§ 78b. — Necessity for regulation.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC78b]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2B--SECURITIES EXCHANGES
Sec. 78b. Necessity for regulation
For the reasons hereinafter enumerated, transactions in securities
as commonly conducted upon securities exchanges 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 effected 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
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.
(June 6, 1934, ch. 404, title I, Sec. 2, 48 Stat. 881; Pub. L. 94-29,
Sec. 2, June 4, 1975, 89 Stat. 97.)
Amendments
1975--Pub. L. 94-29 inserted ``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,'' after
``require appropriate reports,'' in introductory provisions preceding
par. (1).
Effective Date of 1975 Amendment
Section 31(a) of Pub. L. 94-29 provided that: ``This Act [enacting
sections 78k-1, 78o-4, 78q-1, and 78kk of this title, amending this
section and sections 77d, 77x, 77yyy, 78c, 78d-1, 78f, 78h, 78k, 78l,
78m, 78o, 78o-3, 78q, 78s, 78u, 78w, 78x, 78y, 78bb, 78ee, 78ff, 78iii,
79z-3, 80a-9, 80a-10, 80a-13, 80a-15, 80a-16, 80a-18, 80a-31, 80a-35,
80a-48, 80b-3, 80b-4, and 80b-17 of this title, and enacting provisions
set out as notes under sections 78a and 78f of this title] shall become
effective on the date of its enactment [June 4, 1975] except as
hereinafter provided. The amendments made by this Act to sections
3(a)(12), 6(a) through (d), 11A(b), 15(a), 15A, 15B(a), 17A(b), and (c),
and 19(g) of the Securities Exchange Act of 1934 [sections 78c(a)(12),
78f(a) through (d), 78k-1(b), 78o(a), 78o-3, 78o-4(a), 78q-1(b) and (c),
and 78s(g) of this title] shall become effective one hundred eighty days
after the date of enactment of this Act [June 4, 1975], and the
amendments made by this Act to section 31 of the Securities Exchange Act
of 1934 [section 78ee of this title] shall become effective on January
1, 1976. Neither the provisions of section 3(a)(3), 6(b)(2), or 6(c)(1)
of the Securities Exchange Act of 1934 (as amended by this Act) [section
78c(a)(3), 78f(b)(2), or 78f(c)(1) of this title] nor any rule or
regulation thereunder shall apply so as to deprive any person of
membership in any national securities exchange (or its successor) of
which such person was, on the date of enactment of this Act [June 4,
1975], a member or a member firm as defined in the constitution of such
exchange or so as to deny membership in any such exchange (or its
successor) to any natural person who is or becomes associated with such
member or member firm.''
Study and Report on Impact of Technological Advances on Securities
Markets
Pub. L. 104-290, title V, Sec. 510(a), Oct. 11, 1996, 110 Stat.
3450, provided that:
``(1) Study.--
``(A) In general.--The Commission shall conduct a study of--
``(i) the impact of technological advances and the use of
on-line information systems on the securities markets, including
steps that the Commission has taken to facilitate the electronic
delivery of prospectuses to institutional and other investors;
``(ii) how such technologies have changed the way in which
the securities markets operate; and
``(iii) any steps taken by the Commission to address such
changes.
``(B) Considerations.--In conducting the study under
subparagraph (A), the Commission shall consider how the Commission
has adapted its enforcement policies and practices in response to
technological developments with regard to--
``(i) disclosure, prospectus delivery, and other customer
protection regulations;
``(ii) intermediaries and exchanges in the domestic and
international financial services industry;
``(iii) reporting by issuers, including communications with
holders of securities;
``(iv) the relationship of the Commission with other
national regulatory authorities and organizations to improve
coordination and cooperation; and
``(v) the relationship of the Commission with State
regulatory authorities and organizations to improve coordination
and cooperation.
``(2) Report.--Not later than 1 year after the date of enactment of
this Act [Oct. 11, 1996], the Commission shall submit a report to the
Congress on the results of the study conducted under paragraph (1).''
Joint Study on Impact of Additional Securities Based on Pooled
Obligations
Pub. L. 103-325, title II, Sec. 209, Sept. 23, 1994, 108 Stat. 2202,
provided that:
``(a) Joint Study Required.--The Board and the Commission shall
conduct a joint study of the impact of the provisions of this subtitle
[subtitle A [Secs. 201-210 of title II of Pub. L. 103-325], see Short
Title of 1994 Amendment note set out under section 78a of this title]
(including the amendments made by this subtitle) on the credit and
securities markets. Such study shall evaluate--
``(1) the impact of the provisions of this subtitle on the
availability of credit for business and commercial enterprises in
general, and the availability of credit in particular for--
``(A) businesses in low- and moderate-income areas;
``(B) businesses owned by women and minorities;
``(C) community development efforts;
``(D) community development financial institutions;
``(E) businesses in different geographical regions; and
``(F) a diversity of types of businesses;
``(2) the structure and operation of the markets that develop
for small business related securities and commercial mortgage
related securities, including the types of entities (such as pension
funds and insurance companies) that are significant purchasers of
such securities, the extent to which such entities are sophisticated
investors, the use of credit enhancements in obtaining investment-
grade ratings, any conflicts of interest that arise in such markets,
and any adverse effects of such markets on commercial real estate
ventures, pension funds, or pension fund beneficiaries;
``(3) the extent to which the provisions of this subtitle with
regard to margin requirements, the number of eligible investment
rating categories, preemption of State law, and the treatment of
such securities as government securities for the purpose of State
investment limitations, affect the structure and operation of such
markets; and
``(4) in view of the findings made pursuant to paragraphs (2)
and (3), any additional suitability or disclosure requirements or
other investor protections that should be required.
``(b) Reports.--
``(1) In general.--The Board and the Commission shall submit to
the Congress a report on the results of the study required by
subsection (a) before the end of--
``(A) the 2-year period beginning on the date of enactment
of this Act [Sept. 23, 1994];
``(B) the 4-year period beginning on such date of enactment;
and
``(C) the 6-year period beginning on such date of enactment.
``(2) Contents of report.--Each report required under paragraph
(1) shall contain or be accompanied by such recommendations for
administrative or legislative action as the Board and the Commission
consider appropriate and may include recommendations regarding the
need to develop a system for reporting additional information
concerning investments by the entities described in subsection
(a)(2).
``(c) Definitions.--As used in this section--
``(1) the term `Board' means the Board of Governors of the
Federal Reserve System; and
``(2) the term `Commission' means the Securities and Exchange
Commission.''
Intermarket Coordination; Reports to Congress
Pub. L. 101-432, Sec. 8(a), Oct. 16, 1990, 104 Stat. 976, provided
that: ``The Secretary of the Treasury, the Chairman of the Board of
Governors of the Federal Reserve System, the Chairman of the Securities
and Exchange Commission, and the Chairman of the Commodity Futures
Trading Commission, shall report to the Congress not later than May 31,
1991, and annually thereafter until May 31, 1995, on the following:
``(1) the efforts their respective agencies have made relating
to the coordination of regulatory activities to ensure the integrity
and competitiveness of United States financial markets;
``(2) the efforts their respective agencies have made to
formulate coordinated mechanisms across marketplaces to protect the
payments and market systems during market emergencies;
``(3) the views of their respective agencies with respect to the
adequacy of margin levels and use of leverage by market
participants; and
``(4) such other issues and concerns relating to the soundness,
stability, and integrity of domestic and international capital
markets as may be appropriate.
The agencies shall cooperate in the development of their reports, and
prior to submitting its report to Congress, each agency shall provide
copies to the other agencies.''
Securities Laws Study
Pub. L. 100-704, Sec. 7, Nov. 19, 1988, 102 Stat. 4682, directed
Securities and Exchange Commission to study and investigate adequacy of
Federal securities laws and regulations for protection of the public
interest and interests of investors, specified subjects for the study
and investigation and authority of Commission in conducting the study
and investigation, directed Commission to supply interim information to
Congress on the progress of, and any impediments to completing, the
study and investigation, directed Commission to report to Congress on
results of the study and investigation within 18 months after the date
funds are appropriated for the study and investigation, including in
such report the Commission's recommendations.
Foreign Investment Study
Pub. L. 93-479, Oct. 26, 1974, 88 Stat. 1450, directed Secretary of
the Treasury and Secretary of Commerce to conduct a comprehensive,
overall study of foreign direct and portfolio investments in the United
States and submit to Congress an interim report twelve months after Oct.
26, 1974, and not later than one and one-half years after Oct. 26, 1974,
a full and complete report of the findings made under the study
authorized, together with such recommendations as they considered
appropriate.
Ex. Ord. No. 11858. Foreign Investment in the United States
Ex. Ord. No. 11858, May 7, 1975, 40 F.R. 20263, as amended by Ex.
Ord. No. 12188, Jan. 2, 1980, 45 F.R. 989; Ex. Ord. No. 12661, Dec. 27,
1988, 54 F.R. 779; Ex. Ord. No. 12860, Sept. 3, 1993, 58 F.R. 47201; Ex.
Ord. No. 13286, Sec. 57, Feb. 28, 2003, 68 F.R. 10629, provided:
By virtue of the authority vested in me by the Constitution and
statutes of the United States of America, including the Act of February
14, 1903, as amended (15 U.S.C. 1501 et seq.), section 10 of the Gold
Reserve Act of 1934, as amended (31 U.S.C. 822a), and section 301 of
title 3 of the United States Code, and as President of the United States
of America, it is hereby ordered as follows:
Section 1. (a) There is hereby established the Committee on Foreign
Investment in the United States (hereinafter referred to as the
Committee). The Committee shall be composed of the following:
(1) The Secretary of State.
(2) The Secretary of the Treasury.
(3) The Secretary of Defense.
(4) The Secretary of Commerce.
(5) The United States Trade Representative.
(6) The Chairman of the Council of Economic Advisers.
(7) The Attorney General.
(8) The Secretary of Homeland Security.
(9) The Director of the Office of Management and Budget.
(9)[sic] the Director of the Office of Science and Technology
Policy.
(10) the Assistant to the President for National Security Affairs.
(11) the Assistant to the President for Economic Policy.
The Secretary of the Treasury shall be the chairman of the
Committee. The chairman, as he deems appropriate, may invite
representatives of other departments and agencies to participate from
time to time in activities of the Committee.
(b) The Committee shall have primary continuing responsibility
within the Executive Branch for monitoring the impact of foreign
investment in the United States, both direct and portfolio, and for
coordinating the implementation of United States policy on such
investment. In fulfillment of this responsibility, the Committee shall:
(1) arrange for the preparation of analyses of trends and
significant developments in foreign investments in the United States;
(2) provide guidance on arrangements with foreign governments for
advance consultations on prospective major foreign governmental
investments in the United States;
(3) review investments in the United States which, in the judgment
of the Committee, might have major implications for United States
national interests;
(4) consider proposals for new legislation or regulations relating
to foreign investment as may appear necessary; and
(5) coordinate the views of the Executive Branch and discharge the
responsibilities with respect to Section 721(a) and (e) of the Defense
Production Act of 1950 [50 U.S.C. App. 2170(a), (e)], as amended (50
U.S.C. App. 2061 et seq.) (``Defense Production Act'').
(c) As the need arises, the Committee shall submit recommendations
and analyses to the National Security Council and to the Economic Policy
Board. It shall also arrange for the preparation and publication of
periodic reports.
Sec. 2. The Secretary of Commerce, with respect to the collection
and use of data on foreign investment in the United States, shall
provide, in particular, for the performance of the following activities:
(a) The obtainment, consolidation, and analysis of information on
foreign investment in the United States;
(b) the improvement of procedures for the collection and
dissemination of information on such foreign investment;
(c) the close observation of foreign investment in the United
States;
(d) the preparation of reports and analyses of trends and of
significant developments in appropriate categories of such investment;
(e) the compilation of data and preparation of evaluations of
significant investment transactions; and
(f) the submission to the Committee of appropriate reports,
analyses, data and recommendations relating to foreign investment in the
United States, including recommendations as to how information on
foreign investment can be kept current.
Sec. 3. The Secretary of the Treasury is authorized, without further
approval of the President, to make reasonable use of the resources of
the Exchange Stabilization Fund, in accordance with section 10 of the
Gold Reserve Act of 1934, as amended (31 U.S.C. 822a) [31 U.S.C. 5302],
to pay any of the expenses directly incurred by the Secretary of
Commerce in the performance of the functions and activities provided by
this order. This authority shall be in effect for one year, unless
revoked prior thereto.
Sec. 4. All departments and agencies are directed to provide, to the
extent permitted by law, such information and assistance as may be
requested by the Committee or the Secretary of Commerce in carrying out
their functions and activities under this order.
Sec. 5. Information which has been submitted or received in
confidence shall not be publicly disclosed, except to the extent
required by law; and such information shall be used by the Committee
only for the purpose of carrying out the functions and activities
prescribed by this order. Information or documentary material filed
pursuant to Section 1(b)(5) or Section 7 of this Order shall be treated
in accordance with paragraph (b) of Section 721 of the Defense
Production Act [50 U.S.C. App. 2170(b)].
Sec. 6. Nothing in this order shall affect the data-gathering,
regulatory, or enforcement authority of any existing department or
agency over foreign investment, and the review of individual investments
provided by this order shall not in any way supersede or prejudice any
other process provided by law.
Sec. 7. (1) Investigations. (a) The Committee is designated to
receive notices and other information, to determine whether
investigations should be undertaken, and to make investigations,
pursuant to Section 721(a) of the Defense Production Act [50 U.S.C. App.
2170(a)]. (b) If the Committee determines that an investigation should
be undertaken, such investigation shall commence no later than 30 days
after receipt by the Committee of written notification of the proposed
or pending merger, acquisition, or takeover. Such investigation shall be
completed no later than 45 days after such determination. (c) If one or
more Committee members differ with a Committee decision not to undertake
an investigation, the Chairman shall submit a report of the Committee to
the President setting forth the differing views and presenting the
issues for his decision within 25 days after receipt by the Committee of
written notification of the proposed or pending merger, acquisition, or
takeover. (d) A unanimous decision by the Committee not to undertake an
investigation with regard to a notice shall conclude action under this
section on such notice. The Chairman shall advise the President of said
decision.
(2) Report to the President. Upon completion or termination of any
investigation, the Committee shall report to the President and present a
recommendation. Any such report shall include information relevant to
subparagraphs (1) and (2) of Section 721(d) of the Defense Production
Act. If the Committee is unable to reach a unanimous recommendation, the
Chairman shall submit a report of the Committee to the President setting
forth the differing views and presenting the issues for his decision.
Sec. 8. The Chairman of the Committee, in consultation with other
members of the Committee, is hereby delegated the authority to issue
regulations to implement Section 721 of the Defense Production Act [50
U.S.C. App. 2170].
Ex. Ord. No. 12631. Working Group on Financial Markets
Ex. Ord. No. 12631, Mar. 18, 1988, 53 F.R. 9421, provided:
By virtue of the authority vested in me as President by the
Constitution and laws of the United States of America, and in order to
establish a Working Group on Financial Markets, it is hereby ordered as
follows:
Section 1. Establishment. (a) There is hereby established a Working
Group on Financial Markets (Working Group). The Working Group shall be
composed of:
(1) the Secretary of the Treasury, or his designee;
(2) the Chairman of the Board of Governors of the Federal Reserve
System, or his designee;
(3) the Chairman of the Securities and Exchange Commission, or his
designee; and
(4) the Chairman of the Commodity Futures Trading Commission, or her
designee.
(b) The Secretary of the Treasury, or his designee, shall be the
Chairman of the Working Group.
Sec. 2. Purposes and Functions. (a) Recognizing the goals of
enhancing the integrity, efficiency, orderliness, and competitiveness of
our Nation's financial markets and maintaining investor confidence, the
Working Group shall identify and consider:
(1) the major issues raised by the numerous studies on the events in
the financial markets surrounding October 19, 1987, and any of those
recommendations that have the potential to achieve the goals noted
above; and
(2) the actions, including governmental actions under existing laws
and regulations (such as policy coordination and contingency planning),
that are appropriate to carry out these recommendations.
(b) The Working Group shall consult, as appropriate, with
representatives of the various exchanges, clearinghouses, self-
regulatory bodies, and with major market participants to determine
private sector solutions wherever possible.
(c) The Working Group shall report to the President initially within
60 days (and periodically thereafter) on its progress and, if
appropriate, its views on any recommended legislative changes.
Sec. 3. Administration. (a) The heads of Executive departments,
agencies, and independent instrumentalities shall, to the extent
permitted by law, provide the Working Group such information as it may
require for the purpose of carrying out this Order.
(b) Members of the Working Group shall serve without additional
compensation for their work on the Working Group.
(c) To the extent permitted by law and subject to the availability
of funds therefor, the Department of the Treasury shall provide the
Working Group with such administrative and support services as may be
necessary for the performance of its functions.
Ronald Reagan.
