On July 9, the Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee approved the Securities Act of 2008 for consideration by the House Financial Services Committee. The Act would amend numerous provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 and the Investment Advisers Act of 1940. The following is a summary of the certain substantive changes contained in the Act.
1. Civil Penalties in Cease and Desist Proceedings
Section 8A of the Securities Act would be amended by adding a new provision that would provide the Securities and Exchange Commission with the authority to impose civil money penalties in cease and desist proceedings before an SEC administrative law judge, against anyone alleged to have violated the Act.
Section 21B(a) of the Exchange Act, Section 9(d)(1) of the Investment Company Act, and Section 203(i)(1) of the Advisers Act would be similarly amended by adding subsections that would authorize the SEC to impose civil penalties in cease and desist proceedings against any defendant before administrative law judges.
2. Scope of Exemption from State Securities Registration
The Act proposes to add a provision to the Securities Act that would allow the New York Stock Exchange, the NASDAQ Stock Market LLC and the American Stock Exchange to establish tiers on which stocks can be listed, even if those stocks would not otherwise qualify as “covered securities” exempt from state registration requirements.
3. Exempt Offerings
The Act would amend Section 18(b)(4)(D) of the Securities Act to provide that states can require that notice filings for exempt securities contain all of the information required by Form D including the appendix to Form D.
Other changes approved by the Subcommittee include:
- Amending provisions of the Exchange Act and Advisers Act to prevent associated persons who violate federal securities laws in one capacity (i.e., as an associated person of a broker dealer) from being associated with other securities businesses in a different capacity (i.e.,as an associated person of an investment adviser).
- Amending Section 205 of the Advisers Act to provide that such Section regarding contractual provisions between clients and advisers does not apply to state registered advisers.
- Adding Section 24 to the Exchange Act which would provide that the SEC shall not be deemed to have waived any privilege by sharing information with another agency of the U.S. government, any foreign securities authority, any foreign law enforcement authority and any state securities or law enforcement authority.
- Amending provisions of the Securities Act, Exchange Act, Investment Company Act and Advisers Act to allow for nationwide service of subpoenas.