Welcome to the November 2009 edition of the Sarbanes
Oxley Compliance Professionals Association (SOXCPA)
newsletter
The
Garrett-Adler amendment to the Sarbanes Oxley Act
Dear
Members,
Prepare
for the Garrett-Adler amendment to the Sarbanes Oxley Act.
The House Financial Services (HFS) Committee has voted to amend
the Sarbanes-Oxley Act to
permanently
exempt small public companies
(companies valued at less than $75 million) from the provisions of
Sarbanes-Oxley
Section 404b.
The Garrett-Adler amendment,
offered by Rep. Scott Garrett (R-NJ) and Rep. John Adler (D-NJ),
was approved in the HFS Committee as part of
the Investor Protection Act (IPA).
The Garrett-Adler amendment (that is incorporated in the Investor
Protection Act of 2009) exempts all small
issuers from 404(b) and requires the SEC to study how the
cost-of-compliance burden for companies with market caps between
$75 million and $250 million can be reduced.
More than 50%
of all publicly traded companies have market capitalizations below
$75 million.
Let's remember Section 404b of the Sarbanes Oxley Act
SEC. 404. MANAGEMENT ASSESSMENT OF INTERNAL
CONTROLS.
(a) RULES REQUIRED.—
The Commission shall prescribe
rules requiring each annual report required by section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)) to contain an internal control report, which shall—
(1) state the responsibility of management for establishing and
maintaining an adequate internal control structure and procedures
for financial reporting; and
(2) contain an assessment, as of the end of the most recent fiscal
year of the issuer, of the effectiveness of the internal control
structure and procedures of the issuer for financial
reporting.
404(b)
INTERNAL CONTROL EVALUATION AND REPORTING.—
With respect to the internal control
assessment required by subsection (a), each registered public
accounting firm that prepares or issues the audit report for the
issuer shall attest to, and report on, the assessment made by the
management of the issuer.
An attestation
made under this subsection shall be made in accordance with
standards for attestation engagements issued or adopted by the
Board. Any such attestation shall not be the subject of a separate
engagement.
Is it a good
decision?
I do not think so. It is a fact that smaller
public companies have less controls in place and face more risks,
as there are as many people in the smaller companies committing
fraud as those in major organizations.
I am
also surprised with the humor or the ignorance - they do not
protect investors of small public companies any more, with an
amendment incorporated in the "Investor Protection Act"!!!
I have made a decision: I will never invest in smaller public
companies again, as there is no independent reasonable assurance
that their financial statements are reflecting the financial
conditions of these companies.
Audiatur et
altera pars (hear the other side)
Garrett
Statement on Committee Passage of Sarbanes Oxley Amendment
Rep. Scott Garrett’s (R-NJ) Sarbanes-Oxley amendment to the
Investor Protection Act of 2009, cosponsored by Rep. John Adler
(D-NJ), was approved by the Financial Services Committee today by
a roll call vote of 37-32.
This amendment would exempt small businesses from the burdensome
reporting requirements contained within Section 404(b) of the
Sarbanes-Oxley (SOX) Act of 2002 .
The amendment language mirrors legislation
Garrett introduced earlier this year, the “Small Business SOX
Compliance Relief Act.”
“Although the stated intent of
Sarbanes-Oxley was to provide investor confidence in our markets
through greater accountability and disclosure, the Act has had the
unintended effect of creating undue—and often unbearable—burdens
on small businesses,” Garrett said.
“There is a place for Federal oversight, but the weighty cost of
compliance under Section 404 is slowly strangling small
businesses. It is diverting valuable resources away from other
legitimate business needs; creating massive and tedious
documentation requirements; and discouraging the public listing of
both international and domestic companies on U.S. markets.
Honest
companies are being punished and the U.S. economy will suffer as a
result. Especially now, as our country struggles to emerge
from a recession, the last thing American small businesses need is
another barrier to economic stabilization.
I would like to thank my
colleague from New Jersey for working with me on this bipartisan
amendment that will free small businesses from onerous regulations
and allow them to return their focus and their resources to
creating jobs for unemployed Americans and innovating for our
economy.”
The Securities and Exchange Commission (SEC) has
repeatedly extended the deadline for
non-accelerated filers to begin providing audited
assessments of their internal controls over financial reporting,
an acknowledgement of continued concern about compliance costs.
Although reforms were made in 2007 to relax the guidelines for
smaller companies, businesses of all sizes still report excessive
compliance costs, as noted in an SEC report from September 2009 .
In
summarizing survey responses from businesses regarding the
benefits of Section 404 compliance, the SEC wrote, “[A] majority
felt that the costs of compliance outweighed the benefits. This
was especially true among smaller companies.”
The extra requirements of Section 404 increase costs to small
companies significantly.
Section 404 adds external
consulting costs, including legal fees, and substantially
increases the audit and attestation fees for these companies.
Research by NASDAQ shows that the burden of compliance, on a
percentage of revenue basis, is 11 times greater for small
companies . This creates an unfair
competitive advantage for larger companies.
The Investor
Protection Act of 2009
TITLE IX—ADDITIONAL IMPROVEMENTS TO
FINANCIAL MARKETS REGULATION
SEC. 901. SHORT TITLE.
This title may be cited as the “Investor Protection Act of 2009.”
Subtitle
A—Disclosure
SEC. 911. INVESTOR ADVISORY COMMITTEE
ESTABLISHED.
The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by adding at the end the
following new section:
“SEC. 38. INVESTOR ADVISORY COMMITTEE.
“(a) ESTABLISHMENT AND PURPOSE.—
There is established an
Investor Advisory Committee to advise
and consult with the Commission on—
“(1) regulatory priorities and issues regarding new products,
trading strategies, fee structures and the effectiveness of
disclosures;
“(2) initiatives to protect investor interest; and
“(3) initiatives to promote investor confidence in the integrity
of the market place.
“(b) MEMBERSHIP.—
“(1) APPOINTMENT.—
The Chairman of the Commission
shall appoint the members of the Investor Advisory Committee,
which members shall—
“(A) represent the interests of individual investors;
“(B) represent the interests of institutional investors; and
“(C) use a wide range of investment and approaches.
“(2) MEMBERS NOT COMMISSION EMPLOYEES.—
Members shall not be deemed
employees or agents of the Commission solely because of membership
on the Investor Advisory Commission.
“(c) MEETINGS.—The Investor Advisory Committee
shall meet from time to time at the call of
the Commission, but, at a minimum, shall meet at least twice in
each year.
“(d) COMPENSATION AND TRAVEL EXPENSES.—
Members of the Investor
Advisory Committee who are not full-time employees of the United
States shall—
“(1) be entitled to receive compensation at a rate fixed by the
Commission while attending meetings of the Investor Advisory
Committee, including travel time; and
“(2) be allowed travel expenses, including transportation and
subsistence, while away from their homes or regular places of
business.
“(e) COMMITTEE FINDINGS.—
Nothing
in this section requires the Commission to accept, agree, or act
upon the findings or recommendations of the Investor Advisory
Committee.
“(f) AUTHORIZATION OF APPROPRIATIONS.—
There is authorized to be
appropriated to the Commission such sums as are necessary to cover
the costs of the Investor Advisory Committee.”.
SEC. 912. CLARIFICATION OF THE COMMISSION’S
AUTHORITY TO ENGAGE IN CONSUMER TESTING.
(a) AMENDMENT TO SECURITIES ACT OF 1933.—
Section 19 of the Securities
Act of 1933 (15 U.S.C. 77s) is amended by adding at the end the
following new subsection:
“(e) For the purposes of evaluating its rules and programs and for
considering, proposing, adopting, or engaging in rules or
programs, the Commission is authorized to gather information,
communicate with investors or other members of the public, and
engage in such temporary or experimental programs as it in its
discretion determines is in the public interest or for the
protection of investors. The Commission may delegate to its staff
some or all of the authority conferred by this subsection.”.
(b) AMENDMENT TO SECURITIES EXCHANGE ACT OF
1934.—
Section 23 of the Securities
Exchange Act of 1934 (15 U.S.C. 78w) is amended by adding the
following new subsection (b) after subsection (a) and
redesignating subsections (b), (c), and (d) as subsections (c),
(d), and (e):
“(c) GATHERING INFORMATION.—
For the purposes of evaluating
its rules and programs and for considering proposing, adopting, or
engaging in rules or programs, the
Commission is authorized to gather information, communicate with
investors or other members of the public, and engage in such
temporary or experimental programs as it in its discretion
determines is in the public interest or for the protection of
investors. The Commission may delegate to its staff some or
all of the authority conferred by this subsection.”.
(d) AMENDMENT TO INVESTMENT COMPANY ACT OF
1940.—
Section 38 of the Investment
Company Act of 1940 (15 U.S.C. 80a-38) is amended by adding at the
end the following new subsection:
“(e) GATHERING INFORMATION.—
For the purposes of evaluating
its rules and programs and for considering proposing, adopting, or
engaging in rules or programs, the
Commission is authorized to gather information, communicate with
investors or other members of the public, and engage in such
temporary or experimental programs as it in its discretion
determines is in the public interest or for the protection of
investors. The Commission may delegate to its staff some or
all of the authority conferred by this subsection.”.
(f) AMENDMENT TO THE INVESTMENT ADVISERS ACT
OF 1940.—
Section 211 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-11) is amended by adding at
the end the following new subsection:
“(g) For the purposes of evaluating its rules and programs and for
considering proposing, adopting, or engaging in rules or programs,
the Commission is authorized to gather information, communicate
with investors or other members of the public, and engage in such
temporary or experimental programs as it in its discretion
determines is in the public interest or for the protection of
investors. The Commission may delegate to its staff some or all of
the authority conferred by this subsection.”.
SEC. 913. ESTABLISHMENT OF A FIDUCIARY DUTY
FOR BROKERS, DEALERS, AND INVESTMENT ADVISERS, AND HARMONIZATION
OF THE REGULATION OF BROKERS, DEALERS, AND INVESTMENT ADVISERS.
(a) AMENDMENT TO SECURITIES EXCHANGE ACT OF
1934.—
Section 15 of the Securities
Exchange Act of 1934 (15 U.S.C. 78o) is amended by adding at the
end the following new subsections:
“(k) STANDARDS OF CONDUCT.—
Notwithstanding any other
provision of this Act or the Investment Advisers Act of 1940, the
Commission may promulgate rules to provide, in substance, that the
standards of conduct for all brokers, dealers, and investment
advisers, in providing investment advice about securities to
retail customers or clients (and such other customers or clients
as the Commission may by rule provide), shall be to act solely in
the interest of the customer or client without regard to the
financial or other interest of the broker, dealer or investment
adviser providing the advice.
“(l) OTHER MATTERS.—
The Commission shall—
“(1) take steps to facilitate the provision
of simple and clear disclosures to investors regarding the terms
of their relationships with investment professionals; and
“(2) examine and, where appropriate, promulgate rules prohibiting
sales practices, conflicts of interest, and compensation schemes
for financial intermediaries (including brokers, dealers, and
investment advisers) that it deems contrary to the public interest
and the interests of investors.”.
(b) AMENDMENT TO INVESTMENT ADVISERS ACT OF
1940.—
Section 211 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-11) is amended by adding at
the end the following new subsections:
“(f) STANDARDS OF CONDUCT.—
Notwithstanding any other
provision of this Act or the Securities Exchange Act of 1934, the
Securities and Exchange Commission may promulgate rules to
provide, in substance, that the standards of conduct for all
brokers, dealers, and investment advisers, in providing investment
advice about securities to retail customers or clients (and such
other customers or clients as the Commission may by rule provide),
shall be to act solely in the interest of the customer or client
without regard to the financial or other interest of the broker,
dealer, or investment adviser providing the advice.
“(g) OTHER MATTERS.—
The Commission shall—
“(1) take steps to facilitate the provision of simple and clear
disclosures to investors regarding the terms of their
relationships with investment professionals, including
consultation with other financial regulators on best practices for
consumer disclosures, as appropriate; and
“(2) examine and, where appropriate, promulgate rules prohibiting
sales practices, conflicts of interest, and compensation schemes
for financial intermediaries (including brokers, dealers, and
investment advisers) that it deems contrary to the public interest
and the interests of investors.”.
SEC. 914. CLARIFICATION OF COMMISSION
AUTHORITY TO REQUIRE INVESTOR DISCLOSURES BEFORE PURCHASE OF
INVESTMENT COMPANY SHARES.
Section 24 of the Investment Company Act of 1940 (15 U.S.C.
80a-24) is amended by adding at the end the following new
subsection:
“(h) TIMING OF DISCLOSURE.—
Notwithstanding any other provision of this Act or the Securities
Act of 1933, the Commission is authorized to promulgate rules
designating documents or information that must precede a sale to a
purchaser of securities issued by a registered investment
company.”.
Subtitle B—Enforcement and Remedies
SEC. 921. AUTHORITY TO RESTRICT MANDATORY
PRE-DISPUTE ARBITRATION.
(a) AMENDMENT TO SECURITIES EXCHANGE ACT OF 1934.—
Section 15 of the Securities
Exchange Act of 1934 (15 U.S.C. 78o) is amended by adding at the
end the following new subsection:
“(m) AUTHORITY TO RESTRICT MANDATORY
PRE-DISPUTE ARBITRATION.—
The Commission, by rule, may
prohibit, or impose conditions or limitations on the use of,
agreements that require customers or clients of any broker,
dealer, or municipal securities dealer to arbitrate any future
dispute between them arising under the federal securities laws or
the rules of a self-regulatory organization if it finds that such
prohibition, imposition of conditions, or limitations are in the
public interest and for the protection of investors.”.
(b) AMENDMENT TO INVESTMENT ADVISERS ACT OF
1940.—
Section 205 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-5) is amended by adding at the
end the following new subsection:
“(f) AUTHORITY TO RESTRICT MANDATORY
PRE-DISPUTE ARBITRATION.—
The Commission, by rule, may
prohibit, or impose conditions or limitations on the use of,
agreements that require customers or clients of any investment
adviser to arbitrate any future dispute between them arising under
the federal securities laws or the rules of a self-regulatory
organization if it finds that such prohibition, imposition of
conditions, or limitations are in the public interest and for the
protection of investors.”.
SEC. 922 WHISTLEBLOWER PROTECTION.
The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by adding after section 21E the
following new section:
“SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND PROTECTION.
“(a) IN GENERAL.—
In any judicial or
administrative action brought by the Commission under the
securities laws that results in monetary sanctions exceeding
$1,000,000, the Commission, under regulations prescribed by the
Commission and subject to subsection (b), may pay an award or
awards not exceeding an amount equal to 30 percent, in total, of
the monetary sanctions imposed in the action or related actions to
one or more whistleblowers who voluntarily provided original
information to the Commission that led to the successful
enforcement of the action. Any amount payable under the preceding
sentence shall be paid from the fund described in subsection (f).
“(b) DETERMINATION OF AMOUNT OF AWARD;
DENIAL OF AWARD.—
“(1) DETERMINATION OF AMOUNT OF AWARD.—
The determination of the
amount of an award, within the limit specified in subsection (a),
shall be in the sole discretion of the Commission. The Commission
may take into account the significance of the whistleblower’s
information to the success of the judicial or administrative
action described in subsection (a), the degree of assistance
provided by the whistleblower and any legal representative of the
whistleblower in such action, the Commission’s programmatic
interest in deterring violations of the securities laws by making
awards to whistleblowers who provide information that leads to the
successful enforcement of such laws, and such additional factors
as the Commission may establish by rules or regulations.
“(2) DENIAL OF AWARD.—No award under
subsection (a) shall be made—
“(A) to any individual who is, or was at the time he or she
acquired the original information submitted to the Commission, a
member, officer, or employee of any appropriate regulatory agency,
the Department of Justice, or a self-regulatory organization;
“(B) to any individual who is convicted of a criminal violation
related to the judicial or administrative action for which the
individual otherwise could receive an award under this section; or
“(C) to any individual who fails to submit information to the
Commission in such form as the Commission may, by rule, require.
“(c) REPRESENTATION.—
“(1) PERMITTED REPRESENTATION.—
Any whistleblower who makes a
claim for an award under subsection (a) may be represented by
counsel.
“(2) REQUIRED REPRESENTATION.—
Any whistleblower who makes a
claim for an award under subsection (a) must be represented by
counsel if the whistleblower submits the information upon which
the claim is based anonymously. Prior to the payment of an award,
a whistleblower must disclose his or her identity and provide such
other information as the Commission may require.
“(d) NO CONTRACT NECESSARY.—
No contract with the
Commission is necessary for any whistleblower to receive an award
under subsection (a), unless the Commission, by rule or
regulation, so requires.
“(e) APPEALS.—
Any determinations under this
section, including whether, to whom, or in what amounts to make
awards, shall be in the sole discretion of the Commission, and any
such determinations shall be final and not subject to judicial
review.
“(f) INVESTOR PROTECTION FUND.—
“(1) FUND ESTABLISHED.—
There is established in the
Treasury of the United States a fund to be known as the
“Securities and Exchange Commission Investor Protection Fund”
(referred to in this section as the “Fund”).
“(2) USE OF FUND.—
The Fund shall be available to
the Commission, without further appropriation or fiscal year
limitation, for the following purposes:
“(A) paying awards to whistleblowers as provided in subsection
(a); and.
“(B) funding investor education initiatives designed to help
investors protect themselves against securities fraud or other
violations of the securities laws, or the rules and regulations
thereunder.
“(2) DEPOSITS AND CREDITS.—
There shall be deposited into
or credited to the Fund—
“(A) any monetary sanction collected by the Commission in any
judicial or administrative action brought by the Commission under
the securities laws that is not added to a disgorgement fund
pursuant to Section 308 of the Sarbanes-Oxley Act of 2002 or other
fund or otherwise distributed to victims of a violation of the
securities laws, or the rules and regulations thereunder,
underlying such action, unless the balance of the Fund at the time
the monetary sanction is collected exceeds $100,000,000;
“(B) any monetary sanction added to a disgorgement fund pursuant
to Section 308 of the Sarbanes-Oxley Act of 2002 or other fund
that is not distributed to the victims for whom the disgorgement
fund was established, unless the balance of the Fund at the time
the determination is made not to distribute the monetary sanction
to such victims exceeds $100,000,000; and
“(C) all income from investments made under paragraph (3).
“(3)INVESTMENTS.—
“(A) AMOUNTS IN FUND MAY BE INVESTED.—
The Commission may request the
Secretary of the Treasury to invest the portion of the Fund that
is not, in the Commission’s judgment, required to meet the current
needs of the Fund.
“(B) ELIGIBLE INVESTMENTS.—
Investments shall be made by
the Secretary of the Treasury in obligations of the United States
or obligations that are guaranteed as to principal and interest by
the United States, with maturities suitable to the needs of the
Fund as determined by the Commission.
“(C) INTEREST AND PROCEEDS CREDITED.—
The interest on, and the
proceeds from the sale or redemption of, any obligations held in
the Fund shall be credited to, and form a part of, the Fund.
“(4) REPORTS TO CONGRESS.—
Not later than October 30 of
each year, the Commission shall transmit to the Committee on
Banking, Housing, and Urban Affairs of the Senate, and the
Committee on Financial Services of the House of Representatives a
report on—
“(A) the Commission’s whistleblower award program under this
section, including a description of the number of awards granted
and the types of cases in which awards were granted during the
preceding fiscal year;
“(B) investor education initiatives described in paragraph (1)(B)
that were funded by the Fund during the preceding fiscal year;
“(C) the balance of the Fund at the beginning of the preceding
fiscal year;
“(D) the amounts deposited into or credited to the Fund during the
preceding fiscal year;
“(E) the amount of earnings on investments of amounts in the Fund
during the preceding fiscal year;
“(F) the amount paid from the Fund during the preceding fiscal
year to whistleblowers pursuant to subsection (a);
“(G) the amount paid from the Fund during the preceding fiscal
year for investor education initiatives described in paragraph
(1)(B);
“(H) the balance of the Fund at the end of the preceding fiscal
year; and
“(I) a complete set of audited financial statements, including a
balance sheet, income statement, and cash flow analysis.
“(g) PROTECTION OF WHISTLEBLOWERS.—
“(1) PROHIBITION AGAINST RETALIATION.—
“(A) IN GENERAL.—
Any employee, contractor, or
agent shall be entitled to all relief necessary to make that
employee, contractor, or agent whole, if that employee,
contractor, or agent is discharged, demoted, suspended,
threatened, harassed, or in any other manner discriminated against
in the terms and conditions of employment because of any lawful
act done by the employee, contractor, or agent or associated
others in providing information to the Commission in accordance
with subsection (a), or in assisting in any investigation or
judicial or administrative action of the Commission based upon or
related to such information.
‘‘(B) RELIEF.—
Relief under subparagraph (A)
shall include reinstatement with the same seniority status that
the employee, contractor, or agent would have had, but for the
discrimination, 2 times the amount of back pay, with interest; and
compensation for any special damages sustained as a result of the
discrimination, including litigation costs, expert witness fees,
and reasonable attorneys’ fees. An action under this subsection
may be brought in the appropriate district court of the United
States for the relief provided in this subsection.
“(C) PROCEDURE.—
“(i) SUBPOENAS.—
A subpoena requiring the
attendance of a witness at a trial or hearing conducted under this
section may be served at any place in the United States.
“(ii) STATUTE OF LIMITATIONS.—
An action under this
subsection may not be brought more than 6 years after the date on
which the violation reported in section (a) is committed, or more
than 3 years after the date when facts material to the right of
action are known or reasonably should have been known by the
whistleblower, but in no event after 10 years after the date on
which the violation is committed.
“(2) CONFIDENTIALITY.—
“(A) IN GENERAL.—
Except as provided in
subparagraph (B), all information provided to the Commission by a
whistleblower shall be confidential and privileged as an
evidentiary matter (and shall not be subject to civil discovery or
other legal process) in any proceeding in any Federal or State
court or administrative agency, and shall be exempt from
disclosure, in the hands of an agency or establishment of the
Federal Government, under the Freedom of Information Act (5 U.S.C.
552), or otherwise, unless and until required to be disclosed to a
defendant or respondent in connection with a public proceeding
instituted by the Commission or any entity described in
subparagraph (B). For purposes of section 552 of title 5, United
States Code, this paragraph shall be considered a statute
described in subsection (b)(3)(B) of such section 552. Nothing
herein is intended to limit the Attorney General’s ability to
present such evidence to a grand jury or to share such evidence
with potential witnesses or defendants in the course of an ongoing
criminal investigation.
“(B) AVAILABILITY TO GOVERNMENT AGENCIES.—
Without the loss of its status
as confidential and privileged in the hands of the Commission, all
information referred to in subparagraph (A) may, in the discretion
of the Commission, when determined by the Commission to be
necessary to accomplish the purposes of this Act and protect
investors, be made available to—
“(i) the Attorney General of the United States;
“(ii) an appropriate regulatory authority;
“(iii) a self-regulatory organization;
“(iv) State attorneys general in connection with any criminal
investigation; and
“(v) any appropriate State regulatory authority,
each of which shall maintain such information as confidential and
privileged, in accordance with the requirements in subparagraph
(A).
“(3) RIGHTS RETAINED.—
Nothing in this section shall
be deemed to diminish the rights, privileges, or remedies of any
whistleblower under any Federal or State law, or under any
collective bargaining agreement.
“(h) RULEMAKING AUTHORITY.—
The Commission shall have the
authority to issue such rules and regulations as may be necessary
or appropriate to implement the provisions of this section
consistent with the purposes of this section.
“(i) DEFINITIONS.—
For purposes of this section,
the following terms have the following meanings:
“(1) ORIGINAL INFORMATION.—
The term ‘original
information’ means information that—
“(A) is based on the direct and independent knowledge or analysis
of a whistleblower;
“(B) is not known to the Commission from any other source; and
“(C) is not based on allegations in a judicial or administrative
hearing, in a governmental report, hearing, audit, or
investigation, or from the news media, unless the whistleblower is
the initial source of the information that resulted in the
judicial or administrative hearing, governmental report, hearing,
audit, or investigation, or the news media’s report on the
allegations.
“(2) MONETARY SANCTIONS.—
The term ‘monetary sanctions,’
when used with respect to any judicial or administrative action,
means any monies, including but not limited to penalties,
disgorgement, and interest, ordered to be paid, and any monies
deposited into a disgorgement fund pursuant to Section 308(b) of
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(b)), as a result of
such action or any settlement of such action.
“(3) RELATED ACTION.—
The term ‘related action,’
when used with respect to any judicial or administrative action
brought by the Commission under the securities laws, means any
judicial or administrative action brought by an entity described
in subsection (g)(2)(B) that is based upon the same original
information provided by a whistleblower pursuant to subsection (a)
that led to the successful enforcement of the Commission action.
“(4) WHISTLEBLOWER.—The term ‘whistleblower’
means an individual, or two or more individuals acting jointly,
who submit information to the Commission as provided in this
section.”.
SEC. 923. CONFORMING AMENDMENTS FOR
WHISTLEBLOWER PROTECTION.
(a) IN GENERAL.—
Each of the following
provisions is amended by inserting “and section 21F of the
Securities Exchange Act of 1934” after “the Sarbanes-Oxley Act of
2002”:
(1) Section 20(d)(3)(A) of the Securities Act of 1933 (15 U.S.C.
77t(d)(3)(A)).
(2) Section 42(e)(3)(A) of the Investment Company Act of 1940 (15
U.S.C. 80a–41(e)(3)(A)).
(3) Section 209(e)(3)(A) of the Investment Advisers Act of 1940
(15 U.S.C. 80b–9(e)(3)(A)). 15
(b) SECURITIES EXCHANGE ACT.—
The Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.) is amended—
(1) in section 21(d)(3)(C)(i) (15 U.S.C. 78u(d)(3)(C)(i)), by
inserting “and section 21F of this title” after “the
Sarbanes-Oxley Act of 2002”;
(2) in section 21A(d)(1) (15 U.S.C. 78u-1(d)(1)), by
(A) striking “(subject to subsection (e))”; and
(B) inserting “and section 21F of this title” after “the
Sarbanes-Oxley Act of 2002”; and
(C) by striking section 21A(e) (15 U.S.C. 78u-1(e)) and
renumbering sections 21A(f) and (g) (15 U.S.C. 78u-1(f) and (g))
as sections 21A(e) and (f).
SEC. 924. IMPLEMENTATION AND TRANSITION
PROVISIONS FOR WHISTLEBLOWER PROTECTIONS.
(a) IMPLEMENTING RULES.—
The Securities and Exchange
Commission shall issue final regulations implementing the
provisions of section 21F of the Securities Exchange Act of 1934,
as added by this subtitle, no later than 270 days after the date
of enactment of this Act.
(b) ORIGINAL INFORMATION.—
Information submitted to the
Commission by a whistleblower in accordance with regulations
implementing the provisions of section 21F of the Securities
Exchange Act of 1934, as added by this subtitle, shall not lose
its status as original information, as defined in section
21F(i)(1) of the Securities Exchange Act of 1934, as added by this
subtitle, solely because the whistleblower submitted such
information prior to the effective date of such regulations,
provided such information was submitted after the date of
enactment of this subtitle, or related to insider trading
violations for which a bounty could have been paid at the time
such information was submitted.
(c) AWARDS.—
A whistleblower may receive an
award pursuant to section 21F of the Securities Exchange Act of
1934, as added by this subtitle, regardless of whether any
violation of a provision of the securities laws, or a rule or
regulation thereunder, underlying the judicial or administrative
action upon which the award is based occurred prior to the date of
enactment of this subtitle.
SEC.
925. COLLATERAL BARS.
(a) SECTION 15 OF THE SECURITIES EXCHANGE
ACT OF 1934.—
Section 15(b)(6)(A) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is
amended by striking “12 months, or bar such person from being
associated with a broker or dealer, ” and inserting “12 months, or
bar any such person from being associated with a broker, dealer,
investment adviser, municipal securities dealer, transfer agent,
or nationally recognized statistical rating organization, ”.
(b) SECTION 15B OF THE SECURITIES EXCHANGE
ACT OF 1934.—
Section 15B(c)(4) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-4(c)(4)) is amended
by striking “twelve months or bar any such person from being
associated with a municipal securities dealer, ” and inserting
“twelve months or bar any such person from being associated with a
broker, dealer, investment adviser, municipal securities dealer,
transfer agent, or nationally recognized statistical rating
organization,”.
(c) SECTION 17A OF THE SECURITIES EXCHANGE
ACT OF 1934.—
Section 17A(c)(4)(C) of the
Securities Exchange Act of 1934 (15 U.S.C. 78q-1(c)(4)(C)) is
amended by striking “twelve months or bar any such person from
being associated with the transfer agent, ” and inserting “twelve
months or bar any such person from being associated with any
transfer agent, broker, dealer, investment adviser, municipal
securities dealer, or nationally recognized statistical rating
organization,”.
(d) SECTION 203 OF THE INVESTMENT ADVISERS
ACT OF 1940.—
Section 203(f) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-3(f)) is amended by
striking “twelve months or bar any such person from being
associated with an investment adviser, ” and inserting “twelve
months or bar any such person from being associated with an
investment adviser, broker, dealer, municipal securities dealer,
transfer agent, or nationally recognized statistical rating
organization,”.
SEC. 926. AIDING AND ABETTING AUTHORITY
UNDER THE SECURITIES ACT AND THE INVESTMENT COMPANY ACT.
(a) UNDER THE SECURITIES ACT OF 1933.—Section 15 of the Securities
Act of 1933 (15 U.S.C. 77o) is amended to read as follows:
“SEC. 15. LIABILITY OF CONTROLLING PERSONS AND PERSONS WHO AID AND
ABET VIOLATIONS.
“(a) CONTROLLING PERSONS.—
Every person who, by or
through stock ownership, agency, or otherwise, or who, pursuant to
or in connection with an agreement or understanding with one or
more other persons by or through stock ownership, agency, or
otherwise, controls any person liable under section 11, or 12,
shall also be liable jointly and severally with and to the same
extent as such controlled person to any person to which such
controlled person is liable, unless the controlling person had no
knowledge of or reasonable ground to believe in the existence of
the facts by reason of which the liability of the controlled
person is alleged to exist.
“(b) PROSECUTION OF PERSONS WHO AID AND ABET
VIOLATIONS.—
For purposes of any action
brought by the Commission under subparagraph (b) or (d) of section
20, any person that knowingly or recklessly provides substantial
assistance to another person in violation of a provision of this
Act, or of any rule or regulation issued under this Act, shall be
deemed to be in violation of such provision to the same extent as
the person to whom such assistance is provided.”.
(b) UNDER THE INVESTMENT COMPANY ACT OF
1940.—
Section 48 of the Investment
Company Act of 1940 (15 U.S.C. 80a-48) is amended to read as
follows:
“SEC. 48. LIABILITY OF CONTROLLING PERSONS
AND PERSONS WHO AID AND ABET VIOLATIONS; PREVENTING COMPLIANCE
WITH ACT.
“(a) CONTROLLING PERSONS.—
It shall be unlawful for any
person, directly or indirectly, to cause to be done any act or
thing through or by means of any other person which it would be
unlawful for such person to do under the provisions of this Act or
any rule, regulation, or order thereunder.
“(b) PROSECUTION OF PERSONS WHO AID AND ABET
VIOLATIONS.—
For purposes of any action
brought by the Commission under subsection (d) or (e) of section
42, any person that knowingly or recklessly provides substantial
assistance to another person in violation of a provision of this
Act, or of any rule or regulation issued under this Act, shall be
deemed to be in violation of such provision to the same extent as
the person to whom such assistance is provided.
“(c) PREVENTING COMPLIANCE WITH ACT.—
It shall be unlawful for any
person without just cause to hinder, delay, or obstruct the
making, filing, or keeping of any information, document, report,
record, or account required to be made, filed, or kept under any
provision of this Act or any rule, regulation, or order thereunder.”.
SEC. 927. AUTHORITY TO IMPOSE PENALTIES FOR
AIDING AND ABETTING VIOLATIONS OF THE INVESTMENT ADVISERS ACT.
Section 209 of the Investment Advisers Act of 1940 (15 U.S.C.
80b-9) is amended by inserting at the end the following new
subsection:
“(f) AIDING AND ABETTING.—
For purposes of any action
brought by the Commission under subsection (e), any person that
knowingly or recklessly has aided, abetted, counseled, commanded,
induced, or procured a violation of any provision of this Act, or
of any rule, regulation, or order hereunder, shall be deemed to be
in violation of such provision, rule, regulation, or order to the
same extent as the person that committed such violation
Dear member,
Write in your CV, resume, websites etc. that
you are member of the Sarbanes Oxley Compliance Professionals
Association.
Take advantage of
the distance learning and online certification program of our
Association - at a cost that is unheard of.
www.sarbanes-oxley-association.com/Distance_Learning_and_Certification.htm
Best
Regards,
George Lekatis
President of the Sarbanes Oxley
Compliance Professionals Association
General Manager, Compliance
LLC
1200 G Street NW Suite 800, Washington DC 20005, USA
Tel: (202) 449-9750
Email: lekatis@sarbanes-oxley-association.com
Web:
www.sarbanes-oxley-association.com
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