Text: S.1260 — 105th Congress (1997-1998)All Bill Information (Except Text)

Text available as:

Shown Here:
Public Law No: 105-353 (11/03/1998)

 
[105th Congress Public Law 353]
[From the U.S. Government Printing Office]


<DOC>
[DOCID: f:publ353.105]


[[Page 112 STAT. 3227]]

Public Law 105-353
105th Congress

                                 An Act


 
To amend the Securities Act <<NOTE: Nov. 3, 1998 -  [S. 1260]>>  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 <<NOTE: Securities Litigation 
Uniform Standards Act of 1998.>>  assembled,

SECTION 1. SHORT <<NOTE: 15 USC 78a note.>>  TITLE.

    This Act may be cited as the ``Securities Litigation Uniform 
Standards Act of 1998''.

SEC. 2. <<NOTE: 15 USC 78a note.>> FINDINGS.

    The Congress finds that--
            (1) the Private Securities Litigation Reform Act of 1995 
        sought to prevent abuses in private securities fraud lawsuits;
            (2) since enactment of that legislation, considerable 
        evidence has been presented to Congress that a number of 
        securities class action lawsuits have shifted from Federal to 
        State courts;
            (3) this shift has prevented that Act from fully achieving 
        its objectives;
            (4) State securities regulation is of continuing importance, 
        together with Federal regulation of securities, to protect 
        investors and promote strong financial markets; and
            (5) in order to prevent certain State private securities 
        class action lawsuits alleging fraud from being used to 
        frustrate the objectives of the Private Securities Litigation 
        Reform Act of 1995, it is appropriate to enact national 
        standards for securities class action lawsuits involving 
        nationally traded securities, while preserving the appropriate 
        enforcement powers of State securities regulators and not 
        changing the current treatment of individual lawsuits.

            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

[[Page 112 STAT. 3228]]

addition to any and all other rights and remedies that may exist at law 
or in equity.
    ``(b) Class Action Limitations.--No covered 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 Covered Class Actions.--Any covered 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 covered 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 covered 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.

[[Page 112 STAT. 3229]]

            ``(3) Actions under contractual agreements between issuers 
        and indenture trustees.--Notwithstanding subsection (b) or (c), 
        a covered 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 one 
        or more intermediaries, controls or is controlled by or is under 
        common control with, the issuer.
            ``(2) Covered class action.--
                    ``(A) In general.--The term `covered 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) one 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 `covered 
                class action' does not include an exclusively derivative 
                action brought by one 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 one person or prospective class 
                member, but

[[Page 112 STAT. 3230]]

                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 paragraph (1) or (2) of section 18(b) 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).''.
            (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 covered 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 covered 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 covered class actions.--Any covered 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.--

[[Page 112 STAT. 3231]]

                          ``(i) Actions preserved.--Notwithstanding 
                      paragraph (1) or (2), a covered 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 covered 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 covered 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)

[[Page 112 STAT. 3232]]

        of any State shall retain jurisdiction under the laws of such 
        State to investigate and bring enforcement actions.
            ``(5) Definitions.--For <<NOTE: Applicability.>> 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 one or more intermediaries, controls 
                or is controlled by or is under common control with, the 
                issuer.
                    ``(B) Covered class action.--The term `covered 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) one 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 `covered 
                class action' does not include an exclusively derivative 
                action brought by one 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 one 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 paragraph (1) or (2) of 
                section 18(b) 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 that 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

[[Page 112 STAT. 3233]]

                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 adding at the end 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) <<NOTE: 15 USC 77p note.>>  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. <<NOTE: 15 USC 78u note.>>  102. PROMOTION OF RECIPROCAL SUBPOENA 
            ENFORCEMENT.

    (a) Commission Action.--The Securities and Exchange Commission, in 
consultation with State securities commissions (or any agencies or 
offices performing like functions), 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) <<NOTE: Deadline.>>  Report.--Not later than 24 months after the 
date of enactment of this Act, the Securities and Exchange Commission 
(hereafter in this section referred to as 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 that the Commission 
        recommends for such purposes.

   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;

[[Page 112 STAT. 3234]]

            ``(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.''.

SEC. 202. REQUIREMENTS FOR THE EDGAR SYSTEM.

    Section 35A of the Securities Exchange Act of 1934 (15 U.S.C. 78ll) 
is amended--
            (1) by striking subsections (a), (b), (c), and (e); and
            (2) in subsection (d)--
                    (A) by striking ``(d)'';
                    (B) in paragraph (2), by striking ``; and'' at the 
                end and inserting a period; and
                    (C) by striking paragraph (3).

SEC. 203. COMMISSION PROFESSIONAL ECONOMISTS.

    Section 4(b) of the Securities Exchange Act of 1934 (15 U.S.C. 
78d(b)) is amended--
            (1) by redesignating paragraph (2) as paragraph (3); and
            (2) by inserting after paragraph (1) the following:
            ``(2) Economists.--
                    ``(A) Commission authority.--Notwithstanding the 
                provisions of chapter 51 of title 5, United States Code, 
                the Commission is authorized--
                          ``(i) to establish its own criteria for the 
                      selection of such professional economists as the 
                      Commission deems necessary to carry out the work 
                      of the Commission;
                          ``(ii) to appoint directly such professional 
                      economists as the Commission deems qualified; and
                          ``(iii) to fix and adjust the compensation of 
                      any professional economist appointed under this 
                      paragraph, without regard to the provisions of 
                      chapter 54 of title 5, United States Code, or 
                      subchapters II, III, or VIII of chapter 53, of 
                      title 5, United States Code.
                    ``(B) Limitation on compensation.--No base 
                compensation fixed for an economist under this paragraph 
                may exceed the pay for Level IV of the Executive 
                Schedule, and no payments to an economist appointed 
                under this paragraph shall exceed the limitation on 
                certain payments in section 5307 of title 5, United 
                States Code.

[[Page 112 STAT. 3235]]

                    ``(C) Other benefits.--All professional economists 
                appointed under this paragraph shall remain within the 
                existing civil service system with respect to employee 
                benefits.''.

              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--
                    (A) by striking ``3(a)(2) of the Act'' and inserting 
                ``3(a)(2)''; and
                    (B) 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, in that order.
            (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)(vi) (15 U.S.C. 78c(a)(12)(A)(vi)) is 
        amended by moving the margin 2 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

[[Page 112 STAT. 3236]]

                    (B) by striking ``section 3(t)'' and inserting 
                ``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)(8), by moving the margin 2 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)(5) (15 U.S.C. 78s(c)(5)) is amended by 
        moving the margin 2 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) in subsection (g)(2)(B)(i), by striking 
                ``paragraph (1)'' and inserting ``subparagraph (A)''.
                    (B) by redesignating subsection (g) as subsection 
                (f); and
            (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)) is amended 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''.

[[Page 112 STAT. 3237]]

            (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) (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)''.

    Approved November 3, 1998.

LEGISLATIVE HISTORY--S. 1260 (H.R. 1689):
---------------------------------------------------------------------------

HOUSE REPORTS: Nos. 105-640 accompanying H.R. 1689 (Comm. on Commerce) 
and 105-803 (Comm. of Conference).
SENATE REPORTS: No. 105-182 (Comm. on Banking, Housing, and Urban 
Affairs).
CONGRESSIONAL RECORD, Vol. 144 (1998):
            May 13, considered and passed Senate.
            July 22, considered and passed House, amended, in lieu of 
                H.R. 1689.
            Oct. 13, House and Senate agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 34 (1998):
            Nov. 3, Presidential statement.

                                  <all>