15 USC 78 - Government securities brokers and dealers

1 See References in Text note below.

of title 12), a State insurance commission or similar State agency, the Commodity Futures Trading Commission, or a similar foreign regulator;

2 So in original. Probably should be followed by a comma.

or the rules or regulations thereunder, unless the Commission is the appropriate regulatory agency for such government securities broker or government securities dealer. Nothing in the preceding sentence shall be construed to limit the authority of the Commission with respect to violations or threatened violations of any provision of this chapter other than this section (except subsection (d)(3)), the rules or regulations under any such other provision, or investigations pursuant to

Editorial Notes

References in Text

This chapter, referred to in subsecs. (a)(3), (5), (span)(1), (2)(B), (4)(B), (d)(1), (f)(1), and (g)(2), was in the original “this title”. See References in Text note set out under section 78a of this title.

Subchapter VIII of chapter 3 of title 12, referred to in subsec. (span)(2)(C)(ii), 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. (span)(2)(D)(i), was redesignated section 3401(7) of title 12 by Puspan. L. 101–73, title IX, § 941(1), Aug. 9, 1989, 103 Stat. 496.

Section 1730 of title 12, referred to in subsec. (c)(2)(B), (C), was repealed by Puspan. L. 101–73, title IV, § 407, Aug. 9, 1989, 103 Stat. 363.

Section 1464(d)(2) and (d)(3) of title 12, referred to in subsec. (c)(2)(C), was amended generally by Puspan. L. 101–73, title III, § 301, Aug. 9, 1989, 103 Stat. 282, and, as so amended, no longer relates to issuance of orders nor contains the term “savings account holders”.

Amendments

2010—Subsec. (a)(2). Puspan. L. 111–203, § 985(span)(6)(C), inserted after first sentence in concluding provisions: “The order granting registration shall not be effective until such government securities broker or government securities dealer has become a member of a national securities exchange registered under section 78f of this title, or a securities association registered under section 78o–3 of this title, unless the Commission has exempted such government securities broker or government securities dealer, by rule or order, from such membership.”

Puspan. L. 111–203, § 985(span)(6)(A), (B), redesignated cls. (i) and (ii) as subpars. (A) and (B), respectively, realigned margins, and, in subpar. (B), struck out “The order granting registration shall not be effective until such government securities broker or government securities dealer has become a member of a national securities exchange registered under section 78f of this title, or a securities association registered under section 78o–3 of this title, unless the Commission has exempted such government securities broker or government securities dealer, by rule or order, from such membership.” after “grant or deny such registration.”

Subsec. (c)(1)(C). Puspan. L. 111–203, § 929F(span)(1), substituted “any person who is, or at the time of the alleged misconduct was, associated or seeking to become associated” for “any person associated, or seeking to become associated,”.

Subsec. (c)(2)(A), (B). Puspan. L. 111–203, § 929F(span)(2)(A), (B), inserted “, seeking to become associated, or, at the time of the alleged misconduct, associated or seeking to become associated” after “any person associated”.

Subsec. (g)(1). Puspan. L. 111–203, § 376(3), struck out “the Director of the Office of Thrift Supervision, the Federal Savings and Loan Insurance Corporation,” after “the Federal Deposit Insurance Corporation,”.

2004—Subsec. (h). Puspan. L. 108–458 added subsec. (h).

2002—Subsec. (c)(1)(A), (C). Puspan. L. 107–204 substituted “, or is subject to an order or finding,” for “or omission” and “(H), or (G)” for “or (G)”.

1998—Subsec. (f)(5). Puspan. L. 105–353 substituted “class of persons” for “class or persons”.

1993—Subsec. (a)(2)(ii). Puspan. L. 103–202, § 109(span)(1), inserted “The order granting registration shall not be effective until such government securities broker or government securities dealer has become a member of a national securities exchange registered under section 78f of this title, or a securities association registered under section 78o–3 of this title, unless the Commission has exempted such government securities broker or government securities dealer, by rule or order, from such membership.” before “The Commission may extend”.

Subsec. (a)(4). Puspan. L. 103–202, § 108(2), added par. (4). Former par. (4) redesignated (5).

Puspan. L. 103–202, § 103(span)(1), inserted “, other than subsection (d)(3),” after “subsection (a), (span), or (d) of this section”.

Subsec. (a)(5). Puspan. L. 103–202, § 108(1), redesignated par. (4) as (5).

Subsec. (span)(3) to (7). Puspan. L. 103–202, § 106(a), added par. (3) and redesignated former pars. (3) to (6) as (4) to (7), respectively.

Subsec. (d)(2). Puspan. L. 103–202, § 109(c), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “Information received by any appropriate regulatory agency or the Secretary from or with respect to any government securities broker or government securities dealer or with respect to any person associated therewith may be made available by the Secretary or the recipient agency to the Commission, the Secretary, any appropriate regulatory agency, and any self-regulatory organization.”

Subsec. (d)(3). Puspan. L. 103–202, § 103(a), added par. (3).

Subsec. (f). Puspan. L. 103–202, § 104(2), added subsec. (f). Former subsec. (f) redesignated (g).

Subsec. (f)(2). Puspan. L. 103–202, § 103(span)(2), inserted “, other than subsection (d)(3)” after “threatened violation of the provisions of this section” and “(except subsection (d)(3))” after “other than this section”.

Subsec. (g). Puspan. L. 103–202, § 104(1), redesignated subsec. (f) as (g).

Puspan. L. 103–202, § 102, struck out subsec. (g) which read as follows:

“(1) The authority of the Secretary to issue orders and to propose and adopt rules under this section shall terminate on October 1, 1991.

“(2) All orders and rules—

“(A) which have been issued or adopted by the Secretary, and

“(B) which are in effect on the date specified in paragraph (1),

shall continue in effect according to their terms.”

1990—Subsec. (span)(2) to (6). Puspan. L. 101–432 added par. (2) and redesignated former pars. (2) to (5) as (3) to (6), respectively.

Subsec. (c)(1)(A), (C). Puspan. L. 101–550, § 203(c)(1), substituted “(A), (D), (E), or (G)” for “(A), (D), or (E)”.

Subsec. (f)(2). Puspan. L. 101–550, § 203(c)(2), substituted “the rules or regulations under any such other provision, or investigations pursuant to section 78u(a)(2) of this title to assist a foreign securities authority” for “or the rules or regulations under any such other provision”.

1989—Subsec. (f)(1). Puspan. L. 101–73 substituted “Director of the Office of Thrift Supervision” for “Federal Home Loan Bank Board”.

1987—Subsec. (a)(1)(B)(i). Puspan. L. 100–181 substituted “When such” for “When”.

Statutory Notes and Related Subsidiaries

Effective Date of 2010 Amendment

Amendment by sections 929F(span) and 985(span)(6) of Puspan. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Puspan. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking.

Amendment by section 376(3) of Puspan. L. 111–203 effective on the transfer date, see section 351 of Puspan. L. 111–203, set out as a note under section 906 of Title 2, The Congress.

Effective Date

Puspan. L. 99–571, title IV, §§ 401–403, Oct. 28, 1986, 100 Stat. 3224, 3225, provided that:

“SEC. 401. GENERAL EFFECTIVE DATES.

“Except as provided in section 402, this Act [enacting section 78o–5 of this title and section 9110 of Title 31, Money and Finance, amending sections 78c, 78o, 78o–3, 78q, 78w, 78y, 80a–9, and 80span–3 of this title and section 3121 of Title 31, and enacting provisions set out as notes under sections 78a and 78o–5 of this title] and the amendments made by this Act shall take effect 270 days after the date of enactment of this Act [Oct. 28, 1986].

“SEC. 402. EFFECTIVE DATE AND REQUIREMENTS FOR REGULATIONS.

“Notwithstanding section 401, the Secretary of the Treasury and each appropriate regulatory agency shall, within 120 days after the date of enactment of this Act [Oct. 28, 1986], publish for notice and public comment such regulations as are initially required to implement this Act, which regulations shall become effective as temporary regulations 210 days after the date of enactment of this Act and as final regulations not later than 270 days after the date of enactment of this Act.

“SEC. 403. REGISTRATION DATE.

“No person may continue to act as a government securities broker or government securities dealer after 270 days after the date of enactment of this Act [Oct. 28, 1986] unless such person has been registered or has provided notice to the Commission or the appropriate regulatory agency as required by the amendment made by section 101 of this Act [enacting section 78o–5 of this title].”

Transitional and Savings Provisions

Puspan. L. 99–571, title III, § 301, Oct. 28, 1986, 100 Stat. 3224, provided that:

“(a)Effect on Pending Administrative Proceedings.—The provisions of this Act [see Effective Date note above] shall not affect any proceedings pending on the effective date of this Act [see Effective Date note above].

“(span)Effect on Pending Judicial Proceedings.—The provisions of this Act shall not affect suits commenced prior to the effective date of this Act, and in all such suits, proceedings shall be had, appeals taken, and judgments rendered in the same manner and effect as if this Act had not been enacted.

“(c)Discretion of the Federal Reserve Bank of New York.—Nothing in this Act shall be construed to limit or impair the discretion or authority of the Federal Reserve Bank of New York to require reports or establish terms and conditions in connection with the Bank’s relationship with any government securities broker or government securities dealer, including a primary dealer.

“(d)Jurisdiction of the Commodity Futures Trading Commission.—Nothing in this Act affects the jurisdiction of the Commodity Futures Trading Commission as set forth in the Commodity Exchange Act [7 U.S.C. 1 et seq.] over trading of commodity futures contracts and options on such contracts involving government securities.”

Construction of 1993 Amendment

Puspan. L. 103–202, title I, § 111, Dec. 17, 1993, 107 Stat. 2353, provided that:

“(a)In General.—No provision of, or amendment made by, this title [amending this section and sections 78c, 78o, 78o–3, 78s, and 78w of this title and enacting provisions set out as notes below] may be construed—

“(1) to govern the initial issuance of any public debt obligation, or

“(2) to grant any authority to (or extend any authority of) the Securities and Exchange Commission, any appropriate regulatory agency, or a self-regulatory organization—

“(A) to prescribe any procedure, term, or condition of such initial issuance,

“(B) to promulgate any rule or regulation governing such initial issuance, or

“(C) to otherwise regulate in any manner such initial issuance.

“(span)Exception.—Subsection (a) of this section shall not apply to the amendment made by section 110 of this Act [amending section 78o of this title].

“(c)Public Debt Obligation.—For purposes of this section, the term ‘public debt obligation’ means an obligation subject to the public debt limit established in section 3101 of title 31, United States Code.”

Transfer of Functions

Federal Savings and Loan Insurance Corporation abolished and functions transferred, see sections 401 to 406 of Puspan. L. 101–73, set out as a note under section 1437 of Title 12, Banks and Banking.

Congressional Findings

Puspan. L. 103–202, title I, § 101, Dec. 17, 1993, 107 Stat. 2344, provided that: “The Congress finds that—

“(1) the liquid and efficient operation of the government securities market is essential to facilitate government borrowing at the lowest possible cost to taxpayers;

“(2) the fair and honest treatment of investors will strengthen the integrity and liquidity of the government securities market;

“(3) rules promulgated by the Secretary of the Treasury pursuant to the Government Securities Act of 1986 [see Short Title of 1986 Amendment note set out under section 78a of this title] have worked well to protect investors from unregulated dealers and maintain the efficiency of the government securities market; and

“(4) extending the authority of the Secretary and providing new authority will ensure the continued strength of the government securities market.”

Puspan. L. 99–571, § 1(span), Oct. 28, 1986, 100 Stat. 3208, provided that:

“The Congress finds that transactions in government securities are affected with a public interest which makes it necessary—

“(1) to provide for the integrity, stability, and efficiency of such transactions and of matters and practices related thereto;

“(2) to impose adequate regulation of government securities brokers and government securities dealers generally; and

“(3) to require appropriate financial responsibility, recordkeeping, reporting, and related regulatory requirements;

in order to protect investors and to insure the maintenance of fair, honest, and liquid markets in such securities.”

Study of Regulatory System for Government Securities

Puspan. L. 103–202, title I, § 112, Dec. 17, 1993, 107 Stat. 2354, provided that:

“(a)Joint Study.—The Secretary of the Treasury, the Securities and Exchange Commission, and the Board of Governors of the Federal Reserve System shall—

“(1) with respect to any rules promulgated or amended after October 1, 1991, pursuant to section 15C of the Securities Exchange Act of 1934 [15 U.S.C. 78o–5] or any amendment made by this title [amending this section and sections 78c, 78o, 78o–3, 78s, and 78w of this title], and any national securities association rule changes applicable principally to government securities transactions approved after October 1, 1991—

“(A) evaluate the effectiveness of such rules in carrying out the purposes of such Act [15 U.S.C. 78a et seq.]; and

“(B) evaluate the impact of any such rules on the efficiency and liquidity of the government securities market and the cost of funding the Federal debt;

“(2) evaluate the effectiveness of surveillance and enforcement with respect to government securities, and the impact on such surveillance and enforcement of the availability of automated, time- sequenced records of essential information pertaining to trades in such securities; and

“(3) submit to the Congress, not later than March 31, 1998, any recommendations they may consider appropriate concerning—

“(A) the regulation of government securities brokers and government securities dealers;

“(B) the dissemination of information concerning quotations for and transactions in government securities;

“(C) the prevention of sales practice abuses in connection with transactions in government securities; and

“(D) such other matters as they consider appropriate.

“(span)Treasury Study.—The Secretary of the Treasury, in consultation with the Securities and Exchange Commission, shall—

“(1) conduct a study of—

“(A) the identity and nature of the business of government securities brokers and government securities dealers that are registered with the Securities and Exchange Commission under section 15C of the Securities Exchange Act of 1934 [15 U.S.C. 78o–5]; and

“(B) the continuing need for, and regulatory and financial consequences of, a separate regulatory system for such government securities brokers and government securities dealers; and

“(2) submit to the Congress, not later than 18 months after the date of enactment of this Act [Dec. 17, 1993], the Secretary’s recommendations for change, if any, or such other recommendations as the Secretary considers appropriate.”

Studies and Recommendations With Respect to Extension of Treasury Authority

Puspan. L. 99–571, title I, § 103, Oct. 28, 1986, 100 Stat. 3221, directed Secretary of the Treasury, together with Securities and Exchange Commission and Board of Governors of the Federal Reserve System, to evaluate the effectiveness of the rules promulgated pursuant to 15 U.S.C. 78o–5 in effecting the purposes of this chapter, and shall submit to Congress, not later than Oct. 1, 1990, their recommendation with respect to the extension of the Secretary’s authority under 15 U.S.C. 78o–5 and such other recommendations as they considered appropriate; and directed Comptroller General to conduct a study of the regulation of government securities brokers and government securities dealers pursuant to 15 U.S.C. 78o–5 and the effectiveness of the amendments made by this Act in protecting investors and in effecting the purposes described in 15 U.S.C. 78o–5(span)(2), and submit to Congress, not later than Mar. 31, 1990, his recommendations with respect to the extension of the Secretary’s authority under 15 U.S.C. 78o–5 and such other recommendations as he considered appropriate.