15 U.S.C. § 78p — Directors, officers, and principal stock-

Page 389 TITLE 15—COMMERCE AND TRADE § 78p 2 See References in Text note below. eral Housing Finance Agency shall jointly define the term ‘‘qualified residential mort- gage’’ for purposes of this subsection, taking into consideration underwriting and product features that historical loan performance data indicate result in a lower risk of de- fault, such as— (i) documentation and verification of the financial resources relied upon to qualify the mortgagor; (ii) standards with respect to— (I) the residual income of the mort- gagor after all monthly obligations; (II) the ratio of the housing payments of the mortgagor to the monthly income of the mortgagor; (III) the ratio of total monthly install- ment payments of the mortgagor to the income of the mortgagor; (iii) mitigating the potential for pay- ment shock on adjustable rate mortgages through product features and underwriting standards; (iv) mortgage guarantee insurance or other types of insurance or credit enhance- ment obtained at the time of origination, to the extent such insurance or credit en- hancement reduces the risk of default; and (v) prohibiting or restricting the use of balloon payments, negative amortization, prepayment penalties, interest-only pay- ments, and other features that have been demonstrated to exhibit a higher risk of borrower default. (C) Limitation on definition The Federal banking agencies, the Com- mission, the Secretary of Housing and Urban Development, and the Director of the Fed- eral Housing Finance Agency in defining the term ‘‘qualified residential mortgage’’, as re- quired by subparagraph (B), shall define that term to be no broader than the definition ‘‘qualified mortgage’’ as the term is defined under section 129C(c)(2) of the Truth in Lending Act, as amended by the Consumer Financial Protection Act of 2010,2 and regu- lations adopted thereunder. (5) Condition for qualified residential mort- gage exemption The regulations issued under paragraph (4) shall provide that an asset-backed security that is collateralized by tranches of other asset-backed securities shall not be exempt from the risk retention requirements of this subsection. (6) Certification The Commission shall require an issuer to certify, for each issuance of an asset-backed security collateralized exclusively by qualified residential mortgages, that the issuer has evaluated the effectiveness of the internal su- pervisory controls of the issuer with respect to the process for ensuring that all assets that collateralize the asset-backed security are qualified residential mortgages. (f) Enforcement The regulations issued under this section shall be enforced by— (1) the appropriate Federal banking agency, with respect to any securitizer that is an in- sured depository institution; and (2) the Commission, with respect to any securitizer that is not an insured depository institution. (g) Authority of Commission The authority of the Commission under this section shall be in addition to the authority of the Commission to otherwise enforce the securi- ties laws. (h) Authority to coordinate on rulemaking The Chairperson of the Financial Stability Oversight Council shall coordinate all joint rule- making required under this section. (i) Effective date of regulations The regulations issued under this section shall become effective— (1) with respect to securitizers and origina- tors of asset-backed securities backed by resi- dential mortgages, 1 year after the date on which final rules under this section are pub- lished in the Federal Register; and (2) with respect to securitizers and origina- tors of all other classes of asset-backed securi- ties, 2 years after the date on which final rules under this section are published in the Federal Register. (June 6, 1934, ch. 404, title I, § 15G, as added Pub. L. 111–203, title IX, § 941(b), July 21, 2010, 124 Stat. 1891.) Editorial Notes REFERENCES IN TEXT The Securities Act of 1933, referred to in subsec. (c)(1)(G)(iii), is title I of act May 27, 1933, ch. 38, 48 Stat. 74, which is classified generally to subchapter I (§ 77a et seq.) of chapter 2A of this title. For complete classifica- tion of this Act to the Code, see section 77a of this title and Tables. Section 129C(c)(2) of the Truth in Lending Act, as amended by the Consumer Financial Protection Act of 2010, referred to in subsec. (e)(4)(C), probably means section 129C(b)(2) of Pub. L. 90–321, as amended by title X of Pub. L. 111–203, which defines ‘‘qualified mort- gage’’ and is classified to section 1639c(b)(2) of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of Title 12, Banks and Banking. § 78p. Directors, officers, and principal stock- holders (a) Disclosures required (1) Directors, officers, and principal stock- holders required to file Every person who is directly or indirectly the beneficial owner of more than 10 percent of any class of any equity security (other than an exempted security) which is registered pursu- ant to section 78l of this title, or who is a di- rector or an officer of the issuer of such secu- rity, shall file the statements required by this subsection with the Commission. Page 390 TITLE 15—COMMERCE AND TRADE § 78p (2) Time of filing The statements required by this subsection shall be filed— (A) at the time of the registration of such security on a national securities exchange or by the effective date of a registration state- ment filed pursuant to section 78l(g) of this title; (B) within 10 days after he or she becomes such beneficial owner, director, or officer, or within such shorter time as the Commission may establish by rule; (C) if there has been a change in such own- ership, or if such person shall have pur- chased or sold a security-based swap agree- ment involving such equity security, before the end of the second business day following the day on which the subject transaction has been executed, or at such other time as the Commission shall establish, by rule, in any case in which the Commission determines that such 2-day period is not feasible. (3) Contents of statements A statement filed— (A) under subparagraph (A) or (B) of para- graph (2) shall contain a statement of the amount of all equity securities of such issuer of which the filing person is the bene- ficial owner; and (B) under subparagraph (C) of such para- graph shall indicate ownership by the filing person at the date of filing, any such changes in such ownership, and such pur- chases and sales of the security-based swap agreements or security-based swaps as have occurred since the most recent such filing under such subparagraph. (4) Electronic filing and availability Beginning not later than 1 year after July 30, 2002— (A) a statement filed under subparagraph (C) of paragraph (2) shall be filed electroni- cally; (B) the Commission shall provide each such statement on a publicly accessible Internet site not later than the end of the business day following that filing; and (C) the issuer (if the issuer maintains a corporate website) shall provide that state- ment on that corporate website, not later than the end of the business day following that filing. (b) Profits from purchase and sale of security within six months For the purpose of preventing the unfair use of information which may have been obtained by such beneficial owner, director, or officer by rea- son of his relationship to the issuer, any profit realized by him from any purchase and sale, or any sale and purchase, of any equity security of such issuer (other than an exempted security) or a security-based swap agreement involving any such equity security within any period of less than six months, unless such security or secu- rity-based swap agreement was acquired in good faith in connection with a debt previously con- tracted, shall inure to and be recoverable by the issuer, irrespective of any intention on the part of such beneficial owner, director, or officer in entering into such transaction of holding the se- curity or security-based swap agreement pur- chased or of not repurchasing the security or se- curity-based swap agreement sold for a period exceeding six months. Suit to recover such prof- it may be instituted at law or in equity in any court of competent jurisdiction by the issuer, or by the owner of any security of the issuer in the name and in behalf of the issuer if the issuer shall fail or refuse to bring such suit within sixty days after request or shall fail diligently to prosecute the same thereafter; but no such suit shall be brought more than two years after the date such profit was realized. This sub- section shall not be construed to cover any transaction where such beneficial owner was not such both at the time of the purchase and sale, or the sale and purchase, of the security or secu- rity-based swap agreement or a security-based swap involved, or any transaction or trans- actions which the Commission by rules and reg- ulations may exempt as not comprehended with- in the purpose of this subsection. (c) Conditions for sale of security by beneficial owner, director, or officer It shall be unlawful for any such beneficial owner, director, or officer, directly or indirectly, to sell any equity security of such issuer (other than an exempted security), if the person selling the security or his principal (1) does not own the security sold, or (2) if owning the security, does not deliver it against such sale within twenty days thereafter, or does not within five days after such sale deposit it in the mails or other usual channels of transportation; but no person shall be deemed to have violated this subsection if he proves that notwithstanding the exercise of good faith he was unable to make such delivery or deposit within such time, or that to do so would cause undue inconvenience or expense. (d) Securities held in investment account, trans- actions in ordinary course of business, and establishment of primary or secondary mar- ket The provisions of subsection (b) of this section shall not apply to any purchase and sale, or sale and purchase, and the provisions of subsection (c) of this section shall not apply to any sale, of an equity security not then or theretofore held by him in an investment account, by a dealer in the ordinary course of his business and incident to the establishment or maintenance by him of a primary or secondary market (otherwise than on a national securities exchange or an ex- change exempted from registration under sec- tion 78e of this title) for such security. The Commission may, by such rules and regulations as it deems necessary or appropriate in the pub- lic interest, define and prescribe terms and con- ditions with respect to securities held in an in- vestment account and transactions made in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market. (e) Application of section to foreign or domestic arbitrage transactions The provisions of this section shall not apply to foreign or domestic arbitrage transactions unless made in contravention of such rules and 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