Exchange Act § 3 
Definitions and Application
a. Definitions
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 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,
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).
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 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 24 of Title 12, in conformity with
section
15C 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 1841 of Title 12), 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 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 November 12, 1999; 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 1841 of Title 12) other than--
I. a registered broker or dealer; or
II. an affiliate that is engaged in merchant banking,
as described in section 1843(k)(4)(H) of Title 12.
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
November 12, 1999, is not affiliated with a broker or dealer that has
been registered for more than 1 year in accordance with this title, 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;
(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) 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)).
ix. Identified
banking products
The bank effects transactions in identified banking products
as defined in section 206 of the Gramm-Leach-Bliley Act [15 U.S.C.A. §
78c note].
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--
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 November 12, 1999, 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 24 of Title 12, in conformity with
section
15C 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.
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 [15 U.S.C.A. § 78c
note].
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 section 92a of Title 12, 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.
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 collateral-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);
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 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);
vi. solely
for purposes of sections 12,
13,
14,
and, 16,
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); 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".
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.
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.
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 Title 26,
(ii) an annuity plan which meets the requirements for the deduction of
the employer's contribution under section 404(a)(2) of Title 26, or (iii)
a governmental plan as defined in section 414(d) of Title 26 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 subparagraph
which (I) covers employees some or all of whom are employees within the
meaning of section 401(c) of Title 26, or (II) is a plan funded by an
annuity contract described in section 403(b) of Title 26.
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.
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.
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) (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 "person 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.
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 organizations, 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 153 of Title 47, subject to the
jurisdiction of the Federal Communications Commission or a State commission,
as defined in section 153 of Title 47, 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 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 registered 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))
the Municipal Securities Rulemaking Board established by
section
15B.
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 Title 26) the interest on which is excludable from
gross income under section 103(a)(1) of Title 26 if, by reason of the
application of paragraph (4) or (6) of section 103(c) of Title 26 (determined
as if paragraphs (4)(A), (5), and (7) were not included in such section
103(c)), paragraph (1) of such section 103(c) does not apply to such security.
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 Securities Rulemaking Board in
accordance with section
15B(b)(2)(H)), 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 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 [12 U.S.C.A. § 1811 et seq.]:
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;
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 [12 U.S.C.A. § 1811 et seq.]; 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 [12 U.S.C.A. § 3101
et seq.]);
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 [12 U.S.C.A. § 601
et seq. or 611 et seq.];
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 1813(b) of Title 12) the deposits of
which are insured by the Federal Deposit Insurance Corporation; and
v. the
Commission, in the case of all other government securities brokers and
government securities dealers.
H. When used
with respect to an institution described in subparagraph (D), (F), or
(G) of section 1841(c)(2), or held under section 1843(f), of Title 12--
i. the
Comptroller of the Currency, in the case of a national bank or a bank
in the District of Columbia examined by the Comptroller of the Currency;
ii. the
Board of Governors of the Federal Reserve System, in the case of a State
member bank of the Federal Reserve System or any corporation chartered
under section 25A of the Federal Reserve Act [12 U.S.C.A. § 611 et seq.];
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 [12 U.S.C.A. § 1811 et seq.]; or
iv. the
Commission in the case of all other such institutions.
As used in this paragraph, the terms "bank holding company"
and "subsidiary of a bank holding company" have the meanings
given them in section 1841 of Title 12, and the term "District of
Columbia savings and loan association" means any association subject
to examination and supervision by the Office of Thrift Supervision under
section 1466a of Title 12.
35. A
person exercises "investment discretion"
with respect to an account if, directly or indirectly, such person (A)
is authorized to determine what securities or other property shall be
purchased or sold by or for the account, (B) makes decisions as to what
securities or other property shall be purchased or sold by or for the
account even though some other person may have responsibility for such
investment decisions, or (C) otherwise exercises such influence with respect
to the purchase and sale of securities or other property by or for the
account as the Commission, by rule, determines, in the public interest
or for the protection of investors, should be subject to the operation
of the provisions of this title and the rules and regulations thereunder.
36. A
class of persons or markets is subject to "equal
regulation" if no member of the class has a competitive advantage
over any other member thereof resulting from a disparity in their regulation
under this title which the Commission determines is unfair and not necessary
or appropriate in furtherance of the purposes of this title.
37. The
term "records" means accounts, correspondence,
memorandums, tapes, discs, papers, books, and other documents or transcribed
information of any type, whether expressed in ordinary or machine language.
38. The
term "market maker" means any specialist
permitted to act as a dealer, any dealer acting in the capacity of block
positioner, and any dealer who, with respect to a security, holds himself
out (by entering quotations in an inter-dealer communications system or
otherwise) as being willing to buy and sell such security for his own
account on a regular or continuous basis.
39. A person is subject
to a "statutory disqualification"
with respect to membership or participation in, or association with a
member of, a self- regulatory organization, if such person --
A. has
been and is expelled or suspended from membership or participation in,
or barred or suspended from being associated with a member of, any self-
regulatory organization, foreign equivalent of a self regulatory organization,
foreign or international securities exchange, contract market designated
pursuant to section 5 of the Commodity Exchange Act (7 U.S.C. 7), or any
substantially equivalent foreign statute or regulation, or futures association
registered under section 17 of such Act (7 U.S.C. 21), or any substantially
equivalent foreign statute or regulation, or has been and is denied trading
privileges on any such contract market or foreign equivalent;
B. is subject
to --
i. an
order of the Commission, other appropriate regulatory agency, or foreign
financial regulatory authority --
I. denying, suspending for a period not exceeding 12
months, or revoking his registration as a broker, dealer, municipal securities
dealer, government securities broker, or government securities dealer
or limiting his activities as a foreign person performing a function substantially
equivalent to any of the above; or
II. barring or suspending for a period not exceeding
12 months his being associated with a broker, dealer, municipal securities
dealer, government securities broker, government securities dealer, or
foreign person performing a function substantially equivalent to any of
the above;
ii. an
order of the Commodity Futures Trading Commission denying, suspending,
or revoking his registration under the Commodity Exchange Act (7 U.S.C.
1 et seq.); or
iii. an
order by a foreign financial regulatory authority denying, suspending,
or revoking the person's authority to engage in transactions in contracts
of sale of a commodity for future delivery or other instruments traded
on or subject to the rules of a contract market, board of trade, or foreign
equivalent thereof;
C. by
his conduct while associated with a broker, dealer, municipal securities
dealer, government securities broker, or government securities dealer,
or while associated with an entity or person required to be registered
under the Commodity Exchange Act [7 U.S.C.A. § 1 et seq.], has been found
to be a cause of any effective suspension, expulsion, or order of the
character described in subparagraph (A) or (B) of this paragraph, and
in entering such a suspension, expulsion, or order, the Commission, an
appropriate regulatory agency, or any such self-regulatory organization
shall have jurisdiction to find whether or not any person was a cause
thereof;
D. by
his conduct while associated with any broker, dealer, municipal securities
dealer, government securities broker, government securities dealer, or
any other entity engaged in transactions in securities, or while associated
with an entity engaged in transactions in contracts of sale of a commodity
for future delivery or other instruments traded on or subject to the rules
of a contract market, board of trade, or foreign equivalent thereof, has
been found to be a cause of any effective suspension, expulsion, or order
by a foreign or international securities exchange or foreign financial
regulatory authority empowered by a foreign government to administer or
enforce its laws relating to financial transactions as described in
subparagraph
(A) or (B) of this paragraph;
E. has
associated with him any person who is known, or in the exercise of reasonable
care should be known, to him to be a person described by
subparagraph
(A), (B),
(C), or
(D) of this paragraph; or
F. has
committed or omitted any act, or is subject to an order or finding, enumerated
in subparagraph (D),
(E),
(H), or
(G) of paragraph
(4) of section 15(b), has been convicted of any offense specified
in subparagraph (B) of such paragraph (4) or any other felony within ten
years of the date of the filing of an application for membership or participation
in, or to become associated with a member of, such self-regulatory organization,
is enjoined from any action, conduct, or practice specified in
subparagraph
(C) of such paragraph (4), has willfully made or caused to be made in
any application for membership or participation in, or to become associated
with a member of, a self regulatory organization, report required to be
filed with a self-regulatory organization, or proceeding before a self-regulatory
organization, any statement which was at the time, and in the light of
the circumstances under which it was made, false or misleading with respect
to any material fact, or has omitted to state in any such application,
report, or proceeding any material fact which is required to be stated
therein.
40. The
term "financial responsibility
rules" means the rules and regulations of the Commission or the
rules and regulations prescribed by any self-regulatory organization relating
to financial responsibility and related practices which are designated
by the Commission, by rule or regulation, to be financial responsibility
rules.
41. The term "mortgage related security" means
a security that is rated in one of the two highest rating categories by
at least one nationally recognized statistical rating organization, and
either:
A. represents
ownership of one or more promissory notes or certificates of interest
or participation in such notes (including any rights designed to assure
servicing of, or the receipt or timeliness of receipt by the holders of
such notes, certificates, or participations of amounts payable under,
such notes, certificates, or participations), which notes:
i. are
directly secured by a first lien on a single parcel of real estate, including
stock allocated to a dwelling unit in a residential cooperative housing
corporation, upon which is located a dwelling or mixed residential and
commercial structure, on a residential manufactured home as defined in
section 5402(6) of Title 42, whether such manufactured home is considered
real or personal property under the laws of the State in which it is to
be located or on one or more parcels of real estate upon which is located
one or more commercial structures; and
ii. were
originated by a savings and loan association, savings bank, commercial
bank, credit union, insurance company, or similar institution which is
supervised and examined by a Federal or State authority, or by a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to
sections 1709 and 1715b of Title 12, or, where such notes involve a lien
on the manufactured home, by any such institution or by any financial
institution approved for insurance by the Secretary of Housing and Urban
Development pursuant to section 1703 of Title 12; or
B. is
secured by one or more promissory notes or certificates of interest or
participations in such notes (with or without recourse to the issuer thereof)
and, by its terms, provides for payments of principal in relation to payments,
or reasonable projections of payments, on notes meeting the requirements
of subparagraphs (A)(i) and (ii) or certificates of interest or participations
in promissory notes meeting such requirements.
For the purpose of this paragraph, the term "promissory note",
when used in connection with a manufactured home, shall also include a
loan, advance, or credit sale as evidenced by a retail installment sales
contract or other instrument.
42. The term "government securities" means--
A. securities
which are direct obligations of, or obligations guaranteed as to principal
or interest by, the United States;
B. securities
which are issued or guaranteed by corporations in which the United States
has a direct or indirect interest and which are designated by the Secretary
of the Treasury for exemption as necessary or appropriate in the public
interest or for the protection of investors;
C. securities
issued or guaranteed as to principal or interest by any corporation the
securities of which are designated, by statute specifically naming such
corporation, to constitute exempt securities within the meaning of the
laws administered by the Commission;
D. for purposes
of sections 15C and
17A, any put, call, straddle, option, or privilege
on a security described in subparagraph (A), (B), or (C) other than a
put, call, straddle, option, or privilege--
i. that
is traded on one or more national securities exchanges; or
ii. for
which quotations are disseminated through an automated quotation system
operated by a registered securities association; or
E. for
purposes of sections 15,
15C,
and 17A
as applied to a bank, a qualified Canadian government obligation as defined
in section 24 of Title 12.
43. The term "government
securities broker" means any person regularly engaged in the business
of effecting transactions in government securities for the account of
others, but does not include--
A. any
corporation the securities of which are government securities under
subparagraph
(B) or (C) of paragraph (42) of this subsection; or
B. any
person registered with the Commodity Futures Trading Commission, any contract
market designated by the Commodity Futures Trading Commission, such contract
market's affiliated clearing organization, or any floor trader on such
contract market, solely because such person effects transactions in government
securities that the Commission, after consultation with the Commodity
Futures Trading Commission, has determined by rule or order to be incidental
to such person's futures-related business.
44. The term "government
securities dealer" means any person engaged in the business of buying
and selling government 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;
B. any
corporation the securities of which are government securities under
subparagraph
(B) or (C) of paragraph (42) of this subsection;
C. any
bank, unless the bank is engaged in the business of buying and selling
government securities for its own account other than in a fiduciary capacity,
through a broker or otherwise; or
D. any
person registered with the Commodity Futures Trading Commission, any contract
market designated by the Commodity Futures Trading Commission, such contract
market's affiliated clearing organization, or any floor trader on such
contract market, solely because such person effects transactions in government
securities that the Commission, after consultation with the Commodity
Futures Trading Commission, has determined by rule or order to be incidental
to such person's futures-related business.
45. The
term "person associated with a government securities broker or government
securities dealer" means any partner, officer, director, or branch
manager of such government securities broker or government securities
dealer (or any person occupying a similar status or performing similar
functions), and any other employee of such government securities broker
or government securities dealer who is engaged in the management, direction,
supervision, or performance of any activities relating to government securities,
and any person directly or indirectly controlling, controlled by, or under
common control with such government securities broker or government securities
dealer.
46. The term "financial institution" means--
A. a
bank (as defined in paragraph (6) of this subsection);
B. a
foreign bank (as such term is used in the International Banking Act of
1978); and
C. a
savings association (as defined in section 1813(b) of Title 12) the deposits
of which are insured by the Federal Deposit Insurance Corporation.
47. The
term "securities laws" means the
Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley
Act of 2002, the Public Utility Holding Company Act of 1935 (15 U.S.C.
79a et seq.) [15 U.S.C.A. § 79 et seq.], the Trust Indenture Act of 1939
(15 U.S.C. 77aaa et seq.), the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and the Securities Investor Protection Act of 1970
(15 U.S.C. 78aaa et seq.).
48. The
term "registered broker or dealer"
means a broker or dealer registered or required to register pursuant to
section 15
or 15B,
except that in paragraph (3) of this subsection and
sections 6
and 15A
the term means such a broker or dealer and a government securities broker
or government securities dealer registered or required to register pursuant
to section
15C(a)(1)(A).
49. The
term "person associated with a transfer agent" and "associated
person of a transfer agent" mean any person (except an employee whose
functions are solely clerical or ministerial) directly engaged in the
management, direction, supervision, or performance of any of the transfer
agent's activities with respect to transfer agent functions, and any person
directly or indirectly controlling such activities or controlled by the
transfer agent in connection with such activities.
50. The
term "foreign securities authority"
means any foreign government, or any governmental body or regulatory organization
empowered by a foreign government to administer or enforce its laws as
they relate to securities matters.
51.
A. The term
"penny stock" means any equity security
other than a security that is--
i. registered
or approved for registration and traded on a national securities exchange
that meets such criteria as the Commission shall prescribe by rule or
regulation for purposes of this paragraph;
ii. authorized
for quotation on an automated quotation system sponsored by a registered
securities association, if such system (I) was established and in operation
before January 1, 1990, and (II) meets such criteria as the Commission
shall prescribe by rule or regulation for purposes of this paragraph;
iii. issued
by an investment company registered under the Investment Company Act of
1940;
iv. excluded,
on the basis of exceeding a minimum price, net tangible assets of the
issuer, or other relevant criteria, from the definition of such term by
rule or regulation which the Commission shall prescribe for purposes of
this paragraph; or
v. exempted,
in whole or part, conditionally or unconditionally, from the definition
of such term by rule, regulation, or order prescribed by the Commission.
B. The
Commission may, by rule, regulation, or order, designate any equity security
or class of equity securities described in clause (i) or (ii) of subparagraph
(A) as within the meaning of the term "penny stock" if such
security or class of securities is traded other than on a national securities
exchange or through an automated quotation system described in clause
(ii) of subparagraph (A).
C. In
exercising its authority under this paragraph to prescribe rules, regulations,
and orders, the Commission shall determine that such rule, regulation,
or order is consistent with the public interest and the protection of
investors.
52. The
term "foreign financial
regulatory authority" means any (A) foreign securities authority,
(B) other governmental body or foreign equivalent of a self-regulatory
organization empowered by a foreign government to administer or enforce
its laws relating to the regulation of fiduciaries, trusts, commercial
lending, insurance, trading in contracts of sale of a commodity for future
delivery, or other instruments traded on or subject to the rules of a
contract market, board of trade, or foreign equivalent, or other financial
activities, or (C) membership organization a function of which is to regulate
participation of its members in activities listed above.
53.
A. The term
"small business related security"
means a security that is rated in 1 of the 4 highest rating categories
by at least 1 nationally recognized statistical rating organization, and
either --
i. represents
an interest in 1 or more promissory notes or leases of personal property
evidencing the obligation of a small business concern and originated by
an insured depository institution, insured credit union, insurance company,
or similar institution which is supervised and examined by a Federal or
State authority, or a finance company or leasing company; or
ii. is
secured by an interest in 1 or more promissory notes or leases of personal
property (with or without recourse to the issuer or lessee) and provides
for payments of principal in relation to payments, or reasonable projections
of payments, on notes or leases described in
clause (i).
B. For purposes
of this paragraph --
i. an
"interest in a promissory note or a lease of personal property"
includes ownership rights, certificates of interest or participation in
such notes or leases, and rights designed to assure servicing of such
notes or leases, or the receipt or timely receipt of amounts payable under
such notes or leases;
ii. the
term "small business concern" means a business that meets the
criteria for a small business concern established by the Small Business
Administration under section 632(a) of this title;
iii. the
term "insured depository institution" has the same meaning as
in section 1813 of Title 12; and
iv. the
term "insured credit union" has the same meaning as in section
1752 of Title 12.
54. Qualified
investor
A. Definition
Except as provided in subparagraph (B), for purposes of this
title, the term 'qualified investor' means --
i. any
investment company registered with the Commission under section
8 of the Investment Company Act of 1940;
ii. any
issuer eligible for an exclusion from the definition of investment company
pursuant to section
3(c)(7) of the Investment Company Act of 1940;
iii. any
bank (as defined in paragraph (6) of this subsection),
savings association (as defined in section 1813(b) of Title 12), broker,
dealer, insurance company (as defined in
section
2(a)(13)) of the Securities Act of 1933, or business development company
(as defined in section
2(a)(48) of the Investment Company Act of 1940);
iv. any
small business investment company licensed by the United States Small
Business Administration under section 681(c) or (d) of this title;
v. any
State sponsored employee benefit plan, or any other employee benefit plan,
within the meaning of the Employee Retirement Income Security Act of 1974,
other than an individual retirement account, if the investment decisions
are made by a plan fiduciary, as defined in section 1002(21) of Title
29, which is either a bank, savings and loan association, insurance company,
or registered investment adviser;
vi. any
trust whose purchases of securities are directed by a person described
in clauses (i) through (v) of this subparagraph;
vii. any
market intermediary exempt under section
3(c)(2) of the Investment Company Act of 1940;
viii. any
associated person of a broker or dealer other than a natural person;
ix. any
foreign bank (as defined in section 3101(b)(7) of Title 12);
x. the
government of any foreign country;
xi. any
corporation, company, or partnership that owns and invests on a discretionary
basis, not less than $25,000,000 in investments;
xii. any
natural person who owns and invests on a discretionary basis, not less
than $25,000,000 in investments;
xiii. any
government or political subdivision, agency, or instrumentality of a government
who owns and invests on a discretionary basis not less than $50,000,000
in investments; or
xiv. any
multinational or supranational entity or any agency or instrumentality
thereof.
B. Altered
thresholds for asset-backed securities and loan participations
For purposes of subsection (a)(5)(C)(iii)
of this section and section 206(a)(5) of the Gramm-Leach-Bliley Act [15
U.S.C.A. § 78c note], the term 'qualified investor' has the meaning given
such term by subparagraph (A) of this paragraph except that clauses (xi)
and (xii) shall be applied by substituting '$10,000,000' for '$25,000,000'.
C. Additional
authority
The Commission may, by rule or order, define a "qualified
investor" as any other person, taking into consideration such factors
as the financial sophistication of the person, net worth, and knowledge
and experience in financial matters.
55.
A. The
term "security future" means a contract
of sale for future delivery of a single security or of a narrow-based
security index, including any interest therein or based on the value thereof,
except an exempted security under subsection (a)(12)
as in effect on January 11, 1983 (other than any municipal security as
defined in subsection (a)(29) as in effect on January
11, 1983). The term "security future" does not include any agreement,
contract, or transaction excluded from the Commodity Exchange Act under
section 2(c), 2(d) , 2(f), or 2(g) of Title 7 (as in effect on December
21, 2000) or title IV of the Commodity Futures Modernization Act of 2000.
B. The term
"narrow-based security index"
means an index --
i. that
has 9 or fewer component securities;
ii. in
which a component security comprises more than 30 percent of the index's
weighting;
iii. in
which the five highest weighted component securities in the aggregate
comprise more than 60 percent of the index's weighting; or
iv. in
which the lowest weighted component securities comprising, in the aggregate,
25 percent of the index's weighting have an aggregate dollar value of
average daily trading volume of less than $50,000,000 (or in the case
of an index with 15 or more component securities, $30,000,000), except
that if there are two or more securities with equal weighting that could
be included in the calculation of the lowest weighted component securities
comprising, in the aggregate, 25 percent of the index's weighting, such
securities shall be ranked from lowest to highest dollar value of average
daily trading volume and shall be included in the calculation based on
their ranking starting with the lowest ranked security.
C. Notwithstanding
subparagraph (B), an index is not a narrow-based security index if--
i.
I. it has at least nine component securities;
II. no component security comprises more than 30 percent
of the index' s weighting; and
III. each
component security is--
(aa) registered
pursuant to section 12;
(bb) one of 750 securities
with the largest market capitalization; and
(cc) one of 675 securities
with the largest dollar value of average daily trading volume;
ii. a
board of trade was designated as a contract market by the Commodity Futures
Trading Commission with respect to a contract of sale for future delivery
on the index, before December 21, 2000;
iii.
I. a contract of sale for future delivery on the index
traded on a designated contract market or registered derivatives transaction
execution facility for at least 30 days as a contract of sale for future
delivery on an index that was not a narrow-based security index; and
II. it has been a narrow-based security index for no
more than 45 business days over 3 consecutive calendar months;
iv. a
contract of sale for future delivery on the index is traded on or subject
to the rules of a foreign board of trade and meets such requirements as
are jointly established by rule or regulation by the Commission and the
Commodity Futures Trading Commission;
v. no
more than 18 months have passed since December 21, 2000 and--
I. it is traded on or subject to the rules of a foreign
board of trade;
II. the offer and sale in the United States of a contract
of sale for future delivery on the index was authorized before December
21, 2000; and
III. the conditions of such authorization continue to
be met; or
vi. a
contract of sale for future delivery on the index is traded on or subject
to the rules of a board of trade and meets such requirements as are jointly
established by rule, regulation, or order by the Commission and the Commodity
Futures Trading Commission.
D. Within
1 year after December 21, 2000, the Commission and the Commodity Futures
Trading Commission jointly shall adopt rules or regulations that set forth
the requirements under clause (iv) of subparagraph (C).
E. An
index that is a narrow-based security index solely because it was a narrow-based
security index for more than 45 business days over 3 consecutive calendar
months pursuant to clause (iii) of subparagraph (C) shall not be a narrow-based
security index for the 3 following calendar months.
F. For purposes
of subparagraphs (B) and (C) of this paragraph--
i. the
dollar value of average daily trading volume and the market capitalization
shall be calculated as of the preceding 6 full calendar months; and
ii. the
Commission and the Commodity Futures Trading Commission shall, by rule
or regulation, jointly specify the method to be used to determine market
capitalization and dollar value of average daily trading volume.
56. The
term "security futures product"
means a security future or any put, call, straddle, option, or privilege
on any security future.
57.
A. The
term "margin", when used with respect to a security
futures product, means the amount, type, and form of collateral required
to secure any extension or maintenance of credit, or the amount, type,
and form of collateral required as a performance bond related to the purchase,
sale, or carrying of a security futures product.
B. The
terms "margin level" and "level of margin", when used with
respect to a security futures product, mean the amount of margin required
to secure any extension or maintenance of credit, or the amount of margin
required as a performance bond related to the purchase, sale, or carrying
of a security futures product.
C. The
terms "higher margin level" and "higher level of margin",
when used with respect to a security futures product, mean a margin level
established by a national securities exchange registered pursuant to
section
6(g) that is higher than the minimum amount established and in effect
pursuant to section
7(c)(2)(B).
58.
Audit
committee
The term 'audit committee' means --
A. a
committee (or equivalent body) established by and amongst the board of
directors of an issuer for the purpose of overseeing the accounting and
financial reporting processes of the issuer and audits of the financial
statements of the issuer; and
B. if
no such committee exists with respect to an issuer, the entire board of
directors of the issuer.
59.
Registered public accounting firm
The term 'registered public accounting firm' has the same meaning
as in section
2 of the Sarbanes-Oxley Act of 2002.
60.
Credit rating.--The term 'credit rating' means an assessment of the creditworthiness of an obligor as an entity or with respect to specific securities or money market instruments.
61. Credit rating agency.--The term 'credit rating agency' means any person--
A. engaged in the business of issuing credit ratings on the Internet or through another readily accessible means, for free or for a reasonable fee, but does not include a commercial credit reporting company;
B. either a quantitative or qualitative model, or both, to determine credit ratings; and
C. receiving fees from either issuers, investors, or other market participants, or a combination thereof.
62. Nationally recognized statistical rating organization.-- The term 'nationally recognized statistical rating organization' means a credit rating agency that--
A. has been in business as a credit rating agency for at least the 3 consecutive years immediately preceding the date of its application for registration under section 15E;
B. issues credit ratings certified by qualified institutional buyers, in accordance with section 15E(a)(1)(B)(ix), with respect to--
i. financial institutions, brokers, or dealers;
ii. insurance companies;
iii. corporate issuers;
iv. issuers of asset-backed securities (as that term is defined in section 1101(c) of part 229 of title 17, Code of Federal Regulations, as in effect on the date of enactment of this paragraph); ;
v. issuers of government securities, municipal securities, or securities issued by a foreign government; or
vi. a combination of one or more categories of obligors described in any of clauses (i) through (v); and
C. is registered under section 15E.
63. Person associated with a nationally recognized statistical rating organization.--The term 'person associated with' a nationally recognized statistical rating organization means any partner, officer, director, or branch manager of a nationally recognized statistical rating organization (or any person occupying a similar status or performing similar functions), any person directly or indirectly controlling, controlled by, or under common control with a nationally recognized statistical rating organization, or any employee of a nationally recognized statistical rating organization.
64. Qualified institutional buyer.--The term 'qualified institutional buyer' has the meaning given such term in section
230.144A(a) of title 17, Code of Federal Regulations, or any successor
thereto.''
b. Applicable Definitions.--As used in this Act--
1. the term ''Commission'' means the Securities and Exchange Commission; and
2. the term ''nationally recognized statistical rating organization'' has the same meaning as in section 3(a)(62) of the Securities Exchange Act of 1934, as added by this Act.
c. Power
to define technical, trade, accounting, and other terms
The Commission and the Board of Governors of the Federal Reserve System,
as to matters within their respective jurisdictions, shall have power
by rules and regulations to define technical, trade, accounting, and other
terms used in this title, consistently with the provisions and purposes
of this title.
d. Application
to governmental departments or agencies
No provision of this title shall apply to, or be deemed to include,
any executive department or independent establishment of the United States,
or any lending agency which is wholly owned, directly or indirectly, by
the United States, or any officer, agent, or employee of any such department,
establishment, or agency, acting in the course of his official duty as
such, unless such provision makes specific reference to such department,
establishment, or agency.
e. Issuers
of municipal securities
No issuer of municipal securities or officer or employee thereof acting
in the course of his official duties as such shall be deemed to be a "broker",
"dealer", or "municipal securities dealer" solely
by reason of buying, selling, or effecting transactions in the issuer's
securities.
f. Charitable organizations
1. Exemption
Notwithstanding any other provision of this title, but subject
to paragraph (2) of this subsection, a charitable organization, as defined
in section
3(c)(10)(D) of the Investment Company Act of 1940 or any trustee,
director, officer, employee, or volunteer of such a charitable organization
acting within the scope of such person's employment or duties with such
organization, shall not be deemed to be a "broker", "dealer",
"municipal securities broker", "municipal securities dealer",
"government securities broker", or "government securities
dealer" for purposes of this title solely because such organization
or person buys, holds, sells, or trades in securities for its own account
in its capacity as trustee or administrator of, or otherwise on behalf
of or for the account of--
A. such
a charitable organization;
B. a
fund that is excluded from the definition of an investment company under
section
3(c)(10)(B) of the Investment Company Act of 1940; or
C. a
trust or other donative instrument described in section 3(c)(10)(B) of
the Investment Company Act of 1940, or the settlors (or potential settlors)
or beneficiaries of any such trust or other instrument.
2. Limitation
on compensation
The exemption provided under
paragraph (1) shall not be available
to any charitable organization, or any trustee, director, officer, employee,
or volunteer of such a charitable organization, unless each person who,
on or after 90 days after December 8, 1995, solicits donations on behalf
of such charitable organization from any donor to a fund that is excluded
from the definition of an investment company under section 3(c)(10)(B)
of the Investment Comapny Act of 1940, is either a volunteer or is engaged
in the overall fund raising activities of a charitable organization and
receives no commission or other special compensation based on the number
or the value of donations collected for the fund.
g. Consideration
of promotion of efficiency, competition, and capital formation
Whenever pursuant to this title the Commission is engaged in rulemaking,
or in the review of a rule of a self-regulatory organization, and is required
to consider or determine whether an action is necessary or appropriate
in the public interest, the Commission shall also consider, in addition
to the protection of investors, whether the action will promote efficiency,
competition, and capital formation.
h. Church plans
No church plan described in section 414(e) of Title 26, no person or
entity eligible to establish and maintain such a plan under Title 26,
no 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 no trustee, director,
officer or employee of or volunteer for such plan, company, account person,
or entity, acting within the scope of that person's employment or activities
with respect to such plan, shall be deemed to be a "broker",
"dealer", "municipal securities broker", "municipal
securities dealer", "government securities broker", "government
securities dealer", "clearing agency", or "transfer
agent" for purposes of this title--
1. solely
because such plan, company, person, or entity buys, holds, sells, trades
in, or transfers securities or acts as an intermediary in making payments
in connection with transactions in securities for its own account in its
capacity as trustee or administrator of, or otherwise on behalf of, or
for the account of, 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
2. if
no such person or entity receives a commission or other transaction- related
sales compensation in connection with any activities conducted in reliance
on the exemption provided by this subsection.
|
June 6, 1934, c. 404, Title I, § 3, 48 Stat.
882
Aug. 23, 1935, c. 614, § 203(a), 49 Stat. 704; Proc. No.
2695, eff. July 4, 1946, 11 F.R. 7517, 60 Stat. 1352
June 25, 1959, Pub.L. 86-70, § 12(b), 73 Stat. 143
July 12, 1960, Pub.L. 86-624, § 7(b), 74 Stat. 412
Aug. 20, 1964, Pub.L. 88-467, § 2, 78 Stat. 565
Aug. 10, 1970, Pub.L. 91-373, Title IV, § 401(b), 84 Stat. 718
Dec. 14, 1970, Pub.L. 91-547, § 28(a), (b), 84 Stat. 1435
Dec. 22, 1970, Pub.L. 91-567, § 6(b), 84 Stat. 1499
June 4, 1975, Pub.L. 94- 29, § 3, 89 Stat. 97
May 21,
1978, Pub.L. 95-283, § 16, 92 Stat. 274
Oct. 21, 1980, Pub.L. 96-477, Title VII, § 702, 94 Stat. 2295
Oct. 13, 1982, Pub.L. 97-303, § 2, 96 Stat. 1409
Aug. 10, 1984, Pub.L. 98-376, § 6(a), 98 Stat. 1265
Oct.
3, 1984, Pub.L. 98-440, Title I, § 101, 98 Stat. 1689
Oct. 22, 1986, Pub.L. 99-514, § 2, 100 Stat. 2095
Oct. 28, 1986, Pub.L. 99-571, Title I, § 102(a) to (d), 100 Stat. 3214 to 3216
Dec. 4, 1987, Pub.L. 100 181, Title III, §§ 301 to 306, 101 Stat. 1253, 1254
Nov. 19, 1988, Pub.L. 100-704, § 6(a), 102 Stat. 4681
Aug. 9, 1989, Pub.L. 101-73, Title VII, § 744(u)(1), 103 Stat. 441
Oct. 15, 1990, Pub.L. 101- 429, Title V, § 503, 104 Stat. 952
Nov. 15, 1990, Pub.L. 101-550, Title II, §§ 203(b),
204, 104 Stat. 2717, 2718
Dec. 17, 1993, Pub.L. 103-202, Title I, §§
106(b)(2)(A), 109(a), 107 Stat. 2350, 2352; Sept. 23, 1994, Pub.L. 103-325,
Title II, § 202, Title III, § 347(a), 108 Stat. 2198, 2241
Dec. 8, 1995, Pub.L. 104-62, § 4(a), (b), 109 Stat. 684
Oct. 11, 1996, Pub.L. 104-290, Title I, § 106(b), Title V, § 508(c), 110 Stat.
3425, 3447
Nov. 3, 1998, Pub.L. 105-353, Title III, § 301(b)(1) to (4), 112 Stat. 3235
Nov. 12,
1999, Pub.L. 106-102, Title II, §§ 201, 202, 207, 208, 221(b), 231(b)(1), 113
Stat. 1385, 1390, 1394, 1395, 1401, 1406
Dec. 21, 2000, Pub.L. 106-554, § 1(a)(5) [Title II, § 201], 114 Stat. 2763
July 30, 2002, P.L. 107-204, § 2(b), Title II, § 205(a), Title VI, §
604(c)(1)(A), 116 Stat. 749, 773, 796 |
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