§ 78o-3. — Registered securities associations.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC78o-3]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2B--SECURITIES EXCHANGES
Sec. 78o-3. Registered securities associations
(a) Registration; application
An association of brokers and dealers may be registered as a
national securities association pursuant to subsection (b) of this
section, or as an affiliated securities association pursuant to
subsection (d) of this section, under the terms and conditions
hereinafter provided in this section and in accordance with the
provisions of section 78s(a) of this title, by filing with the
Commission an application for registration in such form as the
Commission, by rule, may prescribe containing the rules of the
association and such other information and documents as the Commission,
by rule, may prescribe as necessary or appropriate in the public
interest or for the protection of investors.
(b) Determinations by Commission requisite to registration of applicant
as national securities association
An association of brokers and dealers shall not be registered as a
national securities association unless the Commission determines that--
(1) By reason of the number and geographical distribution of its
members and the scope of their transactions, such association will
be able to carry out the purposes of this section.
(2) Such association is so organized and has the capacity to be
able to carry out the purposes of this chapter and to comply, and
(subject to any rule or order of the Commission pursuant to section
78q(d) or 78s(g)(2) of this title) to enforce compliance by its
members and persons associated with its members, with the provisions
of this chapter, the rules and regulations thereunder, the rules of
the Municipal Securities Rulemaking Board, and the rules of the
association.
(3) Subject to the provisions of subsection (g) of this section,
the rules of the association provide that any registered broker or
dealer may become a member of such association and any person may
become associated with a member thereof.
(4) The rules of the association assure a fair representation of
its members in the selection of its directors and administration of
its affairs and provide that one or more directors shall be
representative of issuers and investors and not be associated with a
member of the association, broker, or dealer.
(5) The rules of the association provide for the equitable
allocation of reasonable dues, fees, and other charges among members
and issuers and other persons using any facility or system which the
association operates or controls.
(6) The rules of the association are designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system,
and, in general, to protect investors and the public interest; and
are not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers, to fix minimum profits, to impose any
schedule or fix rates of commissions, allowances, discounts, or
other fees to be charged by its members, or to regulate by virtue of
any authority conferred by this chapter matters not related to the
purposes of this chapter or the administration of the association.
(7) The rules of the association provide that (subject to any
rule or order of the Commission pursuant to section 78q(d) or
78s(g)(2) of this title) its members and persons associated with its
members shall be appropriately disciplined for violation of any
provision of this chapter, the rules or regulations thereunder, the
rules of the Municipal Securities Rulemaking Board, or the rules of
the association, by expulsion, suspension, limitation of activities,
functions, and operations, fine, censure, being suspended or barred
from being associated with a member, or any other fitting sanction.
(8) The rules of the association are in accordance with the
provisions of subsection (h) of this section, and, in general,
provide a fair procedure for the disciplining of members and persons
associated with members, the denial of membership to any person
seeking membership therein, the barring of any person from becoming
associated with a member thereof, and the prohibition or limitation
by the association of any person with respect to access to services
offered by the association or a member thereof.
(9) The rules of the association do not impose any burden on
competition not necessary or appropriate in furtherance of the
purposes of this chapter.
(10) The requirements of subsection (c) of this section, insofar
as these may be applicable, are satisfied.
(11) The rules of the association include provisions governing
the form and content of quotations relating to securities sold
otherwise than on a national securities exchange which may be
distributed or published by any member or person associated with a
member, and the persons to whom such quotations may be supplied.
Such rules relating to quotations shall be designed to produce fair
and informative quotations, to prevent fictitious or misleading
quotations, and to promote orderly procedures for collecting,
distributing, and publishing quotations.
(12) The rules of the association to promote just and equitable
principles of trade, as required by paragraph (6), include rules to
prevent members of the association from participating in any limited
partnership rollup transaction (as such term is defined in
paragraphs (4) and (5) of section 78n(h) of this title) unless such
transaction was conducted in accordance with procedures designed to
protect the rights of limited partners, including--
(A) the right of dissenting limited partners to one of the
following:
(i) an appraisal and compensation;
(ii) retention of a security under substantially the
same terms and conditions as the original issue;
(iii) approval of the limited partnership rollup
transaction by not less than 75 percent of the outstanding
securities of each of the participating limited
partnerships;
(iv) the use of a committee that is independent, as
determined in accordance with rules prescribed by the
association, of the general partner or sponsor, that has
been approved by a majority of the outstanding securities of
each of the participating partnerships, and that has such
authority as is necessary to protect the interest of limited
partners, including the authority to hire independent
advisors, to negotiate with the general partner or sponsor
on behalf of the limited partners, and to make a
recommendation to the limited partners with respect to the
proposed transaction; or
(v) other comparable rights that are prescribed by rule
by the association and that are designed to protect
dissenting limited partners;
(B) the right not to have their voting power unfairly
reduced or abridged;
(C) the right not to bear an unfair portion of the costs of
a proposed limited partnership rollup transaction that is
rejected; and
(D) restrictions on the conversion of contingent interests
or fees into non-contingent interests or fees and restrictions
on the receipt of a non-contingent equity interest in exchange
for fees for services which have not yet been provided.
As used in this paragraph, the term ``dissenting limited partner''
means a person who, on the date on which soliciting material is
mailed to investors, is a holder of a beneficial interest in a
limited partnership that is the subject of a limited partnership
rollup transaction, and who casts a vote against the transaction and
complies with procedures established by the association, except that
for purposes of an exchange or tender offer, such person shall file
an objection in writing under the rules of the association during
the period in which the offer is outstanding.
(13) The rules of the association prohibit the authorization for
quotation on an automated interdealer quotation system sponsored by
the association of any security designated by the Commission as a
national market system security resulting from a limited partnership
rollup transaction (as such term is defined in paragraphs (4) and
(5) of section 78n(h) of this title), unless such transaction was
conducted in accordance with procedures designed to protect the
rights of limited partners, including--
(A) the right of dissenting limited partners to one of the
following:
(i) an appraisal and compensation;
(ii) retention of a security under substantially the
same terms and conditions as the original issue;
(iii) approval of the limited partnership rollup
transaction by not less than 75 percent of the outstanding
securities of each of the participating limited
partnerships;
(iv) the use of a committee that is independent, as
determined in accordance with rules prescribed by the
association, of the general partner or sponsor, that has
been approved by a majority of the outstanding securities of
each of the participating partnerships, and that has such
authority as is necessary to protect the interest of limited
partners, including the authority to hire independent
advisors, to negotiate with the general partner or sponsor
on behalf of the limited partners, and to make a
recommendation to the limited partners with respect to the
proposed transaction; or
(v) other comparable rights that are prescribed by rule
by the association and that are designed to protect
dissenting limited partners;
(B) the right not to have their voting power unfairly
reduced or abridged;
(C) the right not to bear an unfair portion of the costs of
a proposed limited partnership rollup transaction that is
rejected; and
(D) restrictions on the conversion of contingent interests
or fees into non-contingent interests or fees and restrictions
on the receipt of a non-contingent equity interest in exchange
for fees for services which have not yet been provided.
As used in this paragraph, the term ``dissenting limited partner''
means a person who, on the date on which soliciting material is
mailed to investors, is a holder of a beneficial interest in a
limited partnership that is the subject of a limited partnership
rollup transaction, and who casts a vote against the transaction and
complies with procedures established by the association, except that
for purposes of an exchange or tender offer, such person shall file
an objection in writing under the rules of the association during
the period during which the offer is outstanding.
(c) National association rules; provision for registration of affiliated
securities association
The Commission may permit or require the rules of an association
applying for registration pursuant to subsection (b) of this section, to
provide for the admission of an association registered as an affiliated
securities association pursuant to subsection (d) of this section, to
participation in said applicant association as an affiliate thereof,
under terms permitting such powers and responsibilities to such
affiliate, and under such other appropriate terms and conditions, as may
be provided by the rules of said applicant association, if such rules
appear to the Commission to be necessary or appropriate in the public
interest or for the protection of investors and to carry out the
purposes of this section. The duties and powers of the Commission with
respect to any national securities association or any affiliated
securities association shall in no way be limited by reason of any such
affiliation.
(d) Registration as affiliated association; prerequisites; association
rules
An applicant association shall not be registered as an affiliated
securities association unless it appears to the Commission that--
(1) such association, notwithstanding that it does not satisfy
the requirements set forth in paragraph (1) of subsection (b) of
this section, will, forthwith upon the registration thereof, be
admitted to affiliation with an association registered as a national
securities association pursuant to subsection (b) of this section,
in the manner and under the terms and conditions provided by the
rules of said national securities association in accordance with
subsection (c) of this section; and
(2) such association and its rules satisfy the requirements set
forth in paragraphs (2) to (10), inclusive, and paragraph (12),\1\
of subsection (b) of this section; except that in the case of any
such association any restrictions upon membership therein of the
type authorized by paragraph (3) of subsection (b) of this section
shall not be less stringent than in the case of the national
securities association with which such association is to be
affiliated.
---------------------------------------------------------------------------
\1\ See References in Text note below.
---------------------------------------------------------------------------
(e) Dealings with nonmember professionals
(1) The rules of a registered securities association may provide
that no member thereof shall deal with any nonmember professional (as
defined in paragraph (2) of this subsection) except at the same prices,
for the same commissions or fees, and on the same terms and conditions
as are by such member accorded to the general public.
(2) For the purposes of this subsection, the term ``nonmember
professional'' shall include (A) with respect to transactions in
securities other than municipal securities, any registered broker or
dealer who is not a member of any registered securities association,
except such a broker or dealer who deals exclusively in commercial
paper, bankers' acceptances, and commercial bills, and (B) with respect
to transactions in municipal securities, any municipal securities dealer
(other than a bank or division or department of a bank) who is not a
member of any registered securities association and any municipal
securities broker who is not a member of any such association.
(3) Nothing in this subsection shall be so construed or applied as
to prevent (A) any member of a registered securities association from
granting to any other member of any registered securities association
any dealer's discount, allowance, commission, or special terms, in
connection with the purchase or sale of securities, or (B) any member of
a registered securities association or any municipal securities dealer
which is a bank or a division or department of a bank from granting to
any member of any registered securities association or any such
municipal securities dealer any dealer's discount, allowance,
commission, or special terms in connection with the purchase or sale of
municipal securities: Provided, however, That the granting of any such
discount, allowance, commission, or special terms in connection with the
purchase or sale of municipal securities shall be subject to rules of
the Municipal Securities Rulemaking Board adopted pursuant to section
78o-4(b)(2)(K) of this title.
(f) Transactions in municipal securities
Nothing in subsection (b)(6) or (b)(11) of this section shall be
construed to permit a registered securities association to make rules
concerning any transaction by a registered broker or dealer in a
municipal security.
(g) Denial of membership
(1) A registered securities association shall deny membership to any
person who is not a registered broker or dealer.
(2) A registered securities association may, and in cases in which
the Commission, by order, directs as necessary or appropriate in the
public interest or for the protection of investors shall, deny
membership to any registered broker or dealer, and bar from becoming
associated with a member any person, who is subject to a statutory
disqualification. A registered securities association shall file notice
with the Commission not less than thirty days prior to admitting any
registered broker or dealer to membership or permitting any person to
become associated with a member, if the association knew, or in the
exercise of reasonable care should have known, that such broker or
dealer or person was subject to a statutory disqualification. The notice
shall be in such form and contain such information as the Commission, by
rule, may prescribe as necessary or appropriate in the public interest
or for the protection of investors.
(3)(A) A registered securities association may deny membership to,
or condition the membership of, a registered broker or dealer if (i)
such broker or dealer does not meet such standards of financial
responsibility or operational capability or such broker or dealer or any
natural person associated with such broker or dealer does not meet such
standards of training, experience, and competence as are prescribed by
the rules of the association or (ii) such broker or dealer or person
associated with such broker or dealer has engaged and there is a
reasonable likelihood he will again engage in acts or practices
inconsistent with just and equitable principles of trade. A registered
securities association may examine and verify the qualifications of an
applicant to become a member and the natural persons associated with
such an applicant in accordance with procedures established by the rules
of the association.
(B) A registered securities association may bar a natural person
from becoming associated with a member or condition the association of a
natural person with a member if such natural person (i) does not meet
such standards of training, experience, and competence as are prescribed
by the rules of the association or (ii) has engaged and there is a
reasonable likelihood he will again engage in acts or practices
inconsistent with just and equitable principles of trade. A registered
securities association may examine and verify the qualifications of an
applicant to become a person associated with a member in accordance with
procedures established by the rules of the association and require a
natural person associated with a member, or any class of such natural
persons, to be registered with the association in accordance with
procedures so established.
(C) A registered securities association may bar any person from
becoming associated with a member if such person does not agree (i) to
supply the association with such information with respect to its
relationship and dealings with the member as may be specified in the
rules of the association and (ii) to permit examination of its books and
records to verify the accuracy of any information so supplied.
(D) Nothing in subparagraph (A), (B), or (C) of this paragraph shall
be construed to permit a registered securities association to deny
membership to or condition the membership of, or bar any person from
becoming associated with or condition the association of any person
with, a broker or dealer that engages exclusively in transactions in
municipal securities.
(4) A registered securities association may deny membership to a
registered broker or dealer not engaged in a type of business in which
the rules of the association require members to be engaged: Provided,
however, That no registered securities association may deny membership
to a registered broker or dealer by reason of the amount of such type of
business done by such broker or dealer or the other types of business in
which he is engaged.
(h) Discipline of registered securities association members and persons
associated with members; summary proceedings
(1) In any proceeding by a registered securities association to
determine whether a member or person associated with a member should be
disciplined (other than a summary proceeding pursuant to paragraph (3)
of this subsection) the association shall bring specific charges, notify
such member or person of, and give him an opportunity to defend against,
such charges, and keep a record. A determination by the association to
impose a disciplinary sanction shall be supported by a statement setting
forth--
(A) any act or practice in which such member or person
associated with a member has been found to have engaged, or which
such member or person has been found to have omitted;
(B) the specific provision of this chapter, the rules or
regulations thereunder, the rules of the Municipal Securities
Rulemaking Board, or the rules of the association which any such act
or practice, or omission to act, is deemed to violate; and
(C) the sanction imposed and the reason therefor.
(2) In any proceeding by a registered securities association to
determine whether a person shall be denied membership, barred from
becoming associated with a member, or prohibited or limited with respect
to access to services offered by the association or a member thereof
(other than a summary proceeding pursuant to paragraph (3) of this
subsection), the association shall notify such person of and give him an
opportunity to be heard upon, the specific grounds for denial, bar, or
prohibition or limitation under consideration and keep a record. A
determination by the association to deny membership, bar a person from
becoming associated with a member, or prohibit or limit a person with
respect to access to services offered by the association or a member
thereof shall be supported by a statement setting forth the specific
grounds on which the denial, bar, or prohibition or limitation is based.
(3) A registered securities association may summarily (A) suspend a
member or person associated with a member who has been and is expelled
or suspended from any self-regulatory organization or barred or
suspended from being associated with a member of any self-regulatory
organization, (B) suspend a member who is in such financial or operating
difficulty that the association determines and so notifies the
Commission that the member cannot be permitted to continue to do
business as a member with safety to investors, creditors, other members,
or the association, or (C) limit or prohibit any person with respect to
access to services offered by the association if subparagraph (A) or (B)
of this paragraph is applicable to such person or, in the case of a
person who is not a member, if the association determines that such
person does not meet the qualification requirements or other
prerequisites for such access and such person cannot be permitted to
continue to have such access with safety to investors, creditors,
members, or the association. Any person aggrieved by any such summary
action shall be promptly afforded an opportunity for a hearing by the
association in accordance with the provisions of paragraph (1) or (2) of
this subsection. The Commission, by order, may stay any such summary
action on its own motion or upon application by any person aggrieved
thereby, if the Commission determines summarily or after notice and
opportunity for hearing (which hearing may consist solely of the
submission of affidavits or presentation of oral arguments) that such
stay is consistent with the public interest and the protection of
investors.
(i) Broker-dealer disciplinary history
A registered securities association shall, within one year from
October 15, 1990, (1) establish and maintain a toll-free telephone
listing to receive inquiries regarding disciplinary actions involving
its members and their associated persons, and (2) promptly respond to
such inquiries in writing. Such association may charge persons, other
than individual investors, reasonable fees for written responses to such
inquiries. Such an association shall not have any liability to any
person for any actions taken or omitted in good faith under this
paragraph.
(j) Registration for sales of private securities offerings
A registered securities association shall create a limited
qualification category for any associated person of a member who effects
sales as part of a primary offering of securities not involving a public
offering, pursuant to section 77c(b), 77d(2), or 77d(6) of this title
and the rules and regulations thereunder, and shall deem qualified in
such limited qualification category, without testing, any bank employee
who, in the six month period preceding November 12, 1999, engaged in
effecting such sales.
(k) Limited purpose national securities association
(1) Regulation of members with respect to security futures
products
A futures association registered under section 21 of title 7
shall be a registered national securities association for the
limited purpose of regulating the activities of members who are
registered as brokers or dealers in security futures products
pursuant to section 78o(b)(11) of this title.
(2) Requirements for registration
Such a securities association shall--
(A) be so organized and have the capacity to carry out the
purposes of the securities laws applicable to security futures
products and to comply, and (subject to any rule or order of the
Commission pursuant to section 78s(g)(2) of this title) to
enforce compliance by its members and persons associated with
its members, with the provisions of the securities laws
applicable to security futures products, the rules and
regulations thereunder, and its rules;
(B) have rules that--
(i) are designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles
of trade, and, in general, to protect investors and the
public interest, including rules governing sales practices
and the advertising of security futures products reasonably
comparable to those of other national securities
associations registered pursuant to subsection (a) of this
section that are applicable to security futures products;
and
(ii) are not designed to regulate by virtue of any
authority conferred by this chapter matters not related to
the purposes of this chapter or the administration of the
association;
(C) have rules that provide that (subject to any rule or
order of the Commission pursuant to section 78s(g)(2) of this
title) its members and persons associated with its members shall
be appropriately disciplined for violation of any provision of
the securities laws applicable to security futures products, the
rules or regulations thereunder, or the rules of the
association, by expulsion, suspension, limitation of activities,
functions, and operations, fine, censure, being suspended or
barred from being associated with a member, or any other fitting
sanction; and
(D) have rules that ensure that members and natural persons
associated with members meet such standards of training,
experience, and competence necessary to effect transactions in
security futures products and are tested for their knowledge of
securities and security futures products.
(3) Exemption from rule change submission
Such a securities association shall be exempt from submitting
proposed rule changes pursuant to section 78s(b) of this title,
except that--
(A) the association shall file proposed rule changes related
to higher margin levels, fraud or manipulation, recordkeeping,
reporting, listing standards, or decimal pricing for security
futures products, sales practices for, advertising of, or
standards of training, experience, competence, or other
qualifications for security futures products for persons who
effect transactions in security futures products, or rules
effectuating the association's obligation to enforce the
securities laws pursuant to section 78s(b)(7) of this title;
(B) the association shall file pursuant to sections
78s(b)(1) and 78s(b)(2) of this title proposed rule changes
related to margin, except for changes resulting in higher margin
levels; and
(C) the association shall file pursuant to section 78s(b)(1)
of this title proposed rule changes that have been abrogated by
the Commission pursuant to section 78s(b)(7)(C) of this title.
(4) Other exemptions
Such a securities association shall be exempt from and shall not
be required to enforce compliance by its members, and its members
shall not, solely with respect to their transactions effected in
security futures products, be required to comply, with the following
provisions of this chapter and the rules thereunder:
(A) Section 78h of this title.
(B) Subsections (b)(1), (b)(3), (b)(4), (b)(5), (b)(8),
(b)(10), (b)(11), (b)(12), (b)(13), (c), (d), (e), (f), (g),
(h), and (i) of this section.
(C) Subsections (d), (f), and (k) of section 78q of this
title.
(D) Subsections (a), (f), and (h) of section 78s of this
title.
(l) Rules to avoid duplicative regulation of dual registrants
Consistent with this chapter, each national securities association
registered pursuant to subsection (a) of this section shall issue such
rules as are necessary to avoid duplicative or conflicting rules
applicable to any broker or dealer registered with the Commission
pursuant to section 78o(b) of this title (except paragraph (11)
thereof), that is also registered with the Commodity Futures Trading
Commission pursuant to section 6f(a) of title 7 (except paragraph (2)
thereof), with respect to the application of--
(1) rules of such national securities association of the type
specified in section 78o(c)(3)(B) of this title involving security
futures products; and
(2) similar rules of national securities associations registered
pursuant to subsection (k) of this section and national securities
exchanges registered pursuant to section 78f(g) of this title
involving security futures products.
(m) Procedures and rules for security future products
A national securities association registered pursuant to subsection
(a) of this section shall, not later than 8 months after December 21,
2000, implement the procedures specified in section 78f(h)(5)(A) of this
title and adopt the rules specified in subparagraphs (B) and (C) of
section 78f(h)(5) of this title.
(June 6, 1934, ch. 404, title I, Sec. 15A, as added June 25, 1938, ch.
677, Sec. 1, 52 Stat. 1070; amended Pub. L. 88-467, Sec. 7, Aug. 20,
1964, 78 Stat. 574; Pub. L. 94-29, Sec. 12, June 4, 1975, 89 Stat. 127;
Pub. L. 99-571, title I, Sec. 102(g), Oct. 28, 1986, 100 Stat. 3218;
Pub. L. 101-429, title V, Sec. 509, Oct. 15, 1990, 104 Stat. 957; Pub.
L. 103-202, title I, Sec. 106(b)(1), title III, Sec. 303(a), (c), Dec.
17, 1993, 107 Stat. 2350, 2364, 2366; Pub. L. 106-102, title II,
Sec. 203, Nov. 12, 1999, 113 Stat. 1391; Pub. L. 106-554, Sec. 1(a)(5)
[title II, Secs. 203(c), 206(j), (k)(1)], Dec. 21, 2000, 114 Stat. 2763,
2763A-422, 2763A-433.)
References in Text
This chapter, referred to in subsecs. (b)(2), (6), (7), (9),
(h)(1)(B), (k)(2)(B)(ii), (4), and (l), was in the original ``this
title''. See References in Text note set out under section 78a of this
title.
Paragraph (12), of subsection (b) of this section, referred to in
subsec. (d)(2), was omitted in the general amendment of subsec. (b) by
Pub. L. 94-29, see par. (11) of subsec. (b). A new par. (12) was added
by Pub. L. 103-302, Sec. 303(a).
Codification
October 15, 1990, referred to in subsec. (i), was in the original
``the date of enactment of this section'' and was translated as meaning
the date of enactment of Pub. L. 101-429, which enacted subsec. (i), to
reflect the probable intent of Congress.
Amendments
2000--Subsec. (k). Pub. L. 106-554, Sec. 1(a)(5) [title II,
Sec. 203(c)], added subsec. (k).
Subsec. (l). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec. 206(j)],
added subsec. (l).
Subsec. (m). Pub. L. 106-554, Sec. 1(a)(5) [title II,
Sec. 206(k)(1)], added subsec. (m).
1999--Subsec. (j). Pub. L. 106-102 added subsec. (j).
1993--Subsec. (b)(12). Pub. L. 103-202, Sec. 303(a), added par.
(12).
Subsec. (b)(13). Pub. L. 103-202, Sec. 303(c), added par. (13).
Subsec. (f). Pub. L. 103-202, Sec. 106(b)(1)(A), redesignated par.
(3) as entire subsec. (f) and struck out pars. (1) and (2) which read as
follows:
``(1) Except as provided in paragraph (2) of this subsection,
nothing in this section shall be construed to apply with respect to any
transaction by a registered broker or dealer in any exempted security.
``(2) A registered securities association may adopt and implement
rules applicable to members of such association (A) to enforce
compliance by registered brokers and dealers with applicable provisions
of this chapter and the rules and regulations thereunder, (B) to provide
that its members and persons associated with its members shall be
appropriately disciplined, in accordance with subsections (b)(7),
(b)(8), and (h) of this section, for violation of applicable provisions
of this chapter and the rules and regulations thereunder, (C) to provide
for reasonable inspection and examination of the books and records of
registered brokers and dealers, (D) to provide for the matters described
in paragraphs (b)(3), (b)(4), and (b)(5) of this section, (E) to
implement the provisions of subsection (g) of this section, and (F) to
prohibit fraudulent, misleading, deceptive, and false advertising.''
Subsec. (g)(3)(D). Pub. L. 103-202, Sec. 106(b)(1)(B)(i),
substituted ``transactions in municipal securities'' for ``transactions
in exempted securities''.
Subsec. (g)(4), (5). Pub. L. 103-202, Sec. 106(b)(1)(B)(ii), (iii),
redesignated par. (5) as (4) and struck out former par. (4) which
allowed a registered securities association to deny membership to,
condition the membership of, or to otherwise bar association with, the
association, under circumstances where a government securities broker or
dealer or other person violated financial responsibility rules adopted
under section 78o-5(b)(1)(A) of this title, or where it appeared likely
that such person or entity had or would engage in conduct which would
subject such person or entity to sanctions under section 78o-5(c) of
this title.
1990--Subsec. (i). Pub. L. 101-429 added subsec. (i).
1986--Subsec. (f). Pub. L. 99-571, Sec. 102(g)(1), amended subsec.
(f) generally. Prior to amendment, subsec. (f) read as follows:
``Nothing in this section shall be construed to apply with respect to
any transaction by a broker or dealer in any exempted security.''
Subsec. (g)(3)(D). Pub. L. 99-571, Sec. 102(g)(2)(A), added subpar.
(D).
Subsec. (g)(4), (5). Pub. L. 99-571, Sec. 102(g)(2)(B), (C), added
par. (4) and redesignated former par. (4) as (5).
1975--Subsec. (a). Pub. L. 94-29, Sec. 12(2), struck out ``with the
Commission'' after ``registered'', inserted reference to section 78s(a)
of this title, substituted provisions covering an application for
registration in the form prescribed by Commission rule containing the
rules of the association and such other information and documents as the
Commission prescribes as necessary or appropriate in the public interest
or for the protection of investors for provisions covering a statement
in the form prescribed by the Commission setting forth specified
information and accompanied by specified documents, and struck out
provision that registration not be construed as a waiver of
constitutional rights or as a waiver of the right to contest the
validity of Commission rules or regulations.
Subsec. (b). Pub. L. 94-29, Sec. 12(2), amended subsec. (b)
generally, to conform its provisions concerning the registration and
regulation of national and affiliated securities associations to those
covering the registration and regulation of national securities
exchanges contained in section 78f of this title and inserted provisions
necessary to accommodate the creation of the Municipal Securities
Rulemaking Board and to implement its purposes.
Subsec. (e). Pub. L. 94-29, Sec. 12(3), redesignated subsec. (i) as
(e) and in subsec. (e) as so redesignated substituted ``nonmember
professional'' for ``nonmember broker or dealer'' in par. (1),
substituted ``term `nonmember professional' shall include (A) with
respect to transactions in securities other than municipal securities,
any registered broker or dealer who is not a member of any registered
securities association, except such a broker or dealer who deals
exclusively in commercial paper, bankers' acceptances, and commercial
bills'' for ``term `nonmember broker or dealer' shall include any broker
or dealer who makes use of the mails or of any means or instrumentality
of interstate commerce to effect any transaction in, or to induce the
purchase or sale of, any security otherwise than on a national
securities exchange, who is not a member of any registered securities
association, except a broker or dealer who deals exclusively in
commercial paper, bankers' acceptances, or commercial bills'' and added
cl. (B) in par. (2), and, in par. (3), designated existing provisions as
cl. (A) and added cl. (B). Former subsec. (e), covering the grant and
denial of registration and the revocation of affiliated association
registration, was struck out. See section 78s of this title.
Subsec. (f). Pub. L. 94-29, Sec. 12(3), redesignated subsec. (m) as
(f). Former subsec. (f), covering withdrawal from registration, was
struck out. See section 78s of this title.
Subsec. (g). Pub. L. 94-29, Sec. 12(3), (4), added subsec. (g).
Former subsec. (g), covering review by the Commission of adverse actions
against association members and stays of such actions, was struck out.
See section 78s of this title.
Subsec. (h). Pub. L. 94-29, Sec. 12(3), (4), added subsec. (h).
Former subsec. (h), covering the Commission's action upon findings, was
struck out. See sections 78s of this title.
Subsec. (i). Pub. L. 94-29, Sec. 12(3), redesignated subsec. (i) as
(e) and amended subsec. (e) as so redesignated.
Subsecs. (j) to (l). Pub. L. 94-29, Sec. 12(3), struck out subsecs.
(j) to (l) which covered the filing of changes or additions to
association rules and current information, the abrogation and alteration
of association rules and supplements to association rules, the
suspension of an association or its members, the revocation of
registration, the expulsion of members, and the removal of officers or
directors. See section 78s of this title.
Subsec. (m). Pub. L. 94-29, Sec. 12(3), redesignated subsec. (m) as
(f).
Subsec. (n). Pub. L. 94-29, Sec. 12(3), struck out subsec. (n) which
directed that provisions of this section prevail in the event of any
conflict between this section and any other law of the United States in
force on June 25, 1938.
1964--Subsec. (b)(1), (2). Pub. L. 88-467, Sec. 7(a)(1), substituted
a period for the semicolon at end of pars. (1) and (2).
Subsec. (b)(3). Pub. L. 88-467, Sec. 7(a)(1), (2), substituted a
period for the semicolon at end of par. (3), struck out ``of'' before
``any means'', substituted ``paragraph (4) or (5) of this subsection, or
a rule of the association permitted under this paragraph. The rules''
for ``paragraph (4) of this subsection: Provided, That the rules'', and
inserted provision authorizing a registered securities association to
adopt rules under which it might exclude from membership persons who had
been suspended or expelled from a national securities exchange or who
were barred or suspended from being associated with all brokers or
dealers who are members of such an exchange for violation of exchange
rules.
Subsec. (b)(4). Pub. L. 88-467, Sec. 7(a)(1), (3), substituted a
period for the semicolon at end of par. (4), deleted from text preceding
cl. (A) the language ``or (2) any partner, officer, director, or branch
manager of such broker or dealer (or any person occupying a similar
status or performing similar functions), or any person directly or
indirectly controlling or controlled by such broker or dealer, whether
prior or subsequent to becoming such'', inserted in cl. (A) ``or has
been and is barred or suspended from being associated with all brokers
or dealers which are members of such exchange'', inserted in cl. (B)
provision for suspension for period not exceeding twelve months or
barring or suspending the broker or dealer from being associated with a
broker or dealer, inserted at the beginning of cl. (C) ``whether prior
or subsequent to becoming a broker or dealer,'' (derived from former cl.
(1) of this paragraph) and added to cl. (C) provision conferring
jurisdiction upon the Commission, an exchange, or a registered
securities association to determine whether an individual is the cause
of disciplinary action taken by them against a broker or a dealer, and
added cl. (D).
Subsec. (b)(5). Pub. L. 88-467, Sec. 7(a)(4), added par. (5). Former
par. (5) redesignated (6).
Subsec. (b)(6) to (8). Pub. L. 88-467, Sec. 7(a)(1), (4),
substituted periods for semicolons at end of paragraphs, and
redesignated former pars. (5) to (7) as (6) to (8), respectively. Former
pars. (6) to (8) redesignated (7) to (9), respectively.
Subsec. (b)(9). Pub. L. 88-467, Sec. 7(a)(1), (4), (5), substituted
a period for the semicolon at the end, redesignated former par. (8) as
(9), and inserted ``and persons associated with its members'' and ``or
being suspended or barred from being associated with all members,'',
respectively. Former par. (9) redesignated (10).
Subsec. (b)(10). Pub. L. 88-467, Sec. 7(a)(4), (6), redesignated
former par. (9) as (10), and inserted in paragraph preceding cl. (A)
``and persons associated with members'', ``or the barring of any person
from being associated with a member'', ``or other persons'', and ``or
person'', substituted a period for a comma at end of cls. (A) and (B)
and a period for ``, and'' at end of cl. (C), inserted in cl. (A) ``or
other person'' in two places and in concluding sentence ``or whether any
person shall be barred from being associated with a member'', ``or
person'', ``or bar'' in two places, and substituted a period for ``;
and'', respectively. Former par. (10) redesignated (11).
Subsec. (b)(11). Pub. L. 88-467, Sec. 7(a)(4), redesignated former
par. (10) as (11).
Subsec. (b)(12). Pub. L. 88-467, Sec. 7(a)(7), added par. (12).
Pub. L. 88-467, Sec. 7(a)(7), inserted effective date provisions for
application of subsec. (b) prior to its amendment and since its
amendment with July 1, 1964 as the guiding date.
Subsec. (d)(2). Pub. L. 88-467, Sec. 7(b), substituted ``(10)'' for
``(9)'' and inserted ``and paragraph (12),'' after ``, inclusive,''.
Subsec. (g). Pub. L. 88-467, Sec. 7(c), provided that disciplinary
action taken by a registered securities association against a person
associated with a member will be reviewable by the Commission, shortened
the period for review by an aggrieved person from sixty days or within
such longer period as the Commission may determine to thirty days or
within such longer period as the Commission may determine, authorized
the Commission, after notice and opportunity for hearing on the question
of stay to order no stay of action of a registered securities
association pending the Commission's decision on review, and authorized
the Commission to limit the hearing on the question of stay to
affidavits and oral arguments.
Subsec. (h). Pub. L. 88-467, Sec. 7(d), made the procedures and the
Commission's authority in reviewing disciplinary action by a registered
securities association against members and in reviewing association
action in denying membership also applicable to Commission review of
disciplinary action against persons associated with members and to the
barring by an association of any person from being associated with a
member.
Subsec. (k)(2). Pub. L. 88-467, Sec. 7(e), inserted ``, or with such
modifications of such alteration or supplement as it deems necessary''
after ``in the manner theretofore requested'', redesignated cls. (1) to
(4) as (A) to (D), respectively, and inserted in cl. (A) ``or the
barring from being associated with a member'' and ``or persons
associated with members, or the qualifications required for members or
natural persons associated with members or any class thereof''.
Subsec. (l). Pub. L. 88-467, Sec. 7(f), substituted a period for a
semicolon at end of par. (1) and inserted in par. (2) preceding cl. (A)
``, or to suspend for a period not exceeding twelve months or to bar any
person from being associated with a member thereof,''.
Effective Date of 1999 Amendment
Amendment by 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.
Effective Date of 1993 Amendment
Amendment by section 303(a), (c) of Pub. L. 103-202 effective 12
months after Dec. 17, 1993, with provisions for rulemaking authority and
review of filings prior to effective date, see section 304(a) of Pub. L.
103-202, set out as a note under section 78f of this title.
Effective Date of 1990 Amendment
Amendment by Pub. L. 101-429 effective Oct. 15, 1990, with
provisions relating to civil penalties and accounting and disgorgement,
see section 1(c)(1), (2) of Pub. L. 101-429, set out in a note under
section 77g 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 1975 Amendment
Amendment by Pub. L. 94-29 effective 180 days after June 4, 1975,
see section 31(a) of Pub. L. 94-29, set out as a note under section 78b
of this title.
Effective Date of 1964 Amendment
Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see section 13
of Pub. L. 88-467, set out as a note under section 78c of this title.
Construction of 1993 Amendment
Amendment by section 106(b)(1) of 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.
Amendment by section 303(a), (c) of Pub. L. 103-202 not to limit
authority of Securities and Exchange Commission, a registered securities
association or a national securities exchange under any provision of
this chapter, or preclude the Commission or such association or exchange
from imposing a remedy or procedure required to be imposed under such
amendment, see section 304(b) of Pub. L. 103-202, set out in an
Effective Date of 1993 Amendment note under section 78f 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.
Section Referred to in Other Sections
This section is referred to in sections 77c, 77r, 78c, 78f, 78o,
78o-5, 78q, 78s, 78u, 78y, 80a-12, 80a-22 of this title; title 7
sections 2, 7a, 7a-2, 7b-1, 21; title 26 section 901.
