15 U.S.C. § 78cc — Validity of contracts

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 Page 454 TITLE 15—COMMERCE AND TRADE § 78dd thereunder, and every contract (including any contract for listing a security on an exchange) heretofore or hereafter made, the performance of which involves the violation of, or the con- tinuance of any relationship or practice in viola- tion of, any provision of this chapter or any rule or regulation thereunder, shall be void (1) as re- gards the rights of any person who, in violation of any such provision, rule, or regulation, shall have made or engaged in the performance of any such contract, and (2) as regards the rights of any person who, not being a party to such con- tract, shall have acquired any right thereunder with actual knowledge of the facts by reason of which the making or performance of such con- tract was in violation of any such provision, rule, or regulation: Provided, (A) That no con- tract shall be void by reason of this subsection because of any violation of any rule or regula- tion prescribed pursuant to paragraph (3) of sub- section (c) of section 78o of this title, and (B) that no contract shall be deemed to be void by reason of this subsection in any action main- tained in reliance upon this subsection, by any person to or for whom any broker or dealer sells, or from or for whom any broker or dealer pur- chases, a security in violation of any rule or reg- ulation prescribed pursuant to paragraph (1) or (2) of subsection (c) of section 78o of this title, unless such action is brought within one year after the discovery that such sale or purchase involves such violation and within three years after such violation. The Commission may, in a rule or regulation prescribed pursuant to such paragraph (2) of such section 78o(c) of this title, designate such rule or regulation, or portion thereof, as a rule or regulation, or portion there- of, a contract in violation of which shall not be void by reason of this subsection. (c) Validity of loans, extensions of credit, and creation of liens; actual knowledge of viola- tion Nothing in this chapter shall be construed (1) to affect the validity of any loan or extension of credit (or any extension or renewal thereof) made or of any lien created prior or subsequent to the enactment of this chapter, unless at the time of the making of such loan or extension of credit (or extension or renewal thereof) or the creating of such lien, the person making such loan or extension of credit (or extension or re- newal thereof) or acquiring such lien shall have actual knowledge of facts by reason of which the making of such loan or extension of credit (or extension or renewal thereof) or the acquisition of such lien is a violation of the provisions of this chapter or any rule or regulation there- under, or (2) to afford a defense to the collection of any debt or obligation or the enforcement of any lien by any person who shall have acquired such debt, obligation, or lien in good faith for value and without actual knowledge of the vio- lation of any provision of this chapter or any rule or regulation thereunder affecting the le- gality of such debt, obligation, or lien. (June 6, 1934, ch. 404, title I, § 29, 48 Stat. 903; June 25, 1938, ch. 677, § 3, 52 Stat. 1076; Pub. L. 101–429, title V, § 507, Oct. 15, 1990, 104 Stat. 956; Pub. L. 111–203, title IX, §§ 927, 929T, July 21, 2010, 124 Stat. 1852, 1867.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this title’’. See References in Text note set out under section 78a of this title. AMENDMENTS 2010—Subsec. (a). Pub. L. 111–203, §§ 927, 929T, amended subsec. (a) identically, substituting ‘‘a self-regulatory organization,’’ for ‘‘an exchange required thereby’’. 1990—Subsec. (b). Pub. L. 101–429 substituted in cl. (A) ‘‘paragraph (3)’’ for ‘‘paragraph (2) or (3)’’ and in cl. (B) ‘‘paragraph (1) or (2)’’ for ‘‘paragraph (1)’’, and inserted at end ‘‘The Commission may, in a rule or regulation prescribed pursuant to such paragraph (2) of such sec- tion 78o(c) of this title, designate such rule or regula- tion, or portion thereof, as a rule or regulation, or por- tion thereof, a contract in violation of which shall not be void by reason of this subsection.’’ 1938—Subsec. (b). Act June 25, 1938, inserted proviso. 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. EFFECTIVE DATE OF 1990 AMENDMENT Amendment by Pub. L. 101–429 effective Oct. 15, 1990, with provisions relating to civil penalties and account- ing and disgorgement, see section 1(c)(1), (2) of Pub. L. 101–429, set out in a note under section 77g of this title. § 78dd. Foreign securities exchanges (a) Unlawful transactions on foreign securities exchanges It shall be unlawful for any broker or dealer, directly or indirectly, to make use of the mails or of any means or instrumentality of interstate commerce for the purpose of effecting on an ex- change not within or subject to the jurisdiction of the United States, any transaction in any se- curity the issuer of which is a resident of, or is organized under the laws of, or has its principal place of business in, a place within or subject to the jurisdiction of the United States, in con- travention of such rules and regulations as the Commission may prescribe as necessary or ap- propriate in the public interest or for the pro- tection of investors or to prevent the evasion of this chapter. (b) Business without the jurisdiction of the United States The provisions of this chapter or of any rule or regulation thereunder shall not apply to any person insofar as he transacts a business in secu- rities without the jurisdiction of the United States, unless he transacts such business in con- travention of such rules and regulations as the Commission may prescribe as necessary or ap- propriate to prevent the evasion of this chapter. (c) Rule of construction No provision of this chapter that was added by the Wall Street Transparency and Account- ability Act of 2010, or any rule or regulation thereunder, shall apply to any person insofar as such person transacts a business in security- based swaps without the jurisdiction of the United States, unless such person transacts such