15 U.S.C. § 78bb — Effect on existing law

Page 450 TITLE 15—COMMERCE AND TRADE § 78aa–1 stituted ‘‘United States District Court for the District of Columbia’’ for ‘‘district court of the United States for the District of Columbia’’. Pub. L. 100–181 struck out reference to the United States District Court for the District of Columbia. Previously, such words had been editorially eliminated as superfluous in view of section 132(a) of Title 28, Judiciary and Judicial Proce- dure, which provides that ‘‘There shall be in each judi- cial district a district court which shall be a court of record known as the United States District Court for the district’’, and section 88 of Title 28 which provides that ‘‘the District of Columbia constitutes one judicial district’’. AMENDMENTS 2010—Pub. L. 111–203, § 929P(b)(2), designated existing provisions as subsec. (a), inserted heading, and added subsec. (b). Pub. L. 111–203, § 929E(b), inserted ‘‘In any action or proceeding instituted by the Commission under this chapter in a United States district court for any judi- cial district, a subpoena issued to compel the attend- ance of a witness or the production of documents or tangible things (or both) at a hearing or trial may be served at any place within the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not apply to a subpoena issued under the pre- ceding sentence.’’ after ‘‘defendant may be found.’’ 1987—Pub. L. 100–181 struck out ‘‘, the United States District Court for the District of Columbia,’’ after ‘‘dis- trict courts of the United States’’ and substituted ‘‘sec- tions 1254, 1291, 1292, and 1294 of title 28’’ for ‘‘sections 128 and 240 of the Judicial Code, as amended (U.S.C., title 28, secs. 225 and 347)’’. See Codification note above. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking. Executive Documents TRANSFER OF FUNCTIONS For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title. § 78aa–1. Special provision relating to statute of limitations on private causes of action (a) Effect on pending causes of action The limitation period for any private civil ac- tion implied under section 78j(b) of this title that was commenced on or before June 19, 1991, shall be the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991. (b) Effect on dismissed causes of action Any private civil action implied under section 78j(b) of this title that was commenced on or be- fore June 19, 1991— (1) which was dismissed as time barred sub- sequent to June 19, 1991, and (2) which would have been timely filed under the limitation period provided by the laws ap- plicable in the jurisdiction, including prin- ciples of retroactivity, as such laws existed on June 19, 1991, shall be reinstated on motion by the plaintiff not later than 60 days after December 19, 1991. (June 6, 1934, ch. 404, title I, § 27A, as added Pub. L. 102–242, title IV, § 476, Dec. 19, 1991, 105 Stat. 2387.) Editorial Notes CONSTITUTIONALITY For information regarding the constitutionality of certain provisions of this section, see the Table of Laws Held Unconstitutional in Whole or in Part by the Su- preme Court on the Constitution Annotated website, constitution.congress.gov. § 78bb. Effect on existing law (a) Limitation on judgments (1) In general No person permitted to maintain a suit for damages under the provisions of this chapter shall recover, through satisfaction of judg- ment in 1 or more actions, a total amount in excess of the actual damages to that person on account of the act complained of. Except as otherwise specifically provided in this chapter, nothing in this chapter shall affect the juris- diction of the securities commission (or any agency or officer performing like functions) of any State over any security or any person in- sofar as it does not conflict with the provi- sions of this chapter or the rules and regula- tions under this chapter. (2) Rule of construction Except as provided in subsection (f), the rights and remedies provided by this chapter shall be in addition to any and all other rights and remedies that may exist at law or in eq- uity. (3) State bucket shop laws No State law which prohibits or regulates the making or promoting of wagering or gam- ing contracts, or the operation of ‘‘bucket shops’’ or other similar or related activities, shall invalidate— (A) any put, call, straddle, option, privi- lege, or other security subject to this chap- ter (except any security that has a pari-mu- tuel payout or otherwise is determined by the Commission, acting by rule, regulation, or order, to be appropriately subject to such laws), or apply to any activity which is inci- dental or related to the offer, purchase, sale, exercise, settlement, or closeout of any such security; (B) any security-based swap between eligi- ble contract participants; or (C) any security-based swap effected on a national securities exchange registered pur- suant to section 78f(b) of this title. (4) Other State provisions No provision of State law regarding the offer, sale, or distribution of securities shall apply to any transaction in a security-based swap or a security futures product, except that this paragraph may not be construed as lim- iting any State antifraud law of general appli- cability. A security-based swap may not be regulated as an insurance contract under any provision of State law. (b) Modification of disciplinary procedures Nothing in this chapter shall be construed to modify existing law with regard to the binding Page 451 TITLE 15—COMMERCE AND TRADE § 78bb effect (1) on any member of or participant in any self-regulatory organization of any action taken by the authorities of such organization to settle disputes between its members or participants, (2) on any municipal securities dealer or munic- ipal securities broker of any action taken pursu- ant to a procedure established by the Municipal Securities Rulemaking Board to settle disputes between municipal securities dealers and munic- ipal securities brokers, or (3) of any action de- scribed in paragraph (1) or (2) on any person who has agreed to be bound thereby. (c) Continuing validity of disciplinary sanctions The stay, setting aside, or modification pursu- ant to section 78s(e) of this title of any discipli- nary sanction imposed by a self-regulatory orga- nization on a member thereof, person associated with a member, or participant therein, shall not affect the validity or force of any action taken as a result of such sanction by the self-regu- latory organization prior to such stay, setting aside, or modification: Provided, That such ac- tion is not inconsistent with the provisions of this chapter or the rules or regulations there- under. The rights of any person acting in good faith which arise out of any such action shall not be affected in any way by such stay, setting aside, or modification. (d) Physical location of facilities of registered clearing agencies or registered transfer agents not to subject changes in beneficial or record ownership of securities to State or local taxes No State or political subdivision thereof shall impose any tax on any change in beneficial or record ownership of securities effected through the facilities of a registered clearing agency or registered transfer agent or any nominee thereof or custodian therefor or upon the delivery or transfer of securities to or through or receipt from such agency or agent or any nominee thereof or custodian therefor, unless such change in beneficial or record ownership or such transfer or delivery or receipt would otherwise be taxable by such State or political subdivision if the facilities of such registered clearing agen- cy, registered transfer agent, or any nominee thereof or custodian therefor were not phys- ically located in the taxing State or political subdivision. No State or political subdivision thereof shall impose any tax on securities which are deposited in or retained by a registered clearing agency, registered transfer agent, or any nominee thereof or custodian therefor, un- less such securities would otherwise be taxable by such State or political subdivision if the fa- cilities of such registered clearing agency, reg- istered transfer agent, or any nominee thereof or custodian therefor were not physically lo- cated in the taxing State or political subdivi- sion. (e) Exchange, broker, and dealer commissions; brokerage and research services (1) No person using the mails, or any means or instrumentality of interstate commerce, in the exercise of investment discretion with respect to an account shall be deemed to have acted unlaw- fully or to have breached a fiduciary duty under State or Federal law unless expressly provided to the contrary by a law enacted by the Con- gress or any State subsequent to June 4, 1975, solely by reason of his having caused the ac- count to pay a member of an exchange, broker, or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission another member of an exchange, broker, or dealer would have charged for effect- ing that transaction, if such person determined in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such member, broker, or dealer, viewed in terms of either that particular transaction or his over- all responsibilities with respect to the accounts as to which he exercises investment discretion. This subsection is exclusive and plenary insofar as conduct is covered by the foregoing, unless otherwise expressly provided by contract: Pro- vided, however, That nothing in this subsection shall be construed to impair or limit the power of the Commission under any other provision of this chapter or otherwise. (2) A person exercising investment discretion with respect to an account shall make such dis- closure of his policies and practices with respect to commissions that will be paid for effecting se- curities transactions, at such times and in such manner, as the appropriate regulatory agency, by rule, may prescribe as necessary or appro- priate in the public interest or for the protec- tion of investors. (3) For purposes of this subsection a person provides brokerage and research services insofar as he— (A) furnishes advice, either directly or through publications or writings, as to the value of securities, the advisability of invest- ing in, purchasing, or selling securities, and the availability of securities or purchasers or sellers of securities; (B) furnishes analyses and reports con- cerning issuers, industries, securities, eco- nomic factors and trends, portfolio strategy, and the performance of accounts; or (C) effects securities transactions and per- forms functions incidental thereto (such as clearance, settlement, and custody) or re- quired in connection therewith by rules of the Commission or a self-regulatory organization of which such person is a member or person as- sociated with a member or in which such per- son is a participant. (4) The provisions of this subsection shall not apply with regard to securities that are security futures products. (f) Limitations on remedies (1) Class action limitations No covered class action based upon the stat- utory or common law of any State or subdivi- sion thereof may be maintained in any State or Federal court by any private party alleg- ing— (A) a misrepresentation or omission of a material fact in connection with the pur- chase or sale of a covered security; or (B) that the defendant used or employed any manipulative or deceptive device or con- trivance in connection with the purchase or sale of a covered security. Page 452 TITLE 15—COMMERCE AND TRADE § 78bb (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 sub- ject to paragraph (1). (3) Preservation of certain actions (A) Actions under State law of State of incor- poration (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 main- tained in a State or Federal court by a pri- vate 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 ex- clusively from or to holders of equity se- curities 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 eq- uity 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 in- volving a covered security on its own be- half, or as a member of a class comprised solely of other States, political subdivi- sions, 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 pen- sion 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 be- tween 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 ac- tions. (5) Definitions For purposes of this subsection, the fol- lowing 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, pre- dominate 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 af- fecting only individual persons or mem- bers; 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, consoli- dated, 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 cor- poration. (D) Counting of certain class members For purposes of this paragraph, a corpora- tion, 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 se- curity that satisfies the standards for a cov- Page 453 TITLE 15—COMMERCE AND TRADE § 78cc 1 See References in Text note below. ered security specified in paragraph (1) or (2) of section 18(b) of the Securities Act of 1933 [15 U.S.C. 77r(b)], at the time during which it is alleged that the misrepresentation, omis- sion, or manipulative or deceptive conduct occurred, except that such term shall not in- clude any debt security that is exempt from registration under the Securities Act of 1933 [15 U.S.C. 77a et seq.] pursuant to rules issued by the Commission under section 4(2) 1 of that Act [15 U.S.C. 77d(a)(2)]. (F) Rule of construction Nothing in this paragraph shall be con- strued 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. (June 6, 1934, ch. 404, title I, § 28, 48 Stat. 903; Pub. L. 94–29, § 21, June 4, 1975, 89 Stat. 160; Pub. L. 97–303, § 4, Oct. 13, 1982, 96 Stat. 1409; Pub. L. 100–181, title III, §§ 327–329, Dec. 4, 1987, 101 Stat. 1259; Pub. L. 104–290, title I, § 103(b), Oct. 11, 1996, 110 Stat. 3422; Pub. L. 105–353, title I, § 101(b)(1), Nov. 3, 1998, 112 Stat. 3230; Pub. L. 106–554, § 1(a)(5) [title II, §§ 203(a)(2), 210], Dec. 21, 2000, 114 Stat. 2763, 2763A–422, 2763A–436; Pub. L. 111–203, title VII, § 767, July 21, 2010, 124 Stat. 1799.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (a) to (c) and (e), was in the original ‘‘this title’’. See References in Text note set out under section 78a of this title. The Securities Act of 1933, referred to in subsec. (f)(5)(E), is act May 27, 1933, ch. 38, title I, 48 Stat. 74, which is classified generally to subchapter I (§ 77a et seq.) of chapter 2A of this title. Section 4(2) of the Act was redesignated section 4(a)(2) by Pub. L. 112–106, title II, § 201(b)(1), (c)(1), Apr. 5, 2012, 126 Stat. 314, and is classified to section 77d(a)(2) of this title. For complete classification of this Act to the Code, see section 77a of this title and Tables. AMENDMENTS 2010—Subsec. (a). Pub. L. 111–203 amended subsec. (a) generally. Prior to amendment, subsec. (a) related to rights and remedies provided by this chapter and appli- cability of certain State securities laws. 2000—Subsec. (a). Pub. L. 106–554, § 1(a)(5) [title II, § 210], inserted ‘‘subject to this chapter’’ after ‘‘privi- lege, or other security’’, substituted ‘‘any such secu- rity’’ for ‘‘any such instrument, if such instrument is traded pursuant to rules and regulations of a self-regu- latory organization that are filed with the Commission pursuant to section 78s(b) of this title’’, and inserted at end ‘‘No provision of State law regarding the offer, sale, or distribution of securities shall apply to any transaction in a security futures product, except that this sentence shall not be construed as limiting any State antifraud law of general applicability.’’ Subsec. (e)(4). Pub. L. 106–554, § 1(a)(5) [title II, § 203(a)(2)], added par. (4). 1998—Subsec. (a). Pub. L. 105–353, § 101(b)(1)(A), sub- stituted ‘‘Except as provided in subsection (f) of this section, the rights and remedies’’ for ‘‘The rights and remedies’’. Subsec. (f). Pub. L. 105–353, § 101(b)(1)(B), added sub- sec. (f). 1996—Subsec. (a). Pub. L. 104–290 substituted ‘‘Except as otherwise specifically provided in this chapter, noth- ing’’ for ‘‘Nothing’’. 1987—Subsec. (c). Pub. L. 100–181, § 327, substituted ‘‘on’’ for ‘‘or’’ after ‘‘self-regulatory organization’’. Subsec. (d). Pub. L. 100–181, § 328, substituted ‘‘change in beneficial’’ for ‘‘change is beneficial’’. Subsec. (e)(1). Pub. L. 100–181, § 329, substituted ‘‘sub- sequent to the date of enactment of the Securities Acts Amendments of 1975’’ for ‘‘subsequent to the date of en- actment of the Securities Acts Amendments in 1975’’, which for purposes of codification was translated as ‘‘subsequent to June 4, 1975,’’ thus requiring no change in text. 1982—Subsec. (a). Pub. L. 97–303 inserted provision that no State law which prohibits or regulates the making or promoting of wagering or gaming contracts, or the operation of ‘‘bucket shops’’ or other similar or related activities, shall invalidate any put, call, strad- dle, option, privilege, or other security, or apply to any activity which is incidental or related to the offer, pur- chase, sale, exercise, settlement, or closeout of any such instrument, if such instrument is traded pursuant to rules and regulations of a self-regulatory organiza- tion that are filed with the Commission pursuant to section 78s(b) of this title. 1975—Subsec. (b). Pub. L. 94–29, § 21(1), struck out pro- visions that nothing in this chapter be construed to modify existing law with regard to the binding effect on any member of an exchange of any disciplinary ac- tion taken by the authorities of an exchange and made the remaining provisions applicable to all members of and participants in all self-regulatory organizations as well as municipal securities professionals. Subsecs. (c) to (e). Pub. L. 94–29, § 21(2), added subsecs. (c) to (e). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the later of 360 days after July 21, 2010, or, to the extent a provi- sion of subtitle B (§§ 761–774) of title VII of Pub. L. 111–203 requires a rulemaking, not less than 60 days after publication of the final rule or regulation imple- menting such provision of subtitle B, see section 774 of Pub. L. 111–203, set out as a note under section 77b of this title. EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105–353 not to affect or apply to any action commenced before and pending on Nov. 3, 1998, see section 101(c) of Pub. L. 105–353, set out as a note under section 77p of this title. EFFECTIVE DATE OF 1975 AMENDMENT Amendment by Pub. L. 94–29 effective June 4, 1975, see section 31(a) of Pub. L. 94–29, set out as a note under section 78b of this title. Executive Documents TRANSFER OF FUNCTIONS For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title. § 78cc. Validity of contracts (a) Waiver provisions Any condition, stipulation, or provision bind- ing any person to waive compliance with any provision of this chapter or of any rule or regu- lation thereunder, or of any rule of a self-regu- latory organization, shall be void. (b) Contract provisions in violation of chapter Every contract made in violation of any provi- sion of this chapter or of any rule or regulation