Summary: S.647 — 101st Congress (1989-1990)All Information (Except Text)

Bill summaries are authored by CRS.

Shown Here:
Senate agreed to House amendment with amendment (09/27/1990)

Securities Enforcement Remedies and Penny Stock Reform Act of 1990 - Title I: Amendments to the Securities Act of 1933 - Amends the Securities Act of 1933 to establish tiered civil money penalties for violations. Permits a court to prohibit violators from serving as officers and directors of securities-issuing entities.

Authorizes the Securities and Exchange Commission (SEC) to issue: (1) cease and desist orders; (2) temporary restraining orders; and (3) orders for accounting and disgorgement.

Title II: Amendments to the Securities Exchange Act of 1934 - Amends the Securities Exchange Act of 1934 to: (1) authorize a court to prohibit individuals from acting as officers or directors of securities-issuing entities if they have demonstrated a substantial unfitness to serve in that capacity; and (2) impose tiered civil money penalties for violations of such Act. Sets forth circumstances under which the SEC (or the appropriate regulatory agency) may: (1) impose tiered civil money penalties pursuant to administrative findings of violations of the Act; (2) enter an order requiring an accounting and disgorgement; (3) issue cease and desist orders; and (4) issue temporary restraining orders. Requires the SEC to establish regulations providing for the expeditious conduct of hearings and rendering of decisions in cease and desist order proceedings.

Prohibits a registered transfer agent from engaging in any activity in connection with the guarantee of a signature of an endorser of a security, including the acceptance or rejection of such guarantee, in contravention of SEC rules and regulations.

Title III: Amendments to the Investment Company Act of 1940 - Amends the Investment Company Act of 1940 to authorize the SEC to impose civil remedies pursuant to civil and administrative proceedings, including: (1) tiered money penalties; (2) orders requiring an accounting and disgorgement; (3) cease and desist orders; and (4) temporary restraining orders.

Title IV: Amendments to the Investment Advisers Act of 1940 - Amends the Investment Advisers Act of 1940 to authorize the SEC to impose civil remedies pursuant to administrative and civil proceedings, including: (1) tiered money penalties; (2) orders requiring an accounting and disgorgement; (3) cease and desist orders; and (4) temporary restraining orders.

Title V: Penny Stock Reform - Penny Stock Reform Act of 1990 - Amends the Securities Exchange Act of 1934 to define "penny stock" securities and to extend regulatory authority over persons engaged in penny stock activities. Requires the SEC to prescribe rules implementing such authority by a specified deadline.

Empowers the SEC to exclude persons from participating in penny stock distributions if they have violated certain registration regulations. Requires the SEC to make recommendations to each House of Congress on further revision of such Act, including the possibility of expanding its applicability.

Prescribes requirements for brokers and dealers in penny stock transactions, including guidelines for mandatory risk disclosure statements.

Requires the SEC to: (1) facilitate the establishment of automated penny stock quotation systems according to specified guidelines; and (2) submit annual status reports to the Congress.

Authorizes the SEC to designate rules whose violation shall not automatically render a contract void.

Amends the Securities Act of 1933 to require the SEC to prescribe special rules for registration statements filed by any issuer that is a blank check company (one with no specific business plan or purpose, or whose intent is to merge with an unidentified company). Authorizes such rules to include the right of shareholder rescission.

Amends the Securities Exchange Act of 1934 to require registered securities associations to establish a toll-free consumer hotline regarding broker-dealer disciplinary history.

Requires the Comptroller General to report to the Congress on the results of a review of the oversight and enforcement activities of self-regulatory organizations under the Securities Exchange Act of 1934 with respect to penny stocks.