15 U.S.C. § 78q — Records and reports

Page 391 TITLE 15—COMMERCE AND TRADE § 78q regulations as the Commission may adopt in order to carry out the purposes of this section. (f) Treatment of transactions in security futures products The provisions of this section shall apply to ownership of and transactions in security fu- tures products. (g) Limitation on Commission authority The authority of the Commission under this section with respect to security-based swap agreements shall be subject to the restrictions and limitations of section 78c–1(b) of this title. (June 6, 1934, ch. 404, title I, § 16, 48 Stat. 896; Pub. L. 88–467, § 8, Aug. 20, 1964, 78 Stat. 579; Pub. L. 106–554, § 1(a)(5) [title II, § 208(b)(3), title III, § 303(g), (h)], Dec. 21, 2000, 114 Stat. 2763, 2763A–435, 2763A–455, 2763A–456; Pub. L. 107–204, title IV, § 403(a), July 30, 2002, 116 Stat. 788; Pub. L. 111–203, title VII, § 762(d)(5), title IX, § 929R(b), July 21, 2010, 124 Stat. 1761, 1867.) Editorial Notes AMENDMENTS 2010—Subsec. (a)(1). Pub. L. 111–203, § 929R(b)(1), struck out ‘‘(and, if such security is registered on a na- tional securities exchange, also with the exchange)’’ after ‘‘Commission’’. Subsec. (a)(2)(B). Pub. L. 111–203, § 929R(b)(2), inserted ‘‘, or within such shorter time as the Commission may establish by rule’’ after ‘‘officer’’. Subsec. (a)(2)(C). Pub. L. 111–203, § 762(d)(5)(A), struck out ‘‘(as defined in section 206(b) of the Gramm-Leach- Bliley Act (15 U.S.C. 78c note))’’ after ‘‘security-based swap agreement’’. Subsec. (a)(3)(B). Pub. L. 111–203, § 762(d)(5)(B), which directed amendment of subpar. (B) by inserting ‘‘or se- curity-based swaps’’ after ‘‘security-based swap agree- ment’’, was executed by making the insertion after ‘‘se- curity-based swap agreements’’, to reflect the probable intent of Congress. Subsec. (b). Pub. L. 111–203, § 762(d)(5)(D), which di- rected amendment of subsec. (b) by substituting ‘‘or a security-based swap’’ for ‘‘(as defined in section 206B of the Gramm-Leach Bliley Act)’’ in third sentence, was executed by making the substitution for ‘‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’’ in third sentence, to reflect the probable intent of Congress. Pub. L. 111–203, § 762(d)(5)(C), struck out ‘‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’’ after ‘‘security-based swap agreement’’ in first sentence. Subsec. (g). Pub. L. 111–203, § 762(d)(5)(E), struck out ‘‘(as defined in section 206B of the Gramm-Leach-Bliley Act)’’ after ‘‘security-based swap agreements’’. 2002—Pub. L. 107–204 reenacted section catchline without change, added heading and text of subsec. (a), and struck out former subsec. (a) which read as follows: ‘‘Every person who is directly or indirectly the bene- ficial owner of more than 10 per centum of any class of any equity security (other than an exempted security) which is registered pursuant to section 78l of this title, or who is a director or an officer of the issuer of such security, shall file, at the time of the registration of such security on a national securities exchange or by the effective date of a registration statement filed pur- suant to section 78l(g) of this title, or within ten days after he becomes such beneficial owner, director, or of- ficer, a statement with the Commission (and, if such se- curity is registered on a national securities exchange, also with the exchange) of the amount of all equity se- curities of such issuer of which he is the beneficial owner, and within ten days after the close of each cal- endar month thereafter, if there has been a change in such ownership or if such person shall have purchased or sold a security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act) involving such equity security during such month, shall file with the Commission (and if such security is registered on a national securities exchange, shall also file with the exchange), a statement indicating his ownership at the close of the calendar month and such changes in his ownership and such purchases and sales of such secu- rity-based swap agreements as have occurred during such calendar month.’’ 2000—Subsecs. (a), (b). Pub. L. 106–554, § 1(a)(5) [title III, § 303(g)], amended subsecs. (a) and (b) generally, re- vising provisions to extend application to security- based swap agreements. Subsec. (f). Pub. L. 106–554, § 1(a)(5) [title II, § 208(b)(3)], added subsec. (f). Subsec. (g). Pub. L. 106–554, § 1(a)(5) [title III, § 303(h)], added subsec. (g). 1964—Subsec. (a). Pub. L. 88–467, § 8(a), substituted ‘‘registered pursuant to section 78l of this title’’ for ‘‘registered on a national securities exchange’’, ‘‘Com- mission (and, if such security is registered on a na- tional securities exchange, also with the exchange)’’ for ‘‘exchange (and a duplicate original thereof with the Commission)’’, ‘‘a change’’ for ‘‘any change’’, and ‘‘Commission (and if such security is registered on a national securities exchange, shall also file with the exchange) a statement’’ for ‘‘exchange a statement (and a duplicate original thereof with the Commis- sion)’’, and inserted ‘‘on a national securities exchange or by the effective date of a registration statement filed pursuant to section 78l(g) of this title’’ after ‘‘reg- istration of such security’’. Subsecs. (d), (e). Pub. L. 88–467, § 8(b), added subsec. (d) and redesignated former subsec. (d) as (e). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by section 929R(b) of Pub. L. 111–203 ef- fective 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. Amendment by section 762(d)(5) of Pub. L. 111–203 ef- fective on the later of 360 days after July 21, 2010, or, to the extent a provision 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 implementing 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 2002 AMENDMENT Pub. L. 107–204, title IV, § 403(b), July 30, 2002, 116 Stat. 789, provided that: ‘‘The amendment made by this section [amending this section] shall be effective 30 days after the date of the enactment of this Act [July 30, 2002].’’ EFFECTIVE DATE OF 1964 AMENDMENT Amendment by Pub. L. 88–467 effective Aug. 20, 1964, see section 13 of Pub. L. 88–467, set out as a note under section 78c 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. § 78q. Records and reports (a) Rules and regulations (1) Every national securities exchange, mem- ber thereof, broker or dealer who transacts a Page 392 TITLE 15—COMMERCE AND TRADE § 78q 1 So in original. 2 So in original. Probably should be ‘‘consult’’. 3 So in original. Probably should be preceded by ‘‘an’’. 4 So in original. Probably should be preceded by ‘‘a’’. business in securities through the medium of any such member, registered securities associa- tion, registered broker or dealer, registered mu- nicipal securities dealer municipal advisor,,1 registered securities information processor, reg- istered transfer agent, nationally recognized statistical rating organization, and registered clearing agency and the Municipal Securities Rulemaking Board shall make and keep for pre- scribed periods such records, furnish such copies thereof, and make and disseminate such reports as the Commission, by rule, prescribes as nec- essary or appropriate in the public interest, for the protection of investors, or otherwise in fur- therance of the purposes of this chapter. Any re- port that a nationally recognized statistical rat- ing organization is required by Commission rules under this paragraph to make and dissemi- nate to the Commission shall be deemed fur- nished to the Commission. (2) Every registered clearing agency shall also make and keep for prescribed periods such records, furnish such copies thereof, and make and disseminate such reports, as the appropriate regulatory agency for such clearing agency, by rule, prescribes as necessary or appropriate for the safeguarding of securities and funds in the custody or control of such clearing agency or for which it is responsible. (3) Every registered transfer agent shall also make and keep for prescribed periods such rec- ords, furnish such copies thereof, and make such reports as the appropriate regulatory agency for such transfer agent, by rule, prescribes as nec- essary or appropriate in furtherance of the pur- poses of section 78q–1 of this title. (b) Records subject to examination (1) Procedures for cooperation with other agencies All records of persons described in sub- section (a) of this section are subject at any time, or from time to time, to such reasonable periodic, special, or other examinations by representatives of the Commission and the ap- propriate regulatory agency for such persons as the Commission or the appropriate regu- latory agency for such persons deems nec- essary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this chapter: Provided, however, That the Commission shall, prior to conducting any such examination of a— (A) registered clearing agency, registered transfer agent, or registered municipal secu- rities dealer for which it is not the appro- priate regulatory agency, give notice to the appropriate regulatory agency for such clearing agency, transfer agent, or munic- ipal securities dealer of such proposed exam- ination and consult with such appropriate regulatory agency concerning the feasibility and desirability of coordinating such exam- ination with examinations conducted by such appropriate regulatory agency with a view to avoiding unnecessary regulatory du- plication or undue regulatory burdens for such clearing agency, transfer agent, or mu- nicipal securities dealer; or (B) broker or dealer registered pursuant to section 78o(b)(11) of this title, exchange reg- istered pursuant to section 78f(g) of this title, or national securities association reg- istered pursuant to section 78o–3(k) of this title, give notice to the Commodity Futures Trading Commission of such proposed exam- ination and consults 2 with the Commodity Futures Trading Commission concerning the feasibility and desirability of coordinating such examination with examinations con- ducted by the Commodity Futures Trading Commission in order to avoid unnecessary regulatory duplication or undue regulatory burdens for such broker or dealer or ex- change. (2) Furnishing data and reports to CFTC The Commission shall notify the Commodity Futures Trading Commission of any examina- tion conducted of any broker or dealer reg- istered pursuant to section 78o(b)(11) of this title, exchange registered pursuant to section 78f(g) of this title, or national securities asso- ciation registered pursuant to section 78o–3(k) of this title and, upon request, furnish to the Commodity Futures Trading Commission any examination report and data supplied to, or prepared by, the Commission in connection with such examination. (3) Use of CFTC reports Prior to conducting an examination under paragraph (1), the Commission shall use the reports of examinations, if the information available therein is sufficient for the purposes of the examination, of— (A) any broker or dealer registered pursu- ant to section 78o(b)(11) of this title; (B) exchange 3 registered pursuant to sec- tion 78f(g) of this title; or (C) national 4 securities association reg- istered pursuant to section 78o–3(k) of this title; that is made by the Commodity Futures Trad- ing Commission, a national securities associa- tion registered pursuant to section 78o–3(k) of this title, or an exchange registered pursuant to section 78f(g) of this title. (4) Rules of construction (A) Notwithstanding any other provision of this subsection, the records of a broker or dealer registered pursuant to section 78o(b)(11) of this title, an exchange registered pursuant to section 78f(g) of this title, or a national se- curities association registered pursuant to section 78o–3(k) of this title described in this subparagraph shall not be subject to routine periodic examinations by the Commission. (B) Any recordkeeping rules adopted under this subsection for a broker or dealer reg- istered pursuant to section 78o(b)(11) of this title, an exchange registered pursuant to sec- tion 78f(g) of this title, or a national securities association registered pursuant to section 78o–3(k) of this title shall be limited to records with respect to persons, accounts, agreements, Page 393 TITLE 15—COMMERCE AND TRADE § 78q contracts, and transactions involving security futures products. (C) Nothing in the proviso in paragraph (1) shall be construed to impair or limit (other than by the requirement of prior consultation) the power of the Commission under this sub- section to examine any clearing agency, trans- fer agent, or municipal securities dealer or to affect in any way the power of the Commission under any other provision of this chapter or otherwise to inspect, examine, or investigate any such clearing agency, transfer agent, or municipal securities dealer. (c) Copies of reports filed with other regulatory agencies (1) Every clearing agency, transfer agent, and municipal securities dealer for which the Com- mission is not the appropriate regulatory agen- cy shall (A) file with the appropriate regulatory agency for such clearing agency, transfer agent, or municipal securities dealer a copy of any ap- plication, notice, proposal, report, or document filed with the Commission by reason of its being a clearing agency, transfer agent, or municipal securities dealer and (B) file with the Commis- sion a copy of any application, notice, proposal, report, or document filed with such appropriate regulatory agency by reason of its being a clear- ing agency, transfer agent, or municipal securi- ties dealer. The Municipal Securities Rule- making Board shall file with each agency enu- merated in section 78c(a)(34)(A) of this title cop- ies of every proposed rule change filed with the Commission pursuant to section 78s(b) of this title. (2) The appropriate regulatory agency for a clearing agency, transfer agent, or municipal se- curities dealer for which the Commission is not the appropriate regulatory agency shall file with the Commission notice of the commence- ment of any proceeding and a copy of any order entered by such appropriate regulatory agency against any clearing agency, transfer agent, mu- nicipal securities dealer, or person associated with a transfer agent or municipal securities dealer, and the Commission shall file with such appropriate regulatory agency, if any, notice of the commencement of any proceeding and a copy of any order entered by the Commission against the clearing agency, transfer agent, or municipal securities dealer, or against any per- son associated with a transfer agent or munic- ipal securities dealer for which the agency is the appropriate regulatory agency. (3) The Commission and the appropriate regu- latory agency for a clearing agency, transfer agent, or municipal securities dealer for which the Commission is not the appropriate regu- latory agency shall each notify the other and make a report of any examination conducted by it of such clearing agency, transfer agent, or municipal securities dealer, and, upon request, furnish to the other a copy of such report and any data supplied to it in connection with such examination. (4) The Commission or the appropriate regu- latory agency may specify that documents re- quired to be filed pursuant to this subsection with the Commission or such agency, respec- tively, may be retained by the originating clear- ing agency, transfer agent, or municipal securi- ties dealer, or filed with another appropriate regulatory agency. The Commission or the ap- propriate regulatory agency (as the case may be) making such a specification shall continue to have access to the document on request. (d) Self-regulatory organizations (1) The Commission, by rule or order, as it deems necessary or appropriate in the public in- terest and for the protection of investors, to fos- ter cooperation and coordination among self- regulatory organizations, or to remove impedi- ments to and foster the development of a na- tional market system and national system for the clearance and settlement of securities trans- actions, may— (A) with respect to any person who is a member of or participant in more than one self-regulatory organization, relieve any such self-regulatory organization of any responsi- bility under this chapter (i) to receive regu- latory reports from such person, (ii) to exam- ine such person for compliance, or to enforce compliance by such person, with specified pro- visions of this chapter, the rules and regula- tions thereunder, and its own rules, or (iii) to carry out other specified regulatory functions with respect to such person, and (B) allocate among self-regulatory organiza- tions the authority to adopt rules with respect to matters as to which, in the absence of such allocation, such self-regulatory organizations share authority under this chapter. In making any such rule or entering any such order, the Commission shall take into consider- ation the regulatory capabilities and procedures of the self-regulatory organizations, availability of staff, convenience of location, unnecessary regulatory duplication, and such other factors as the Commission may consider germane to the protection of investors, cooperation and coordi- nation among self-regulatory organizations, and the development of a national market system and a national system for the clearance and set- tlement of securities transactions. The Commis- sion, by rule or order, as it deems necessary or appropriate in the public interest and for the protection of investors, may require any self- regulatory organization relieved of any respon- sibility pursuant to this paragraph, and any per- son with respect to whom such responsibility re- lates, to take such steps as are specified in any such rule or order to notify customers of, and persons doing business with, such person of the limited nature of such self-regulatory organiza- tion’s responsibility for such person’s acts, prac- tices, and course of business. (2) A self-regulatory organization shall furnish copies of any report of examination of any per- son who is a member of or a participant in such self-regulatory organization to any other self- regulatory organization of which such person is a member or in which such person is a partici- pant upon the request of such person, such other self-regulatory organization, or the Commission. (e) Balance sheet and income statement; other fi- nancial statements and information (1)(A) Every registered broker or dealer shall annually file with the Commission a balance Page 394 TITLE 15—COMMERCE AND TRADE § 78q 5 So in original. Probably should be ‘‘an’’. sheet and income statement certified by a 5 inde- pendent public accounting firm, or by a reg- istered public accounting firm if the firm is re- quired to be registered under the Sarbanes- Oxley Act of 2002,,1 prepared on a calendar or fis- cal year basis, and such other financial state- ments (which shall, as the Commission specifies, be certified) and information concerning its fi- nancial condition as the Commission, by rule may prescribe as necessary or appropriate in the public interest or for the protection of investors. (B) Every registered broker and dealer shall annually send to its customers its certified bal- ance sheet and such other financial statements and information concerning its financial condi- tion as the Commission, by rule, may prescribe pursuant to subsection (a) of this section. (C) The Commission, by rule or order, may conditionally or unconditionally exempt any registered broker or dealer, or class of such bro- kers or dealers, from any provision of this para- graph if the Commission determines that such exemption is consistent with the public interest and the protection of investors. (2) The Commission, by rule, as it deems nec- essary or appropriate in the public interest or for the protection of investors, may prescribe the form and content of financial statements filed pursuant to this chapter and the account- ing principles and accounting standards used in their preparation. (f) Missing, lost, counterfeit, and stolen securi- ties (1) Every national securities exchange, mem- ber thereof, registered securities association, broker, dealer, municipal securities dealer, gov- ernment securities broker, government securi- ties dealer, registered transfer agent, registered clearing agency, participant therein, member of the Federal Reserve System, and bank whose de- posits are insured by the Federal Deposit Insur- ance Corporation shall— (A) report to the Commission or other per- son designated by the Commission and, in the case of securities issued pursuant to chapter 31 of title 31, to the Secretary of the Treasury such information about securities that are missing, lost, counterfeit, stolen, or cancelled, in such form and within such time as the Com- mission, by rule, determines is necessary or appropriate in the public interest or for the protection of investors; such information shall be available on request for a reasonable fee, to any such exchange, member, association, broker, dealer, municipal securities dealer, government securities broker, government se- curities dealer, transfer agent, clearing agen- cy, participant, member of the Federal Re- serve System, or insured bank, and such other persons as the Commission, by rule, des- ignates; and (B) make such inquiry with respect to infor- mation reported pursuant to this subsection as the Commission, by rule, prescribes as nec- essary or appropriate in the public interest or for the protection of investors, to determine whether securities in their custody or control, for which they are responsible, or in which they are effecting, clearing, or settling a transaction have been reported as missing, lost, counterfeit, stolen, cancelled, or reported in such other manner as the Commission, by rule, may prescribe. (2) Every member of a national securities ex- change, broker, dealer, registered transfer agent, registered clearing agency, registered se- curities information processor, national securi- ties exchange, and national securities associa- tion shall require that each of its partners, di- rectors, officers, and employees be fingerprinted and shall submit such fingerprints, or cause the same to be submitted, to the Attorney General of the United States for identification and ap- propriate processing. The Commission, by rule, may exempt from the provisions of this para- graph upon specified terms, conditions, and peri- ods, any class of partners, directors, officers, or employees of any such member, broker, dealer, transfer agent, clearing agency, securities infor- mation processor, national securities exchange, or national securities association, if the Com- mission finds that such action is not incon- sistent with the public interest or the protection of investors. Notwithstanding any other provi- sion of law, in providing identification and proc- essing functions, the Attorney General shall provide the Commission and self-regulatory or- ganizations designated by the Commission with access to all criminal history record informa- tion. (3)(A) In order to carry out the authority under paragraph (1) above, the Commission or its designee may enter into agreement with the Attorney General to use the facilities of the Na- tional Crime Information Center (‘‘NCIC’’) to re- ceive, store, and disseminate information in re- gard to missing, lost, counterfeit, or stolen secu- rities and to permit direct inquiry access to NCIC’s file on such securities for the financial community. (B) In order to carry out the authority under paragraph (1) of this subsection, the Commission or its designee and the Secretary of the Treas- ury shall enter into an agreement whereby the Commission or its designee will receive, store, and disseminate information in the possession, and which comes into the possession, of the De- partment of the Treasury in regard to missing, lost, counterfeit, or stolen securities. (4) In regard to paragraphs (1), (2), and (3), above insofar as such paragraphs apply to any bank or member of the Federal Reserve System, the Commission may delegate its authority to: (A) the Comptroller of the Currency as to national banks; (B) the Federal Reserve Board in regard to any member of the Federal Reserve System which is not a national bank; and (C) the Federal Deposit Insurance Corpora- tion for any State bank which is insured by the Federal Deposit Insurance Corporation but which is not a member of the Federal Reserve System. (5) The Commission shall encourage the insur- ance industry to require their insured to report expeditiously instances of missing, lost, coun- terfeit, or stolen securities to the Commission or to such other person as the Commission may, by rule, designate to receive such information. Page 395 TITLE 15—COMMERCE AND TRADE § 78q (g) Persons extending credit Any broker, dealer, or other person extending credit who is subject to the rules and regula- tions prescribed by the Board of Governors of the Federal Reserve System pursuant to this chapter shall make such reports to the Board as it may require as necessary or appropriate to enable it to perform the functions conferred upon it by this chapter. If any such broker, deal- er, or other person shall fail to make any such report or fail to furnish full information therein, or, if in the judgment of the Board it is other- wise necessary, such broker, dealer, or other person shall permit such inspections to be made by the Board with respect to the business oper- ations of such broker, dealer, or other person as the Board may deem necessary to enable it to obtain the required information. (h) Risk assessment for holding company sys- tems (1) Obligations to obtain, maintain, and report information Every person who is (A) a registered broker or dealer, or (B) a registered municipal securi- ties dealer for which the Commission is the appropriate regulatory agency, shall obtain such information and make and keep such records as the Commission by rule prescribes concerning the registered person’s policies, procedures, or systems for monitoring and controlling financial and operational risks to it resulting from the activities of any of its as- sociated persons, other than a natural person. Such records shall describe, in the aggregate, each of the financial and securities activities conducted by, and the customary sources of capital and funding of, those of its associated persons whose business activities are reason- ably likely to have a material impact on the financial or operational condition of such reg- istered person, including its net capital, its li- quidity, or its ability to conduct or finance its operations. The Commission, by rule, may re- quire summary reports of such information to be filed with the Commission no more fre- quently than quarterly. (2) Authority to require additional information If, as a result of adverse market conditions or based on reports provided to the Commis- sion pursuant to paragraph (1) of this sub- section or other available information, the Commission reasonably concludes that it has concerns regarding the financial or oper- ational condition of (A) any registered broker or dealer, or (B) any registered municipal se- curities dealer, government securities broker, or government securities dealer for which the Commission is the appropriate regulatory agency, the Commission may require the reg- istered person to make reports concerning the financial and securities activities of any of such person’s associated persons, other than a natural person, whose business activities are reasonably likely to have a material impact on the financial or operational condition of such registered person. The Commission, in re- quiring reports pursuant to this paragraph, shall specify the information required, the pe- riod for which it is required, the time and date on which the information must be furnished, and whether the information is to be furnished directly to the Commission or to a self-regu- latory organization with primary responsi- bility for examining the registered person’s fi- nancial and operational condition. (3) Special provisions with respect to associ- ated persons subject to Federal banking agency regulation (A) Cooperation in implementation In developing and implementing reporting requirements pursuant to paragraph (1) of this subsection with respect to associated persons subject to examination by or report- ing requirements of a Federal banking agen- cy, the Commission shall consult with and consider the views of each such Federal banking agency. If a Federal banking agency comments in writing on a proposed rule of the Commission under this subsection that has been published for comment, the Com- mission shall respond in writing to such written comment before adopting the pro- posed rule. The Commission shall, at the re- quest of the Federal banking agency, publish such comment and response in the Federal Register at the time of publishing the adopt- ed rule. (B) Use of banking agency reports A registered broker, dealer, or municipal securities dealer shall be in compliance with any recordkeeping or reporting requirement adopted pursuant to paragraph (1) of this subsection concerning an associated person that is subject to examination by or report- ing requirements of a Federal banking agen- cy if such broker, dealer, or municipal secu- rities dealer utilizes for such recordkeeping or reporting requirement copies of reports filed by the associated person with the Fed- eral banking agency pursuant to section 161 of title 12, subchapter VIII of chapter 3 of title 12, section 1817(a) of title 12, section 1467a(b) of title 12, or section 1847 of title 12. The Commission may, however, by rule adopted pursuant to paragraph (1), require any broker, dealer, or municipal securities dealer filing such reports with the Commis- sion to obtain, maintain, or report supple- mental information if the Commission makes an explicit finding that such supple- mental information is necessary to inform the Commission regarding potential risks to such broker, dealer, or municipal securities dealer. Prior to requiring any such supple- mental information, the Commission shall first request the Federal banking agency to expand its reporting requirements to include such information. (C) Procedure for requiring additional infor- mation Prior to making a request pursuant to paragraph (2) of this subsection for informa- tion with respect to an associated person that is subject to examination by or report- ing requirements of a Federal banking agen- cy, the Commission shall— (i) notify such agency of the information required with respect to such associated person; and Page 396 TITLE 15—COMMERCE AND TRADE § 78q 6 See References in Text note below. (ii) consult with such agency to deter- mine whether the information required is available from such agency and for other purposes, unless the Commission deter- mines that any delay resulting from such consultation would be inconsistent with ensuring the financial and operational condition of the broker, dealer, municipal securities dealer, government securities broker, or government securities dealer or the stability or integrity of the securities markets. (D) Exclusion for examination reports Nothing in this subsection shall be con- strued to permit the Commission to require any registered broker or dealer, or any reg- istered municipal securities dealer, govern- ment securities broker, or government secu- rities dealer for which the Commission is the appropriate regulatory agency, to obtain, maintain, or furnish any examination report of any Federal banking agency or any super- visory recommendations or analysis con- tained therein. (E) Confidentiality of information provided No information provided to or obtained by the Commission from any Federal banking agency pursuant to a request by the Com- mission under subparagraph (C) of this para- graph regarding any associated person which is subject to examination by or reporting re- quirements of a Federal banking agency may be disclosed to any other person (other than a self-regulatory organization), with- out the prior written approval of the Federal banking agency. Nothing in this subsection shall authorize the Commission to withhold information from Congress, or prevent the Commission from complying with a request for information from any other Federal de- partment or agency requesting the informa- tion for purposes within the scope of its ju- risdiction, or complying with an order of a court of the United States in an action brought by the United States or the Com- mission. (F) Notice to banking agencies concerning fi- nancial and operational condition con- cerns The Commission shall notify the Federal banking agency of any concerns of the Com- mission regarding significant financial or operational risks resulting from the activi- ties of any registered broker or dealer, or any registered municipal securities dealer, government securities broker, or govern- ment securities dealer for which the Com- mission is the appropriate regulatory agen- cy, to any associated person thereof which is subject to examination by or reporting re- quirements of the Federal banking agency. (G) ‘‘Federal banking agency’’ defined For purposes of this paragraph, the term ‘‘Federal banking agency’’ shall have the same meaning as the term ‘‘appropriate Fed- eral bank agency’’ in section 1813(q) of title 12. (4) Exemptions The Commission by rule or order may ex- empt any person or class of persons, under such terms and conditions and for such periods as the Commission shall provide in such rule or order, from the provisions of this sub- section, and the rules thereunder. In granting such exemptions, the Commission shall con- sider, among other factors— (A) whether information of the type re- quired under this subsection is available from a supervisory agency (as defined in sec- tion 3401(6) 6 of title 12), a State insurance commission or similar State agency, the Commodity Futures Trading Commission, or a similar foreign regulator; (B) the primary business of any associated person; (C) the nature and extent of domestic or foreign regulation of the associated person’s activities; (D) the nature and extent of the registered person’s securities activities; and (E) with respect to the registered person and its associated persons, on a consolidated basis, the amount and proportion of assets devoted to, and revenues derived from, ac- tivities in the United States securities mar- kets. (5) Authority to limit disclosure of information Notwithstanding any other provision of law, the Commission shall not be compelled to dis- close any information required to be reported under this subsection, or any information sup- plied to the Commission by any domestic or foreign regulatory agency that relates to the financial or operational condition of any asso- ciated person of a registered broker, dealer, government securities broker, government se- curities dealer, or municipal securities dealer. Nothing in this subsection shall authorize the Commission to withhold information from Congress, or prevent the Commission from complying with a request for information from any other Federal department or agency re- questing the information for purposes within the scope of its jurisdiction, or complying with an order of a court of the United States in an action brought by the United States or the Commission. For purposes of section 552 of title 5, this subsection shall be considered a statute described in subsection (b)(3)(B) of such section 552. In prescribing regulations to carry out the requirements of this subsection, the Commission shall designate information described in or obtained pursuant to subpara- graph (B) or (C) of paragraph (3) of this sub- section as confidential information for pur- poses of section 78x(b)(2) of this title. (i) Authority to limit disclosure of information Notwithstanding any other provision of law, the Commission shall not be compelled to dis- close any information required to be reported under subsection (h) or (i) 6 or any information supplied to the Commission by any domestic or foreign regulatory agency that relates to the fi- nancial or operational condition of any associ- Page 397 TITLE 15—COMMERCE AND TRADE § 78q ated person of a broker or dealer, investment bank holding company, or any affiliate of an in- vestment bank holding company. Nothing in this subsection shall authorize the Commission to withhold information from Congress, or pre- vent the Commission from complying with a re- quest for information from any other Federal department or agency or any self-regulatory or- ganization requesting the information for pur- poses within the scope of its jurisdiction, or complying with an order of a court of the United States in an action brought by the United States or the Commission. For purposes of sec- tion 552 of title 5, this subsection shall be con- sidered a statute described in subsection (b)(3)(B) of such section 552. In prescribing regu- lations to carry out the requirements of this subsection, the Commission shall designate in- formation described in or obtained pursuant to subparagraphs (A), (B), and (C) of subsection (i)(5) 6 as confidential information for purposes of section 78x(b)(2) of this title. (j) Coordination of examining authorities (1) Elimination of duplication The Commission and the examining authori- ties, through cooperation and coordination of examination and oversight activities, shall eliminate any unnecessary and burdensome duplication in the examination process. (2) Coordination of examinations The Commission and the examining authori- ties shall share such information, including reports of examinations, customer complaint information, and other nonpublic regulatory information, as appropriate to foster a coordi- nated approach to regulatory oversight of bro- kers and dealers that are subject to examina- tion by more than one examining authority. (3) Examinations for cause At any time, any examining authority may conduct an examination for cause of any broker or dealer subject to its jurisdiction. (4) Confidentiality (A) In general Section 78x of this title shall apply to the sharing of information in accordance with this subsection. The Commission shall take appropriate action under section 78x(c) of this title to ensure that such information is not inappropriately disclosed. (B) Appropriate disclosure not prohibited Nothing in this paragraph authorizes the Commission or any examining authority to withhold information from the Congress, or prevent the Commission or any examining authority from complying with a request for information from any other Federal depart- ment or agency requesting the information for purposes within the scope of its jurisdic- tion, or complying with an order of a court of the United States in an action brought by the United States or the Commission. (5) ‘‘Examining authority’’ defined For purposes of this subsection, the term ‘‘examining authority’’ means a self-regu- latory organization registered with the Com- mission under this chapter (other than a reg- istered clearing agency) with the authority to examine, inspect, and otherwise oversee the activities of a registered broker or dealer. (June 6, 1934, ch. 404, title I, § 17, 48 Stat. 897; May 27, 1936, ch. 462, § 4, 49 Stat. 1379; June 25, 1938, ch. 677, § 5, 52 Stat. 1076; Pub. L. 94–29, § 14, June 4, 1975, 89 Stat. 137; Pub. L. 99–571, title I, § 102(h), (i), Oct. 28, 1986, 100 Stat. 3219; Pub. L. 100–181, title III, § 321, title VIII, § 801(b), Dec. 4, 1987, 101 Stat. 1257, 1265; Pub. L. 101–432, § 4(a), Oct. 16, 1990, 104 Stat. 966; Pub. L. 104–290, title I, § 108, Oct. 11, 1996, 110 Stat. 3425; Pub. L. 105–353, title III, § 301(b)(5), Nov. 3, 1998, 112 Stat. 3236; Pub. L. 106–102, title II, § 231(a), Nov. 12, 1999, 113 Stat. 1402; Pub. L. 106–554, § 1(a)(5) [title II, § 204], Dec. 21, 2000, 114 Stat. 2763, 2763A–424; Pub. L. 107–204, title II, § 205(c)(2), July 30, 2002, 116 Stat. 774; Pub. L. 108–386, § 8(f)(5), (6), Oct. 30, 2004, 118 Stat. 2232; Pub. L. 109–291, § 5, Sept. 29, 2006, 120 Stat. 1338; Pub. L. 111–203, title VI, § 617(a), title IX, §§ 929D, 929S, 975(h), 982(e)(2), 985(b)(7), July 21, 2010, 124 Stat. 1616, 1853, 1867, 1923, 1929, 1934.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (a)(1), (b), (d)(1)(A), (B), (e)(2), (g), and (j)(5), was in the original ‘‘this title’’. See References in Text note set out under section 78a of this title. The Sarbanes-Oxley Act of 2002, referred to in subsec. (e)(1)(A), is Pub. L. 107–204, July 30, 2002, 116 Stat. 745. For complete classification of this Act to the Code, see Short Title note set out under section 7201 of this title and Tables. Subchapter VIII of chapter 3 of title 12, referred to in subsec. (h)(3)(B), was in the original ‘‘section 9 of the Federal Reserve Act’’, meaning section 9 of act Dec. 23, 1913, ch. 6, 38 Stat. 251, which is classified generally to subchapter VIII (§ 321 et seq.) of chapter 3 of Title 12, Banks and Banking. Section 3401(6) of title 12, referred to in subsec. (h)(4)(A), was redesignated section 3401(7) of title 12 by Pub. L. 101–73, title IX, § 941(1), Aug. 9, 1989, 103 Stat. 496. Subsection (i) of this section, referred to in subsec. (i), was repealed, and subsec. (j) was redesignated (i), by Pub. L. 111–203, § 617(a). See 2010 Amendment note below. AMENDMENTS 2010—Subsec. (a)(1). Pub. L. 111–203, § 975(h), inserted ‘‘municipal advisor,’’ after ‘‘municipal securities deal- er’’. Subsec. (b)(1)(B). Pub. L. 111–203, § 985(b)(7), sub- stituted ‘‘give notice to’’ for ‘‘gives notice to’’. Subsec. (e)(1)(A). Pub. L. 111–203, § 982(e)(2), sub- stituted ‘‘independent public accounting firm, or by a registered public accounting firm if the firm is required to be registered under the Sarbanes-Oxley Act of 2002,’’ for ‘‘registered public accounting firm’’. Subsec. (f)(1)(A). Pub. L. 111–203, § 929D(1), substituted ‘‘securities that are missing, lost, counterfeit, stolen, or cancelled’’ for ‘‘missing, lost, counterfeit, or stolen securities’’. Subsec. (f)(1)(B). Pub. L. 111–203, § 929D(2), substituted ‘‘stolen, cancelled, or reported in such other manner as the Commission, by rule, may prescribe’’ for ‘‘or sto- len’’. Subsec. (f)(2). Pub. L. 111–203, § 929S, in first sentence, substituted ‘‘registered clearing agency, registered se- curities information processor, national securities ex- change, and national securities association’’ for ‘‘and registered clearing agency,’’ and, in second sentence, Page 398 TITLE 15—COMMERCE AND TRADE § 78q–1 substituted ‘‘clearing agency, securities information processor, national securities exchange, or national se- curities association,’’ for ‘‘or clearing agency,’’. Subsecs. (i) to (k). Pub. L. 111–203, § 617(a), redesig- nated subsecs. (j) and (k) as (i) and (j), respectively, and struck out former subsec. (i) which related to super- vision of investment bank holding companies and rec- ordkeeping and reporting requirements. 2006—Subsec. (a)(1). Pub. L. 109–291 inserted ‘‘nation- ally recognized statistical rating organization,’’ after ‘‘registered transfer agent,’’ and inserted at end ‘‘Any report that a nationally recognized statistical rating organization is required by Commission rules under this paragraph to make and disseminate to the Com- mission shall be deemed furnished to the Commission.’’ 2004—Subsec. (f)(4)(A). Pub. L. 108–386, § 8(f)(5), struck out ‘‘and banks operating under the Code of Law for the District of Columbia’’ before semicolon. Subsec. (f)(4)(B). Pub. L. 108–386, § 8(f)(6), struck out ‘‘or a bank operating under the Code of Law for the District of Columbia’’ before semicolon. 2002—Subsecs. (e)(1)(A), (i)(3)(A)(ii). Pub. L. 107–204 substituted ‘‘a registered public accounting firm’’ for ‘‘an independent public accountant’’. 2000—Subsec. (b). Pub. L. 106–554, § 1(a)(5) [title II, § 204(5)], which directed amendment of subsec. (b) by adding at the end pars. (2) to (4)(B), was executed by making the addition after par. (1), to reflect the prob- able intent of Congress. Pub. L. 106–554, § 1(a)(5) [title II, § 204(1) to (4), (6)], in- serted subsec. heading, inserted par. (1) designation and heading before ‘‘All’’, substituted ‘‘prior to conducting any such examination of a—’’ for ‘‘prior to conducting any such examination of a’’, inserted subpar. (A) des- ignation before ‘‘registered clearing’’, added subpar. (B), designated last sentence as par. (4)(C) and sub- stituted ‘‘Nothing in the proviso in paragraph (1)’’ for ‘‘Nothing in the proviso to the preceding sentence’’. 1999—Subsecs. (i) to (k). Pub. L. 106–102 added subsecs. (i) and (j) and redesignated former subsec. (i) as (k). 1998—Subsec. (g). Pub. L. 105–353 substituted ‘‘Board of Governors of the Federal Reserve System’’ for ‘‘Fed- eral Reserve Board’’ in first sentence. 1996—Subsec. (i). Pub. L. 104–290 added subsec. (i). 1990—Subsec. (h). Pub. L. 101–432 added subsec. (h). 1987—Subsec. (c)(2). Pub. L. 100–181, § 321(1), sub- stituted new par. (2) for former par. (2) which read as follows: ‘‘The appropriate regulatory agency for a clearing agency, transfer agent, or municipal securities dealer for which the Commission is not the appropriate regulatory agency shall file with the Commission no- tice of the commencement of any proceeding and a copy of any order entered by such appropriate regu- latory agency against such clearing agency, transfer agent, or municipal securities dealer, and the Commis- sion shall file with such appropriate regulatory agency notice of the commencement of any proceeding and a copy of any order entered by the Commission against such clearing agency, transfer agent, or municipal se- curities dealer.’’ Subsec. (f)(1)(A). Pub. L. 100–181, § 801(b), substituted ‘‘securities issued pursuant to chapter 31 of title 31’’ for ‘‘government securities’’. Subsec. (f)(2). Pub. L. 100–181, § 321(2), inserted at end ‘‘Notwithstanding any other provision of law, in pro- viding identification and processing functions, the At- torney General shall provide the Commission and self- regulatory organizations designated by the Commis- sion with access to all criminal history record informa- tion.’’ Subsec. (f)(3)(A). Pub. L. 100–181, § 321(3), substituted ‘‘paragraph (1)’’ for ‘‘paragraphs (1) and (2)’’. 1986—Subsec. (c)(4). Pub. L. 99–571, § 102(h), added par. (4). Subsec. (f)(1). Pub. L. 99–571, § 102(i)(1), inserted ‘‘gov- ernment securities broker, government securities deal- er,’’ in introductory provisions and in subpar. (A). Subsec. (f)(1)(A). Pub. L. 99–571, § 102(i)(2), inserted ‘‘and, in the case of government securities, to the Sec- retary of the Treasury’’. Subsec. (f)(3). Pub. L. 99–571, § 102(i)(3), designated ex- isting provisions as subpar. (A) and added subpar. (B). 1975—Subsec. (a). Pub. L. 94–29 designated existing provisions as par. (1), expanded the coverage to require registered municipal securities dealers, the Municipal Securities Rulemaking Board, registered securities in- formation processors, and registered clearing agencies to make and keep such records, to furnish copies there- of, and to make such reports as the Commission may prescribe and clarified the Commission’s authority to require the dissemination of reports submitted pursu- ant to the rules of the Commission, and added pars. (2) and (3). Subsecs. (b) to (g). Pub. L. 94–29 added subsecs. (b) to (f) and redesignated former subsec. (b) as (g). 1938—Subsec. (a). Act June 25, 1938, inserted ‘‘every registered securities association’’. 1936—Subsec. (a). Act May 27, 1936, substituted ‘‘every broker or dealer registered pursuant to section 78o of this title’’ for ‘‘every broker or dealer making or cre- ating a market for both the purchase and sale of securi- ties through the use of the mails or of any means or in- strumentality of interstate commerce’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by sections 929D, 929S, 982(e)(2), and 985(b)(7) of 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 sec- tion 5301 of Title 12, Banks and Banking. Pub. L. 111–203, title VI, § 617(b), July 21, 2010, 124 Stat. 1616, provided that: ‘‘The amendments made by this section [amending this section] shall take effect on the transfer date.’’ [For definition of ‘‘transfer date’’ as used in section 617(b) of Pub. L. 111–203, set out above, see section 5301 of Title 12, Banks and Banking.] Amendment by section 975(h) of Pub. L. 111–203 effec- tive Oct. 1, 2010, see section 975(i) of Pub. L. 111–203, set out as a note under section 78o of this title. EFFECTIVE DATE OF 2004 AMENDMENT Amendment by Pub. L. 108–386 effective Oct. 30, 2004, and, except as otherwise provided, applicable with re- spect to fiscal year 2005 and each succeeding fiscal year, see sections 8(i) and 9 of Pub. L. 108–386, set out as notes under section 321 of Title 12, Banks and Bank- ing. EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–571 effective 270 days after Oct. 28, 1986, see section 401 of Pub. L. 99–571, set out as an Effective Date note under section 78o–5 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. § 78q–1. National system for clearance and settle- ment of securities transactions (a) Congressional findings; facilitating establish- ment of system (1) The Congress finds that— (A) The prompt and accurate clearance and settlement of securities transactions, includ-