer more than ninety days prior to the fiing of the registration
statement;
(28) a copy of any agreement or agreements (or, if identical
agreements are used, the forms thereof) made with any underwriter,
including all contracts and agreements referred to in paragraph
(17) of this schedule;
(29) a copy of the opinion or opinions of counsel in respect to
the legality of the issue, with a translation of such opinion, when
necessary, into the English language;
(30) a copy of all material contracts referred to in paragraph
(24) of this schedule, but no disclosure shall be required of any portion
of any such contract if the Commission determines that disclosure
of such portion would impair the value of the contract and
would not be necessary for the protection of the investors;
(31) unless previously filed and registered under the provisions
of this title, and brought up to date, (a) a copy of its articles of
incorporation, with all amendments thereof and of its existing bylaws
or instruments corresponding thereto, whatever the name, if
the issuer be a corporation; (b) copy of all instruments by which the
trust is created or declared, if the issuer is a trust; (c) a copy of
its articles of partnership or association and all other papers pertaining
to its organization, if the issuer is a partnership, unincorporated
association, joint-stock company, or any other form of organization;
and
(32) a copy of the underlying agreements or indentures affecting
any stock, bonds, or debentures offered or to be offered.
In case of certificates of deposit, voting trust certificates, collateral
trust certificates, certificates of interest or shares in unincorporated
investment trusts, equipment trust certificates, interim or
other receipts for certificates, and like securities, the Commission
shall establish rules and regulations requiring the submission of
information of a like character applicable to such cases, together
with such other information as it may deem appropriate and necessary
regarding the character, financial or otherwise, of the actual
issuer of the securities and/or the person performing the acts and
assuming the duties of depositor or manager.
SCHEDULE B
(1) Name of borrowing government or subdivision thereof;
(2) specific purposes in detail and the approximate amounts to
be devoted to such purposes, so far as determinable, for which the
security to be offered is to supply funds, and if the funds are to be
raised in part from other sources, the amounts thereof and the
sources thereof, shall be stated;
Sec. 28 SECURITIES ACT OF 1933 54
(3) the amount of the funded debt and the estimated amount
of the floating debt outstanding and to be created by the security
to be offered, excluding intergovernmental debt, and a brief
description of the date, maturity, character of such debt, rate of interest,
character of amortization provisions, and the security, if
any, therefor. If substitution of any security is permissible, a statement
of the conditions under which such substitution is permitted.
If substitution is permissible without notice, a specific statement to
that effect;
(4) whether or not the issuer or its predecessor has, within a
period of twenty years prior to the filing of the registration statement,
defaulted on the principal or interest of any external security,
excluding intergovernmental debt, and, if so, the date,
amount, and circumstances of such default, and the terms of the
succeeding arrangement, if any;
(5) the receipts, classified by source, and the expenditures,
classified by purpose, in such detail and form as the Commission
shall prescribe for the latest fiscal year for which such information
is available and the two preceding fiscal years, year by year;
(6) the names and addresses of the underwriters;
(7) the name and address of its authorized agent, if any, in the
United States;
(8) the estimated net proceeds to be derived from the sale in
the United States of the security to be offered;
(9) the price at which it is proposed that the security shall be
offered in the United States to the public or the method by which
such price is computed. A variation in price may be proposed prior
to the date of the public offering of the security, but the Commission
shall immediately be notified of such variation;
(10) all commissions paid or to be paid, directly or indirectly,
by the issuer to the underwriters in respect of the sale of the security
to be offered. Commissions shall include all cash, securities,
contracts, or anything else of value, paid, to be set aside, disposed
of, or understandings with or for the benefit of any other persons
in which the underwriter is interested, made, in connection with
the sale of such security. Where any such commission is paid, the
amount of such commission paid to each underwriter shall be
stated;
(11) the amount or estimated amounts, itemized in reasonable
detail, of expenses, other than the commission specified in paragraph
(10) of this schedule, incurred or borne by or for the account
of the issuer in connection with the sale of the security to be offered
or properly chargeable thereto, including legal, engineering,
certification, and other charges;
(12) the names and addresses of counsel who have passed upon
the legality of the issue;
(13) a copy of any agreement or agreements made with any
underwriter governing the sale of the security within the United
States; and
(14) an agreement of the issuer to furnish a copy of the opinion
or opinions of counsel in respect to the legality of the issue, with
a translation, where necessary, into the English language. Such
opinion shall set out in full all laws, decrees, ordinances, or other
55 SECURITIES ACT OF 1933 Sec. 203
acts of Government under which the issue of such security has
been authorized.
TITLE II
SEC. 201. ø77bb¿ For the purpose of protecting, conserving,
and advancing the interests of the holders of foreign securities in
default, there is hereby created a body corporate with the name
‘‘Corporation of Foreign Security Holders’’ (herein called the ‘‘Corporation’’).
The principal office of the Corporation shall be located
in the District of Columbia, but there may be established agencies
or branch offices in any city or cities of the United States under
rules and regulations prescribed by the board of directors.
SEC. 202. ø77cc¿ The control and management of the Corporation
shall be vested in a board of six directors, who shall be appointed
and hold office in the following manner: As soon as practicable
after the date this Act takes effect the Federal Trade Commission
(hereinafter in this title called ‘‘Commission’’) shall appoint
six directors, and shall designate a chairman and a vice chairman
from among their number. After the directors designated as chairman
and vice chairman cease to be directors, their successors as
chairman and vice chairman shall be elected by the board of directors
itself. Of the directors first appointed, two shall continue in office
for a term of two years, two for a term of four years, and two
for a term of six years, from the date of this Act takes effect, the
term of each to be designated by the Commission at the time of
appointment. Their successors shall be appointed by the Commission,
each for a term of six years from the date of the expiration
of the term for which his predecessor was appointed, except that
any person appointed to fill a vacancy occurring prior to the expiration
of the term for which his predecessor was appointed shall be
appointed only for the unexpired term of such predecessor. No person
shall be eligible to serve as a director who within the five years
preceding has had any interest, direct or indirect, in any corporation,
company, partnership, bank or association which has sold, or
offered for sale any foreign securities. The office of a director shall
be vacated if the board of directors shall at a meeting specially convened
for that purpose by resolution passed by a majority of at
least two thirds of the board of directors, remove such member
from office, provided that the member whom it is proposed to remove
shall have seven days’ notice sent to him of such meeting and
that he may be heard.
SEC. 203. ø77dd¿ The Corporation shall have power to adopt,
alter, and use a corporate seal; to make contracts; to lease such
real estate as may be necessary for the transaction of its business;
to sue and be sued, to complain and to defend, in any court of competent
jurisdiction, State or Federal; to require from trustees,
financial agents, or dealers in foreign securities information relative
to the original or present holders of foreign securities and
such other information as may be required and to issue subpenas
therefor; to take over the functions of any fiscal and paying agents
of any foreign securities in default; to borrow money for the purposes
of this title, and to pledge as collateral for such loans any
securities deposited with the Corporation pursuant to this title; by

Sec. 204 SECURITIES ACT OF 1933 56
and with the consent and approval of the Commission to select, employ,
and fix the compensation of officers, directors, members of
committees, employees, attorneys, and agents of the Corporation,
without regard to the provisions of other laws applicable to the
employment and compensation of officers or employees of the
United States; to define their authority and duties, require bonds
of them and fix the penalties thereof, and to dismiss at pleasure
such officers, employees, attorneys, and agents; and to prescribe,
amend, and repeal, by its board of directors, bylaws, rules, and regulations
governing the manner in which its general business may
be conducted and the powers granted to it by law may be exercised
and enjoyed, together with provisions for such committees and the
functions thereof as the board of directors may deem necessary for
facilitating its business under this title. The board of directors of
the Corporation shall determine and prescribe the manner in which
its obligations shall be incurred and its expenses allowed and paid.
SEC. 204. ø77ee¿ The board of directors may—
(1) Convene meetings of holders of foreign securities.
(2) Invite the deposit and undertake the custody of foreign
securities which have defaulted in the payment either of principal
or interest, and issue receipts or certificates in the place
of securities so deposited.
(3) Appoint committees from the directors of the Corporation
and/or all other persons to represent holders of any class
or classes of foreign securities which have defaulted in the payment
either of principal or interest and determine and regulate
the functions of such committees. The chairman and vice chairman
of the board of directors shall be ex officio chairman and
vice chairman of each committee.
(4) Negotiate and carry out, or assist in negotiating and
carrying out, arrangements for the resumption of payments
due or in arrears in respect of any foreign securities in default
or for rearranging the terms on which such securities may in
future be held or for converting and exchanging the same for
new securities or for any other object in relation thereto; and
under this paragraph any plan or agreement made with respect
to such securities shall be binding upon depositors, providing
that the consent of holders resident in the United States
of 60 per centum of the securities deposited with the Corporation
shall be obtained.
(5) Undertake, superintend, or take part in the collection
and application of funds derived from foreign securities which
come into the possession of or under the control or management
of the Corporation.
(6) Collect, preserve, publish, circulate, and render available
in readily accessible form, when deemed essential or necessary,
documents, statistics, reports, and information of all
kinds in respect of foreign securities, including particularly
records of foreign external securities in default and records of
the progress made toward the payment of past-due obligations.
(7) Take such steps as it may deem expedient with the
view of securing the adoption of clear and simple forms of foreign
securities and just and sound principles in the conditions
and terms thereof.
57 SECURITIES ACT OF 1933 Sec. 210
(8) Generally, act in the name and on behalf of the holders
of foreign securities the care or representation of whose interests
may be entrusted to the Corporation; conserve and protect
the rights and interests of holders of foreign securities issued,
sold, or owned in the United States; adopt measures for the
protection, vindication, and preservation or reservation of the
rights and interests of holders of foreign securities either on
any default in or on breach or contemplated breach of the conditions
on which such foreign securities may have been issued,
or otherwise; obtain for such holders such legal and other
assistance and advice as the board of directors may deem expedient;
and do all such other things as are incident or conducive
to the attainment of the above objects.
SEC. 205. ø77ff¿ The board of directors shall cause accounts to
be kept of all matters relating to or connected with the transactions
and business of the Corporation, and cause a general account and
balance sheet of the Corporation to be made out in each year, and
cause all accounts to be audited by one or more auditors who shall
examine the same and report thereon to the board of directors.
SEC. 206. ø77gg¿ The Corporation shall make, print, and make
public an annual report of its operations during each year, send a
copy thereof, together with a copy of the account and balance sheet
and auditor’s report, to the Commission and to both Houses of Congress,
and provide one copy of such report but not more than one
on the application of any person and on receipt of a sum not exceeding
$1: Provided, That the board of directors in its discretion
may distribute copies gratuitously.
SEC. 207. ø77hh¿ The Corporation may in its discretion levy
charges, assessed on a pro rata basis, on the holders of foreign
securities deposited with it: Provided, That any charge levied at
the time of depositing securities with the Corporation shall not exceed
one fifth of 1 per centum of the face value of such securities:
Provided further, That any additional charges shall bear a close
relationship to the cost of operations and negotiations including
those enumerated in sections 203 and 204 and shall not exceed 1
per centum of the face value of such securities.
SEC. 208. ø77ii¿ The Corporation may receive subscriptions
from any person, foundation with a public purpose, or agency of the
United States Government, and such subscriptions may, in the discretion
of the board of directors, be treated as loans repayable
when and as the board of directors shall determine.
SEC. 209. ø77jj¿ The Reconstruction Finance Corporation is
hereby authorized to loan out of its funds not to exceed $75,000 for
the use of the Corporation.
SEC. 210. ø77kk¿ Notwithstanding the foregoing provisions of
this title, it shall be unlawful for, and nothing in this title shall be
taken or construed as permitting or authorizing, the Corporation in
this title created, or any committee of said Corporation, or any person
or persons acting for or representing or purporting to represent
it—
(a) to claim or assert or pretend to be acting for or to represent
the Department of State or the United States Government;
Sec. 211 SECURITIES ACT OF 1933 58
(b) to make any statements or representations of any kind
to any foreign government or its officials or the officials of any
political subdivision of any foreign government that said Corporation
or any committee thereof or any individual or individuals
connected therewith were speaking or acting for the said
Department of State or the United States Government; or
(c) to do any act directly or indirectly which would interfere
with or obstruct or hinder or which might be calculated to
obstruct, hinder or interfere with the policy or policies of the
said Department of State or the Government of the United
States or any pending or contemplated diplomatic negotiations,
arrangements, business or exchanges between the Government
of the United States or said Department of State and any foreign
government or any political subdivision thereof.
SEC. 211. ø77ll¿ This title shall not take effect until the President
finds that its taking effect is in the public interest and by
proclamation so declares.
SEC. 212. ø77mm¿ This title may be cited as the ‘‘Corporation
of Foreign Bondholders Act, 1933.’’
TITLE III
[Title III, the Trust Indenture Act of 1939, is set forth
beginning on page 361

2.    <<SECURITIES EXCHANGE ACT OF 1934>>:

Notes to the Reader
1. This document is extracted from Committee Print 108-B of the
Committee on Financial Services of the U.S. House of Representatives,
and was prepared at the direction of that Committee.
2. Any material contained within brackets ø ¿ is not part of the
text of the law but is inserted as an aid to the reader.
3. Citations have been included to enable the reader to locate the
same material in the United States Code (U.S.C.). These citations
are not a part of the text of the law in which they appear. For
changes after the revision date of this excerpt (September 30, 2004)
to provisions of law in this publication that have citations to the
U.S. Code, see the United States Code Classification Tables published
by the Office of the Law Revision Counsel of the House of
Representatives at http://uscode.house.gov/uscct.htm.
REVISED THROUGH SEPTEMBER 30, 2004

SECURITIES EXCHANGE ACT OF 1934
(References in brackets ø ¿ are to title 15, United States Code)
AN ACT To provide for the regulation of securities exchanges and of over-thecounter
markets operating in interstate and foreign commerce and through the
mails, to prevent inequitable and unfair practices on such exchanges and markets,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
TITLE I—REGULATION OF SECURITIES EXCHANGES
SHORT TITLE
SECTION 1. ø78a¿ This Act may be cited as the ‘‘Securities Exchange
Act of 1934’’.
NECESSITY FOR REGULATION AS PROVIDED IN THIS TITLE 1
SEC. 2. ø78b¿ For the reasons hereinafter enumerated, transactions
in securities as commonly conducted upon securities ex

P.L. 100–704) contained the following additional provisions:
SEC. 7. SECURITIES LAWS STUDY.
(a) FINDINGS.—The Congress finds that—
(1) recent disclosures of securities fraud and insider trading have caused public concern
about the adequacy of Federal securities laws, rules, and regulations;
(2) Federal securities laws, rules, and regulations have not undergone a comprehensive
and exhaustive review since the advent of the modern international, institutionalized securities
market;
(3) since that review, the volume of securities transactions and the nature of the securities
industry have changed dramatically; and
(4) there is an important national interest in maintaining fair and orderly securities trading,
assuring the fairness of securities transactions and markets and protecting investors.
(b) STUDY AND INVESTIGATION REQUIRED.—
(1) GENERAL REQUIREMENT.—The Securities and Exchange Commission shall, subject to
the availability of funds appropriated pursuant to subsection (d), make a study and investigation
of the adequacy of the Federal securities laws and rules and regulations thereunder
for the protection of the public interest and the interests of investors.
(2) REQUIRED SUBJECTS FOR STUDY AND INVESTIGATION.—Such study and investigation
shall include an analysis of—
(A) the extent of improper trading while in possession of insider information, such
as trading with advance knowledge of tender offers or forthcoming announcements of
material financial information;
(B) the adequacy of surveillance methods and technologies of brokers, dealers, and
self-regulatory organizations;
(C) the adequacy of cooperation between the Federal, State, and foreign enforcement
authorities concerning securities laws enforcement; and
(D) impediments to the fairness and orderliness of the securities markets and to improvements
in the breadth and depth of the capital available to the securities markets,
and additional methods to promote those objectives.
(3) CONDUCT OF STUDY AND INVESTIGATION.—In conducting the study and investigation
required by this section, the Commission—
(A) may exercise any existing authority to gather information, including all power
and authority the Commission would have if such investigation were being conducted
pursuant to section 21 of the Securities Exchange Act of 1934;

3 SECURITIES EXCHANGE ACT OF 1934 Sec. 2
(B) may consult with and obtain such assistance and information from other agencies
in the executive and legislative branches of the Government (including the Department
of Justice) as is necessary to enable the Commission to carry out this section;
(C) may appoint, without regard to the civil service laws, rules, and regulations, such
personnel as the Commission deems advisable to carry out such study and investigation
and to fix their respective rates of compensation without regard to such laws, rules, and
regulations, but no such rate shall exceed the rate payable pursuant to section 5314
of title 5, United States Code; and
(D) may, on a reimbursable basis, use the services of personnel detailed to the Commission
from any Federal agency.
(4) SUPPORT FROM OTHER AGENCIES.—(A) The head of any Federal agency—
etail employees to the Commission for the purposes of this section; and
(ii) shall provide to the Commission such information as it requires for the performance
of its functions under this section, consistent with applicable law.
(B) The Comptroller General and the Director of the Office of Technology Assessment are
authorized to assist the Commission in the performance of its functions under this section.
(c) REPORTS AND INFORMATION TO CONGRESS.—
(1) GENERAL REPORT.—The Commission shall report to the Congress on the results
of its study and investigation within 18 months after the date funds to carry out this
section are appropriated under subsection (d). Such report shall include the Commission’s
recommendations, including such recommendations for legislation as the Commission
deems advisable.
(2) INTERIM INFORMATION TO CONGRESS.—The Commission shall keep the Committee
on Energy and Commerce of the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate, and the members thereof, fully informed
on the progress of, and any impediments to completing, the study and investigation required
by this section.
(d) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated $5,000,000
to carry out the study and investigation required by this section.
(e) DEFINITIONS.—As used in this section—
(1) the term ‘‘Commission’’ means the Securities and Exchange Commission; and
(2) the term ‘‘Federal securities laws’’ has the meaning given the term securities laws by
section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47)).
1 So in law. Should be ‘‘effected’’.
changes and over-the-counter markets are affected with a national
public interest which makes it necessary to provide for regulation
and control of such transactions and of practices and matters related
thereto, including transactions by officers, directors, and principal
security holders, to require appropriate reports, to remove impediments
to and perfect the mechanisms of a national market system
for securities and a national system for the clearance and settlement
of securities transactions and the safeguarding of securities
and funds related thereto, and to impose requirements necessary to
make such regulation and control reasonably complete and effective,
in order to protect interstate commerce, the national credit,
the Federal taxing power, to protect and make more effective the
national banking system and Federal Reserve System, and to insure
the maintenance of fair and honest markets in such transactions:
(1) Such transactions (a) are carried on in large volume by the
public generally and in large part originate outside the States in
which the exchanges and over-the-counter markets are located and/
or are affected 1 by means of the mails and instrumentalities of
interstate commerce; (b) constitute an important part of the current
of interstate commerce; (c) involve in large part the securities
of issuers engaged in interstate commerce; (d) involve the use of
credit, directly affect the financing of trade, industry, and transportation
in interstate commerce, and directly affect and influence the
volume of interstate commerce; and affect the national credit.
(2) The prices established and offered in such transactions are
generally disseminated and quoted throughout the United States
and foreign countries and constitute a basis for determining and
establishing the prices at which securities are bought and sold, the

Sec. 3 SECURITIES EXCHANGE ACT OF 1934 4
amount of certain taxes owing to the United States and to the several
States by owners, buyers, and sellers of securities, and the
value of collateral for bank loans.
(3) Frequently the prices of securities on such exchanges and
markets are susceptible to manipulation and control, and the dissemination
of such prices gives rise to excessive speculation, resulting
in sudden and unreasonable fluctuations in the prices of securities
which (a) cause alternately unreasonable expansion and unreasonable
contraction of the volume of credit available for trade,
transportation, and industry in interstate commerce, (b) hinder the
proper appraisal of the value of securities and thus prevent a fair
calculation of taxes owing to the United States and to the several
States by owners, buyers, and sellers of securities, and (c) prevent
the fair valuation of collateral for bank loans and/or obstruct the
effective operation of the national banking system and Federal Reserve
System.
(4) National emergencies, which produce widespread unemployment
and the dislocation of trade, transportation, and industry,
and which burden interstate commerce and adversely affect the
general welfare, are precipitated, intensified, and prolonged by
manipulation and sudden and unreasonable fluctuations of security
prices and by excessive speculation on such exchanges and markets,
and to meet such emergencies the Federal Government is put
to such great expense as to burden the national credit.
DEFINITIONS AND APPLICATION OF TITLE
SEC. 3. ø78c¿ (a) When used in this title, unless the context
otherwise requires—
(1) The term ‘‘exchange’’ means any organization, association,
or group of persons, whether incorporated or unincorporated,
which constitutes, maintains, or provides a market
place or facilities for bringing together purchasers and sellers
of securities or for otherwise performing with respect to securities
the functions commonly performed by a stock exchange as
that term is generally understood, and includes the market
place and the market facilities maintained by such exchange.
(2) The term ‘‘facility’’ when used with respect to an exchange
includes its premises, tangible or intangible property
whether on the premises or not, any right to the use of such
premises or property or any service thereof for the purpose of
effecting or reporting a transaction on an exchange (including,
among other things, any system of communication to or from
the exchange, by ticker or otherwise, maintained by or with
the consent of the exchange), and any right of the exchange to
the use of any property or service.
(3)(A) The term ‘‘member’’ when used with respect to a national
securities exchange means (i) any natural person permitted
to effect transactions on the floor of the exchange without
the services of another person acting as broker, (ii) any
registered broker or dealer with which such a natural person
is associated, (iii) any registered broker or dealer permitted to
designate as a representative such a natural person, and (iv)
any other registered broker or dealer which agrees to be regulated
by such exchange and with respect to which the exchange


5 SECURITIES EXCHANGE ACT OF 1934 Sec. 3
undertakes to enforce compliance with the provisions of this
title, the rules and regulations thereunder, and its own rules.
For purposes of sections 6(b)(1), 6(b)(4), 6(b)(6), 6(b)(7), 6(d),
17(d), 19(d), 19(e), 19(g), 19(h), and 21 of this title, the term
‘‘member’’ when used with respect to a national securities exchange
also means, to the extent of the rules of the exchange
specified by the Commission, any person required by the Commission
to comply with such rules pursuant to section 6(f) of
this title.
(B) The term ‘‘member’’ when used with respect to a registered
securities association means any broker or dealer who
agrees to be regulated by such association and with respect to
whom the association undertakes to enforce compliance with
the provisions of this title, the rules and regulations thereunder,
and its own rules.
(4) BROKER.—
(A) IN GENERAL.—The term ‘‘broker’’ means any person
engaged in the business of effecting transactions in
securities for the account of others.
(B) EXCEPTION FOR CERTAIN BANK ACTIVITIES.—A bank
shall not be considered to be a broker because the bank engages
in any one or more of the following activities under
the conditions described:
(i) THIRD PARTY BROKERAGE ARRANGEMENTS.—The
bank enters into a contractual or other written
arrangement with a broker or dealer registered under
this title under which the broker or dealer offers brokerage
services on or off the premises of the bank if—
(I) such broker or dealer is clearly identified
as the person performing the brokerage services;
(II) the broker or dealer performs brokerage
services in an area that is clearly marked and, to
the extent practicable, physically separate from
the routine deposit-taking activities of the bank;
(III) any materials used by the bank to advertise
or promote generally the availability of brokerage
services under the arrangement clearly indicate
that the brokerage services are being provided
by the broker or dealer and not by the bank;
(IV) any materials used by the bank to advertise
or promote generally the availability of
brokerage services under the arrangement are in
compliance with the Federal securities laws before
distribution;
(V) bank employees (other than associated
persons of a broker or dealer who are qualified
pursuant to the rules of a self-regulatory organization)
perform only clerical or ministerial functions
in connection with brokerage transactions including
scheduling appointments with the associated
persons of a broker or dealer, except that bank
employees may forward customer funds or securities
and may describe in general terms the types

Sec. 3 SECURITIES EXCHANGE ACT OF 1934 6
of investment vehicles available from the bank
and the broker or dealer under the arrangement;
(VI) bank employees do not receive incentive
compensation for any brokerage transaction unless
such employees are associated persons of a
broker or dealer and are qualified pursuant to the
rules of a self-regulatory organization, except that
the bank employees may receive compensation for
the referral of any customer if the compensation is
a nominal one-time cash fee of a fixed dollar
amount and the payment of the fee is not contingent
on whether the referral results in a transaction;
(VII) such services are provided by the broker
or dealer on a basis in which all customers that
receive any services are fully disclosed to the
broker or dealer;
(VIII) the bank does not carry a securities account
of the customer except as permitted under
clause (ii) or (viii) of this subparagraph; and
(IX) the bank, broker, or dealer informs each
customer that the brokerage services are provided
by the broker or dealer and not by the bank and
that the securities are not deposits or other obligations
of the bank, are not guaranteed by the
bank, and are not insured by the Federal Deposit
Insurance Corporation.
(ii) TRUST ACTIVITIES.—The bank effects transactions
in a trustee capacity, or effects transactions in
a fiduciary capacity in its trust department or other
department that is regularly examined by bank examiners
for compliance with fiduciary principles and
standards, and—
(I) is chiefly compensated for such transactions,
consistent with fiduciary principles and
standards, on the basis of an administration or
annual fee (payable on a monthly, quarterly, or
other basis), a percentage of assets under management,
or a flat or capped per order processing fee
equal to not more than the cost incurred by the
bank in connection with executing securities
transactions for trustee and fiduciary customers,
or any combination of such fees; and
(II) does not publicly solicit brokerage business,
other than by advertising that it effects
transactions in securities in conjunction with
advertising its other trust activities.
(iii) PERMISSIBLE SECURITIES TRANSACTIONS.—The
bank effects transactions in—
(I) commercial paper, bankers acceptances, or
commercial bills;
(II) exempted securities;
(III) qualified Canadian government obligations
as defined in section 5136 of the Revised
7 SECURITIES EXCHANGE ACT OF 1934 Sec. 3
Statutes, in conformity with section 15C of this
title and the rules and regulations thereunder, or
obligations of the North American Development
Bank; or
(IV) any standardized, credit enhanced debt
security issued by a foreign government pursuant
to the March 1989 plan of then Secretary of the
Treasury Brady, used by such foreign government
to retire outstanding commercial bank loans.
(iv) CERTAIN STOCK PURCHASE PLANS.—
(I) EMPLOYEE BENEFIT PLANS.—The bank effects
transactions, as part of its transfer agency
activities, in the securities of an issuer as part of
any pension, retirement, profit-sharing, bonus,
thrift, savings, incentive, or other similar benefit
plan for the employees of that issuer or its affiliates
(as defined in section 2 of the Bank Holding
Company Act of 1956), if the bank does not solicit
transactions or provide investment advice with respect
to the purchase or sale of securities in connection
with the plan.
(II) DIVIDEND REINVESTMENT PLANS.—The
bank effects transactions, as part of its transfer
agency activities, in the securities of an issuer as
part of that issuer’s dividend reinvestment plan,
if—
(aa) the bank does not solicit transactions
or provide investment advice with respect to
the purchase or sale of securities in connection
with the plan; and
(bb) the bank does not net shareholders’
buy and sell orders, other than for programs
for odd-lot holders or plans registered with
the Commission.
(III) ISSUER PLANS.—The bank effects transactions,
as part of its transfer agency activities, in
the securities of an issuer as part of a plan or program
for the purchase or sale of that issuer’s
shares, if—
(aa) the bank does not solicit transactions
or provide investment advice with respect to
the purchase or sale of securities in connection
with the plan or program; and
(bb) the bank does not net shareholders’
buy and sell orders, other than for programs
for odd-lot holders or plans registered with
the Commission.
(IV) PERMISSIBLE DELIVERY OF MATERIALS.—
The exception to being considered a broker for a
bank engaged in activities described in subclauses
(I), (II), and (III) will not be affected by delivery
of written or electronic plan materials by a bank
to employees of the issuer, shareholders of the
Sec. 3 SECURITIES EXCHANGE ACT OF 1934 8
1 The Gramm-Leach-Bliley Act was enacted on November 12, 1999 (P.L. 106–102; 113 Stat.
1338).
issuer, or members of affinity groups of the issuer,
so long as such materials are—
(aa) comparable in scope or nature to that
permitted by the Commission as of the date of
the enactment of the Gramm-Leach-Bliley
Act 1; or
(bb) otherwise permitted by the Commission.
(v) SWEEP ACCOUNTS.—The bank effects transactions
as part of a program for the investment or reinvestment
of deposit funds into any no-load, open-end
management investment company registered under
the Investment Company Act of 1940 that holds itself
out as a money market fund.
(vi) AFFILIATE TRANSACTIONS.—The bank effects
transactions for the account of any affiliate of the
bank (as defined in section 2 of the Bank Holding
Company Act of 1956) other than—
(I) a registered broker or dealer; or
(II) an affiliate that is engaged in merchant
banking, as described in section 4(k)(4)(H) of the
Bank Holding Company Act of 1956.
(vii) PRIVATE SECURITIES OFFERINGS.—The bank—
(I) effects sales as part of a primary offering
of securities not involving a public offering, pursuant
to section 3(b), 4(2), or 4(6) of the Securities
Act of 1933 or the rules and regulations issued
thereunder;
(II) at any time after the date that is 1 year
after the date of the enactment of the Gramm-
Leach-Bliley Act 1, is not affiliated with a broker
or dealer that has been registered for more than
1 year in accordance with this Act, and engages in
dealing, market making, or underwriting activities,
other than with respect to exempted securities;
and
(III) if the bank is not affiliated with a broker
or dealer, does not effect any primary offering described
in subclause (I) the aggregate amount of
which exceeds 25 percent of the capital of the
bank, except that the limitation of this subclause
shall not apply with respect to any sale of government
securities or municipal securities.
(viii) SAFEKEEPING AND CUSTODY ACTIVITIES.—
(I) IN GENERAL.—The bank, as part of customary
banking activities—
(aa) provides safekeeping or custody services
with respect to securities, including the
exercise of warrants and other rights on behalf
of customers;
9 SECURITIES EXCHANGE ACT OF 1934 Sec. 3
(bb) facilitates the transfer of funds or
securities, as a custodian or a clearing agency,
in connection with the clearance and settlement
of its customers’ transactions in securities;
(cc) effects securities lending or borrowing
transactions with or on behalf of customers as
part of services provided to customers pursuant
to division (aa) or (bb) or invests cash collateral
pledged in connection with such transactions;
(dd) holds securities pledged by a customer
to another person or securities subject
to purchase or resale agreements involving a
customer, or facilitates the pledging or transfer
of such securities by book entry or as otherwise
provided under applicable law, if the
bank maintains records separately identifying
the securities and the customer; or
(ee) serves as a custodian or provider of
other related administrative services to any
individual retirement account, pension, retirement,
profit sharing, bonus, thrift savings,
incentive, or other similar benefit plan.
(II) EXCEPTION FOR CARRYING BROKER ACTIVITIES.—
The exception to being considered a broker
for a bank engaged in activities described in subclause
(I) shall not apply if the bank, in connection
with such activities, acts in the United States
as a carrying broker (as such term, and different
formulations thereof, are used in section 15(c)(3)
of this title and the rules and regulations thereunder)
for any broker or dealer, unless such carrying
broker activities are engaged in with respect
to government securities (as defined in paragraph
(42) of this subsection).
(ix) IDENTIFIED BANKING PRODUCTS.—The bank effects
transactions in identified banking products as defined
in section 206 of the Gramm-Leach-Bliley Act.
(x) MUNICIPAL SECURITIES.—The bank effects
transactions in municipal securities.
(xi) DE MINIMIS EXCEPTION.—The bank effects,
other than in transactions referred to in clauses (i)
through (x), not more than 500 transactions in securities
in any calendar year, and such transactions are
not effected by an employee of the bank who is also an
employee of a broker or dealer.
(C) EXECUTION BY BROKER OR DEALER.—The exception
to being considered a broker for a bank engaged in activities
described in clauses (ii), (iv), and (viii) of subparagraph
(B) shall not apply if the activities described in such
provisions result in the trade in the United States of any
security that is a publicly traded security in the United
States, unless—
Sec. 3 SECURITIES EXCHANGE ACT OF 1934 10
1 The Gramm-Leach-Bliley Act was enacted on November 12, 1999 (P.L. 106–102; 113 Stat.
1338).
(i) the bank directs such trade to a registered
broker or dealer for execution;
(ii) the trade is a cross trade or other substantially
similar trade of a security that—
(I) is made by the bank or between the bank
and an affiliated fiduciary; and
(II) is not in contravention of fiduciary principles
established under applicable Federal or
State law; or
(iii) the trade is conducted in some other manner
permitted under rules, regulations, or orders as the
Commission may prescribe or issue.
(D) FIDUCIARY CAPACITY.—For purposes of subparagraph
(B)(ii), the term ‘‘fiduciary capacity’’ means—
(i) in the capacity as trustee, executor, administrator,
registrar of stocks and bonds, transfer agent,
guardian, assignee, receiver, or custodian under a uniform
gift to minor act, or as an investment adviser if
the bank receives a fee for its investment advice;
(ii) in any capacity in which the bank possesses
investment discretion on behalf of another; or
(iii) in any other similar capacity.
(E) EXCEPTION FOR ENTITIES SUBJECT TO SECTION
15(e).—The term ‘‘broker’’ does not include a bank that—
(i) was, on the day before the date of enactment
of the Gramm-Leach-Bliley Act 1, subject to section
15(e); and
(ii) is subject to such restrictions and requirements
as the Commission considers appropriate.
(5) DEALER.—
(A) IN GENERAL.—The term ‘‘dealer’’ means any person
engaged in the business of buying and selling securities for
such person’s own account through a broker or otherwise.
(B) EXCEPTION FOR PERSON NOT ENGAGED IN THE BUSINESS
OF DEALING.—The term ‘‘dealer’’ does not include a
person that buys or sells securities for such person’s own
account, either individually or in a fiduciary capacity, but
not as a part of a regular business.
(C) EXCEPTION FOR CERTAIN BANK ACTIVITIES.—A bank
shall not be considered to be a dealer because the bank engages
in any of the following activities under the conditions
described:
(i) PERMISSIBLE SECURITIES TRANSACTIONS.—The
bank buys or sells—
(I) commercial paper, bankers acceptances, or
commercial bills;
(II) exempted securities;
(III) qualified Canadian government obligations
as defined in section 5136 of the Revised
Statutes of the United States, in conformity with
section 15C of this title and the rules and regula

11 SECURITIES EXCHANGE ACT OF 1934 Sec. 3
1 Replaced by 12 U.S.C. 92a. [Printed in appendix to this volume.]
tions thereunder, or obligations of the North
American Development Bank; or
(IV) any standardized, credit enhanced debt
security issued by a foreign government pursuant
to the March 1989 plan of then Secretary of the
Treasury Brady, used by such foreign government
to retire outstanding commercial bank loans.
(ii) INVESTMENT, TRUSTEE, AND FIDUCIARY TRANSACTIONS.—
The bank buys or sells securities for investment
purposes—
(I) for the bank; or
(II) for accounts for which the bank acts as a
trustee or fiduciary.
(iii) ASSET-BACKED TRANSACTIONS.—The bank engages
in the issuance or sale to qualified investors,
through a grantor trust or other separate entity, of
securities backed by or representing an interest in
notes, drafts, acceptances, loans, leases, receivables,
other obligations (other than securities of which the
bank is not the issuer), or pools of any such obligations
predominantly originated by—
(I) the bank;
(II) an affiliate of any such bank other than
a broker or dealer; or
(III) a syndicate of banks of which the bank is
a member, if the obligations or pool of obligations
consists of mortgage obligations or consumer-related
receivables.
(iv) IDENTIFIED BANKING PRODUCTS.—The bank
buys or sells identified banking products, as defined in
section 206 of the Gramm-Leach-Bliley Act.
(6) The term ‘‘bank’’ means (A) a banking institution organized
under the laws of the United States, (B) a member bank
of the Federal Reserve System, (C) any other banking institution,
whether incorporated or not, doing business under the
laws of any State or of the United States, a substantial portion
of the business of which consists of receiving deposits or exercising
fiduciary powers similar to those permitted to national
banks under the authority of the Comptroller of the Currency
pursuant to the first section of Public Law 87–722 (12 U.S.C.
92a), and which is supervised and examined by State or Federal
authority having supervision over banks, and which is not
operated for the purpose of evading the provisions of this title,
and (D) a receiver, conservator, or other liquidating agent of
any institution or firm included in clauses (A), (B), or (C) of
this paragraph.1
(7) The term ‘‘director’’ means any director of a corporation
or any person performing similar functions with respect to any
organization, whether incorporated or unincorporated.
(8) The term ‘‘issuer’’ means any person who issues or proposes
to issue any security; except that with respect to certificates
of deposit for securities, voting-trust certificates, or colSec.
3 SECURITIES EXCHANGE ACT OF 1934 12
lateral-trust certificates, or with respect to certificates of interest
or shares in an unincorporated investment trust not having
a board of directors or of the fixed, restricted management, or
unit type, the term ‘‘issuer’’ means the person or persons performing
the acts and assuming the duties of depositor or manager
pursuant to the provisions of the trust or other agreement
or instrument under which such securities are issued; and except
that with respect to equipment-trust certificates or like
securities, the term ‘‘issuer’’ means the person by whom the
equipment or property is, or is to be, used.
(9) The term ‘‘person’’ means a natural person, company,
government, or political subdivision, agency, or instrumentality
of a government.
(10) The term ‘‘security’’ means any note, stock, treasury
stock, security future, bond, debenture, certificate of interest or
participation in any profit-sharing agreement or in any oil, gas,
or other mineral royalty or lease, any collateral-trust certificate,
preorganization certificate or subscription, transferable
share, investment contract, voting-trust certificate, certificate
of deposit for a security, any put, call, straddle, option, or privilege
on any security, certificate of deposit, or group or index of
securities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered
into on a national securities exchange relating to foreign currency,
or in general, any instrument commonly known as a
‘‘security’’; or any certificate of interest or participation in, temporary
or interim certificate for, receipt for, or warrant or right
to subscribe to or purchase, any of the foregoing; but shall not
include currency or any note, draft, bill of exchange, or banker’s
acceptance which has a maturity at the time of issuance
of not exceeding nine months, exclusive of days of grace, or any
renewal thereof the maturity of which is likewise limited.
(11) The term ‘‘equity security’’ means any stock or similar
security; or any security future on any such security; or any
security convertible, with or without consideration, into such a
security, or carrying any warrant or right to subscribe to or
purchase such a security; or any such warrant or right; or any
other security which the Commission shall deem to be of similar
nature and consider necessary or appropriate, by such rules
and regulations as it may prescribe in the public interest or for
the protection of investors, to treat as an equity security.
(12)(A) The term ‘‘exempted security’’ or ‘‘exempted securities’’
includes—
(i) government securities, as defined in paragraph (42)
of this subsection;
(ii) municipal securities, as defined in paragraph (29)
of this subsection;
(iii) any interest or participation in any common trust
fund or similar fund that is excluded from the definition
of the term ‘‘investment company’’ under section 3(c)(3) of
the Investment Company Act of 1940;
(iv) any interest or participation in a single trust fund,
or a collective trust fund maintained by a bank, or any
security arising out of a contract issued by an insurance
13 SECURITIES EXCHANGE ACT OF 1934 Sec. 3
1 Additional exemptions contained at: 12 U.S.C. 1455, 1717, 1719, 1723c, 20 U.S.C. 1087–2,
1087hh; 22 U.S.C. 283h, 285h, 286k–1, 290i–9, 43 U.S.C. 1625; 45 U.S.C. 270.
2 26 U.S.C. 401.
3 26 U.S.C. 404(a)(2).
4 26 U.S.C. 414(d).
company, which interest, participation, or security is
issued in connection with a qualified plan as defined in
subparagraph (C) of this paragraph;
(v) any security issued by or any interest or participation
in any pooled income fund, collective trust fund, collective
investment fund, or similar fund that is excluded
from the definition of an investment company under section
3(c)(10)(B) of the Investment Company Act of 1940;
(vi) solely for purposes of sections 12, 13, 14, and 16
of this title, any security issued by or any interest or participation
in any church plan, company, or account that is
excluded from the definition of an investment company
under section 3(c)(14) of the Investment Company Act of
1940; and
(vii) such other securities (which may include, among
others, unregistered securities, the market in which is predominantly
intrastate) as the Commission may, by such
rules and regulations as it deems consistent with the public
interest and the protection of investors, either unconditionally
or upon specified terms and conditions or for
stated periods, exempt from the operation of any one or
more provisions of this title which by their terms do not
apply to an ‘‘exempted security’’ or to ‘‘exempted securities’’.
1
(B)(i) Notwithstanding subparagraph (A)(i) of this paragraph,
government securities shall not be deemed to be
‘‘exempted securities’’ for the purposes of section 17A of this
title.
(ii) Notwithstanding subparagraph (A)(ii) of this paragraph,
municipal securities shall not be deemed to be
‘‘exempted securities’’ for the purposes of sections 15 and 17A
of this title.
(C) For purposes of subparagraph (A)(iv) of this paragraph,
the term ‘‘qualified plan’’ means (i) a stock bonus, pension, or
profit-sharing plan which meets the requirements for qualification
under section 401 of the Internal Revenue Code of 1954,2
(ii) an annuity plan which meets the requirements for the
deduction of the employer’s contribution under section
404(a)(2) of such Code,3 or (iii) a governmental plan as defined
in section 414(d) 4 of such Code which has been established by
an employer for the exclusive benefit of its employees or their
beneficiaries for the purpose of distributing to such employees
or their beneficiaries the corpus and income of the funds accumulated
under such plan, if under such plan it is impossible,
prior to the satisfaction of all liabilities with respect to such
employees and their beneficiaries, for any part of the corpus or
income to be used for, or diverted to, purposes other than the
exclusive benefit of such employees or their beneficiaries, other
than any plan described in clause (i), (ii), or (iii) of this subSec.
3 SECURITIES EXCHANGE ACT OF 1934 14
5 26 U.S.C. 403(b).
1 The words ‘‘Philippine Islands’’ were deleted from the definition of the term ‘‘State’’ on the
basis of Presidential Proclamation No. 2695, effective July 4, 1946 (11 F.R. 7517; 60 Stat. 1352),
which granted Independence to the Philippine Islands.
paragraph which (I) covers employees some or all of whom are
employees within the meaning of section 401(c) of such Code,
or (II) is a plan funded by an annuity contract described in section
403(b) of such Code.5
(13) The terms ‘‘buy’’ and ‘‘purchase’’ each include any contract
to buy, purchase, or otherwise acquire. For security futures
products, such term includes any contract, agreement, or
transaction for future delivery.
(14) The terms ‘‘sale’’ and ‘‘sell’’ each include any contract
to sell or otherwise dispose of. For security futures products,
such term includes any contract, agreement, or transaction for
future delivery.
(15) The term ‘‘Commission’’ means the Securities and Exchange
Commission established by section 4 of this title.
(16) The term ‘‘State’’ means any State of the United
States, the District of Columbia, Puerto Rico, the Virgin Islands,
or any other possession of the United States.1
(17) The term ‘‘interstate commerce’’ means trade, commerce,
transportation, or communication among the several
States, or between any foreign country and any State, or between
any State and any place or ship outside thereof. The
term also includes intrastate use of (A) any facility of a national
securities exchange or of a telephone or other interstate
means of communication, or (B) any other interstate instrumentality.
(18) The term ‘‘person associated with a broker or dealer’’
or ‘‘associated person of a broker or dealer’’ means any partner,
officer, director, or branch manager of such broker or dealer (or
any person occupying a similar status or performing similar
functions), any person directly or indirectly controlling, controlled
by, or under common control with such broker or dealer,
or any employee of such broker or dealer, except that any person
associated with a broker or dealer whose functions are
solely clerical or ministerial shall not be included in the meaning
of such term for purposes of section 15(b) of this title (other
than paragraph (6) thereof).
(19) The terms ‘‘investment company,’’ ‘‘affiliated person,’’
‘‘insurance company,’’ ‘‘separate account,’’ and ‘‘company’’ have
the same meanings as in the Investment Company Act of 1940.
(20) The terms ‘‘investment adviser’’ and ‘‘underwriter’’
have the same meanings as in the Investment Advisers Act of
1940.
(21) The term ‘‘persons associated with a member’’ or
‘‘associated person of a member’’ when used with respect to a
member of a national securities exchange or registered securities
association means any partner, officer, director, or branch
manager of such member (or any person occupying a similar
status or performing similar functions), any person directly or
indirectly controlling, controlled by, or under common control
with such member, or any employee of such member.
15 SECURITIES EXCHANGE ACT OF 1934 Sec. 3
1 47 U.S.C. 153. [Printed in appendix to this volume.]
(22)(A) The term ‘‘securities information processor’’ means
any person engaged in the business of (i) collecting, processing,
or preparing for distribution or publication, or assisting, participating
in, or coordinating the distribution or publication of,
information with respect to transactions in or quotations for
any security (other than an exempted security) or (ii) distributing
or publishing (whether by means of a ticker tape, a communications
network, a terminal display device, or otherwise)
on a current and continuing basis, information with respect to
such transactions or quotations. The term ‘‘securities information
processor’’ does not include any bona fide newspaper, news
magazine, or business or financial publication of general and
regular circulation, any self-regulatory organization, any bank,
broker, dealer, building and loan, savings and loan, or homestead
association, or cooperative bank, if such bank, broker,
dealer, association, or cooperative bank would be deemed to be
a securities information processor solely by reason of functions
performed by such institutions as part of customary banking,
brokerage, dealing, association, or cooperative bank activities,
or any common carrier, as defined in section 3 of the Communications
Act of 1934,1 subject to the jurisdiction of the Federal
Communications Commission or a State commission, as defined
in section 3 of that Act, unless the Commission determines
that such carrier is engaged in the business of collecting,
processing, or preparing for distribution or publication, information
with respect to transactions in or quotations for any
security.
(B) The term ‘‘exclusive processor’’ means any securities
information processor or self-regulatory organization which, directly
or indirectly, engages on an exclusive basis on behalf of
any national securities exchange or registered securities association,
or any national securities exchange or registered securities
association which engages on an exclusive basis on its
own behalf, in collecting, processing, or preparing for distribution
or publication any information with respect to (i) transactions
or quotations on or effected or made by means of any
facility of such exchange or (ii) quotations distributed or published
by means of any electronic system operated or controlled
by such association.
(23)(A) The term ‘‘clearing agency’’ means any person who
acts as an intermediary in making payments or deliveries or
both in connection with transactions in securities or who provides
facilities for comparison of data respecting the terms of
settlement of securities transactions, to reduce the number of
settlements of securities transactions, or for the allocation of
securities settlement responsibilities. Such term also means
any person, such as a securities depository, who (i) acts as a
custodian of securities in connection with a system for the central
handling of securities whereby all securities of a particular
class or series of any issuer deposited within the system are
treated as fungible and may be transferred, loaned, or pledged
by bookkeeping entry without physical delivery of securities
Sec. 3 SECURITIES EXCHANGE ACT OF 1934 16
certificates, or (ii) otherwise permits or facilitates the settlement
of securities transactions or the hypothecation or lending
of securities without physical delivery of securities certificates.
(B) The term ‘‘clearing agency’’ does not include (i) any
Federal Reserve bank, Federal home loan bank, or Federal
land bank; (ii) any national securities exchange or registered
securities association solely by reason of its providing facilities
for comparison of data respecting the terms of settlement of
securities transactions effected on such exchange or by means
of any electronic system operated or controlled by such association;
(iii) any bank, broker, dealer, building and loan, savings
and loan, or homestead association, or cooperative bank if such
bank, broker, dealer, association, or cooperative bank would be
deemed to be a clearing agency solely by reason of functions
performed by such institution as part of customary banking,
brokerage, dealing, association, or cooperative banking activities,
or solely by reason of acting on behalf of a clearing agency
or a participant therein in connection with the furnishing by
the clearing agency of services to its participants or the use of
services of the clearing agency by its participants, unless the
Commission, by rule, otherwise provides as necessary or appropriate
to assure the prompt and accurate clearance and settlement
of securities transactions or to prevent evasion of this
title; (iv) any life insurance company, its registered separate
accounts, or a subsidiary of such insurance company solely by
reason of functions commonly performed by such entities in
connection with variable annuity contracts or variable life policies
issued by such insurance company or its separate accounts;
(v) any registered open-end investment company or
unit investment trust solely by reason of functions commonly
performed by it in connection with shares in such registered
open-end investment company or unit investment trust, or (vi)
any person solely by reason of its performing functions described
in paragraph 25(E) of this subsection.
(24) The term ‘‘participant’’ when used with respect to a
clearing agency means any person who uses a clearing agency
to clear or settle securities transactions or to transfer, pledge,
lend, or hypothecate securities. Such term does not include a
person whose only use of a clearing agency is (A) through another
person who is a participant or (B) as a pledgee of securities.
(25) The term ‘‘transfer agent’’ means any person who engages
on behalf of an issuer of securities or on behalf of itself
as an issuer of securities in (A) countersigning such securities
upon issuance; (B) monitoring the issuance of such securities
with a view to preventing unauthorized issuance, a function
commonly performed by a person called a registrar; (C) registering
the transfer of such securities; (D) exchanging or converting
such securities; or (E) transferring record ownership of
securities by bookkeeping entry without physical issuance of
securities certificates. The term ‘‘transfer agent’’ does not include
any insurance company or separate account which performs
such functions solely with respect to variable annuity
contracts or variable life policies which it issues or any reg17
SECURITIES EXCHANGE ACT OF 1934 Sec. 3
1 See footnote 1, p. 8. (26 U.S.C. 103(b).)
2 See footnote 2, p. 8. (26 U.S.C. 103(b)(13).)
istered clearing agency which performs such functions solely
with respect to options contracts which it issues.
(26) The term ‘‘self-regulatory organization’’ means any national
securities exchange, registered securities association, or
registered clearing agency, or (solely for purposes of sections
19(b), 19(c), and 23(b) of this title) the Municipal Securities
Rulemaking Board established by section 15B of this title.
(27) The term ‘‘rules of an exchange’’, ‘‘rules of an association’’,
or ‘‘rules of a clearing agency’’ means the constitution,
articles of incorporation, bylaws, and rules, or instruments corresponding
to the foregoing, of an exchange, association of brokers
and dealers, or clearing agency, respectively, and such of
the stated policies, practices, and interpretations of such exchange,
association, or clearing agency as the Commission, by
rule, may determine to be necessary or appropriate in the public
interest or for the protection of investors to be deemed to
be rules of such exchange, association, or clearing agency.
(28) The term ‘‘rules of a self-regulatory organization’’
means the rules of an exchange which is a national securities
exchange, the rules of an association of brokers and dealers
which is a registered securities association, the rules of a clearing
agency which is a registered clearing agency, or the rules
of the Municipal Securities Rulemaking Board.
(29) The term ‘‘municipal securities’’ means securities
which are direct obligations of, or obligations guaranteed as to
principal or interest by, a State or any political subdivision
thereof, or any agency or instrumentality of a State or any
political subdivision thereof, or any municipal corporate instrumentality
of one or more States, or any security which is an
industrial development bond (as defined in section 103(c)(2) of
the Internal Revenue Code of 1954) 1 the interest on which is
excludable from gross income under section 103(a)(1) of such
Code if, by reason of the application of paragraph (4) or (6) of
section 103(c) of such Code (determined as if paragraphs (4)(A),
(5), and (7) 2 were not included in such section 103(c)), paragraph
(1) of such section 103(c) does not apply to such security.
(30) The term ‘‘municipal securities dealer’’ means any person
(including a separately identifiable department or division
of a bank) engaged in the business of buying and selling municipal
securities for his own account, through a broker or otherwise,
but does not include—
(A) any person insofar as he buys or sells such securities
for his own account, either individually or in some
fiduciary capacity, but not as a part of a regular business;
or
(B) a bank, unless the bank is engaged in the business
of buying and selling municipal securities for its own account
other than in a fiduciary capacity, through a broker
or otherwise; Provided, however, That if the bank is engaged
in such business through a separately identifiable
department or division (as defined by the Municipal SecuSec.
3 SECURITIES EXCHANGE ACT OF 1934 18
rities Rulemaking Board in accordance with section
15B(b)(2)(H) of this title), the department or division and
not the bank itself shall be deemed to be the municipal
securities dealer.
(31) The term ‘‘municipal securities broker’’ means a
broker engaged in the business of effecting transactions in municipal
securities for the account of others.
(32) The term ‘‘person associated with a municipal securities
dealer’’ when used with respect to a municipal securities
dealer which is a bank or a division or department of a bank
means any person directly engaged in the management, direction,
supervision, or performance of any of the municipal securities
dealer’s activities with respect to municipal securities,
and any person directly or indirectly controlling such activities
or controlled by the municipal securities dealer in connection
with such activities.
(33) The term ‘‘municipal securities investment portfolio’’
means all municipal securities held for investment and not for
sale as part of a regular business by a municipal securities
dealer or by a person, directly or indirectly, controlling, controlled
by, or under common control with a municipal securities
dealer.
(34) The term ‘‘appropriate regulatory agency’’ means—
(A) When used with respect to a municipal securities
dealer:
(i) the Comptroller of the Currency, in the case of
a national bank or a bank operating under the Code
of Law for the District of Columbia, or a subsidiary or
a department or division of any such bank;
(ii) the Board of Governors of the Federal Reserve
System, in the case of a State member bank of the
Federal Reserve System, a subsidiary or a department
or division thereof, a bank holding company, a subsidiary
of a bank holding company which is a bank
other than a bank specified in clause (i) or (iii) of this
subparagraph, or a subsidiary or a department or division
of such subsidiary;
(iii) the Federal Deposit Insurance Corporation, in
the case of a bank insured by the Federal Deposit
Insurance Corporation (other than a member of the
Federal Reserve System), or a subsidiary or department
or division thereof; and
(iv) the Commission in the case of all other municipal
securities dealers.
(B) When used with respect to a clearing agency or
transfer agent:
(i) the Comptroller of the Currency, in the case of
a national bank or a bank operating under the Code
of Law for the District of Columbia, or a subsidiary of
any such bank;
(ii) the Board of Governors of the Federal Reserve
System, in the case of a State member bank of the
Federal Reserve System, a subsidiary thereof, a bank
holding company, or a subsidiary of a bank holding
19 SECURITIES EXCHANGE ACT OF 1934 Sec. 3
company which is a bank other than a bank specified
in clause (i) or (iii) of this subparagraph;
(iii) the Federal Deposit Insurance Corporation, in
the case of a bank insured by the Federal Deposit
Insurance Corporation (other than a member of the
Federal Reserve System), or a subsidiary thereof; and
(iv) the Commission in the case of all other clearing
agencies and transfer agents.
(C) When used with respect to a participant or applicant
to become a participant in a clearing agency or a person
requesting or having access to services offered by a
clearing agency:
(i) the Comptroller of the Currency, in the case of
a national bank or a bank operating under the Code
of Law for the District of Columbia when the appropriate
regulatory agency for such clearing agency is
not the Commission;
(ii) the Board of Governors of the Federal Reserve
System in the case of a State member bank of the Federal
Reserve System, a bank holding company, or a
subsidiary of a bank holding company, or a subsidiary
of a bank holding company which is a bank other than
a bank specified in clause (i) or (iii) of this subparagraph
when the appropriate regulatory agency for
such clearing agency is not the Commission;
(iii) the Federal Deposit Insurance Corporation, in
the case of a bank insured by the Federal Deposit
Insurance Corporation (other than a member of the
Federal Reserve System) when the appropriate regulatory
agency for such clearing agency is not the Commission;
and
(iv) the Commission in all other cases.
(D) When used with respect to an institutional investment
manager which is a bank the deposits of which are
insured in accordance with the Federal Deposit Insurance
Act:
(i) the Comptroller of the Currency, in the case of
a national bank or a bank operating under the Code
of Law for the District of Columbia;
(ii) the Board of Governors of the Federal Reserve
System, in the case of any other member bank of the
Federal Reserve System; and
(iii) the Federal Deposit Insurance Corporation, in
the case of any other insured bank.
(E) When used with respect to a national securities exchange
or registered securities association, member
thereof, person associated with a member thereof, applicant
to become a member thereof or to become associated
with a member thereof, or person requesting or having access
to services offered by such exchange or association or
member thereof, or the Municipal Securities Rulemaking
Board, the Commission.
(F) When used with respect to a person exercising
investment discretion with respect to an account:
Sec. 3 SECURITIES EXCHANGE ACT OF 1934 20
(i) the Comptroller of the Currency, in the case of
a national bank or a bank operating under the Code
of Law for the District of Columbia;
(ii) the Board of Governors of the Federal Reserve
System in the case of any other member bank of the
Federal Reserve System;
(iii) the Federal Deposit Insurance Corporation, in
the case of any other bank the deposits of which are
insured in accordance with the Federal Deposit Insurance
Act; and
(iv) the Commission in the case of all other such
persons.
(G) When used with respect to a government securities
broker or government securities dealer, or person associated
with a government securities broker or government
securities dealer:
(i) the Comptroller of the Currency, in the case of
a national bank, a bank in the District of Columbia
examined by the Comptroller of the Currency, or a
Federal branch or Federal agency of a foreign bank (as
such terms are used in the International Banking Act
of 1978);
(ii) the Board of Governors of the Federal Reserve
System, in the case of a State member bank of the
Federal Reserve System, a foreign bank, an uninsured
State branch or State agency of a foreign bank, a commercial
lending company owned or controlled by a foreign
bank (as such terms are used in the International
Banking Act of 1978), or a corporation organized or
having an agreement with the Board of Governors of
the Federal Reserve System pursuant to section 25 or
section 25A of the Federal Reserve Act;
(iii) the Federal Deposit Insurance Corporation, in
the case of a bank insured by the Federal Deposit
Insurance Corporation (other than a member of the
Federal Reserve System or a Federal savings bank) or
an insured State branch of a foreign bank (as such
terms are used in the International Banking Act of
1978);
(iv) the Director of the Office of Thrift Supervision,
in the case of a savings association (as defined
in section 3(b) of the Federal Deposit Insurance Act)
the deposits of which are insured by the Federal Deposit
Insurance Corporation;
(v) the Commission, in the case of all other government
securities brokers and government securities
dealers.
As used in this paragraph, the terms ‘‘bank holding company’’
and ‘‘subsidiary of a bank holding company’’ have the meanings
given them in section 2 of the Bank Holding Company Act
of 1956, and the term ‘‘District of Columbia savings and loan
association’’ means any association subject to examination and