[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1689 Reported in House (RH)]
Union Calendar No. 361
105th CONGRESS
2d Session
H. R. 1689
[Report No. 105-640]
_______________________________________________________________________
A BILL
To amend the Securities Act of 1933 and the Securities Exchange Act of
1934 to limit the conduct of securities class actions under State law,
and for other purposes.
_______________________________________________________________________
July 21, 1998
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
Union Calendar No. 361
105th CONGRESS
2d Session
H. R. 1689
[Report No. 105-640]
To amend the Securities Act of 1933 and the Securities Exchange Act of
1934 to limit the conduct of securities class actions under State law,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 21, 1997
Mr. White (for himself, Ms. Eshoo, Mr. Barton of Texas, Mr. Brown of
Ohio, Mr. Bilbray, Mr. Dooley of California, Mr. Campbell, Mr. Fazio of
California, Mr. Coburn, Mr. Farr of California, Mr. Cox of California,
Mr. Frank of Massachusetts, Ms. Dunn, Ms. Harman, Mr. Klug, Mr. Kennedy
of Massachusetts, Mr. Nethercutt, Ms. Lofgren, Mr. Paxon, Mr. Roemer,
Ms. Pryce of Ohio, Mrs. Tauscher, Mr. Tauzin, Mr. Towns, and Mr.
Deutsch) introduced the following bill; which was referred to the
Committee on Commerce
July 21, 1998
Additional sponsors: Mr. Rogan, Ms. Pelosi, Mr. Burr of North Carolina,
Mr. Shimkus, Mr. Deal of Georgia, Mr. Kleczka, Mr. Pickett, Mr.
Hastert, Mr. Pallone, Mr. Rush, Ms. Furse, Mr. Ganske, Mrs. Myrick, Mr.
Crapo, Mr. Stearns, Mr. Boehner, Mr. Moran of Virginia, Mr. Blumenauer,
Mr. Gordon, Mr. Green, Mr. Hall of Texas, Ms. McCarthy of Missouri, Mr.
Hoyer, Mr. Davis of Virginia, Mr. Wynn, Mr. Norwood, Mr. Strickland,
Mr. Boucher, Mr. Dan Schaefer of Colorado, Mr. Peterson of Minnesota,
Mr. McCollum, Ms. Hooley of Oregon, Mr. Whitfield, Mr. Sherman, Mr.
Holden, Mr. Shaw, Mr. Upton, Mr. Largent, Mr. Rohrabacher, Mr.
Cunningham, Ms. Stabenow, Mr. Kennedy of Rhode Island, Mr. Baker, Mr.
Royce, Mr. Weldon of Florida, Mr. Bilirakis, Mr. Sawyer, Mr. Cooksey,
Mr. Livingston, Mr. Boyd, Mr. Edwards, Mr. Hefley, Mr. Porter, Mr.
Riggs, Mr. Miller of Florida, Mr. Calvert, Mr. Dreier, Mr. Doyle, Mr.
Barcia, Mr. Bunning, Mr. McHale, Mr. Goodling, Mr. Pitts, Mr.
Greenwood, Mr. Condit, Mr. Barr of Georgia, Mr. Gekas, Mr. McKeon, Mrs.
Cubin, Mr. Schiff, Mr. Linder, Mr. Bono, Mr. Gejdenson, Mr. Luther, Mr.
Thornberry, Mr. Fox of Pennsylvania, Mr. Mica, Mr. Houghton, Mr.
Metcalf, Mr. Hayworth, Mr. Collins, Mr. Minge, Mr. Adam Smith of
Washington, Mr. Frelinghuysen, Mr. Forbes, Ms. Granger, Mr. Pappas, Mr.
Manzullo, Mr. Aderholt, Mr. Pombo, Mr. LaHood, Mr. Camp, Mr. Cramer,
Mrs. Linda Smith of Washington, Mr. Pickering, Mr. Packard, Mr.
Snowbarger, Mr. Kind, Mr. Hilleary, Mr. Hastings of Washington, Mr.
Ortiz, Mr. Crane, Mr. Salmon, Mr. Neal of Massachusetts, Ms. DeLauro,
Mr. Davis of Florida, Mr. Bishop, Mr. Vento, Mr. Franks of New Jersey,
Ms. Slaughter, Mr. Herger, Mrs. Kennelly of Connecticut, Mr. Jefferson,
Mr. Rothman, Mr. Stenholm, Mr. Etheridge, Mr. Goss, Mrs. Kelly, Mrs.
Northup, Mr. Gallegly, Mr. Goode, Mr. Peterson of Pennsylvania, Mr.
Ramstad, Mr. Ensign, Mr. Wicker, Mr. Skeen, Mr. Watts of Oklahoma, Mr.
King, Mr. Combest, Mr. Inglis of South Carolina, Mr. Shadegg, Mr. Sam
Johnson of Texas, Mr. Lewis of Kentucky, Mr. Sununu, Mr. Turner, Mr.
Weygand, Mr. LoBiondo, Mr. Hostettler, Mr. Meehan, Mr. Kingston, Mr.
Shays, Mr. McIntosh, Mr. Clement, Mr. Hill, Mr. Bartlett of Maryland,
Mr. Stump, Mr. Snyder, Mr. Ehrlich, Mr. Fossella, Mr. Hoekstra, Mr.
Ford, Mr. McCrery, Mr. Graham, Mr. Weller, Mr. Maloney of Connecticut,
Ms. Sanchez, Mr. Riley, Mr. Rogers, Mr. Neumann, Mr. Christensen, Mr.
McGovern, Mr. Lazio of New York, Mr. Gillmor, Mr. Cannon, Mr. Redmond,
Ms. Velazquez, Mr. Lantos, Mrs. Morella, Mr. Archer, Mrs. Johnson of
Connecticut, Mr. Foley, Mr. Walsh, Mr. Bentsen, Mr. Burton of Indiana,
Mr. Sensenbrenner, Mr. Doolittle, Mr. Ackerman, Mr. Souder, Mr. Wolf,
Mr. Gutknecht, Mr. Smith of Texas, Mr. Ryun, Mr. Ney, Mr. Chabot, Mr.
DeLay, Mr. Cook, Mr. Bryant, Mr. Smith of New Jersey, Mr. John, Mr.
Pomeroy, Mr. Talent, Mr. Kolbe, Mr. Bob Schaffer of Colorado, Mr.
Brady, Mr. Armey, Mr. Gibbons, Mr. Berry, Mr. Baesler, Mr. Sisisky,
Mrs. Bono, Mr. McIntyre, Mr. Ballenger, Mrs. Roukema, Mr. Goodlatte,
Mr. Thomas, Mr. Moran of Kansas, Mr. Andrews, and Mr. Chambliss
July 21, 1998
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on May 21,
1997]
_______________________________________________________________________
A BILL
To amend the Securities Act of 1933 and the Securities Exchange Act of
1934 to limit the conduct of securities class actions under State law,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Securities Litigation Uniform
Standards Act of 1998''.
TITLE I--SECURITIES LITIGATION UNIFORM STANDARDS
SEC. 101. LIMITATION ON REMEDIES.
(a) Amendments to the Securities Act of 1933.--
(1) Amendment.--Section 16 of the Securities Act of 1933
(15 U.S.C. 77p) is amended to read as follows:
``SEC. 16. ADDITIONAL REMEDIES; LIMITATION ON REMEDIES.
``(a) Remedies Additional.--Except as provided in subsection (b),
the rights and remedies provided by this title shall be in addition to
any and all other rights and remedies that may exist at law or in
equity.
``(b) Class Action Limitations.--No class action based upon the
statutory or common law of any State or subdivision thereof may be
maintained in any State or Federal court by any private party
alleging--
``(1) an untrue statement or omission of a material fact in
connection with the purchase or sale of a covered security; or
``(2) that the defendant used or employed any manipulative
or deceptive device or contrivance in connection with the
purchase or sale of a covered security.
``(c) Removal of Class Actions.--Any class action brought in any
State court involving a covered security, as set forth in subsection
(b), shall be removable to the Federal district court for the district
in which the action is pending, and shall be subject to subsection (b).
``(d) Preservation of Certain Actions.--
``(1) Actions under state law of state of incorporation.--
``(A) Actions preserved.--Notwithstanding
subsection (b) or (c), a class action described in
subparagraph (B) of this paragraph that is based upon
the statutory or common law of the State in which the
issuer is incorporated (in the case of a corporation)
or organized (in the case of any other entity) may be
maintained in a State or Federal court by a private
party.
``(B) Permissible actions.--A class action is
described in this subparagraph if it involves--
``(i) the purchase or sale of securities by
the issuer or an affiliate of the issuer
exclusively from or to holders of equity
securities of the issuer; or
``(ii) any recommendation, position, or
other communication with respect to the sale of
securities of the issuer that--
``(I) is made by or on behalf of
the issuer or an affiliate of the
issuer to holders of equity securities
of the issuer; and
``(II) concerns decisions of those
equity holders with respect to voting
their securities, acting in response to
a tender or exchange offer, or
exercising dissenters' or appraisal
rights.
``(2) State actions.--
``(A) In general.--Notwithstanding any other
provision of this section, nothing in this section may
be construed to preclude a State or political
subdivision thereof or a State pension plan from
bringing an action involving a covered security on its
own behalf, or as a member of a class comprised solely
of other States, political subdivisions, or State
pension plans that are named plaintiffs, and that have
authorized participation, in such action.
``(B) State pension plan defined.--For purposes of
this paragraph, the term `State pension plan' means a
pension plan established and maintained for its
employees by the government of the State or political
subdivision thereof, or by any agency or
instrumentality thereof.
``(3) Actions under contractual agreements between issuers
and indenture trustees.--Notwithstanding subsection (b) or (c),
a class action that seeks to enforce a contractual agreement
between an issuer and an indenture trustee may be maintained in
a State or Federal court by a party to the agreement or a
successor to such party.
``(4) Remand of removed actions.--In an action that has
been removed from a State court pursuant to subsection (c), if
the Federal court determines that the action may be maintained
in State court pursuant to this subsection, the Federal court
shall remand such action to such State court.
``(e) Preservation of State Jurisdiction.--The securities
commission (or any agency or office performing like functions) of any
State shall retain jurisdiction under the laws of such State to
investigate and bring enforcement actions.
``(f) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Affiliate of the issuer.--The term `affiliate of the
issuer' means a person that directly or indirectly, through 1
or more intermediaries, controls or is controlled by or is
under common control with, the issuer.
``(2) Class action.--
``(A) In general.--The term `class action' means--
``(i) any single lawsuit in which--
``(I) damages are sought on behalf
of more than 50 persons or prospective
class members, and questions of law or
fact common to those persons or members
of the prospective class, without
reference to issues of individualized
reliance on an alleged misstatement or
omission, predominate over any
questions affecting only individual
persons or members; or
``(II) 1 or more named parties seek
to recover damages on a representative
basis on behalf of themselves and other
unnamed parties similarly situated, and
questions of law or fact common to
those persons or members of the
prospective class predominate over any
questions affecting only individual
persons or members; or
``(ii) any group of lawsuits filed in or
pending in the same court and involving common
questions of law or fact, in which--
``(I) damages are sought on behalf
of more than 50 persons; and
``(II) the lawsuits are joined,
consolidated, or otherwise proceed as a
single action for any purpose.
``(B) Exception for derivative actions.--
Notwithstanding subparagraph (A), the term `class
action' does not include an exclusively derivative
action brought by 1 or more shareholders on behalf of a
corporation.
``(C) Counting of certain class members.--For
purposes of this paragraph, a corporation, investment
company, pension plan, partnership, or other entity,
shall be treated as 1 person or prospective class
member, but only if the entity is not established for
the purpose of participating in the action.
``(D) Rule of construction.--Nothing in this
paragraph shall be construed to affect the discretion
of a State court in determining whether actions filed
in such court should be joined, consolidated, or
otherwise allowed to proceed as a single action.
``(3) Covered security.--The term `covered security' means
a security that satisfies the standards for a covered security
specified in section 18(b)(1) at the time during which it is
alleged that the misrepresentation, omission, or manipulative
or deceptive conduct occurred, except that such term shall not
include any debt security that is exempt from registration
under this title pursuant to rules issued by the Commission
under section 4(2) of this title.''.
(2) Circumvention of stay of discovery.--Section 27(b) of
the Securities Act of 1933 (15 U.S.C. 77z-1(b)) is amended by
inserting after paragraph (3) the following new paragraph:
``(4) Circumvention of stay of discovery.--Upon a proper
showing, a court may stay discovery proceedings in any private
action in a State court as necessary in aid of its
jurisdiction, or to protect or effectuate its judgments, in an
action subject to a stay of discovery pursuant to this
subsection.''.
(3) Conforming amendments.--Section 22(a) of the Securities
Act of 1933 (15 U.S.C. 77v(a)) is amended--
(A) by inserting ``except as provided in section 16
with respect to class actions,'' after ``Territorial
courts,''; and
(B) by striking ``No case'' and inserting ``Except
as provided in section 16(c), no case''.
(b) Amendments to the Securities Exchange Act of 1934.--
(1) Amendment.--Section 28 of the Securities Exchange Act
of 1934 (15 U.S.C. 78bb) is amended--
(A) in subsection (a), by striking ``The rights and
remedies'' and inserting ``Except as provided in
subsection (f), the rights and remedies''; and
(B) by adding at the end the following new
subsection:
``(f) Limitations on Remedies.--
``(1) Class action limitations.--No class action based upon
the statutory or common law of any State or subdivision thereof
may be maintained in any State or Federal court by any private
party alleging--
``(A) a misrepresentation or omission of a material
fact in connection with the purchase or sale of a
covered security; or
``(B) that the defendant used or employed any
manipulative or deceptive device or contrivance in
connection with the purchase or sale of a covered
security.
``(2) Removal of class actions.--Any class action brought
in any State court involving a covered security, as set forth
in paragraph (1), shall be removable to the Federal district
court for the district in which the action is pending, and
shall be subject to paragraph (1).
``(3) Preservation of certain actions.--
``(A) Actions under state law of state of
incorporation.--
``(i) Actions preserved.--Notwithstanding
paragraph (1) or (2), a class action described
in clause (ii) of this subparagraph that is
based upon the statutory or common law of the
State in which the issuer is incorporated (in
the case of a corporation) or organized (in the
case of any other entity) may be maintained in
a State or Federal court by a private party.
``(ii) Permissible actions.--A class action
is described in this clause if it involves--
``(I) the purchase or sale of
securities by the issuer or an
affiliate of the issuer exclusively
from or to holders of equity securities
of the issuer; or
``(II) any recommendation,
position, or other communication with
respect to the sale of securities of an
issuer that--
``(aa) is made by or on
behalf of the issuer or an
affiliate of the issuer to
holders of equity securities of
the issuer; and
``(bb) concerns decisions
of such equity holders with
respect to voting their
securities, acting in response
to a tender or exchange offer,
or exercising dissenters' or
appraisal rights.
``(B) State actions.--
``(i) In general.--Notwithstanding any
other provision of this subsection, nothing in
this subsection may be construed to preclude a
State or political subdivision thereof or a
State pension plan from bringing an action
involving a covered security on its own behalf,
or as a member of a class comprised solely of
other States, political subdivisions, or State
pension plans that are named plaintiffs, and
that have authorized participation, in such
action.
``(ii) State pension plan defined.--For
purposes of this subparagraph, the term `State
pension plan' means a pension plan established
and maintained for its employees by the
government of a State or political subdivision
thereof, or by any agency or instrumentality
thereof.
``(C) Actions under contractual agreements between
issuers and indenture trustees.--Notwithstanding
paragraph (1) or (2), a class action that seeks to
enforce a contractual agreement between an issuer and
an indenture trustee may be maintained in a State or
Federal court by a party to the agreement or a
successor to such party.
``(D) Remand of removed actions.--In an action that
has been removed from a State court pursuant to
paragraph (2), if the Federal court determines that the
action may be maintained in State court pursuant to
this subsection, the Federal court shall remand such
action to such State court.
``(4) Preservation of state jurisdiction.--The securities
commission (or any agency or office performing like functions)
of any State shall retain jurisdiction under the laws of such
State to investigate and bring enforcement actions.
``(5) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Affiliate of the issuer.--The term `affiliate
of the issuer' means a person that directly or
indirectly, through 1 or more intermediaries, controls
or is controlled by or is under common control with,
the issuer.
``(B) Class action.--The term `class action'
means--
``(i) any single lawsuit in which--
``(I) damages are sought on behalf
of more than 50 persons or prospective
class members, and questions of law or
fact common to those persons or members
of the prospective class, without
reference to issues of individualized
reliance on an alleged misstatement or
omission, predominate over any
questions affecting only individual
persons or members; or
``(II) 1 or more named parties seek
to recover damages on a representative
basis on behalf of themselves and other
unnamed parties similarly situated, and
questions of law or fact common to
those persons or members of the
prospective class predominate over any
questions affecting only individual
persons or members; or
``(ii) any group of lawsuits filed in or
pending in the same court and involving common
questions of law or fact, in which--
``(I) damages are sought on behalf
of more than 50 persons; and
``(II) the lawsuits are joined,
consolidated, or otherwise proceed as a
single action for any purpose.
``(C) Exception for derivative actions.--
Notwithstanding subparagraph (B), the term `class
action' does not include an exclusively derivative
action brought by 1 or more shareholders on behalf of a
corporation.
``(D) Counting of certain class members.--For
purposes of this paragraph, a corporation, investment
company, pension plan, partnership, or other entity,
shall be treated as 1 person or prospective class
member, but only if the entity is not established for
the purpose of participating in the action.
``(E) Covered security.--The term `covered
security' means a security that satisfies the standards
for a covered security specified in section 18(b)(1) of
the Securities Act of 1933, at the time during which it
is alleged that the misrepresentation, omission, or manipulative or
deceptive conduct occurred, except that such term shall not include any
debt security that is exempt from registration under the Securities Act
of 1933 pursuant to rules issued by the Commission under section 4(2)
of such Act.
``(F) Rule of construction.--Nothing in this
paragraph shall be construed to affect the discretion
of a State court in determining whether actions filed
in such court should be joined, consolidated, or
otherwise allowed to proceed as a single action.''.
(2) Circumvention of stay of discovery.--Section 21D(b)(3)
of the Securities Exchange Act of 1934 (15 U.S.C. 78u-4(b)(3))
is amended by inserting after subparagraph (C) the following
new subparagraph:
``(D) Circumvention of stay of discovery.--Upon a
proper showing, a court may stay discovery proceedings
in any private action in a State court as necessary in
aid of its jurisdiction, or to protect or effectuate
its judgments, in an action subject to a stay of
discovery pursuant to this paragraph.''.
(c) Applicability.--The amendments made by this section shall not
affect or apply to any action commenced before and pending on the date
of enactment of this Act.
SEC. 102. ISSUANCE OF SUBPOENAS IN JUDICIAL ACTIONS.
(a) Securities Act.--Section 22(a) of the Securities Act of 1933
(15 U.S.C. 77v(a)) is amended by inserting after the second sentence
the following: ``In any action or proceeding instituted by the
Commission under this title in the district court of the United States
for any judicial district, subpoenas issued by such court to compel the
attendance of witnesses may be served in any other district.''.
(b) Securities Exchange Act.--Section 27 of the Securities Act of
1934 (15 U.S.C. 78aa) is amended by inserting after the third sentence
the following: ``In any action or proceeding instituted by the
Commission under this title in the district court of the United States
for any judicial district, subpoenas issued by such court to compel the
attendance of witnesses may be served in any other district.''.
(c) Investment Company Act.--Section 44 of the Investment Company
Act of 1940 (15 U.S.C. 80a-43) is amended by inserting after the fourth
sentence the following: ``In any action or proceeding instituted by the
Commission under this title in the district court of the United States
for any judicial district, subpoenas issued by such court to compel the
attendance of witnesses may be served in any other district.''.
(d) Investment Advisers Act.--Section 214 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-14) is amended by inserting after
the third sentence the following: ``In any action or proceeding
instituted by the Commission under this title in the district court of
the United States for any judicial district, subpoenas issued by such
court to compel the attendance of witnesses may be served in any other
district.''.
(e) Public Utility Holding Company Act.--Section 25 of the Public
Utility Holding Company Act of 1935 (15 U.S.C. 79y) is amended by
inserting after the third sentence the following: ``In any action or
proceeding instituted by the Commission under this title in the
district court of the United States for any judicial district,
subpoenas issued by such court to compel the attendance of witnesses
may be served in any other district.''.
SEC. 103. PROMOTION OF RECIPROCAL SUBPOENA ENFORCEMENT.
(a) Commission Action.--The Securities and Exchange Commission, in
consultation with State securities commissions, shall seek to encourage
the adoption of State laws providing for reciprocal enforcement by
State securities commissions of subpoenas issued by another State
securities commission seeking to compel persons to attend, testify in,
or produce documents or records in connection with an action or
investigation by a State securities commission of an alleged violation
of State securities laws.
(b) Report.--Within 24 months after the date of enactment of this
Act, the Commission shall submit a report to the Congress--
(1) identifying the States that have adopted laws described
in subsection (a);
(2) describing the actions undertaken by the Commission and
State securities commissions to promote the adoption of such
laws; and
(3) identifying any further actions the Commission
recommends for such purposes.
SEC. 104. REPORT ON CONSEQUENCES.
The Securities and Exchange Commission shall include in each of its
first 3 annual reports submitted after the date of enactment of this
Act a report regarding--
(1) the nature and the extent of the class action cases
that are preempted by, or removed pursuant to, the amendments
made by section 101 of this title;
(2) the extent to which that preemption or removal either
promotes or adversely affects the protection of securities
investors or the public interest; and
(3) if adverse effects are found, alternatives to, or
revisions of, such preemption or removal that--
(A) would not have such adverse effects;
(B) would further promote the protection of
investors and the public interest; and
(C) would still substantially reduce the risk of
abusive securities litigation.
TITLE II--REAUTHORIZATION OF THE SECURITIES AND EXCHANGE COMMISSION
SEC. 201. AUTHORIZATION OF APPROPRIATIONS.
Section 35 of the Securities Exchange Act of 1934 (15 U.S.C. 78kk)
is amended to read as follows:
``SEC. 35. AUTHORIZATION OF APPROPRIATIONS.
``(a) In General.--In addition to any other funds authorized to be
appropriated to the Commission, there are authorized to be appropriated
to carry out the functions, powers, and duties of the Commission
$351,280,000 for fiscal year 1999.
``(b) Miscellaneous Expenses.--Funds appropriated pursuant to this
section are authorized to be expended--
``(1) not to exceed $3,000 per fiscal year, for official
reception and representation expenses;
``(2) not to exceed $10,000 per fiscal year, for funding a
permanent secretariat for the International Organization of
Securities Commissions; and
``(3) not to exceed $100,000 per fiscal year, for expenses
for consultations and meetings hosted by the Commission with
foreign governmental and other regulatory officials, members of
their delegations, appropriate representatives, and staff to
exchange views concerning developments relating to securities
matters, for development and implementation of cooperation
agreements concerning securities matters and provision of
technical assistance for the development of foreign securities
markets, such expenses to include necessary logistic and
administrative expenses and the expenses of Commission staff
and foreign invitees in attendance at such consultations and
meetings, including--
``(A) such incidental expenses as meals taken in
the course of such attendance;
``(B) any travel or transportation to or from such
meetings; and
``(C) any other related lodging or subsistence.''.
TITLE III--CLERICAL AND TECHNICAL AMENDMENTS
SEC. 301. CLERICAL AND TECHNICAL AMENDMENTS.
(a) Securities Act of 1933.--The Securities Act of 1933 (15 U.S.C.
77 et seq.) is amended as follows:
(1) Section 2(a)(15)(i) (15 U.S.C. 77b(a)(15)(i)) is
amended by striking ``section 2(13) of the Act'' and inserting
``paragraph (13) of this subsection''.
(2) Section 11(f)(2)(A) (15 U.S.C. 77k(f)(2)(A)) is amended
by striking ``section 38'' and inserting ``section 21D(f)''.
(3) Section 13 (15 U.S.C. 77m) is amended--
(A) by striking ``section 12(2)'' each place it
appears and inserting ``section 12(a)(2)''; and
(B) by striking ``section 12(1)'' each place it
appears and inserting ``section 12(a)(1)''.
(4) Section 18 (15 U.S.C. 77r) is amended--
(A) in subsection (b)(1)(A), by inserting ``, or
authorized for listing,'' after ``Exchange, or
listed'';
(B) in subsection (c)(2)(B)(i), by striking
``Capital Markets Efficiency Act of 1996'' and
inserting ``National Securities Markets Improvement Act
of 1996'';
(C) in subsection (c)(2)(C)(i), by striking
``Market'' and inserting ``Markets'';
(D) in subsection (d)(1)(A)--
(i) by striking ``section 2(10)'' and
inserting ``section 2(a)(10)''; and
(ii) by striking ``subparagraphs (A) and
(B)'' and inserting ``subparagraphs (a) and
(b)'';
(E) in subsection (d)(2), by striking ``Securities
Amendments Act of 1996'' and inserting ``National
Securities Markets Improvement Act of 1996''; and
(F) in subsection (d)(4), by striking ``For
purposes of this paragraph, the'' and inserting
``The''.
(5) Sections 27, 27A, and 28 (15 U.S.C. 77z-1, 77z-2, 77z-
3) are transferred to appear after section 26.
(6) Paragraph (28) of schedule A of such Act (15 U.S.C.
77aa(28)) is amended by striking ``identic'' and inserting
``identical''.
(b) Securities Exchange Act of 1934.--The Securities Exchange Act
of 1934 (15 U.S.C. 78 et seq.) is amended as follows:
(1) Section 3(a)(10) (15 U.S.C. 78c(a)(10)) is amended by
striking ``deposit, for'' and inserting ``deposit for''.
(2) Section 3(a)(12)(A) (15 U.S.C. 78c(a)(12)(A)) is
amended by moving clause (vi) two em spaces to the left.
(3) Section 3(a)(22)(A) (15 U.S.C. 78c(a)(22)(A)) is
amended--
(A) by striking ``section 3(h)'' and inserting
``section 3''; and
(B) by striking ``section 3(t)'' and inserting
``such section 3''.
(4) Section 3(a)(39)(B)(i) (15 U.S.C. 78c(a)(39)(B)(i)) is
amended by striking ``an order to the Commission'' and
inserting ``an order of the Commission''.
(5) The following sections are each amended by striking
``Federal Reserve Board'' and inserting ``Board of Governors of
the Federal Reserve System'': subsections (a) and (b) of
section 7 (15 U.S.C. 78g(a), (b)); section 17(g) (15 U.S.C.
78q(g)); and section 26 (15 U.S.C. 78z).
(6) The heading of subsection (d) of section 7 (15 U.S.C.
78g(d)) is amended by striking ``Exception'' and inserting
``Exceptions''.
(7) Section 14(g)(4) (15 U.S.C. 78n(g)(4)) is amended by
striking ``consolidation sale,'' and inserting ``consolidation,
sale,''.
(8) Section 15 (15 U.S.C. 78o) is amended--
(A) in subsection (c), by moving paragraph (8) two
em spaces to the left;
(B) in subsection (h)(2), by striking ``affecting''
and inserting ``effecting'';
(C) in subsection (h)(3)(A)(i)(II)(bb), by
inserting ``or'' after the semicolon;
(D) in subsection (h)(3)(A)(ii)(I), by striking
``maintains'' and inserting ``maintained'';
(E) in subsection (h)(3)(B)(ii), by striking
``association'' and inserting ``associated''.
(9) Section 15B(c)(4) (15 U.S.C. 78o-4(c)(4)) is amended by
striking ``convicted by any offense'' and inserting ``convicted
of any offense''.
(10) Section 15C(f)(5) (15 U.S.C. 78o-5(f)(5)) is amended
by striking ``any person or class or persons'' and inserting
``any person or class of persons''.
(11) Section 19(c) (15 U.S.C. 78s(c)) is amended by moving
paragraph (5) two em spaces to the right.
(12) Section 20 (15 U.S.C. 78t) is amended by redesignating
subsection (f) as subsection (e).
(13) Section 21D (15 U.S.C. 78u-4) is amended--
(A) by redesignating subsection (g) as subsection
(f); and
(B) in paragraph (2)(B)(i) of such subsection, by
striking ``paragraph (1)'' and inserting ``subparagraph
(A)''.
(14) Section 31(a) (15 U.S.C. 78ee(a)) is amended by
striking ``this subsection'' and inserting ``this section''.
(c) Investment Company Act of 1940.--The Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) is amended as follows:
(1) Section 2(a)(8) (15 U.S.C. 80a-2(a)(8)) is amended by
striking ``Unitde'' and inserting ``United''.
(2) Section 3(b) (15 U.S.C. 80a-3(b)) is amended by
striking ``paragraph (3) of subsection (a)'' and inserting
``paragraph (1)(C) of subsection (a)''.
(3) Section 12(d)(1)(G)(i)(III)(bb) (15 U.S.C. 80a-
12(d)(1)(G)(i)(III)(bb)), by striking ``the acquired fund'' and
inserting ``the acquired company''.
(4) Section 18(e)(2) (15 U.S.C. 80a-18(e)(2)) is amended by
striking ``subsection (e)(2)'' and inserting ``paragraph (1) of
this subsection''.
(5) Section 30 (15 U.S.C. 80a-29) is amended--
(A) by inserting ``and'' after the semicolon at the
end of subsection (b)(1);
(B) in subsection (e), by striking ``semi-
annually'' and inserting ``semiannually''; and
(C) by redesignating subsections (g) and (h) as
added by section 508(g) of the National Securities
Markets Improvement Act of 1996 as subsections (i) and
(j), respectively.
(6) Section 31(f) (15 U.S.C. 80a-30(f)) is amended by
striking ``subsection (c)'' and inserting ``subsection (e)''.
(d) Investment Advisers Act of 1940.--The Investment Advisers Act
of 1940 (15 U.S.C. 80b et seq.) is amended as follows:
(1) Section 203(e)(8)(B) (15 U.S.C. 80b-3(e)(8)(B)) is
amended by inserting ``or'' after the semicolon.
(2) Section 222(b)(2) of (15 U.S.C. 80b-18a(b)(2)) is
amended by striking ``principle'' and inserting ``principal''.
(e) Trust Indenture Act of 1939.--The Trust Indenture Act of 1939
(15 U.S.C. 77aaa et seq.) is amended as follows:
(1) Section 303 (15 U.S.C. 77ccc) is amended by striking
``section 2'' each place it appears in paragraphs (2) and (3)
and inserting ``section 2(a)''.
(2) Section 304(a)(4)(A) (15 U.S.C. 77ddd(a)(4)(A)) is
amended by striking ``(14) of subsection'' and inserting ``(13)
of section''.
(3) Section 313(a) (15 U.S.C. 77mmm(a)) is amended--
(A) by inserting ``any change to'' after the
paragraph designation at the beginning of paragraph
(4); and
(B) by striking ``any change to'' in paragraph (6).
(4) Section 319(b) (15 U.S.C. 77sss(b)) is amended by
striking ``the Federal Register Act'' and inserting ``chapter
15 of title 44, United States Code,''.
SEC. 302. EXEMPTION OF SECURITIES ISSUED IN CONNECTION WITH CERTAIN
STATE HEARINGS.
Section 18(b)(4)(C) of the Securities Act of 1933 (15 U.S.C.
77r(b)(4)(C)) is amended by striking ``paragraph (4) or (11)'' and
inserting ``paragraph (4), (10), or (11)''.