84 STAT. 1498 Exempted securities. Ante, p. 718. 68A Stat. 29; 82 Stat. 266, 1349. 26 USC 103. 68A Stat. 134. 26 USC 401. 76 Stat. 1141. 76 Stat. 811. 48 Stat. 77; 68 Stat. 684. 15 USC 77e. "Bank." ably designed to prevent, such acts and practices as are fraudulent, deceptive, or manipulative." SEC. 6. (a) Section 3 (a) (2) of the Securities Act of 1933 (15 U.S.C. 77c (a) (2)) is amended to read as follows: "(2) Any security issued or guaranteed by the United States or any territory thereof, or by the District of Columbia, or by any State of the United States, or by any political subdivision of a State or territory, or by any public instrumentality of one or more States or territories, or by any person controlled or supervised by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States; or any certificate of deposit for any of the foregoing; or any security issued or guaranteed by any bank; or any security issued by or representing an interest in or a direct obligation of a Federal Reserve bank; or any interest or participation in any common trust fund or similar fund maintained by a bank exclusively for the collective investment and reinvestment of assets contributed thereto by such bank in its capacity as trustee, executor, administrator, or guardian; or any security which is an industrial development bond (as defined in section 103 (c) (2) of the Internal Revenue Code of 1954) the interest on which is excludable from gross income under section 103 (a)(1) of such Code if, by reason of the application of paragraph (4) or (6) of section 103 (c) of such Code (determined as if paragraphs (4) (A), (5), and (7) were not included in such section 103 (c)), paragraph (1) of such section 103 (c) does not apply to such security; or any interest or participation in a single or collective trust fund maintained by a bank or in a separate account maintained by an insurance company which interest or participation is issued in connection with (A) a stock bonus, pension, or profit-sharing plan which meets the requirements for qualification under section 401 of the Internal Revenue Code of 1954, or (B) an annuity plan which meets the requirements for the deduction of the employer's contribution under section 404 (a) (2) of such Code, other than any plan described in clause (A) or (B) of this paragraph (i) the contributions under which are held in a single trust fund maintained by a bank or in a separate account maintained by an insurance company for a single employer and under which an amount in excess of the employer's contribution is allocated to the purchase of securities (other than interests or participations in the trust or separate account itself) issued by the employer or by any company directly or indirectly controlling, controlled by or under common control with the employer or (ii) which covers employees some or all of whom are employees within the meaning of section 401 (c) (1) of such Code. The Commission, by rules and regulations or order, shall exempt from the provisions of section 5 of this title any interest or participation issued in connection with a stock bonus, pension, profit-sharing, or annuity plan which covers employees some or all of whom are employees within the meaning of section 401 (c) (1) of the Internal Revenue Code of 1954, if and to the extent that the Commission determines this to be necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of this title. For purposes of this paragraph, a security issued or guaranteed by a bank shall not include any interest or participation in any collective trust fund maintained by a bank; and the term 'bank' means any national bank, or any banking institution organized under the laws. of any State, territory, or the District of Columbia, the business of which is substantially confined to banking and is supervised by the State or territorial banking commission or similar official; except that in the case of a common trust fund or similar fund, or a collective trust fund, the term 'bank' has the same meaning as in the Investment Company Act of 1940." 84 STAT. 1499 54 Stat. 791. 15 USC 80a-2. (b) Section 3 (a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c) (relating to exempted securities) is amended by inserting after Ante, p. 718. "any municipal corporate instrumentality of one or more States;" in paragraph (12) the following: "or any security which is an industrial development bond (as defined in section 103 (c) (2) of the Internal Revenue Code of 1954) the interest on which is excludable from gross income under section 103 (a) (1) of such Code if, by reason of the application of paragraph (4) or (6) of section 103 (c) of such Code (determined as if paragraphs (4) (A), (5), and (7) were not included in such section 103 (c)), paragraph (1) of such section 103 (c) does not apply to such security;". 82 Stat. 266, 1349. 26 USC 103. (c) Section 304 (a) of the Trust Indenture Act of 1939 (15 U.S.C. 77ddd) (relating to exempted securities) is amended by reclassifying 53 Stat. 1153. the present text of paragraph (4) thereof as paragraph (4) (A), and by adding a new subparagraph (B) at the end of such paragraph (4), to read as follows: "(B) any security exempted from the provisions of the Securities Act of 1933, as amended, by paragraph (2) of subsection 3 (a) thereof, as amended by section 401 of the Employment Security Amendments of 1970." Ante, p. 1498. Ante, p. 718. (d) The amendments made by this section shall apply with respect Effective date. to securities sold after January 1, 1970. Approved December 22, 1970. LEGISLATIVE HISTORY: HOUSE REPORT No. 91-1655 (Comm. on Interstate and Foreign Commerce). CONGRESSIONAL RECORD, Vol. 116 (1970): Aug. 18, considered and passed Senate. Deo. 7, considered and passed House, amended. Dec. 9, Senate agreed to House amendments with an amendment. 91st Congress, H. R. 19333 An Act To provide greater protection for customers of registered brokers and dealers and members of national securities exchanges. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE, ETC. (a) SHORT TITLE; TABLE OF CONTENTS.-This Act, with the following table of contents, may be cited as the "Securities Investor Protection Act of 1970". (d) Requirements respecting assessments and lines of credit. (e) Prior trusts; overpayments and underpayments. (f) Borrowing authority. (g) SEC loans to SIPC. (h) SEC notes issued to Treasury. (1) "Gross revenue" defined. Sec. 3. Protection of customers. (a) Determination of need of protection. (b) Court action. (c) SEC participation in proceedings. Sec. 6. Liquidation proceedings. (a) General purposes of liquidation proceeding. (b) Powers and duties of trustee. (c) Application of Bankruptcy Act. (d) Completion of open contractual commitments. (e) Notice. 84 STAT. 1636 Securities Investor Protection Act of 1970. 84 STAT. 1637 48 Stat. 881. 78 Stat. 570. 15 USC 780. 76 Stat. 265. TABLE OF CONTENTS-Continued Sec. 11. Miscellaneous provisions. (a) Public inspection of reports. (b) Application of Act to foreign members. (d) Liability of SIPC and Directors. (e) Advertising. (f) SIPC exempt from taxation. (g) Section 20 (a) of 1934 Act not to apply. Sec. 12. Definitions. (b) SECTION HEADINGS.-Headings for sections and subsections, and the table of contents, are included only for convenience, and shall be given no legal effect. SEC. 2. APPLICATION OF SECURITIES EXCHANGE ACT OF 1934. Except as otherwise provided in this Act, the provisions of the Securities Exchange Act of 1934 (15 U.S.C., sec. 78a and fol.; hereinafter referred to as the "1934 Act") apply as if this Act constituted an amendment to, and was included as a section of, such Act. SEC. 3. SECURITIES INVESTOR PROTECTION CORPORATION. (a) CREATION.-There is hereby established a body corporate to be known as "Securities Investor Protection Corporation" (hereafter in this Act referred to as "SIPC"). SIPC shall be a nonprofit corporation and shall have succession until dissolved by act of the Congress. SIPC shall (1) not be an agency or establishment of the United States Government; (2) be a membership corporation the members of which shall be (A) all persons registered as brokers or dealers under section 15(b) of the 1934 Act, and (B) all persons who are members of a national securities exchange, other than persons whose business as a broker or dealer consists exclusively of (i) the distribution of shares of registered open end investment companies or unit investment trusts, (ii) the sale of variable annuities, (iii) the business of insurance, or (iv) the business of rendering investment advisory services to one or more registered investment companies or insurance company separate accounts; and (3) except as otherwise provided in this Act, be subject to, and have all the powers conferred upon a nonprofit corporation by, the District of Columbia Nonprofit Corporation Act (D.C. Code, sec. 29-1001 and fol.). (b) POWERS. In addition to the powers granted to SIPC elsewhere in this Act, SIPC shall have the power— (1) to sue and be sued, complain and defend, in its corporate name and through its own counsel, in any court, State, or Federal; (2) to adopt, alter, and use a corporate seal, which shall be judicially noticed; (3) subject to the provisions of this Act, to adopt, amend, and repeal, by its Board of Directors, bylaws and rules relating to the conduct of its business and the exercise of all other rights and powers granted to it by this Act; (4) to conduct its business (including the carrying on of operations and the maintenance of offices) and to exercise all other rights and powers granted to it by this Act in any State or other jurisdiction without regard to any qualification, licensing, or other statute in such State or other jurisdiction; (5) to lease, purchase, accept gifts or donations of or otherwise acquire, to own, hold, improve, use, or otherwise deal in or with, and to sell, convey, mortgage, pledge, lease, exchange or otherwise dispose of, any property, real, personal or mixed, or any interest therein, wherever situated; (6) subject to the provisions of subsection (c), to elect or appoint such officers, attorneys, employees, and agents as may be required, to determine their qualifications, to define their duties, to fix their salaries, require bonds for them and fix the penalty thereof; (7) to enter into contracts, to execute instruments, to incur liabilities, and to do any and all other acts and things as may be necessary or incidental to the conduct of its business and the exercise of all other rights and powers granted to SIPC by this Act; and (8) by bylaw, to establish its fiscal year. (c) BOARD OF DIRECTORS. (1) FUNCTIONS. SIPC shall have a Board of Directors which, subject to the provisions of this Act, shall determine the policies which shall govern the operations of SIPC. (2) NUMBER AND APPOINTMENT.-The Board of Directors shall consist of seven persons as follows: (A) One director shall be appointed by the Secretary of the Treasury from among the officers and employees of the Department of the Treasury. (B) One director shall be appointed by the Federal Reserve Board from among the officers and employees of the Federal Reserve Board. (C) Five directors shall be appointed by the President, by and with the advice and consent of the Senate, as follows (i) three such directors shall be selected from among persons who are associated with, and representative of different aspects of, the securities industry, not all of whom shall be from the same geographical area of the United States, and 84 STAT. 1638 (ii) two such directors shall be selected from the general public from among persons who are not associated with any broker or dealer, within the meaning of paragraph (18) of section 3(a) of the 1934 Act, or similarly 78 Stat. 565. associated with a national securities exchange or other 15 USC 78c. securities industry group and who have not had any such association during the two years preceding appointment. (3) CHAIRMAN AND VICE CHAIRMAN.-The President shall designate a Chairman and Vice Chairman from among those directors appointed under paragraph (2)(C)(ii) of this subsection. (4) TERMS. (A) Except as provided in subparagraphs (B) and (C), (i) two shall hold office for a term expiring on Decem- (ii) two shall hold office for a term expiring on December 31, 1972, and (iii) three shall hold office for a term expiring on as designated by the President at the time they take office. |