Summary: H.R.2032 — 99th Congress (1985-1986)All Information (Except Text)

Bill summaries are authored by CRS.

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House agreed to Senate amendment with amendment (10/06/1986)

(House agreed to senate amendments with amendments (pursuant to H. Res. 574))

Government Securities Act of 1986 - Title I: Government Securities Brokers and Dealers - Amends the Securities Exchange Act of 1934 to prohibit any Government securities dealer or broker from using the mails or any means of interstate commerce to effect any transaction in Government securities unless: (1) such dealer or broker is registered in accordance with this Act; and (2) if such dealer or broker is a financial institution or is registered, such dealer or broker has filed with the appropriate regulatory agency written notice that it is a Government securities dealer or broker. Requires a Government securities broker or dealer to notify the appropriate regulatory agency when it is no longer acting as such. Directs each regulatory agency to provide such notices to the Securities and Exchange Commission (SEC) which shall make them available to the public.

Provides that registration shall be accomplished by filing a registration application with the Commission containing such information and documents as the Commission may require. Directs the Commission, within 45 days, to: (1) grant registration; or (2) institute proceedings, to be concluded within 120 days, to determine whether registration should be denied.

Makes unlawful any act or practice or course of business forbidden by the Securities and Exchange Act by a registered Government securities broker or dealer, irrespective of the use of the mails or any means of interstate commerce.

Allows the Secretary of the Treasury to exempt any Government securities broker or dealer from the requirements of this Act upon finding that such an exemption is consistent with the public interest, the protection of investors, and the purposes of this Act. Directs the Secretary to prescribe rules governing such brokers and dealers which: (1) establish safeguards for financial responsibility and related practices; (2) set forth reporting and recordkeeping requirements; (3) are designed to prevent fraudulent and manipulative acts and practices and to protect the integrity, liquidity, and efficiency of the Government securities market, investors, and the public interests; and (4) shall not be designed to permit unfair discrimination between customers, issuers, Government securities brokers or dealers, or to impose any unnecessary or inappropriate burden on competition.

Authorizes the Commission to censure or impose restrictions on a registered Government securities broker or dealer or suspend or revoke the registration of such a broker or dealer, or to censure, suspend, or bar a person associated with a Government securities broker or dealer, if after notice and opportunity for hearing the Commission finds that such action would be in the public interest and that such broker, dealer, or associated person violated this Act. Permits a registered broker or dealer to voluntarily withdraw from registration. Authorizes the appropriate regulatory agencies to: (1) impose similar sanctions on a Government securities dealer or broker not required to register and on any associated person; and (2) enforce compliance by such an entity or person with the provisions of this Act. Requires such agencies to notify the Commission of any such sanctions imposed. Directs the Commission to maintain a public record of such sanctions and any sanctions it imposes.

Authorizes the appropriate regulatory agencies to: (1) examine all records of Government securities brokers and dealers at any time as the agency deems necessary or appropriate; and (2) make available information it receives concerning such an entity or associated person to the Commission, the Secretary, other appropriate regulatory agencies, and any self-regulatory organizations.

Requires Government securities brokers and dealers subject to registration under this Act to be members of a registered national securities exchange or a registered securities association, unless specifically exempted by the Commission.

Terminates the authority of the Secretary under this Act on October 1, 1991.

Revises certain definitions for purposes of the Securities and Exchange Act of 1934.

Authorizes the Commission to impose sanctions on a broker or dealer for violations arising from activity as a Government securities broker or dealer.

Authorizes a registered securities association to implement rules governing member brokers and dealers, including rules to prohibit fraudulent, misleading, deceptive, and false advertising and rules to provide for the examination of the records of Government securities brokers and dealers, and excluding rules concerning municipal securities transactions. Authorizes such an association to: (1) deny or condition the membership of a Government securities broker or dealer which does not meet standards for financial responsibility or conduct under the Securities Exchange Act; and (2) bar any person from being associated with a member if such person has engaged in prohibited conduct or refused to provide requested information.

Authorizes the Commission or the appropriate regulatory agency to specify that documents required to be filed pursuant to securities transaction reporting requirements may be retained by the originating clearing agency, transfer agent, or municipal securities dealer, or filed with another appropriate regulatory agency, provided that the Commission or specifying agency shall continue to have access to the document on request.

Applies Commission reporting requirements concerning missing, lost, counterfeit, and stolen securities to Government securities brokers and dealers. Directs the Secretary and the Commission to agree that the Commission will receive, store, and disseminate information in the possession of the Treasury concerning such securities.

Applies to the Secretary, with respect to rulemaking for Government securities brokers and dealers, rulemaking requirements concerning competitive effects and recordkeeping imposed on the Commission with respect to securities brokers and dealers.

Amends the Investment Company Act of 1940 to include as persons who are ineligible for service with investment companies: (1) any person who is enjoined from acting as a municipal securities dealer, Government securities broker or dealer, or entity or person required to be registered under the Commodity Exchange Act; and (2) any person who, within ten years, has been convicted of any felony or misdemeanor involving securities activities in such a capacity. Authorizes the Commission, after notice and a hearing, to prohibit any person who has violated or aided in the violation of the Commodity Exchange Act from serving a registered investment company. Amends the Investment Adviser Act to subject such persons to administrative sanctions by the Commission.

Directs the Secretary, the Commission, and the Federal Reserve Board to evaluate the effectiveness of rules promulgated pursuant to this Act and to submit to the Congress by October 1, 1990, their recommendations on the extension of the Secretary's rulemaking authority under this Act. Directs the Comptroller General to study the regulation of Government securities brokers and dealers under this Act and the effectiveness of provisions concerning protecting investors and the public interest and preventing fraud and unfair discrimination and to submit to the Congress by March 31, 1990, recommendations on continuing the Secretary's authority under this Act.

Directs the Comptroller General to study and report to the Congress within six months concerning the nature of the current trading system in the secondary market for Government securities.

Directs the Commission to study and report to the Congress within six months concerning the use of the exemption for domestic securities guaranteed by banks under the Securities Act of 1933 and the use of insurance policies to guarantee securities.

Title II: Depository Institutions - Requires the Secretary to prescribe standards for the safeguarding and use of obligations issued or guaranteed by the United States or by a Government-sponsored corporation. Applies such standards to depository institutions that are not Government securities brokers or dealers and which hold such obligations for customers. Requires such standards to provide for adequate segregation of such obligations. Provides for the enforcement of such standards by the appropriate regulatory agencies which may issue cease and desist orders for violations. Directs the Secretary to determine whether a regulatory agency's rules meet the purposes of such standards and, if so, to exempt from such standards any depository institution subject to such rules.

Title III: Transitional and Savings Provisions - Provides that the provisions of this Act shall not affect: (1) pending administrative proceedings; (2) suits commenced before the effective date of this Act; (3) the authority of the Federal Reserve Bank of New York to require reports or establish terms and conditions in connection with the Bank's relationship with any Government securities broker or dealer; or (4) the jurisdiction of the Commodity Futures Trading Commission over trading commodities futures contracts and options involving Government securities.

Title IV: Effective Dates - Sets forth the effective dates of provisions of, and regulations promulgated pursuant to, this Act.

Prohibits any person from acting as a Government securities broker or dealer after 270 days after enactment of this Act unless such person has been registered or has provided notice to the Commission or the appropriate regulatory agency as required by this Act.