§ 78c. — Definitions and application.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC78c]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2B--SECURITIES EXCHANGES
Sec. 78c. Definitions and application
(a) Definitions
When used in this chapter, 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 chapter, the rules and regulations
thereunder, and its own rules. For purposes of sections 78f(b)(1),
78f(b)(4), 78f(b)(6), 78f(b)(7), 78f(d), 78q(d), 78s(d), 78s(e),
78s(g), 78s(h), and 78u of this title, the term ``member'' when used
with respect to a national securities exchange also means, to the
extent of the rules of the exchange specified by the Commission, any
person required by the Commission to comply with such rules pursuant
to section 78f(f) of this title.
(B) The term ``member'' when used with respect to a registered
securities association means any broker or dealer who agrees to be
regulated by such association and with respect to whom the
association undertakes to enforce compliance with the provisions of
this chapter, 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 chapter 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 78o-5 of this title and the rules and
regulations thereunder, or obligations of the North
American Development Bank; or
(IV) any standardized, credit enhanced debt security
issued by a foreign government pursuant to the March
1989 plan of then Secretary of the Treasury Brady, used
by such foreign government to retire outstanding
commercial bank loans.
(iv) Certain stock purchase plans.--
(I) Employee benefit plans.--The bank effects
transactions, as part of its transfer agency activities,
in the securities of an issuer as part of any pension,
retirement, profit-sharing, bonus, thrift, savings,
incentive, or other similar benefit plan for the
employees of that issuer or its affiliates (as defined
in section 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 [15 U.S.C. 80a-1 et seq.] 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 [15 U.S.C. 77c(b), 77d(2), 77d(6)] 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 chapter, 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 78o(c)(3) of this title and
the rules and regulations thereunder) for any broker or
dealer, unless such carrying broker activities are
engaged in with respect to government securities (as
defined in paragraph (42) of this subsection).
(ix) Identified banking products.--The bank effects
transactions in identified banking products as defined in
section 206 of the Gramm-Leach-Bliley Act.
(x) Municipal securities.--The bank effects transactions
in municipal securities.
(xi) De minimis exception.--The bank effects, other than
in transactions referred to in clauses (i) through (x), not
more than 500 transactions in securities in any calendar
year, and such transactions are not effected by an employee
of the bank who is also an employee of a broker or dealer.
(C) Execution by broker or dealer.--The exception to being
considered a broker for a bank engaged in activities described
in clauses (ii), (iv), and (viii) of subparagraph (B) shall not
apply if the activities described in such provisions result in
the trade in the United States of any security that is a
publicly traded security in the United States, unless--
(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 78o(e).--The
term ``broker'' does not include a bank that--
(i) was, on the day before November 12, 1999, subject to
section 78o(e) of this title; 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 78o-5 of this title and the rules and
regulations thereunder, or obligations of the North
American Development Bank; or
(IV) any standardized, credit enhanced debt security
issued by a foreign government pursuant to the March
1989 plan of then Secretary of the Treasury Brady, used
by such foreign government to retire outstanding
commercial bank loans.
(ii) Investment, trustee, and fiduciary transactions.--
The bank buys or sells securities for investment purposes--
(I) for the bank; or
(II) for accounts for which the bank acts as a
trustee or fiduciary.
(iii) Asset-backed transactions.--The bank engages in
the issuance or sale to qualified investors, through a
grantor trust or other separate entity, of securities backed
by or representing an interest in notes, drafts,
acceptances, loans, leases, receivables, other obligations
(other than securities of which the bank is not the issuer),
or pools of any such obligations predominantly originated
by--
(I) the bank;
(II) an affiliate of any such bank other than a
broker or dealer; or
(III) a syndicate of banks of which the bank is a
member, if the obligations or pool of obligations
consists of mortgage obligations or consumer-related
receivables.
(iv) Identified banking products.--The bank buys or
sells identified banking products, as defined in section 206
of the Gramm-Leach-Bliley Act.
(6) The term ``bank'' means (A) a banking institution organized
under the laws of the United States, (B) a member bank of the
Federal Reserve System, (C) any other banking institution, whether
incorporated or not, doing business under the laws of any State or
of the United States, a substantial portion of the business of which
consists of receiving deposits or exercising fiduciary powers
similar to those permitted to national banks under the authority of
the Comptroller of the Currency pursuant to 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 chapter, 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) of the Investment
Company Act of 1940 [15 U.S.C. 80a-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) of
the Investment Company Act of 1940 [15 U.S.C. 80a-3(c)(10)(B)];
(vi) solely for purposes of sections 78l, 78m, 78n, and 78p
of this title, any security issued by or any interest or
participation in any church plan, company, or account that is
excluded from the definition of an investment company under
section 3(c)(14) of the Investment Company Act of 1940 [15
U.S.C. 80a-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 chapter
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 78q-1 of this title.
(ii) Notwithstanding subparagraph (A)(ii) of this paragraph,
municipal securities shall not be deemed to be ``exempted
securities'' for the purposes of sections 78o and 78q-1 of this
title.
(C) For purposes of subparagraph (A)(iv) of this paragraph, the
term ``qualified plan'' means (i) a stock bonus, pension, or profit-
sharing plan which meets the requirements for qualification under
section 401 of 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 78d of this title.
(16) The term ``State'' means any State of the United States,
the District of Columbia, Puerto Rico, the Virgin Islands, or any
other possession of the United States.
(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 78o(b) of this title (other than
paragraph (6) thereof).
(19) The terms ``investment company'', ``affiliated person'',
``insurance company'', ``separate account'', and ``company'' have
the same meanings as in the Investment Company Act of 1940 [15
U.S.C. 80a-1 et seq.].
(20) The terms ``investment adviser'' and ``underwriter'' have
the same meanings as in the Investment Advisers Act of 1940 [15
U.S.C. 80b-1 et seq.].
(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 chapter; (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
78s(b), 78s(c), and 78w(b) \1\ of this title) the Municipal
Securities Rulemaking Board established by section 78o-4 of this
title.
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\1\ See References in Text note below.
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(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) \1\ of title 26) the interest on which
is excludable from gross income under section 103(a)(1) \1\ of title
26 if, by reason of the application of paragraph (4) or (6) of
section 103(c) \1\ of title 26 (determined as if paragraphs (4)(A),
(5), and (7) were not included in such section 103(c)),\1\ paragraph
(1) of such section 103(c) \1\ 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 78o-4(b)(2)(H) of this title),
the department or division and not the bank itself shall be
deemed to be the municipal securities dealer.
(31) The term ``municipal securities broker'' means a broker
engaged in the business of effecting transactions in municipal
securities for the account of others.
(32) The term ``person associated with a municipal securities
dealer'' when used with respect to a municipal securities dealer
which is a bank or a division or department of a bank means any
person directly engaged in the management, direction, supervision,
or performance of any of the municipal securities dealer's
activities with respect to municipal securities, and any person
directly or indirectly controlling such activities or controlled by
the municipal securities dealer in connection with such activities.
(33) The term ``municipal securities investment portfolio''
means all municipal securities held for investment and not for sale
as part of a regular business by a municipal securities dealer or by
a person, directly or indirectly, controlling, controlled by, or
under common control with a municipal securities dealer.
(34) The term ``appropriate regulatory agency'' means--
(A) When used with respect to a municipal securities dealer:
(i) the Comptroller of the Currency, in the case of a
national bank or a bank operating under the Code of Law for
the District of Columbia, or a subsidiary or a department or
division of any such bank;
(ii) the Board of Governors of the Federal Reserve
System, in the case of a State member bank of the Federal
Reserve System, a subsidiary or a department or division
thereof, a bank holding company, a subsidiary of a bank
holding company which is a bank other than a bank specified
in clause (i) or (iii) of this subparagraph, or a subsidiary
or a department or division of such subsidiary;
(iii) the Federal Deposit Insurance Corporation, in the
case of a bank insured by the Federal Deposit Insurance
Corporation (other than a member of the Federal Reserve
System), or a subsidiary or department or division thereof;
and
(iv) the Commission in the case of all other municipal
securities dealers.
(B) When used with respect to a clearing agency or transfer
agent:
(i) the Comptroller of the Currency, in the case of a
national bank or a bank operating under the Code of Law for
the District of Columbia, or a subsidiary of any such bank;
(ii) the Board of Governors of the Federal Reserve
System, in the case of a State member bank of the Federal
Reserve System, a subsidiary thereof, a bank holding
company, or a subsidiary of a bank holding 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.
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.
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. 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. 601 et seq., 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
3(b) of the Federal Deposit Insurance Act [12 U.S.C.
1813(b)]) the deposits of which are insured by the Federal
Deposit Insurance Corporation; \2\
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\2\ So in original. Probably should be followed by ``and''.
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(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. 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.
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 chapter 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 chapter which the Commission determines is
unfair and not necessary or appropriate in furtherance of the
purposes of this chapter.
(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, 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 78o(b) of this title, 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 evidence \3\ by a retail
installment sales contract or other instrument.
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\3\ So in original. Probably should be ``evidenced''.
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(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 78o-5 and 78q-1 of this title,
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 78o, 78o-5, and 78q-1 of this
title 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 3(b) of the
Federal Deposit Insurance Act [12 U.S.C. 1813(b)]) the deposits
of which are insured by the Federal Deposit Insurance
Corporation.
(47) The term ``securities laws'' means the Securities Act of
1933 (15 U.S.C. 77a et seq.), the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.), the Sarbanes-Oxley Act of 2002 [15 U.S.C.
7201 et seq.], the Public Utility Holding Company Act of 1935 (15
U.S.C. 79a et seq.) [15 U.S.C. 79 et seq.], the Trust Indenture Act
of 1939 (15 U.S.C. 77aaa et seq.), the Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.), the Investment Advisers Act of 1940
(15 U.S.C. 80b et seq.) [15 U.S.C. 80b-1 et seq.], 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 78o or
78o-4 of this title, except that in paragraph (3) of this subsection
and sections 78f and 78o-3 of this title 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 78o-5(a)(1)(A) of this title.
(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 [15 U.S.C. 80a-1 et seq.];
(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 in 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 3 of the Federal Deposit Insurance
Act [12 U.S.C. 1813]; 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 chapter, the term ``qualified investor''
means--
(i) any investment company registered with the
Commission under section 8 of the Investment Company Act of
1940 [15 U.S.C. 80a-8];
(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 [15 U.S.C. 80a-
3(c)(7)];
(iii) any bank (as defined in paragraph (6) of this
subsection), savings association (as defined in section 3(b)
of the Federal Deposit Insurance Act [12 U.S.C. 1813(b)]),
broker, dealer, insurance company (as defined in section
2(a)(13) of the Securities Act of 1933 [15 U.S.C.
77b(a)(13)]), or business development company (as defined in
section 2(a)(48) of the Investment Company Act of 1940 [15
U.S.C. 80a-2(a)(48)]);
(iv) any small business investment company licensed by
the United States Small Business Administration under
section 301(c) [15 U.S.C. 681(c)] or (d) \4\ of the Small
Business Investment Act of 1958;
---------------------------------------------------------------------------
\4\ See References in Text note below.
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(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 [29 U.S.C.
1001 et seq.], other than an individual retirement account,
if the investment decisions are made by a plan fiduciary, as
defined in section 3(21) of that Act [29 U.S.C. 1002(21)],
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 [15 U.S.C.
80a-3(c)(2)];
(viii) any associated person of a broker or dealer other
than a natural person;
(ix) any foreign bank (as defined in section 1(b)(7) of
the International Banking Act of 1978 [12 U.S.C. 3101(7)]);
(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, 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 paragraph (12) of this
subsection as in effect on January 11, 1983 (other than any
municipal security as defined in paragraph (29) of this subsection
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 [7 U.S.C. 1 et seq.] under section 2(c),
2(d), 2(f), or 2(g) of the Commodity Exchange Act [7 U.S.C. 2(c),
(d), (f), (g)] (as in effect on December 21, 2000) or sections 27 to
27f of title 7.
(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 78l of this title;
(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 78f(g) of this title that is higher
than the minimum amount established and in effect pursuant to
section 78g(c)(2)(B) of this title.
(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 [15 U.S.C. 7201].
(b) 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 chapter, consistently with the provisions
and purposes of this chapter.
(c) Application to governmental departments or agencies
No provision of this chapter 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.
(d) 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.
(e) Charitable organizations
(1) Exemption
Notwithstanding any other provision of this chapter, 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
[15 U.S.C. 80a-3(c)(10)(D)], 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 chapter 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 [15 U.S.C. 80a-3(c)(10)(B)]; or
(C) a trust or other donative instrument described in
section 3(c)(10)(B) of the Investment Company Act of 1940 [15
U.S.C. 80a-3(c)(10)(B)], 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
Company Act of 1940 [15 U.S.C. 80a-3(c)(10)(B)], 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.
(f) Consideration of promotion of efficiency, competition, and capital
formation
Whenever pursuant to this chapter 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.
(g) 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 [15
U.S.C. 80a-3(c)(14)], 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
chapter--
(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 [15 U.S.C. 80a-3(c)(14)]; 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, ch. 404, title I, Sec. 3, 48 Stat. 882; Aug. 23, 1935,
ch. 614, Sec. 203(a), 49 Stat. 704; Proc. No. 2695, eff. July 4, 1946,
11 F.R. 7517, 60 Stat. 1352; Pub. L. 86-70, Sec. 12(b), June 25, 1959,
73 Stat. 143; Pub. L. 86-624, Sec. 7(b), July 12, 1960, 74 Stat. 412;
Pub. L. 88-467, Sec. 2, Aug. 20, 1964, 78 Stat. 565; Pub. L. 91-373,
title IV, Sec. 401(b), Aug. 10, 1970, 84 Stat. 718; Pub. L. 91-547,
Sec. 28(a), (b), Dec. 14, 1970, 84 Stat. 1435; Pub. L. 91-567,
Sec. 6(b), Dec. 22, 1970, 84 Stat. 1499; Pub. L. 94-29, Sec. 3, June 4,
1975, 89 Stat. 97; Pub. L. 95-283, Sec. 16, May 21, 1978, 92 Stat. 274;
Pub. L. 96-477, title VII, Sec. 702, Oct. 21, 1980, 94 Stat. 2295; Pub.
L. 97-303, Sec. 2, Oct. 13, 1982, 96 Stat. 1409; Pub. L. 98-376,
Sec. 6(a), Aug. 10, 1984, 98 Stat. 1265; Pub. L. 98-440, title I,
Sec. 101, Oct. 3, 1984, 98 Stat. 1689; Pub. L. 99-514, Sec. 2, Oct. 22,
1986, 100 Stat. 2095; Pub. L. 99-571, title I, Sec. 102(a)-(d), Oct. 28,
1986, 100 Stat. 3214-3216; Pub. L. 100-181, title III, Secs. 301-306,
Dec. 4, 1987, 101 Stat. 1253, 1254; Pub. L. 100-704, Sec. 6(a), Nov. 19,
1988, 102 Stat. 4681; Pub. L. 101-73, title VII, Sec. 744(u)(1), Aug. 9,
1989, 103 Stat. 441; Pub. L. 101-429, title V, Sec. 503, Oct. 15, 1990,
104 Stat. 952; Pub. L. 101-550, title II, Secs. 203(b), 204, Nov. 15,
1990, 104 Stat. 2717, 2718; Pub. L. 103-202, title I,
Secs. 106(b)(2)(A), 109(a), Dec. 17, 1993, 107 Stat. 2350, 2352; Pub. L.
103-325, title II, Sec. 202, title III, Sec. 347(a), Sept. 23, 1994, 108
Stat. 2198, 2241; Pub. L. 104-62, Sec. 4(a), (b), Dec. 8, 1995, 109
Stat. 684; Pub. L. 104-290, title I, Sec. 106(b), title V, Sec. 508(c),
Oct. 11, 1996, 110 Stat. 3424, 3447; Pub. L. 105-353, title III,
Sec. 301(b)(1)-(4), Nov. 3, 1998, 112 Stat. 3235, 3236; Pub. L. 106-102,
title II, Secs. 201, 202, 207, 208, 221(b), 231(b)(1), Nov. 12, 1999,
113 Stat. 1385, 1390, 1394, 1395, 1401, 1406; Pub. L. 106-554,
Sec. 1(a)(5) [title II, Sec. 201], Dec. 21, 2000, 114 Stat. 2763, 2763A-
413; Pub. L. 107-204, Sec. 2(b), title II, Sec. 205(a), title VI,
Sec. 604(c)(1)(A), July 30, 2002, 116 Stat. 749, 773, 796.)
References in Text
This chapter, referred to in subsecs. (a), (b), (c), (e)(1), (f),
and (g), was in the original ``this title''. See References in Text note
set out under section 78a of this title.
The Investment Company Act of 1940, referred to in subsec.
(a)(4)(B)(v), (19), (47), (51)(A)(iii), is title I of act Aug. 20, 1940,
ch. 686, 54 Stat. 789, as amended, which is classified generally to
subchapter I (Sec. 80a-1 et seq.) of chapter 2D of this title. For
complete classification of this Act to the Code, see section 80a-51 of
this title and Tables.
This chapter, referred to in subsec. (a)(4)(B)(vii)(II), was in the
original ``this Act''. See References in Text note set out under section
78a of this title.
Section 206 of the Gramm-Leach-Bliley Act, referred to in subsec.
(a)(4)(B)(ix), (5)(C)(iv), (54)(B), is section 206 of Pub. L. 106-102,
which is set out as a note below.
The Investment Advisers Act of 1940, referred to in subsec. (a)(20),
(47), is title II of act Aug. 20, 1940, ch. 686, 54 Stat. 847, as
amended, which is classified generally to subchapter II (Sec. 80b-1 et
seq.) of chapter 2D of this title. For complete classification of this
Act to the Code, see section 80b-20 of this title and Tables.
Section 78w(b) of this title, referred to in subsec. (a)(26), was
omitted from the Code.
Section 103 of title 26, referred to in subsec. (a)(29), which
related to interest on certain governmental obligations, was amended
generally by Pub. L. 99-514, title XIII, Sec. 1301(a), Oct. 22, 1986,
100 Stat. 2602, and, as so amended, relates to interest on State and
local bonds. Section 103(b)(2) (formerly section 103(c)(2)), which prior
to the general amendment defined industrial development bond, relates to
the applicability of the interest exclusion to arbitrage bonds.
The Federal Deposit Insurance Act, referred to in subsec.
(a)(34)(D), (F)(iii), (H)(iii), is act Sept. 21, 1950, ch. 967, Sec. 2,
64 Stat. 873, as amended, which is classified generally to chapter 16
(Sec. 1811 et seq.) of Title 12, Banks and Banking. For complete
classification of this Act to the Code, see Short Title note set out
under section 1811 of Title 12 and Tables.
The International Banking Act of 1978, referred to in subsec.
(a)(34)(G)(i) to (iii), (46)(B), is Pub. L. 95-369, Sept. 17, 1978, 92
Stat. 607, which enacted sections 347d, 611a, and 3101 to 3111 of Title
12, amended sections 72, 378, 614, 615, 618, 619, 1813, 1815, 1817,
1818, 1820, 1821, 1822, 1823, 1828, 1829b, 1831b, and 1841 of Title 12,
and enacted provisions set out as notes under sections 36, 247, 601,
611a, and 3101 of Title 12. For complete classification of this Act to
the Code, see Short Title note set out under section 3101 of Title 12
and Tables.
Section 25 of the Federal Reserve Act, referred to in subsec.
(a)(34)(G)(ii), is classified to subchapter I (Sec. 601 et seq.) of
chapter 6 of Title 12, Banks and Banking. Section 25A of the Federal
Reserve Act, referred to in subsec. (a)(34)(G)(ii), (H)(ii), is
classified to subchapter II (Sec. 611 et seq.) of chapter 6 of Title 12.
The Commodity Exchange Act, referred to in subsec. (a)(39)(B)(ii),
(C), (55)(A), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended,
which is classified generally to chapter 1 (Sec. 1 et seq.) of Title 7,
Agriculture. For complete classification of this Act to the Code, see
section 1 of Title 7 and Tables.
The Securities Act of 1933, referred to in subsec. (a)(47), is act
May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended, which is
classified generally to subchapter I (Sec. 77a et seq.) of chapter 2A of
this title. For complete classification of this Act to the Code, see
section 77a of this title and Tables.
The Securities Exchange Act of 1934, referred to in subsec. (a)(47),
is act June 6, 1934, ch. 404, 48 Stat. 881, as amended, which is
classified generally to this chapter (Sec. 78a et seq.). For complete
classification of this Act to the Code, see section 78a of this title
and Tables.
The Sarbanes-Oxley Act of 2002, referred to in subsec. (a)(47), is
Pub. L. 107-204, July 30, 2002, 1974, 116 Stat. 745, which is classified
principally to chapter 98 (Sec. 7201 et seq.) of this title. Section 2
of the Act enacted section 7201 of this title and amended this section.
For complete classification of this Act to the Code, see Tables.
The Public Utility Holding Company Act of 1935, referred to in
subsec. (a)(47), is act Aug. 26, 1935, ch. 687, title I, 49 Stat. 838,
as amended, which is classified generally to chapter 2C (Sec. 79 et
seq.) of this title. For complete classification of this Act to the
Code, see section 79 of this title and Tables.
The Trust Indenture Act of 1939, referred to in subsec. (a)(47), is
title III of act May 27, 1933, ch. 38, as added Aug. 3, 1939, ch. 411,
53 Stat. 1149, as amended, which is classified generally to subchapter
III (Sec. 77aaa et seq.) of chapter 2A of this title. For complete
classification of this Act to the Code, see section 77aaa of this title
and Tables.
The Securities Investor Protection Act of 1970, referred to in
subsec. (a)(47), is Pub. L. 91-598, Dec. 30, 1970, 84 Stat. 1636, as
amended, which is classified generally to chapter 2B-1 (Sec. 78aaa et
seq.) of this title. For complete classification of this Act to the
Code, see section 78aaa of this title and Tables.
Section 301(d) of the Small Business Investment Act of 1958,
referred to in subsec. (a)(54)(A)(iv), was classified to section 681(d)
of this title and was repealed by Pub. L. 104-208, div. D, title II,
Sec. 208(b)(3)(A), Sept. 30, 1996, 110 Stat. 3009-742.
The Employee Retirement Income Security Act of 1974, referred to in
subsec. (a)(54)(A)(v), is Pub. L. 93-406, Sept. 2, 1974, 88 Stat. 832,
as amended, which is classified principally to chapter 18 (Sec. 1001 et
seq.) of Title 29, Labor. For complete classification of this Act to the
Code, see Short Title note set out under section 1001 of Title 29 and
Tables.
Codification
Words ``Philippine Islands'' deleted from definition of term
``State'' in subsec. (a)(16) under authority of Proc. No. 2695, which
granted independence to the Philippine Islands. Proc. No. 2695 was
issued pursuant to section 1394 of Title 22, Foreign Relations and
Intercourse, and is set out as a note under that section.
Amendments
2002--Subsec. (a)(39)(F). Pub. L. 107-204, Sec. 604(c)(1)(A),
inserted ``, or is subject to an order or finding,'' before
``enumerated'' and substituted ``(H), or (G)'' for ``or (G)''.
Subsec. (a)(47). Pub. L. 107-204, Sec. 2(b), inserted ``the
Sarbanes-Oxley Act of 2002,'' before ``the Public Utility Holding
Company Act of 1935''.
Subsec. (a)(58), (59). Pub. L. 107-204, Sec. 205(a), added pars.
(58) and (59).
2000--Subsec. (a)(10). Pub. L. 106-554, Sec. 1(a)(5) [title II,
Sec. 201(1)], inserted ``security future,'' after ``treasury stock,''.
Subsec. (a)(11). Pub. L. 106-554, Sec. 1(a)(5) [title II,
Sec. 201(2)], added par. (11) and struck out former par. (11) which read
as follows: ``The term `equity security' means any stock or similar
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.''
Subsec. (a)(13), (14). Pub. L. 106-554, Sec. 1(a)(5) [title II,
Sec. 201(3), (4)], inserted at end ``For security futures products, such
term includes any contract, agreement, or transaction for future
delivery.''
Subsec. (a)(55) to (57). Pub. L. 106-554, Sec. 1(a)(5) [title II,
Sec. 201(5)], added pars. (55) to (57).
1999--Subsec. (a)(4). Pub. L. 106-102, Sec. 201, inserted heading
and amended text of par. (4) generally. Prior to amendment, text read as
follows: ``The term `broker' means any person engaged in the business of
effecting transactions in securities for the account of others, but does
not include a bank.''
Subsec. (a)(5). Pub. L. 106-102, Sec. 202, inserted heading and
amended text of par. (5) generally. Prior to amendment, text read as
follows: ``The term `dealer' means any person engaged in the business of
buying and selling securities for his own account, through a broker or
otherwise, but does not include a bank, or any person insofar as he buys
or sells securities for his own account, either individually or in some
fiduciary capacity, but not as a part of a regular business.''
Subsec. (a)(12)(A)(iii). Pub. L. 106-102, Sec. 221(b), amended cl.
(iii) generally. Prior to amendment, cl. (iii) read as follows: ``any
interest or participation in any common trust fund or similar fund
maintained by a bank exclusively for the collective investment and
reinvestment of assets contributed thereto by such bank in its capacity
as trustee, executor, administrator, or guardian;''.
Subsec. (a)(34)(H). Pub. L. 106-102, Sec. 231(b)(1), which directed
insertion of subpar. (H) at end of par. (34), was executed by inserting
subpar. (H) after subpar. (G) and before concluding provisions to
reflect the probable intent of Congress.
Subsec. (a)(42)(E). Pub. L. 106-102, Sec. 208, added subpar. (E).
Subsec. (a)(54). Pub. L. 106-102, Sec. 207, added par. (54).
1998--Subsec. (a)(10). Pub. L. 105-353, Sec. 301(b)(1), substituted
``deposit for'' for ``deposit, for''.
Subsec. (a)(12)(A)(vi). Pub. L. 105-353, Sec. 301(b)(2), realigned
margins.
Subsec. (a)(22)(A). Pub. L. 105-353, Sec. 301(b)(3), substituted
``section 153'' for ``section 153(h)'' and for ``section 153(t)''.
Subsec. (a)(39)(B)(i). Pub. L. 105-353, Sec. 301(b)(4), substituted
``of the Commission'' for ``to the Commission'' in introductory
provisions.
1996--Subsec. (a)(12)(A)(vi), (vii). Pub. L. 104-290,
Sec. 508(c)(1), added cl. (vi) and redesignated former cl. (vi) as
(vii).
Subsecs. (f), (g). Pub. L. 104-290, Secs. 106(b), 508(c)(2), added
subsecs. (f) and (g), respectively.
1995--Subsec. (a)(12)(A)(iv) to (vi). Pub. L. 104-62, Sec. 4(a),
struck out ``and'' at end of cl. (iv), added cl. (v), and redesignated
former cl. (v) as (vi).
Subsec. (e). Pub. L. 104-62, Sec. 4(b), added subsec. (e).
1994--Subsec. (a)(41)(A)(i). Pub. L. 103-325, Sec. 347(a),
substituted ``on a residential'' for ``or on a residential'' and
inserted before semicolon ``, or on one or more parcels of real estate
upon which is located one or more commercial structures''.
Subsec. (a)(53). Pub. L. 103-325, Sec. 202, added par. (53).
1993--Subsec. (a)(12)(B)(ii). Pub. L. 103-202, Sec. 106(b)(2)(A),
substituted ``sections 78o and 78q-1'' for ``sections 78o, 78o-3 (other
than subsection (g)(3)), and 78q-1''.
Subsec. (a)(34)(G)(ii) to (iv). Pub. L. 103-202, Sec. 109(a)(1),
amended cls. (ii) to (iv) generally. Prior to amendment, cls. (ii) to
(iv) read as follows:
``(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, a State branch or a State agency of a foreign bank, or a
commercial lending company owned or controlled by a foreign bank (as
such terms are used in the International Banking Act of 1978);
``(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);
``(iv) the Director of the Office of Thrift Supervision, in the case
of a savings association the deposits of which are insured by the
Federal Deposit Insurance Corporation;''.
Subsec. (a)(46). Pub. L. 103-202, Sec. 109(a)(2), amended par. (46)
generally. Prior to amendment, par. (46) read as follows: ``The term
`financial institution' means (A) a bank (as such term is defined in
paragraph (6) of this subsection), (B) a foreign bank, and (C) an
insured institution (as such term is defined in section 1724 of title
12).''
Subsec. (a)(52). Pub. L. 103-202, Sec. 109(a)(3), redesignated par.
(51) defining ``foreign financial regulatory authority'' as (52).
1990--Subsec. (a)(39)(A). Pub. L. 101-550, Sec. 203(b)(1), inserted
``foreign equivalent of a self-regulatory organization, foreign or
international securities exchange,'' after ``self-regulatory
organization,'', ``or any substantially equivalent foreign statute or
regulation,'' after ``(7 U.S.C. 7),'' and ``(7 U.S.C. 21),'', and ``or
foreign equivalent'' after ``contract market''.
Subsec. (a)(39)(B). Pub. L. 101-550, Sec. 203(b)(2), added subpar.
(B) and struck out former subpar. (B) which read as follows: ``is
subject to an order of the Commission or other appropriate regulatory
agency denying, suspending for a period not exceeding twelve months, or
revoking his registration as a broker, dealer, municipal securities
dealer, government securities broker, or government securities dealer,
or barring or suspending for a period not exceeding 12 months his being
associated with a broker, dealer, municipal securities dealer,
government securities broker, or government securities dealer, or is
subject to 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.);''.
Subsec. (a)(39)(D). Pub. L. 101-550, Sec. 203(b)(4), added subpar.
(D). Former subpar. (D) redesignated (E).
Subsec. (a)(39)(E). Pub. L. 101-550, Sec. 203(b)(3), (5),
redesignated subpar. (D) as (E) and substituted ``(A), (B), (C), or
(D)'' for ``(A), (B), or (C)''. Former subpar. (E) redesignated (F).
Subsec. (a)(39)(F). Pub. L. 101-550, Sec. 203(b)(3), (6),
redesignated subpar. (E) as (F), substituted ``(D), (E), or (G)'' for
``(D) or (E)'', and inserted ``or any other felony'' before ``within ten
years''.
Subsec. (a)(51). Pub. L. 101-550, Sec. 204, added par. (51) defining
``foreign financial regulatory authority''.
Pub. L. 101-429 added par. (51) defining ``penny stock''.
1989--Subsec. (a)(34). Pub. L. 101-73, Sec. 744(u)(1)(B),
substituted ``Office of Thrift Supervision'' for ``Federal Home Loan
Bank Board'' in concluding provisions.
Subsec. (a)(34)(G)(iv) to (vi). Pub. L. 101-73, Sec. 744(u)(1)(A),
added cl. (iv), redesignated cl. (vi) as (v), and struck out former cls.
(iv) and (v) which read as follows:
``(iv) the Federal Home Loan Bank Board, in the case of a Federal
savings and loan association, Federal savings bank, or District of
Columbia savings and loan association;
``(v) the Federal Savings and Loan Insurance Corporation, in the
case of an institution insured by the Federal Savings and Loan Insurance
Corporation (other than a Federal savings and loan association, Federal
savings bank, or District of Columbia savings and loan association);''.
1988--Subsec. (a)(50). Pub. L. 100-704 added par. (50).
1987--Subsec. (a)(6)(C). Pub. L. 100-181, Sec. 301, substituted
``under the authority of the Comptroller of the Currency pursuant to
section 92a of title 12'' for ``under section 11(k) of the Federal
Reserve Act, as amended''.
Subsec. (a)(16). Pub. L. 100-181, Sec. 302, struck out reference to
Canal Zone.
Subsec. (a)(22)(B). Pub. L. 100-181, Sec. 303, substituted
``association, or any'' and ``own behalf, in'' for ``association or
any'' and ``own behalf in'', respectively.
Subsec. (a)(34)(C)(ii). Pub. L. 100-181, Sec. 304, substituted
``State'' for ``state''.
Subsec. (a)(39)(B). Pub. L. 100-181, Sec. 305, substituted ``months,
or revoking'' for ``months, revoking'' and ``barring or suspending for a
period not exceeding 12 months his'' for ``barring his''.
Subsec. (a)(47). Pub. L. 100-181, Sec. 306(1), added par. (47).
Subsec. (a)(49). Pub. L. 100-181, Sec. 306(2), added par. (49).
1986--Subsec. (a)(12). Pub. L. 99-571, Sec. 102(a), in amending par.
(12) generally, expanded definition of ``exempted security'' or
``exempted securities'' to include government securities as defined in
par. (42) of this subsection, provided that such securities not be
deemed exempt for purposes of section 78q-1 of this title, substituted
section 78o-3(g)(3) of this title for section 78o-3(b)(6), (11), and
(g)(2) of this title in provision relating to municipal securities as
not being ``exempted securities'' and defined ``qualified plan'' to mean
qualified stock bonus, pension, or profit-sharing plan, qualified
annuity plan, or governmental plan.
Pub. L. 99-514 substituted ``Internal Revenue Code of 1986'' for
``Internal Revenue Code of 1954'', which for purposes of codification
was translated as ``title 26'' thus requiring no change in text.
Subsec. (a)(29). Pub. L. 99-514 substituted ``Internal Revenue Code
of 1986'' for ``Internal Revenue Code of 1954'', which for purposes of
codification was translated as ``title 26'' thus requiring no change in
text.
Subsec. (a)(34). Pub. L. 99-571, Sec. 102(b)(2), inserted ``, and
the term `District of Columbia savings and loan association' means any
association subject to examination and supervision by the Federal Home
Loan Bank Board under section 1466a of title 12'' in concluding
provisions.
Subsec. (a)(34)(G). Pub. L. 99-571, Sec. 102(b)(1), added subpar.
(G).
Subsec. (a)(39)(B). Pub. L. 99-571, Sec. 102(c)(1)(A), which
directed insertion of ``or other appropriate regulatory agency'' after
``Commission'' was executed by making the insertion after ``Commission''
the first place appearing as the probable intent of Congress.
Pub. L. 99-571, Sec. 102(c)(1)(B), substituted ``municipal
securities dealer, government securities broker, or government
securities dealer'' for ``or municipal securities dealer'' in two
places.
Subsec. (a)(39)(C). Pub. L. 99-571, Sec. 102(c)(2), substituted
``municipal securities dealer, government securities broker, or
government securities dealer'' for ``or municipal securities dealer''
and inserted ``, an appropriate regulatory agency,'' after ``the
Commission''.
Subsec. (a)(42) to (46), (48). Pub. L. 99-571, Sec. 102(d), added
pars. (42) to (46) and (48).
1984--Subsec. (a)(39)(A). Pub. L. 98-376, Sec. 6(a)(1), inserted ``,
contract market designated pursuant to section 5 of the Commodity
Exchange Act (7 U.S.C. 7), or futures association registered under
section 17 of such Act (7 U.S.C. 21), or has been and is denied trading
privileges on any such contract market''.
Subsec. (a)(39)(B). Pub. L. 98-376, Sec. 6(a)(2), inserted ``, or is
subject to 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.)''.
Subsec. (a)(39)(C). Pub. L. 98-376, Sec. 6(a)(3), inserted ``or
while associated with an entity or person required to be registered
under the Commodity Exchange Act,''.
Subsec. (a)(41). Pub. L. 98-440 added par. (41).
1982--Subsec. (a)(10). Pub. L. 97-303 inserted ``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,'' after ``for a security,''.
1980--Subsec. (a)(12). Pub. L. 96-477 included within definition of
``exempted security'' interests or participation in single trust funds,
provided that qualifying interests, participation, or securities could
be issued in connection with certain governmental plans as defined in
section 414(d) of title 26, substituted provisions relating to
securities arising out of contracts issued by insurance companies for
provisions relating to separate accounts maintained by insurance
companies, and excluded from definition of ``exempted security'' any
plans described in cls. (A), (B), or (C) of par. (12) which were funded
by annuity contracts described in section 403(b) of title 26.
1978--Subsec. (a)(40). Pub. L. 95-283 added par. (40).
1975--Subsec. (a)(3). Pub. L. 94-29, Sec. 3(1), redefined term
``member'' to recognize the elimination of fixed commission rates in the
case of exchanges, inserted definition of term when used in the case of
registered securities associations, expanded definition of term when
used with respect to an exchange to include any natural person permitted
to effect transactions on the floor of an exchange without the services
of another person acting as broker, any registered broker or dealer with
which such natural person is associated, any registered broker or dealer
permitted to designate a natural person as its representative on the
floor of an exchange, and any other registered broker or dealer which
agrees to be regulated by an exchange and with respect to whom the
exchange has undertaken to enforce compliance with its rules, this
chapter, and the rules and regulations thereunder, introduced the
concept of including among members any person required to comply with
the rules of an exchange to the extent specified by the Commission in
accordance with section 78f(f) of this title, and expanded definition of
term when used with respect to a registered securities association to
include any broker or dealer who has agreed to be regulated and with
respect to whom the association undertakes to enforce compliance with
its own rules, this chapter, and the rules and regulations thereunder.
Subsec. (a)(9). Pub. L. 94-29, Sec. 3(2), substituted ``a natural
person, company, government, or political subdivision, agency, or
instrumentality of a government'' for ``an individual, a corporation, a
partnership, an association, a joint-stock company, a business trust, or
an unincorporated organization''.
Subsec. (a)(12). Pub. L. 94-29, Sec. 3(3), brought brokers and
dealers engaged exclusively in municipal securities business within the
registration provisions of this chapter by transferring the existing
description of municipal securities to subsec. (a)(29) and by inserting
in its place provisions revoking the exempt status of municipal
securities for purposes of sections 78o, 78o-3 (except subsections
(b)(6), (b)(11), and (g)(2) thereof) and 78q-1 of this title.
Subsec. (a)(17). Pub. L. 94-29, Sec. 3(4), expanded definition of
``interstate commerce'' to establish that the intrastate use of any
facility of an exchange, any telephones or other interstate means of
communication, or any other interstate instrumentality constitutes a use
of the jurisdictional means for purposes of this chapter.
Subsec. (a)(18). Pub. L. 94-29, Sec. 3(4), expanded definition to
include persons under common control with the broker or dealer and
struck out references to the classification of the persons, including
employees, controlled by a broker or a dealer.
Subsec. (a)(19). Pub. L. 94-29, Sec. 3(4), substituted `` `separate
account', and `company' '' for ``and `separate account'.''
Subsec. (a)(21). Pub. L. 94-29, Sec. 3(5), broadened definition of
term ``person associated with a member'' to encompass a person
associated with a broker or dealer which is a member of an exchange by
restating directly the definition of a ``person associated with a broker
or dealer'' in subsec. (a)(18).
Subsec. (a)(22) to (39). Pub. L. 94-29, Sec. 3(6), added pars. (22)
to (39).
Subsec. (b). Pub. L. 94-29, Sec. 3(7), substituted ``accounting, and
other terms used in this chapter, consistently with the provisions and
purposes of this chapter'' for ``and accounting terms used in this
chapter insofar as such definitions are not inconsistent with the
provisions of this chapter''.
Subsec. (d). Pub. L. 94-29, Sec. 3(8), added subsec. (d).
1970--Subsec. (a)(12). Pub. L. 91-567 inserted provisions which
brought within definition of ``exempted security'' any security which is
an industrial development bond the interest on which is excludable from
gross income under section 103(a)(1) of title 26 if, by reason of the
application of section 103(c)(4) or (6) of title 26, section 103(c)(1)
does not apply to such security. Such amendment was also made by Pub. L.
91-373.
Pub. L. 91-547, Sec. 28(a), struck out reference to industrial
development bonds the interest on which is excludable from gross income
under section 103(a)(1) of title 26; and included as exempted securities
interests or participations in common trust funds maintained by a bank
for collective investment of assets held by it in a fiduciary capacity;
interests or participations in bank collective trust funds maintained
for funding of employees' stock-bonus, pension, or profit-sharing plans;
interests or participations in separate accounts maintained by insurance
companies for funding certain stock-bonus, pension, or profit-sharing
plans which meet the requirements for qualification under section 401 of
title 26; and such other securities as the Commission by rules and
regulations deems necessary in the public interest.
Pub. L. 91-373 inserted provisions which brought within definition
of ``exempted security'' any security which is an industrial development
bond the interest on which is excludable from gross income under section
103(a)(1) of title 26 if, by reason of the application of section
103(c)(4) or (6) of title 26, section 103(c)(1) does not apply to such
security. Such amendment was also made by Pub. L. 91-567.
Subsec. (a)(19). Pub. L. 91-547, Sec. 28(b), provided for term
``separate account'' the same meaning as in the Investment Company Act
of 1940.
1964--Subsec. (a)(18) to (21). Pub. L. 88-467 added pars. (18) to
(21).
1960--Subsec. (a)(16). Pub. L. 86-624 struck out reference to
Hawaii.
1959--Subsec. (a)(16). Pub. L. 86-70 struck out reference to Alaska.
Change of Name
Act Aug. 23, 1935, substituted ``Board of Governors of the Federal
Reserve System'' for ``Federal Reserve Board''.
Effective Date of 1999 Amendment
Amendment by sections 201, 202, 207, and 208 of Pub. L. 106-102
effective at the end of the 18-month period beginning on Nov. 12, 1999,
see section 209 of Pub. L. 106-102, set out as a note under section 1828
of Title 12, Banks and Banking.
Amendment by section 221(b) of Pub. L. 106-102 effective 18 months
after Nov. 12, 1999, see section 225 of Pub. L. 106-102, set out as a
note under section 77c of this title.
Effective Date of 1995 Amendment
Amendment by Pub. L. 104-62 applicable as defense to any claim in
administrative and judicial actions pending on or commenced after Dec.
8, 1995, that any person, security, interest, or participation of type
described in Pub. L. 104-62 is subject to the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, or any State statute or regulation
preempted as provided in section 80a-3a of this title, except as
specifically provided in such statutes, see section 7 of Pub. L. 104-62,
set out as a note under section 77c of this title.
Effective Date of 1994 Amendment
Amendment by section 347(a) of Pub. L. 103-325 effective upon date
of promulgation of final regulations under section 347(c) of Pub. L.
103-325, see section 347(d) of Pub. L. 103-325, set out as an Effective
Date of 1994 Amendment note under section 24 of Title 12, Banks and
Banking.
Effective Date of 1990 Amendment
Amendment by Pub. L. 101-429 effective 12 months after Oct. 15,
1990, or upon issuance of final regulations initially implementing such
amendment, whichever is earlier, with provision to commence rulemaking
proceedings to implement such amendment note later than 180 days after
Oct. 15, 1990, and with provisions relating to civil penalties and
accounting and disgorgement, see section 1(c)(2), (3)(A), (C) of Pub. L.
101-429, set out in a note under section 77g of this title.
Effective Date of 1988 Amendment
Amendment by Pub. L. 100-704, except for amendment by section 6, not
applicable to actions occurring before Nov. 19, 1988, see section 9 of
Pub. L. 100-704, set out as a note under section 78o of this title.
Effective Date of 1986 Amendment
Amendment by Pub. L. 99-571 effective 270 days after Oct. 28, 1986,
see section 401 of Pub. L. 99-571, set out as an Effective Date note
under section 78o-5 of this title.
Effective Date of 1984 Amendment
Section 7 of Pub. L. 98-376 provided that: ``The amendments made by
this Act [amending this section and sections 78o, 78t, 78u, and 78ff of
this title] shall become effective immediately upon enactment of this
Act [Aug. 10, 1984].''
Effective Date of 1975 Amendment
Amendment by Pub. L. 94-29 effective June 4, 1975, except for
amendment of subsec. (a)(12) by Pub. L. 94-29 to be effective 180 days
after June 4, 1975, with provisions of subsec. (a)(3), as amended by
Pub. L. 94-29, or rules or regulations thereunder, not to apply in a way
so as to deprive any person of membership in any national securities
exchange (or its successor) of which such person was, on 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, see section 31(a) of Pub. L. 94-29, set out as a note under
section 78b of this title.
Effective Date of 1970 Amendments
For effective date of amendment by Pub. L. 91-567, see section 6(d)
of Pub. L. 91-567, set out as a note under section 77c of this title.
Amendment by Pub. L. 91-547 effective Dec. 14, 1970, see section 30
of Pub L. 91-547, set out as a note under section 80a-52 of this title.
For effective date of amendment by Pub. L. 91-373, see section
401(c) of Pub. L. 91-373, set out as a note under section 77c of this
title.
Effective Date of 1964 Amendment
Section 13 of Pub. L. 88-467 provided that: ``The amendments made by
this Act shall take effect as follows:
``(1) The effective date of section 12(g)(1) of the Securities
Exchange Act of 1934, as added by section 3(c) of this Act [section
78l(g)(1) of this title], shall be July 1, 1964.
``(2) The effective date of the amendments to sections 12(b) and
15(a) of the Securities Exchange Act of 1934 [sections 78l(b) and 78o(a)
of this title], contained in sections 3(a) and 6(a), respectively, of
this Act shall be July 1, 1964.
``(3) All other amendments contained in this Act [amending this
section and sections 77d, 78l, 78m, 78n, 78o, 78o-3, 78p, 78t, 78w, and
78ff of this title] shall take effect on the date of its enactment [Aug.
20, 1964].''
Construction of 1993 Amendment
Amendment by Pub. L. 103-202 not to be construed to govern initial
issuance of any public debt obligation or to grant any authority to (or
extend any authority of) the Securities and Exchange Commission, any
appropriate regulatory agency, or a self-regulatory organization to
prescribe any procedure, term, or condition of such initial issuance, to
promulgate any rule or regulation governing such initial issuance, or to
otherwise regulate in any manner such initial issuance, see section 111
of Pub. L. 103-202, set out as a note under section 78o-5 of this title.
Transfer of Functions
For transfer of functions of Securities and Exchange Commission,
with certain exceptions, to Chairman of such Commission, see Reorg. Plan
No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat.
1265, set out under section 78d of this title.
State Opt Out
Section 347(e) of Pub. L. 103-325 provided that: ``Notwithstanding
the amendments made by this section [amending this section and section
24 of Title 12, Banks and Banking], a note that is directly secured by a
first lien on one or more parcels of real estate upon which is located
one or more commercial structures shall not be considered to be a
mortgage related security under section 3(a)(41) of the Securities
Exchange Act of 1934 [15 U.S.C. 78c(a)(41)] in any State that, prior to
the expiration of 7 years after the date of enactment of this Act [Sept.
23, 1994], enacts a statute that specifically refers to this section and
either prohibits or provides for a more limited authority to purchase,
hold, or invest in such securities by any person, trust, corporation,
partnership, association, business trust, or business entity or class
thereof than is provided by the amendments made by this subsection. The
enactment by any State of any statute of the type described in the
preceding sentence shall not affect the validity of any contractual
commitment to purchase, hold, or invest that was made prior thereto, and
shall not require the sale or other disposition of any securities
acquired prior thereto.''
Definitions
Pub. L. 106-554, Sec. 1(a)(5) [title III, Sec. 301(b)], Dec. 21,
2000, 114 Stat. 2763, 2763A-451, provided that: ``As used in the
amendment made by subsection (a) [enacting sections 206A to 206C of Pub.
L. 106--102, set out below], the term `security' has the same meaning as
in section 2(a)(1) of the Securities Act of 1933 [15 U.S.C. 77b(a)(1)]
or section 3(a)(10) of the Securities Exchange Act of 1934 [15 U.S.C.
78c(a)(10)].''
Pub. L. 106-102, title II, Sec. 206, Nov. 12, 1999, 113 Stat. 1393,
provided that:
``(a) Definition of Identified Banking Product.--For purposes of
paragraphs (4) and (5) of section 3(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(4), (5)), the term `identified banking product'
means--
``(1) a deposit account, savings account, certificate of
deposit, or other deposit instrument issued by a bank;
``(2) a banker's acceptance;
``(3) a letter of credit issued or loan made by a bank;
``(4) a debit account at a bank arising from a credit card or
similar arrangement;
``(5) a participation in a loan which the bank or an affiliate
of the bank (other than a broker or dealer) funds, participates in,
or owns that is sold--
``(A) to qualified investors; or
``(B) to other persons that--
``(i) have the opportunity to review and assess any
material information, including information regarding the
borrower's creditworthiness; and
``(ii) based on such factors as financial
sophistication, net worth, and knowledge and experience in
financial matters, have the capability to evaluate the
information available, as determined under generally
applicable banking standards or guidelines; or
``(6) any swap agreement, including credit and equity swaps,
except that an equity swap that is sold directly to any person other
than a qualified investor (as defined in section 3(a)(54) of the
Securities Act of 1934 [15 U.S.C. 78c(a)(54)]) shall not be treated
as an identified banking product.
``(b) Definition of Swap Agreement.--For purposes of subsection
(a)(6), the term `swap agreement' means any individually negotiated
contract, agreement, warrant, note, or option that is based, in whole or
in part, on the value of, any interest in, or any quantitative measure
or the occurrence of any event relating to, one or more commodities,
securities, currencies, interest or other rates, indices, or other
assets, but does not include any other identified banking product, as
defined in paragraphs (1) through (5) of subsection (a).
``(c) Classification Limited.--Classification of a particular
product as an identified banking product pursuant to this section shall
not be construed as finding or implying that such product is or is not a
security for any purpose under the securities laws, or is or is not an
account, agreement, contract, or transaction for any purpose under the
Commodity Exchange Act [7 U.S.C. 1 et seq.].
``(d) Incorporated Definitions.--For purposes of this section, the
terms `bank' and `qualified investor' have the same meanings as given in
section 3(a) of the Securities Exchange Act of 1934 [15 U.S.C. 78c(a)],
as amended by this Act.''
Pub. L. 106-102, title II, Secs. 206A--206C, as added by Pub. L.
106-554, Sec. 1(a)(5) [title III, Sec. 301(a)], Dec. 21, 2000, 114 Stat.
2763, 2763A-449, provided that:
``SEC. 206A. SWAP AGREEMENT.
``(a) In General.--Except as provided in subsection (b), as used in
this section, the term `swap agreement' means any agreement, contract,
or transaction between eligible contract participants (as defined in
section 1a(12) of the Commodity Exchange Act [7 U.S.C. 1a(12)] as in
effect on the date of the enactment of this section [Dec. 21, 2000]),
other than a person that is an eligible contract participant under
section 1a(12)(C) of the Commodity Exchange Act, the material terms of
which (other than price and quantity) are subject to individual
negotiation, and that--
``(1) is a put, call, cap, floor, collar, or similar option of
any kind for the purchase or sale of, or based on the value of, one
or more interest or other rates, currencies, commodities, indices,
quantitative measures, or other financial or economic interests or
property of any kind;
``(2) provides for any purchase, sale, payment or delivery
(other than a dividend on an equity security) that is dependent on
the occurrence, non-occurrence, or the extent of the occurrence of
an event or contingency associated with a potential financial,
economic, or commercial consequence;
``(3) provides on an executory basis for the exchange, on a
fixed or contingent basis, of one or more payments based on the
value or level of one or more interest or other rates, currencies,
commodities, securities, instruments of indebtedness, indices,
quantitative measures, or other financial or economic interests or
property of any kind, or any interest therein or based on the value
thereof, and that transfers, as between the parties to the
transaction, in whole or in part, the financial risk associated with
a future change in any such value or level without also conveying a
current or future direct or indirect ownership interest in an asset
(including any enterprise or investment pool) or liability that
incorporates the financial risk so transferred, including any such
agreement, contract, or transaction commonly known as an interest
rate swap, including a rate floor, rate cap, rate collar, cross-
currency rate swap, basis swap, currency swap, equity index swap,
equity swap, debt index swap, debt swap, credit spread, credit
default swap, credit swap, weather swap, or commodity swap;
``(4) provides for the purchase or sale, on a fixed or
contingent basis, of any commodity, currency, instrument, interest,
right, service, good, article, or property of any kind; or
``(5) is any combination or permutation of, or option on, any
agreement, contract, or transaction described in any of paragraphs
(1) through (4).
``(b) Exclusions.--The term `swap agreement' does not include--
``(1) 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;
``(2) any put, call, straddle, option, or privilege entered into
on a national securities exchange registered pursuant to section
6(a) of the Securities Exchange Act of 1934 [15 U.S.C. 78f(a)]
relating to foreign currency;
``(3) any agreement, contract, or transaction providing for the
purchase or sale of one or more securities on a fixed basis;
``(4) any agreement, contract, or transaction providing for the
purchase or sale of one or more securities on a contingent basis,
unless such agreement, contract, or transaction predicates such
purchase or sale on the occurrence of a bona fide contingency that
might reasonably be expected to affect or be affected by the
creditworthiness of a party other than a party to the agreement,
contract, or transaction;
``(5) any note, bond, or evidence of indebtedness that is a
security as defined in section 2(a)(1) of the Securities Act of 1933
[15 U.S.C. 77b(a)(1)] or section 3(a)(10) of the Securities Exchange
Act of 1934 [15 U.S.C. 78c(a)(10)]; or
``(6) any agreement, contract, or transaction that is--
``(A) based on a security; and
``(B) entered into directly or through an underwriter (as
defined in section 2(a) of the Securities Act of 1933 [15 U.S.C.
77b(a)]) by the issuer of such security for the purposes of
raising capital, unless such agreement, contract, or transaction
is entered into to manage a risk associated with capital
raising.
``(c) Rule of Construction Regarding Master Agreements.--As used in
this section, the term `swap agreement' shall be construed to include a
master agreement that provides for an agreement, contract, or
transaction that is a swap agreement pursuant to subsections (a) and
(b), together with all supplements to any such master agreement, without
regard to whether the master agreement contains an agreement, contract,
or transaction that is not a swap agreement pursuant to subsections (a)
and (b), except that the master agreement shall be considered to be a
swap agreement only with respect to each agreement, contract, or
transaction under the master agreement that is a swap agreement pursuant
to subsections (a) and (b).
``SEC. 206B. SECURITY-BASED SWAP AGREEMENT.
``As used in this section, the term `security-based swap agreement'
means a swap agreement (as defined in section 206A) of which a material
term is based on the price, yield, value, or volatility of any security
or any group or index of securities, or any interest therein.
``SEC. 206C. NON-SECURITY-BASED SWAP AGREEMENT.
``As used in this section, the term `non-security-based swap
agreement' means any swap agreement (as defined in section 206A) that is
not a security-based swap agreement (as defined in section 206B).''
Section Referred to in Other Sections
This section is referred to in sections 77b, 77g, 77r, 77r-1, 77s,
77z-2, 78c-1, 78j-1, 78m, 78o-4, 78o-5, 78q, 78w, 78y, 78mm, 78ccc,
78fff-2, 78lll, 80a-2, 80a-3a, 80a-30, 80b-2, 80b-4, 6102, 6603, 6821,
6827, 7201, 7246 of this title; title 2 section 1602; title 5 section
4802; title 6 section 131; title 7 sections 1a, 2, 6c, 6d, 7a, 12a, 27;
title 10 sections 4357, 6975, 9356; title 11 sections 101, 523; title 12
sections 24, 371c-1, 1441b, 1464, 1757, 1787, 1821, 1828, 1831l, 2290;
title 22 sections 282k, 283h, 283ii, 285h, 286k-1, 290i-9, 290l-7, 290m,
290o-7; title 26 sections 543, 1234B, 1256, 7603; title 28 section 1658;
title 29 section 1021; title 31 sections 3121, 9110.
