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

11/03/1998 Became Public Law No: 105-353

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[Congressional Bills 105th Congress]
[From the U.S. Government Printing Office]
[S. 1260 Enrolled Bill (ENR)]

        S.1260

                       One Hundred Fifth Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
the twenty-seventh day of January, one thousand nine hundred and ninety-
                                  eight


                                 An Act


 
 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''.

SEC. 2. 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 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.
        ``(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 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.--
                ``(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) 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 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 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) 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. 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) 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;
        ``(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.
            ``(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
            (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''.
        (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)''.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.